SEC stops Ponzi scheme targeting seniors and small business owners

The SEC has just filed an emergency action against a $6 million Ponzi scheme that targets seniors and small business owners. The SEC has obtained a temporary restraining order and freeze of asset filing against Neil Burkholz of Boca Raton, and Frank Bianco of Pembroke Pines, Florida.

The two individuals targeted and defrauded at least 55 investors through two companies, building a $6 million Ponzi scheme.

According to the SEC, the victims of the scheme are senior citizens and small business owners. Mr. Neil Burkholz operated through Palm Financial Management LLC and Mr. Frank Pembroke via Shore Management Systems. They both lured investors by misrepresenting their proprietary options trading strategies as “highly profitable”.  What happened after investors deposited their funds with the two companies is that the two “managers” invested less than 50% of the funds. which resulted in nearly 100% loss for their clients.

Burkholz and Pembroke have allegedly misappropriated more than 50% of the funds, which they used to repay other investors and even using around $900,000 for themselves.

Just like in the 2007 Bernie Madoff $50-billion Ponzi scheme, the two defendants in this case sent misleading reports to their clients in order to hide their fraudulent doings and just “reassure” investors of stable positive returns, where none such existed.

The complaint of the SEC was filed in Miami. The charge for the two criminals is securities fraud charge. The complaint seeks emergency relief and permanent injunctions. In addition, the two defendants are to return the gains with interest and pay civil penalties, as per the SEC’s complaint.

Interestingly, the two wives of the defendants are pointed as relief defendants.

More about the SEC can be found here:

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