Scout,
Here is the statement from the SEC as to why this direction was taken:
http://www.sec.gov/litigation/complaints/2006/comp19864.pdf
It is in PDF, so you need Adobe Acrobat.
If I were an investor, after reading this statement I personally would feel more comfortable with the SEC involved.
Why are we being sent K-1 if profits are supposed to be treated as return of capital by the receiver? Why should there be any tax obligation if receiver is treating 25% returns as return of capital? What is the point of sending us K-1? We are being scammed from both sides - on the one had we are supposed to pay taxes on money received form pinnadcle as if that was real income for us but on the other hand, receiver would treat money received by investors as return of capital. Receiver should clarify why we are asked to pay taxes when there is no income, only return of capital.
Contractually, each partnership expired after 90 or 60 days. Rollover, if any, created brand new set of partnership with whatever capital amount investor chose to have invested in new partnership. It has nothing to do with how this capital was derived by investor. Thus money due to an investor is money investor had in his/her capital account at the end of 60-day partnership. Receiver can not take past earnings from previous expired partnerships in his calculations to calculate amount owed to investors. In that case, paying taxes on income and K-1 are justified. We need clarifications from receiver on issue of K1.
In regards to the K-1's! I e-mailed Hays office and they have no idea - how, why, who are mailing these out. At least this is what she is telling me. They are trying to sort out everything as much as possible. She is saying that she will post something on their site soon as to what is to do with these - or maybe the receiver will post on this site: Hint Hint!
Mycounselor, I agree with you, we need to stick together and not loose site of what is ours. If you can get your paperwork in to Hays consulting soon; everyone is working on that right now...
Order the front and back of your check from your bank and e-mail the routing and account numbers to Hays office.
This helps them know how many banks they had/have.
I'm wondering why on the claim forms it says "if you have not invested in Pinnacle we would appreciate you returning this form with an indication that you made no investment" Doesn't that just tie up more time, money, and paperwork to go through? If someone didn't invest, why should they have any reason to fill out a claim form at all?
we are compiling a list of investors on a spread sheet for future possible civil class action after the SEC is finished. Al started and I'm continuing.
If you haven't done so already please email (Name, email address, tel # )to:
chemar22
I think that is in there for those who were contractors or suppliers for Pinnacle. I am one of those and have also suffered losses due to this situation. I am reluctant to actually file a claim to get paid for what is outstanding since it is, after all, investor money and I believe it should be returned to the investors. I, of course, would have liked to have been paid for my equipment and services as it is needed to maintain my business, but would entertain the idea of just getting some of the equipment back. It has some value, even if it is used.
Dear Investors:
We have become aware of potential errors with the K-1 forms that were recently released by Pinnacle personnel. We have copies of the K-1's and the Receiver's tax team will analyze these as a part of our investigation.
While the K-1’s were mailed to you, the K-1’s have not been provided to the IRS. We will review and if we identify errors in the returns, we will provide corrected returns where appropriate.
Please go to the Receiver’s web site for a more detailed memo on the tax issues. We will make every effort to get this memo posted as soon as possible. We also plan to post a list of Frequently Asked Questions that will address many of the issues investors are raising in this forum.
Thank you for your patience and support of our efforts during our investigation and analysis.
S. Gregory Hays, Receiver
berkeleyguy,
i was looking into a class action law suit against the media for posting pinnacle's ads, but i spoke with a lawyer and he didn't think there was much of a case to go on. did you see the article in the WSJ today? front of the marketplace section discusses how the media did not look into pinnacle despite wild guarantees of returns - article went on to say that media is protected by rights to free speech.
what other type of class action suit is being considered? i'm definitely interested - looking for any way to recover our losses.
Vabrch,
Can you post the WSJ article on this forum? I cant seem to view the article online
Thanks
Vince
My sister and I invested $100,000 between the both of us in August. We accepted the short form waiting for the actual contract to come. It never came. We called Pinnacle repeatedly and were told that there were no contracts this time and the accounts were being closed. They said they were returning our money with the 25% return for 60 days. Of course at this point we are not interested in the 25% return. I do believe that this would have happened if the SEC did not freeze their accounts. I feel that technically we aren't even investors because there was no real estate at this point that we were partners on which is basically what we were told and that we would receive our money which was supposed to be this week. Is anyone else in this position?
Yes - my family is in your situation. Our mother put in 20K Beginning of September and Us another 30K! Never in a partnership, only in with a "short form" - I call this stolen money at this point.
