The Securities and Exchange Commission filed a complaint against a man accused of running a $100 million real estate based Ponzi scheme in Utah. According to the complaint, Wayne Palmer of National Note of Utah, lured more than 600 individuals into investing in mortgage notes and real estate assets by promising annual returns of 12% a year.
"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. The SEC obtained a temporary restraining order and froze the assets of Palmer and his business.
The SEC's complaint, filed in the U.S. District Court for the District of Utah, charges National Note and Palmer with violating the anti-fraud and securities registration provisions of U.S. securities laws. Additionally, Palmer faces charges that he operated as an unregistered broker-dealer.
According to the SEC Palmer told investors their money would be completely secure and that his company had a gleaming record and never missed paying principal or interest on its promissory notes. Marketing materials handed out by Palmer to some investors showed National Note returns did not fluctuate, and said investors were guaranteed payment even if property owners missed payment on mortgage loans held by the company.
National Note then allegedly used most of the money from new investors to pay earlier investors — a Ponzi scheme by definition. The complaint said, since 2009, National Note would not have been able to survive had it not been for new investor funds, and that its payments to investors stopped in October of last year. The complaint alleges that Palmer continued to tell investors the money was on its way, while simultaneously soliciting new investors without disclosing that the company was delinquent in making payments to existing investors.