- February 9, 2020
- Lighthouse Capital Group
Rena Morris (CRD # 4867589) and Stephen Holt (CRD #5900842) are Financial Advisors at Lighthouse Capital Group in Pasadena, California. They are also members of JRW Investments, an affiliated company that specializes in 1031 exchange transactions.
Both Rena Morris and Stephen Holt were previously registered with Sandlapper Securities, a brokerage firm that was recently expelled by FINRA after it made specific findings that Sandlapper and its principals engaged in fraud.
In 2015, clients of the Wolper Law Firm, P.A. sold personal real estate and subsequently engaged Rena Morris, Stephen Holt, JRW Investments, and Lighthouse Capital Group in order to facilitate a 1031 exchange. Rena Morris, Stephen Holt, JRW Investments and Lighthouse Capital Group held themselves out as experts in pooled real estate securities structured as a Delaware Statutory Trust (“DST”), vehicles that are frequently used to accomplish a 1031 exchange. The DST owns underlying real estate, which is professionally managed by the sponsor of the DST.
Lighthouse Capital, JRW Investments, Rena Morris and Stephen Holt stated that they would recommend appropriate DSTs after conducting an extensive due diligence process, which they touted as second to none. According to the website for JRW Investments, “At JRW, we are convinced that exceptional due diligence is key to successfully protecting and growing our clients’ wealth. Only investments that meet or exceed our highest due diligence standards earn our recommendation. Over the past 15 years, we have reviewed investment offerings whose aggregate value exceeds $20 billion. Less than 10% of those offerings ultimately met our standards for recommendation.”
Ultimately, Lighthouse Capital, Rena Morris and Stephen Holt recommended that the clients collectively invest $966,720 of their retirement savings in a DST issued by Sandlapper CPCM Apartments DST (“Sandlapper Campus Point/Campus Manor DST”). The sponsor and trustee of the Sandlapper Campus Point/Campus Manor DST is Sandlapper Capital Investments, LLC, (“Sandlapper”) an affiliate business of Sandlapper Securities. Trevor Gordon is the CEO of both Sandlapper Capital Investments and Sandlapper Securities.
It is alleged that Rena Morris and Stephen Holt represented that they conducted due diligence and that the investment were “safe,” “secure” and that Sandlapper and its CEO, Mr. Gordon, were reputable sponsors that would effectively represent the investors’ interests in the management of the property. In reality, it is alleged that neither Lighthouse Capital Group, JRW Investments nor Rena Morris/Stephen Holt had conducted a modicum of due diligence regarding the investment or of Sandlapper. Had they done so, they would have discovered and disclosed to the clients that Sandlapper Securities and Mr. Gordon have a tortured regulatory history that culminated in a November 2018 recommendation by a FINRA hearing officer that both Sandlapper Securities and Mr. Gordon be permanently barred from the securities industry for, among other things, “willfully defrauding investors” in connection with privately held investments in saltwater disposal wells.
Respondents would have also discovered that neither Sandlapper nor Mr. Gordon had meaningful experience structuring and managing DST investments and allowed the underlying property owned by the DST to quickly fall into disrepair and, ultimately, foreclosure. The clients have lost the entirety of their investment capital while it is alleged that Lighthouse Capital Group, JRW Investments, Rena Morris and Stephen Holt failed to take any remedial steps to protect their clients’ investment.
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org.