Securities Fraud Case: Summary Judgment Granted

On January 27, 2015, the Los Angeles Superior Court granted my client’s, Shattuck Hammond Partners, motion for summary judgment.

In 2003, Asset Real Estate & Investment Co. created structured transactions to acquire senior assisted living facilities. AREI planned to finance these acquisitions by raising equity through the sale of tenant-in-common interests to investors and by raising debt from institutional lenders. In 2004, AREI retained Shattuck Hammond to help solicit and obtain debt financing from institutional lenders.

Between 2008 and 2010, TIC investors in five AREI properties filed five separate lawsuits against AREI and others involved in the transactions, including broker-dealers, law firms, lenders, title insurance companies, and Shattuck Hammond. In all five cases, Plaintiffs’ central allegation was that the private placement memoranda on which they relied in making their investment decision failed to disclose material information about AREI and about the transaction. Plaintiffs alleged that AREI was a Ponzi scheme and that the defendants had conspired with AREI to defraud Plaintiffs.

Earlier in 2015, Shattuck Hammond settled with the plaintiffs in four of the five cases, but plaintiffs in the Roseville case persisted. The Roseville Plaintiffs asserted three causes of action against Shattuck Hammond. First, material assistance in a securities violation under Cal. Corps. Code 25504.1, second, conspiracy to commit fraud, and third, fraudulent nondisclosure.

After more than a year of discovery, Plaintiffs were unable to present any evidence that created a triable issue of fact that Shattuck Hammond knew of the alleged omissions from the PPM, that it had any intent to defraud, or that it had agreed with AREI to defraud. The court agreed that the evidence established that the debt and equity sides of the transaction were separate, that Shattuck Hammond did not owe a duty of disclosure to Plaintiffs, that Shattuck Hammond did not materially assist in the alleged securities violation, and that Shattuck Hammond did not conspire with AREI to defraud the TIC investors.

I led the litigation team in this matter.

Neal Marder Quoted in the Daily Journal

On January 29, 2015, the Daily Journal published an article titled “Judge Tosses Charges Against Investment Bank.” I was quoted in this article regarding my representation of Shattuck Hammond Partners.

The article discusses a Superior Court judge’s decision to dismiss charges against my client, an investment bank, for their alleged role in a Ponzi scheme that duped dozens of investors into buying $200 million in securities for senior housing facilities.

The plaintiff investors accused the investment bank of assisting Asset Real Estate and Investment Company in sales of tenant-in-common (TIC) interests in 34 properties.

I am quoted in the article stating: “We had no involvement on the equity side in an attempt to raise money on these TIC interests. The court agreed with us.”

Shattuck Hammond had no involvement in the private placement memorandum – a document in the sales process of securities – that formed the basis for the investors’ investments.

Neal Marder Quoted in Article on Dehumidifier Suit

In early 2014, Neal Marder was quoted in an article relating to a $150 million suit over fire-prone dehumidifiers. Soleus International Inc., represented by a legal team that included Marder, sued Gree Electric Appliances Inc. over dehumidifiers that Soleus and Gree were selling together in the United States via a joint venture. Allegations made in the case accused Gree of a number of instances of misbehavior, which included pressuring Soleus to mask complaints and attempting to harm Soleus’ business after it brought concerns about overheating to the U.S. Consumer Product Safety Commission, which recalled the dehumidifiers in 2013.

Gree moved to have the case dismissed, claiming it had no merit, but a federal judge in California granted Gree’s motion on only one of five claims made by Soleus, paving the way for the case to proceed on the other four claims. In response, Neal Marder said that “the court got it right in overruling virtually all aspects of the motion” and expressed his client’s intention to proceed to a jury trial.

Recent Changes to Parens Patriae Suits




The Supreme Court ruled in early 2014 that parens patriae suits initiated by state attorneys general did not count as “mass actions” and could not be taken out of state courts and moved into federal courts under the Class Action Fairness Act of 2005. The ruling was issued in response to a case brought by the state of Mississippi against manufacturers of liquid-crystal display (LCD) panels. It served to clarify federal law after several circuit courts split over whether such lawsuits could be removed to federal jurisdiction under the law.




The term “parens patriae,” which means “parent of the country,” originated in English common law under which certain powers and obligations belonged to the king as the “father of the country.” In the United States today, the government has adapted the doctrine for several purposes. It is most commonly used to assert the government’s role in protecting children and people with mental illnesses, but it also permits state attorneys general to litigate on behalf of the residents of their states.

Get Involved and Have a Ball with Bet Tzedek




A public interest law firm and nonprofit organization, Bet Tzedek provides comprehensive legal services free of charge to low-income families and individuals in the Los Angeles area. From its beginnings 40 years ago, as a group of volunteer attorneys helping impoverished Holocaust survivors, Bet Tzedek has grown into one of the country’s premier legal service agencies, with expertise in such practice areas as employment rights, housing, and public benefits.

While attorneys and other legal professionals can offer their expertise to the organization by serving on its board of directors, there are numerous ways for the public to get involved. One of the most popular ways for individuals to support Bet Tzedek is by attending its annual Justice Ball. Held every summer, the Justice Ball features live music and entertainment, dancing, and a silent auction, all in support of the more than 15,000 people Bet Tzedek serves each year. The event, which regularly sells out, has raised over $4 million for the organization since its inauguration in 1996.

A Summary of the RICO Law

Neal Marder has earned widespread recognition as a leading white-collar defense attorney with a focus on class action litigation and securities fraud cases. He has successfully defended numerous clients, including China-based corporations and individuals. Among his areas of practice, Marder has gained experience in cases involving the well-known RICO law.

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In 1970, the U.S. Congress passed the Racketeer Influenced and Corrupt Organizations Act, designed to fight the operations of alleged organized crime syndicates. The law permits prosecution, as well as the levying of civil penalties, for any type of racketeering operation conducted in the course of an ongoing set of criminal activities. The racketeering charges may stem from alleged involvement in counterfeiting, money laundering, bribery, unlawful gambling, and a variety of other actions.
Since its origins as a Mafia-fighting tool for law enforcement, RICO has broadened in practice to include prosecution of a number of non-organized crime operations and organizations, including motorcycle gangs, corporations accused of environmental pollution, and protest groups focused on social issues.
To obtain a RICO conviction, the government agency plaintiff must demonstrate that the defendant was involved in at least two instances of racketeering activity and additionally maintained direct involvement in one or more criminal actions touching on foreign or domestic interstate commerce.

What Happens in a Class Action Lawsuit?

A class action lawsuit brings together a set of plaintiffs claiming to have received a similar injury from the same business or organization from which they seek to obtain damages. Class action suits take place in the realm of civil, as opposed to criminal, law. Any class action suit must still follow the established rules of civil law in its procedure, even though it may represent hundreds or thousands of plaintiffs.

An attorney may file a class action suit under federal or state law, as applicable. Class action suits must receive certification, with a judge determining whether the case meets the requirements. After certification, defendants may raise objections, and potential plaintiffs may decide to opt out to pursue individual lawsuits. If the parties reach a settlement agreement before trial, they must inform the public of the agreement’s provisions. When class action suits do go to trial, the litigation can proceed for years.

Los Angeles-based attorney Neal Marder has successfully defended numerous corporations in this area of litigation. Among his recent cases is George v. China Automotive Systems Inc., in which he obtained a denial of class certification. That decision received widespread attention due to its status as one of the first-ever securities fraud cases involving a Chinese firm that entered the market in the United States due to a reverse merger transaction.