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‘I can’t lose this money’: KC area investors, IRAs ensnared in big Florida bankruptcy


A $283 million bankruptcy in Florida has knocked Khosrow “Kevin” Sohraby off his plan to retire in a house he’d picked out in Overland Park.

The bankruptcy has left Beverly Durant in financial limbo not knowing where her money is, a small inheritance that she could use for a car, dental work or to help her adult children.

And it swallowed the money Wanda Christensen received after her son, Nick Moeder, was killed five years ago by a downed and unattended power line at Rosedale Park in Kansas City, Kan.

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“It feels like I’ve lost Nick all over again,” Christensen said in a statement through her attorney.

They are among scores of people in the Kansas City area and thousands nationwide who sank their money into “memorandums of indebtedness” from the now bankrupt 1 Global Capital in Hallandale Beach, Fla. The company uses the name 1st Global Capital.

Each of them had been offered the deals by Matthew Walker or others working for his Overland Park-based group of Pinnacle Plus companies.

Public records show Walker has financial partners, among them Americo Financial Life and Annuity Co. It’s owned by Americo Life Inc., which served as financial backer for Burns & McDonnell in its failed bid to build a new terminal at Kansas City International Airport.

In a brief interview with The Star, Walker declined to say how many investors he and his firms sold the “memorandums of indebtedness” to, and it is unclear how widely their sales efforts reached.

Bankruptcy records identified more than 4,000 1st Global Capital accounts nationwide, sold by many advisers in several states, according to one published report. Many are individual retirement accounts, including 11 IRAs each owed between $621,000 and $922,000 and listed among the bankruptcy’s 20 largest unsecured claims.

About 250 of the 4,000 or so accounts carry Missouri or Kansas addresses, including roughly 160 in the Kansas City area.

Walker said he cares “deeply” about his clients, but “there’s so much we don’t know” about what has happened with 1st Global Capital. (The company is unrelated to Dallas-based 1st Global Capital Corp.)

Walker declined to comment on what Sohraby claims Walker told him when they first talked about the bankruptcy.

“He sounded pretty upset about it and said, ‘This is probably going to ruin my career,’ ” Sohraby said.

Ten Kansas City-area investors have sued their investment advisers, who claimed 1st Global Capital in Florida was a safe investment and posed little or no risk. Instead, feds charged 1st Global was a fraud. Illustration by Neil Nakahodo

Federal investigations

Walker’s offerings left clients entangled in a bankruptcy that 1st Global Capital claims was triggered by twin federal investigations.

1st Global Capital formed five years ago to finance small businesses. It funneled money to restaurants, shops, construction companies, manufacturing operations, health care concerns, e-commerce businesses and others across the country.

Much of the money came from those “memorandums of indebtedness” for which firms like Walker’s and their employees earned commissions by selling them to investors. One investor shared a memorandum of indebtedness that was written up as a contract, signed by each party and identifying the individual as “lender.”

A court filing by 1st Global Capital blamed its bankruptcy on investigations by the Securities and Exchange Commission and the U.S. attorney’s office in southern Florida into “alleged possible securities law violations.”

The inflow of money from investors stopped. 1st Global Capital faced “a sudden and acute liquidity crisis,” its bankruptcy report said. The bankruptcy proceeding protects the company from that long list of “lenders” and gives it time to reorganize in a bid to stay in business.

A key issue is whether the deals sold to all those IRA accounts and individuals amounted to securities that should have been registered with state or federal regulatory agencies.

Securities officials in Kansas and Missouri say they have investigations based on inquiries about the 1st Global Capital situation, but neither had received complaints. The 1st Global Capital memorandums of indebtedness were not registered as securities or filed as exempt from registration in either state.

Another key issue is the 2.25 percent commissions that Pinnacle Plus Capital and individuals who sold the memorandums of indebtedness received on each of the nine-month contracts. In Kansas, receiving a commission indicates a company or individual is working as an agent for another party and generally should be registered as a broker.

Walker and others with Pinnacle Plus who offered 1st Global Capital’s memorandums of indebtedness were not registered as brokers, though some were registered as investment advisers.

