Hard as this may be to believe, Michigan for nearly 40 years elected one of the most respected and feared state attorneys general in the country. In an era before hyper-partisan law enforcement became the norm, Frank J. Kelley focused less on political signaling and more on roughing up big, powerful corporations.
Really big and powerful corporations — like tobacco companies.
President Bill Clinton acknowledged Kelley as a leading force behind the Tobacco Master Settlement Agreement, which resulted in most states receiving large, multi-year payments to compensate them for the costs of tobacco-related illnesses. Kelley also was responsible for scuttling Consumers Power’s plans to pass on to consumers the cost overruns of its nuclear power plant. He became known as “The People’s Lawyer” because of his pioneering consumer protection efforts.
When Kelley died in March 2021, Michigan Gov. Gretchen Whitmer ordered the lowering of U.S. and Michigan flags within the State Capitol Complex and on all public buildings and grounds to honor his life and service.
My introduction to Kelley came when his office arrested a slick Ponzi scheme scamster who sold legions of Michigan residents mortgage loans that were quietly assigned to multiple investors. The loans carried interest rates well above the industry average, which is why they were so easy to sell. Television commercials featuring actor Lloyd Bridges — the father of actor Jeff Bridges — gave the scamster’s A.J. Obie business a patina of legitimacy.
New to Michigan and to the Detroit News banking beat, I expected Kelley to thunder about how he would bring the scamster to justice for bilking the good citizens of Michigan.
Instead, he began his news conference with a simple cautionary line:
“If something sounds too good to be true, it probably is.”
I immediately recalled Kelley’s words upon reading about Todd Burkhalter, the founder and chief executive officer of Georgia-based Drive Planning LLC, who has pleaded guilty to wire fraud for masterminding a $380 million Ponzi scheme — the largest in Georgia’s history. The scheme allowed Burkhalter to live lavishly while thousands of investors lost hundreds of millions of dollars.
One of Burkhalter’s investment funds guaranteed a 10% return every three months. Ten percent per quarter compounds to roughly 46% annually. Even Warren Buffett’s investors have never expected the Oracle of Omaha to repeatedly generate that kind of performance quarter after quarter. Buffett has long cautioned that markets are volatile and unpredictable and that unusually smooth or “guaranteed” returns should set off alarm bells, not admiration.
As the saying goes, there’s a sucker born every minute — and Wall Street has become very good at identifying which ones have the most money. Burkhalter corralled thousands of them.
“Todd Burkhalter built a massive Ponzi scheme on lies, exploiting trust to steal hundreds of millions of dollars from more than 2,000 victims while funding an extravagant lifestyle,” Paul Brown, Special Agent in Charge of FBI Atlanta, said in a Department of Justice release announcing Burkhalter’s guilty plea. “The FBI will continue to aggressively pursue those who weaponize fraud and deception against investors, and we are committed to holding them fully accountable and seeking justice for every victim harmed.”
Brown spoke exactly how I had expected Frank Kelley to sound decades earlier when he arrested Michigan’s Ponzi scamster.
Investors getting scammed is something I know quite a bit about. When I owned a New York-based PR firm, I represented one of the most prominent securities arbitration attorneys in the country. Successful securities arbitration attorneys must possess unusual talent because they work on contingency — meaning they charge nothing upfront and collect only a portion of the settlements they secure.
My client honed his expertise working at a controversial Wall Street firm, and he knew every trick in the book money managers and investment advisors used to separate successful people — particularly doctors and small business owners — from their money.
Underscoring just how far ahead of the curve he was, my client pursued cases involving subprime mortgage funds even before the 2008 financial collapse that those instruments helped trigger.
I once asked my client for advice on how investors could best avoid getting scammed. He said one of the biggest warning signs was a money manager who lived high off the hog — flying on private planes, driving exotic cars, and dating models.
Sure enough, Burkhalter fit the profile. According to the DOJ, he spent approximately:
- $2 million to purchase a yacht;
- $2.1 million toward a luxury condo in Cabo San Lucas, Mexico;
- $800,000 on multiple luxury vehicles, including a 2020 Prevost Marathon motorcoach and two 2024 Land Rovers;
- Millions on luxury travel, including chartering private jets; and
- $320,000 on clothing, jewelry, and beauty treatments.
For all the FBI’s tough talk about holding Ponzi scheme scamsters “fully accountable” and “seeking justice for every victim harmed,” Burkhalter was permitted to continue soliciting investor funds even while under federal investigation. Even more alarming, Ponzi schemes have been steadily rising in recent years, making it difficult for the SEC and FBI to argue that their deterrence efforts have been particularly effective.
According to the website Ponzitracker, Ponzi scheme discoveries hit a seven-year high in 2023, continuing a sharp increase from 2022. The 66 Ponzi schemes uncovered in 2023 were nearly double the number discovered in 2021 and nearly 20% higher than in 2022. While Ponzitracker has not yet released figures for 2024 or 2025, there is little reason to believe the trend has reversed. Indeed, Georgia regulators are duking it out who is responsible for investigating another alleged $140 million Ponzi scheme in the state.
The Federal Trade Commission reported that losses to fraud jumped to $12.5 billion in 2024, with investment scams accounting for the largest share — $5.7 billion. Investments where retail investors get burned are often perfectly legal: so-called principal-protected structured notes, collateralized debt obligations, leveraged and inverse ETFs, and SPACs, among others.
Over the years, I’ve heard money managers at major brokerage firms refer to retail investors as “dumb money.” I also learned that Wall Street brokers view physicians and small business owners as especially ripe for the picking — not because they lack intelligence, but because they tend to mistake complexity for sophistication.
On Wall Street, there’s an old saying that neatly captures the dynamic: Bulls make money. Bears make money. Pigs get slaughtered.
It’s not a moral judgment. It’s a warning about greed, leverage, and believing you’re entitled to outsized returns without commensurate risk.
Another securities arbitration attorney once told me he wished investor arbitration proceedings were open to the public. High-net-worth clients who get burned, he said, are shocked by how quickly lawyers for big brokerage firms turn on them after years of being wined, dined, and coddled. The clients are made to feel disingenuous for claiming they didn’t understand the investments their brokers placed them in — despite being smart enough to pass medical school or run successful businesses.
One must also appreciate the pressure on big banks to squeeze their wealthiest customers. Over the past decade, the largest banks have spent a combined $500 billion buying back their own stock to boost share prices and justify ever-higher CEO compensation. The stock manipulation is perfectly legal, but it is a treadmill that never stops. In all the bank earnings calls I’ve listened to over the years, I can’t recall a single CEO boasting about how much money they made for their clients.
That’s one reason I’m more comfortable dealing with Fidelity, which is privately owned and controlled by the Johnson family. CEO Abigail Johnson, whose net worth is estimated at roughly $36 billion, keeps a notably low profile. I perceive her as an ethical brainiac — an executive who seems more comfortable reviewing spreadsheets than hobnobbing with business elites, Hollywood celebrities, or talking to the media. And instead of spending tens of billions on stock buybacks, Fidelity funds and operates what has become America’s largest charity.
As for Michigan’s former attorney general Frank Kelley, despite his refusal to coddle victims at the news conference I attended early in my Detroit News career, the Ponzi scheme scammer his office charged was tried, convicted, and jailed within months.
R.I.P. Frank Kelley. On behalf of increasingly aggrieved consumers in Michigan and across the country, your leadership is missed more than ever.