Shopoff Securities, Inc. President and CEO William Shopoff Charged by FINRA with Fraud

Posted on Saturday, July 20th, 2019 at 8:25 pm    

Shopoff Securities, Inc.

Erez Law is currently investigating Shopoff Securities, Inc. president and chief executive officer (CEO) William Shopoff (CRD# 1273471) regarding allegations that he fraudulently sold $12.57 million of promissory notes. Shopoff has been registered with Shopoff Securities, Inc. in Irvine, California since 2007.

In January 2019, FINRA named Shopoff in a complaint alleging his member firm, through him as the president and CEO and the firm’s senior vice president for investor relations, fraudulently sold promissory note investments to investors. The FINRA complaint alleges that Shopoff formed a fund with the stated purpose of raising funds for his private real estate firm, Shopoff Realty.

It is alleged that Shopoff recommended his clients invest in the following funds:

It is alleged that Shopoff and the firm’s vice president “each distributed or directed others at the firm to distribute the Private Placement Memorandum (the PPM), the fund Subscription Agreement template (subscription agreement), and a document entitled Loan Guaranty Agreement (the guaranty) to fund investors, each of which Shopoff approved and contained certain material misrepresentations and omissions of facts. The PPM’s material misrepresentations included Shopoff’s Realty debt, the profits and commission that Shopoff Realty received or could receive from anticipated sales of projects described in the PPM, the identity of the chief financial officer and senior vice president for land acquisitions for Shopoff Realty and the maximum size of the offering. The PPM also omitted information necessary to make statements in the PPM not misleading. The subscription agreement contained a material misrepresentation because it falsely stated that the fund had no current financial or operating history and the guaranty omitted material information about the Shopoffs’ liquidity, net worth, cash balance and assets that was necessary for an investor to assess the risk involved in the fund investment.

It is also alleged that “Shopoff, the firm, and the Vice President failed to disclose that some investment proceeds would actually be transferred to Shopoff and his personal trust to pay his and his wife’s personal expenses, and that approximately $165,000 was used for those personal expenses. Shopoff, the firm, and the Vice President also failed to disclose that some investment proceeds would be used to repay previous Notes investors.” Additionally, it is alleged that Shopoff Securities, Inc., through Shopoff, fraudulently sold two private placement offerings that were sponsored by his private real estate firm

Shopoff has been the subject of three customer complaints between 2018 and 2019, according to his CRD report:

May 2019. “Plaintiffs assert claims for breach of guaranty (contract), for set aside of allegedly voidable transfers, and for declaratory relief, relating to alleged breaches of written Guaranty agreements (entered into in 2014 and 2015) and alleged post-breach transfers.” The customer is seeking $25,056,868 in damages.

May 2019. “Plaintiff asserts two claims, for breach of contract and violation of the Uniform Voidable Transactions Act, relating to an alleged breach (in February 2018) of a written Guaranty entered into in April 2014, and alleged post-breach transfers.” The customer is seeking $6,003,000 in damages.

December 2018. “Former employee of Firm affiliate (Executive Vice President, Commercial Real Estate), and related investment entities, assert claims for breach of contract against individual and family trust, as guarantors, relating to two guaranties executed in 2012 and 2014. Specifically, plaintiff asserts claims for breach of guaranty, specific performance, and breach of the covenant of good faith and fair dealing, as well as a single conclusory (unsupported) claim for fraud based on alleged statements made at the time of the guaranties.” The customer is seeking $4,250,895 in damages and the case is currently pending.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Shopoff Securities, Inc. may be liable for investment or other losses suffered by Shopoff’s customers.

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.

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