On March 22, 2018, the Securities and Exchange Commission (“SEC”) announced it settled fraud charges against the operators of the Alaska Financial Company III, LLC (“AFC III”) real estate fund that was allegedly used to bilk millions of dollars from investors.
AFC III is operated by Tobias Preston, his brother, Charles Preston, and his son, Caleb Preston. The Prestons raised more than $66 million between 2012 and 2016 from about 300 investors by selling them promissory notes in AFC III. The SEC alleged the Prestons falsely represented to investors that the promissory notes were secured by real estate and would provide significant returns.
The SEC said, in reality, the Prestons used AFC III to misappropriate $31 million of the investors’ funds. Tobias Preston allegedly used $17 million of the funds to purchase a home in Mexico and fund personal ventures. The Prestons reportedly used another $14 million of the funds to pay the operating expenses of AFC III’s affiliate, McKinley Mortgage Co. LLC.
Options for Investors to Recover Losses
Marquardt Law Office LLC is interested in speaking with investors who were recommended an AFC III fund by their brokers or investment advisors.
Rules and regulations require investment brokers and advisors to recommend only suitable investment products and strategies to their customers. This requires brokers and advisors to be familiar with their customers and their investment needs. This also requires brokers and advisors to be knowledgeable of investments like AFC III to ensure they are suitable to a particular customer.
Additionally, rules and regulations require brokerage firms to closely monitor and supervise their brokers and advisors to ensure they recommend only suitable investments to their customers.
When brokers and firms breach these duties, their customers have a right to pursue claims for their losses through FINRA arbitration claims.
If you believe your investment in the AFC III fund may have been unsuitably recommended to you, contact Marquardt Law Office LLC to speak with a securities attorney for free consultation.
Marquardt Law Office LLC is a securities law firm located in Chicago, IL that represents clients nationwide who have suffered losses due to misconduct such as fraud and negligence.