A scheme that raised over $300m from more than 2,000 investors by promising 10% returns every three months has led the SEC to file fraud charges. The agency called the plan a “scheme to defraud from day one.”

The charges are against Russell Todd Burkhalter and his alleged corporate alter ego, Atlanta-based Drive Planning LLC. The agency also received a preliminary injunction and asset freeze against the defendants, which was granted without opposition.

Exorbitant promises

In its complaint, the SEC accuses Burkhalter of offering investors unregistered securities in the form of what he called “real estate acceleration loans” (REALs).

Burkhalter told investors that he would pool their money and loan it to property developers. He described the scheme as a “bridge-loan opportunity” that would generate 10% in returns every three months.

Investors were urged to “to tap their savings, retirement accounts, and even open lines of credit to invest.” According to the SEC, Burkhalter induced investors to stay locked into the scam by prompting them to rollover their REAL investments at the end of each three-month term.

From 2020 to June 2024, Burkhalter raised over $300m from over 2,000 investors. According to Drive Planning brochures, $20,000 investment minimums were required to participate.

However, the SEC said that Drive Planning never had enough business to generate the over-the-top returns. Instead, Burkhalter used the funds to purchase a $3.1m yacht and a $2.1m luxury condo, among other lavish purchases.

“In reality, the defendants did not have a business capable of generating the promised returns, and they instead used investor funds to make Ponzi-like payments” to earlier investors, the SEC stated in a press release.

Assets frozen

The asset freeze came after Burkhalter promised to cease all commission payments and investment returns on June 10.

However, Burkhalter allegedly resumed sales commission payments 11 days later.

The SEC contended that there was a serious risk of asset dissipation if an emergency freeze was not granted, noting that Burkhalter remained a signatory on bank accounts containing millions of dollars of investor funds. The complaint lists Burkhalter’s ex-wife Jacqueline Burkhalter as a Relief Defendant, but she is accused of no wrongdoing.

The agency highlighted the importance of preserving as much of the remaining funds as possible.

Rules violations

The SEC accused Burkhalter and Drive Planning LLC of violating:  

• Section 10(b) of the Exchange Act and subsections (a), (b), and (c) of Rule 10b-5 thereunder;
• Section 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act.

Beyond the already-granted temporary asset freezes, the SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants.

It also seeks an officer-and-director bar against Burkhalter.