More Pain for Motor City as SEC Halts Bravata’s $50 Million Ponzi Scheme

July 29th, 2009
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The SEC announced today that it halted an alleged fraud and Ponzi scheme that was being orchestrated by Detroit area residents John J. Bravata and Richard J. Trabulsy. The two individuals allegedly raised approximately $50 million from over 440 investors.

Bravata and Trabulsy operated their scheme through BBC Equities LLC and Bravata Financial Group, Inc. by offering investors membership interests in a real estate investment fund. They allegedly promised investors annual returns of 8-12%, but according to the SEC “not even half of the money raised was actually spent acquiring real estate, and Bravata and Trabulsy used money from new investors to make Ponzi-like payments to earlier investors.” They also used investor funds for personal expenditures, including: mansions, extravagant vacations and gambling debts.

The SEC alleges that only around $20 million of investors’ capital was actually used to invest in highly leveraged real estate deals. Bravata and Trabulsy apparently “spent approximately $7.2 million of investor money for their own personal benefit. In order to keep their scheme afloat, they paid out $11.3 million in Ponzi-like payments by using new investment proceeds to pay distributions to earlier investors. They also spent $14 million soliciting and marketing the offering in order to continue the scheme.”
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For Detailed Investor Profiles on these Investors, click below:
Bravata Financial Group & BBC Equities LLC
Related People: John J. Bravata; Richard J. Trabulsy
Related Article Tags: Hedge Fund Fraud and Ponzi Scheme News


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