Enforcement News: Company That Purchases Distressed Retail Companies Charged With Conducting Fraudulent Securities Offerings, Misusing Investor Funds, and Making Ponzi-Like Payments to Investors
Print Article- Posted on: Oct 5 2025
By: Jeffrey M. Haber
On September 25, 2025, the Securities and Exchange Commission (“SEC”) announced (here) that it charged the co-founders of Retail Ecommerce Ventures LLC (“REV”), and REV’s Chief Operating Officer (collectively, “Defendants”), with conducting a series of fraudulent securities offerings, misusing investor funds, and making Ponzi-like payments to investors.
According to the SEC’s complaint, REV’s primary business was purchasing distressed retail companies with name brand recognition and converting them into e-commerce only businesses, and serving as the holding company and manager of the REV retailer brands. From approximately April 2020 through November 2022, Defendants raised approximately $112 million from hundreds of investors through fraudulent offerings involving eight REV portfolio companies: Brahms LLC; Dress Barn Online, Inc.; Franklin Mint Online, LLC; Linens ‘N Things Online, Inc.; Modell’s Sporting Goods Online, Inc.; Pier 1 Imports Online, Inc.; RadioShack Online, LLC; and Stein Mart Online, Inc. (collectively, the “REV Retailer Brands”).
In the complaint, the SEC alleged that Defendants sold securities in the form of unsecured notes promising up to 25% annualized returns, as well as equity (membership units) with a monthly preferential dividend as high as 2.083%. The purported purpose of the offerings was to raise capital to acquire the predecessor of and raise additional operating capital for each particular REV Retailer Brand.
According to the SEC, the co-founder defendants made material misstatements in connection with these offerings about the success and profitability of REV’s business model and the REV Retailer Brands, as well as the safety of investors’ investments. The SEC further alleged that Defendants transferred at least $5.9 million in investor proceeds directly between portfolio companies, contrary to the written and oral representations made to investors about the use of proceeds; that at least $5.9 million of the returns distributed to investors were, in reality, Ponzi-like payments funded by other investors; and that defendants misappropriated approximately $16.1 million in investor funds for the co-founder defendants’ personal use.
The SEC filed its complaint in the U.S. District Court for the Southern District of Florida.[1] The SEC charged the co-founder defendants with violations of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. The SEC also charged a company officer with violations of Sections 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) thereunder. Finally, the SEC charged the same defendant with aiding and abetting the co-founder defendants’ violations of Section 17(a)(2) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder. The SEC seeks permanent injunctions, civil penalties, and officer-and-director bars as to each defendant. In addition, the SEC seeks disgorgement and prejudgment interest as to the co-founder defendants.
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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.
[1] Securities and Exchange Commission v. Lopez, et al., Case 1:25-cv-24356 (S.D. Fla.).
Tagged with: Ponzi Scheme, Regulatory Defense and Investigations, SEC Enforcement Actions, Securities, Securities and Exchange Commission, Securities Fraud
