Erez Law Files FINRA Claim Against Colorado Financial Service Corp. and Former Financial Advisor Tracy Turner
Posted on Tuesday, April 9th, 2019 at 12:30 pm
Erez Law recently filed a FINRA arbitration against Colorado Financial Service Corp. on behalf of a retired California couple.
Their customer alleges that Tracy Turner (CRD #1385745), who was a registered representative of Colorado Financial Service Corp., in Carlsbad, California from 2012 to 2014, solicited the couple to invest in an unapproved investment. The clients were risk averse investors who were interested in generating stable cash flow while preserving their capital.
Turner promoted and marketed himself as an expert in 1031 exchanges, which allows an investor to sell a property and reinvest the proceeds in a new property and to defer all capital gains and taxes. The newly purchased property must be of like-kind. It is alleged that Turner promoted and sold investments to investors that would take advantage of 1031 exchanges and supposedly provide higher cash flow and greater diversification to investors.
In 2014, after the clients sold a property, Turner solicited the couple to invest $300,000 of the proceeds from the sale in a Moreland Salt Water Disposal Facility. It is alleged that Turner represented to the couple that the facility offered a 21.8% cash-on-cash return and was an outstanding opportunity for a 1031 exchange. Additionally, Turner showed the customer investment illustrations that reflected they would earn $65,250 per year for 5 years. Based on Turner’s recommendations, the Erez Law clients invested in Moreland Salt Water Disposal Facility.
Regrettably, Turner engaged in widespread illicit conduct including “selling away” in connection with the sale of the Moreland Salt Water Facility, which led to his termination and permanent bar from the securities industry.
It is alleged that Turned violated FINRA Rule 3040, which prohibits financial advisors from participating in any manner in a private securities transaction. Turner sold the investment in the Moreland SWD Facility to the clients without Colorado Financial Service Corp.’s approval. By recommending that the clients invest in an unapproved investment, Colorado Financial Service Corp. did not do any required due diligence on the investment and it was therefore unsuitable. The investment in the Moreland Salt Water Disposal Facility was a high risk or speculative investment and was unsuitable for the couple.
Additionally, the claim alleges that Turner’s representations in the Offering Memorandum and an online message as to the investment’s cash flow and anticipated returns were not fair and balanced and lacked a foundation. The distributions that the clients have received from their investment in the Moreland Salt Water Disposal Facility have been a fraction of what Turner represented and have diminished significantly. Moreover, the value of their interest is illiquid and believed to be near worthless.
FINRA investigation Turner and found that he engaged in selling away and making misleading representations about investing in Moreland Salt Water Disposal Facility. As a result, in May 2017, Turner received a lifetime bar from the securities industry and is required to disgorge $272,979.04 as a fine, which is the amount of commissions he earned on the illicit sales of the Moreland Salt Water Disposal Facility. According to his BrokerCheck profile, “Turner was named a respondent in a FINRA complaint alleging that he failed to give prior written notice to, and receive prior written permission from, his member firm before participating in private securities transactions. The complaint alleges that Turner offered and sold interests to investors totaling approximately $4.1 million. For successfully soliciting these investments, Turner received approximately $270,000 in compensation. The complaint also alleges that to promote the interests, Turner created and made publicly available online an offering memorandum concerning the offer of one of the interests that failed to provide a sound basis for evaluating the investment and made promissory and unwarranted statements and claims. In addition, Turner wrote an accompanying message to the offering memorandum, also publicly available online, that failed to provide a sound basis for evaluating the investment and included a promissory and unwarranted statement. The complaint further alleges that the offering memorandum and the accompanying message were not approved by a registered firm principal and were not filed with FINRA prior to their dissemination.”
In addition to the case above, Turner has been the subject of 31 additional customer complaints, dating from 1988 to present, according to his CRD report.
Turner was previously registered with Lighthouse Capital Corporation in Vista, California from 2010 to 2011, with Private Asset Group, Inc. in Carlsbad, California from 2009 to 2010, and with Capwest Securities, Inc. in Carlsbad, California from March to June 2009, when he was terminated regarding, “Evidence suggested that RR may have conducted prospecting and/or sales activity in states where he was not registered, with applications signed by another member of the branch.”
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.