Securities and Exchange Commission v. National Note of Utah, LC and Wayne LaMar Palmer, Case No. 2:12-cv-00591. On June 25, 2012, the SEC obtained a temporary restraining order and asset freeze against Wayne L. Palmer and his firm, National Note of Utah, LC, for operating a real estate-based Ponzi scheme that raised $100 million from investors. Palmer told investors their money would be used to buy mortgage notes and real estate assets, or to make real estate loans. Approximately 600 investors participated due to the promise of annual returns of 12 percent.
Palmer assured investors their money would be completely secure due to National Note’s perfect record. Palmer provided marketing materials which showed that National Note returns did not fluctuate and stated its investors were guaranteed payment even if property owners missed mortgage loan payments. However, National Note used most of the money from new investors to pay earlier investors. Since 2009, National Note would not have been able to survive without the influx of new investors. Payment to investors stopped by October 2011. Nevertheless, Palmer continued to solicit new investors without disclosing that it was delinquent in making payments to existing investors.
National Note and Palmer are charged with violating Sections 5(a), 5(c), and 17(a) of the Securities Act, and Section 10(b) and 15(a) of the Exchange Act and Rule 10b-5, thereunder.