Cannabis Investor Accused in ‘Ponzi-Like’ Scheme
Credit: Somchairakin
The U.S. Securities and Exchange Commission filed a lawsuit on Monday against California businessman Robert Newell and one of his former companies, Black Hawk Funding. They alleged that Newell orchestrated a $38 million “Ponzi-like” scheme to defraud investors.
The lawsuit, filed in U.S. District Court in the Central District of California, alleges that 63-year-old Newell raised $37.7 million from about 200 investors nationwide between 2016 and 2019 to ostensibly invest in legal marijuana businesses. Instead, he “engaged in various undisclosed and unauthorized uses of the funds, including making Ponzi-like payments to investors and paying for the expenses of unrelated entities.”
Newell founded Black Hawk Funding in 2011, originally with a focus on the real estate industry, but he pivoted to cannabis following recreational legalization in California in November 2016, according to the lawsuit. Newell acted as the principal financial adviser to three private funds: Verde Ventures Inc., Verde Holdings Inc., and Verde Partners Inc, according to Green Market Report.
Another separate corporation, National Asset Valuation Services, was also created by Newell “as a conduit to misappropriate money” from two of the three funds, the SEC lawsuit alleges.
“Newell engaged in a scheme and deceptive course of business to defraud investors by creating a false impression that the Verde Funds were more successful than they were, which allowed Newell to continue raising funds from investors and to enrich himself at the expense of the investors,” the SEC alleged in the suit.
