Podcast Host Cash Flow King Charged by SEC with Operating a Ponzi Scheme
A podcast is similar to a radio talk show program but it is distributed in the form of a digital audio file that can be downloaded from the internet to a computer or mobile device. Podcasts are gaining in popularity with the American public. Over a quarter of Americans over the age of 12, or roughly 80 million people, listen to a podcast each week according to research.1
It is also reported that 50 percent of Americans listen to podcasts on a monthly basis and research reveals that 68 percent of listeners report having a deep connection with their favorite podcasters.2 The research further reveals that 75 percent of survey respondents say that podcasters have changed their minds on something they once believed in.3
One podcast host, the Cash Flow King, purportedly capitalized on his position as an influencer by defrauding 50 listeners of more than $11 million.
On September 25, the Securities and Exchange Commission (SEC) charged the host of the Cash Flow King podcast, Matthew Motil, of North Olmsted, Ohio, with defrauding investors by promising low-risk and high-returns on promissory notes in which first mortgages on homes located throughout Ohio were used as collateral.4
The SEC alleges in the complaint that Motil used his website, social media accounts and approximately 147 podcasts to promote investment opportunities ranging from $10,000 to $10 million.
Motil told investors that he bought houses, renovated them and either sold the homes at a profit or refinanced them and rented them. He further told investors that they would be “acting as a bank” as their funds would be secured by a first position mortgage lien on the property and they would receive interest payments and, at the end of the term, their principal. Motif created and issued promissory notes and a document he created entitled “Mortgage.”
Motil told investors that once he received payment from the investor he would record the mortgage and they would get a signed copy mailed directly from the appropriate county clerk. When investors contacted Motil to inquire why they hadn’t received the recorded mortgage, Motil bought time by saying that county clerks were backlogged by months.
In bankruptcy hearings Motil admitted that he only actually sought recording of mortgages “a couple times, if asked.”5 By not properly recording the mortgages, Motil was able to sell Notes to multiple investors using the same property as collateral. The SEC alleges, in fact, that Motil “sold more than $1 million of promissory notes to 20 investors, each note supposedly collateralized by the same property he had acquired for $47,000.”6
Motil used new investor money to make Ponzi payments to existing investors. He also used the investors’ funds to rent a lakeside mansion, purchase courtside season tickets to NBA games and to pay his wife’s credit card charges to the tune of $400,000. The SEC is seeking injunctive relief, disgorgement plus prejudgment interest, civil money penalties and that Motil be permanently barred from acting as an officer or director of any issuer with a class of registered securities and required to file reports under the Exchange Act.
Know Your Rights as an Investor
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1 Move Over Social Media. Podcasters are the New Influencers in Town by Ken Lagana, 10/17/2021
Link: https://audacyinc.com/insights/move-over-social-media-podcasters-are-the-new-influencers-in-town/
2 ,3 Podcasts: A New Era of Influence by Edwin H. Wong and Julia Goorin, 5/10/2023
Link: https://www.voxmedia.com/2023/5/10/23718269/podcasts-a-new-era-of-influence
4,6 SEC Charges Cash Flow King Podcast Host with Perpetrating $11 Million Ponzi Scheme, 9/25/2023
Link: https://www.sec.gov/news/press-release/2023-196
5 SEC Complaint: Case No. 23-CV-1853
Link: https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-196.pdf