EquiAlt $170 Million Ponzi Scheme California Class Action

“This case arises from $170 million Ponzi scheme operated by EquiAlt, LLC[,]”the complaint for this class action says in its opening line. According to the complaint, EquiAlt claims to use investor funds to buy distressed real estate and promised eight to ten percent profit with very little risk. However, the complaint claims that the promises were false and that investor funds were misappropriated and misused.

Named as defendants in this case are Benjamin Charles Moore and the corporation Ben Mohr, Inc., along with a number of “Does” or presently unknown persons. The complaint describes Mohr as an unregistered sales agent for the scheme.

According to the complaint, Mohr promoted EquiAlt, asked for investments, offered promotional materials, gave investors advice, and was paid on a transaction basis. Among the things he did not disclose, the complaint says, is that “the EquiAlt funds have lost money every year since inception and that they are insolvent.”

EquiAlt managed four real estate investment trusts and issued securities. It appears that the EquiAlt securities are not properly registered.

Plaintiff Robert G. Mar received an e-mail in April 2018 advertising “‘Exciting News’ about investment opportunities including (a) new life settlement product; (b) investments earning 8-10% in as little as one year; (c) investments that are liquid within 60 days; and (d) investment opportunities outside the stock market.”

The investment term was to be 48 months. A brochure claimed the company had acquired $200 million and liquidated over $300 million in distressed real estate. However, the complaint says Mar’s Private Placement Memorandum “did not include any information about EquiAlt’s financial statements, EquiAlt’s intended use of the offering proceeds, risk factors, conflicts of interest, offering expenses, or the amount of selling compensation that will be paid to the manager and its affiliates.”

Mar invested $100,000.

In February 2020, the Securities and Exchange Commission filed an emergency action against EquiAlt, its funds, and two individuals. The SEC said that, while EquiAlt had promised that 90% of the investments it received would go to real estate expenses, in reality it used only about half that way and misappropriated the rest. Also, the complaint claims that “EquiAlt’s business is almost solely reliant on new investor money to fund[] its operations.”

The complaint says that, on February 14, 2020, a court froze the assets of EquiAlt, LLC its funds, and its top officers, and “appointed Receiver to take possession of EquiAlt’s assets and investigate the true value of losses suffered by” the investors. The company has over $80 million less in assets than the amount they will owe investors in December 2020.

The class for this action is all those who live in California who bought or currently hold EquiAlt securities (that is, debentures issued by EquiAlt, LLC) acquired by a transaction with Benjamin Charles Mohr or Ben Mohr, Inc. between January 1, 2017 and the present.

The counts include uniform fraud and deceit and intentional misrepresentation, among other things.

Article Type: Lawsuit
Topic: Investments

Most Recent Case Event

EquiAlt $170 Million Ponzi Scheme California Complaint

Complaint document not available.

EquiAlt $170 Million Ponzi Scheme California Complaint

Case Event History

EquiAlt $170 Million Ponzi Scheme California Complaint

Complaint document not available.

EquiAlt $170 Million Ponzi Scheme California Complaint
Tags: Fraud, Investment Losses, Investments, Offering or Sale of Unregistered Securities, Ponzi Scheme, Securities Frauds