SEC Charges Equialt Managing Director of Investments for Unlawful Sales of Securities to Elderly Retail Investors
Litigation Release No. 25002 / December 31, 2020
Securities and Exchange Commission v. DeAndre P. Sears et al., Case No. 20-cv-03114 (M.D. Fla filed December 31, 2020)
The Securities and Exchange Commission today announced charges against DeAndre P. Sears and MASears LLC d/b/a Picasso Group, an entity he controlled and operated, with registration violations for unlawfully selling securities of Florida-based real estate firm EquiAlt LLC to retail investors. The SEC previously filed an enforcement action against EquiAlt LLC, its CEO Brian Davison, and its Managing Director Barry Rybicki on February 11, 2020, in connection with the alleged scheme.
According to the SEC's complaint, between 2014 and 2020, Sears directly and indirectly, through the use of third-party agents, sold at least $25 million of EquiAlt's securities to more than 145 largely unaccredited, unsophisticated, and elderly retail investors located in 25 states. 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. Sears, through Picasso Group, received approximately $3.5 million in transaction-based sales commissions from EquiAlt, despite neither being registered as broker dealers. The complaint alleges that beginning in approximately 2016, EquiAlt was actually operating a Ponzi scheme during which it raised more than $170 million from approximately 1,100 investors in 35 states.
The SEC's complaint charges Sears and Picasso Group with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, and the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934. Without admitting or denying the allegations in the complaint, 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. Sears also agreed to associational and penny stock bars as part of a settled follow-on administrative proceeding.
The SEC's continuing investigation is being conducted by Chanel T. Rowe and Andre Zamorano, with assistance from Mark Dee, and supervised by Thierry Olivier Desmet and Glenn S. Gordon in the Miami Regional Office. The SEC's litigation is being led by Alise Johnson and supervised by Andrew O. Schiff.
The SEC encourages investors to check the backgrounds of people selling investments by using the SEC's Investor.gov to identify quickly whether they are registered professionals and confirm their identity.