Entrepreneurs Featured on X Investigated for Apparent ‘Ponzi Scheme’

Barron’s reported last month that Florida securities regulators were collecting information from related to business run by Dutch Mendenhall and Amy Vaughn. (Screengrabs from the Going Public website)

Prosecutors in Florida have subpoenaed records from real estate entrepreneurs Dutch Mendenhall and Amy Vaughn, who were featured in a video series featured by Elon Musk’s X.

The subpoenas, disclosed in a statement posted online Tuesday by Florida Attorney General James Uthmeier, marks an escalation of a state probe into the pair first reported by Barron’s.

“Our office has received complaints that a popular internet duo selling real estate investment services through their fund is pocketing cash instead of buying properties as advertised,” Uthmeier said in the statement. “This appears to be a Ponzi scheme.”

Barron’s reported last month that Florida securities regulators were collecting information from investors with Mendenhall and Vaughn’s past venture, RAD Diversified REIT.

Mendenhall and Vaughn appeared on the X series, Going Public, to promote their latest business called OmniCo Golf, a turnaround firm for struggling golf courses.

Going Public, which has described itself as “Shark Tank meets The Apprentice,” introduces audiences to businesses seeking financial backing, allowing those viewers to invest in the businesses under “crowdfunding” provisions of federal law. Purchases are made through a brokerage firm operated by series co-creator Darren Marble.

Marble, Mendenhall, Vaughn, and X didn’t respond to messages from Barron’s on Wednesday.

X CEO Linda Yaccarino greenlit Going Public for X’s original programming strategy after meeting with Marble at a hotel bar last summer, Marble has said.

Separately on Wednesday, Yaccarino said she was stepping down from her post.

The Going Public season featuring OmniCo—alongside a cashew-based beverage business and a business-software maker—consisted of four prerecorded episodes that were posted in May. Viewers were told the opportunity to invest would come during a real-time finale that would stream on X’s Live feed on June 13.

Mitchell Smith, head of original content at X, said in a press release promoting the final episode that the series “has been an essential part of our programming push for X’s enthusiastic business and finance audience.”

The finale was delayed after Barron’s reported that Mendenhall and Vaughn’s RAD Diversified REIT was under investigation by Florida’s Office of Financial Regulation and that some RAD investors and former employees had been interviewed by Securities and Exchange Commission investigators about the company’s practices.

Going Public’s producers “felt the live finale needed to go even further, that you deserved more,” they wrote in an email to the show’s mailing list, hours before the final episode had been scheduled to run. “So, plans have changed.”

The producers later said on X that the timing was changed to accommodate an appearance by heavyweight champion Mike Tyson.

When the finale streamed later in June, Mendenhall appeared briefly, to announce he was stepping aside as CEO of OmniCo and naming Gabriel Perez, a director at its first golf club, as his replacement. Perez is Mendenhall’s brother-in-law, which was not disclosed.

At the time of the rescheduled finale on June 24, the other featured companies on the show had filed necessary paperwork with the SEC and were accepting investment. As of Wednesday, there was no equivalent paperwork from OmniCo in the SEC’s public database.

The Florida Attorney General’s Office said on Tuesday it was investigating Mendenhall and Vaughn based on allegations that they violated Florida’s Deceptive and Unfair Trade Practices Act through their management of RAD Diversified REIT, which solicited investment in residential properties across multiple states.

Investors have complained that they have been unable to collect proceeds or have their principal returned due to “roadblocks” by Mendenhall and Vaughn, the agency said. Former employees have told Barron’s that the sky-high returns touted in RAD’s ads were based on valuations set by RAD executives, not outside appraisers.

Attorney General Uthmeier issued subpoenas to collect banking and financial documents, marketing messages, and other records.

“We are investigating to ensure Floridians are not being deceived by greedy fraudsters,” Uthmeier said.

Write to Jacob Adelman at jacob.adelman@barrons.com