SEC Charges Las Vegas Business Owner for Alleged Role in Defrauding Elderly Investors

The US Securities and Exchange Commission (SEC) has charged a Florida business owner for unlawfully selling securities of real estate firm EquiAlt LLC to retail investors, many of whom were elderly people who invested through their individual retirement accounts (IRAs).

DeAndre Sears, who resided in Las Vegas, and his company MASears LLC, which does business as Picasso Group, were charged with registration violations. The SEC previously filed an enforcement action against EquiAlt, CEO Brian Davison, and Managing Director Barry Rybicki in connection with the alleged scheme.

According to the SEC’s complaint, between 2014 and 2020, Sears sold at least $25 million of EquiAlt’s securities to more than 145 investors who were mainly unaccredited, unsophisticated, and elderly. During those years, Sears was identified in EquiAlt private placement memoranda as the company’s managing director of investments, president of business development and marketing, or vice president of investor relations.

The SEC said that through the Picasso Group, Sears received approximately $3.5 million in transaction-based sales commissions from EquiAlt, despite not being registered as a broker/dealer (B/D). The SEC alleges that EquiAlt was operating a Ponzi scheme in which it raised more than $170 million from approximately 1,100 investors in 35 states.

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EquiAlt, through a network of unregistered sale agents, sold investors three- or four-year term debentures. The firm’s executives told investors that their money would be used to purchase real estate in distressed markets in the US and that the investments would generate revenues sufficient to pay interest rates of 8% to 10% per year. However, the EquiAlt Funds “were unprofitable almost from inception,” according to the SEC.

The SEC said the investors were unsophisticated in that they lacked knowledge or expertise in financial or business matters, were not capable of evaluating the merits or risks of the investment, and were not capable of bearing the economic risks of the investment.

“Many of the investors in this Ponzi scheme were attracted to investments in the EquiAlt Funds by representations that the investments were secure, safe, low risk, and conservative,” said the complaint, which added that when EquiAlt’s revenues were not sufficient to pay the money owed to investors, it “soon resorted to fraud, using new investor money to pay the interest promised to existing investors.”

The SEC’s complaint charges Sears and Picasso Group with violating the securities registration provisions of the Securities Act of 1933, and the broker/dealer registration provisions of the Securities Exchange Act of 1934. Without admitting or denying the SEC’s allegations, Sears and Picasso Group have agreed to the entry of a judgment providing injunctive relief with disgorgement and civil penalties to be determined by a court at a later date.

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Tags: Barry Rybicki, Brian Davison, DeAndre Sears, Elderly, EquiAlt, Fraud, MASears, Picasso Group, SEC

The party’s dominance will permit a third round of federal stimulus this winter, lifting 2021 GDP to 6.4% growth, the firm says, as it brightens its forecast.

The twin victories of Democrats in the Georgia Senate contests this week, which gave the party control of both congressional houses, should lift 2021’s economic growth, according to Goldman Sachs economists.

Goldman is now projecting gross domestic product (GDP) growth of 6.4% this year, up from 5.9% before. That should compel unemployment to drop to 4.8% at the end of 2021 and 3.9% at the end of 2023, the firm’s economists declared in a research note. The latest jobless report is 6.7%.

The reasons for the investment firm’s sunnier view on the economy: 1) Realization that Democratic dominance in Washington boosts odds of a third federal relief package in the near future. And: 2) That the economy might need the fiscal aid, given the new, more transmittable strain of COVID-19 arriving on US shores and the slow roll-out of vaccinations.

At the same time, Goldman contended that while the Biden administration would now be able to raise taxes, the increase would be modest—the prospect of a whopper tax expansion under the Dems has been worrying the financial community.

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The tax hike, kicking in next year, would amount to about 0.25% of GDP, the report said. “The tax and spending increases should net out as modestly positive for GDP,” it stated. Other analysts have explained that narrow Democratic margins in both houses would constrain the party from passing more onerous tax increases.

Democratic President-elect Joe Biden has expressed his desire for another round of pandemic relief, on top of the two that have passed already. But Republican Mitch McConnell, who had been the Senate majority leader, has been a skeptic about further aid. In the new Congress, though, he now will lead the minority. (Technically, there’s a 50-50 split, with Vice President Kamala Harris breaking the tie for her party).

The new money, amounting to some $750 billion, should pass Congress between mid-February and mid-March, wrote the Goldman team of economists, led by chief Jan Hatzius. The fresh stimulus, they said, should boost disposable personal income, as did the one enacted last spring.

The new Goldman prediction is well above consensus estimates of about 3.9%. Wall Street economists are growing more optimistic lately, though. Bank of America improved its GDP outlook for 2021 to 6%, from 5%. Morgan Stanley just upped its projection for the year to 5.6%. Other, non-Wall Street prognosticators have been less sanguine. The International Monetary Fund, for instance, has forecast a mere 3.1% rise this year. The US-based Conference Board, a notable research group, is looking for an only slightly better showing, 3.6%.

Previously, the stock market had seemed happy about the prospect of divided government, with the presidency and the House of Representatives in Democratic hands, and the Senate continuing under GOP control. But things have changed recently: The S&P 500 climbed 0.71% on Wednesday and 1.48% on Thursday, following news of the Democratic sweep in Georgia.