FOR IMMEDIATE RELEASE
Washington, DC, June 25, 2012 –The Securities and Exchange Commission today obtained a temporary restraining order and asset freeze against a Utah man and company charged with operating a real estate-based Ponzi scheme that bilked $100 million from investors nationwide.
The SEC’s complaint filed in U.S. District Court for the District of Utah, names Wayne L. Palmer and his firm, National Note of Utah, LC, both of West Jordan, UT. According to the complaint, Palmer told investors that their money would be used to buy mortgage notes and real estate assets, or to make real estate loans. More than 600 individuals invested, lured by promises of annual returns of 12 percent, the SEC alleged.
“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 told investors that their money would be completely secure and that National Note had a perfect record, having never missed paying principal or interest on its promissory notes. Glossy marketing materials that Palmer provided to some investors showed that National Note returns did not fluctuate and stated that investors were guaranteed payment even if property owners missed payment on mortgage loans that National Note held.
Contrary to Palmer’s claims, National Note used most of the money it took in from new investors to pay earlier investors, making it a classic Ponzi scheme, the SEC alleged. It said that since 2009, National Note would not have been able survive but for the influx of new investor funds, and that its payments to investors all but stopped in October 2011. According to the SEC’s complaint, Palmer reassured investors that the money would be forthcoming, and continued to solicit new investors in National Note without disclosing the fact that it is delinquent in making payments to existing investors.
The SEC’s complaint charges National Note and Palmer with violating the anti-fraud and securities registration provisions of U.S. securities laws. Palmer also faces charges that he operated as an unregistered broker-dealer.
Scott Frost, Paul Feindt, Matthew Himes and Alison Okinaka of the SEC’s Salt Lake Regional Office conducted the investigation; Thomas Melton will lead the litigation.
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