Brett Johnson Has Used Unbuilt Pawtucket Soccer Stadium as Collateral for Personal Loans

Brett Johnson Has Used Unbuilt Pawtucket Soccer Stadium as Collateral for Personal Loans

GoLocal has secured copies of financial documents that unveil that Brett Johnson, the head of Fortuitous Partners, has used his interest in the proposed Pawtucket soccer stadium project to secure personal loans in the secondary banking market.

Johnson and Fortuitous have been asking for tens of millions of dollars of taxpayer subsidies to fund a proposed minor league soccer stadium.

Johnson and his team claim they have raised $50 million -- a fraction of the cost of the $124 million stadium cost. The remaining portion of the project -- $74 million -- is slated to be paid for by the City of Pawtucket and state taxpayers. Construction on the Pawtucket stadium stopped abruptly in June due to non-payment. GoLocal caught on video contractors removing materials from the site. Johnson has more recently claimed to have raised additional capital, but has refused to release the names of investors.

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In addition, in another loan, Johnson borrowed from a man who pled guilty for his role in a $1.3 billion Ponzi scheme, according to the Securities and Exchange Commission. 

 

Borrowing Personally by Collateralizing the Pawtucket Minor League Soccer Stadium Project

According to UCC statements filed with the California Secretary of State, Johnson borrowed monies from Pasadena Private Finance and used the Pawtucket project as collateral.

A UCC filing is a form of notice that lenders use when securing a borrower’s loan with an asset or group of assets. This enables lenders to seize the listed property to recoup loan funds in the case of borrower default. UCC filings may cover an individual piece of collateral, or a lender can list all of a business’s assets and then only repossess what is necessary to pay off the defaulted loan balance.

 

 

According to the filling, Johnson, the “Debtor” collateralized the loan with:

(a)    all of Debtor’s membership interest and/or other ownership interest in BMJ Enterprises LLC, a Delaware limited liability company (collectively, the “Borrower Pledged Interest”);

(b)    all of Debtor’s membership interest and/or other ownership interest in Fortuitous Tidewater OZ Fund, LLC, a Delaware limited liability company (collectively, the “Fortuitious Pledged Interest”);

(c)    all of Debtor’s membership interest and/or other ownership interest in Tidewater Stadium, LLC, a Delaware limited liability company (collectively, the “Tidewater Pledged Interest”) (the Tidewater Pledged Interest, the Borrower Pledged Interest and the Fortuitous Pledged Interest collectively, the “Pledged Interests”); and (c) all Proceeds of the Pledged Interests.

Then, less than two weeks ago, Johnson shifted the collateral to a different combination of legal entities  — one of which appears to be tied to the Pawtucket project as well as to entities tied to another soccer club. Johnson owns about 1% of the Ipswich Town F.C. -- a team that lost $17 million last year.

GoLocal asked Johnson why he had not notified Rhode Island nor Pawtucket officials of the leveraging of the project for personal loans, a spokesperson for Johnson did not answer the questions but sent a statement.

“Mr. Johnson and Fortuitous have adhered with every necessary disclosure as it relates to the Tidewater partnership with the City and the State.  Fortuitous has raised over $50M of private capital for this project and is looking forward to moving forward with this transformative development in partnership with the City of Pawtucket and the State of Rhode Island,” said Mike Raia, a spokesperson for the project.

 

Concerns Raised by Forensic Expert

Stephen Griffin, who was once the founding partner of Point Judith Capital with now U.S. Commerce Secretary Gina Raimondo, and now the founder of the firm Alley 101, said, “UCC liens naming Johnson as a debtor – CommerceRI, the City of Pawtucket, RI taxpayers, as well as private investors, should have been informed that the principal developer has been borrowing against his interests in entities affiliated with the Tidewater project.  Further, the liens raise other questions such as: What information was provided to the lenders? Was that information consistent with what was provided to the State of Rhode Island, the City of Pawtucket, and private investors?  Have the lenders loaned funds against future tax credits?  All of this also raises more concerns the sources of capital funding the project."

"Rhode Island taxpayers deserve to know the identity of investors in the Tidewater project," added Griffin.

Griffin’s firm has deep experience in investigating sports fraud. He has been featured in the Wall Street Journal and Inc. magazine.

"I led the forensic investigation of Legacy Global Sports and its subsidiary Global Premier Soccer (GPS).  We exposed a widespread fraudulent visa scheme that brought youth soccer coaches to the U.S. illegally. Many of these coaches were underpaid, overworked and provided inadequate housing accommodations. Certain individuals on fraudulent visas avoided background checks required by the Center for Safesport and have since been arrested for abuse of minors. The U.S. Department of Justice has prosecuted two cases resulting in guilty pleas," said Griffin.

"I also exposed fraud involving the $284 million bond financing of a youth sports complex in Mesa, Arizona.  In that matter, I have been supporting the Securities and Exchange Commission as well as the U.S. Trustee overseeing the bankruptcy.  I am also presently working on several other cases involving securities fraud," said Griffin.

 

Johnson Borrowed From Ponzi Scheme Leader

Johnson also borrowed from iAlt Enhanced Income Portfolio I, LLC — a company controlled by Ivan Acevedo.

“One of the entities named as a lender in the UCC filings was formed and operated by an individual convicted for his role in a $1.3 billion Ponzi scheme that defrauded nearly 10,000 individual investors, many of whom were retirees,” said Griffin.

On July 12, 2021, Acevedo pled guilty to participating in a massive investment fraud scheme in which more than 7,000 victims suffered financial losses, in violation of 18 U.S.C. § 371.  Co-defendant Robert Shapiro, the former owner, president, and CEO of Woodbridge Group of Companies LLC (“Woodbridge”) was previously sentenced to the maximum sentence of 25 years in prison for his leadership role in the fraud scheme and his separate income tax fraud.

According to the indictment, superseding information, and court documents, Shapiro spearheaded and concealed an enormous Ponzi scheme through his business, Woodbridge.  Woodbridge employed approximately 130 people and had offices located throughout the United States, including in Boca Raton, Florida; Sherman Oaks, California; Colorado; Tennessee; and Connecticut.  The scheme ran from at least July 2012 to December 2017, when Woodbridge filed for Chapter 11 bankruptcy and defaulted on its obligations to investors.

According to the SEC, “After Acevedo’s termination of employment with Woodbridge, he acted as an external sales agent for Woodbridge and recruited additional Woodbridge investors through his company iAlt Enhanced Income Portfolio, LLC.  Acevedo received approximately $1.1 million in Woodbridge compensation.”

Acevedo is serving a five-year prison sentence for his role in the Woodbridge Ponzi scheme, the SEC said.