Nearly 100 Small to Midsize Firms Sued for Sales of DBSI TICs

Investment News reported that the trustee for the DBSI bankruptcy, James Zazzali, filed suit against nearly 100 small to midsized independent broker dealers that were big sellers of TICs from DBSI, Inc., according to an Investment News article by Bruce Kelly. Mr. Zazzali alleged in the petition that the TIC deals from DBSI were in reality a $600 million Ponzi scheme, since after 2004 “the guaranteed returns of old investors could only be satisfied by the flow of funds from new investors.” The claim is to recoup $49 million in commissions generated by the firms selling the product. Tenant in common exchanges gained popularity following an Internal Revenue Service ruling in 2002 allowing investors to defer capital gains on commercial real estate transactions involving the exchange of properties.

The five firms earning the most from the sale of the DBSI TICs, were Berthel Fisher & Company Financial Services, Inc., QA3 Financial Corporation, DeWaay Financial Network LLC, The Private Cosulting Group and Questar Capital Corporation. Unlike other issuers of private placements that collapsed such as Medical Capital Holdings, Inc. and Provident Royalties, DBSI has not yet been charged with fraud by the Securities and Exchange Commission (SEC).

A full list of the firms and commissions generated, according to Investment News, is as follows:


Berthel Fisher & Co. $5,581,000
QA3 Financial Corp. $5,455,000
DeWaay Financial Network Inc. $3,632,000
The Private Consulting Group (Closed March 2009) $3,580,000
Questar Capital Corp. $2,128,000
AFA Financial Group Inc. (Closed in April 2010) $2,000,000
Investors Capital $1,648,000
G.A. Repple & Co. $1,525,000
Equity Services Inc. $1,348,000
KMS Financial Services Inc. $1,341,000
Alternative Wealth Strategies Inc. $1,120,000
First Montauk Securities Corp. (Closed December 2008) $1,113,000
J.P. Turner Co. LLC $898,000
CapWest Securities Inc. $774,000
Direct Capital Securities Inc. (Closed February 2010) $734,000
LaSalle St. Securities $685,000
GunnAllen Financial Inc. (Shut down March 2010) $661,000
Fintegra LLC $597,000
Steven L. Falk & Associates $581,000
Askar Corp. $578,000
American Independent Securities Group $524,000
Capital Financial Services $481,000
National Securities Corp. $454,000
Calton & Associates $435,000
Intermountain Financial Services Inc. $411,000
Advisory Group Equity Services Ltd. $410,000
Brecek & Young Advisors Inc. (Merged into Securities America Corp. in 2009) $383,000
Milestone Financial Services Inc.(Closed in October 2008) $373,000 Capital Analysts Inc. $339,000
Beneficial Investor Services (firm's status as broker-dealer unclear) $322,000
Fox & Company Investments Inc. (Closed December 2008) $317,000
Private Asset Group Inc. (Closed in April 2010) $316,000
Alliance Affiliated Equity Corp. $304,000
Sigma Financial Corp. $279,000
OMNI Brokerage Inc. $271,000
K-One Investment Co. Inc. (Closed June 2009) $268,000
Empire Securities Corp. (Closed April 2010) $265,000
Burch and Company $260,000
Regent Capital Group Inc. $252,000
J.W. Cole Financial Inc. $244,000
Investment Security Corp. $236,000
Professional Asset Management Inc. $235,000
TransAm Securities Inc. $233,000
American Wealth Management Inc. $225,000
Axiom Capital $214,000
MCL Financial Group Inc. $210,000
Girard Securities Inc. $204,000
Pavek Investments $197,000
Philip Oleson (Registered rep affiliated with Independent Financial Group LLC) $195,000
Inlet Securities LLC $191,000
Cullum & Burks Securities Inc. (Shut down in May 2010) $189,000
Sammons Securities Co. LLC $186,000
Empire Financial Group Inc. (Closed November 2008) $185,000
Midpoint Financial Services Inc. (Closed December 2008) $168,000
Cambridge Investment Research Inc. $149,000
Regal Securities Inc. $135,000
Crews & Associates Inc. $130,000
Finance 500 Inc. $127,000
Ogilvie Security Advisors Corp. $123,000
NEXT Financial Group Inc. $121,000
Portfolio Advisors Alliance Inc. $120,000
American Portfolios Financial Services Inc. $116,000
Partnervest Securities Inc. $114,000
Partnervest Financial Group LLC (holding company for Partnervest Securities) $114,000
Great Northern Financial Securities Inc. (Closed in March 2006) $109,000
Harrison Douglas Inc. $108,000
The Street Inc. $105,000
Sterling Enterprises Group Inc. $88,000
Nations Financial Group Inc. $88,000
Intervest International Equities Corp. $79,000
Mid Atlantic Capital Corp. $75,000
Resource Horizons Group LLC $66,000
Basic Investors Inc. (Closed in October 2008) $64,000
Costa Financial Securities Inc. (Shut down February 2008) $62,000
Sanders Morris Harris Inc. $61,000
MICG Investment Management LLC (Shut down May 2010) $59,000
Merrimac Corporate Securities Inc. $58,000
Dawson James Securities Inc. $57,000
RP Capital LLC $51,000
Brewer Financial Services LLC $48,000
NFP Securities Inc. $45,000
Centaurus Financial Inc. $44,000
Courtlandt Financial Group Inc., securities offered through Courtlandt Securities Corp. $39,000
Independent Financial Group LLC $36,000
Capital Management Securities Inc. $35,000
Morgan Peabody Inc. (Closed October 2008) $33,000
CFD Investments Inc. $33,000
Money Concepts Capital Corp. $29,000
Notman Financial Group (affiliated with Berthel Fisher) $20,000
Capital Quest Securities Inc. $20,000
Charter Pacific Securities LLC (Closed October 2008) $19,000
NewBridge Securities Corp. $17,000
Great American Advisors Inc. $16,000
Okoboji Financial Services (Closed May 2010) $15,000
Miller Johnson Steichen Kinnard Inc. (Closed in January 2008) $15,000
Northland Securities Inc. $14,000
Mcginn Smith & Co. Inc. (Closed in August 2010) $11,000
Total $48,623,000

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