Buyers of Radio Shack, Pier 1 brands accused of running $112M Ponzi scheme

Summary

A pair of e-commerce entrepreneurs who bought a number of well-known retail brands — including RadioShack, Modell's Sporting Goods and Pier 1 Imports — out of bankruptcy are accused of running a Ponzi scheme. The Securities and Exchange Commission on Monday accused Alex Mehr and Tai Lopez, founders of the Miami-based Retail Ecommerce Ventures (REV), of defrauding investors out of approximately $112 million.Through their holding company, Mehr and Lopez acquired distressed brick-and-mortar companies in order to turn them into successful, online-only brands. Dress Barn and Linens 'n Things were also among their acquisitions. REV acquired RadioShack in 2020, three years after the nearly century-old electronics chain filed for its second bankruptcy. RadioShack first filed for Chapter 11 protection in 2015. In 2023, Unicomer Group acquired RadioShack, and in 2024, relaunched it as an e-commerce platform. RadioShack's current owners are not named in the lawsuit.Modell's Sporting Goods filed for bankruptcy in March 2020, when it also announced it would be closing all of its stores. REV bought the Modell's brand name and assets in August 2020. Pier 1 Imports — which still exists as an online store — declared bankruptcy in early 2020. REV acquired its trademark name and assets later that same year. The SEC's suit alleges that between 2020 and 2022, Mehr and Lopez, "made material misrepresentations" to hundreds of investors about the bankrupt retailers they had acquired. For example, to entice individuals to invest in their acquisitions, they said their portfolio companies were "on fire" and that "cash flow is strong." They also told prospective backers that money raised for a company would only be invested in that specific firm. That proved not to be the case, according to the SEC's lawsuit, which was filed Monday in the U.S. District Court for the Southern District of Florida."Contrary to these representations, while some of the REV Retailer Brands generated revenue, none ge...