💥RAD Ponzi Scheme, Bro💥
ZipRecruiter, Inc. ($ZIP) circles the drain + RAD Diversified REIT, Inc. lands in chapter 11
⏩One to Watch: ZipRecruiter, Inc. ($ZIP)⏩
Santa Monica, CA-based ZipRecruiter, Inc. ($ZIP) (the “company”) is a “two-sided marketplace that enables employers and job seekers to connect with one another online to fill job opportunities.” In other words, it’s a job board not unlike Monster or CareerBuilder, both of which filed chapter 11 midway through last year.
The company makes money from potential employers in two similar ways. “Subscription revenue” consists of employer time-based job postings, upsell services (e.g., more prominently displayed job postings), and access to a database of resumes, while “performance-based revenue” takes a more Google Ads approach to postings. Under it, employers pay per job-seeker click on a job posting, typically opting for that approach when they have “… consistent hiring needs and sophisticated recruitment campaigns where they manage incoming applications and job postings on their own applicant tracking systems.”
Over the last several years, subscription revenue has composed ~77-81% of revenue, with performance-based making up the remainder:
Holy hell, though, just look at total revenue line ☝️. Talk about …
In reality, though, it’s mostly a regression back to the mean: in FY’19, total revenue came in at ~$429.6mm and a year later, it was slightly lower at $418.1mm.*
The years that followed were the anomaly. The COVID vaccine rolled out, folks were getting out of the house and — more importantly — back to work, and the economy experienced “… a significant and broadly distributed increase in demand for labor.” Short-lived too, but enough to take advantage of. As revenue was in the process of increasing 77% YoY in ‘21, company management knew it was an opportune time to …
Hence the ticker. In May ‘21, the company’s direct listing opened at $20/share, which climbed in November to ~$31.
A high it’s not seen since.
Why? Simple. By the third and fourth quarter of ‘22, revenue growth already reflected “… more typical seasonal patterns” in line with the pre-COVID era. Fast forward three years, and the company’s total revenue figures are out of orbit and solidly back to earth:
Unsurprisingly, the company’s stock walked in the wrong direction too. In fact, excepting a very brief pop in February ‘23, it’s been below the company’s opening $20 price since May ‘22 — a year after listing — and today, you can snag a slice for the low, low price of [$1.98] as of March 24, 2026.
We’ll venture a guess and say this ain’t the bottom either.
The market seems to think that anyway. You see, when flying high, the company issued $550mm in 5% senior unsecured notes in January ‘22, and per FINRA, those bad boys are currently trading at ~62c as of March 24, 2026.
The company, however, has plenty of runway before a restructuring in earnest. The notes don’t mature until January ‘30, and aside from them, the company only has $2.3mm in funded debt from letters of credit issued under a $290mm credit facility with JPMorgan Chase Bank, N.A. ($JPM), the balance of which is fully available to be drawn. Not that the company will need to borrow in the near-term; as of December 31, 2025, it is sitting on ~$188mm of cash and cash equivalents and $221.1mm in marketable securities.
That said, the forecast ain’t great. Mostly because the job market is in the proverbial sh*tter:
How bad was that? Here’s NBC:
“… [L]ast year will go down as the worst year for hiring since 2020, or since 2003 outside of a recession.
Seeing the problems on the horizon, on April 10, 2025, Fitch downgraded the company from B+ to B “… due to weak hiring amid a more competitive environment and deteriorating macroeconomic landscape, resulting in high leverage.” A rating it reaffirmed on February 5, 2026.
For FY’26, the company is projecting flat YoY revenue while improving EBITDA margin from 9% to 14%. It must mean in the back-half of the year because Q1’26 projections don’t marry up:
Perhaps the company thinks Jennifer Saenz will help? On February 5, 2026, she joined the company’s board, although we’re not quite certain what the play is. Ms. Saenz’s background is in food and beverages, currently serving as CCO of Albertsons ($ACI), down 14.4% YoY and which she joined in July ‘21 after a nearly sixteen year stint at PepsiCo Inc.($PEP). Notably, the company chose her “… to serve on the Board because of her experience and expertise as an executive of multi-national corporations.”
Will that be enough? We doubt it, but hope springs eternal.
*Per the company’s Form S-1.
💥New Chapter 11 Bankruptcy Filing - RAD Diversified REIT, Inc.💥
Back on March 1, 2026, Tampa-based RAD Diversified REIT, Inc. (“RAD Diversified”) and four affiliates (collectively, with RAD Diversified, the “debtors”) filed “emergency” chapter 11 bankruptcy cases in the Middle District of Florida (Judge McEwen). The debtors are … um … let’s have Florida Attorney General James Uthmeier take this one:
“This appears to be a Ponzi scheme …”
Why? Here he is again:
“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.”
The front was apparently masquerading as a REIT. According to CRO and first day declarant Katie Goodman, the “business,” born in May ‘17, was “formed to acquire, manage, renovate or reposition, and operate real property, consisting primarily of single family residential properties and vacant lots located in Florida, Pennsylvania, Texas, and New Jersey.”
A real winner too. Founders Brandon “Dutch” Mendenhall and Amy Vaughn …
… only give off good vibes. We mean, check out Mr. Mendendall’s humbleness in self-proclaiming to be “… one of the great financial thought leaders in America.”
Oh brother.
In fairness, “ripping off your investors” is a “financial thought.” Allegedly. Ms. Goodman’s declaration is scant on the details on those matters …
“The Debtors have also been the subject of some private litigation by investors, including a civil RICO suit in which a well-known media personality asserts that certain affiliates of the Debtors allegedly misled investors.”
