Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Thursday, March 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

$15 Million Demand in Tangled Mall Deal

SANTA ANA, Calif. (CN) - Investors claim in a class action that they lost $15 million in a real estate securities "scam" involving property at the Ashtabula Mall in Ohio.

Named plaintiffs Cabot Ashtabula 22 LLC, Randall Lynch and the Lynch Family Trust sued six people and 10 businesses, in Superior Court.

The lead defendant is Carlton P. Cabot; also sued are Cabot Investment Properties, two other Cabot entities, Ashtabula Mall Co., and the Nixon Peabody law firm.

The plaintiffs sued on behalf of investors who bought tenant in common interests in the Ashtabula Mall between Aug. 24, 2007 and Feb. 28, 2008.

The class claims it was "fraudulently induced to invest over $15,100,000 of their hard earned money in a syndicated tenant in common real estate transaction investing in a regional mall commonly known as 'Ashtabula Mall.' ... The transaction was nothing more than a real estate scam put together by the defendants to line their own pockets.

"The defendants arranged the acquisition of the property at a price of $44,387,755 and then claimed an illegal real estate commission of $1,300,000 disguised as an acquisition fee, illegal real estate loan commissions of $794,500 and other hidden and undisclosed fees of $362,245 for a grand total of $2,456,745, as illegal and unearned fees all paid to affiliates of the promoters."

Cabot Investment Properties is a Massachusetts-based company organized by Carlton Cabot, of Massachusetts, and co-defendant Timothy Kroll, of New York, according to the complaint.

The class claims, among other things, that the defendants failed to disclose that the complicated deal was "a less desirable option for the class seeking Internal Revenue Code Section 1031 capital gains tax deferral than simply paying the maximum 15 percent capital gains tax they sought to defer."

The complaint continues: "Because the securities were not as represented, as well as defendants' mismanagement, the property is now in the process of foreclosure and the investment a total loss."

They seek the $15.1 million they say they lost on the real property securities, rescission and punitive damages for 16 causes of action, including fraud, intentional misrepresentation and unfair business practices.

The plaintiffs are represented by Kenneth Catanzarite of Anaheim.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Loading...