RadioShack and Pier 1 buyers accused of running $112M Ponzi scheme by SEC in Miami fraud case

The Securities and Change Fee (SEC) accuses the lads who’ve dressed bankrupt chains Radioshack, Modell’s Sporting Items and Pier 1 Import of operating a Ponzi scheme that buyers from tens of hundreds of thousands of {dollars} have purchased the lads.

A grievance filed a grievance with the American courtroom for the southern district of Florida on Tuesday, claims that the co-founders of Miami-based Retail-Ecmmerce Ventures, Alex Mehr and Tai Lopez, along with the Chief Working Officer Maya Burkenroad from the corporate, have taken about $ 112 million.

Between April 2020 to November 2022 they raised cash by promoting two kinds of investments. They bought unsecured notes that promised the return of a most of 25% per yr, and possession shares that, in line with the grievance, supplied month-to-month payouts of as much as 2%.

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A homeless man sleeps for a closed pier 1 -import retailer on Hollywood Boulevard on July 16, 2020 in Hollywood, California. (Frederic J. Brown / AFP by way of / getty photos)

In addition they claimed that the cash can be used to purchase struggling retail manufacturers and to finance actions, however the SEC claims that Mehr and Lopez have misled buyers about how nicely the businesses have been really doing.

The grievance talked about a minimum of one promotional video, publicly accessible on the web, the place Lopez talked about the REV strategy as ‘among the finest methods in which you’ll make investments’. The SEC additionally stated that she and Lopez buyers additional assured that whereas different corporations have been struggling, their portfolio corporations have been on hearth “and that” money circulate is robust “.

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A person walks previous a radio hack retailer within the Chelsea district, March 9, 2017, in New York Metropolis. (Drew Angerer / Getty Pictures)

They insured buyers that the collected funds for a particular portfolio firm can be used for that particular firm, and that Rev and the REV retailer manufacturers by no means paid a single investor, the grievance continued. Nonetheless, the SEC stated that though some REV retailer manufacturers generated earnings, none of them yielded a revenue.

So as to pay curiosity, dividends and ripening funds, Mehr and Lopez refuge to using a mixture of loans from exterior lenders, commerce contacts, collected cash from new and present buyers and transfers from different portfolio corporations to cowl obligations, the sec stated

A closed pier 1 -import retailer in Fairfax, Virginia, on Could 21, 2020. (Andrew Harrer / Bloomberg by way of / getty photos)

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Not less than $ 5.9 million of the returns distributed to buyers have been “ponzi-like funds financed by different buyers,” stated the grievance. Mehr and Lopez have been additionally accused of deepening round $ 16.1 million in investor funds for ‘their private use’.

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In complete, Rev and are associated corporations, together with Costume Barn, Linen ‘n Issues, Modell’s, Pier 1 and Radioshack, about $ 112 million picked up from buyers. After they have been in default, collectors took the manufacturers and bought them to a brand new firm, Omni Retail Enterprises, LLC.