Lessons from the EquiAlt Ponzi Case-Avoiding Real Estate Schemes

Lessons from the EquiAlt Ponzi Case-Avoiding Real Estate Schemes

In February of this year, news broke that Florida real estate firm EquiAlt, its CEO and its managing director, were being charged with scamming more than 1,100 people out of most of their life savings. The Securities and Exchange Commission (SEC) charged the company and its leaders with fraud concerning approximately $170 million raised mostly from retirees. In Florida, investors have also filed suit in federal court with the same allegations. Here are some lessons from the EquiAlt Ponzi case that may assist you in avoiding real estate schemes.

The EquiAlt Ponzi Scheme

The SEC and investors allege that Tampa-based EquiAlt, its CEO Brian Davison and its Managing Director Barry Rybicki made several misrepresentations regarding the company’s investment strategy, the financial health of investments, and how proceeds were used.

Investors from California, Arizona, and Florida, the majority of whom were retirees, invested approximately $170 million with the firm.  Instead of investing the majority of the funds in underperforming real estate, Davison and Rybicki allegedly used a significant amount of the money to buy themselves luxury items and to charter private jets. Only half of the money is believed to have actually gone into real estate investment. In at least one case, the SEC alleges that EquiAlt took money from one investment fund to pay investors in another. The firm also failed to pay 8% to 10% annual returns to investors. Davison and Rybicki deny the allegations, and the matters remain pending in federal court.

Avoiding Ponzi Schemes

Avoiding Ponzi schemes can be difficult when those involved seem credible and present well.  Practicing due diligence when it comes to any investment is always prudent. If you are unfamiliar with a firm or real estate professional, take steps to find out more about them and their reputation. When a real estate professional has connections within the local community, it may be easier to learn about his or her reputation. Search the SEC’s and Better Business Bureau’s (BBB’s) websites for active cases against the individual or company.  Look into the firm or person’s accreditations and any disciplinary actions by their licensing boards.

When you are considering buying or investing in Florida real estate, it’s crucial that you work with a local real estate attorney who is Florida Bar Board Certified. Your counsel will have the specific knowledge you need to help protect your interest as you navigate the complexities of your transaction.

Contact a Florida Board-Certified Real Estate Attorney

At Rabideau Klein, David E. Klein Esq. and Guy Rabideau, Esq. are dedicated, Palm Beach County Florida Bar Board-Certified Real Estate Attorneys with extensive experience assisting clients with multi-million-dollar property transactions. We have the expertise and knowledge you need to ensure that your property interests are protected.  Contact Rabideau Klein today to discuss your real estate legal needs.

 

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