The Rise of Ponzi Schemes in the Digital Age: A Case Study on the “Cash Flow King”

Investment scams are as old as the financial markets themselves, but the digital age has given fraudsters new tools to deceive and defraud. The recent case of Matt Motil, an Ohio podcast host accused by the U.S. Securities and Exchange Commission (SEC) of running an $11 million Ponzi scheme, is a cautionary tale. This article delves into the details of the case, and explores the broader implications for investors.

The Allure of the “Cash Flow King”

Matt Motil branded himself as the “Cash Flow King,” promising to help investors make high returns from rental real estate investments. Using social media and his podcast, he built a facade of success that attracted a diverse group of over 50 investors, from cancer researchers to active-duty military officers.

Motil issued “promissory notes” to these investors that were supposedly fully collateralized by first mortgages on homes across Ohio. He convinced investors that these were low-risk, high-return notes, but according to the SEC, Motil didn’t secure first lien positions as he claimed.

The complaint against Motil alleges that he used proceeds from selling promissory notes to make payments to earlier investors, a type of scam known as a “Ponzi scheme.” He is also accused of forging signatures and misusing a notary’s seal, among other things.

What Investors Need to Know

This case highlights the need for investors to conduct thorough due diligence before parting with their hard-earned money. It is likely that many investors trusted Motil due to his large following and self-proclaimed success as an investor.

However, the SEC complaint suggests that this appearance may have been based at least in part on misrepresentations or even outright lies by Motil. Unfortunately, social media makes it easier than ever for fraudsters to create an unrealistic image that can be used to influence investors.

Crucial due diligence methods include performing a background check on anyone asking you for money, as well as having a trusted third party like an accountant, lawyer or financial advisor review the opportunity and provide their professional opinion.

What You Can Do If You Suspect Fraud

If you suspect you’ve fallen victim to an investment scam, it’s crucial to consult with legal experts who specialize in these matters. Girard Bengali, APC, is one of a select group of law firms in the nation that addresses all types of FINRA, securities and investment law matters, and we can help you navigate the complex legal landscape related to investment fraud.

We have a long track record of securing significant compensation for investors who have suffered financial losses due to deceptive investment practices. Contact Girard Bengali, APC, today to schedule a free consultation and learn about your options.