Alpharetta company accused of running a Ponzi scheme is in receivership

The lavish purchases Burkhalter made with proceeds from the alleged fraud include a luxury yacht, a ranch in the North Georgia Mountains and luxury cars, according to the SEC complaint.

Burkhalter had advertised in its promotional materials a “bridge loan opportunity” called REAL, an acronym for Real Estate Acceleration Loan, and a minimum amount of $20,000 was required to participate. According to the marketing materials, the loans were sold as short-term investment vehicles to real estate developers who needed financing for projects already underway.

The loans were for three months and carried 10% interest. For example, in a chart in a brochure, Drive Planning cited a $100,000 investment in a 12-month loan that was worth more than $146,000, a profit of almost 50%.

In the colorful brochure, the company helpfully asked: “You may be wondering if the REAL plan is too good to be true?”

The brochure assured the reader that the investment was backed by collateral. “Even if something goes wrong in the real estate market, the risk is really low.”

Payments to investors “suspended indefinitely”

Burkhalter, an author who has worked for years in the financial industry in the Atlanta area, cooperated with the SEC in the initial actions, according to a statement late Thursday from his attorneys Aaron Danzig and Kara Silverman.

“Mr. Burkhalter denies the allegations contained in the SEC's complaint and hopes for a speedy resolution of this matter,” the statement said.

Murena, who was appointed receiver of Drive Planning, declined to comment.

However, Murena has set up a publicly accessible website aimed primarily at people who have invested in the company. The site is intended to provide information, but also to serve as a way to find those who have invested money in Drive Planning in the hope of eventually returning the money owed to the allegedly defrauded investors.

Payments to investors are “suspended indefinitely,” Murena wrote in a letter to investors posted on the new website. “The liquidator is currently unable to repay any investments,” he wrote.

The goal is to “maximize returns for investors,” he wrote.

According to the SEC Complaint , Drive Planning has attracted a lot of investor money.

According to the SEC, the company raised more than $336 million from more than 2,000 investors in four years as of 2020, with $66.9 million of that amount coming from retirement accounts.

Drive Planning paid out $131 million in “alleged returns to investors,” the SEC's complaint said, citing a company document. “According to the spreadsheet, Drive Planning owes investors $287 million.”

It is unclear how much regulators and Murena can recover for investors.

The SEC listed a number of Burkhalter's expenses, which authorities said were in part due to a lavish, extravagant lifestyle funded by investors. But the expenses listed in the filing total less than $15 million.

Years to find a solution?

The receiver's job is to collect wrongfully acquired goods while also searching for the rest of the money obtained under false circumstances, says Chris Tierney, a partner at Atlanta-based accounting firm Moore Colson, who has been appointed as a receiver in about 40 cases.

A bankruptcy trustee can issue subpoenas, seize property, confiscate bank accounts and other assets and involve law enforcement if necessary, he said.

“The receiver has tremendous power,” Tierney said. “The receiver is the referee's right hand man.”

A big part of the receiver's job is uncovering the details, Tierney said. “I guarantee you that as the receiver goes through all of this, they're going to find other things that people didn't know about. There's a lot more that can be uncovered.”

As big as this alleged fraud may have been, it was modest compared to the one Bernie Madoff ran for nearly two decades, a Ponzi scheme involving more than $60 billion, according to the Corporate Finance Institute.

But it's still a lot of money, and for individuals it can spell financial disaster, Tierney said. “Unfortunately, a lot of people are probably going to lose money here.”

Everyone has weaknesses and is potentially vulnerable to some kind of fraud, Tierney said.

Burkhalter's overtures began in the early days of the pandemic, a time of uncertainty and concern about financial security. Today, the legal process can be painfully drawn out, especially for older investors.

“Given the magnitude of this case, it's safe to assume it will take years to resolve,” Tierney said. “That means investors won't see their money for years. If some of these investors are older, some of them may die first.”

Were you an investor in Drive Planning?

The insolvency administrator has set up a website for Drive Planning where he can contact investors: https://driveplanningreceivership.com/

What you should know

What is a Ponzi scheme? Scams come in countless sizes and shapes. A Ponzi scheme typically promises above-average profits and no risk. And, at least initially, the scammer appears to deliver those profits to the original investors using money collected from later waves of victims.

What should set off alarm bells for you? If it sounds too good to be true, well, maybe it is. Always check the history of people you trust with a lot of money. Get a second opinion. Maybe a third.

Are there special alarms? Beware of aggressive sales tactics, demands to make decisions without consulting other experts or friends, and pressure to withdraw money from retirement funds that you cannot afford to lose.

Sources: Moore Colson, Investopedia