Wells Real Estate Investment, LLC, Janalie C. Joseph a/k/a Janalie C. Bingham, and Jean Joseph, et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26079 / August 20, 2024
Securities and Exchange Commission v. Wells Real Estate Investment, LLC, Janalie C. Joseph a/k/a Janalie C. Bingham, and Jean Joseph, et al., No. 9:24-cv-80980 (S.D. Fla. filed Aug. 12, 2024)
SEC Obtains Emergency Relief, Charges CEO and Her Convicted Felon Spouse in $56 Million South Florida Real Estate Ponzi Scheme
The Securities and Exchange Commission today announced that it filed an emergency action and obtained an asset freeze against Wells Real Estate Investment, LLC ("Wells"), based in West Palm Beach, Florida, its CEO Janalie C. Bingham and undisclosed control person and previously convicted financial fraud felon Jean Joseph. The SEC's complaint charges them with fraudulently raising at least $56 million from approximately 660 investors nationwide, a substantial portion of which came from investors' retirement savings. The complaint also names 23 Wells-affiliated companies as relief defendants.
According to the SEC's complaint, which was filed in the U.S. District Court for the Southern District of Florida and unsealed today, the SEC alleges that the defendants represented that Wells has a $450 million real estate portfolio and only uses investor funds to invest in and improve real estate, with its primary focus on South Florida. From at least January 2020, using a network of unregistered sales agents, the defendants allegedly solicited investors to invest in Wells' "Assets-to-Income Program" offering promissory notes, purportedly collateralized and secured by real estate, that promised to pay interest ranging from 12% annually, to 99% at the end of three years.
In reality, the SEC alleges that approximately $11 million of investor funds was used to purchase real properties, which are heavily financed through mortgages and generate insufficient income to pay promised returns to investors. Bingham and Joseph also allegedly misused approximately $28 million of investor proceeds by diverting those funds to dozens of brokerage accounts and engaging in highly speculative futures and options trading, losing about $11.9 million of investor funds.
The SEC alleges that the defendants have paid approximately $6.9 million in undisclosed commissions to sales agents and, in a Ponzi-like fashion, misused about $10 million of investor funds to make interest payments and redemptions to investors. Bingham and Joseph allegedly stole about $1.8 million for personal expenses and transferred $1.95 million of Wells-financed properties to themselves. While the defendants touted Bingham's bona fides as "an accomplished real estate investor" with a $100 million personal portfolio, they allegedly concealed that Wells is co-managed by Bingham's husband, Joseph, who is a convicted felon.
The SEC's complaint charges the defendants with violations of the antifraud and broker-dealer registration provisions of the federal securities laws. The District Court granted the SEC's request for emergency relief to protect investors and preserve investor assets, including asset freezes, an order prohibiting the destruction of documents, and sworn accountings. The court also granted the SEC's request to appoint Andrés Rivero as receiver over Wells and the relief defendants. The SEC is also seeking an officer-and-director bar against Bingham and Joseph, permanent injunctions and civil money penalties against the defendants, and disgorgement of ill-gotten gains with prejudgment interest against the defendants and the relief defendants.
The SEC's investigation, which is ongoing, is being conducted by Hughens Dolisca and Mark Dee, under the supervision of Jason R. Berkowitz, Fernando Torres, and Glenn S. Gordon in the Miami Regional Office. The SEC's litigation is being led by Brian Lechich and Mr. Dolisca, and supervised by Teresa J. Verges.