Ponzi Schemer's Ferrari, Harley, Boats Scheduled For Auction

Several luxury cars, boats, and a motorcycle, including a Ferrari Spyder 348 Convertible, are scheduled to be auctioned off after their previous owner was convicted of operating a Ponzi scheme that duped hundreds of investors out of more than $50 million.  John Bravata, of Kalamazoo, Michigan, was found guilty in March 2013 of fifteen criminal charges, including fourteen counts of wire fraud.  Each count of wire fraud carries a maximum statutory sentence of up to twenty years in prison, as well as up to a $250,000 fine.  The auction is scheduled for June 18th - the same day Bravata is scheduled to be sentenced.

The Scheme

 Bravata operated BBC Equities, LLC ("BBC") and Bravata Financial Group, LLC ("Bravata Financial"), along with his son, Antonio, who served as a sales associate, and Richard Trabulsy, who served as chief executive.  According to Bravata, the 'BBC' used in the entity names was an acronym for 'Billionaire Boys Club.'  BBC was touted to potential investors as a successful real estate investment fund, initially raising more than $3 million from family and friends.  Later, BBC and Bravata Financial hosted free seminars where potential investors were provided with a free lunch and told that their investments would be used to purchase real estate that would provide a guaranteed annual return of 12%.  Investors were provided with offering materials, including private placement memoranda outlining the proposed use of investor funds.  BBC also used a variety of advertisements to reach potential investors, including an elaborate websites and magazine advertisements, including a spread in Forbes magazine in December 2008.  In total, over 400 investors contributed approximately $50 million.  Neither the Bravatas nor their two funds were registered with the Securities and Exchange Commission.  

However, neither BBC nor Bravata Financial was a legitimate business, and instead were used by John Bravata to perpetrate a massive Ponzi scheme that survived only by constantly soliciting new investors. Of the $50 million raised from investors, only $20 million was spent on real estate that was not only highly-leveraged, but did not produce income.  Indeed, it is estimated that, at the time the fraud was uncovered, existing mortgages on these properties exceeded $128 million.  The remainder of investor funds were used to sustain an elaborate lifestyle for the Bravatas and Trabulsy, with purchases ranging from luxury vehicles to vacations to artwork.  

The Toys

The Securities and Exchange Commission filed a complaint against Bravata and his related entities in 2009, and a receiver was ultimately appointed to marshal assets for the benefit of defrauded investors.  In its complaint, the SEC alleged that Bravata had used investors funds for a variety of purposes, including to sustain a luxury lifestyle that included the purchase of fancy boats and cars.  One car, a 1995 Ferrari 348 Spyder, was the source of legal wrangling between Bravata and the SEC, with the SEC ultimately seeking to have Bravata held in contempt after they alleged he traded the Ferrari with a business associate to settle previous debts.  Bravata later claimed he needed the Ferrari as collateral to pay his legal debts. 

In March 2011, after a criminal case was instituted, a federal judge ordered the seizure of numerous luxury automobiles and watercraft belonging to Bravata.  This included:

  • 1969 Ferrari conversion
  • 2007 Maserati Quattroporte
  • 1995 Ferrari 348 Spider
  • 2003 Ford Pickup
  • 2004 Seadoo personal watercraft
  • 2003 Seadoo personal watercraft 
  • 2006 Chevrolet Corvette
  • 2004 Nortech Catamaran

Since their seizure, the cars and boats have been maintained by an auction company.  With Bravata's conviction, five of those items have been scheduled for auction: the 1995 Ferrari, the 2007 Maserati, two of the Seadoo personal watercraft, and a 2003 Harley Davidson.  The auction is scheduled to begin June 18, 2013, at 8:00 A.M. EST, and each item will have a beginning asking price of $1,000.  

All proceeds from the auction will go to Bravata's victims.  

A link to the auction website is here.