EquiAlt LLC – SEC Files Complaint Against EquiAlt LLC and EquiAlt Fund | Goodman & Nekvasil P.A. May Recover Investor Losses
EQUIALT LLC, EQUIALT FUND, LLC, EQUIALT FUND II, LLC, EQUIALT FUND III, LLC, EA SIP, LLC, BRIAN DAVISON and BARRY M. RYBICKI
According to the SEC Complaint:
The Commission brings this emergency action to halt an ongoing fraud conducted by EquiAlt LLC (“EquiAlt”), a private real estate investment company. Beginning in 2011 to the present, Defendants EquiAlt, Brian Davison (“Davison”) and Barry Rybicki (“Rybicki”) conducted a Ponzi scheme raising more than $170 million from over 1,100 investors nationwide, many of them elderly, through fraudulent unregistered securities offerings. Defendants promised investors that substantially all of their money would be used to purchase real estate in distressed markets in the United States and their investments would yield generous returns. Instead, EquiAlt, Davison, and Rybicki misappropriated millions in investor funds for their own personal use and benefit.
Despite receiving over $170 million in investor funds, the revenues generated by the Funds during the last nine years have been significantly less than the amounts of interest owed to investors. Without sufficient revenues to pay the money owed to investors, the Defendants resorted to fraud, using new investor money to pay the returns promised to existing investors. Meanwhile, Davison and Rybicki paid themselves millions from the Funds and spent it on luxury automobiles, fine jewelry and chartering private jets, among other expenditures.
Material Misrepresentations and Omissions to Investors
In addition to conducting a Ponzi scheme and misappropriating investor money, Davison and Rybicki made material misrepresentations and omissions to investors. The investments-unregistered securities in the form of debentures issued by four real estate investment funds managed by EquiAlt-were falsely touted to investors as “secure,” “safe,” “low risk,” and “conservative.” Moreover, Davison and Rybicki paid significant sales commissions to numerous unregistered sales agents who sold investments to unaccredited and unsophisticated investors in various states.
At all times relevant to the allegations herein, Davison and Rybicki exercised control over the business operations of EquiAlt and its four real estate investment funds: EquiAlt Fund, LLC (“Fund I”), EquiAlt Fund II, LLC (“Fund 2”),’ EquiAlt Fund III (“Fund 3”), and EA SIP, LLC (“EA SIP Fund”)(the “Corporate Defendants”). More specifically, Davison controlled the accounting and finances for these Funds as well as their bank accounts. He was also responsible for making Ponzi payments to investors. Rybicki controlled communications with investors and executed agreements with investors, including debentures and subscription agreements containing numerous representations and warranties.
Investors Money was Misused and Misappropriated
Investor money has been misused and misappropriated in several distinct ways, including (a) money from one Fund used to purchase real estate for another Fund or for third party entities owned by Davison; (b) money from one Fund used to pay investors in another Fund; (c) substantial undisclosed commissions paid to unregistered sales agents; (d) substantial undisclosed fees such as due diligence fees, management fees, success fees, auction fees, underwriting fees, purchase discount fees, and bonuses paid to EquiAlt and Davison; and (e) substantial improper distributions of cash to Davison and Rybicki. As a result of this misuse and misappropriation of millions of dollars of investor funds, Fund 1, Fund 2, and the EA SIP Fund are in a precarious financial condition.
Davison and Rybicki misappropriated millions of dollars from the Funds – spent it on luxury automobiles (such as Ferraris, Porsches and a Rolls Royce), fine jewelry (watches) and chartering private jets, among other expenditures. Davison alone spent more than $2.7 million on luxury automobiles and watches and chartering private jets. The SEC alleges that they received improper cash distributions totaling more than $18.3 million in 2017 – 2019 – $60 million misused by Davison and Rybicki.
Fund Assets are Insufficient to Pay Investors Principal and Interest Owed to Them
The combined assets of EquiAlt and its three active funds (Fund 1, Fund 2, and the EA SIP Fund) are insufficient to repay the principal and interest owed to approximately 1,100 investors. By December 2020, investors in these three funds will be owed approximately $167 million in principal and interest. However, as of November 2019, the assets of EquiAlt, Fund 1, Fund 2, and the EA SIP Fund total only $6.8 million in cash and real property purportedly worth $145 million, which is based on EquiAlt’s own inflated valuation. Thus, the combined assets of the three active Funds are insufficient to pay investors the principal and interest owed to them at the end of this year.
Investors in EquiAlt LLC May Recover their Losses with Goodman & Nekvasil, P.A.
If you invested in EquiAlt LLC, Goodman & Nekvasil, P.A. may help you. Goodman & Nekvasil, P.A., a Clearwater, Florida, law firm with a national practice representing victimized investors, has recovered more than $180 million dollars on behalf of victimized investors.
All our cases are handled on a purely contingency fee basis by Kalju Nekvasil, Esq., formerly regional counsel with the NASD, now known as FINRA. Kalju Nekvasil, Esq. has practiced in this area of the law for more than 35 years.
There is no charge for an evaluation of your case. Further, we handle our cases on a contingency fee basis. This means that unless we recover money for you, we charge no attorney’s fee. Unless you recover any money, you pay us nothing, not even the costs and expenses which the firm will advance on your behalf.
If you incurred investment losses in EquiAlt LLC and would like your case evaluated by a securities attorney (again, there is no charge for an evaluation and all cases are handled on a purely contingency fee basis), please contact us.
EquiAlt LLC, Unsuitable Investment Advice, Investment Fraud, Churning, Misrepresentation and Omission of Material Facts, Elder Fraud, Unauthorized Trading, Theft, Selling Away, Unapproved Outside Business, Nationwide, SEC, EquiAlt LLC