KC investors, out $2.5M, sue OP-based Pinnacle in bankrupt Florida ‘zero risk’ deal

Ten Kansas City-area investors with $2.5 million stuck in a $283 million Florida bankruptcy have sued the Overland Park-based investment group that had recommended the soured deal.

The lawsuit names Pinnacle Plus Capital, Pinnacle Plus Financial and Pinnacle Wealth Management, which share an office on College Boulevard. It also named Matthew Walker, who is an owner of the group, George Gille and Travis Horn.

Each of the three men had recommended their clients invest with Florida-based 1st Global Capital. The men received commissions with each investment and each time the investments were renewed.

Court records show about 160 1st Global Capital accounts involved Kansas City area addresses, many representing individual retirement accounts or IRAs.

Calls to Walker and the Pinnacle offices were not immediately returned Monday.

Several of the investors who sued had complained previously to The Star about Walker’s and Pinnacle’s practices. They included Beverly Durant, who said she had told Matthew Walker “I can’t lose this money,” and that she “made that super clear, and he repeated it to me.”

Each of the local investors had put substantial portions of their retirement assets, and in some cases their life savings, into 1st Global Capital loan contracts called memorandums of understanding, the lawsuit said.

1st Global Capital would in turn lend the money to small businesses.

The lawsuit said Pinnacle advisers told their clients they would earn substantial amounts of interest, in some cases between 10 percent and 13 percent interest.

1st Global, however, sought the shelter of bankruptcy court in late July — freezing nearly 4,000 investors’ accounts — after learning it was the target of two federal investigations. The Securities and Exchange Commission subsequently charged 1st Global Capital’s one-time CEO had used investors’ money to support his other businesses and his “lavish personal spending.”

Although investors in the memorandums of indebtedness may receive money out of the bankruptcy proceeding, the amounts and timing are unknown, and they will have no access to their money as the case proceeds.

The lawsuit filed in Johnson County District Court against the Pinnacle group said the advisers had recommended 1st Global Capital often without inquiring into the investors’ financial situations, their goals or their tolerance for investment risks.

Moreover, it said, the Pinnacle advisers downplayed the risks the investments posed to their clients.

Walker told one client, Wanda Christensen, that he had personally researched Global Capital, lent it his own money and “that the loan had zero risk involved,” the lawsuit said.

It was money she had received when her son was killed five years ago by an unattended downed power line. It was nearly all the money she had.

One couple, according to the lawsuit, “trusted Matt Walker with their life savings” but that he had done nothing to investigate their personal assets or their net worth.

The lawsuit said the Pinnacle advisers told clients variously that the 1st Global Capital memorandums of indebtedness were a safe investment, “safer than putting money in the stock market,” would never lose money, would make money regardless of how the economy was doing, or that the risk of loss was only 3 percent.

Most of the local investors had met Walker, Gille or Horn at free dinners that the Pinnacle companies held to attract clients, the lawsuit said. Some had told The Star that the men did not talk about 1st Global Capital at the dinners, but afterward when the investors went to Pinnacle’s offices.

The advisers failed to say that the memorandums of indebtedness were intended for “sophisticated and qualified individuals” who were working with 1st Global “on a commercial basis,” the lawsuit said. It said none of the 10 investors met that description and that the Pinnacle advisers should have know that.