Owners of Radio Shack, Pier 1 Imports and other brands accused by SEC of operating $112 million Ponzi scheme

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Owners of Radio Shack, Pier 1 Imports and other brands accused by SEC of operating 2 million Ponzi scheme — Owners of Radio Shack Pier 1 Imports and other brands.jpg

A dynamic duo of e-commerce entrepreneurs, Alex Mehr and Tai Lopez, who made headlines for acquiring struggling retail giants like Pier 1 Imports, RadioShack, and Modell’s Sporting Goods, are now facing allegations of running a $112 million Ponzi scheme, as per a recent lawsuit filed by the US Securities and Exchange Commission.

Mehr and Lopez, the founders of Miami-based Retail Ecommerce Ventures (REV), were known for their strategy of reviving bankrupt brick-and-mortar brands by transitioning them into online-only businesses. Their portfolio also includes Dress Barn, Modell’s Sporting Goods, and Stein Mart, among others.

The partnership between Mehr, an Iranian-born immigrant with a background in risk and safety management at NASA, and Lopez, a social media influencer and self-help author, was formed during the retail crisis of 2019 when thousands of stores were shutting down across the country.

In a bold move, REV acquired RadioShack in 2020, following the chain’s second bankruptcy. They also added Modell’s assets and Pier 1 Imports to their roster through additional acquisitions of bankrupt companies.

However, according to the SEC lawsuit, Mehr and Lopez allegedly misled hundreds of investors between 2020 and 2022 by making false claims about the performance of their brands, falsely stating that the companies were thriving when they were actually struggling.

Furthermore, the SEC accused the pair of making deceptive promises to investors regarding the use of funds raised, claiming that the money would solely be allocated to the specific company in question. In reality, the lawsuit alleges that the duo used a combination of loans, cash advances, and funds from new investors to meet financial obligations, rather than generating profits through the businesses.

The SEC also claimed that at least $5.9 million in return payments to investors were actually Ponzi-like payments, sourced from other investors rather than actual company profits. Additionally, Mehr and Lopez were accused of diverting $16.1 million for personal use.

As of now, neither Lopez nor Mehr have responded to requests for comment on the allegations made in the lawsuit. The case continues to unfold as authorities investigate the alleged Ponzi scheme involving the high-profile entrepreneurs.