by T. GormanPosted on Posted in SECActions

Frequently well-known retail operations fail and are liquidated through a bankruptcy proceeding. In some instances, the retail brand name may be purchased from bankruptcy followed by an attempt to resurrect the firm.  In others the name and brand that sank into  bankruptcy is liquidated along with the other remains of the once flourishing business. The idea of purchasing a failing business with a well-known brand name was recently at the center of a Commission enforcement action, SEC v. Lopez,  Civil Action No. 1:25-cv-24356 (S.D. Fla.).

Named as defendants in this action are Taino Loopez and Alexander Mehr. The two men were co-founders of Retail Ecommerce Ventures LLC. Also named as  a defendant is the former Chief Operating Officer of the firm, Maya Burkenroad. The firm’s primary business was the acquisition of firms with brand name recognition.  Over a period of about two years Messrs. Lopez and Mehr acquired a series of retail bands. Those included Pier I Imports Online, Inc., Dress Barn Online, LLC, Linens N’ Things Online, LLC, and RadioShack Online, LLC.

To acquires these and other firms, the complaint claims that Defendants sold securities in the form of unsecured notes. Investors were promised up to 25% annual returns as well as equity plus a monthly preferential dividend as high as 2.083%. The purpose of the offerings was supposed to be raising capital to acquire the predecessor  entity with the name brand name and sufficient operating capital to revive each firm.

Defendants Lopea and Mehr, however, made material misstatements in connection with the offerings used to acquire the name-brand entities.  In addition, about $5.9 million in investor  funds was transferred directly between portfolio companies. Those actions were contrary to the written and oral representations made to each investor.  About the same amount of cash that is claimed to have been distributed to investors was actually Ponzi-like payments funded by the other investors.  Defendants are also alleged to have misappropriated  about $16.1 million for personal use.

The complaint charges Defendants Lopez and Mehr with violations of Securities Act Section 17(a)(1) & (3) and Exchange Act Section 10(b) and Rule 10b-5. Defendant Burkenroad is charged with aiding and abetting the violations of Messrs. Lopez and Mehrs of Securities Act Section 17(a)(2) and Exchange Act Section 10(b) and Rule b-5(b).  See  Lit. Rel. No. 26413 (Sept. 25, 2025).

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by T. GormanPosted on Posted in SECActions

Authorization for certain corporate actions is typically required by the board of directors for significant undertakings such as soliciting investors to purchase shares or interests in the company to raise capital.  While the approval process may be informal, that does not necessarily relieve those at the company from complying with the appropriate requirements and procedures. For example, if the firm seeks to raise money, typically those involved in the process on behalf of the firm usually will be required to comply with certain procedures specified by the law or the firm. Ignoring those requirements may be a violation of law or at least of corporate policies and procedures.  A recent action by the Commission presents this issue.  SEC v. Hudson,  Civil Action No. 3:25-cv-08106 (N.D. Cal. Filed Sept. 2, 2025).

Named as defendant in the action is Matthew Derrick Hudson.  He is the founder of Canadian private  technology company Invenia Technical Computing company.  The complaint alleges that about $120 million was fraudulently raised by Mr. Hudson for the private company.

The funds were raised through solicitations conducted beginning in October 2020.  At that point, Mr. Hudson began raising capital from investors.  Investors were told about the financial condition of the company, its performance and other metrics.  Those solicited were provided with lists of investors, pertinent board resolutions and closing documents. Two rounds of solicitations were conducted.

Unfortunately, the materials provided to those solicited were riddled with falsehoods.  The solicitations were not authorized; much of the information was inaccurate; and the documents contained false statements.  Indeed, one of the signatures on the closing documents had been forged. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5.  See  Lit. Rel. No. 26411 (Sept. 24, 2025).

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