Commission Obtains Freeze Order Against Ponzi Scheme

Ponzi schemes and offering frauds have long been staples of the Commission’s enforcement program. Actions filed by the agency in this area range from those against the infamous Bernie Madoff to much smaller and simpler matters which inflict the same kind of damage and pain on investors as the Madoff debacles but with smaller fraudulent schemes. Regardless of the size of the scheme, the injury to each investor who is deceived into handing over his or her money to the schemer is the same – very real and extremely harmful. The same is true for the Commission’s latest case in this area which has a long list of relief defendants — those who potentially lost money here. SEC v. Cambridge Real Estate Management, LLC, No. 9:24-cv-80980 (S.D. Fla. Filed August 13, 2024).

Named as defendants are: Wells Real Estate Investment, LLC, a firm which supposedly acquires, sells, and manages commercial and residential real estate and which has multiple on-line brokerage accounts; Janalie C. Joseph a/k/a Janalie Bingham, the founder, CEO and controller of the Wells equity membership interests; and Jean Joseph who pleaded guilty in November 2019 to one count of wire fraud and was sentenced to serve 15 months in prison and pay about $3 million in restitution.

In the action here Defendants used a network of agents to solicit investors to acquire interests in Well’s “Assets-to-Income Program.” Beginning in 2020 investors were offered the opportunity to purchase interests in the program. Investors were told that under the program the notes offered for sale paid interest ranging from about 12% annually for 18 or 28 month notes or more at the end of 36 months.

Potential investors were assured that their funds would be used to acquire, develop and revitalized residential and commercial properties in South Florida. Defendants also touted Ms. Bingham’s bona fides as an accomplished real estate investor who supposedly had a personal real estate portfolio valued at over $100 million.

Defendants were able to raise about $56 million through their scheme. About $11 million was used to acquire real estate. Those properties were supposedly acquired and managed through twenty-three affiliated limited liability companies controlled by Relief Defendants. The claims were false – Defendants were operating a Ponzi scheme. Defendants misappropriated portions of the investor funds. The complaint alleges violations of Securities Act Sections 17(a) and Exchange Act Sections 10(b), 15(a) and 20(a). The Commission obtained emergency relief which includes an asset freeze. See Lit. Rel. No. 26079 (August 20, 2024).