Introduction
1847 Holdings LLC (EFSH) and its spinoff, Polished.com Inc. (POLCQ, formerly 1847 Goedeker), stand accused of orchestrating a decade-long scheme of alleged fraud, financial mismanagement, and insider enrichment that has devastated thousands of shareholders, customers, and employees. As a former major shareholder of 1847 Holdings, I have witnessed firsthand the catastrophic losses—amounting to a 99.99% erosion of shareholder value—and experienced the company’s deceptive practices directly. This letter, addressed to shareholders, regulators, and law enforcement, demands an independent forensic audit of both entities and the immediate invocation of the NYSE Clawback Provision to recover allegedly stolen funds. The scale of the alleged misconduct, involving hundreds of millions of dollars, undermines trust in financial markets and necessitates urgent action to ensure accountability and justice.
Background: The Rise and Fall of 1847 Holdings and Polished
1847 Holdings LLC, a publicly traded holding company, presents itself as an acquirer of cash-flow-positive businesses, promising to enhance their value and deliver returns to shareholders. Its spinoff, Polished.com Inc., was positioned as a promising e-commerce platform for appliances, raising over $400 million through initial public offerings (IPOs) and loans. However, both entities have collapsed under the weight of alleged fraudulent practices, leaving investors with near-total losses and subsidiaries in bankruptcy.
Since its inception, 1847 Holdings has executed four reverse stock splits, each followed by rapid dilution through toxic financings and convertible notes, eroding shareholder value by 90-99% over 15 months. Polished, spun off from 1847 Holdings, filed for bankruptcy in February 2024, wiping out its shareholders entirely. The shared leadership and financial practices between the two entities suggest a coordinated strategy of deception, asset stripping, and insider enrichment, necessitating a thorough investigation.
Allegations of Fraudulent Conduct
The allegations against 1847 Holdings and Polished center on a deliberate scheme to mislead investors, drain subsidiaries, and enrich insiders. Key accusations include:
Misleading Financial Practices
1847 Holdings and Polished have consistently misrepresented their financial health, portraying failures as successes. Bankruptcies of subsidiaries like ICU Eyewear and Asien’s Appliances were framed as strategic divestitures, despite evidence of asset stripping through exorbitant management fees and leveraged loans. Defaults on debt were spun as victories, with CEO Ellery Roberts claiming lender leniency as a sign of confidence, even as these defaults triggered toxic financings that devastated shareholder equity.
Roberts repeatedly assured investors, including myself, that no additional capital raises were planned, only to execute dilutive offerings shortly thereafter. In one instance, after denying the need for further funding, the company announced a capital raise within a week, proving his assurances false. These deceptive tactics were compounded by poor internal controls, with repeated disclaimers in filings admitting material weaknesses that undermined the accuracy of financial reports.
Systematic Looting of Subsidiaries
The collapse of Polished, ICU Eyewear, and Asien’s Appliances reveals a pattern of systematic looting. Collectively, these subsidiaries raised over $500 million through IPOs, loans, and credit lines, yet all three imploded within years. Polished, despite raising $400 million, filed for bankruptcy in 2024, with auditors disavowing its financials. ICU Eyewear, acquired by 1847 Holdings, secured a $15 million loan before being assigned to creditors, while Asien’s Appliances was drained through management fees and insider payments, leading to bankruptcy.
These rapid collapses suggest deliberate asset stripping, with funds diverted through questionable transactions. The scale of the losses—potentially over $700 million—points to calculated theft rather than mismanagement, demanding a forensic audit to trace the flow of funds.
Questionable Disbursements
In February 2024, 1847 Holdings disbursed $2.5 million to four consulting firms—TraDigital Marketing Group, Alchemy Advisory LLC, Reef Digital LLC, and SeaPath Advisory LLC—while drowning in $40 million of toxic debt. These payments, made during negotiations for promissory note extensions, raise suspicions of financial misconduct, potentially including money laundering. The lack of a clear business rationale and the timing, coinciding with Bank of America’s seizure of $1.99 million from Polished’s accounts, underscore the need for an investigation into whether these transactions were used to obscure or misappropriate funds.
Coordinated Defaults
On August 4, 2023, lenders Mast Hill Fund and Leonite Capital issued identical default notices, triggering catastrophic dilution through prearranged promissory notes. This coordinated action, coupled with allegations from a civil suit that Leonite is unregistered with the SEC, suggests insider collusion and potential violations of securities laws. The defaults enabled insiders to profit from discounted equity conversions while shareholders suffered massive losses, highlighting a deliberate betrayal of investor trust.
Deceptive Reverse Splits
Between September 2023 and November 2024, 1847 Holdings executed four reverse stock splits, claiming they were necessary to attract institutional investors. However, each split was followed by dilutive instruments—convertible notes, equity offerings, and toxic financings—that obliterated any gains. These splits were not strategic but manipulative, designed to create a false impression of stability while enriching insiders through predatory terms.
Fraudulent Customer Practices
Perhaps the most egregious aspect of the alleged fraud involves 1847 Holdings’ subsidiaries, Appliances Connection and Asien’s Appliances, which sold appliances with no intention of delivery and pushed extended warranties on nonexistent products. Days before filing for bankruptcy, employees were instructed to sell warranties on phantom appliances and cold-call existing customers to upsell worthless warranties. This deliberate scam, orchestrated across multiple stores, targeted vulnerable consumers, cementing the company’s reputation for unethical conduct.