Yes there are others. Lots in the six figure club!
The forum admins are rigid about copyright laws so I will only post the most interesting 100 words from the article. Today's article was the by far the longest--1400 words--the WSJ has written on Pinnacle.
Online access isn't free, so go to the newstand.
-----------
Reputable publications typically review every ad they accept, from classifieds to full-page spreads, to conform to internal standards. Those flagged as potentially libelous, illegal or offensive to readers are passed along to lawyers for a more-rigorous review. Publications say they don't endorse ads that they run.
In a perfect world, ads with spurious claims would be instantly recognized and rejected; that such isn't the case often shocks readers and dismays Mitchell Zuckoff, a professor of journalism at Boston University. "There's a compact of trust between publications and their readers," says Mr. Zuckoff, who wrote a biography of Charles Ponzi, namesake of the scheme. "I trust the article that runs right next to the ads, right? I should be able to trust the ads as well."
But legal precedents and contracts with advertisers generally protect publications from liability for running ads that turn out to be fraudulent -- which is the way it should be, says Floyd Abrams, who specializes in free-speech issues and media law at Cahill Gordon & Reindel in New York.
"Society cannot ask, and the courts will not ask, of newspapers that they do the equivalent of investigative journalism to check out the bona fides of their advertisers," Mr. Abrams says. He says further that publications are hesitant to vet their advertising, or at least tell readers they do, because "if they fail to identify the fraudulent ad, they might be in more trouble than if they hadn't started down that road in the first place."
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For those questioning the SEC decision:
"Newsweek won't say how many times it ran Pinnacle ads, but at least 15 were found in the magazine during the April-September time period. Those ads would have raised $3 million for Newsweek, according to the magazine's published rates, even allowing for a multi-appearance discount."
Your money was being hemorrhage in these expenses. If the SEC hadn't moved in as quickly, more of your money would have vanished.
As one who nearly got hooked by Pinnacle six months ago, I am terribly sorry for anyone who is in the red with them. But the blame game going on here is quite sad. The fault is not with the SEC, or publications, or advisors or attorneys. The warning signs of fraud were clearly there in their offering materials and discussions with their "sales reps".
A 25% return in 45-60 days for ANY investment in which you do not have complete control? Come on folks, get real. It was a major red flag to start. The inability to contact all current investors, and refusal to permit direct discussions with their "attorney"? Red flags all over the place.
Truly, I feel awful if there are losses to be taken. But the blame is not with anyone else but those who let themselves be blinded by greed.
(NOTE: The poster Lindq is not involved with Hays, or any aspect of the ongoing investigation into Pinnacle)
Dear Investors:
Tonight we have posted the "Frequently Asked Questions" to my website on the Pinnacle page. I have provided the link below.
http://www.haysconsulting.net/pinnacle.html
In the event that the link does not take you directly to our website, please type the information into your browser or visit my website at www.haysconsulting.net and click on the Pinnacle logo.
Our FAQ sheet is intended to answer as many of your initial questions as possible and provide you with the most current information available until our First Interim Report of the Receiver is finalized.
Thank you for your continued support of our efforts during the course of our investigation,
S. Gregory Hays, Receiver
Receiver
Your FAQ mentions that your team will correct defective K-1 issued by Pinnacle. It however does not address why such k-1
needs to be issued at all if 25% profit distrinution are going to be treated as return of capital, thus having no tax obligations. I can understand if 1099 will need to be issued for referral fees received by investors, but why k-1? What is your rationale for issuing k-1?
Corbin
My comments relate to 2005(Pinnacle started taking partners around Oct 2005) - I doubt anybody would have recovered their investment plus made profit on top of it in year 2005, unless they chose to have one term partnership and not rolled-over - only such investors would qualify for k-1. For 2006, many investors would qualify to receive k-1. But we are not talking about 2006.
There shouldn't be any tax consequences put on the investors unless you actually had capital gains. Even if a person did get some referrals and returns, you could still be at a net loss overall.
If you really want to laugh, look at this... :shock:
http://smallbusiness.dnb.com/my-dnb/company-detail.asp?partner=SBS&itemId=2386461&AutoId=FD20C34C-FEC2-411E-BF61-67424419F528&key=187529776&country=US&referrer=Alerts_otherco_norpt&cm_mmc=SBS*Alerts*OtherCo*NoRpt&showupsell=true&showalertdetails=true
As usual Scout,
What in the world are you talking about now? :shock: