SEC Sues Florida Litigation Funder Over Mass Tort Investor Scam

Summary

SEC says fraudulent litigation finance scheme misled investors
Money instead used for father-son duo’s personal expenses

Bloomberg Law

"The Securities and Exchange Commission is accusing two Florida men of defrauding investors out of $125,000 in a litigation finance scheme.

The agency on Friday sued Michael Chhabra and his father, Vineet “Vincent” Chhabra, in a federal court in Washington. SEC lawyers say the pair used money invested in their supposed litigation finance company as a personal slush fund.

The Chhabras promised investors returns and interest from lending money to law firms to finance mass tort litigation, according to the SEC. They allegedly used the funds instead for personal expenses, like rent, food, and travel, and to pay off debts from other ventures.

The Chhabras formed Tort Fund LLC in April 2019 to lend money to law firms actively litigating mass tort suits against manufacturers of household products and specific medical devices. They used specialty purpose vehicles to raise funds and advertised the investment opportunity on Facebook.

Tort Fund LLC did not provide any such funding, however, and did not enter agreements with law firms to do so, the SEC said.

Some of the $125,000 it garnered from three investors allegedly was used for legal fees for litigation against Michael Chhabra in bankruptcy proceedings, expenses to clean up Michael Chhabra’s online reputation, and purchases at restaurants, groceries, and retail stores. About $40,000 allegedly went into perpetuating the fraud and compensating individuals for soliciting additional investors..."

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SEC Sues Florida Litigation Funder Over Mass Tort Investor Scam

Published by Administrator on September 6, 2024September 6, 2024

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SEC Sues Florida Litigation Funder Over Mass Tort Investor Scam

Published by Administrator on September 6, 2024September 6, 2024

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