Last Updated on January 30, 2026 by Jason Andrew
You know what I like more than a YouTuber trying to sell me a dropshipping course?
A YouTuber running a Ponzi scheme.
Sam Bankman-Fried, Elizabeth Holmes, and Charlie Javice. We have yet another legend joining their ranks, Tai Lopez.
After reaching YouTube notoriety, Lopez decided to step it up a notch.
“Knowledge,” Lamborghinis and 80% gross margins on social media marketing agency courses weren’t enough.
He needed more.
Why not start raising Special Purpose Vehicles (SPVs) to go buy distressed retail businesses, and start funnelling money from investors into your own bank account?
Guarantee investors 25%+ annual returns and monthly dividends.
What could possibly go wrong?
This is the story of how course bro Tai Lopez constructed a $112m Ponzi Scheme, Retail Ecommerce Ventures.
Tai Lopez Background
Tai Lopez was the OG course guru YouTuber.
Most well known for his “Here in My Garage” video, which racked up 72 million views,
Tai’s initial endeavours were focused on selling courses to his rapidly growing audience.
“Dropshipping.” “Wealth creation strategies.” “Dating advice.” You name it, Tai had you covered.
While the courses were very expensive and misleading in terms of the value they delivered, often costing upwards of $997 for access to information that could easily be found on the internet, his activities were still legal.
So how did Tai go from a course guy to staring down the barrel of prison time for defrauding investors?
But equally importantly, why?
Selling digital products on the internet was one of the easiest cash grabs of the past decade.
Why take the risk?
Well, it’s very possible that Tai’s initial ventures weren’t as profitable as you expect. He spent millions of dollars to acquire customers for his “Here in My Garage” video, running a huge YouTube advertising campaign.
Then there are the overheads with the courses themselves.
RE Ventures
He wanted even more easy money.
The solution?
Start raising SPVs.
In 2019, Tai Lopez, alongside co-founder Alexander Mehr, launched “Retail Ecommerce Ventures” or “REV,” a series of SPVs raised to buy out the brand IP of distressed brick and mortar retail brands, and relaunch the businesses as ecommerce only businesses.
Not quite a private equity playbook, given that they weren’t actually acquiring the operating company, only the brand itself, but still quite an operational endeavour.
RE Ventures felt destined for failure from the beginning.
The choice of industry was questionable. While Lopez himself had experience with digital marketing, he had no prior experience working in ecommerce or for a retailer.
Similarly, his co-founder also had no experience in ecommerce, having previously run an online dating website, Zoosk.
In fact, looking at the extended REV team, none of the people within the business had any prior experience working in online retail.
Lopez hired his cousin Maya Burkenroad, advertised as having “over 10 years’ experience managing multimillion dollar companies,” when in fact her only prior experience was working as a substitute preschool teacher and as a radio station promoter.
Other hires included Anton De Martino, an “Associate,” who failed to list any qualifying credentials on the website, but instead offered a Charlie Munger quote.
I suppose if you can quote Munger, you’re qualified to run ecommerce turnarounds, right?
But the duo, with their crew of associates, were confident that they could improve these businesses.
When asked in an initial interview about the strategy of RE Ventures, Mehr remarked:
INTERVIEWER: “What do you plan to do with the business?”
MEHR: “We make them better, we modernise them, we bring them online, and we make them better. Sometimes these brands are stuck in their old ways, it’s just a matter of taking them online and making them better.”
INTERVIEWER: “You make it sound so simple.”
MEHR: “We only look at two factors, (1) brand awareness, (2) brand affinity.”
So REV went after businesses like RadioShack (bankrupt in 2015, acquired in 2020), Pier 1 (bankrupt 2020, acquired 2020), and six other retail assets.
Well, it turns out that there is a little bit more nuance to running a retailer than just “taking them online.”
Take RadioShack for instance, one of the brands acquired by REV in 2020. Looking at the RadioShack website, they are advertising a portable CD player on the homepage.
How many people even own CDs today?
If you want to pressure-test whether your business fundamentals could withstand the kind of stress that broke REV
👉 Schedule a call with SBO to review your cash flow durability, investor obligations, and operational discipline.
The Details
The SPVs themselves were raised as notes offering 25% annual returns to investors in the form of monthly dividend payments, on top of the return of their principal capital after some period of time.
Investors were promised that their funds would only be used to purchase and operate the specific portfolio company they were backing.
Off the bat, this is an extremely high rate of return to be offering investors given the risk of the venture involved.
