The SEC has frozen the assets of a Utah man and company charged with operating a real estate-based Ponzi scheme that bilked $100 million from investors nationwide.
Wayne L. Palmer and his firm, National Note of Utah, promised returns of 12% to 600 investors who thought their investments would be used to buy mortgage notes and real estate assets, or to make real-estate related loans.
“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.
National Note told investors it had a flawless repayment record, and went so far as to promise payment even if property owners missed payments on loans held by National Note.
But National Note, in a classic Ponzi scheme, used new investors’ money to pay earlier investors, the SEC alleges.
In October of 2011, payments to investors stopped almost completely, but Palmer continued to recruit new clients, while assuring existing investors that payment would be forthcoming.
Palmer has been charged with operating an unlicensed broker-dealer. He and National Note have also been charged with violating the anti-fraud and securities registration provisions of U.S. securities laws.