SEC v. ROBERT NEWELL; and BLACK HAWK FUNDING, INC., No. 5:24-cv-01524, Central District of California (July 23, 2024) — Complaint

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SHEILA O’CALLAGHAN (Cal. Bar No. 131032)
Email:  [email protected]
KASHYA SHEI (Cal. Bar No. 173125)
Email:  [email protected]
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
Monique C. Winkler, Regional Director
Jason H. Lee, Associate Regional Director
Marc Katz, Regional Trial Counsel
44 Montgomery Street, Suite 2800
San Francisco, CA 94104
Telephone: (415) 705-2500
Facsimile:  (415) 705-2501
UNITED STATES DISTRICT COURT
CENTRAL DISTRI
CT OF CALIFORNIA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
          v.
ROBERT NEWELL and BLACK HAWK
FUNDING, INC.,
Defendants.
Case No.
COMPLAINT
Plaintiff Securities and Exchange Commission (“SEC”) alleges:
JURISDICTION AND
VENUE
1. This
Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1), and 22(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C.
§§
 77t(b), 77t(d)(1), and 77v(a)]; Sections 21(d), 21(e), and 27 of the Securities
Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u(d), 78u(e), and 78aa]; and
Sections 209(d), 209(3)(1), and 214 of the Investment Advisers Act of 1940
(“Advisers Act”) [115 U.S.C. §§ 80b-9(d), 80b-9(e)(1), and 90b-14].

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2.Defendants Robert Newell (“Newell”) and Black Hawk Funding, Inc.
(“Black Hawk”) (together refer
red to as “Defendants”) have, directly or indirectly,
made use of the means and instruments of interstate commerce or of the mails in
connection with the acts, transactions, practices, and courses of business alleged in this
complaint.
3.Venue is proper in this district pursu
ant to Section 22(a) of the Securities
Act [15 U.S.C. § 77v(a)], Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)],
and Sections 209(d) and 209(e)(1) of the Advisers Act [115 U.S.C. §§ 80b-9(d), 80b-
9(e)(1)] because certain transactions, acts, practices, and courses of conduct
constituting violations of the federal securities laws as alleg
ed in the complaint
occurred in Riverside County, California. Newell resides in this district and Black
Hawk is headquartered in this district.
SUMMARY
4.From about November 2016 through at least September 2019 (the
“relevant t
ime period”), Defendants Newell and Black Hawk raised approximately
$37.7 million from over 200 investors across the United States for the disclosed
purpose of investing in the cannabis industry. Rather than use the money raised in the
stated manner, however, Defendants 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. Additionally, Newell misappropriated at least
around $668,000 of investor funds for his own personal benefit. During the relevant
time period, Newell was the control person and Chief Executive Officer of Black
Hawk.
5.Based on the foregoing, Defendants violat
ed the antifraud provisions of
the federal securities laws. Specifically, Defendants violated Section 17(a) of the
Securities Act [15 U.S.C. § 77q(a)]; Section 10(b) of the Exchange Act [15 U.S.C. §
78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; and Sections 206(1),

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206(2), and 206(4) of the Advisers Act [15 U.S.C. §§ 80b-6(1), (2), and (4)] and Rule
206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
6. With this complaint, the SEC seeks against the Defendants permanent
injunctions prohibiting future violations of the federal securities laws and injunctions
prohibiting Defendants from directly or indirectly, including, but not limited to,
through any entity owned or controlled by either Defendant, participating in the
issuance, purchase, offer, or sale of any securities, with a carve-out as to Defendant
Newell that permits trading in his personal accounts. In addition, against Defendant
Newell only, the SEC seeks an order requiring Newell to disgorge his ill-gotten gains,
along with prejudgment interest, an order requiring Newell to pay civil penalties, and
an order barring Newell from serving as an officer or director of a publicly traded
company.
DEFENDANTS
7. Robert Newell, age 63, resides in Indio, California. He founded Black
Hawk in or about 2011 and, until his resignation in September 2019, was its CEO and
control person. During the relevant time period, Newell owned all of Black Hawk’s
voting shares and almost all of its non-voting common shares.
8. Black Hawk Funding, Inc. was incorporated in Nevada in 2011 and,
from at least November 2016 through approximately October 2019, was dually
headquartered in Coeur d’Alene, Idaho and La Quinta, California. Black Hawk
managed various private funds and other assets. From 2016 to 2019, Black Hawk
raised approximately $37.7 million from over 200 investors across the United States in
three private funds created to invest in the cannabis industry. Black Hawk was the
investment adviser to the three private funds and had exclusive control over the funds,
determined which investments the funds made, and received compensation for
advising and managing the funds.

