The U.S. Securities and Exchange Commission (SEC) charged the host of “The Cash Flow King” podcast for defrauding investors in an alleged Ponzi scheme involving promissory notes that were purportedly backed by residential mortgages.
The regulator charged Ohio-based podcaster Matthew Motil for raising US$11 million from investors using notes that promised high returns with low risk. The notes, which were promoted on his podcast and website, were supposed to be collateralized by mortgages on homes in Ohio, with returns to be generated by flipping, refinancing and renting various properties, it said.
However, the SEC alleged that various notes were regularly secured by the same properties, and that rather than using investor funds to renovate the properties, investors’ money was used to make payments to earlier investors and to finance Motil’s personal expenses.
“Nearly everything about his scheme was a lie,” the SEC said in its complaint. “Many of the promissory notes he offered and sold to investors were not ‘fully collateralized by first mortgages’ because Motil purposely issued multiple promissory notes ‘secured’ by the same property to numerous investors,” it said.
“We allege that Motil used podcasts and social media platforms to bolster his reputation as an investing expert while fraudulently targeting investors’ hard-earned retirement assets, including, in at least one instance, almost the full balance of an investor’s self-directed IRA,” said Mark Cave, associate director of the SEC’s enforcement division, in a release.
The allegations have not been proven.
In its complaint, the SEC is seeking injunctive relief, civil penalties, disgorgement plus interest, and an officer and director ban.