On May 11, 2020 the US District Court for the Southern District of Florida entered final judgments against Neil Burkholz and Frank Bianco for knowingly operating a Ponzi scheme. Neil Burkholz, age 82, is a resident of Boca Raton, Florida. He is the founder and co-CEO of Palm Management, and co-Founder and Manager of Shore Management. Frank Bianco, age 70, is a resident of Pembroke Pines, Florida. He is co-CEO of Palm Management, and co-Founder and Manager of Shore Management. Both Defendants opened bank and brokerage accounts for the entities and their investment funds. They are the only signatories on the bank accounts, and they exercised exclusive trading authority over the brokerage accounts.
The alleged fraudulent investment scheme raised more than $6 million from at least 55 investors, many of whom are senior citizens. According to the complaint, to solicit and retain investors, Defendants falsely represented that they were advisers and fiduciaries who would profitably manage investor assets, when in reality, through at least two investment management companies, Defendants knowingly misappropriated investor assets by diverting them to pay other investors and by transferring funds to themselves and their spouses. The SEC’s complaint alleged that Burkholz, Bianco, and their companies: Palm Financial Management and Shore Management Systems, solicited investors by falsely representing that their proprietary options trading strategies were highly profitable. In effect, per the complaint, the defendants invested less than half of investor funds and those investments resulted in near-total losses. Additionally, they misappropriated the remaining funds by using them to repay other investors and by transferring approximately $880,000 of investor funds to Burkholz, Bianco, and their spouses for personal use. To conceal their misappropriation and trading losses, Defendants delivered false reports to investors giving the false impression they were generating positive returns. In sum, Defendants were managing and operating a Ponzi scheme.
Without admitting or denying the allegations in the SEC Complaint, Burkholz and Bianco consented to the entry of a final judgement permanently enjoining them from violating antifraud provisions of the Securities Exchange Act and ordered them to disgorge $873,577 combined, and $1,841,650 in civil penalties. Further, Bianco’s wife Suzanne Bianco, who the SEC named as a relief defendant, consented to the entry of a final judgment ordering her to disgorge$49,751 on a joint and several basis with Bianco, representing the amount of investor funds Bianco paid her, plus prejudgment interest. Additionally, the Court ordered over $1.2 million in disgorgement and prejudgment interest against Palm Management and Shore Management. After the SEC receives approval from the Court, it plans to establish a fair fund to distribute money received from defendants to harmed investors.
If you have not hired an attorney and wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL 33324. By phone: 954.693.7577 or 800.718.1422.