The founder and CEO of a financial consulting firm based in Atlanta has been identified by federal regulators as the mastermind behind a $300 million Ponzi scheme that misappropriated investor funds to maintain his extravagant way of living.
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On Wednesday, the Securities and Exchange Commission (SEC) charged Todd Burkhalter, the CEO and founder of Drive Planning, with breaching antifraud laws. The SEC has frozen both Burkhalter’s assets and those of his company, which it claims serves as his “alter ego.”
In the last four years, Burkhalter has offered unregistered securities, representing them as a “bridge loan opportunity offering 10% in three months,” according to a complaint filed by the SEC in the U.S. District Court for the Northern District of Georgia. By late June, over 2,000 investors had poured in more than $300 million.
A team of more than 100 sales agents from Drive Planning encouraged individuals to invest their savings in these securities, claiming that the company combined these funds to loan them to property developers for profit. However, the complaint alleges that money from new investors was simply used to pay returns to previous investors and support Burkhalter’s lifestyle.
“The defendants’ operation was nothing but a traditional Ponzi scheme, employing new investor funds to pay existing investors, with Burkhalter pilfering millions to sustain a lavish lifestyle,” stated Nekia Hackworth Jones, director of the SEC’s Atlanta office.
In a section of the complaint aptly titled “Spending Other People’s Money,” the SEC detailed some of Burkhalter’s supposed misuse of funds, such as a $3.1 million payment to a boat dealer for a yacht called the “Stillwater,” which he renamed “Live More.”
Drive Planning also expended nearly $320,000 on clothing, jewelry, and beauty services, which included a purchase of $75,785 at Louis Vuitton, along with $4.6 million on chartering private jets and luxury vehicles. The SEC noted that hundreds of thousands more were allocated for hotels, resorts, and automobile-related expenses.
Burkhalter invested investor cash to acquire a clothing store owned by TBR Supply House, based in Blue Ridge, Georgia. Additionally, $1.45 million was transferred to NetJets, a private jet vendor under Berkshire Hathaway, the complaint states.
Investor money was also allocated for Burkhalter to purchase a ranch in Mineral Bluff, Georgia, which features a large barn financed by investor funds that he rents out for events. The SEC reported that at least $2 million from investors was used to acquire a luxury condominium in Cabo San Lucas, Mexico.
The SEC alleges that Burkhalter has utilized or intends to utilize real estate purchased with investor funds to fulfill his obligations from a divorce settlement. At least $6.6 million from Drive Planning has been used to buy real estate in the names of Burkhalter and his former wife.
Burkhalter and Drive Planning did not respond immediately to requests for comment.