SEC: ‘Cash Flow King’ Host Ran $11M Ponzi Scheme
Matthew Motil was charged with defrauding over 50 investors in a scheme involving notes backed by residential properties.
The Securities and Exchange Commission on Monday charged the host of the podcast “The Cash Flow King” with fraudulently raising about $11 million from over 50 investors in a Ponzi scheme involving notes that were purportedly backed by residential properties.
According to the SEC’s complaint, Matthew Motil, of North Olmsted, Ohio, defrauded investors by promising them low-risk, high-return promissory notes purportedly collateralized by first mortgages on homes throughout Ohio.
Why it matters: Retirees are at particular risk of seeing their life savings and retirement accounts wiped out by scams.
Motil promoted the investments on his website, inviting potential investors to “be a real estate investing badass!” On his podcast, he promised investors that the investments he offered were safe and backed by a “first lien position” on the underlying real estate assets, the complaint said.
What to know: Motil told investors he would pay returns on their investments from profits made by renovating, reselling, refinancing and renting the properties.
The complaint alleges, however, that Motil didn’t really secure first lien positions for the investors as promised and he regularly sold multiple promissory notes he claimed were secured by the same property to multiple investors.
In one instance, Motil allegedly sold over $1 million of promissory notes to 20 investors, each note supposedly collateralized by the same property he had bought for $47,000.
Instead of renovating the properties, he allegedly used investor money to make Ponzi payments to previous investors and for his own luxury personal expenses, including to rent a lakeside mansion, buy 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.
Looking ahead: The SEC’s complaint, filed in U.S. District Court for the Northern District of Ohio, charges Motil with violating the registration and antifraud provisions of the Securities Act of 1933 and the antifraud provisions of the Securities Exchange Act of 1934.
The complaint seeks injunctive relief, disgorgement plus prejudgment interest, civil money penalties, and an officer and director bar.
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