SEC Halts Multi-Million Dollar Ponzi Scheme in South Florida
On November 19th, 2019, the Securities and Exchange Commission (SEC) announced that it obtained an emergency restraining order and asset freeze in order to stop a $6 million Ponzi scheme in Palm Beach County, Florida. According to the agency, the Ponzi scheme was operated by:
- Neil Burkholz of Palm Beach County, FL;
- Frank Bianco, of Broward County, FL;
- Palm Financial Management LLC; and
- Shore Management Systems LLC.
While the case is still under investigation and federal regulators are still gathering additional information, at least 55 different investors have thus far been identified as victims of the fraud scheme.
SEC Complaint: Ponzi Scheme Targeted Senior Citizens
In its complaint, the Securities and Exchange Commission alleges that Neil Burkholz and Frank Bianco used their companies—Palm Beach Financial and Shore Management Systems—to carry out a securities fraud scheme that, for the most part, targeted senior citizen investors. Beginning in 2014, the SEC believes that more than $6 million was solicited from investors. Most of the affected investors were also based in Florida.
To entice investors, Mr. Burkholz and Mr. Bianco provided them with private placement materials and operating agreements. These documents indicated that the two men would proactively manage investor funds, using advanced trading strategies that they developed to generate a safe, secure, and above market return. The documents also state that the two men would receive the equivalent of a two percent annual fee in exchange for their services.
Unfortunately, serious misrepresentations were made to investors. The SEC believes that the majority of customer funds were never invested at all. Instead, the money was shuffled around to pay off new investors—in other words, the securities fraud operated like a traditional Ponzi scheme. Further, the actual investments that were made performed poorly. For example, in 2018, investors were told that Shore Management generated a 26 percent ROI on its holdings. In reality, the fund suffered a nearly 60 percent loss during that period.
Federal Regulators Took Emergency Action to Protect Investors
Until the SEC took emergency action, Mr. Burkholz and Mr. Bianco were still operating their Ponzi scheme. In 2019 alone, more than $1 million was raised from investors. In order to put a stop to the ongoing fraud, the SEC took emergency action, freezing assets and preventing the defendants from seeking new investors. Beyond the emergency relief, the SEC is also seeking payment of restitution, disgorgement of ill-gotten gains, and other civil penalties. The wives of both defendants have been named in the complaint.
Call Our Miami Ponzi Scheme Lawyers for Immediate Assistance
At Carlson & Associates, P.A., our Miami Ponzi scheme lawyers are experienced advocates for investors. If you or someone you know suffered sharp financial losses in a Ponzi scheme or any other type of fraud scheme, we are ready to help. Call us now for a confidential review of your case. With an office location in Miami, we represent investors throughout Florida.
Resource:
sec.gov/litigation/complaints/2019/comp-pr2019-239.pdf