SEC: RadioShack Revival Was a $112M Ponzi Scheme

Two men behind a company known for buying up bankrupt retail brands like RadioShack, Pier 1 Imports, and Modell's Sporting Goods now face accusations of orchestrating a $112 million Ponzi scheme. In a lawsuit filed Monday in Florida, the Securities and Exchange Commission alleges that Alex Mehr and Tai Lopez, founders of Miami-based Retail Ecommerce Ventures (REV), misled hundreds of investors while reviving bankrupt brick-and-mortar retailers as online ventures, exaggerating the health of their portfolio companies and promising that funds raised for each acquisition would remain earmarked for that specific business when that wasn't the case, CBS News reports.

The complaint alleges that none of the acquired companies—Dressbarn, Linens 'N Things, and Stein Mart among them—turned a profit. Instead, the lawsuit claims, the duo shuffled funds between companies and used outsider lender loans, cash advances, and new investments to keep up with their financial obligations. The SEC contends that roughly $5.9 million of investor returns were actually paid using money from other investors, rather than from genuine business earnings—a classic hallmark of a Ponzi scheme. On top of this, the complaint accuses Mehr and Lopez of diverting $16 million of investor money for personal use.

The complaint also names REV's chief operating officer, Maya Burkenroad, a cousin of Lopez and a former substitute preschool teacher who was falsely touted as having a decade of experience managing major companies, per Bloomberg. She's likewise accused of deceiving investors.