SEC Charges Real Estate Ponzi Scheme

Risky Business... "What have you heard? ... I want to invest. But people think it's too good to be true, and maybe even a Ponzi scheme."

That's a quote from an e-mail that I received last month from a person who (presumably) Googled "Pinnacle Development Partners, LLC" and found a link to my Dispatch Can You Earn a 25% Profit in 45 Days? (May 16, 2006).

No. It is not possible. Shouldn't any prudent investor already know that?

And now the SEC has sued Pinnacle Development Partners, LLC, in Atlanta for selling "fraudulently unregistered securities." (Atlanta Journal-Constitution, October 12, 2006, free registration required).

"The suit cited a property at 1459 East Mercer Ave. in College Park, purchased in February by Pinnacle for $500,000. The property was sold in March for $600,000 to 1459 East Mercer Development Partners, then the same day to Village at East Mercer Development Partners for $1.55 million. Both partnerships are operated by Pinnacle, the suit says."

Hmm. Sounds like a Ponzi scheme to me. Read more about the Pinnacle fallout at BiggerPockets. You'll find dozens of angry posts from disappointed Pinnacle investors, as enthusiasm turns to heartbreak.

Here's Charles Ponzi, the swindler himself, describing the enthusiastic crowd outside his Boston office in July 1920 waiting to invest in his scheme. "The air was tense with ill-suppressed excitement. Hope and greed could be read in everybody's countenance, [or] guessed from the wads of money nervously clutched and waved by thousands of outstretched fists." (Ponzi's Scheme, Mitchell Zuckoff)

Yet, just a month later Ponzi was arrested. Isn't it amazing how history repeats itself?

-- Peter Pike