BBC Equities CEO Arrested In Scheme To Defraud Investors At JFK Airport


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BBC Equities CEO Arrested In Scheme To Defraud Investors At JFK Airport

By Daniel Baxter

May 8, 2011 - John Bravata, the founder and chairman of BBC Equities, LLC, was arrested Thursday at JFK International Airport, announced U.S. Attorney Barbara L. McQuade. Bravata was arrested on an inbound flight from Italy.  

Bravata was charged in a criminal complaint with wire fraud in connection with his solicitation of investor funds for BBC, which Bravata characterized as a real estate investment fund. The complaint charges that from 2006 through 2009, Bravata knowingly participated in a scheme to defraud investors.  

Bravata and those working on his behalf made multiple misrepresentations to numerous prospective investors, including misrepresentations regarding how their investment funds would be utilized, the security of funds invested with BBC, and the returns that could be expected by investors of BBC.

Bravata also misled investors by telling them that managers of BBC would not earn money unless BBC was profitable. He also represented that the managers of BBC did not take fees, commissions, or a salary.

In reality, Bravata and others received lucrative compensation from BBC and related entities despite that fact that BBC was never profitable. Bravata also used investor funds to pay for the construction of his roughly 18,000 square foot personal home and to pay for other personal expenses. The charge in the complaint, wire fraud, carries a maximum penalty of 20 years? imprisonment and a $250,000 fine. 

On July 27, 2009, the SEC obtained an asset freeze and temporary restraining order against John J. Bravata and Richard J. Trabulsy, and their companies, BBC Equities, LLC (BBC) and Bravata Financial Group, Inc. (BFG), in connection with an alleged Ponzi scheme. The SEC also obtained an asset freeze against Antonio M. Bravata, John Bravata's son, and named John Bravata's wife, Shari A. Bravata as a relief defendant. 

According the complaint, the defendants 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 alleges that although the defendants told prospective investors that BBC was a real estate investment fund and safe investment vehicle, they spent no more than $20.7 million of the money raised on real estate acquisitions.


Instead, the SEC alleges that Bravata and Trabulsy used approximately $7.2 million of investor funds for their personal benefit, paid out $11.3 in Ponzi payments and spent $14 million soliciting and marketing the offering. On September 2, 2009, the Court appointed Earle I. Erman as Receiver for BBC and BFG to collect assets for defrauded investors. The Receiver has recently filed a second interim report with the Court that states the Receiver has not yet concluded his investigation. The report further states that claims against the Receivership Entities are in excess of $47 million and approximately $110,000.00 in unencumbered funds have been recovered to date.


The Receiver further reports that although there are certain assets to be liquidated and claims to pursue that may generate additional funds, taking into consideration the remaining assets, including potential claims against third parties, and the combined debt including the expense of administration, at this time there does not appear to be a reasonable prospect of any significant recovery for creditors and investors.

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