Sales people are sometimes referred to as the high priest of profits. And, in the Burkhalter financial investment Ponzi scheme, they lived up to their title. Burkhalter himself wasn’t having much luck in sales, but during four years, his 100 plus sales agents managed to finagle $336 million from 2,000 investors for a purported short-term real estate loan scheme.
Russell Todd Burkhalter hailed from St Petersburg, Florida. His ex-wife, Jacqueline Burkhalter, called Fannin County, Georgia home. The company, Drive Planning, at the center of this Ponzi Scheme was located in Johns Creek, Georgia.
The company didn’t utilize any accounting software, not even QuickBooks. The entire operation (selling unregistered securities called REAL) was documented on a spreadsheet. While the bank records and spreadsheet differ some, the financial investment fraud picture is clear. “Based on the Spreadsheet, Drive Planning owes REAL investors $287,000,000, as of May 6, 2024.” In order to keep the scam going, Drive Planning paid investors approximately $131 to $154 million, which was sourced primarily from other investors’ money. (SEC Complaint)
What Did Burkhalter Do With The Bulk Of Investors’ Money?
Drive Planning’s payroll processor received $65 million, “the vast majority of that amount was commission payments to sale agents.” SEC Complaint
The amount of investors’ money that was deployed for its purpose, bridge loans to developers or joint ventures with developers, was miniscule. Therefore, much of the money went to fund a lavish lifestyle and purchase other assets.
- Burkhalter purchased a yacht for $3.1 million, of which at least $2 million came from investors.
- Other lifestyle purchases include: $219,628 for clothing, jewelry and beauty treatments, $69,293 at Diamonds Direct and $75,785 at Louis Vuitton.
- Defendants spent $4.6 million on private jets and luxury car services, as well as $183,871 on hotels and resorts.
- Vehicle purchases and automobile related expenses totaled $749,243.
- $732,966 was transferred to Coinbase.
- Burkhalter bought a ranch in Georgia, Mineral Bluff, which includes an event venue barn rental.
- TBR Supply House is a clothing business in Georgia that Burkhalter bought with investors’ money.
- Burkhalter purchased a Cabo San Lucas luxury condo for $2 million.
- And NetJets, a private jet company benefited to the tune of $1.1 million. (SEC Complaint)
How Did They Perpetrate This Financial Investment Fraud For Multiple Years?
- The sales team at Drive Planning received four percent commission for financial investment sales of three-month investments with a guaranteed 10% return, purportedly for bridge loans to property developers. The minimum investment was $20,000, which was allegedly secured by real estate quitclaim deeds.
- When the initial investment was a “winner” due to the Ponzi payment, often times the investor would roll the original investment plus earnings into another investment. Many people even started investing more.
- Drive Planning distributed a significant amount of purported earnings to investors to encourage more investment.
Over time, the scheme started failing when the new investors signing up started to wane. Since the company had never developed their core business, the “profit” payments became difficult to fund. And what of those real estate security interests to protect investors? The company didn’t really have the real estate to secure the investments.
The SEC is going after the personal assets of the Burkhalter, as well as some of the assets of the companies purchased with investor money. But the investors’ losses are substantial.
How Could Potential Investors Uncover The Financial Investment Fraud Before Investing?
- Research whether the security and the sales team are registered at the state or federal level. The REAL investment was not registered.
- Be very wary of any guaranteed stream of income or return.
- Ask which counties and states the real estate is located in and do a quick real estate search through the county tax office to see what the company actually owned.
We continue to write about Ponzi schemes and financial investment fraud, so that potential investors realize how extensive the game is. We report a small fraction of what we find. Be careful when investing. Do your research. Don’t make hasty decisions. Just because a friend or family member refers the investment to you, does not mean they are not aware of the problems.
We hope all your real estate, commodities, foreign exchange, and oil and gas investments are safe and profitable. But if you find yourself searching for an experienced investment fraud attorney, oil and gas litigator or a commercial litigation lawyer, we are here to help.
