Appeals Court Reinstates Grant Cardone Class Action Lawsuit
A photo illustration of Grant Cardone (Getty, Google Maps, United States District Court for the Central District of California)
Grant Cardone has said, “Most opportunities are disguised as problems.” If that’s true, he has had his share of opportunities in 2022.
In May, unknown robbers allegedly stole his expensive designer watch in a VIP area at Hardrock Stadium during the Miami Grand Prix.
A recent Palm Beach Post investigation uncovered Cardone Capital has overcharged tenants living in an apartment complex with workforce housing owned by the Aventura-based firm.
And last week, a federal appeals judge reversed last year’s dismissal of a Los Angeles class action lawsuit against Cardone and his company alleging he misled investors on social media about potential profits they could make from his multifamily deals. Cardone Capital owns about $5 billion in apartment rental complexes in South Florida and across the country
U.S. Appeals Judge Barbara Lynn’s decision means plaintiff Luis Pino’s complaint can move forward, and other investors can join the lawsuit or file their own claims against Cardone and Cardone Capital. In siding with Pino, Lynn determined that Cardone’s social media posts promoting his crowd-funded investments are subject to federal securities regulations that guard against misstatements and omissions.
Cardone did not respond to a request for comment.
To his millions of followers, Cardone flaunts his personal wealth while doling out advice on how they too can become rich by putting their savings, 401K earnings and other investments in apartment buildings and communities, particularly the properties he owns and the ones he is looking to purchase. Cardone also promotes his real estate deals at conferences and forums he hosts around the country.
Investors place their money into real estate funds overseen by Cardone and his firm, which generate fees from the acquisition, management and disposition of the real estate assets.
In 2020, Pino sued Cardone and Cardone Capital, alleging he violated securities laws based on alleged misleading statements about his real estate funds on social media. A year earlier, Pino, who resides in Inglewood, California, invested $10,000 in two Cardone Capital real estate funds after attending a Cardone summit in Anaheim, the complaint states.
In May of last year, U.S. District Judge John F. Walter ruled in Cardone’s favor. Walter concluded that Pino failed to adequately allege that Cardone made material misstatements and omissions. Lynn, the appeals judge, disagreed. She determined that Cardone’s Instagram posts and YouTube videos are “the types of potentially injurious solicitations that are intended to command attention and persuade potential” investors.
“Pino fairly alleges that the nature of social media presents dangers that investors will be persuaded to purchase securities without full and fair information,” Lynn wrote.
