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Zamansky LLC, a leading securities arbitration and class action law firm, has commenced an investigation of brokerage firm David Lerner & Associates, Inc. (David Lerner), of Syosset, NY, and its Apple REIT Ten (Apple REIT), a non-traded or unlisted $2 billion Real Estate Investment Trust.

On May 31, 2011, David Lerner was charged by the Financial Industry Regulatory Authority (FINRA) in a complaint with providing misleading information to investors, targeting unsophisticated and elderly customers with unsuitable sales of the illiquid security and failing to conduct a reasonable investigation to determine suitability for investors. David Lerner was also charged with continuing to issue and recommend investments in the Apple REIT despite the fact that its value remained unchanged at a constant $11 per share through the recent real estate crisis.

FINRA alleged that, since 2004, the Apple REIT maintained outsized distributions of 7 to 8 percent distributions to investors not from earnings or funds from operations, but through borrowing and returns of capital to investors. FINRA further alleged that David Lerner provided misleading information and omitted material information to prospective investors about the Apple REIT because the firm did not disclose that its distributions far exceeded income from operations and were funded by debt that further leveraged the Apple REIT. David Lerner also allegedly failed to disclose to recent investors that distributions from the Apple REIT had recently been reduced.

Since January 2011, David Lerner was sole underwriter for the Apple REIT, and sold over $300 million of an open $2 billion offering. Since 1992, David Lerner also has been the sole underwriter and sold nearly $6.8 billion of Apple REIT securities to its approximately 122,600 DLA customer accounts. DLA earns 10 percent of all offerings of Apple REIT securities as well as other fees. Apple REIT sales have generated $600 million for DLA, accounting for 60 to 70 percent of DLA’s business annually since 1996.

In addition to the allegations in FINRA’s complaint, Zamansky LLC is investigating whether the Apple REIT was an unsuitable or high risk investment for David Lerner customers that did not have high risk objectives.

If you were an investor in the Apple REITs through David Lerner, and would like to discuss your legal rights, please contact Jake Zamansky at (212) 742-1414, or email at

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