Some local investors are more focused on why Walker got them into 1st Global Capital in the first place. They had plans for their money, now tied up in bankruptcy proceedings half a continent away.

House money

Like many others, Sohraby met Matt Walker at a free dinner last winter. The investment adviser pitched his services before his audience as Sohraby and about two dozen others ate.

The topic that night was annuities from insurance giant Allianz. Those memorandums of indebtedness from 1st Global Capital didn’t come up until later, when Sohraby met Walker in the Overland Park offices of Pinnacle Plus Financial.

These were short-term deals that were supposed to pay back Sohraby with interest at the end of nine months. Sohraby signed and his memorandum of indebtedness was due to pay off Aug. 8 — about a week after 1st Global Capital entered bankruptcy proceedings and froze thousands of accounts, including his.

This was Sohraby’s house money. The whole house. His plan was to buy that Overland Park home with cash and retire at 62. Instead, he has gotten a mortgage and forgotten about retiring.

“I can’t (retire). I’m going to have to make payments on the loan that I have,” Sohraby said.

More recently, Sohraby said he has learned through research by his daughter that Walker had been fired from a previous job.

Records available through FINRA, the Financial Industry Regulatory Authority, show Lincoln Financial Group “discharged” Walker in 2010 over his “failure to disclose outside activity,” meaning work not done for Lincoln Financial. The record shows Walker claimed he disclosed the activity verbally but not in writing.

Beverly Durant said she went to one of Walker’s free dinners but not until after a co-worker had vouched for him and Pinnacle.

That was five years ago, and Durant bought an Allianz annuity with some retirement money. She returned to Walker last fall for advice on what to do with the money she’d gotten from selling her late father’s house in Ohio.

“I had a level of trust with him,” Durant said of Walker.

Walker sold her a 1st Global Capital memorandum of indebtedness, Durant said, assuring her that it was safer than the stock market and that she was protected because she had a contract with 1st Global Capital.

Durant’s problem now is that she doesn’t know where her money is. She said Walker’s firm had filed the paperwork to retrieve her money when her nine-month deal matured on July 13. She doesn’t have her money and her name does not appear among the 1st Global Capital accounts listed in the bankruptcy.

“I can’t lose this money,” Durant said she told Walker. “It’s all I have. I made that super clear, and he repeated it to me.”

The $3 million sale

Pinnacle Plus Capital recently notified clients in a note signed by Walker that it had hired a Kansas City bankruptcy attorney to intervene in the Florida bankruptcy.

Neil Sader confirmed he was hired to represent any of the companies involved but not to represent their clients or Walker.

He said that the company had a “written agreement” with 1st Global Capital and that Walker and Pinnacle Plus had done “a fair amount of due diligence,” including visiting the Florida operation before offering the memorandums of indebtedness to clients.

Records connect Walker to a network of businesses and show that he has six partners in Kansas, Colorado and Utah.

Most companies carry the Pinnacle name: Pinnacle Plus Holdings, Pinnacle Plus Financial, Pinnacle Wealth Management, Pinnacle Plus Capital, Pinnacle Plus Group, Senior Plus Advisors, and Pinnacle Consulting Group. Each lists as its address 11225 College Blvd., Suite 150, in Overland Park.

The group also reports that Pinnacle Plus Capital was the business that offered the 1st Global Capital memorandums of indebtedness to clients. But emails Durant received about her 1st Global Capital account came from a sales coordinator of Pinnacle Plus Financial.

Financial information about the companies is unavailable, but at least one carried a hefty price tag last year.

In March 2017, Americo Financial paid $3 million for 50 percent of Pinnacle Consulting Group. Filings with Missouri insurance officials show Americo also committed “a possible additional $7 million” if Pinnacle Consulting Group meets revenue targets over a 49-month period.

Americo Life officials were not available for comment.

Pinnacle Consulting Group, according to Americo Financial’s description in insurance filings, “operates a call center that focuses on sales of Medicare supplement products.”

Look before you invest

State securities officials urge consumers to check before they invest money to see whether the investment and the person offering it are registered in their state.

Kansas Office of the Securities Commissioner: 800-232-9580

Missouri Securities Division: 800-721-7996

FINRA BrokerCheck provides background and regulatory information about brokers and investment advisers.

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