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OTHER RELEVANT ENTITIES
9. Verde Ventures, Inc. (“Verde Ventures”) was a pooled investment
vehicle Defendants created and offered to investors beginning in approximately
November 2016 for the stated purpose of providing loans and venture capital for
“Marijuana emerging markets.” From approximately November 2016 to January 2018,
Defendants raised about $9.8 million for Verde Ventures from over 50 investors by
selling securities that purportedly paid ten percent annual returns on a quarterly basis
and that purportedly included potential profit sharing of eight percent on the first $10
million of net income.
10. Verde Holdings, Inc. (“Verde Holdings”) was a pooled investment
vehicle Defendants created and offered to investors beginning in approximately
December 2017 for the stated purpose of developing “Cannibis [sic] grow facilities,
cultivation projects, distribution networks, and manufacturing centers.” From
approximately December 2017 to November 2018, nearly $21.1 million was raised for
Verde Holdings from almost 160 investors by selling securities that purportedly paid
ten percent annual returns on a quarterly basis and that purportedly included potential
profit sharing of eight percent on the first $20 million of net income.
11. Verde Partners, Inc. (“Verde Partners”) was a pooled investment vehicle
Defendants created and offered to investors from approximately February 2019 to
approximately October 2019 to invest in the cannabis industry. Defendants raised
nearly $6.8 million from over 40 investors through the sale of Verde Partners preferred
stock. Defendants disclosed in Verde Partners’ offering document that investors would
receive a “pro rata cash dividend equal to 10.0% of the Preferred Sock’s purchase
price,” with the timing of the payments to be declared by Verde Partners’ Board of
Directors. In addition, the preferred shares purportedly included potential profit
sharing of eight percent on the first $40 million of net income. In late 2019,
Defendants ceased fundraising from investors for Verde Partners shortly after Newell’s
departure from Black Hawk in September 2019.

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12. National Asset Valuation Services, LLC (“NAVS”) was a purported
Washington company founded in 2008, which was wholly owned by Newell. But in
actuality, Newell used NAVS as a conduit to misappropriate money from Verde
Ventures and Verde Holdings for his personal benefit.
THE ALLEGATIONS
13. In approximately 2011, Newell founded Black Hawk for the primary
purpose of providing hard money loans for real estate transactions. By approximately
2016, Black Hawk managed or had an ownership interest in dozens of affiliated
entities. At all relevant times, Newell controlled Black Hawk.
14. By at least early 2016, Defendants’ businesses were struggling and
Newell determined that investing in the cannabis industry could be profitable. Newell
then shifted Black Hawk’s business to investing in the cannabis industry by raising
money through three securities offerings. From about November 2016 through
approximately September 2019, Newell through Black Hawk offered to investors three
private funds created to invest in the cannabis industry: Verde Ventures, Verde
Holdings, and Verde Partners (collectively, the “Verde Funds”).
Defendants’ Fraudulent Conduct
A. Defendants’ Materially False and Misleading Statements to Investors
15. In order to raise money for the Verde Funds, Defendants provided
offering materials to investors, which for Verde Ventures and Verde Holdings
consisted of one-page documents, each entitled “Executive Loan Summary,” and for
Verde Partners consisted of a private placement memorandum (“PPM”).
16. The Executive Loan Summaries and the PPM stated that the money raised
would be invested in the cannabis industry, including a grow facility located in
Coachella, California (the “Coachella Campus”). For Verde Ventures and Verde
Holdings, the Executive Loan Summaries also stated that investments could include
other cannabis-related projects such as cultivation, distribution, extraction, a lab testing
facility, and manufacturing. The Verde Partners PPM separately disclosed that investor

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funds could be used “to finance other opportunities consistent with the Company’s
[Verde Partners’] plan of operation,” which were specific to the cannabis industry. The
PPM also disclosed that a management fee would be paid by Verde Partners to Black
Hawk. No other use of investor funds was disclosed by the Executive Loan Summaries
and PPM.
17. The Executive Loan Summaries for Verde Ventures and Verde Holdings
disclosed that investors’ securities purchases would carry a ten percent annual return,
paid quarterly. The PPM for Verde Partners stated that investors would receive a ten
percent cash dividend when declared by Verde Partners’ Board of Directors.
18. But substantial portions of investor funds were not invested in the
cannabis industry and were instead used to make Ponzi-like payments to investors;
were used for undisclosed purposes such as for other Black Hawk affiliated/managed
entities not in the cannabis industry or to pay salespersons’ commissions; and were
misappropriated by Newell. These uses of investor funds were not disclosed to
investors or authorized by Verde Ventures’ and Verde Holdings’ Executive Loan
Summaries or Verde Partners’ PPM.
B. Defendants Misused Investor Proceeds.
i. Defendants Paid Returns to Investors Through Ponzi-like
Payments.

