Two brothers have been accused of operating a Ponzi scheme that resulted in more than 80 investors being defrauded to fuel what the U.S. Securities and Exchange Commission alleges were the men’s “lavish lifestyles” of high-end cars and expensive houses.
Tanner S. Adam, 38, of Miami, and Jonathan L. Adam, 42, of Angelton, Texas, were sued Monday by the SEC in U.S. District Court in Atlanta. The brothers are accused of offering and selling misrepresented cryptocurrency-related securities, the lawsuit says. The investments were allegedly sold throughout the country, including in Georgia, to raise at least $61.5 million between January 2023 and June 2024.
The lawsuit alleges at least $53.9 million of those funds were either misappropriated on personal expenses — including condos, houses, cars and recreational vehicles — or were used to pay interest, finders fees to people who connected them with investors and other prior investors.
“As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles and million-dollar homes,” Justin Jeffries of SEC’s Atlanta Regional Office said in a news release.
The Adam brothers did not have listed legal representation as of Tuesday afternoon. Neither Tanner Adam nor Jonathan Adam could be immediately reached for comment.
Jonathan Adam was convicted in 2004 in Kansas on three felony securities law violations, according to the SEC. He was sentenced to 50 months in prison and was ordered to pay more than $314,000 in restitution.
Through two Wyoming-based companies, GCZ Global LLC and Triten Financial Group LLC, the Adam brothers offered investors automated crypto-trading products that promised up to 13.5% monthly investment returns, according to the complaint.
The SEC alleges the brothers falsely told investors Jonathan Adam had created a “bot” that operates on a crypto asset trading platform to identify arbitrage trading opportunities, which is when an asset is sold across markets at different prices to make a quick profit. The investors were allegedly told their funds would go into a lending pool that would fund “flash loans” to complete these trades. Jonathan Adam is also accused of hiding his prior felony convictions from investors.
The SEC alleges the lending pool and “bot” tool did not exist. This allowed the brothers to carry out an alleged Ponzi scheme, the SEC said, where new investor funds are used to pay off prior investors while creating the illusion of a profitable venture.
With the raised funds, Tanner Adam is accused of making a down payment and installments to build a $30 million condo in Miami, while Jonathan Adam allegedly used at least $480,000 to purchase cars, trucks and recreational vehicles.
This latest SEC lawsuit comes on the heels of an SEC complaint filed earlier this month against an Alpharetta company, Drive Planning, and its founder and chief executive, Russell Todd Burkhalter, who are accused of operating a $300 million Ponzi scheme. Drive allegedly sold fraudulent real estate loans as investments.
In the Adam brothers’ case, the SEC said it obtained emergency asset freezes against the men and their companies. The SEC said the agency is seeking permanent injunctions against the defendants alongside the repayment of investors and other civil penalties.
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