Gerritsen Beach Investments, Ltd., et al v. Southwest Securities, Inc., et al

Fraud verdict against securities brokerage firm

The Case

Reese Marketos’s clients were two Dallas-based investment firms, Gerritsen Beach Investments, Ltd. and SSST Riviera Investments I, Ltd. (“Dallas Investors”), who invested in three land development deals in New York promoted by Stephen Jemal. Jemal held himself out as a wealthy and successful developer. In reality, he was a con artist who had convinced banks and other investors to invest or loan him tens of millions of dollars. Jemal provided lenders and investors with doctored brokerage statements that showed he owned tens of millions in blue chip stocks like Google and Apple. In reality, he owned nothing but a penny stock that he frequently bought and sold with proceeds from his loans and investments.

44th Judicial District Court in Dallas County

The Issue

The Dallas Investors became wary of Jemal and agreed to sell their interests back to him in exchange for a promissory note. As part of that transaction, Jemal provided the doctored brokerage statements, which the Dallas Investors relied upon to sell their interests. Ultimately, the Dallas Investors discovered the fraud after Jemal defaulted on the promissory note and filed for bankruptcy.

The Dallas Investors sued his brokerage firm and a commercial bank that had acted as an investment banker on the three real estate deals. The bank settled before trial. The Dallas based brokerage firm had won two prior trials in Pennsylvania against other law firms involving similar allegations. The trial with Reese Marketos did not turn out the same way.

The Verdict

After a two-week trial with more than a dozen witnesses, a Dallas jury returned a verdict totaling more than $5.45 million in favor of the Dallas Investors. Details of the trial and the case can be found in article published by the Dallas Morning News. The case settled soon after trial.

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