… but we dug up the underlying complaint filed by conservative media “personality” Buck Sexton:
“This case stems from the elaborate scheme by the Defendants to steal millions of dollars from unsuspecting investors, including the Plaintiff, by offering too good to be true returns on investments, while leveraging the good will and popularity of celebrities, such as the Plaintiff, to add a false sense of legitimacy in order to hide their criminal endeavors.”
How “too good to be true”? Enough that anybody with a pulse should have seen it coming. From a November ‘21 US Securities and Exchange Commission (the “SEC”) letter to the debtors:
“We note the statements on your website at https://raddiversified.com that RAD Diversified made a 36.7% annualized return in 2020 and has cleared 35.48% in the past 12 months. We also note your statement that RAD Diversified offers monthly distributions, a 5% bottom-line guarantee… Explain the basis for your statement regarding a 5% bottom line guarantee.”
The public is still waiting on that explanation. Nevertheless, the scheme carried on. Per an offering memorandum (the “OM”) filed with the SEC, the company raised ~$73.8mm from 5k+ suckers investors through March ‘23.
Again, there were signs along the way. A year earlier, in March ‘22, The Philadelphia Inquirer reported:
“… [S]ome of the rents in the [] inventory of RAD’s holdings appear to be overstated, in light of the buildings’ conditions, as characterized by [Philadelphia’s Department of Licenses and Inspections]. The boarded-up rowhouse at 4243 Leidy Ave., for example, is said to be earning the company $14,400 a year in rent — even though it has no rental license and its most recent license was as a vacant property.”
Okay, $14.4k per year doesn’t sound like much — no doubt some of you UESers reading this are paying more than that each and every month (🙄) — but please don’t tell us you skimmed over “boarded-up.” It’s an utter sh*thole:
One that, hopefully, no one calls “home.”
Anyway, after having failed to qualify the OM within nine months, on February 2, 2024, the SEC declared the offering statement abandoned, which prompted a response from the debtors. They “temporarily”, lol, froze redemptions.
A deep freeze that never thawed. Here’s the reason, per Forbes:
“According to one investor who spent time on RAD’s board with access to its books during the summer of 2025, there were numerous foreclosures in its real estate portfolio, and assets were missing amounting to an estimated $100 million.”
Most likely, duped investors will get back little of that in chapter 11. Per Ms. Goodman, “… most of the real properties owned by the Debtors are subject to deeds of trust, mortgages, and other secured debt,” only “certain” of which have value extending beyond the mortgage debt and “many” of which are vacant.*
Ms. Goodman and independent director Michael Roye appear to think so anyway. They are calling it quits on the debtors’ future, opting to sell what they can and desire to establish “… a post-confirmation trust to manage and liquidate the remaining properties.”
If they can actually confirm a plan. Seems real iffy because the debtors filed with $15k in cash and, to fund the cases, “… hope to negotiate consensual use of cash collateral.” In the interim, non-consensual use of a projected ~$90k in monthly rents will work fine for them.
Although, Ms. Goodman and the debtors’ other professionals will be heaps motivated to get to consensual. See what they’ve allocated for themselves in the filed budgets:
Twice even.
… which is far from great for the pros because some work is about to go on “the tab.” On March 24, 2026, the aforementioned mortgage lenders, who were already foreclosing pre-BK, showed up and started firing off motions for relief from the automatic stay (here, here, here, and here) to take their balls properties and go home.
Anyway, on March 5, 2026, Judge McEwen held the first day hearing, where the court granted all requested relief … except the debtors’ employment of financial advisor KapilaMukamal, LLP (Soneet Kapila). Why not? Well, for one, we’re not sure why retention apps were up at all at the first day, but for a second, the Florida AG wasn’t thrilled. It had previously been negotiating with Mr. Kapila to serve as a state court receiver for the debtors and filed an “initial” objection to KapilaMukamal, LLP to “… to have more time to understand the nature of the proposed engagement by Debtor of Mr. Kapila.” Anyway, the court continued that app to March 19, 2026 but still hasn’t ruled, although it did approve a second interim period of cash collateral usage. The next hearing, which’ll presumably include those stay relief motions, is scheduled for April 16, 2026 at 3:30pm ET.
The debtors are represented by Pack Law (Joseph Pack, Jessey Krehl) as legal counsel, (maybe) KapilaMukamal, LLP (Soneet Kapila) as financial advisor, and GGG Partners, LLC (Katie Goodman) as CRO.** Michael Roye is the debtors’ independent director. Mr. Mendenhall is was represented by Bush Ross, P.A. (Kathleen DiSanto, Jeffrey Warren) as legal counsel.
*Tenants have also been withholding rent “… because they have been served with foreclosure lawsuits.”
**Ms. Goodman’s firm was previously retained as financial advisor, but she hasn’t yet spilled the beans on why the switch was made.
📚Resources📚
We have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. 💥You can find it here💥.
📤 Notice📤
Alec Weinberg (Associate) joined Milbank LLP from Goodwin Procter LLP.
Alexander Overton (Associate) joined Latham & Watkins LLP from McMillan LLP.
Bob Frezza (Managing Director) joined CohnReznick from Deloitte.
🍾Congratulations to…🍾
Berkeley Research Group, LLC for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the Inspired Healthcare Capital, LLC chapter 11 bankruptcy cases.
FTI Consulting, Inc. ($FCN) (Narendra Ganti) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the North Star Health Alliance, Inc. chapter 11 bankruptcy cases.
Pachulski Stang Ziehl & Jones LLP (Bradford Sandler, Robert Feinstein, Edward Corma) for securing the legal mandate on behalf of the official committee of unsecured creditors in the Multi-Color Corporation chapter 11 bankruptcy cases.
Province, LLC (Michael Atkinson) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the Carbon Health Technologies, Inc. chapter 11 bankruptcy cases.