SEC Alleges Investment Fraud – EquiAlt LLC – Recovery Options

shutterstock_180341738-200x300The attorneys at Gana Weinstein LLP are investigating potential claims against brokerage firms for selling securities issued by entities related to EquiAlt, LLC.  EquiAlt purports to be a private real estate company with at least four private placements offerings: EquiAlt Fund, LLC; EquiAlt Fund II, LLC; EquiAlt Fund III, LLC; and EA Sip, LLC.

On February 18, 2020, the Securities and Exchange Commission (SEC) filed an emergency enforcement action and sought to obtain a temporary restraining order along with an asset freeze against EquiAlt LLC, its CEO Brian Davison, and its Managing Director Barry Rybicki.  The SEC alleged that the action was being made in connection with EquiAlt’s alleged fraudulent unregistered securities offering that raised more than $170 million from at least 1,100 investors.

According to the SEC’s complaint, in the U.S. District Court for the Middle District of Florida, EquiAlt, Davison, Rybicki, and the other entities involved in the claimed fraud, raised millions of dollars by making material misrepresentations and false claims to investors about EquiAlt’s investment strategy.  The SEC claims that the EquiAlt told investors they would pool investor funds and use approximately 90% of the money to purchase under-valued real estate, rent or flip the properties, and pay investors 8-10% annual interest generated from the real estate investments. However, as in the case with so many frauds, the SEC is claiming that a large portion of investor money went to support Davison’s and Rybicki’s lavish personal spending and that in fact less than 50% of the funds raised were used to invest in properties and other legitimate purposes.  The SEC is claiming that money from one investment fund controlled by EquiAlt was allegedly used to make Ponzi-like payments to investors in another fund.  Such commingling of funds amongst supposedly separate entities is common in Ponzi-schemes.

A federal judge has granted the SEC’s request for emergency relief and obtaining a temporary restraining order and an asset freeze.  The court also granted the SEC’s request to appoint a receiver, whose job it is to marshal assets on behalf of defrauded investors.  However, in many cases of fraud the receive only obtains a very small amount of funds to return to investors in relation to the size of the fraud.

If EquiAlt was recommended to you by a broker or investment advisor we would like to hear from you.  Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client.  In order to make a suitable recommendation the broker must meet certain requirements.  First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors.  Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation.  At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts.  Claims may be brought in securities arbitration before FINRA.  Our consultations are free of charge and the firm is only compensated if you recover.

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