(HedgeCo.Net) The Securities and Exchange Commission has charged Matthew Motil, host of the podcast, “The Cash Flow King,” for fraudulently raising approximately $11 million from more than 50 investors in a Ponzi scheme involving notes that were purportedly backed by residential properties.
According to the SEC’s complaint, Motil, of North Olmsted, Ohio, defrauded investors with promises of low-risk, high-return promissory notes purportedly collateralized by first mortgages on homes located throughout Ohio.
The SEC’s complaint alleges that Motil promoted the investments on his website, inviting potential investors to “be a real estate investing badass!,” and on his podcast, where he assured investors that the investments he offered were safe and backed by a “first lien position” on the underlying real estate assets. According to the SEC’s complaint, Motil told investors that he would pay the investors returns on their investments from profits from renovating, reselling, refinancing, and renting the properties. As the complaint alleges, however, Motil did not in fact secure first lien positions for the investors as promised and regularly sold multiple promissory notes he claimed were secured by the same property to multiple investors. In one instance, Motil allegedly sold more than $1 million of promissory notes to 20 investors, each note supposedly collateralized by the same property he had acquired for $47,000. Rather than renovate the properties, Motil allegedly used investor money to make Ponzi payments to previous investors and for his own extravagant personal expenses, including to rent a lakeside mansion, purchase courtside season tickets to NBA games, and make $400,000 in credit card payments for his wife, Amy Motil, who is named as a relief defendant.
The SEC’s complaint, filed in the federal District Court for the Northern District of Ohio, charges Motil with violating Sections 5(a), and (c) and 17(a) of the Securities Act of 1933, [15 U.S.C. §§ 77e(a), (c), and § 77q(a)]; and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, [15 U.S.C. § 78j(b) and 17 C.F.R. §240.10b?5]. The complaint seeks injunctive relief, disgorgement plus prejudgment interest, civil money penalties, and an officer-and-director bar. The SEC’s Office of Investor Education and Advocacy has issued anInvestor Alert with tips on how investors can avoid become a victim of fraud in self-directed IRAs
