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Commingled Funds and Company-to-Company Shuffles

The complaint details a pattern of fund misuse that violated the defendants' own written agreements with investors. Although offering documents specified that proceeds raised for each portfolio company would be used solely for that company's operations, the reality was far messier.

Lopez, Mehr, and Burkenroad maintained signatory authority over all REV and portfolio company bank accounts. Weekly spreadsheets prepared by REV's head bookkeeper tracked cash balances, expenses, and investor payment obligations across all entities. Burkenroad would share these reports with Lopez and Mehr, and the trio would collectively decide which accounts to tap to cover shortfalls elsewhere.

According to the complaint, the mechanics of the shell game were simple but effective. On February 4, 2022, for example, the defendants transferred $1.41 million from RadioShack's bank account to REV's main account. That same day, REV distributed just over $1 million across five other portfolio companies: $615,000 to Pier 1, $185,000 to Modell's, $225,000 to Dress Barn, $16,000 to Franklin Mint, and $10,000 to Linens 'N Things.

At other times, money moved directly between portfolio companies. In November 2020, $1.7 million in RadioShack investor proceeds was transferred straight into Stein Mart's bank account. In total, the SEC alleges the defendants shifted at least $5.9 million in investor funds directly between portfolio companies—all contrary to representations made in offering documents.

Classic Ponzi Mechanics

None of the REV retailer brands generated profits, according to the complaint. To maintain the illusion of a functioning business model, the defendants resorted to paying earlier investors with money from later investors—the hallmark of a Ponzi scheme.

From July through October 2022 alone, the defendants directed at least $5.9 million in new investor funds to pay interest, dividends, and principal to earlier investors. As the portfolio expanded and the number of investors grew, so did the amount of promised returns and maturing notes. The scheme became unsustainable.

By August 2022, investor payments began arriving late. By September, payments stopped en masse. Yet even as financial collapse loomed, the defendants continued soliciting new investors.

The November 2022 Las Vegas Push

In November 2022—with REV already missing investor payments—Lopez and Mehr hosted an investor conference in Las Vegas, promoting new offerings and touting the financial success of their strategy. They disclosed nothing about the portfolio companies' struggles or missed payments.

Immediately following the conference, Mehr sent an email urging investors to act quickly, using gambling metaphors: "We're going all in on REV and we want you to join us at the table. We've already been dealt a pretty strong hand with all the ace brands we've acquired... If you don't want to look like a joker, then the time to get in on REV is now... Don't call our bluff, this deal folds this Friday, November 11th."

Shortly after that email blast, the defendants stopped hosting investor calls altogether. On December 15, 2022, Lopez finally disclosed during a Zoom call that REV and its portfolio companies were in financial trouble, unable to make investor payments, and exploring restructuring or asset sales.

By December 29, 2023, secured noteholders foreclosed on REV and the portfolio companies, transferring the assets to an unrelated entity called Omni Retail Enterprises, LLC. All eight REV retailer brands are now insolvent.