Remember when Internet marketing “gurus” Tai Lopez and Alex Mehr bought Dressbarn, Pier 1 Imports, RadioShack, and the name brands of other bankrupt retailers through their investment company Retail Ecommerce Ventures? Pepperidge Farm remembers, and so does the Securities and Exchange Commission.
The SEC is now accusing Lopez and Mehr of running a $112M Ponzi scheme, using their acquired brands to defraud investors. Here's what happened…
REV claimed that its investment approach was “one of the best strategies you can invest in” and that unlike other businesses, its portfolio of brands was “on fire” and “cash flow strong.” They also promised investors that their funds would only be invested in the specified firm they were raising money to acquire.
However in actuality, REV's portfolio of brands generated a little revenue, but never any profits, so Lopez and Mehr had to look elsewhere for investor returns.
The SEC alleges:
“Consequently, in order to pay interest, dividends and maturing note payments, Defendants resorted to using a combination of loans from outside lenders, merchant cash advances, money raised from new and existing investors, and transfers from other portfolio companies to cover obligations. At least $5.9 million of the returns distributed to investors were, in reality, Ponzi-like payments funded by other investors.”
The SEC also says that Lopez and Mehr used at least $16M in investment funds for their own personal use. LOL, like renting Lamborghinis and mansions to film videos in?
The SEC also named REV's COO, Maya Burkenroad, in its lawsuit, who was pitched to investors as an experienced manager who had run multi-million dollar companies for a decade, but in reality, was Lopez's cousin who previously worked as his assistant.
Tai Lopez's defense is going to be, “Well I only skimmed and speed-read books on investment law to extract the key ideas quickly, so I didn't actually know that what we were doing was defrauding investors.”
(Come on, that's funny!)