Federal authorities have filed suit against a Florida man alleging that he and his Alpharetta company ran a Ponzi scheme that bilked more than $300 million from thousands of investors while allowing him to live extravagantly.
The Securities and Exchange Commission said Wednesday it has obtained a preliminary injunction against Russell Todd Burkhalter and Drive Planning to freeze their assets based on what the financial regulator said were fraudulent activities that began in mid-2020.
Burkhalter, an author who worked in metro Atlanta’s financial industry for years, was founder and chief executive of the company. Messages left with Burkhalter by The Atlanta Journal-Constitution via phone, text and email were not immediately returned Wednesday.
Credit: Drive Planning
Credit: Drive Planning
The 40-page civil complaint outlined purchases of a multimillion-dollar yacht, jewelry, clothes, luxury bags, vacations across the globe and a ranch in Mineral Bluff in the North Georgia Mountains.
The agency filed suit this week in the U.S. District Court for the Northern District of Georgia, said Nekia Hackworth Jones, director of the SEC’s regional office in Atlanta.
“Drive Planning and Burkhalter gained the trust of everyday people and encouraged them to invest in this scheme by promising exorbitant returns, but … the defendants’ business was nothing more than a classic Ponzi scheme,” she said.
In 2020, Burkhalter began offering what his promotional materials called a “bridge loan opportunity.” He named it REAL, an acronym for Real Estate Acceleration Loan, the SEC said.
Burkhalter and Drive Planning marketed it as a real estate investment that would ostensibly be used for various development projects. To raise funds, investors were encouraged tap into their savings and retirement accounts, or to open lines of credit.
In return investors were promised 10% interest every 3 months, the SEC said.
However, Burkhalter and Drive “did not have a business capable of generating the promised returns,” according to the SEC suit. Instead, investors were paid “returns” with funds redirected from other investors.
Meanwhile, existing investors were encouraged to “roll over” their returns, that is, to reinvest them, the SEC said.
Moreover, much of the money was diverted for Burkhalter’s personal use, funding “his luxurious lifestyle,” according to the complaint. That included purchase of a $3.1 million yacht, outlays of $4.6 million chartering private jets and luxury car services and purchase of $2 million condo.
According to the complaint, investor money allegedly paid for Burkhalter and Drive to spend:
- $319,628 on clothing, jewelry, and beauty treatments.
- $69,293 at Diamonds Direct
- $75,785 at Louis Vuitton
- $7,777 at Drip IV, a beauty and wellness company in St. Petersburg, Florida.
- at least $183,871 on hotels and resorts, including $15,404 on Norwegian Cruise Line and $12,750 to an Italian travel company
- at least $749,243 on automobile related expenses, including at least $92,127 at a Jaguar Land Rover dealer and $243,414 at another dealer
- $732,966 with Coinbase, a cryptocurrency platform
- an unspecified amount for purchase of a ranch in Mineral Bluff, Georgia, where Burkhalter “used investor funds to build a large barn,” which he rents out, according to the SEC
Some of the money was also allegedly spent to sponsor a racecar and to pay for ads at Tampa’s Tropicana Field, home of the Rays of Major League Baseball.
Drive at times had some employees, but most of the efforts to induce investors came from sales agents, who were paid a 4% commission on each investment he or she sold, according to the complaint.
The company’s master spreadsheet shows that, through May 6, it had raised more than $336 million, with $66.9 million of that amount coming from retirement accounts, the SEC said. The money came from more than 2,000 investors.
“According to the spreadsheet, Drive Planning paid $131 million of purported returns to investors,” the complaint said. “Based on the spreadsheet, Drive Planning owes investors $287 million, as of May 6, 2024.”
More than 2,000 people invested in Drive or other of Burkhalter’s related schemes, according to the SEC.
In a statement to the AJC, an attorney for some Drive Planning investors said there would be other actions taken.
“Those who committed, aided or abetted in this Ponzi scheme should be held accountable, civilly and criminally, and we look forward to seeking justice,” said attorney Jeffrey Sonn, who said he represents some Drive Planning investors.
The agency has asked the court to permanently bar Burkhalter and Drive from the business practices in question, but also to order repayment of the money wrongfully obtained and to levy civil penalties.
Burkhalter, who goes by his middle name, was also involved in North Fulton County politics, including a failed run for Johns Creek City Council. Among the books Burkhalter authored was “Bulletproof Your Finances: Confidence In Creating Financial Security.”
Also named in the suit was Burkhalter’s wife, Jacqueline Burkhalter, a resident of Blue Ridge, who was listed as Drive Planning’s chief financial officer. However, she was designated by the SEC as a “relief defendant.” That is someone not charged with wrongdoing but alleged to have profited from illegal gains.
A message left with Jacqueline Burkhalter was not immediately returned.
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