On July 31, 2020, the Court held a show cause hearing to address whether the temporary restraining Order granted by the Court on February 14, 2020, should be converted to a preliminary injunction. The Court granted the SEC’s motion in an Order dated August 17, 2020, making the following findings:
- The Defendants most likely operated as a Ponzi scheme using new investor funds to pay old investor obligations while simultaneously siphoning funds for their own benefit far and above any amount that anyone might reasonably believe was disclosed to investors;
- The Commission [SEC] will likely be able to prove that Defendants Davison and Rybicki used the investor money to purchase high-end luxury items;
- The Commission has demonstrated a substantial likelihood of proving it will prevail on its Section 5 and Section 10(b) claims based on the affirmative evidence developed to date demonstrating fraud, the sale of unregistered securities, and representations to investors that were materially false;
- Defendants Davison and Rybicki are controlling individuals of Defendant EquiAlt and the other Corporate Defendants; and
- Defendants [Davison and Rybicki] appear to have had equally shared responsibilities and acted in concert to successfully perpetrate the Ponzi scheme.
Additionally, the Court granted the Receiver’s motion to expand the receivership to include the REIT and Qualified Opportunity Zone (“QOZ”).