19. From at least November 2016 through approximately September 2019,
inflows of capital to Black Hawk consisted primarily of money raised from the Verde
Funds’ investors. During this relevant time period, the Verde Funds were not profitable
and lacked sufficient revenue to pay the ten percent returns promised to investors.
20. Nevertheless, from approximately April 2017 through June 2019, on a
quarterly basis, Newell ordered Black Hawk employees to pay the ten percent
purported returns to investors. Newell made the ten percent payments to investors even
though he knew that the money used to make payments was sourced from other

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investors’ money—money that Defendants represented to investors would be used to
invest in the cannabis industry.
21. Defendants knew, or were reckless in not knowing, that these ten percent
Ponzi-like payments that were purportedly returns to investors were in fact a misuse of
investor money, which created the false impression to new investors and lulled existing
investors into believing that the Verde Funds’ investments were successful and
lucrative. Newell and Black Hawk continued to use the Executive Loan Summaries
and the PPM to raise money from investors, even while knowing that they were unable
to pay a ten percent return based on the underlying investments of the Verde Funds,
which were unprofitable.
ii. Defendants Improperly Commingled and Further Misused
Investor Funds.

22. At the time of their investments, Black Hawk, through the Verde Funds’
offering documents, informed investors that their money would be used for
investments in the cannabis industry. But beginning in December 2016, as Black
Hawk’s other businesses were struggling, Newell commingled funds by first
transferring money from Verde Ventures to Black Hawk, and then disbursing that
money to other Black Hawk managed or affiliated entities. Once Verde Holdings was
established, Newell almost immediately engaged in the same conduct of transferring
money out of Verde Holdings to Black Hawk to be disbursed as Newell saw fit. These
significant transfers from Verde Ventures and Verde Holdings to Black Hawk resulted
in an outstanding balance owed by Black Hawk of at least $2.5 million by September
30, 2019, when Newell was forced out of Black Hawk. These transfers to Black Hawk
that were then disbursed to other Black Hawk-affiliated entities provided no benefit to
Verde Ventures or Verde Holdings. They were not for the purposes disclosed in the
offering documents and did not provide any other financial benefit to the two Verde
funds. Thus, these undisclosed transfers were a misuse of the investors’ funds.

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23. In addition, Newell also misused investor funds by paying undisclosed
brokerage commissions. The Executive Loan Summaries did not disclose to investors
that their money could be used to pay sales commissions. But starting in or about
December 2016 through May 2018, when salespersons sold securities in Verde
Ventures and Verde Holdings, Newell paid sales commissions directly from the two
Verde funds. These sales commission payments totaled at least $408,689.

iii. Newell Misappropriated Investor Funds.
24. From about February 2017 through October 2018, Newell
misappropriated at least around $668,000 of investors’ money from Verde Ventures
and Verde Holdings by: (a) paying off the second mortgage on a property owned by
NAVS, an entity Newell owns, (b) using Verde money to pay himself for purported
rent and other business expenses for Verde Ventures and Verde Holdings, and (c)
taking profits from selling shares of a startup entity, where the shares belonged to
Verde Ventures and Verde Holdings.
25. NAVS, an entity wholly owned and controlled by Newell, owned Black
Hawk’s office in Coeur d’Alene, Idaho (the “Office”). NAVS had a second mortgage
on the Office.
26. In March 2018, in two separate transactions, money from Verde Holdings
was used to pay down $310,300 on the second mortgage on the Office. In the first
transaction, on or about March 2018, Newell directed Black Hawk to transfer $100,000
from Verde Holdings to pay the second mortgage. In the second transaction, on or
about March 2018, Newell used approximately $210,300 ultimately sourced mostly
from Verde Holdings to pay the second mortgage. Newell did not use any of his own
money in paying down the second mortgage. When Newell sold the Office in June
2018, he received $500,000 in sales proceeds and did not repay the approximately
$310,300 owed to Verde Holdings.

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27. From approximately February 2017 to October 2018, Newell also
misappropriated $212,000 by charging Verde Ventures and Verde Holdings
undisclosed and illegitimate costs in the form of rent for purported use of the Office
and for his purported business travel and office expenses. The rent paid by the two
Verde funds was purportedly for the Office, but the two funds already paid rent for an
office located in La Quinta, California, where the funds’ operations were based.
During that same period, Newell also transferred money from the two Verde funds to
NAVS for his unexplained purported expenses, which were in round thousand dollar
amounts and included reimbursements for personal expenses such as spending at
casinos, cash withdrawals, making first mortgage payments on the Office, and other
personal expenses such as meals. These payments were not disclosed to investors in
Verde Ventures and Verde Holdings’ Executive Loan Summaries or in any other
documents at any time during the relevant time period.
28. Newell also misappropriated $146,000 from Verde Ventures and Verde
Holdings when he directed the sale of shares in a cannabis startup, High Desert
Management, LLC (“High Desert”), which shares should have belonged to those two
funds. The High Desert shares were obtained in a manner that Newell knew resulted in
the shares belonging to Verde Ventures and Verde Holdings. Newell provided no
money to acquire the shares. Instead, these shares were acquired in part using money
from Verde Ventures and Verde Holdings and then sold at a high markup to other
investors. Newell profited $146,000, even though the shares belonged to Verde
Ventures and Verde Holdings. Newell also admitted that these shares rightfully
belonged to Verde Ventures and Verde Holdings.
C. Newell and Black Hawk Were Investment Advisers.
29. Black Hawk and Newell were investment advisers to the Verde Funds.
Newell, as Black Hawk’s then CEO, managed the affairs of the Verde Funds,
including the investments the Verde Funds made in the securities of cannabis startups.

