Class Action Lawsuit Filed Against Brendan Ross, Direct Lending Investments, and Others
A class action lawsuit has been filed in California against Direct Lending Investments, LLC (DLI), Brendan Ross, Bryce Mason, Frank Turner, Rodney Omanoff, and Quarterspot Inc. alleging breach of contract, breaches of fiduciary duty, aiding and abetting breaches of fiduciary duty, and fraudulent inducement.
The claims are drawn from a series of revelations that have come out about the online lending hedge fund, namely that the fund lost nearly 25% of its value through a failed loan to VOIP Guardian Partners I (VOIP) and an SEC complaint that alleged DLI engaged in a scheme to misrepresent performance with the help of an online lender it invested in.
Plaintiffs point out many issues with the VOIP deal but hone in on the fact that the company engaged in risky behavior by taking DLI’s funds and lending out more than 75% of them to just two companies, Najd Technologies Ltd and Telacme Ltd. deBanked previously determined these now-defunct companies were headquartered in the United Arab Emirates and Hong Kong. Documents obtained through VOIP’s bankruptcy filing indicate that both companies ceased making payments in October 2018. Despite this, DLI continued to report to investors that they were achieving very favorable monthly returns, the plaintiffs say, and no mention of VOIP’s distress was disclosed.
Bryce Mason and Frank Turner were named as defendants because they sat on DLI’s investment committee with Ross.
The plaintiffs are investment vehicles for a husband and wife that DLI last reported had a combined value of $758,000. They seek class action certification. They had only just begun investing with DLI last year.
On Monday, a judge in the SEC lawsuit ordered that DLI be placed in receivership. Bradley D. Sharp of Development Specialists, Inc. has been appointed to serve as permanent receiver for the fund’s estate.April 20, 2019