Have you heard about the Dallas-based company selling limited partnership interests in an investment that returns 12%/annually, paid twice a year? The company claims to have 10,000 investors who have invested $250 million and earned $30 million interest. Sounds great. Right? Not so fast!

Prestige Equity is yet another investment scam, like thousands before it. Recently, the Texas State Securities Board issued a cease and desist order to Robert Clemmons, Felix Crayborn, Grant Myers, William Clark, and Miranda Shawns, along with Prestige Equity. Texas Securities Board Press Release

There’s nothing particularly remarkable in the fact pattern in the case against Prestige Equity that we haven’t seen in any Ponzi scheme, oil and gas, or real estate investment fraud case. However, Prestige’s fraudulent investment scheme illustrates several ways a person can spot an investment scam before losing money.

Prestige Equity allegedly was engaged in an illegal online investment scam to sell debt investments to unsuspecting investors. For a minimum $10,000 investment, investors were guaranteed 12% annual return paid twice annually.

Outlined below are some of the issues with Prestige Equity, and a list of what red flags arise in investment deals, along with tips on how to avoid investment scams.

Guaranteed Return

Any time an investment guarantees a return despite the asset performance, this should be a red flag, especially at a 12% rate. Prestige Equity provided no details of their ability to pay this rate of return.

Documents Don’t Match Sales Promises

Prestige Equity told investors their investment made them a limited partner in a private equity fund. However, the contracts did not sell partnership interests. Instead, investors signed contracts that only opened accounts with Prestige. Read everything before you sign it. Have an attorney review the investment contracts before you invest in order to decrease your risk.

Registered Agents

People selling securities must be registered with the government. It’s easy to find out if you are dealing with someone who is registered. Check out your state’s Securities Board and the SEC’s website. You can search to see if the people are registered agents. None of the Prestige players were registered.

Missing Information

When someone is selling you a limited partnership interest, wouldn’t you think information like other investors’ identities would be revealed? Also, limited partnerships should include a document outlining your rights and responsibilities, as well as the general partner’s qualifications and role. Finally, there are generally tax consequences of investing in limited partnership deals which are revealed in documents. None of this information was provided to Prestige Equities’ investors.

In addition, Prestige Equity gave zero information about the types and sizes of small business loans that were to become part of the investment portfolio. Were there certain industries the fund would specialize in? What was the loan criteria? The other part of the investment portfolio was real estate. No information about the types of assets or the criteria or structure of the real estate deals was provided.

Basic Company Information

When you are dealing with a new company offering a private equity investment, always perform some basic research. Does the company really operate at the address that is provided to you? How long has the business been operational? In the case of Prestige Equity, they did not operate out of the address given to investors, and they lied about when the company was founded. Prestige claimed to have opened its doors in 2001, but in fact, didn’t file with the Texas Secretary of State’s office until 2021.

For more information, you can review the Emergency Cease and Desist Order .

The lessons learned are clear. Be careful. Be skeptical. Do your homework. Whether you are exploring securities, oil and gas interests, real estate deals or crypto-currency, do your research. Take time to determine if your salesperson and the securities offering are registered with the state or SEC. Check the history of the people in the deal, as well as any past or pending lawsuits. Read all documents before signing.

We hope all your real estate, crypto-currency, and oil & gas investments are safe and profitable. But if you find yourself searching for an experienced Oil and Gas Litigation Lawyer or an Investment Fraud Attorney, we are here to help.

Photo of Mark Alexander Mark Alexander

Mark Alexander is the principal of the Firm. In 1979, he earned his undergraduate degree at Wayne State University in Detroit, Michigan, and his law degree at Thomas M. Cooley, Lansing, Michigan, in 1985 (Academic Dean’s List).

Mr. Alexander is licensed…

Mark Alexander is the principal of the Firm. In 1979, he earned his undergraduate degree at Wayne State University in Detroit, Michigan, and his law degree at Thomas M. Cooley, Lansing, Michigan, in 1985 (Academic Dean’s List).

Mr. Alexander is licensed to practice law by the Supreme Courts of the States of Texas (1985) and Michigan (1988), and holds licenses before the following courts: Supreme Court of Texas; Supreme Court of Michigan; United States Court of Appeals for the Fifth and Sixth Circuits; United States District Courts for the Northern, Southern, and Western Districts of Texas; and the Eastern and Western Districts of Michigan. In addition he has been admitted in several other Federal and State Courts to represent Texas clients, who have been engaged in significant litigation in those jurisdictions.

Courts have appointed Mr. Alexander to serve as a receiver, and facilitator in complex litigation lawsuits. Additionally he has been a frequent lecturer for organizations on a variety of business law matters.  Mr. Alexander has also served as an Adjunct Professor of Business Law at Henry Ford College in Dearborn, Michigan. Significantly, Mr. Alexander is AV-rated by Martindale-Hubbell, the highest rating an attorney can receive.

Additionally, due to the complex nature of its practice, the Firm has an on-going relationship with a legal group that provides litigation support services. This group is comprised of a team of attorneys, whose combined capabilities allow the group to provide nearly 24-hour coverage at crucial times for any case. This arrangement is but one example of the innovative, cutting-edge approach that the Firm provides to its clients in order to improve representation at reduced legal fees.