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30. Additionally, Black Hawk received compensation for its services in the
form of a four percent management fee paid by Verde Partners as disclosed in its PPM.
Black Hawk also received compensation from Verde Ventures and Verde Holdings,
because those two funds paid Black Hawk’s expenses, such as rent for the La Quinta
office, utilities, and salaries that otherwise would have been paid by Black Hawk.
31. Newell was compensated in the form of a salary and dividends from
Black Hawk.
32. As both Newell and Black Hawk provided advice to the Verde Funds
regarding investments in securities and were compensated for their advice, they both
acted as investment advisers.
D. Newell and Black Hawk Acted With Scienter.
33. Newell drafted, reviewed, and had final authority over the Executive Loan
Summaries and PPM provided by Black Hawk to the Verde Funds’ investors.
Additionally, Newell himself engaged in the misuse of investors’ funds. His actions
included:  making the Ponzi-like payments, which he knew came from investors’
capital; transferring Verde Ventures and Verde Holdings investor money at his
discretion for other uses unrelated to those funds; and misappropriating investors’
money. Newell knew, or was reckless in not knowing, that the Verde Funds’ Executive
Loan Summaries and PPM contained materially false statements and omissions, and
were misleading.
34. In addition, 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. Newell knew, or was
reckless in not knowing, that he engaged in a scheme to defraud investors and potential
investors.
35. As Newell was during the relevant period the CEO and control person of
Black Hawk, Newell’s scienter is imputed to Black Hawk.

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FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
36. The SEC realleges and incorporates by reference paragraphs 1 through 35.
37. Newell and Black Hawk, by engaging in the acts and conduct described
above, directly or indirectly, in connection with the purchase or sale of securities, by
use of means or instrumentalities of interstate commerce, or of the mails, with scienter:
a. Employed devices, schemes, or artifices to defraud;
b. Made untrue statements of material facts or omitted to state
material facts necessary in order to make the statements made, in
light of the circumstances under which they were made, not
misleading; and
c. Engaged in acts, practices, or courses of business which operated or
would operate as a fraud or deceit upon other persons, including
purchasers of securities.
38. By reason of the foregoing, Newell and Black Hawk violated, and unless
restrained and enjoined, are reasonably likely to continue to violate, Section 10(b) of
the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5].

SECOND CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act
39. The SEC realleges and incorporates by reference paragraphs 1 through 35.
40. Newell and Black Hawk, by engaging in the acts and conduct described
above, directly or indirectly, in the offer or sale of securities, by use of the means or
instruments of transportation or communication in interstate commerce or by use of the
mails:
a. With scienter, employed devices, schemes, or artifices to defraud;

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b. Obtained money or property by means of untrue statements of
material fact or by omitting to state a material fact necessary in
order to make the statements made, in light of the circumstances
under which they were made, not misleading; and
c. Engaged in transactions, practices, or courses of business which
operated or would operate as a fraud or deceit upon purchasers.
41. By reason of the foregoing, Defendants Newell and Black Hawk violated,
and unless restrained and enjoined, are reasonably likely to continue to violate, Section
17(a) of the Securities Act [15 U.S.C. § 77q(a)].

THIRD CLAIM FOR RELIEF
Violations of Sections 206(1) and 206(2) of the Advisers Act
42. The SEC realleges and incorporates by reference paragraphs 1 through 35.
43. During the relevant period, Defendants Newell and Black Hawk were
engaged in the business of advising others, specifically the Verde Funds, as to the
value of securities or as to the advisability of investing in, purchasing, or selling
securities, which they did in exchange for compensation. Newell and Black Hawk
were therefore investment advisers to the Verde Funds.
44. As set forth above, Defendants, by use of the mails or any means or
instrumentality of interstate commerce, directly or indirectly (a)
 employed devices,
schemes, or artifices to defraud clients or prospective clients; and (b) engaged in
transactions, practices, or courses of business which operated as a fraud or deceit upon
clients or prospective clients.
45. By reason of the foregoing, Defendants Newell and Black Hawk have
violated, and unless restrained and enjoined, are reasonably likely to continue to
violate, Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-6(1) & 80b-
6(2).

