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Claiming triple damages under the Racketeer Influenced Corrupt Organizations Act a formerly local retired physician is accusing Sage Rutty and Co. Inc. of improperly luring him and other investors into a high-risk investment.
Sage Rutty advisers concealed heavy risks attached to a private placement investment in a Florida real estate project, Michael Cappette M.D. alleges in a RICO complaint filed last Friday in the U.S. District Court in Rochester. Under the RICO statute, Cappette is seeking three times the $50,000 he invested.
Sage Rutty principal Wayne Holly could not immediately be reached for comment.
In addition to making RICO claims, the suit, hoping to add others who invested in Odyssey Diversified VII LLC, seeks class action status. If the lawsuit is certified as a class action, others who invested in the development could join and also seek triple damages.
Cappette’s attorney, Wade Eaton of Chamberlain, D’Amanda, Oppenheimer & Greenfield LLP, would not hazard a guess as to how many others purchased the 9 percent $50,000 Odyssey notes.
An ophthalmologist who had long practiced in the Rochester area, Cappette retired to Cyprus in 2001 and opened retirement accounts with Sage Rutty beginning in 2006. As a retiree relying on investments and social security, Cappette sought low-risk investments, the court complaint states.
According to the complaint, Sage Rutty advisor Neil Frood convinced Cappette, who initially put his money into conservative mutual funds, to invest in the Odyssey private placement. The complaint describes the private placement as one of a series of ventures controlled by Lawrence Maxwell and Todd Maxwell, a pair of Florida developers whose interests include shopping centers, office buildings, flex and warehouse space, and self-storage centers, mostly located in central Florida.
After making some of the LLC’s promised payments, monthly Odyssey checks were first reduced from $450 to $125 and then stopped coming. When Cappette tried to move his money out of the private placement, he was told it could not be done because the Odyssey notes were in default, the complaint states.
In addition to Sage Rutty as a firm, the lawsuit personally names Frood, Holly and firm principal Terri Rumans as defendants.
Charges leveled in the complaint include that:
Cappette’s first inkling of the risks entailed in the private placement, which Frood had characterized as backed by collateral, came in the spring of 2011, when Holly provided him with a subscription agreement laying out the risks, the complaint alleges.
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