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SEC Charges Veros Partners Alleging $15 Million Ponzi Scheme

 

On April 22, 2015, the Securities and Exchange Commission (“SEC”) filed a Complaint in the District Court for the United States Southern District of Indiana, Indianapolis Division (the “Complaint”), against Veros Partners, Inc., Matthew D. Habb, Jeffery B. Risinger, Veros Farm Loan Holding LLC, Tobin J. Senefeld, FarmGrowCap LLC, and PinCap LLC alleging that Veros Partners, Inc. and Mr. Habb, its president, propagated and executed a Ponzi scheme and “fraudulently raised at least $15 million from at least 80 investors … mostly from Veros’ own clients, in two separate farm loan offerings.”

The Complaint states that SEC seeks “to enjoin Defendants from raising additional investor funds, to prevent them from ensnaring more victims in their scheme, and to prevent the further dissipation of investor assets.” The SEC also seeks “the disgorgement of Defendants’ ill-gotten gains, as well as prejudgment interest and significant civil penalties.”

The Ponzi-scheme offerings took place from 2013 to 2014, when investors purchased securities issued by Veros Farm Loan Holding LLC and FarmGrowCap LLC, two companies run by Matthew D. Habb, Jeffrey B. Risinger and Tobin J. Senefeld.  Investors were told that their funds would be used “to make short-term operating loans to farmers for the 2013 and 2014 growing seasons.”  Although some funds were used for the stated purpose, most was used to cover the unpaid debt of the farms, and $7 million was used to pay investors in other, unrelated offerings.  Further, over $800,000 went directly to Matthew D. Habb, Jeffrey B. Risinger and Tobin J. Senefeld for “success” and “interest rate spread” fees.

In 2013, Mr. Habb and Mr. Risinger allegedly used $2.8 million of the 2013 investors’ funds to pay off investors in defaulted 2012 loans, and used $1.9 million of the 2013 investors’ funds to repay investors in a 2014 “Bridge Loan” Offering set to mature on the same day.  In 2014, they used over $2.4 million of the 2014 investors’ funds to repay the 2013 investors and the 2014 Bridge Loan Offering.  Mr. Habb also encouraged many of the 2013 investors to “roll over” their principal into the 2014 loan offering as part of the Ponzi scheme, “knowing that the actual amounts repaid by the farmers on the 2013 loans would be far less than what was necessary to fully repay all of the 2013 investors.”

Lax & Neville LLP has extensive experience in successfully prosecuting and defending claims on behalf of customers who have suffered losses, including losses incurred as a result of a Ponzi scheme.  Indeed, Lax & Neville LLP has successfully represented clients in various aspects in the Madoff Ponzi scheme and defended various victims of the Agape World Ponzi scheme in the Eastern District of New York Bankruptcy Court. Further, Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.