The Expert Podcast

Okay, here's another story in our series of "Do scammers ever get caught? Do fraudsters ever get caught?" That's the big question we get from a lot of our clients who are victims. Do these criminals ever get busted? Well, here's another article: The SEC (Securities and Exchange Commission) charged a CEO and a convicted felon spouse in a $56 million Ponzi scheme. Here's the key: they obtained emergency relief. What does that mean for victims? Let's take a look.

In this case, the SEC filed an emergency action and obtained an asset freeze. That's the key right there—asset freeze—against Wells Real Estate Investment based in West Palm Beach, Florida. The names of the people involved are all alleged at this point. The SEC charged them with fraudulently raising $56 million from 650 investors nationwide. A substantial portion of the money came from investors' retirement savings. They also had 23 related companies that were shell companies and interrelated companies involved in this fraud. It was a very complicated type of operation. In many cases, that's how these scams work.

The fraudsters or scammers put together a network of companies and represent to the victims that they have a huge portfolio of money, claiming they're making big profits. They’ll tell you, "If you put in $10,000, we’ll double your money in six months," or whatever the high return is. In this case, they said they had a $450 million real estate portfolio and only used investor funds to invest and improve real estate in South Florida. But in reality, they just took the money, and they didn’t really invest that much.

Approximately $11 million of the funds were used to purchase properties, which were heavily financed through mortgages. So, here's the thing: they bought the properties but put debt on them. There was really no return on investment, but at least they could show some properties. They misused $28 million of the proceeds by diverting those funds to dozens of brokerage accounts for highly speculative futures and options trading, losing $11 million of investor funds. The defendants also paid $6.99 million in undisclosed commissions to sales agents, which is another very important factor.

Anytime you're looking at a scam or fraud, you want to see who the third parties are that benefited from it, as they may be liable for the return of money. If a salesperson, agent, or accountant received a commission or benefit from the fraud, that's a good place to look to see if some of that money can come back. It’s called a clawback or chargeback. We always like to look at any fraud to see if there were any third parties that benefited from it, even unknowingly, because if they did, they might have liability. More importantly, they might have an insurance policy that could cover some of these losses.

Many times, the scammer has already spent some of the money they stole, and it's unrecoverable. For example, if the scammer spent a million dollars on a vacation, you can’t get those vacations back—that’s gone. So, how do you fill the gaps? Many times, it comes from third parties, like banks or insurance companies. But the first thing you have to do is shut down the fraud. This is a good example of where the SEC stepped in. They did have some private investigative assistance to give them information from the sellers.

The defendants were charged with anti-fraud broker-dealer violations, and the SEC appointed a receiver. This is an important fact of the case: when a scam is discovered, the government often wants to appoint someone to step in and control the assets and finances of the company, so that the money can’t be further diminished.

If you are a victim of fraud, the first thing you want to do is report it. If it's an internet fraud, you want to report it to IC3. Also, consider getting legal advice and contacting a private investigator. You can click the link below to see what options you have, and at least do a consultation to find out what’s possible and what's not.

Either way, these scams and frauds are really rampant. They could be crypto scams, real estate scams, bond scams—there are all kinds of reasons people are asked to send money, but they’re never really legitimate. They’re always about someone lining their own pockets. If you have been a victim, click below, let us know what happened, and let’s see how that fits into possible recovery options for you.

If you liked this video, be sure to check out a few others on our channel to see if there’s other information that might be helpful to you, whether on this same subject or maybe even other related topics that could assist with the resolution of your issue.