Securities Fraud Lawyer Blog

Community National Bank IRA Custodian for self directed retirement accounts

The use of self directed IRAs has soared in the past ten years.  IRA custodians like Community National Bank allow individuals to make their own investment decisions with their IRA funds.  Investors looking for non-traditional investments  can roll “qualified” pretax funds from a 401k or a pension plan into a self-directed IRA.  Once the funds are in the account the investor “directs” the IRA custodian to purchase an investment, which is usually memorialized by a promissory note, a contract or shares of stock.  Once a year the IRA custodian will contact the investment sponsor and ask for a value on the investment, and will report that value to the IRS to ensure that the investor isn’t charged taxes on the investment.

Self-directed IRA custodians like Community National Bank allow investors to purchase investments that aren’t traded on the stock exchange like non traded REITs such as Behringer Harvard, KBS, Inland American, as well as equipment leasing programs such as Cypress, ICON and oil and gas exploration companies.  While this gives investors more choices, it also opens the door to being fleeced by unscrupulous investment promoters.

Update on Lawsuit against Kingdom Trust Company

A lawsuit filed in the US District Court for the Southern District of Ohio against Kingdom Trust Company for its role (or lack thereof) in the William Apostelos ponzi scheme has been the subject of intense motion practice between the parties.  At issue is Plaintiffs’ claim that Kingdom “materially aided” the ponzi scheme.  Kingdom filed a motion to dismiss, arguing that it did nothing more than provide “routine banking” services to investors.

The motion to dismiss, opposition and reply can be found here: