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SEC Halts Real-Estate Based Ponzi Scheme

The SEC obtained a temporary restraining order and asset freeze against Wayne L. Palmer (“Palmer”) and his company National Note of Utah, L.C. (“National Note”), to halt operations of its Ponzi scheme.  At the same time, the SEC filed a complaint against National Note and its managing member and sole owner Wayne L. Palmer, for operating a nationwide real estate-based Ponzi scheme that raised around $100 million.

According to the complaint, Palmer had been in the real-estate and real-estate financing business since 1976.  Since at least 2004, Palmer had raised more than $100 million from over 600 investors in National Note.   Palmer misrepresented that funds were used to buy and sell mortgage notes, underwrite and make loans, or buy and sell real estate.  Palmer promised returns of 12% annually with a minimum investment of $25,000.  Palmer recruited new investors primarily by word of mouth and referrals, as well as through his real-estate speaking engagements.

The SEC alleged that Respondents misrepresented and mislead investors into believing their principal was guaranteed and risk free.  Palmer told investors that National Note had a perfect record, having never missed  principal or interest payments.  Marketing materials provided to investors showed that National Note returns did not fluctuate and stated that investors were guaranteed payment even if property owners missed payment on mortgage loans that the company held.

The SEC stated, “Palmer promised double-digit returns at his real estate seminars, where investors learned the hard way about his lies and deceit.”  The SEC complaint charged National Note and Palmer with violating the anti-fraud and securities registration provisions of U.S. securities laws.  Palmer also faces charges that he operated as an unregistered broker-dealer.

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