SEC Charges CEO and Convicted Felon Spouse in $56 Million Ponzi Scheme, Obtains Emergency Relief
The U.S. Securities and Exchange Commission filed an emergency action and obtained an asset freeze against Wells Real Estate Investment LLC, based in West Palm Beach, Fla.; Janalie C. Bingham, its chief executive officer; and undisclosed control person and previously convicted financial fraud felon Jean Joseph. The SEC’s complaint charges them with fraudulently raising at least $56 million from approximately 660 investors nationwide, a substantial portion of which came from investors’ retirement savings.
The complaint also names 23 Wells-affiliated companies as relief defendants.
Filed in the U.S. District Court for the Southern District of Florida, the SEC alleges that the defendants represented that Wells has a $450 million real estate portfolio and only uses investor funds to invest in and improve real estate, with its primary focus on South Florida. From at least January 2020, using a network of unregistered sales agents, the defendants allegedly solicited investors to invest in Wells’ “assets-to-income program” offering promissory notes, purportedly collateralized and secured by real estate, that promised to pay interest ranging from 12% annually to 99% at the end of three years.
In reality, the SEC alleges that approximately $11 million of investor funds was used to purchase real properties, which are heavily financed through mortgages and generate insufficient income to pay promised returns to investors.
Bingham and Joseph also allegedly misused approximately $28 million of investor proceeds by diverting those funds to dozens of brokerage accounts and engaging in highly speculative futures and options trading, losing about $11.9 million of investor funds.
The SEC alleges that the defendants have paid approximately $6.9 million in undisclosed commissions to sales agents and, in a Ponzi-like fashion, misused about $10 million of investor funds to make interest payments and redemptions to investors. Bingham and Joseph allegedly stole about $1.8 million for personal expenses and transferred $1.95 million of Wells-financed properties to themselves. While the defendants touted Bingham’s bona fides as “an accomplished real estate investor” with a $100 million personal portfolio, they allegedly concealed that Wells is co-managed by Bingham’s husband, Joseph, who is a convicted felon.
The SEC’s complaint charges the defendants with violations of the antifraud and broker-dealer registration provisions of the federal securities laws. The court granted the SEC’s request for emergency relief to protect investors and preserve investor assets, including asset freezes, an order prohibiting the destruction of documents, and sworn accountings.
The court also granted the SEC’s request to appoint a receiver over Wells and the relief defendants. The SEC is also seeking an officer-and-director bar against Bingham and Joseph, permanent injunctions and civil money penalties against the defendants, and disgorgement of ill-gotten gains with prejudgment interest against the defendants and the relief defendants.
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