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FOURTH CLAIM FOR RELIEF
Violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 Thereunder
46. The SEC realleges and incorporates by reference paragraphs 1 through 35.
47. During the relevant time period, the Verde Funds were pooled investment
vehicles and Defendants acted as the pooled investment vehicles’ investment adviser.
48. By engaging in the conduct described above, Defendants, directly or
indirectly, while acting as an investment adviser to a pooled investment vehicle, by use
of the mails or means or instrumentalities of interstate commerce: (a) made untrue
statements of a material fact or omitted to state a material fact necessary in order to
make the statements made, in the light of the circumstances under which they were
made, not misleading, to any investor or prospective investor in the pooled investment
vehicle; or (b) engaged in acts, practices, or courses of business that were fraudulent,
deceptive, or manipulative with respect to any investor or prospective investor in the
pooled investment vehicle.
49. By engaging in the conduct described above, Defendants Newell and
Black Hawk have violated, and unless restrained and enjoined, are reasonably likely to
continue to violate, Section 206(4) of the Advisers Act [15 U.S.C. § 80b-6(4)] and
Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].

FIFTH CLAIM FOR RELIEF AGAINST NEWELL ONLY

In the Alternative, Newell Aided and Abetted Black Hawk’s Violations of
Antifraud Provisions of the Federal Securities Laws

50. The SEC realleges and incorporates by reference paragraphs 1 through 35.
51. By engaging in the conduct described above, Black Hawk, directly or
indirectly, violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder;
Section 17(a) of the Securities; and Sections 206(1), 206(2) and 206(4) of the Advisers
Act and Rule 206(4)-8 thereunder.

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52. By engaging in the acts and conduct alleged above, Newell knowingly or
recklessly provided substantial assistance to Black Hawk in violation of Section 10(b)
of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5]; Section 17(a) of the Securities [15 U.S.C. § 77q(a)]; and Sections 206(1),
(2), and (4) of the Advisers Act [15 U.S.C. §§ 80b-6(1), 80b-6(2), and 80b-6(4)] and
Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8] and thereby aided and abetted
such violations, and unless restrained and enjoined, will continue to violate these
provisions.

PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court,
as to Defendant Newell:
I.
Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Newell, and his agents, servants, employees
and attorneys, and those persons in active concert or participation with any of them,
who receive actual notice of the judgment by personal service or otherwise, and each
of them, from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];
Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17
C.F.R. § 240.10b-5]; and Sections 206(1), (2), and (4) of the Advisers Act [15 U.S.C.
§§ 80b-6(1), 80b-6(2), and 80b-6(4)] and Rule 206(4)-8 thereunder [17 C.F.R. §
275.206(4)-8].
II.
Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendant Newell from, directly or indirectly,
including, but not limited to, through any entity owned or controlled by him,
participating in the issuance, purchase, offer, or sale of any security, provided,

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however, that such injunction shall not prevent him from purchasing or selling
securities for his own personal accounts.
III.
Order Defendant Newell to disgorge all monies received from his illegal
conduct, together with prejudgment interest thereon, pursuant to Sections 21(d)(3),
21(d)(5), and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and
78u(d)(7)].
IV.
Order Defendant Newell to pay civil penalties pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)], Section 21(d) of the Exchange Act [15 U.S.C. §
78u(d)], and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)].
V.
 Order pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 78t(e)] and
Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(a)(d)] that Defendant Newell is
prohibited from serving as an officer or director of any company that has a class of
securities registered with the Commission pursuant to Section 12 of the Exchange Act
[15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the
Exchange Act [15 U.S.C. § 78o(d)].
VI.
Retain jurisdiction of this action in accordance with the principles of equity and
the Federal Rules of Civil Procedure in order to implement and carry out the terms of
all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.
VII.
Grant such other and further relief as this Court may determine to be just and
necessary.

C
OMPLAINT
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WHEREFORE, the SEC respectfully requests that the Court,
as to Defendant Black Hawk:
VIII.
Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Black Hawk and its officers, agents, servants,
employees and attorneys, and those persons in active concert or participation with any
of them, who receive actual notice of the judgment by personal service or otherwise,
and each of them, from violating Section 17(a) of the Securities Act [15 U.S.C. §
77q(a)]; Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5]; and Sections 206(1), (2), and (4) of the Advisers
Act [15 U.S.C. §§ 80b-6(1), 80b-6(2), and 80b-6(4)] and Rule 206(4)-8 thereunder [17
C.F.R. § 275.206(4)-8].
IX.
Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendant Black Hawk from, directly or
indirectly, including, but not limited to, through any entity owned or controlled by it,
participating in the issuance, purchase, offer, or sale of any security.

Dated: July 22, 2024  Respectfully submitted,

/s/  Kashya Shei

Kashya Shei
Attorney for Plaintiff
SECURITIES AND EXCHANGE
COMMISSION

COMPLAINT 1 

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SHEILA O’CALLAGHAN (Cal. Bar No. 131032) 
Email:  [email protected] 
KASHYA SHEI (Cal. Bar No. 173125) 
Email:  [email protected] 

Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
Monique C. Winkler, Regional Director 
Jason H. Lee, Associate Regional Director 
Marc Katz, Regional Trial Counsel 
44 Montgomery Street, Suite 2800 
San Francisco, CA 94104 
Telephone: (415) 705-2500 
Facsimile:  (415) 705-2501 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

 v. 

ROBERT NEWELL and BLACK HAWK 
FUNDING, INC.,  

Defendants. 

