2024-09-06 sec-litreleases litigation_release 65 KB 2,294 chars

SEC v. Michael V. Chhabra; Vineet K. Chhabra; Tort Fund LLC; Tort Fund SPV1, LLC; and Tort Fund SPV2, LLC, No. LR-26098, District of Columbia (Sept. 6, 2024) — Press Release

raw: Michael Chhabra, Vineet Chhabra, Tort Fund LLC, Tort Fund SPV1, LLC, Tort Fund SPV2, LLC

Michael Chhabra, Vineet Chhabra, Tort Fund LLC, Tort Fund SPV1, LLC, Tort Fund SPV2, LLC, No. LR-26098 (D.D.C. Sept. 6, 2024)

Caption
SEC v. Michael V. Chhabra, et al.
summary

The SEC charged Tort Fund, LLC and its founders, Michael and Vineet Chhabra, with a fraudulent scheme to misappropriate at least $125,000 from three investors.

paragraph

The SEC charged Tort Fund, LLC and its founders with the fraudulent offer and sale of at least $125,000 in securities to three investors. The defendants allegedly misrepresented that the fund was lending money to law firms for mass tort litigation to generate investor returns. The charges include violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act of 1934.

narrative

The SEC has charged Tort Fund, LLC, and its founders, Michael V. Chhabra and Vineet K. Chhabra, with orchestrating a fraudulent scheme between April and November 2019. The defendants allegedly induced three investors to provide at least $125,000 by falsely claiming the fund was lending money to law firms for mass tort litigation. In reality, no such loans or agreements existed, and the Chhabras allegedly misappropriated the funds for personal expenses and to perpetuate the fraud. The SEC's complaint filed in the District of Columbia alleges violations of the Securities Act of 1933 and the Exchange Act of 1934. The commission is seeking permanent injunctions, disgorgement, prejudgment interest, and civil penalties. Additionally, the SEC is pursuing officer and director bars against both Michael and Vineet Chhabra.

Enriched metadata

Scheme
financial-fraud (95%)
Court
District of Columbia
Entity
Tort Fund, LLC
Classified financial-fraud(confidence 95%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 67% / precision 23%. detection rule →
Parties
Securities and Exchange CommissionMichael V. ChhabraVineet K. ChhabraTort Fund LLCTort Fund SPV1, LLCTort Fund SPV2, LLC
Keywords
tort fundtortfundchhabramichael chhabrallcchhabra vineetvineet chhabraspvsecurities exchangemichaelsecuritieschhabra tortexchange commissionvineet

Exhibits & Attached Documents (1)

Extracted insights

Dollar amounts 1
  • $125K $125,000 $100K–$1M
Entities 7
  • company $125,000 of securities
  • company investments with tort fund
  • person patricia trujillo
  • agency sec complaint
  • agency sec investigation
  • agency Securities and Exchange Commission
  • company tort fund, llc
Triples 10
  • SEC Charged Tort Fund, LLC and its Founders
  • Tort Fund, LLC Offered and Sold $125,000 of Securities
  • Michael v. Chhabra and Vineet K. Chhabra Misappropriated Investors' Money
  • The Chhabras Falsely Claimed Tort Fund was Lending Money to Law Firms
  • The Chhabras Induced Investments with Tort Fund
  • The Chhabras Misappropriated Raised Money for Personal Expenses
  • SEC Complaint Charges Michael Chhabra, Vineet Chhabra, Tort Fund, Tort Fund SPV1, and Tort Fund SPV2
  • SEC Seeks Permanent Injunctions and Disgorgement
  • Patricia Trujillo Conducted SEC Investigation
  • Kingdon Kase, Scott a. Thompson, and Nicholas P. Grippo Supervised SEC Investigation
PDF (from attached: complaint)
Text layers
Extracted body text (2,294c)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26098 / September 6, 2024 Securities and Exchange Commission v. Michael V. Chhabra, et al., Case No. 24-cv-02561 (D.D.C. filed September 6, 2024) SEC Charges Litigation Financing Company and its Founders with Fraud The Securities and Exchange Commission charged Tort Fund, LLC and its founders, Florida residents Michael V. Chhabra and Vineet K. Chhabra, with the fraudulent offer and sale of at least $125,000 of securities to three investors between April 2019 and November 2019 and the misappropriation and misuse of the investors’ money. According to the SEC’s complaint, the Chhabras falsely claimed that Tort Fund was actively lending money to law firms handling mass tort litigation on behalf of victims of allegedly defective medical devices or harmful consumer products. The Chhabras allegedly induced investments with Tort Fund and its related companies, Tort Fund SPV1, LLC and Tort Fund SPV2, LLC, by falsely claiming that investors would earn returns and interest or profits from the law firms’ repayment of their high-interest debt instruments with Tort Fund. Contrary to their representations, Tort Fund and its related companies allegedly had not loaned any money to any law firm to fund mass tort litigation and had no agreements to do so. The complaint also alleges that the Chhabras misappropriated the money they raised to pay their own personal expenses and used the remainder to try to find new investors to perpetuate their fraudulent scheme. The SEC’s complaint, filed in federal court in the District of Columbia, charges Michael Chhabra, Vineet Chhabra, Tort Fund, Tort Fund SPV1 and Tort Fund SPV2 with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks permanent injunctions against all defendants and disgorgement, prejudgment interest, civil penalties and officer and director bars against Michael Chhabra and Vineet Chhabra. The SEC’s investigation was conducted by Patricia Trujillo and was supervised by Kingdon Kase, Scott A. Thompson, and Nicholas P. Grippo in the Philadelphia Regional Office. The litigation will be led by Kara F. Sweet and Judson T. Mihok and supervised by Gregory R. Bockin.
OCR text (2,294c · html-text · 99% conf)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26098 / September 6, 2024 Securities and Exchange Commission v. Michael V. Chhabra, et al., Case No. 24-cv-02561 (D.D.C. filed September 6, 2024) SEC Charges Litigation Financing Company and its Founders with Fraud The Securities and Exchange Commission charged Tort Fund, LLC and its founders, Florida residents Michael V. Chhabra and Vineet K. Chhabra, with the fraudulent offer and sale of at least $125,000 of securities to three investors between April 2019 and November 2019 and the misappropriation and misuse of the investors’ money. According to the SEC’s complaint, the Chhabras falsely claimed that Tort Fund was actively lending money to law firms handling mass tort litigation on behalf of victims of allegedly defective medical devices or harmful consumer products. The Chhabras allegedly induced investments with Tort Fund and its related companies, Tort Fund SPV1, LLC and Tort Fund SPV2, LLC, by falsely claiming that investors would earn returns and interest or profits from the law firms’ repayment of their high-interest debt instruments with Tort Fund. Contrary to their representations, Tort Fund and its related companies allegedly had not loaned any money to any law firm to fund mass tort litigation and had no agreements to do so. The complaint also alleges that the Chhabras misappropriated the money they raised to pay their own personal expenses and used the remainder to try to find new investors to perpetuate their fraudulent scheme. The SEC’s complaint, filed in federal court in the District of Columbia, charges Michael Chhabra, Vineet Chhabra, Tort Fund, Tort Fund SPV1 and Tort Fund SPV2 with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks permanent injunctions against all defendants and disgorgement, prejudgment interest, civil penalties and officer and director bars against Michael Chhabra and Vineet Chhabra. The SEC’s investigation was conducted by Patricia Trujillo and was supervised by Kingdon Kase, Scott A. Thompson, and Nicholas P. Grippo in the Philadelphia Regional Office. The litigation will be led by Kara F. Sweet and Judson T. Mihok and supervised by Gregory R. Bockin.