WASHINGTON (Legal Newsline) - The Securities and Exchange Commission on Monday obtained a temporary restraining order and asset freeze against a Utah man and company it alleges operated a $100 million nationwide real estate-based Ponzi scheme.
The complaint filed in U.S. District Court for the District of Utah states Wayne L. Palmer, 57, and his firm, National Note of Utah, told investors their money would be used to buy mortgage notes and real estate assets, or to make real estate loans. More than 600 people invested money.
"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.
Palmer allegedly told investors that their money would get a 12 percent return and would be completely secure. He said National Note had a perfect record, having never missed paying principal or interest on its promissory notes.
Palmer furnished information to some investors indicating that National Note was financially solid and claimed that investors were guaranteed payment. But according to the SEC, since 2009 National Note would not have been able survive but for the new investor funds that paid the old investors.
According to the complaint, "National Note raised approximately $50,000,000 in an unregistered offering of notes prior to September 2007... National Note carried out a private placement of notes under Rule 506 of Regulation D and provided offerees with a private placement memorandum that included unaudited financial statements for the prior year.
"National Note raised approximately $50,000,000 in this Rule 506 offering, which has been ongoing since 2007. Some of the investors in notes since 2007 are accredited investors. These accredited investors were provided with the PPM. Other investors were unaccredited, and these individuals did not receive the PPM. Instead, Palmer purports to have granted these unaccredited investors a direct security interest in a specific mortgage asset of National Note."