SEC Charges Utah Man, Firm with Fraud for Alleged Ponzi Scheme
By: Tory Barringer
The Securities and Exchange Commission (SEC) announced Monday that it obtained a temporary restraining order and asset freeze against a Utah man and company charged with operating a Ponzi scheme.
The SEC’s complaint names Wayne L. Palmer and his firm, National Note of Utah, LC, both based in West Jordan, Utah. According to the complaint, Palmer told investors that he would use their money to buy mortgage notes and real estate assets or to make real estate loans and promise them returns of 12 percent annually. The SEC alleged that more than 600 investors nationwide lost a total of approximately $100 million.
“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.
According to the complaint, Palmer told investors that their money would be secure and that National Note had a perfect record with no missed payments of principal or interest on its promissory notes. Marketing materials provided to investors showed that National Note returns stayed solid and said that investors were guaranteed payment even if property owners missed payments on mortgage loans the firm held.
The SEC alleged that National Note actually used most of the money from new investors to pay earlier investors. It said that since 2009, the firm would not have lasted without the influx of new investor funds, and payments to investors mostly stopped in October 2011. In the complaint, the SEC said that Palmer reassured victims that their money was forthcoming and continued to solicit new investors without disclosing the fact that it was delinquent in making payments to existing investors.
The SEC’s complaint charges National Note and Palmer with violating the anti-fraud and securities registration provisions of United States securities laws. In addition, Palmer faces charges of operating as an unregistered broker-dealer.
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