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I had $240,000 invested in mineral rights with Provident Royalties.

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They filed for Chapter 11...
I had $240,000 invested in mineral rights with Provident Royalties. They filed for Chapter 11 bankruptcy. SEC then filed a lawsuit claiming it was a Ponzi scheme. They were using new investor monies to pay old investors' dividends rather then investing in oil and gas assets. It appears there in little to recover. The broker claims he hires a firm to perform due diligence on investments he recommends. I signed an agreement stating there was risk involved and to invest no more than 10% of your net worth. I invested 24% w/o my broker initially knowing. Should I hire a lawyer to sue my broker's firm?(e.g.arbitration) Or should I try to negotiate myself? How will the effect my relationship with my broker? I don't have all the necessary paperwork to file with my tax return to deduct some of theses losses. My contention is I didn't even get a chance to take a risk since it was a Ponzi scheme.
Submitted: 8 years ago.Category: Bankruptcy Law
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8/1/2009
Bankruptcy Lawyer: socrateaser, Attorney replied 8 years ago
socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 39,348
Experience: Attorney and Real Estate Broker -- Retired (mostly)
Verified

You probably have a required arbitration agreement with the broker. For a case with this much money at stake, that's probably a good thing because it would reduce your cost of litagation. You could subpoena the firm that the broker supposedly hires to check out the investments, and if no such firm exists, then that could be used to claim misrepresentation or breach of fiduciary.

 

You could also file a complaint with www.sipc.gov, and maybe recover your entire principal amount. That's what all of the Madoff investors are doing -- for you, the recovery would be sufficient to replace your entire investment.

 

For a lawyer referral, see: http://www.abanet.org/legalservices/lris/directory/ and www.martindale.com.

 

Hope this helps.

 

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Category: Bankruptcy Law
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