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SEC Sues Fraudsters: $112 Million Rev Ponzi Scheme Revealed!
US SEC Sues Founder of Retail Ecommerce Ventures Over Ponzi Scheme and Fraudulent Securities Offerings – $112 Million Affected.
SEC Sues Fraudsters: $112 Million Rev Ponzi Scheme Revealed!
The US Securities and Exchange Commission (SEC) has filed a lawsuit against three people accused of engaging in fraudulent securities offerings and misusing investor funds. The defendants are Taino Lopez and Alexander Mehr, co-founders of Retail Ecommerce Ventures LLC (REV), and COO Maya Burkenroad. According to the SEC, the three allegedly raised approximately $112 million through allegedly fraudulent sales of securities from eight REV portfolio companies from April 2020 to November 2022.
The affected companies include well-known brands such as Brahms, Dress Barn, Franklin Mint, Linens 'N Things, Modell's Sporting Goods Online, Pier 1 Imports, RadioShack and Stein Mart. The SEC found that the defendants sold unsecured bonds with promised annual returns of up to 25% and membership units that offered monthly preferred dividends of up to 2.083%.
Misleading information and Ponzi-like payments
A central allegation by the SEC is that the offerings conveyed materially false information about the success and profitability of the business model and the security of the investments. Although some of REV's retail brands generated revenue, it was not profitable.
The SEC's investigation found that at least $5.9 million paid out to investors were Ponzi-like payments funded with money from other investors. To maintain the appearance of a successful business, the defendants paid promised returns to existing investors using new funds or funds from other REV retail brands. The SEC sees this tactic as a classic case of fraud.
Abuse of investor funds
Additionally, the defendants were accused of misusing approximately $16.1 million in investor funds for personal purposes. This shows the extent of the fraudulent activities carried out by López and Mehr and Burkenroad. The case highlights the dark side of e-commerce and the need for investors to be skeptical and conduct thorough research before investing their funds.
The SEC has therefore addressed the serious situation to protect investors and restore confidence in the market. The legal action against these three individuals is part of a broader approach to combat fraudulent activity in the financial sector.