Backers of a California real-estate investment firm under investigation by the Securities and Exchange Commission have moved to push it into bankruptcy, hoping to shine a light on what happened to their money and determine a way to get it back, WSJ Pro reported. Professional Investors Security Fund Inc. was targeted Thursday in an involuntary chapter 11 filed in a San Francisco bankruptcy court by investors who put an aggregate of more than $5 million into the operation. The SEC began probing the business after the death of its founder in May, when lawyers working on his estate found there wasn’t enough money to pay investors unless money from new investors was used. As such cash recycling would be improper, lawyers sifting through the estate of founder Kenneth Casey instead shut off payments to investors, alerted the SEC and hired specialists to comb the books. The business continues to operate, collecting rents and managing residential and commercial properties in California’s wealthy Marin and Sonoma counties, some of America’s most expensive real-estate markets. But investors aren’t getting paid and many aren’t happy with the answers they’re getting. The involuntary petition, a procedure available to creditors, is designed to protect assets, said Debra Grassgreen, a partner with Pachulski Stang Ziehl & Jones LLP representing the investors. The involuntary bankruptcy proceeding, case No. 20-30579, has been assigned to Judge Hannah Blumenstiel.
