SEC v. NEIL BURKHOLZ, FRANK BIANCO, PALM FINANCIAL MANAGEMENT, LLC, and SHORE MANAGEMENT SYSTEMS, LLC Case No.  19-CV-24713-KMW (S.D. Fl.)

On November 4, 2019, the Commission filed a complaint (the “Complaint”) against Neil Burkholz (“Burkholz”), Frank Bianco (“Bianco”), Palm Financial Management, LLC (“Palm Mgmt.”), and Shore Management Systems, LLC (“Shore Mgmt.”) (collectively the “Defendants”), and Relief Defendants Rhoda Burkholz (“R. Burkholz”) and Suzanne Bianco (“S. Bianco”) (collectively, the “Relief Defendants”). The Complaint alleged that Burkholz and Bianco knowingly operated a fraudulent investment scheme that, since at least 2014, raised more than $1.49 million from at least 30 investors, many of whom were senior citizens. To solicit and retain investors, Defendants falsely represented that they were advisers and fiduciaries who would profitably manage investor assets. In reality, Bianco and Burkholz, through at least two investment management companies (Palm Mgmt. and Shore Mgmt.), knowingly misappropriated investor assets by diverting them to pay other investors and by transferring funds to themselves and their spouses. The Defendants invested less than half of the funds that they solicited, investments that resulted in near-total losses caused by risky options trading. To conceal their misappropriation and trading losses, the Defendants delivered false reports to investors showing that their assets were fully and profitably invested. In these written and oral communications, the Defendants mischaracterized their funds’ performance (typically claiming massive weekly, monthly, and yearly positive returns) and omitted that most investor funds were either misappropriated or lost. See Complaint.

On February 24, 2020, the Court entered a Final Judgment against Palm Mgmt. and Shore Mgmt. The Court ordered Palm Mgmt. to pay $556,231.47 in disgorgement, plus $67,889.61 in prejudgment interest for a total of $624,121.08. The Court ordered Shore Mgmt. to pay $534,418.48 in disgorgement, plus $65,227.27 in prejudgment interest, for a total of $599,645.75. On May 11, 2020, the Court entered Final Judgments against Burkholz and S. Bianco. Additionally, Bianco consented to entry of a Final Judgment without admitting or denying the allegations of the Complaint. The Court ordered Burkholz to pay $373,651.00 in disgorgement, plus $55,928.00 in prejudgment interest, and a civil penalty of $920,825.00, for a total for $1,350,404. The Court ordered Bianco to pay $386,022.29 in disgorgement, prejudgment interest of $57,974.93, and a civil penalty in the amount of $920,825, for a total of $1,364,822.22. The Court ordered S. Bianco to be joint and severally liable with Defendant Bianco for disgorgement of $42,048.00 and prejudgment interest of $7,703.86. On June 10, 2020, the Court issued a Final Judgment against R. Burkholz. The Court ordered R. Burkholz to be jointly and severally liable with Burkholz for $231,418.64 of the disgorgement and $27,402.62 of the prejudgment interest. The Commission was ordered to hold all funds, together with interest and income earned thereon (collectively, the “Fair Fund”), pending further order of the Court.

The Defendants have paid a total of $405,836.55 in disgorgement, prejudgment interest, and penalties to the Commission and any future funds paid pursuant to the Defendants’ judgments will be added to the Fair Fund.

On January 17, 2024, the Court entered an order that established a Fair Fund for the disgorgement, prejudgment interest, and penalties paid, and any future funds paid by the Defendants and Relief Defendants. The order further appointed Miller Kaplan Arase LLP as the Tax Administrator to fulfill the tax obligations of the Fair Fund, appointed Adriene Mixon, a Commission employee, as the Distribution Agent. Additionally, the Order further approved the Commission’s proposed plan of distribution (the “Plan”).  See the Court’s Order and Plan.

The Plan provides that the distribution of the Fair Fund shall be made to investors based on their losses due to investments in Palm Financial Fund LLC and/or Shore Partners LLC between January 2014 and November 2019.

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov