The Securities and Exchange Commission announced that it has filed an emergency action and obtained a temporary restraining order and asset freeze against two individuals and two companies they control in connection with an alleged $6 million Ponzi scheme that defrauded at least 55 investors, many of whom are senior citizens or small business owners. According to the SEC’s complaint, Neil Burkholz of Boca Raton, Florida, and Frank Bianco, of Pembroke Pines, Florida, through their companies Palm Financial Management LLC and Shore Management Systems LLC, solicited investors by falsely representing that their proprietary options trading strategies were highly profitable.
In reality, as alleged in the complaint, the defendants invested less than half of investor funds and those investments resulted in near-total losses. The complaint alleges that the defendants misappropriated the remaining funds by using them to repay other investors and by transferring approximately $880,000 of investor funds to themselves and their spouses for personal use. According to the SEC’s complaint, the defendants sent false reports to investors to conceal their fraudulent conduct and give the investors the false impression they were generating positive returns.
Protect prospective investors
“The SEC’s emergency action is intended to protect prospective investors from future harm by halting what we allege is a brazen ongoing fraud that targeted many senior citizens and small business owners,” said Carolyn M. Welshhans, Associate Director in the SEC’s Division of Enforcement. “Among other things, this emergency relief prohibits the defendants from soliciting new investors, freezes their assets, and orders them to provide a sworn accounting of their assets.”
Charges with securities fraud
The SEC’s complaint, filed in federal court in Miami on Nov. 14 and unsealed Monday, Nov. 18, charges the defendants with securities fraud and seeks certain emergency relief as well as permanent injunctions, return of allegedly ill-gotten gains with prejudgment interest, and civil penalties. The complaint names Burkholz’s wife, Rhoda Burkholz, and Bianco’s wife, Suzanne Bianco, as relief defendants.
Red flags
Investors can learn more about Ponzi scheme red flags and check out the background of their investment professional by using the free and simple search tool at the SEC’s Investor.gov website. Investors should be cautious of investment professionals who are not licensed or registered.
SEC’s investigation
The SEC’s investigation was conducted by Brianna Ripa, John Crimmins, Paul Kisslinger, Dan Furlano, and Daniel Maher, with assistance from Brian Palechek and Brian Shute. The investigation was supervised by Ms. Welshhans and Amy Friedman. Mr. Maher and Ms. Ripa will conduct the litigation for the SEC under the supervision of Jan Folena.
Source: https://www.sec.gov/
