States Charge Operator with “Unregistered CD” Scam That Grossed $47 Million
By Tracey Longo

Four states have charged an unregistered broker with a $47 million scam involving the sale of “CD alternative” investments from 32 real estate development corporations he owned.

The alleged scam artist, Glenn C. Mueller, operated his nationwide operation out of Illinois for more than 40 years and has taken in millions from unsuspecting investors across the country, authorities said.

Mueller “has taken in at least $47 million of investor funds through unregistered promissory notes nationwide and additional funds through unregistered limited partnerships,” the Massachusetts Securities Division said in its charging documents today.

Massachusetts Secretary of the Commonwealth William F. Galvin said he brought charges against Mueller “over the sale of unregistered securities in real estate ventures to Massachusetts investors, totaling nearly $1 million.”

Similar complaints were also brought in New Hampshire, Illinois and New Jersey today.

“This case is a good example of the importance of checking that any investments you are considering are being sold by registered dealers or agents,” Galvin said.

Mueller and Northridge Holdings Ltd. have, for over 40 years, built up “a monumental and byzantine investment empire consisting of at least 32 interwoven real estate development corporations and limited partnerships,” the Massachusetts complaint said.

Mueller owns 100 percent of the stocks in Northridge, the lead property management company operating out of Illinois.

According to the complaint, the promissory notes, referred to by these companies as “CD Alternatives,” were not registered securities, nor were they insured by the Federal Deposit Insurance Corporation.

In one letter obtained by Massachusetts, Mueller told investors: “We also take in funds that are used to upgrade apartments. This allows for higher rents and increases the property value." He went on to promise that the "CD alternative" would yield between 3 percent and 6 percent per month.

By employing a team of “finders” to seek out investors in exchange for commissions, the complaint states that Mueller and Northridge acted as de facto broker-dealers, despite the fact that neither has ever been registered in any state or with the U.S. Securities and Exchange Commission.

Finders were paid commissions as high as $26,500 for inducing targets to invest in the alleged scheme, the Massachusetts complaint said.

Despite not being registered as a broker-dealer, Northridge actually offered investors brokerage accounts complete with money markets and IRAs, which investors could access on the Northridge website, authorities said.

Massachusetts residents have invested a combined total of $926,000 in this scheme and have not received interest or a return of their principal, Galvin said.

All four states are seeking a cease and desist order against Mueller and Northridge, an administrative fine and are asking that they pay investors all profits and restitution “to fairly compensate them for any and all losses.”