Securities Arbitration Lawyers BlogDid You Invest In Cardone Equity Fund V Or Cardone Equity Fund VI?
Grant Cardone, the popular social media influencer, real estate entrepreneur, and sales trainer, is being sued in a class action lawsuit which alleges that he and his company made false and misleading statements and omitted material facts to investors in relation to Cardone Capital LLC’s public offerings in Cardone Equity Fund V, LLC and Cardone Equity Fund VI, LLC.
Cardone Capital, LLC And Cardone Equity Fund V & VI
Cardone Capital, LLC markets itself as providing real estate investment opportunities to investors through crowdfunding. The company states that it uses investors’ money to buy properties that generate rental income, which it uses to pay cash distributions to investors.
Investors make their investment in Cardone Capital’s equity funds, including Cardone Equity Fund V, LLC and Cardone Equity Fund VI, LLC, which acquire the interests in income generating real estate. Cardone claimed to give investment opportunities to “everyday investors” that are normally only available to the wealthy.
Fund V claims that it was the first to raise $50 million through Regulation A using social media crowdfunding. Fund V raised $50 million from more than 2,200 investors from 2018 to 2019. Fund VI raised $50 million from investors from 2019 to 2020.
Fund IV and Fund VI have been offered to both accredited and non-accredited investors, who were solicited through social media and other means. According to the class action complaint, the statements made through social media are “considered offers of securities and are subject to the anti-fraud provisions of the securities laws. Cardone Capital and Grant Cardone made a number of false and misleading statements in connection with these “test the waters” communications.”
Among the false and misleading statements, the complaint lists:
- Grant Cardone told investors that he could return “at least 2X-3X their investment” and investing $100,000 would pay them $500 per month.
- In a September, 2019 video, Cardone advertised that a $220,000 investment in Cardone Capital funds would result in a $660,000 position in the fund and would earn investors $12,000-$15,000 per year in distributions. Investor distributions have been significantly lower than those amounts.
- Cardone told potential investors that he could sell the real estate in 5-7 years at triple the price paid for them.
- Cardone told investors that their capital would be safe because of the value of the real estate assets, without warning investors of the risks of investing in them.
- Cardone and Cardone Capital made false and misleading statements regarding how the properties owned by Fund V and Fund VI would be financed and the interest charged by Cardone for loaning the “aggregate principal balance” to buy the properties.
The complaint calls these statements false and misleading and says Cardone had “no reasonable basis” for making these representations to investors. The class action seeks to recover damages for investors.
Recovering Cardone Capital Losses
If you have investment losses with Cardone Equity Fund V & VI, contact Silver Law Group, a nationally-recognized class action law firm representing investors, to discuss potential options to recover your losses.
Silver Law Group represents victims of investment fraud. Our attorneys represent investors in class action lawsuits in state or federal court and in securities arbitration claims against Wall Street firms for stockbroker misconduct.
Scott Silver, Silver Law Group’s managing partner, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice. Contact us today for a no-cost consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.