Desert Capital REIT, a non-traded realty investment trust founded in 2004, was created to fund short-term, high-interest rate mortgage loans. During the real estate boom, brokerage houses sometimes committed broker fraud by marketing these “hard money” loans as safe investments. Because they could earn as much as 13.4 percent interest, the REIT appealed to investors. But safe? In fact, these types of investments are illiquid and can be among the riskiest real estate investments you can make.
When the real estate market plummeted, investors were stunned by the annihilation of the REIT’s market value. Losses were hefty. In 2007, Desert Capital lost $21M. In 2009, it lost $11M. And it the third quarter of 2010, it lost a staggering $26M. By the time that the company announced the likelihood of its imminent liquidation, investors were left with virtually worthless non-dividend-paying, illiquid investments they couldn’t trade on any exchange.
The Securities and Exchange Commission (SEC) is currently investigating Desert Capital and its relationship with CM Capital and CM Securities, brokerage firms that not only shared Desert Capital CEO Todd Parriott, but also marketed the REIT.
Do you hold investments in Desert Capital? Did you purcuase on the advice of CM Capital or CM Securities? If so, contact Carlson Law at 619-544-9300 for a free consultation. We may be able to help you recover your investment loss.