Thursday, September 21, 2023
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SEC Busts Alleged $25M Ponzi Scam

DALLAS (CN) - Derek Nelson ran a $25 million Ponzi scam through his so-called real estate company, Capital Mountain Holding Corp., the SEC says in Federal Court. Nelson, of Fairview, Texas, promised he could buy property at a discount, fix it up and lease it, but he spent the money on himself until the scheme collapsed this summer, the SEC says.

The SEC sued Nelson, 42, Capital Mountain, and his other companies, Systems XXI, ACT I LLC, Systems XXI ACT II, and relief defendants Plouteo and Homaide Real Estate Services.

"Instead of investing offering proceeds in the real estate necessary to support legitimate business operations, defendants used most of the funds to make Ponzi payments to investors; purchase luxury items for Nelson; pay Nelson's personal expenses; and pay overhead expenses for various companies controlled by Nelson," the federal complaint states. "In addition, investor funds, and assets acquired with investor funds, were transferred to relief defendants.

"In summer 2009, defendants' scheme collapsed, payments to investors ceased, and lien holders began foreclosure proceedings on the properties acquired and held by defendants."

The SEC says there were hundreds of victims.

It seeks disgorgement, penalties and an injunction.

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