What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: June 24, 2019

Stoltmann Law Offices is pursuing investment losses for investors in IGF Investment Grade Funds I, LP (“IGF Fund”). IGF Fund is a real estate private placement that invests in single-tenant, net leased commercial properties, with 75% of the portfolio being “investment grade rated tenants with the remainder being of quality private credit tenants or those trending to investment grade.” IGF Fund advertises that it pays 6% annual returns to investors, paid monthly, with two-thirds of the income being tax-deferred. On its website, IGF Fund solicits property owners and brokers for “single tenant triple net or double net leased assets…retail, office, restaurants, and C-stores, and leases backed by investment grade tenant credit of AAA or BBB-“. While IGF solicits properties from $1 million to $16 million, it raised less than $12 million as of August 2018. IGF Partners Realty LLC is the general partner of the IGF Fund and is headquartered in Santa Barbara, California. The IGF Fund is a Delaware limited partnership and a Regulation D private placement.

Generally, Regulation D private placements should only be sold to accredited investors, with some exceptions. Some of the criteria considered is the investor’s annual income, net worth, and sophistication and investment experience. In order to qualify as an “accredited investor”, an investor must have a $200,000 annual income, or $300,000 joint income for the past two years, or a net worth of $1 million (excluding their home). When considering the suitability of a real estate investment for a client, a broker must take into consideration the client’s current asset allocation. For most client’s, their home is already one of the largest pieces of their net worth, so investing in more real estate (and particularly illiquid real estate investments, like IGF Fund) simply does not make sense.

IGF Fund is desperate to raise cash. The initial offering of $60 million was made on March 29, 2016. As of August 21, 2018, the fund raised only $11,720,000. This means that over 80% was left to be sold two years after the initial offering. Because of this, IGF Fund notified investors in early 2019 that it was extending its offering period from December 31, 2018 to April 30, 2019. IGF Fund and brokers selling this investment have been wining and dining current and potential investors to convince them to invest more cash. The lack of capital raised limits IGF Fund’s ability to purchase properties, thus minimizing any potential return for investors. Moreover, extending the offering period also extends the time period before the Fund can be liquidated. The IGF Fund is still paying distributions to investors, however without sufficient funding to purchase assets it will run dry, leaving investors with nothing.

FINRA-registered brokers and broker-dealers, including but not limited to Axiom Capital Management, Landolt Securities, Moloney Securities, D.H. Hill Securities, Great Point Capital, Arete Wealth Management, Shopoff Securities, Allen C. Ewing & Co., Whitehall Parker Securities, Sutter Securities, McNally Financial Services Corp., Oaktree Securities, KCD Financial, Freedom Investors, Corp., Colorado Financial Service Corporation, Coastal Equities, Capital Financial Services, Purshe Kaplan Sterling Investment, and Ni Advisors, have sold IGF Fund to its clients. These brokerage firms must perform reasonable due diligence into IGF Fund to determine whether it is suitable for any of its investors. From there, the firm must perform a customer-specific suitability analysis, such as reviewing the client’s investment objectives, risk tolerance, income, net worth, and investment portfolio, to determine whether the investment is suitable for each client. Due diligence must be performed before recommending the investment to any clients. Unfortunately, many of the firms gloss over the process and make broad recommendations to its clients to earn the large commissions paid by these investments, usually ranging from 10% to 15% of the client’s investment.

If your broker solicited you to invest in IGF Fund, or any similar private placements or non-traded REITs, you may have a claim against your brokerage firm to rescind this investment, or for compensatory damages. Stoltmann Law Offices will provide you with a free evaluation to determine if you have a case and, if so, will represent you on a contingency fee basis. This means that we don’t make any money until you do. Contact Stoltmann Law Offices today!


The posting on this site are mere OPINIONS and NOT statements of fact in any way whatsoever. The information should not be relied upon and there have been no findings made against the firms or individuals referenced on this site. In addition, this Blog is made available for educational purposes only and incorporates information from the web as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and Stoltmann Law Offices (161 N Clark Street 16th Floor Chicago, IL 60601). The Blog opinions should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


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