EquiAlt LLC, a private real estate firm based in Florida is facing a lawsuit filed by the Securities and Exchange Commission (SEC) alleging that it engaged in a fraudulent unregistered securities offering.
The SEC also included the real estate firm’s CEO Brian Davidson and Managing Director Barry Rybicki, and the entities they control as defendants.
The defendants violated the antifraud and securities registrations provisions as well as the aiding and abetting of the broker-dealer registration provisions of the federal securities laws, according to the Commission.
A federal judge in the U.S. District Court for the Middle District of Florida granted the request of the SEC for emergency relief including an asset freeze and a temporary restraining order against the defendants.
The judge also issued an order requiring an accounting against EquiAlt, Davison, Rybicki and prohibiting them from destroying documents.
SEC alleges that EquiAlt defrauded over a thousand investors
In the lawsuit, the federal securities regulator alleged that EquiAlt defrauded at least 1,100 investors and raised more than $170 million from them. Many of the victims invested their retirement funds.
According to the SEC, EquiAlt Davison, Rybicki misrepresented the real estate firm’s investment strategy to attract investors. They also made false claims about the financial conditions of the investments and the uses of investor funds.
Additionally, the defendants allegedly told investors that they would pool their funds and invest 90 percent to buy undervalued real estate, and then rent or flip the properties.
Furthermore, the defendants promised that they will pay investors around 8-10 percent annual interest, generated from the real estate investments.
However, EquiAlt, Davison, and Rybicki’s lied to investors. In fact, the defendants used a large portion of investor funds to support their lavish lifestyle. They only used less than 50 percent of the funds for real estate investments. EquiAlt used money from an investment fund to make Ponzi-like payments to investors in another fund.
SEC emergency action seeks to prevent further harm to investors
In a statement, SEC Miami Regional Office Director Eric Bustillo, commented, “We allege that Davison and Rybicki made ‘too good to be true’ promises about nearly every material aspect of EquiAlt’s business to induce retail investors, including elderly individuals, to invest with them. The SEC’s emergency action seeks to prevent further harm to these retail investors and locate and preserve as many assets as possible.”
The SEC’s investigation into the defendants’ misconduct is ongoing. Its investigators in the Miami Regional Office including Mark Dee, Andre Zamorano, and Chanel Rowe are conducting the inquiry under the supervision of Thierry Olivier Desmet, Fernando Torres, and Glenn Gordon.