A Boca Raton couple siphoned off most of the $56 million they raised from 660 people nationwide for purported real estate investments, according to a Securities and Exchange Commission lawsuit.
West Palm Beach-based Wells Real Estate Investment, company CEO Janalie C. Bingham and her husband, Jean Joseph, promised investors their funds would go toward purchasing, developing and renovating commercial and residential real estate properties across South Florida, the SEC said in its civil suit. Instead, $11 million went toward real estate, but Bingham and Joseph put the majority of funds, about $28 million, toward speculative options and futures trading that lost at least $11.9 million of the funds, according to the suit.
Wells, Bingham and Joseph are charged with violations of the federal securities laws’ antifraud and broker-dealer registration provisions. Also named as relief defendants are 23 entities affiliated with Wells, some of which were used to open the brokerage accounts at broker-dealers.
Calls to Wells’ West Palm office reached a disconnected number. The company and Bingham didn’t immediately return LinkedIn messages seeking comment. The Real Deal could not reach Joseph.
On Aug. 14, federal Judge Donald M. Middlebrooks in West Palm Beach granted the SEC’s emergency motion to freeze the assets of Wells, Bingham and Joseph, as well as requiring their sworn accountings and prohibiting them from destroying records. Middlebrooks also appointed Andrés Rivero as receiver over Wells and the 23 relief defendants
The SEC originally filed its complaint on Aug. 12, but it wasn’t unsealed until last week.
The case marks the latest allegation of massive real estate fraud in South Florida. In one of the biggest schemes to unravel in recent years, former Venezuelan government officials and a Swiss banker were sentenced for their various roles in an alleged $1.2 billion embezzlement from the country’s state-owned oil company. Some of the funds had been laundered through payment for a unit at Sunny Isles Beach’s Porsche Design Tower.
In the Wells case, $6.9 million was allegedly diverted to pay commissions to sales agents and, in a Ponzi aspect of the scheme, $10 million was allegedly diverted to pay interest due to investors and note redemptions, the SEC charges. Bingham and Joseph also allegedly used at least $1.8 million for personal expenses, including groceries, luxury cars, cash withdrawals and a $293,000 settlement of a separate lawsuit.
Last year, an entity tied to Wells paid nearly $2 million for a five-bedroom Boca Raton home at 930 Parkside Circle North, according to records. In August of last year, the entity transferred the home to Bingham for a nominal $10.
Wells, which ran its alleged scheme from 2020 to this year, gave its enterprise an air of legitimacy by touting the firm’s $450 million real estate portfolio and Bingham’s credentials as having built her own property holdings worth over $100 million. In reality, Wells’ portfolio spanned 34 properties valued at about $46 million at the time of their purchase, the SEC says.
Through a network of unregistered agents, Wells promised that its promissory notes investment platform, called “assets-to-income program,” will yield high returns in the form of 12 percent annual interest for 18-month to 28-month notes, the SEC alleges. Wells also promised that if investors forgo monthly interest payments, then they would get 99 percent interest at the end of the term for 36-month notes, according to the SEC. Many investors put in their retirement funds. But Wells’ properties in reality generated insufficient income to cover expenses and pay back investors, the SEC says.
In February, Wells and Bingham also were hit with a foreclosure lawsuit from lender Best Meridian over a $7.2 million loan on the Bank of America Financial Center at 3661 West Oakland Park Boulevard in Fort Lauderdale.
Wells’ marketing materials also failed to include another point, the SEC said. Joseph is a convicted felon who pleaded guilty in 2019 to one count of wire fraud for misappropriating $3 million while operating his company, Evergreen United Investments. Joseph was ordered to pay this amount as restitution, sentenced to 15 months in prison in 2019 and placed on supervised release in 2021, according to the SEC’s lawsuit.