William Anthony Shopoff, Shopoff Securities and Customer Complaints, and Settlements

The Financial Industry Regulatory Authority (FINRA) created and maintains BrokerCheck, a website at BrokerCheck.com that records complaints against Finanical Adivsors. William A Shopoff, CRD No 1273471, has several reported customer complaints and settlements.

Allegations 12/27/2018
Former employee of Firm affiliate (Executive Vice President, Commercial Real Estate), and related investment entities, asserted claims for breach of contract against individuals and family trust, as guarantors, relating to two guaranties executed in 2012 and 2014. Specifically, plaintiff asserted claims for breach of guaranty, specific performance, and breach of the covenant of good faith and fair dealing, as well as a single conclusory (unsupported) claim for fraud based on alleged statements made at the time of the guaranties.
Damage Amount Requested
$4,250,895.00
Settlement Amount
$4,750,000.00
Broker Comment
This dispute was centered on certain unique and complex instruments (puts and guaranties) negotiated and entered into between sophisticated business partners (not retail investors). The settlement amicably resolved all differences between the parties in this business disputed with valued business partners. Settlement amount includes repurchase of underlying investment interests from claimants.

Allegations 5//2019
Plaintiff asserted two claims, for breach of contract and violation of the Uniform Voidable Transactions Act, relating to an alleged breach (in February 2018) of a written Guaranty entered into in April 2014, and alleged post-breach transfers.
Damage Amount Requested
$8,000,000.00
Settlement Amount
$6,500,000.00
Broker Comment
This disputed was centered on certain unique and complex instruments (puts and guaranties) negotiated and entered into between sophisticated business partners (not retail investors). The settlement amicably resolved all differences between the parties in this business dispute with valued business partners. The settlement amount involved payment on the basic contract claim, with no other findings, and includes repurchase of the underlying investment interests from the plaintiff.

Allegations 5/7/2019
Plaintiffs asserted claims for breach of guaranty (contract), for set aside of allegedly voidable transfers, and for declaratory relief, relating to alleged breaches of written Guaranty agreements (entered into in 2014 and 2015) and alleged post-breach transfers.
Damage Amount Requested
$40,000,000.00
Settlement Amount
$28,750,000.00
Broker Comment
This disputed was centered on certain unique and complex instruments (puts and guaranties) negotiated and entered into between sophisticated business partners (not retail investors). The settlement amicably resolves all differences between the parties in this business disputed with valued business partners. Settlement amount included repurchase of underlying investment interests from claimants.

Allegations 12/21/2021
Plaintiff alleges misstatements and omissions, and related claims, in connection with Tenant-in-Common/1031 Exchange investment transactions in real estate property in late 2016.
Damage Amount Requested
$180,000.00
Settlement Amount
$2,000,000.00
Broker Comment
This dispute was centered on certain complex real estate ownership structures and related agreements negotiated and entered into between experienced parties (not retail investors). Defendants believed that they had valid and effective defenses to the claims, and they denied the allegations and intended to vigorously defend against the litigation, but ultimately settled on a compromise basis, with no admissions, in order to resolve the matter. The settlement amicably resolved all differences between the parties in this business dispute, with no findings, for an amount of $4,000,000, of which the Shopoff-related entities and the co-defendant entities each paid half ($2,000,000). The settlement also included rescission/repurchase of the underlying property interests from the plaintiff through a separate payment/return of capital investment of $5,000,000, of which the Shopoff-related entities and the co-defendant entities again each paid half ($2,500,000).

In Disciplinary Proceeding No. 2016048393501, the FINRA Department of Enforcement filed an action alleging fraud in the sale of promissory notes.  In that action, the hearing officers found in part as follows:

The underlying premise of the Complaint in this disciplinary proceeding is that from
December 2010 through March 2017, Respondent Shopoff Securities, Inc., through Respondents
William and Stephen Shopoff, defrauded investors to obtain desperately needed cash to prop up
a failing enterprise. They allegedly did so by selling $12.47 million in promissory notes to fund
the real estate investment business belonging to William Shopoff and his wife. Three of the
Complaint’s four causes of action allege violations of Section 10(b) of the Securities Exchange
Act of 1934 (“Exchange Act”), Rule 10b-5 thereunder, and FINRA Rules 2020 and 2010. The
remaining cause of action alleges that Respondents’ recommendations were unsuitable in
violation of NASD Rule 2310(b) and FINRA Rules 2111(a) and 2010. Based on the
egregiousness of their alleged wrongdoing, Enforcement seeks to permanently bar William and
Stephen Shopoff from associating with any FINRA member firm in any capacity, expel Shopoff
Securities, Inc. from the securities industry, and compel Respondents to disgorge $134,070 in
commissions gained from sales of securities they offered to investors through other brokerdealers.
It is undisputed that Respondents limited their solicitations to 29 family members and
friends, all affluent customers who knew Respondents and had previously invested with them.
None of the customers lost money or complained that Respondents misled them. The non-family
members have been repaid in full with interest as promised. At the time of the hearing, of the
$12.47 million in notes issued over roughly six years, about $1.1 million in principal and interest
remained to be repaid to several family members.
After carefully reviewing the evidence presented and the testimony given during the
hearing, assessing the credibility of the witnesses, and considering the parties’ extensive prehearing
and post-hearing briefing and the applicable rules and law, the Panel concludes that the
evidence is insufficient to establish the elements essential to prove fraud. Critically, there is
insufficient evidence to support the allegations that Respondents made material
misrepresentations and omissions, acted intentionally or recklessly to defraud the note
purchasers, and recommended the notes without a reasonable basis to believe the notes were
suitable investments for the purchasers.
The Complaint is therefore dismissed.

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