- 1The SEC charged three people with running a $112M Ponzi scheme through November 2022.
- 2Defendants allegedly used outside loans, MCAs, new investor money and transfers between portfolio companies.
- 3Brands named include RadioShack, Linens 'N Things, Modell's, Stein Mart and Pier 1 Imports.
The Securities and Exchange Commission has charged the people behind RadioShack and several other defunct retail brands with running a $112 million Ponzi scheme. Taino Adrian Lopez, Alexander Farhang Mehr and Maya Rose Burkenroad were named in the complaint, which was filed this week.
What the SEC alleges
According to the SEC, none of the household-name brands the defendants acquired was generating profits, though investors were told otherwise so the group could raise capital. The agency says the scheme ran through November 2022.
To keep paying interest, dividends and maturing notes, the SEC alleges, the defendants relied on a mix of sources: loans from outside lenders, merchant cash advances, money from new and existing investors, and transfers from other portfolio companies.
Besides RadioShack, the brands the accused operated were Brahms, Linens 'N Things, Modell's, Stein Mart and Pier 1 Imports.
RadioShack's crypto detour
Retail Ecommerce Ventures acquired the RadioShack brand in 2020 and then pivoted toward cryptocurrency. The RadioShack account on X, then Twitter, became known for combative, attention-seeking posts, and the company said it was building a DeFi platform. A 2021 report covered the company's plans, in which it said RadioShack DeFi was aimed at the early majority and would lean on a brand recognized in more than 190 countries.
An inquiry about the platform at the time produced only a digital coupon for a boombox. The account stopped posting on November 17, 2022, the same month the SEC now says the alleged scheme ended.
The allegations have not been proven in court. The use of merchant cash advances as one of the funding sources makes the case a notable touchpoint for the small-business finance industry.
Source reporting: deBanked.
