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SEC Obtains Judgment Against Recipient of Ponzi Scheme Proceeds

(HedgeCo.Net) The U.S. District Court of the Southern District of Florida entered has entered a final judgment against relief defendant Rhoda Burkholz of Boca Raton, Florida, who has agreed to pay over $250,000 to resolve the SEC’s action against her for allegedly receiving proceeds from a Ponzi scheme conducted by her husband and others that defrauded at least 55 investors.

The SEC’s complaint, filed on November 14, 2019, alleged that Neil Burkholz, his business partner, Frank Bianco, and their companies Palm Financial Management, LLC and Shore Management Systems, LLC solicited investors by falsely representing that their proprietary options trading strategies were highly profitable. In reality, as alleged in the complaint, the defendants invested less than half of investor funds and those investments resulted in near-total losses. The complaint alleged that the defendants misappropriated the remaining funds by using them to repay other investors and by transferring approximately $880,000 of investor funds to Ms. Burkholz and to Mr. Burkholz, Bianco, and Bianco’s wife, Suzanne Bianco, for personal use. According to the SEC’s complaint, the defendants sent false reports to investors to conceal their fraudulent conduct and give the investors the false impression they were generating positive returns.

Without admitting or denying the allegations in the SEC’s complaint, Ms. Burkholz consented to the entry of a final judgment ordering her to pay $258,821 in disgorgement and prejudgment interest on a joint and several basis with Mr. Burkholz, representing the amount of investor funds he shared with her.

The settlement concludes the SEC’s litigation in this matter. In May, the court ordered Mr. Burkholz and the Biancos to pay more than $2.7 million combined in disgorgement, civil penalties, and prejudgment interest. In February, the court ordered Palm Management and Shore Management to pay over $1.2 million in disgorgement and prejudgment interest. The SEC intends to seek approval from the court to establish a fair fund to distribute money received from the defendants and relief defendants to harmed investors.

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