B. Riley Financial Faces Scrutiny Over $580 Million Loss and Prophecy Ponzi Scheme Involvement

B. Riley Financial (RILY) is facing significant scrutiny and potential legal repercussions due to a series of questionable investments and financial decisions. The company purchased Franchise Group's (FRG) Badcock for $580 million and later sold it to Conn's for $62 million, incurring a substantial loss. Additionally, RILY still owns certain Badcock loans and has warned that $148 million in loans to Conn's may be uncollectible due to worthless collateral. The company has also made other dubious investments, including $185 million for Magic Jack and $170 million for Net Zero and Juno, which are considered obsolete in the current market. Furthermore, documents suggest RILY's involvement in financing the Prophecy Ponzi Scheme, which contradicts previous statements from Sullivan & Cromwell and Marcum LLP. Allegations have surfaced that Bryant Riley and his agents may have placed toxic investments into clients' accounts, raising concerns about fiduciary breaches. The Prophecy Ponzi Scheme also involves Kahn entities.