The founder and CEO of Atlanta-based Drive Planning is running a $300 million real estate Ponzi scheme affecting more than 2,000 investors, according to the Securities and Exchange Commission.
The commission imposed a preliminary injunction and asset freeze on Russell Todd Burkhalter to stop the alleged Ponzi scheme. According to the SEC, Burkhalter, through Drive Planning, used millions of dollars from new investors to pay off existing stakeholders and finance his lavish lifestyle, including jet charters and yacht purchases.
“Drive Planning and Burkhalter won the trust of ordinary people and encouraged them to invest in this scheme by promising exorbitant returns, but as our complaint alleges, the defendant's business was nothing more than a classic Ponzi scheme, using the money of new investors to pay returns to existing investors, with Burkhalter stealing millions to finance a lavish lifestyle,” said SEC Atlanta Regional Office Director Nekia Hackworth Jones.
According to the complaint filed in Georgia federal court on Tuesday, the scheme began in 2020 with the formation of Drive Planning.
Burkhalter and his recruited sales agents told potential investors that the firm would pool their money and loan it to property developers or enter into “joint ventures” with property developers to collect a profit of enough for guaranteed three-month returns of 10%.
Burkhalter called the securities “REAL” (an acronym for Real Estate Acceleration Loan). Burkhalter was previously a managing partner with Catalyst Wealth Management during 2014. according to the Drive Planning website. Burkhalter did not respond to questions before publication.
Clients began investing in the fall of 2020 and over the next four years, business boomed; through May 2024, the firm raised more than $336 million from more than 2,000 investors in 48 states and other countries, with nearly $67 million coming from retirement accounts, according to the SEC.
According to bank records, Drive Planning wasn't using the cash from the investments for bridge loans or joint ventures with developers and wasn't getting much income in return. Instead, its income came from commissions earned on life insurance sales, membership fees from clients receiving financial planning, and rental income from some properties.
However, clients expected a 10% return every three months, so Burkhalter began using the new clients' investments to make the switch in a Ponzi-like fashion, according to investigators. Over four years, the SEC believed that up to $137.2 million came from investor funds to pay other investors.
But Burkhalter (through the firm) used investor funds for other personal purchases, according to the SEC.
In 2023, Burkhalter used Drive Planning to buy a yacht called Stillwater, using at least $2 million in investor funds (Burkhalter renamed the yacht Live More).
Burkhalter made many other purchases over the next several years, using money from Drive Planning accounts used to hold investor funds. Regulators believe he was using $319,628 worth of those funds for “clothing, jewelry and beauty treatments,” including $69,293 at Diamonds Direct, $75,785 at Louis Vuitton and $7,777 at Drip IV, a St. Petersburg beauty and wellness company , Fla.
Burkhalter and the firm also spent $4.6 million on private jet charters and car services and $183,871 on hotels (including roughly $15,400 on a Norwegian cruise line). Burkhalter and his firm spent at least $749,243 on expenses related to the car, including more than $92,000 at a Jaguar Land Rover dealer and $243,414 at Crown Automotive in St. Petersburg, Fla.
Burkhalter used investor funds to buy a farm in Mineral Bluff, Ga., and build a large barn that doubles as an event space on that property. According to the SEC, he also used investor funds to buy a Georgia-based apparel business.
According to the commission, during this time, Burkhalter did not tell clients that the money could be used to make principal or interest payments to other investors or to finance personal expenses. In one instance, he told a client that a 10% rate of return was “guaranteed.”
On June 10, Burkhalter allegedly told the SEC that the firm would not accept new investments, pay amounts owed to investors or pay commissions to sales agents. However, according to the SEC, the firm continued to pay those commissions.
Burkhalter allegedly sent an email to sales agents that the SEC was reviewing the program and said the firm could get Drive Planning clients their payments “in a timely manner” if not for the SEC review (though the commission argued that would meant simply a continuation of the Ponzi scheme).
“Burkhalter still has control over tens of millions of dollars currently in Drive Planning's bank accounts, as well as over tens of millions of dollars in real estate and other properties purchased with investor funds,” the commission's complaint argued.