Legal Question in Investment Law in Illinois

I made an investment on the recommendation of a friend to provide a loan to an entity as mezzanine paper (junior lienholder) on a real estate property. My friend also made an investment. While we were not business partners (one company) we filed our lien jointly. The investment turned bad because the people we loaned money to were essentially running a ponzi scheme. I have since found out that my friend was paid a generous commission on the money I invested to recruit me. Does he have an obligation to disclose this commission? He is also a lawyer although he did not prepare any of the documents or represent me. He hired another attorney to do our paperwork. Do I have a case here to sue him on the grounds he didn't disclose his relationship with the entity? And while he lost money too, does him acting as a "agent" on their behalf in some way make him liable? Thanks.


Asked on 2/24/10, 11:33 pm

1 Answer from Attorneys
Adam S. Tracy Securities Compliance Group Ltd

Thank you for your question. I am a securities and corporate finance attorney, so this is an area that I am familiar with. To answer your question, you most likely have a claim against both your friend/attorney and the promoters of the investment. Your claims would include basic claims such as breach of contract, fraud, etc, as well as more complex (and ultimately more profitable) claims such as securities fraud. Please let me know if you would like to discuss further. Feel free to send me an email: [email protected]

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Answered on 3/02/10, 7:41 am


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