Case No.  

COMPLAINT 

Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

JURISDICTION AND VENUE 

1. This Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d)(1), and 22(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. 

§§ 77t(b), 77t(d)(1), and 77v(a)]; Sections 21(d), 21(e), and 27 of the Securities 

Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u(d), 78u(e), and 78aa]; and 

Sections 209(d), 209(3)(1), and 214 of the Investment Advisers Act of 1940

(“Advisers Act”) [115 U.S.C. §§ 80b-9(d), 80b-9(e)(1), and 90b-14].

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 1 of 16   Page ID #:1



COMPLAINT 2 

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2. Defendants Robert Newell (“Newell”) and Black Hawk Funding, Inc.

(“Black Hawk”) (together referred to as “Defendants”) have, directly or indirectly, 

made use of the means and instruments of interstate commerce or of the mails in 

connection with the acts, transactions, practices, and courses of business alleged in this 

complaint.  

3. Venue is proper in this district pursuant to Section 22(a) of the Securities

Act [15 U.S.C. § 77v(a)], Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)], 

and Sections 209(d) and 209(e)(1) of the Advisers Act [115 U.S.C. §§ 80b-9(d), 80b-

9(e)(1)] because certain transactions, acts, practices, and courses of conduct 

constituting violations of the federal securities laws as alleged in the complaint 

occurred in Riverside County, California. Newell resides in this district and Black 

Hawk is headquartered in this district.  

SUMMARY  

4. From about November 2016 through at least September 2019 (the

“relevant time period”), Defendants Newell and Black Hawk raised approximately 

$37.7 million from over 200 investors across the United States for the disclosed 

purpose of investing in the cannabis industry. Rather than use the money raised in the 

stated manner, however, Defendants 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. Additionally, Newell misappropriated at least 

around $668,000 of investor funds for his own personal benefit. During the relevant 

time period, Newell was the control person and Chief Executive Officer of Black 

Hawk. 

5. Based on the foregoing, Defendants violated the antifraud provisions of

the federal securities laws. Specifically, Defendants violated Section 17(a) of the 

Securities Act [15 U.S.C. § 77q(a)]; Section 10(b) of the Exchange Act [15 U.S.C. § 

78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; and Sections 206(1), 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 2 of 16   Page ID #:2



 

COMPLAINT 3  
 

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206(2), and 206(4) of the Advisers Act [15 U.S.C. §§ 80b-6(1), (2), and (4)] and Rule 

206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

6. With this complaint, the SEC seeks against the Defendants permanent 

injunctions prohibiting future violations of the federal securities laws and injunctions 

prohibiting Defendants from directly or indirectly, including, but not limited to, 

through any entity owned or controlled by either Defendant, participating in the 

issuance, purchase, offer, or sale of any securities, with a carve-out as to Defendant 

Newell that permits trading in his personal accounts. In addition, against Defendant 

Newell only, the SEC seeks an order requiring Newell to disgorge his ill-gotten gains, 

along with prejudgment interest, an order requiring Newell to pay civil penalties, and 

an order barring Newell from serving as an officer or director of a publicly traded 

company. 

DEFENDANTS 

7. Robert Newell, age 63, resides in Indio, California. He founded Black 

Hawk in or about 2011 and, until his resignation in September 2019, was its CEO and 

control person. During the relevant time period, Newell owned all of Black Hawk’s 

voting shares and almost all of its non-voting common shares.  

8. Black Hawk Funding, Inc. was incorporated in Nevada in 2011 and, 

from at least November 2016 through approximately October 2019, was dually 

headquartered in Coeur d’Alene, Idaho and La Quinta, California. Black Hawk 

managed various private funds and other assets. From 2016 to 2019, Black Hawk 

raised approximately $37.7 million from over 200 investors across the United States in 

three private funds created to invest in the cannabis industry. Black Hawk was the 

investment adviser to the three private funds and had exclusive control over the funds, 

determined which investments the funds made, and received compensation for 

advising and managing the funds.  

 

 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 3 of 16   Page ID #:3



 

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OTHER RELEVANT ENTITIES 

9. Verde Ventures, Inc. (“Verde Ventures”) was a pooled investment 

vehicle Defendants created and offered to investors beginning in approximately 

November 2016 for the stated purpose of providing loans and venture capital for 

“Marijuana emerging markets.” From approximately November 2016 to January 2018, 

Defendants raised about $9.8 million for Verde Ventures from over 50 investors by 

selling securities that purportedly paid ten percent annual returns on a quarterly basis 

and that purportedly included potential profit sharing of eight percent on the first $10 

million of net income.  

10. Verde Holdings, Inc. (“Verde Holdings”) was a pooled investment 

vehicle Defendants created and offered to investors beginning in approximately 

December 2017 for the stated purpose of developing “Cannibis [sic] grow facilities, 

cultivation projects, distribution networks, and manufacturing centers.” From 

approximately December 2017 to November 2018, nearly $21.1 million was raised for 

Verde Holdings from almost 160 investors by selling securities that purportedly paid 

ten percent annual returns on a quarterly basis and that purportedly included potential 

profit sharing of eight percent on the first $20 million of net income.  

