Cotton Patch Cafe CEO and former TGI Fridays head Brandon Coleman and Debtwire government editor John Bringardner converse to Fox Information Digital about America’s informal eating ‘heydays’ being over.
The Securities and Change Fee (SEC) is accusing the lads who purchased bankrupt chains RadioShack, Modell’s Sporting Items, and Pier 1 Imports of operating a Ponzi scheme that duped traders out of tens of hundreds of thousands of {dollars}.
A grievance filed within the U.S. District Court docket for the Southern District of Florida on Tuesday, alleges the co-founders of Miami-based Retail Ecommerce Ventures, Alex Mehr and Tai Lopez, along with the corporate’s Chief Working Officer Maya Burkenroad, raised roughly $112 million mixed from tons of of U.S. traders by promoting investments in eight corporations they created and managed underneath Retail Ecommerce Ventures.
Between April 2020 by way of Nov. 2022, they raised cash by promoting two varieties of investments. They offered unsecured notes that promised returns of as much as 25% a 12 months, and possession shares that supplied month-to-month payouts as excessive as 2%, in response to the grievance.
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A homeless man sleeps in entrance of a closed Pier 1 Imports retailer on Hollywood Boulevard on July 16, 2020, in Hollywood, California. (Frederic J. Brown/AFP by way of / Getty Photographs)
Additionally they claimed that the cash could be used to purchase struggling retail manufacturers and to fund operations, however the SEC alleges Mehr and Lopez misled traders about how properly the companies had been really doing.
The grievance cited at the least one promotional video, publicly accessible on the web, the place Lopez touted REV’s strategy as “top-of-the-line methods you’ll be able to spend money on.” The SEC additionally mentioned that she and Lopez additional assured traders that whereas different companies had been struggling, their portfolio corporations had been “on fireplace” and that “money circulate is powerful.”
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A person walks previous a RadioShack storefront within the Chelsea neighborhood, March 9, 2017, in New York Metropolis. (Drew Angerer / Getty Photographs)
They assured traders that funds raised for a particular portfolio firm could be used for that particular firm, and that REV and the REV Retailer Manufacturers have by no means did not pay a single investor, the grievance continued. Nonetheless, the SEC mentioned that whereas a few of the REV Retailer Manufacturers generated income, none of them generated any income.
To pay curiosity, dividends and maturing word funds, Mehr and Lopez resorted to utilizing a mix of loans from outdoors lenders, service provider money advances, cash raised from new and present traders, and transfers from different portfolio corporations to cowl obligations, the SEC mentioned.
A closed Pier 1 Imports retailer in Fairfax, Virginia, on Might 21, 2020. (Andrew Harrer/Bloomberg by way of / Getty Photographs)
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At the least $5.9 million of the returns distributed to traders had been “Ponzi-like funds funded by different traders,” the grievance mentioned. Mehr and Lopez had been additionally accused of misappropriating roughly $16.1 million in investor funds for “their private use.”
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In complete, REV and its associated corporations, together with Costume Barn, Linen ‘N Issues, Modell’s, Pier 1 and RadioShack, raised about $112 million from traders. After they defaulted, collectors took the manufacturers and offered them off to a brand new firm, Omni Retail Enterprises, LLC.