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Russell Todd Burkhalter’s alleged $300mn real estate Ponzi scheme has the potential to go down as a classic of the genre.
Per the Securities and Exchange Commission (which has had a busy few days):
The SEC’s complaint alleges that, from 2020 through at least June 2024, Drive Planning and Burkhalter raised more than $300 million for purported real estate investments, telling investors their money would be used to fund land development projects. The defendants promised 10% interest every 3 months and encouraged investors to tap their savings, retirement accounts, and even open lines of credit to invest.
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, according to the complaint. The complaint further alleges that Burkhalter stole investor funds to fund his luxurious lifestyle, including to buy a $3.1 million yacht and spending $4.6 million on chartering private jets and luxury car services and $2 million on a luxury condo.
Court documents filed with the Northern District of Georgia allege that, through his company Drive Planning, the St. Petersburg, Florida, resident encouraged more than 2,000 people to invest in “Real Estate Acceleration Loans” — made-up promissory notes which he said were being used to fund property developments up and down the US.
According to a pitch deck on the Drive Planning website, investors who stumped up a minimum of $20,000 for these “bridge loan opportunities” were protected by collateral including $21mn in cash and $92mn worth of real estate:
We have a program that helps real estate developers get more projects, even while they’re still finishing up others. The thing is, traditional lenders like banks usually won’t offer this kind of loan because of all the regulations and red tape involved. But we’re different – we only work with developers who have a track record of success, and they agree to share their profits with us and our lenders (which is you!). Our program is called the REAL Plan, and it basically allows developers to speed up their business growth, while also helping our lenders (you!) grow their wealth. It’s a win-win situation for everyone involved!
By May of this year, according to the SEC complaint, the scheme was receiving applications for over $1mn every day, driven by a small army of more than 100 sales agents. These “financial consultants” were paid a 4 per cent commission on each REAL Plan investment they sold, including on amounts that investors chose to “rollover” into new 90-day investments, the SEC says, adding: “For one recent two-week period, Drive Planning paid sales commissions of $1.92mn.”
Burkhalter is alleged to have further motivated sales agents by creating two clubs for top sales performers: The Presidents Club and the Chairman’s Council, with membership in each group entitling lackeys to an all-expense paid trip for two to destinations like Cabo San Lucas, the Greek Isles and [checks notes] Toronto.
Drive Planning “conducted frequent training seminars” for its sales agents, but “did not directly disclose to all agents that Drive Planning did not have a profit generating enterprise sufficient to meet obligations,” the SEC says. Parts of one agent’s Drive Planning website profile may hint at the possibility that the company was not always recruiting the brightest and best:
And Burkhalter’s spending habits seem to have been typically Floridian. According to the SEC complaint:
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Last October, Drive Planning transferred $3.1mn from a JPMorgan account to MarineMax for a yacht called “Stillwater”, with at least $2mn coming from investor funds. Burkhalter later renamed the boat “Live More”.
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“Drive Planning and Burkhalter spent $319,628 on clothing, jewellery, and beauty treatments. They spent $69,293 at Diamonds Direct, $75,785 at Louis Vuitton and $7,777 at Drip IV, a beauty and wellness company located in St. Petersburg, Florida”.
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“Defendants also spent considerable funds on luxury travel and vacations, including least $4.6mn on chartering private jets and luxury car services”
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Defendants spent at least $749,243 on automobile-related expenses, including at least $92,127 to a Jaguar Land Rover dealer, $243,414 to Crown Automotive in St. Petersburg, Florida, and another $67,006 to Carvana.
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“From May 24, 2021, through December 2023, Drive Planning transferred $1.9mn to Coinbase. Starting in April 2023, Drive Planning received $1.2mn back from Coinbase, for a net of $732,966 transferred to Coinbase. Burkhalter also used investor funds to buy a ranch in Mineral Bluff (Fannin County), Georgia”
Burkhalter divorced his wife (a relief defendant in the suit) last year but may yet “transfer to his [former] spouse property bought with investor funds,” the SEC warned. A preliminary injunction, asset freeze and other emergency relief have been obtained to protect for investors whatever funds that have not yet been spent on crypto, mooring fees, IV drips, etc.