11. Verde Partners, Inc. (“Verde Partners”) was a pooled investment vehicle 

Defendants created and offered to investors from approximately February 2019 to 

approximately October 2019 to invest in the cannabis industry. Defendants raised 

nearly $6.8 million from over 40 investors through the sale of Verde Partners preferred 

stock. Defendants disclosed in Verde Partners’ offering document that investors would 

receive a “pro rata cash dividend equal to 10.0% of the Preferred Sock’s purchase 

price,” with the timing of the payments to be declared by Verde Partners’ Board of 

Directors. In addition, the preferred shares purportedly included potential profit 

sharing of eight percent on the first $40 million of net income. In late 2019, 

Defendants ceased fundraising from investors for Verde Partners shortly after Newell’s 

departure from Black Hawk in September 2019.  

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 4 of 16   Page ID #:4



 

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12. National Asset Valuation Services, LLC (“NAVS”) was a purported 

Washington company founded in 2008, which was wholly owned by Newell. But in 

actuality, Newell used NAVS as a conduit to misappropriate money from Verde 

Ventures and Verde Holdings for his personal benefit. 

THE ALLEGATIONS 

13. In approximately 2011, Newell founded Black Hawk for the primary 

purpose of providing hard money loans for real estate transactions. By approximately 

2016, Black Hawk managed or had an ownership interest in dozens of affiliated 

entities. At all relevant times, Newell controlled Black Hawk. 

14. By at least early 2016, Defendants’ businesses were struggling and 

Newell determined that investing in the cannabis industry could be profitable. Newell 

then shifted Black Hawk’s business to investing in the cannabis industry by raising 

money through three securities offerings. From about November 2016 through 

approximately September 2019, Newell through Black Hawk offered to investors three 

private funds created to invest in the cannabis industry: Verde Ventures, Verde 

Holdings, and Verde Partners (collectively, the “Verde Funds”). 

Defendants’ Fraudulent Conduct 

A. Defendants’ Materially False and Misleading Statements to Investors 

15. In order to raise money for the Verde Funds, Defendants provided 

offering materials to investors, which for Verde Ventures and Verde Holdings 

consisted of one-page documents, each entitled “Executive Loan Summary,” and for 

Verde Partners consisted of a private placement memorandum (“PPM”). 

16. The Executive Loan Summaries and the PPM stated that the money raised 

would be invested in the cannabis industry, including a grow facility located in 

Coachella, California (the “Coachella Campus”). For Verde Ventures and Verde 

Holdings, the Executive Loan Summaries also stated that investments could include 

other cannabis-related projects such as cultivation, distribution, extraction, a lab testing 

facility, and manufacturing. The Verde Partners PPM separately disclosed that investor 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 5 of 16   Page ID #:5



 

COMPLAINT 6  
 

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funds could be used “to finance other opportunities consistent with the Company’s 

[Verde Partners’] plan of operation,” which were specific to the cannabis industry. The 

PPM also disclosed that a management fee would be paid by Verde Partners to Black 

Hawk. No other use of investor funds was disclosed by the Executive Loan Summaries 

and PPM. 

17. The Executive Loan Summaries for Verde Ventures and Verde Holdings 

disclosed that investors’ securities purchases would carry a ten percent annual return, 

paid quarterly. The PPM for Verde Partners stated that investors would receive a ten 

percent cash dividend when declared by Verde Partners’ Board of Directors.  

18. But substantial portions of investor funds were not invested in the 

cannabis industry and were instead used to make Ponzi-like payments to investors; 

were used for undisclosed purposes such as for other Black Hawk affiliated/managed 

entities not in the cannabis industry or to pay salespersons’ commissions; and were 

misappropriated by Newell. These uses of investor funds were not disclosed to 

investors or authorized by Verde Ventures’ and Verde Holdings’ Executive Loan 

Summaries or Verde Partners’ PPM.  

B. Defendants Misused Investor Proceeds. 

i. Defendants Paid Returns to Investors Through Ponzi-like 
Payments. 

 
19. From at least November 2016 through approximately September 2019, 

inflows of capital to Black Hawk consisted primarily of money raised from the Verde 

Funds’ investors. During this relevant time period, the Verde Funds were not profitable 

and lacked sufficient revenue to pay the ten percent returns promised to investors.  

20. Nevertheless, from approximately April 2017 through June 2019, on a 

quarterly basis, Newell ordered Black Hawk employees to pay the ten percent 

purported returns to investors. Newell made the ten percent payments to investors even 

though he knew that the money used to make payments was sourced from other 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 6 of 16   Page ID #:6



 

COMPLAINT 7  
 

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investors’ money—money that Defendants represented to investors would be used to 

invest in the cannabis industry.  

