John J. Bravata, et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21155 / July 28, 2009
SEC v. John J. Bravata, et al, Case No. 09-CV-12950 (E.D. Mich., filed July 26, 2009)
On July 27, 2009, the Honorable David M. Lawson of the United States District Court for the Eastern District of Michigan issued a temporary restraining order and asset freeze against John J. Bravata (John Bravata) of Brighton, Michigan, Richard J. Trabulsy (Trabulsy) of Northville, Michigan, BBC Equities, LLC (BBC Equities) and Bravata Financial Group, Inc. (Bravata Financial), companies formed, owned and controlled by John Bravata and Trabulsy. The Court also issued an asset freeze against Antonio M. Bravata (Antonio Bravata), John Bravata's son, and John Bravata's wife, Shari A. Bravata (Shari Bravata), a Relief Defendant.
The SEC alleges that Bravata and Trabulsy raised more than $50 million from at least 440 investors by offering them membership interests in a purported real estate investment fund with promised annual returns of 8 to 12 percent. The SEC's complaint alleges that the defendants told prospective investors that BBC Equities was a real estate investment fund and safe investment vehicle. However, the SEC alleges that no more than $20.7 million of the more than $50 million raised since May 2006 through the sale of membership interests in BBC Equities was actually spent on real estate acquisitions. Furthermore, this real estate portfolio is highly leveraged with mortgages and other liabilities exceeding $128 million, and BBC Equities has never been profitable.
The SEC alleges that John Bravata and Trabulsy 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 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.
The SEC's complaint charges John Bravata, Trabulsy, and Bravata Financial with violating Sections 5 and 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint charges BBC Equities with violating Sections 5 and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5. The complaint also charges Antonio Bravata with violating Section 5 of the Securities Act and Section 15(a) of the Exchange Act. The SEC's complaint seeks permanent injunctive relief and disgorgement from all of the Defendants, and civil penalties from John Bravata, Trabulsy, and Antonio Bravata. The SEC's complaint further seeks disgorgement of all investor funds or assets acquired with investor funds from Relief Defendant Shari Bravata. A hearing on the SEC's motion for a preliminary injunction and a receiver has been set for August 4, 2009 at 10:00 a.m.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority and the Michigan Office of Financial and Insurance Regulation in this matter.
