SEC Charges Drive Planning LLC and its Founder with $300M Ponzi Scheme
A Ponzi scheme is defined as an investment scam that promises a high rate of return with little risk to the investor and is one where early investors are paid with money taken from later investors to create an illusion of big profits.1 On August 14 the U.S. Securities and Exchange Commission (SEC) obtained a preliminary injunction against Drive Planning, LLC, based in Alpharetta, Georgia, and its founder, Russell Todd Burkhalter, for allegedly perpetrating a $300 million dollar Ponzi scheme which affected over 2,000 investors.2 The SEC action also included an asset freeze and other emergency relief actions.
Drive Planning was marketed as a full-service financial consulting firm offering a unique and innovative approach to wealth strategy through personalized financial planning and private investments in various sectors such as film, renewable energy, real estate and more.
According to the SEC complaint, in 2020 Burkhalter and Drive Planning began offering investors an opportunity to invest in land development projects and promised those investors 10 percent interest every three months.
By June 2024, over 2,000 investors had funneled more than $300 million into this unregistered sale of securities, many of whom had been encouraged by Drive Planning’s over 100 sales agents to use their savings, retirement investments and even to open lines of credit in order to invest in the land development projects.
In the complaint the SEC alleges that Burkhalter and his company “did not have a business capable of generating the promised returns, and they instead used investor funds to make Ponzi-like payments.”3
The complaint also alleges that Burkhalter used investor funds to buy a $3.1 million yacht, over $300,000 in clothing, jewelry and beauty treatments, $4.6 million to charter private jets and luxury cars, and hundreds of thousands on hotels, resorts and car-related expenses.4 Burkhalter also used investor funds to buy a clothing store, a ranch in Mineral Bluff, Georgia, and a luxury condo in Cabo San Lucas, Mexico, with at least $6.6 million of Drive Planning’s funds used to buy real estate in Burkhalter and his now ex-wife’s names.5
The SEC complaint also names Burkhalter’s ex-wife Jacqueline Burkhalter, the Burkhalter Ranch Corporation, Drive Properties, Drive Gulfport Properties and TBR Supply House as relief defendants. The defendants did not oppose the emergency relief granted by the U.S. District Court for the Northern District of Georgia.
The SEC is also seeking a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants. They are also seeking to bar Russell Todd Burkhalter from being an officer and director. “Investors should be vigilant when they encounter aggressive sellers who make over-the-top sales pitches and promise high rates of guaranteed returns,” said Nekia Hackworth Jones, Director of the SEC’s Atlanta Regional Office.6
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1 Ponzi Scheme: Definition, Examples, and Origins by James Chen, 6/10/2024
Link: https://www.investopedia.com/terms/p/ponzischeme.asp
2, 3, 6 SEC Charges Russell Todd Burkhalter and His Atlanta-Based Firm with $300 Million Ponzi Scheme and Obtains Emergency Relief, 8/14/2024
Link: https://www.sec.gov/newsroom/press-releases/2024-97
4, 5 A Finance CEO’s $300 Million Ponzi Scheme Funded a Lavish Liefestyle, Authorities Say, by William Gavin, 8/14/2024
Link: https://qz.com/ponzi-scheme-fraud-ceo-fund-luxury-yacht-car-ranch-sec-1851621977