The U.S. Securities and Exchange Commission said it halted a $50 million Ponzi scheme near Detroit that raised money for a real-estate investment fund and targeted the elderly.

A federal judge in Michigan agreed to freeze assets after the SEC sued John Bravata, 41, and Richard Trabulsy, 26, claiming they lured more than 400 investors by promising 8 percent to 12 percent annual returns, the agency said today in a statement. Of $50 million raised since May 2006, less than $20.7 million was spent on real estate, the SEC said.

“Investors thought they were investing in a safe and profitable real-estate investment fund, but instead their money was being used to pay for luxury homes, exotic vacations and gambling debts,” said Merri Jo Gillette, director of the SEC’s regional office in Chicago.

The men “lied” to prospective investors about the use of funds and spent $7.2 million buying a $85,000 Maserati, a $90,000 Ferrari, and paying about $80,000 on jewelry and almost $1 million on the mortgage for a vacation house, the SEC said. Trabulsy and Bravata made $11.3 million in Ponzi payments to earlier investors, the SEC said.

BBC Equities’ real-estate investments were highly leveraged, with mortgages and other liabilities exceeding $128 million, the SEC said. To avoid a collapse of the scheme, the defendants continued to solicit investors and held weekly “free lunch” seminars for wealthy senior citizens, the SEC said.

IRA Conversions

The defendants allegedly lured investors by saying the fund offered “safer returns” for individual retirement accounts. More than half the proceeds raised by BBC Equities were conversions from investors’ IRAs, the regulator said.

The SEC lawsuit also named the defendants’ Southfield, Michigan-based companies, BBC Equities LLC and Bravata Financial Group Inc., as well as Antonio Bravata, 21, who allegedly assisted in the scheme.

Telephone calls to George Donnini, Justin Klimko and Joseph Richotte, lawyers representing the defendants at Butzel Long in Detroit, weren’t returned. BBC Equities and Bravata Financial were preparing a response to the SEC actions, said a person answering the telephone at the company’s office.

Contact Steven Peck’s Premier Legal should you suspect an elder loved you know is the victim of financial elder abuse toll free at 1-866-999-9085 to talk to an experienced financial elder abuse attorney.

Adam Peck, ESQ

About the Author

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.