More than two dozen investment fund affiliates of a Laguna Hills-based wealth adviser have filed for bankruptcy amid disclosures that federal and state regulatory authorities are investigating the adviser.
William Jordan Investments Inc., a financial adviser that provides wealth management services in Orange County and San Diego, filed for Chapter 11 protection last month in Santa Ana’s bankruptcy court.
An additional 26 affiliates of the firm—which had invested on behalf of individuals in a variety of real estate properties, development sites and loan portfolios across the country, and also invested in a few local businesses—also filed for bankruptcy protection.
The consolidated amount of assets and liabilities for the 27 individual entities were not disclosed in court filings. A majority of the entities had less than $10 million in assets each, court records show.
The consolidated funds have about 100 investors in total, with some investors in multiple funds, according to court filings.
The affiliated funds are headed by William Jordan, a longtime area financial planner and wealth manager who changed his company’s name from Sentinel Capital Management Inc. to William Jordan Investments in 2010.
He’s the author of “The Seven Percent Solution,” a financial advice book that espouses strategies on how to earn 7% annual returns “on your safe money.” Jordan’s biography also states that he’s a member of Mensa, the high IQ society.
William Jordan Investments cited three main reasons for the bankruptcies.
First, real estate that secured the largest single loan the associated firms invested in—a $6 million loan tied to a hospital site in Baytown, Texas eyed for redevelopment—was condemned, and the existing building was demolished this year.
In addition, a half-dozen funds that each held a small pool of deeds of trust secured by real estate and other assets have “generally underperformed,” according to court documents.
Lastly, the Securities and Exchange Commission and the California Department of Business Oversight began investigating William Jordan Investments due to the lack of annual audits for the individual funds, according to bankruptcy court filings.
The various debtors “have discontinued creating additional funds, raising money from investors, or making new investments,” and a “controlled liquidation” of the debtors’ assets is being planned, according to a statement by Jordan in court filings.
Howard Grobstein, founder and partner of Grobstein Teeple LLP, a law firm with offices in Irvine, has been retained as chief restructuring officer for the various funds, and is now overseeing and directing its operations.
The funds are being represented in the bankruptcy case by Lei Lei Wang Ekvall, a partner with Smiley Wang-Ekvall LLP in Costa Mesa.
Two Orange County firms were among the varied funds’ venture capital-focused investments.
Urban Produce LLC, an Irvine-based vertical farming company that sells leafy greens and wheatgrass to companies such as PepsiCo and Jamba Juice, has gotten an unspecified investment from a few William Jordan Investments funds; court filings suggest that the funds have about a 9% stake in the privately held firm.
Multiple funds have also invested in See Jane Go, a Laguna Hills startup that offers a ride-hailing service similar to San Francisco-based Uber but with only female drivers.
The service is based on the assumption that female passengers will feel safer with female drivers. The company was conceived by Jordan’s daughter, Savannah.
Neither Urban Produce—whose indoor farming operations were profiled last month in the Wall Street Journal—nor See Jane Go are in bankruptcy.
Other investments that the varied funds have made include shopping centers in Las Vegas and Long Beach, a retail property in Huntington Beach, and a 10-acre development site in the San Diego County city of Rancho Santa Fe.
