Real Estate Investment Trusts (REITs) can be a lucrative investment, offering the potential for steady income and capital appreciation. However, the complexity and varying levels of transparency associated with non-traded REITs can sometimes lead to fraudulent schemes that leave investors at a loss.

If you find yourself a victim of a REIT scam, it’s crucial to know how to proceed. This blog post outlines seven essential steps to handle a REIT scam case effectively.

Recognize the Red Flags

The first step in handling a REIT scam is to recognize the warning signs. Often, these can include promises of high returns with little or no risk, aggressive sales tactics, and a lack of clear, accessible financial information about the investment.

If your REIT investment starts to show these red flags, it’s time to dig deeper. Look for inconsistencies in account statements, delayed or missing dividend payments, and any changes in the REIT’s management or investment strategy that were not communicated to investors.

Document Everything

Once you suspect a scam, start documenting every interaction, transaction, and piece of communication related to the REIT. This includes saving emails, recording phone conversations (where legally permissible), and keeping a detailed log of whom you spoke with and when.

Having a comprehensive paper trail is invaluable when you start seeking recourse. It’s also wise to review all your investment documents, like the prospectus and any contracts, to understand the terms and conditions you agreed to.

Consult with a Securities Attorney

Navigating the legal landscape of investment fraud can be daunting. Consulting with a securities attorney who specializes in investment fraud and REIT cases is crucial. They can provide guidance on your rights as an investor and the potential for recovering your losses.

You can read more about REIT Scam Lawyers here before you decide on what to do next. An attorney will also help you understand the complexities of securities law and how it applies to your case, ensuring you take the right legal steps moving forward.

Report the Fraud

Reporting the scam is a critical step in handling the case. Contact the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and your state’s securities regulator to file a complaint. These organizations can investigate the fraud and, if necessary, take action against the perpetrators. Reporting the scam also helps protect other investors from falling victim to the same scheme.

Consider Arbitration or Mediation

Many investment disputes are resolved through arbitration or mediation, which can be faster and less costly than going to court. FINRA offers arbitration and mediation services for disputes between investors and brokers or brokerage firms. Your securities attorney can represent you in these proceedings and work towards a settlement or award that compensates for your losses.

Join a Class Action Lawsuit

If other investors have been defrauded by the same REIT, consider joining a class-action lawsuit. This collective legal action can pool resources and share legal costs, making it a more efficient way to seek justice and compensation. Your attorney can advise you on any existing class-action suits related to the REIT scam or assist in initiating one.

Stay Informed and Involved

Throughout the process, stay informed about the progress of your case and any regulatory or legal actions being taken against the REIT. Keep in regular contact with your attorney and respond promptly to any requests for information or documentation. Being proactive and involved can make a significant difference in the outcome of your case.

Conclusion

Dealing with a REIT scam can be a stressful and complex process, but taking decisive and informed action can help you navigate the situation effectively. By recognizing the signs of fraud, documenting your case, seeking legal counsel, reporting the scam, and exploring all avenues for recourse, you can fight back against the perpetrators and work towards recovering your losses.

Remember, you’re not alone in this—there are resources and legal protections in place to support investors in your position.

Jane