Remember Modell’s? C’mon, it wasn’t that long ago. If you are a Defector reader from the Northeast United States, you absolutely have some sort of weird attachment to this mediocre but very vigorously advertised sporting goods chain that went out of business in 2020. You remember! “Gotta go to Mo’s!” You’d go there to get a hat after your team won the division, or to get socks. You remember! CEO Mitch Modell was on Undercover Boss. You remember! It was a big story, and somehow less than a decade ago, when Dick’s Sporting Goods sued Modell, saying he disguised himself and posed as a Dick’s exec at a store in order to steal trade secrets. The case was eventually settled; the guy really loved putting on costumes. Analysts told the Bergen Record it seemed like Modell did this on a whim instead of as part of some organized espionage, which sounds appropriate for Modell’s. Is that sign still up on the former Modell’s location across from the Barclays Center? It was the last time I walked by.
Mitch Modell is no longer the CEO. The company said it would close 24 stores in February of 2020, and just two weeks after that announced that it was closing for good. Debtors later alleged the company paid millions to the Modell family while insolvent, and settled a lawsuit for $22.7 million last year. In the meantime, the brand was snapped up out of bankruptcy by a concern called Retail Ecommerce Ventures. REV had a novel idea, which they shared openly in a way that suggested they were proud of it. The plan was that they’d buy a bunch of brands that went bust, sometimes quietly, and then use those well-known brands to sell cheap crap online. In addition to Modell’s they acquired a ton of brands you know and possibly forgot about: Pier 1, Stein Mart, Dressbarn, RadioShack, Brahms, Linens ’n Things, The Franklin Mint. “The brand has been around for many decades,” co-founder Alex Mehr told WWD in 2021. “There’s huge brand awareness. If you take a brand that is very strong and updated its business model to a modern e-commerce operation, you see it come back to life.” The e-commerce setup was what Dick’s accused Mitch Modell of snooping on, so maybe REV had a kernel of an idea here.
Well, not enough of one. By 2023 REV was in danger of bankruptcy, as it turns out the women who shopped at Dressbarn didn’t really want to buy items outside of that farm-in-a-mall setting. Last year the company collapsed and its creditors put the assets into a new company, Omni.
But it turns out the company wasn’t just failing, at least according to the SEC. Yesterday the SEC charged three REV execs—co-founders Mehr and YouTube entrepreneur guy Tai Lopez and COO Maya Burkenroad—with operating a Ponzi scheme. The government alleges that the three promised investors ridiculously high returns, but at least $5.9 million of those returns were funded by other investors. Also, $16.1 million in investor funds went to Mehr and Lopez personally.
The filing says some of the brands generated revenue, but none were profitable. REV bought Modell’s in August 2020 and raised $8.7 million, offering 2.083% monthly dividends with 21-25 percent annual returns. If you can believe it, the Modell's On Your Phone concept didn’t deliver on that front.
But Modell’s is still chugging along online, selling the same kind of crap you can buy basically anywhere else. You can get 18 percent off anything right now because “MODELL’S IS BACK!” For how long, who knows.
