Reviving RadioShack Online Turned Into Ponzi Scheme, SEC Claims

(Bloomberg) — A company that snatched up distressed brick-and-mortar brands including RadioShack and Pier 1 Imports and promised investors big returns in a pivot to e-commerce operated as a Ponzi-like scheme, the US Securities and Exchange Commission alleged.

When the pandemic sparked a wave of retail bankruptcies, Retail Ecommerce Ventures picked up a slew of iconic brands on the cheap, with the aim to revive them as online-first businesses. Its portfolio also includes Dress Barn, Modell’s Sporting Goods and Stein Mart.

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To attract investors, REV bragged in promotional videos that its portfolio companies were “on fire,” the regulator alleged in a lawsuit filed Monday in federal court in the Southern District of Florida.

In reality, none of the ventures produced profits and co-founders Taino Lopez and Alexander Mehr and chief operating officer Maya Burkenroad kept investors in the dark, the SEC said. The firm resorted to loans from outside lenders, cash advances, and funds from new and existing investors to cover shortfalls, the SEC alleged.

The regulator accused the firm of raising $112 million from hundreds of investors through fraudulent offerings. About $5.9 million distributed to investors were Ponzi-like payments, according to the agency.

Lopez and Mehr, whom the SEC also accused of diverting about $16.1 million for themselves, didn’t immediately respond to requests for comment.

The firm described Burkenroad, Lopez’s cousin, as having more than a decade of experience managing multimillion-dollar companies, but her previous roles included working as a substitute preschool teacher and radio station promoter, the SEC said. Burkenroad didn’t immediately respond to a request for comment.

The SEC seeks civil penalties, a return of ill-gotten gains and a court order barring the defendants from serving as officers or directors in other companies.

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