Entrepreneurs Accused of Ponzi Scheme Around Reviving Retailers

Two entrepreneurs, who purchased well-known brands such as RadioShack and Pier 1 Imports, are accused of running a Ponzi scheme.

The Securities and Exchange Commission (SEC) filed a complaint in a Florida federal court on Tuesday, Sept. 22 against Alex Mehr and Taino Lopez, accusing the co-founders of Retail Ecommerce Ventures of defrauding investors out of around $112 million between 2020 and 2022, CBS News reported.

“REV’s primary business was identifying distressed companies with name brand recognition, raising funds from investors in order to purchase the brand’s assets, and converting them into successful -e-commerce-only businesses,” according to a federal complaint obtained by PEOPLE.

Some of the companies they acquired also included Modell’s Sporting Goods, Dress Barn and Linens ‘n Things.

The complaint alleges that Mehr and Lopez, “made material misrepresentations” to attract investors, touting “REV’s approach as ‘one of the best strategies you can invest in.’ Defendants further assured investors that while other businesses may be struggling, their portfolio companies were ‘on fire’ and that ‘cash flow is strong.’ ”

According to the SEC, none of their portfolio companies generated any profits.

As a result, the complaint alleged that in order to cover shortfalls, Mehr and Lopez “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.”

The SEC claims that “at least $5.9 million of the returns distributed to investors were, in reality, Ponzi-like payments funded by other investors.”

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The complaint also alleged that the two men took $16.1 million in investor funds “which was diverted for Defendants Lopez’s and Mehr’s personal use.”

Also named in the complaint is REV’s Chief Operating Officer, Maya Burkenroad.

The SEC is seeking civil monetary penalties, disgorgement of ill-gotten gains and barring them from acting as an officer or director in other companies.

Lopez, Mehr and Burkenroad could not be reached for comment.