When investors raised concerns about the impact of the COVID-19 pandemic on their investments, Wallach allegedly falsely told investors that they have nothing to worry about. He told them that PFI was financially secure because it had a huge amount of cash reserves.
In reality, Wallach knew that PFI was a zombie company. It does not have sufficient reserves to meet obligations, had no lines of credit and all of its properties had outstanding debts.
Additionally, the SEC alleged that Wallach used investors’ funds for his personal benefits such as purchasing a vacation home, luxury cars, and coin collection as well as paying for private school tuition.
Wallach admitted his role in the fraudulent Ponzi scheme
The fraudulent Ponzi scheme began to unravel after the death of PFI’s founder on May 6, 2020. A review of the company’s financial records raised concerns about the short-term solvency of PFI and its related entities. Wallach admitted to his role in operating the fraudulent Ponzi scheme including his misuse of investors’ funds.
