Cardone Brothers Face Legal Storm: Appeals Court Revives Major Class Action Against Grant While Gary Battles Separate Investment Allegations
America ı By Samuel Lopez
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Core Insights
- Legal Victory: Ninth Circuit Court of Appeals unanimously reversed lower court dismissal, allowing class action lawsuit to proceed against Grant Cardone and his investment entities
- SEC Intervention Evidence: Court found compelling evidence that Cardone continued promoting investment returns after SEC questioned their validity
- Investor Protection: Appeals court emphasized that disclaiming fraud doesn't shield investment promoters from securities violations when targeting unsophisticated investors
LOS ANGELES, CA - The legal walls are closing in on social media investment guru Grant Cardone as a federal appeals court delivered a devastating blow to his defense strategy, breathing new life into a class action lawsuit that could expose millions in potential damages. The Ninth Circuit Court of Appeals' unanimous decision in Pino v. Cardone Capital, LLC represents a significant escalation in the mounting legal challenges facing the real estate mogul's investment empire.
Grant's Moment of Legal Reckoning
While Gary Cardone battles his own regulatory challenges, it's Grant Cardone who now faces the most immediate and potentially devastating legal consequences. The case centers on Luis Pino, an unaccredited investor who placed his trust—and money—in Grant Cardone's bold promises of financial returns that seemed almost too good to be true. As it turns out, they may have been exactly that.
Grant Cardone, the charismatic founder of Cardone Capital, had been aggressively marketing his real estate investment funds through social media platforms, making eye-catching promises to everyday investors. In Instagram posts and YouTube videos, Cardone boasted that investors could expect a 15% annualized return, telling his audience with characteristic bravado: "You're gonna walk away with a 15% annualized return. If I'm in that deal for 10 years, you're gonna earn 150%...”
The appeals court noted that Cardone even dared regulatory authorities, stating: "You can tell the SEC that's what I said it would be... some people call me Nostradamus, because I'm predicting the future dude, this is what's gonna happen."
The SEC's Warning Shot
The Ninth Circuit's decision systematically dismantled every major argument in Grant Cardone's defense strategy, delivering what legal experts are calling a comprehensive judicial rebuke. The three-judge panel, consisting of Circuit Judges M. Margaret McKeown, Lucy H. Koh, and Anthony D. Johnstone, unanimous in their decision to reverse the lower court's dismissal.
Perhaps most significantly, the appeals court rejected Cardone's attempt to shield himself from liability by disclaiming fraud in his legal filings. The district court had initially accepted this argument, concluding that because Christine Pino (Luis Pino's successor-in-interest) had "disclaimed any and all allegations of fraud," she could not proceed with her misstatement claim under Section 12(a)(2) of the Securities Act.
The Ninth Circuit found this reasoning fundamentally flawed. As the court explained, "fraud is not an element of a § 12(a)(2) claim," and a fair reading of relevant precedent "is consistent with Pino's argument that disclaiming fraud alone does not foreclose an entirely separate § 12(a)(2) misstatement cause of action."
The court emphasized that Section 12(a)(2) is "a virtually absolute liability provision that does not require an allegation that defendants possessed scienter"—meaning intent to deceive or defraud is not required for liability.
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