A Las Vegas investment manager and his company have been charged with fraud for bilking senior citizens out of at least $25 million through a real estate scam that netted the manager more than $2 million in illicit commissions, the Securities and Exchange Commission announced last week.
DeAndre P. Sears and his company, which was doing business as Las Vegas-based Picasso Group, unlawfully sold securities in a Florida-based real estate firm known as EquiAlt, the SEC said. Without admitting or denying guilt, Sears and Picasso Group agreed to a settlement that will include disgorgement and civil penalties that will be set later. Sears also agreed to be barred from dealing in penny stocks.
Between 2014 and 2020, Sears and his associates sold EquiAlt securities to more than 145 largely unaccredited, unsophisticated and elderly retail investors located in 25 states, the complaint said. During that period, Sears was identified in EquiAlt private placement memoranda as managing director of investments, president of business development and marketing, or vice president of investor relations, the complaint said.
Sears, and his associates, through Picasso Group, received approximately $3.5 million in transaction-based sales commissions from EquiAlt, despite neither being registered as broker dealers. Some of those commissions went to the associates, while Sears and his company kept $2.15 million for himself, the complaint said. The complaint alleged EquiAlt was actually operating a Ponzi scheme that raised more than $170 million from approximately 1,100 investors in 35 states.
The SEC previously filed an enforcement action against EquiAlt, its CEO Brian Davison, and its managing director, Barry Rybicki, in connection with the alleged scheme. These defendants agreed to settlements without admitting guilt or innocence last year.
The complaint against Sears said he and a network of unregistered sale agents sold investors three-or four-year term debentures issued by EquiAlt Funds providing a fixed annual return of 8% to 10%.
“Many of the investors were elderly, retired and used their IRAs to invest in the EquiAlt Funds. Moreover, many of the investors were unaccredited or 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 otherwise capable of bearing the economic risks of the investment,” the complaint said.
When announcing the charges, the SEC also encouraged investors to check the backgrounds of people selling investments by using the SEC's website www.investor.gov to identify whether the people involved are registered professionals and to confirm their identities.