1. Why did I receive this check from Prime Group Fair Fund?

You received a check because your Prime Group Holdings account(s) was impacted as described in the Settlement Order entered by the United Security and Exchange Commission (the “Commission” or “SEC”) and you have been identified as an Eligible Claimant.

2. What was the settlement about?

On September 5, 2023, the Commission issued the Order instituting and simultaneously settling cease-and-desist proceedings against the Respondent. In the Order, the Commission found that Respondent, a private equity real estate firm focused on alternative real estate asset classes, made inadequate disclosures and materially misleading statements in the offering materials of Fund II, relating to millions of dollars of earned real estate brokerage fees paid between 2017 and 2021 to an affiliated broker (“Affiliate”), which is wholly owned by Respondent’s CEO. The Respondent managed and oversaw the operations of numerous self-storage real estate properties, some of which are fully owned by Fund II, with others managed on behalf of other investors including Respondent’s CEO. Respondent retained employees and independent contractors to source real estate acquisition transactions (“Deal Teams”). The brokerage fees paid Affiliate in connection with property acquisition were used, in part to compensate the Deal Teams that sourced transactions on behalf of Fund II, as well as to pay for operational expenses of Respondent’s operations. Fund II’s offering materials, including its limited partnership agreement, private placement memorandum, and due diligence questionnaires, included statements regarding certain contemplated fees to be paid by Fund II for services, including brokerage fees. These offering materials, however, did not adequately disclose that certain brokerage fees would be paid to Affiliate or that such payment could create a conflict of interest, or that fees received by Affiliate paid for, in part, operation expenses of Respondent. These failures to disclose material information rendered statements made by Respondent to investors in Fund II misleading.

3. What is the relevant period for those impacted by this settlement?

The settlement timeframe (“Relevant Period”) is March 29, 2017 and April 28, 2021.

4. How much was Prime Group Holdings, LLC ordered to pay in the settlement?

The Commission ordered the Respondent to pay $11,510,625 in disgorgement, $2,561,197 in prejudgment interest, and a $6,500,000 civil money penalty, for a total of $20,571,822, to the Commission. The Commission also created the Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty collected, along with the disgorgement and interest collected, can be distributed to harmed investors.

5. Who performed the payment calculations?

Commission staff, in the course of its investigation, calculated the excess fees paid by each investor.

6. What is my payment amount comprised of:

Your distribution payment is comprised of disgorgement, prejudgment interest, and civil money penalties paid by Prime Group Holdings, LLC.

7. What if I don’t receive a check but I believe I should? What do I need to do if I disagree with the amount of the distribution check I received?

The Recognized Loss payment amounts were calculated by the SEC. The fund administrator calculated the final Pre-Judgement Interest payment amounts and a payment file was accepted by the SEC. The payments amount are final for all eligible claimants.

8. How long do I have to cash the check?

Checks may be cashed within 120 days of the original issuance date noted on the check. If you requested a replacement check, it must be cashed within 60 days of the reissuance date noted on your check. In no event will a check be reissued after 120 days from the original check date without approval of the Commission staff. Once these periods have passed, the funds will no longer be available. It is important that you cash your check(s) as soon as possible to ensure that you receive all the money that was allocated to you. Checks WILL NOT be honored after the stale date.

9. What if the check cashing period has ended?

Once the time for cashing checks has passed, the remaining funds will be sent to the U.S Treasury, per terms of the settlement. DO NOT try to negotiate your check(s) after this point as the payment will no longer be valid and your banking institution may charge you a fee for presenting a stale dated or bounced check.

10. What happens if I do not cash the check?

Checks that are not cashed will be sent to the U.S Treasury, per terms of the settlement.

11. I have more than one account. Will I receive one check or multiple checks?

Depending on the account registration, address of record and eligibility, shareholders owning more than one account may receive one or more checks.

12. My check(s) has been lost/destroyed. What should I do?

If you are unable to cash your check, or have lost it, you can request a replacement check over the phone or sending a signed letter requesting a replacement check. If you are not requesting a replacement by phone, please forward your replacement check request to one of the following:

Please forward your replacement request to:

Upon receipt, we will reissue a replacement check exactly as it was originally issued. Please allow 10-14 days to receive the replacement check. Note: You will have 60 days to negotiate the replacement check; otherwise you may no longer be entitled to the proceeds. Checks presented for payment after the stale date will not be honored. Bank fees charged to you by your bank for presenting a check(s) after the stale date are solely the responsibility of the presenter.

TAX QUESTIONS:

13. Will I receive a Form 1099 to use when filing my taxes?

1. You will receive a Form 1099-INT for the distribution if you cash the check, are a U.S. person and the interest portion of your distribution is $2,000 or more and the payment is being made to you as opposed to a retirement account or plan.
2. You will receive a Form 1042-S if you cash the check and:
   1. You are a Non-Resident Alien;
   2. We do not have a W-8 and W-9 to prove your tax status; or
   3. You are subject to FATCA reporting.
3. The Prime Group Fair Fund is a Qualified Settlement Fund (QSF) under the Internal Revenue Code.
1. The 1099-INT or 1042-S will be produced and mailed under separate cover by Heffler, Radetich & Saitta, LLP; and
2. Reported to the IRS for the tax year in which the payment is made.
4. You may also receive a Form 1099-R if you ask to have a check payable to an IRA or a retirement plan re-issued to you personally depending on a number of facts.

You should consult with your financial advisor or tax professional to determine the appropriate tax treatment for your situation.

14. Are there tax implications for cashing this payment?

The Commission appointed Heffler, Radetich & Saitta, and LLP as Tax Administrator in this matter. Heffler, Radetich & Saitta, LLP will review the potential tax consequences and a Statement to Eligible Claimant is posted on the Tax Information page on this website.

You should consult with your financial advisor or tax professional to determine the appropriate tax treatment for your situation.