Guaranteeing a 25% return is almost unheard of anywhere else in private markets.
Even Blackstone funds can only return ~20% IRRs to their investors. And they’re the best in the business.
It’s unclear whether Lopez and Mehr were simply naive and lacked the financial sophistication to realise this was extremely difficult to achieve, or whether they offered such a high rate of return to attract more capital.
Lopez and his crew planned to fund these payments using the free cash flow of the retail brands.
This is where all of the problems arose.
Not only did REV lock themselves into the obligation to deliver extremely high annual returns to their investors, but to do so, they would need to operate retail assets where they had no prior experience.
CoMingling Funds
This is where things start to get fun.
Two years into the REV journey, how were the portfolio companies faring?
Terribly. An absolute disaster.
It wasn’t just one portfolio company that was struggling. Every single one was unprofitable.
Turns out that competing with Amazon and Walmart selling commoditised physical products online is not a good business to be in.
But Lopez and Mehr continued to insist to their investors that operating performance was strong.
In one of the weekly Zoom calls held with their investor base in late 2021, Lopez told investors that Dressbarn and Steinmart, two of their portfolio companies, were “on fire” and “cash flow is strong.”
This wasn’t true.
In reality, Dressbarn incurred a loss of $7.1m in 2020 and $10.1m in 2021. Steinmart was also unprofitable.
As time progressed, things got worse and worse. In late 2022, it became more difficult for REV to meet the dividend payment obligation to their investors as offered in the note.
So they started to get creative. Why not just raise more money from investors to pay back the old ones? And so the Ponzi scheme began. $5.9m in total, to be precise, was raised from investors in this “Ponzi” style.
In the words of the SEC filing:
“Consequently, in order to pay interest, dividends and maturing note payments, Defendants resorted to using a combination of loans from outside lenders, merchant cash advances, money raised from new and existing investors, and transfers from other portfolio companies to cover obligations.”
So they ramped up fundraising efforts, convincing investors that they were doubling down on the portfolio and needed further funding to fuel their ambitions.
They sold investors on the big vision:
“[W]e’re going all in on REV and we want you to join us at the table. We’ve already been dealt a pretty strong hand with all the ace brands we’ve acquired over the last couple [sic] years and we’re not ready to cash out yet. If you don’t want to look like a joker, then the time to get in on REV is now… [D]on’t call our bluff, this deal folds this Friday, November 11th so reach out to [our investor relations team now],” Tai Lopez
On top of this, in any given month, the bookkeeper for REV would transfer money internally between the accounts of the businesses in order to meet repayments across the portfolio, balancing the books to keep all boats afloat, all under explicit instructions from Lopez.
“REV’s head bookkeeper prepared a weekly spreadsheet that he shared with Defendant Burkenroad. This spreadsheet detailed bank account balances, expenses, other cash outflows including investor payments owed and shortfalls for each of the companies. Defendant Burkenroad shared this information with Defendants Lopez and Mehr and the group would determine from where to pull funds to cover any shortfalls.”
But it gets even better.
Over this entire period, Lopez and Mehr had been siphoning money out of the business accounts for themselves.
Lopez stole $12.5m and Mehr $3.6m. Those Lamborghinis aren’t going to pay for themselves, right?
Unwinding the Scheme
Unfortunately, like all great Ponzi schemes, everything is fine until it’s not…
Like Newton’s laws of physics, what comes up must come down.
In 2023, the scheme started to unwind. As investors stopped getting their monthly payments, they realised there was going to be trouble. REV became the subject of a class action lawsuit instigated by some of its investors.
REV’s portfolio companies had their ownership transferred to investors in 2024, allowing investors to regain some control, although given that the brands are all loss-making, the portfolio is likely worth next to nothing.
As for Lopez? His fate is yet to be determined, but he could be looking at 10 to 20 years behind bars for his actions.
Maybe we’ll get to see some more of his courses from behind prison bars.
What’s the moral of the story? Stick to your circle of competence. Tai should have just stayed focused on YouTube and the course business. His channel today still has 2.49m subscribers, and across all platforms he has over 6 million followers.
Only in the last two weeks he released a podcast with Cluely founder Roy Lee, one of the hottest founders in Silicon Valley.
For someone so good at internet marketing, it’s amazing that he lacked the foresight to see how this would unfold.
If you’re evaluating consumer or ecommerce acquisitions and want to avoid the mistakes that sank these distressed retail rollups:
👉Book a call with SBO to benchmark diligence standards, risk controls, and value-creation pathways.