The Role of Leadership: Ellery Roberts and Louis Bevilacqua
CEO Ellery Roberts is at the center of the allegations, accused of lying to shareholders, misrepresenting financial realities, and orchestrating the looting of subsidiaries. In a recorded conversation in August 2023, Roberts denied plans for a reverse split, only for the company to announce one two days later. His reliance on legal counsel to deflect accountability and his avoidance of earnings calls or unscripted shareholder engagement reflect a deliberate strategy to evade scrutiny.
Louis Bevilacqua, the company’s securities counsel and a preferred shareholder, is implicated in facilitating the alleged fraud. Holding 9% of 1847 Partners Class A Member LLC and 10% of Class B Member LLC, Bevilacqua profited from preferential payouts while retail investors suffered. His dismissal of a forensic audit request as an attempt to “harass the company” and his use of threatening letters to silence critics suggest complicity in protecting the scheme. Bevilacqua’s dual role as counsel and beneficiary raises ethical concerns and underscores the need for an independent investigation.
Alter Ego Liability and Subsidiary Misuse
In February 2024, the former owners of Asien’s Appliances alleged alter ego liability against 1847 Holdings, claiming the company used subsidiaries as extensions of its fraudulent schemes. Evidence of commingling funds, draining resources through management fees, and pushing subsidiaries into bankruptcy supports this claim. The swift settlement of these allegations suggests that discovery would have exposed incriminating evidence, further justifying a forensic audit to uncover the misuse of subsidiaries.
Tax Implications for Investors
The fraudulent practices extend to the tax treatment of investors. 1847 Holdings’ partnership structure allocates exorbitant “investment management fees” on Schedule K-1s, classified as non-deductible miscellaneous itemized deductions under the Tax Cuts and Jobs Act. This reduces investors’ cost basis and limits their ability to offset losses, compounding the financial harm. The fraudulent nature of these fees, relative to investors’ capital accounts, amplifies the need for regulatory scrutiny.
The Strategic Deception of Low-Market-Cap Fraud
Unlike high-profile frauds tied to inflated market caps, 1847 Holdings’ scheme thrives under the radar, using its low market cap to evade scrutiny. By presenting itself as a legitimate holding company while looting subsidiaries, the company obscures the alleged theft of over $700 million. This strategic deception highlights the need for regulators to look beyond market capitalization when assessing fraudulent conduct, as the damage caused is disproportionate to the company’s size.
Intimidation Tactics and Resistance to Transparency
My efforts to demand transparency have been met with intimidation, including threatening letters accusing me of violating California law for recording a conversation with Roberts, despite New York’s single-consent laws. Bevilacqua and his firm have attempted to silence me through baseless claims of extortion and defamation, revealing their desperation to protect the alleged scheme. The company’s refusal to conduct an earnings call or engage in unscripted dialogue further underscores its aversion to accountability.
The Case for a Forensic Audit
A forensic audit is essential to uncover the full extent of the alleged fraud, trace the flow of funds, and identify those responsible. The company’s rejection of my September 2023 audit request, followed by three additional reverse splits and 99.999% losses, confirms the urgency of this demand. An audit would examine questionable disbursements, coordinated defaults, subsidiary bankruptcies, and insider enrichment, providing clarity on the alleged theft of hundreds of millions.
Invocation of the NYSE Clawback Provision
The NYSE Clawback Provision must be enforced to recover funds allegedly stolen through fraudulent practices. This mechanism is not only about financial restitution but also about restoring trust in the financial system. The scale of the losses—potentially $700 million—demands swift action to hold insiders accountable and deliver justice to affected shareholders, customers, and employees.
The Human Cost: Shareholders, Customers, and Employees
The alleged fraud has left thousands financially devastated. Shareholders, including myself, have lost nearly all their investments, with no viable path to recovery due to bankruptcy stays on class action lawsuits. Customers were scammed through undelivered appliances and worthless warranties, with complaints flooding platforms like Reddit. Employees faced job losses and uncertainty as subsidiaries collapsed, highlighting the broad impact of the alleged misconduct.
Regulatory and Legal Implications
The allegations against 1847 Holdings and Polished raise serious questions about regulatory oversight in low-market-cap companies. The SEC must investigate potential violations, including Leonite Capital’s unregistered status and the company’s misleading financial practices. The coordinated defaults, questionable disbursements, and alter ego liability claims suggest criminal behavior, warranting law enforcement scrutiny. The failure to address this fraud risks eroding confidence in financial markets and emboldening similar schemes.
A Challenge to Leadership
I challenge Ellery Roberts, Louis Bevilacqua, and other insiders to defend these allegations publicly, without hiding behind legal counsel. Their refusal to engage in transparent dialogue and their reliance on intimidation tactics reveal a consciousness of guilt. A public reckoning is necessary to expose the truth and restore accountability.
Conclusion: A Call to Action
The alleged fraudulent schemes of 1847 Holdings and Polished represent a betrayal of trust that has devastated thousands of stakeholders. This letter is a call to action for shareholders to unite in demanding an independent forensic audit and the enforcement of the NYSE Clawback Provision. Regulators and law enforcement must act decisively to investigate the alleged theft of over $700 million, hold those responsible accountable, and prevent further harm.
The time for silence and inaction has passed. Shareholders, customers, and employees deserve transparency, restitution, and justice. I will continue to advocate for accountability, undeterred by intimidation, until the full extent of this alleged fraud is exposed and those responsible face the consequences of their actions.
Sincerely,
Matthew Miller
Strategic Risk, LLC
Former Shareholder, 1847 Holdings LLC
[email protected]
