Publicly available records published by the Securities and Exchange Commission (SEC) on March 25, 2019 indicate that the SEC has filed fraud charges against Direct Lending Investments, LLC, a registered investment adviser, in connection with allegations that the company orchestrated “a multi-year fraud” causing about $11 million in “over-charges of management and performance fees to its private funds, as well as the inflation of the private funds’ returns.” Fitapelli Kurta is interested in hearing from investors who have complaints regarding Direct Lending Investments.
The SEC’s complaint alleges that Direct Lending Investments’ owner, Brendan Ross, made an arrangement with the lending platform QuarterSpot in which the latter company would “falsify borrower payment information” for its loans, and then “falsely report to Direct Lending” that its borrowers had completed monthly payments in the hundreds even though they had not done so. According to the SEC, “many of these loans should have been valued at zero, but instead were improperly valued at their full value, because of the false payments Ross helped engineer.” The consequence of this alleged scheme was that for a period of years between 2014 and 2017, Direct Lending Investments overstated by about $53 million “the valuation of its QuarterSpot position,” and additionally made misrepresentations regarding its funds’ performance by about 2-3% each year. According to the SEC’s complaint, if Direct Lending Investments had made a correct valuation of its QuarterSpot position, it would not have collected the ~$11 million in management and performance fees it collected from the funds in question.
Direct Lending Investments has been charged in the Central District of California with violating antifraud provisions of the Securities Exchange Act of 1934, the Securities Act of 1933, and the Investment Advisers Act of 1940. It has agreed to a preliminary injunction from further violations; the SEC is also seeking “disgorgement of allegedly ill-gotten gains along with interest, monetary penalties, and permanent injunctions” in the pending complaint.
If you or someone you know has complaints regarding Direct Lending Investment, call Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recoup your losses. Fitapelli Kurta accepts all cases on a contingency basis: we only get paid if and when you collect money. Time to file your claim may be limited, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.