NEW ORLEANS (CN) - The 5th Circuit affirmed dismissal of a securities fraud class action against Portfolio Equities, Charter Home Funding and their affiliates who pushed a fix-and-flip real estate investment scheme, but allowed investors to sue the companies for common-law fraud.
Lead plaintiff Robert Dorsey accused the defendants of duping him into loaning the company money to buy houses and flip them for a profit. But the defendants never paid the principal or interest on the loans, Dorsey and other investors claimed.
Judge Clement cited inadequate pleading as grounds for dismissing the securities fraud claim, but ruled that the opposite was true for the plaintiffs' common-law fraud claim.
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