The U.S. Securities and Exchange Commission has filed suit against another man who allegedly lured investors into the purported $170 million Ponzi scheme surrounding the Tampa real estate firm EquiAlt LLC.
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DeAndre P. Sears and his company MASears LLC are accused of selling at least $25 million worth of EquiAlt’s unregistered securities in the last six years to mostly “unaccredited, unsophisticated and elderly” investors. The company does business as Picasso Group, however neither entity has ever been registered as broker-dealers.
The complaint, filed on the last day of 2020, almost mirrors another filed in August against a Wyoming man. While allegedly acting as an unregistered broker he sold about $15 million worth of unregistered securities in real estate investment funds managed by EquiAlt LLC.
The securities regulator launched an enforcement action in February claiming two men, EquiAlt CEO Brian Davison and managing director Barry Rybicki, had misused more than half of $170 million raised from investors in their firm. They ultimately concealed the scheme by making Ponzi payments to the investors and sales agents.
At least 1,100 investors in more than 35 states were tricked into believing their money would be used to buy real estate in distressed markets around the U.S. They were misled and told that their “low-risk” investments would generate returns in the 8% to 10% range. The SEC now claims the funds were “unprofitable almost from inception” and EquiAlt implemented a “network of unregistered sale agents” that would carry out fraud instead.
Sears has agreed to the entry of a judgment that will require him and his company to pay a yet-to-be determined disgorgement and civil penalties at a later date. The SEC states he and his company received almost $4 million in commissions from the unregistered sales and netted approximately $2.15 million after making payments to other sales agents.
“Sears personally solicited investors through word of mouth, by touting EquiAlt investments at in-person presentations, over lunch or in the homes of prospective investors, and by directing prospective investors to Picasso and EquiAlt websites,” the SEC complaint says. “He also promoted the sale of the EquiAlt securities by sending PPMs, subscription documents and marketing materials to prospective investors.”
In addition to injunctive relief included in the entered judgement, Sears has also agreed to associational and penny stock bars as part of an in-house SEC case that has already been settled.
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