According to a press release dated July 01, 2009, the complaint alleges that the Credit Union and its representatives negligently solicited and referred its members to Wellstone Securities, LLP, a now-defunct broker-dealer. Wellstone Securities recommended and sold bonds issued by Cornerstone Ministries Investments, Inc. to the Credit Union members. Cornerstone is now in bankruptcy and Credit Union members who purchased the Cornerstone securities have lost millions of dollars.
The complaint alleges that the Credit Union acted as a feeder for Wellstone Securities. A Cornerstone board member has testified in other legal proceedings that the Credit Union entered into a business relationship to refer its members to Wellstone Securities. According to Plaintiff's counsel, this case highlights the problem with respected financial institutions referring their clients to other firms without doing the necessary due diligence or closing their eyes to obvious red flags. The law firms also suggest that this case is similar to the feeder funds that sent their clients' money to Madoff.
There are believed to be hundreds of victims in South Florida and Georgia who collectively have lost millions of dollars. The class period is currently identified as running from July 30, 2004 through September 5, 2008.
The complaint charges the Credit Union, its Chief Executive Officer, and three financial service representatives with negligent violations of the Securities Act of 1933, the Georgia Securities Act, and common-law negligence. The Credit Union is a federally-chartered organization providing banking, lending, and other financial services to its members, most of whom are current or former IBM employees.
The complaint alleges that defendants negligently recommended and referred its members to Wellstone Securities, LLP, where members purchased worthless bonds and other securities issued by Cornerstone Ministries Investments, Inc.
Additionally, the complaint alleges that the Credit Union's financial services representatives aided and abetted violations of the Georgia Securities Act, perpetrated by Wellstone Securities, LLC and Cornerstone.
According to the complaint, the Credit Union, its CEO, and financial service representatives actively solicited members to purchase Cornerstone securities through Wellstone Securities. In the course of such active solicitation, the Credit Union negligently misstated and omitted to state material facts, including Cornerstone's past adverse regulatory history, as well as facts about the creditworthiness of Cornerstone and its securities.
On October 27, 2009, an amended class action complaint was filed in this action against the defendants.
January 21, 2010, an endorsed Order denying the defendants’ Motion to Dismiss for Lack of Jurisdiction without prejudice.
On November 8, 2010, a Third Amended Class Action Complaint was filed with the Court by the putative lead plaintiffs against the defendants.