The Securities and Exchange Commission (SEC) announced this week that the US District Court of the Southern District of Florida entered a final judgment against relief defendant Rhoda Burkholz, in their role in a Ponzi scheme.
On Monday, the regulator said that the defendant has agreed to pay more than $250,000 to resolve the regulator’s action against her. However, also she will be paying the funds without admitting or denying the allegations in the SEC’s complaint.
Specifically, Ms. Burkholz has agreed to the entry of a final judgment which orders her to pay $258,821 in disgorgement and prejudgment interest on a joint and several basis with Mr. Burkholz. This figure represents the investor funds he shared with her, the SEC said on Monday.
Furthermore, the US authority said that Burkholz received proceeds from an options trading Ponzi scheme which was conducted by her husband and others who scammed at least 55 investors.
SEC filed the complaint in 2019
The complaint from the regulator, which was filed on the 14th of November 2019, alleged that Neil Burkholz, his business partner, Frank Bianco, and their companies Palm Financial Management, LLC and Shore Management Systems, LLC were part of the scam.
In particular, they attracted victims to their scam by pretending their proprietary options trading strategies were highly profitable, the regulator said. However, as outlined in the complaint, the defendants invested less than half of investor funds and those investments resulted in near-total losses.
The remaining investor money was used to repay other investors and, according to the SEC, $880,000 of investor funds was transferred to Ms. Burkholz and to Mr. Burkholz, Bianco, and Bianco’s wife, Suzanne Bianco, for personal use.
In addition, the US agency said in its complaint that the defendants sent false reports to investors which concealed their fraudulent behaviour and gave investors the impression they were making money, instead of losing it.
“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,” the SEC said in the statement on Monday.
“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.”