A Facade of Profitability
According to the SEC’s complaint, Lopez and Mehr maintained an aggressive marketing campaign built on fabricated success stories. During twice-weekly Zoom calls with investors and at in-person conferences in Puerto Rico, Virginia, and Las Vegas, the defendants painted a rosy picture of thriving operations.
In a February 2021 email to all investors, Lopez claimed Dress Barn and Stein Mart were “on fire” with “strong cash flow,” and boasted that unlike “public companies operating at heavy losses,” REV had “brands with a positive EBITDA” (earnings before interest, taxes, depreciation, and amortization).
Internal financial records tell a starkly different story. Dress Barn lost $13.7 million in 2020 and $10.7 million in 2021. Stein Mart bled $1.7 million and $5.7 million in the same years. According to consolidated income statements, REV and its portfolio companies collectively hemorrhaged between $3.8 million and $12 million monthly during the twelve months ending October 2022.
The defendants also repeatedly assured investors that REV had “never missed a single payment” to any investor—a claim the SEC alleges was demonstrably false by early 2022, when complaints about missing interest payments were already surfacing.
