The SEC’s complaint states that Palmer told investors that their money would be used to buy mortgage notes and real estate assets, or to make real estate loans. More than 600 individuals invested, lured by promises of annual returns of 12 percent, the SEC alleged.
Palmer told investors that their money would be completely secure and that National Note had a perfect record, having never missed paying principal or interest on its promissory notes. Glossy marketing materials that Palmer provided to some investors showed that National Note returns did not fluctuate and stated that investors were guaranteed payment even if property owners missed payment on mortgage loans that National Note held.
Contrary to Palmer’s claims, National Note used most of the money it took in from new investors to pay earlier investors, making it a classic Ponzi scheme, the SEC alleged. It said that since 2009, National Note would not have been able survive but for the influx of new investor funds, and that its payments to investors all but stopped in October 2011. According to the SEC’s complaint, Palmer reassured investors that the money would be forthcoming, and continued to solicit new investors in National Note without disclosing the fact that it is delinquent in making payments to existing investors.
The SEC’s complaint charges National Note and Palmer with violating the anti-fraud and securities registration provisions of U.S. securities laws. Palmer also faces charges that he operated as an unregistered broker-dealer.
“Palmer promised double-digit returns at his real estate seminars, where investors learned the hard way about his lies and deceit,” said Kenneth Israel, Director of the SEC’s Salt Lake City Regional Office.
Scott Frost, Paul Feindt, Matthew Himes and Alison Okinaka of the SEC’s Salt Lake Regional Office conducted the investigation; Thomas Melton will lead the litigation.
source: Mortgage Fraud Blog
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11 Comments on SEC HALTS $100 MILLION REAL ESTATE BASED PONZI SCHEME
How true Lenn. Where were they three years ago?
Conrad. HA! They were busy ignoring the informants trying to get them to stop Bernie Madoff.
Great re-blog of David Sak's posting.
Always some ponzi scheme getting busted.
This will never end.
To think that they are still pushing for LESS restrictions and oversight. .
It makes you wonder what would they do if no one was watching. .
What a waste of time, talent, and resources...making a buck illegally is never the right choice! Excellent re-blog Lenn.
David should post a story on the Federal Reserve. They have been robbing the country and the citizens since 1913. Do the math on that one, perhaps it may be 100 million a day...
urgh...the heads up came a little late on this one....and bet there are stories like this in every one of the gov't agencies who are charged with "watchdog" duties and to the detriment of the American public...fell asleep. Have a happy 4th !
The more you read about these guys and how they get away so long with staying under the radar the sicker I get...Happy red, white & blue to you, Lenn!
Pete. Not as long as folks are seeking something for nothing.
Fernando. Who is "they"?
Anita. They've been around forever.
Winston. THAT would be a best seller for sure. Have Ron Paul investigate.
Sally and David. The SEC, like all agencies I know is merely a bureaurocratic black hole.
Ginny. Thanks. You too.
After Bernie I think the SEC got the message. Y9ou have to move on these things a lot faster. Thanks for the post and the repost
Charlie. You are right. Good Bernie gave them a wake-up call. Sadly, no one at the SEC experienced their head rolling.
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