$50 million Ponzi Scheme Alleged in Detroit

DETROIT (CN) – Two men who masterminded BBC Equities and Bravata Financial Group stole $50 million from hundreds of people in a Ponzi scheme, a class action claims in Federal Court. The SEC also has sued John Bravata and Richard Trabulsy, who promised 8 to 12 percent returns in a real estate scam, guaranteeing “safer returns than other investment options,” according to the complaint.

     The class claims that Bravata, 41, and Trabulsy, 26, stole their money and spent more than $7 million of it on homes, jewelry, cars, vacations and other luxuries. Bravata used money from his first two investors to buy a $90,268 Ferrari, according to the complaint.
     To “keep the scheme afloat” they spent $14 million soliciting new investors, $11.3 million of new money to pay off earlier investors, and $21 million to buy properties that are “highly leveraged, with mortgages and other liabilities exceeding $128 million,” the complaint states. And the class claims that Bravata and Trabulsy transferred BBC assets to other ventures to continue the scheme and “protect their ill-gotten gains.”
     Bravata was so bold as to name BBC for the “Billionaire Boys Club – an apparent reference to a 1980’s-era Ponzi scheme that began with high-living fraudsters and devolved into recriminations, murder and an NBC miniseries,” according to the complaint.
     The named plaintiff, J. Lincoln Crocker, says he lost $250,000 after he was solicited by his friend, “longtime associate” and now defendant Aaron Simon, who worked for Bravata and Trabulsy.
     Bravata and Trabulsy began by soliciting family and friends for money, then began holding “free lunch” seminars each week to target senior citizens, Crocker says. Half of BBC’s money allegedly came from IRA accounts.
     The class also claims that BBC and its founders falsely advertised on its Web site that its “current real estate portfolio exceeded $400 million,” and in Forbes Magazine, where they said “Bravata’s net worth exceeded $54 million.” Bravata falsely claimed that he had published several books as well, including one titled “The Stealing of Wealth in America,” according to the complaint.
     Named as defendants are BBC Equities, Bravata Financial Group, BBC Capital, BBC Holdings 1-50, BBC Holdings I-XI, Ferndale Lofts, Phoenix Venture Capital, Equity Trust Company, John Bravata, his son and employee Antonio Bravata, his wife Shari Bravata, Richard Trabulsy and Aaron Simon.
     The class is represented by Christopher Kaye with Miller Law in Rochester, Mich.

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