A California lending firm and its principals allegedly defrauded investors out of $8.5 million through falsified documents and misappropriated funds.
Jay Refold, along with five other plaintiffs, filed a lawsuit in the United States District Court for the Central District of California accusing Allstate Lending Group, Inc. and its principals Kenneth Alan Rubendall and Michael Gerard Scannell of running a years-long scheme that left investors without the security interests they were promised.
The investors say they poured more than $8.5 million into fractionalized interests in real estate-backed loans between 2019 and 2024. They were told their money would be secured by recorded liens against identified properties and that they would receive proportional assignments of deeds of trust.
That is not what happened, according to the lawsuit.
The defendants allegedly falsified assignment documents, failed to record security interests, and in many cases recorded reconveyances that wiped out investor protections without any corresponding payoff. Meanwhile, the investors continued receiving reports that purported to show ongoing secured loan payments.
The lawsuit points to a 2023 transaction involving a property at 4028 Kenway Avenue in Los Angeles as an example of the alleged misconduct. Investors were offered participation in a $1,000,000 loan at 10.5 percent annual interest. They received documents showing they had been assigned a 40 percent stake in the deed of trust, with the paperwork appearing to show it had been recorded with Los Angeles County.
When investors later conducted title searches, they discovered the assignment they received had never been recorded. Instead, a different assignment was filed that excluded them entirely, leaving them with no security interest in the property.
The lawsuit identifies 21 properties across California and Hawaii where investors allegedly received fake assignments, never received payments when loans were repaid to the defendants, or both.
The case advances 16 causes of action, including federal securities fraud under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The investors also allege the defendants sold unqualified securities without proper registration with California regulators.
Central to the case is a breach of fiduciary duty claim. The defendants allegedly owed investors duties of loyalty, care, honesty, and full disclosure given their role managing funds, selecting borrowers, servicing loans, and distributing proceeds. The lawsuit claims these obligations were violated through fund misappropriation, document falsification, and withholding of payments.
The lawsuit also names Jennifer A. Rubendall, Cynthia Ann Scannell, and 1210 Solita Road LLC as transferee defendants, accusing them of receiving fraudulent property transfers designed to shield assets from creditors.
The investors are seeking rescission of all transactions, compensatory and punitive damages, disgorgement of profits, and a full accounting of funds. They have demanded a jury trial.
The case remains pending. No determination has been made on the merits of the claims.
A third-generation Pennsylvania firm with 24 advisors and $1.6 billion in client assets has left Cambridge Investment Research.
Fast-growing $7.6 billion Pittsburgh-based RIA secures growth capital but retains full management control.
Bain projects up to seven US trillion-dollar banks by 2030 as consolidation accelerates.
Senators say brokerages leave accounts exposed to fraudulent transfers without verification, intensifying pressure as FINRA weighs its own fraud-hold rule
Meanwhile, the founder of advisor list gives reasons for secret $6 million payment to editor.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income