Internet marketer Tai Lopez bought RadioShack. Now hes being sued for using it in a Ponzi scheme.
RadioShack. Modell's Sporting Goods. Pier 1 Imports. Dress Barn. Linens 'n Things.
What do they all have in common? These once well-known brick-and-mortar retail brands eventually hit hard times and were then acquired by Retail Ecommerce Ventures (REV), run by Tai Lopez and Alex Mehr.
Now, the Securities and Exchange Commission (SEC) is accusing Lopez and Mehr of running a $112 million Ponzi scheme, using these brands in order to defraud investors.
“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,” reads the SEC's lawsuit. Lopez and Mehr first began acquiring struggling retail brand names in 2020. Between 2020 and 2022, Lopez and Mehr "made material misrepresentations" in order to raise money from hundreds of investors.
According to the SEC, REV claimed that its approach was "one of the best strategies you can invest in." The company also told investors that unlike other businesses, its portfolio of brands was "on fire" and "cash flow strong." In addition, REV promised investors that their funds would only be invested in the specified firm.
In reality, according to the SEC, while some of REV's portfolio of brands generated some revenue, none generated any profits.
"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," the SEC's complaint alleges.
"At least $5.9 million of the returns distributed to investors were, in reality, Ponzi-like payments funded by other investors,” says the SEC.
The SEC also says that Lopez and Mehr used at least $16 million in investment funds for their own personal use.
Mashable previously covered Lopez's acquisition of RadioShack after the company started posting viral "edgy" tweets on the social media platform then known as Twitter. Under Lopez's REV, RadioShack attempted to pivot to a cryptocurrency platform in 2022 while also setting up an ecommerce shop using the brand name.
Lopez should be well-known among YouTubers as the internet marketer who once filled the platform with video ads like "Here in My Garage," which features Lopez showing off his Lamborghini, in order to promote his "get rich quick" schemes.
The SEC also names REV's Chief Operating Officer, Maya Burkenroad, in its lawsuit. Burkenroad was pitched to investors as an "experienced" manager who had run multi-million dollar companies for 10 years. In reality, she is Lopez's cousin who previously worked as his assistant.
