A district judge in California has tossed out a class action lawsuit against real estate investor and influencer Grant Cardone. The case has received national attention in real estate media outlets, thanks in part to Cardone’s prominent public profile.
What Was the Case All About?
The class action lawsuit was brought before the Los Angeles Ninth District Court by Christine Pino, daughter of the deceased Luis Pino, who originally had filed the suit in 2019. Pino invested $10,000 in Cardone’s real estate funds after attending the investor’s Breakthrough Wealth Summit in 2019.
The lawsuit, originally dismissed in 2021 and reinstated in 2022, claimed that Cardone received the investment money by using misleading statements on social media. Specifically, the plaintiff argued that Cardone exaggerated the ROIs investors in his business could expect and downplayed their financial liability.
Pino’s case hinged on claims Cardone made in YouTube videos and Instagram posts. In a video from 2019, Cardone said, ‘‘You’re gonna walk away with a 15% annualized return.’’ And an Instagram post by the investor’s official account, Cardone Capital, said: “One question you might want to ask is, who is responsible for the debt? The answer is Grant!’’
The Judge’s Ruling
Earlier this month, district judge John Walter ruled ‘‘Because [the] Plaintiff has disclaimed any and all allegations of fraud, Plaintiff cannot allege that Defendants did not honestly believe in the statements made regarding IRR and distribution projections.’’ In other words, Pino never claimed that Cardone’s statements on social media were fraudulent, so she cannot prove Cardone was misleading potential investors.
The case was dismissed with prejudice, which means it cannot be retried.
“It is a shame our system is so litigious, and the fact is most people simply do not have the resources to defend themselves and will settle,” said Grant Cardone in a statement to BiggerPockets. “I chose to fight for three years, providing the resources and supportive material to dispel all claims made against me. Our system is out of control, where anyone can file suit and make claims against another person for almost anything without any real proof of financial harm.”
According to court documents, Cardone Capital is “a typical real estate syndicator” and operates by buying, renting out, and reselling or refinancing undervalued real estate with money it raises from others’ investments. Some of these investors were accredited, while others were not. Cardone’s business was able to offer investment opportunities to non-accredited or ‘‘everyday investors’’ thanks to Regulation A of the Securities Act, signed into law under the JOBS Act in 2015.
Grant’s funds fell under this law, meaning they could crowdfund investments of as little as $1,000 directly via social media platforms such as Instagram, Twitter, and YouTube. Cardone Capital crowdsourced $50 million in investments between 2019 and 2020 to purchase real estate around the country. At the time the lawsuit was filed, Cardone owned and managed 4,500 units in 20 different locations, then valued at around $700 million.
Since the verdict, Cardone has criticized various real estate media outlets for their coverage of the lawsuit and has reiterated that he has always been transparent with his investors.
Grant Cardone has been featured on BiggerPockets podcasts and videos about his real estate investing strategies and personal wealth journey.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
