ATLANTA (CN) – Atlanta-based securities dealer J.P. Turner & Co. sold securities for a multimillion-dollar Ponzi scheme, according to a class action in Federal Court. The plaintiffs say Turner sold interest in more than a dozen “Shale Royalties” offerings through an agreement with Provident Asset Management – both of which have been sued by the SEC.
The two named plaintiffs say they lost $25,000 and $50,000 due to “misstatements and omissions made by J.P. Turner.” Provident’s Ponzi scheme began collapsing in January this year, and Provident and about 20 of its Shale Royalties, or SR affiliates, filed for bankruptcy in June, according to the complaint, In July, the SEC sued Provident and all the SR entities in Dallas.
Only Turner is named as a defendant in this class action.
The class claims Turner sold interests in SRs 2 through 10, 12, 14, and 15, which raised a total of more than $333 million from more than 5,000 investors.
But “Provident and Shale Royalties were not profitable entities that had generated or would generate substantial surpluses of revenue, sufficient to pay eye-popping returns to investors,” according to the complaint. The class accuses Turner of “recklessly failing to disclose a multitude of material facts” which it knew, or should have known about.
The class claims Turner failed to demand audited financial statements. and “the absence of audited financial statements should have (but apparently did not) suggest to J.P. Turner that Provident and the various SR entities were suspicious entities and not suitable for offering or sale to anyone.”
The plaintiffs seek rescission and compensatory damages. They are represented by Corey Holzer with Holzer, Holzer & Fistel.