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.”