21. Defendants knew, or were reckless in not knowing, that these ten percent 

Ponzi-like payments that were purportedly returns to investors were in fact a misuse of 

investor money, which created the false impression to new investors and lulled existing 

investors into believing that the Verde Funds’ investments were successful and 

lucrative. Newell and Black Hawk continued to use the Executive Loan Summaries 

and the PPM to raise money from investors, even while knowing that they were unable 

to pay a ten percent return based on the underlying investments of the Verde Funds, 

which were unprofitable. 

ii. Defendants Improperly Commingled and Further Misused 
Investor Funds. 

 
22. At the time of their investments, Black Hawk, through the Verde Funds’ 

offering documents, informed investors that their money would be used for 

investments in the cannabis industry. But beginning in December 2016, as Black 

Hawk’s other businesses were struggling, Newell commingled funds by first 

transferring money from Verde Ventures to Black Hawk, and then disbursing that 

money to other Black Hawk managed or affiliated entities. Once Verde Holdings was 

established, Newell almost immediately engaged in the same conduct of transferring 

money out of Verde Holdings to Black Hawk to be disbursed as Newell saw fit. These 

significant transfers from Verde Ventures and Verde Holdings to Black Hawk resulted 

in an outstanding balance owed by Black Hawk of at least $2.5 million by September 

30, 2019, when Newell was forced out of Black Hawk. These transfers to Black Hawk 

that were then disbursed to other Black Hawk-affiliated entities provided no benefit to 

Verde Ventures or Verde Holdings. They were not for the purposes disclosed in the 

offering documents and did not provide any other financial benefit to the two Verde 

funds. Thus, these undisclosed transfers were a misuse of the investors’ funds.   

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 7 of 16   Page ID #:7



 

COMPLAINT 8  
 

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23. In addition, Newell also misused investor funds by paying undisclosed 

brokerage commissions. The Executive Loan Summaries did not disclose to investors 

that their money could be used to pay sales commissions. But starting in or about 

December 2016 through May 2018, when salespersons sold securities in Verde 

Ventures and Verde Holdings, Newell paid sales commissions directly from the two 

Verde funds. These sales commission payments totaled at least $408,689.   

 

iii. Newell Misappropriated Investor Funds. 

24. From about February 2017 through October 2018, Newell 

misappropriated at least around $668,000 of investors’ money from Verde Ventures 

and Verde Holdings by: (a) paying off the second mortgage on a property owned by 

NAVS, an entity Newell owns, (b) using Verde money to pay himself for purported 

rent and other business expenses for Verde Ventures and Verde Holdings, and (c) 

taking profits from selling shares of a startup entity, where the shares belonged to 

Verde Ventures and Verde Holdings.  

25. NAVS, an entity wholly owned and controlled by Newell, owned Black 

Hawk’s office in Coeur d’Alene, Idaho (the “Office”). NAVS had a second mortgage 

on the Office.  

26. In March 2018, in two separate transactions, money from Verde Holdings 

was used to pay down $310,300 on the second mortgage on the Office. In the first 

transaction, on or about March 2018, Newell directed Black Hawk to transfer $100,000 

from Verde Holdings to pay the second mortgage. In the second transaction, on or 

about March 2018, Newell used approximately $210,300 ultimately sourced mostly 

from Verde Holdings to pay the second mortgage. Newell did not use any of his own 

money in paying down the second mortgage. When Newell sold the Office in June 

2018, he received $500,000 in sales proceeds and did not repay the approximately 

$310,300 owed to Verde Holdings. 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 8 of 16   Page ID #:8



 

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27. From approximately February 2017 to October 2018, Newell also 

misappropriated $212,000 by charging Verde Ventures and Verde Holdings 

undisclosed and illegitimate costs in the form of rent for purported use of the Office 

and for his purported business travel and office expenses. The rent paid by the two 

Verde funds was purportedly for the Office, but the two funds already paid rent for an 

office located in La Quinta, California, where the funds’ operations were based. 

During that same period, Newell also transferred money from the two Verde funds to 

NAVS for his unexplained purported expenses, which were in round thousand dollar 

amounts and included reimbursements for personal expenses such as spending at 

casinos, cash withdrawals, making first mortgage payments on the Office, and other 

personal expenses such as meals. These payments were not disclosed to investors in 

Verde Ventures and Verde Holdings’ Executive Loan Summaries or in any other 

documents at any time during the relevant time period. 

28. Newell also misappropriated $146,000 from Verde Ventures and Verde 

Holdings when he directed the sale of shares in a cannabis startup, High Desert 

Management, LLC (“High Desert”), which shares should have belonged to those two 

funds. The High Desert shares were obtained in a manner that Newell knew resulted in 

the shares belonging to Verde Ventures and Verde Holdings. Newell provided no 

money to acquire the shares. Instead, these shares were acquired in part using money 

from Verde Ventures and Verde Holdings and then sold at a high markup to other 

investors. Newell profited $146,000, even though the shares belonged to Verde 

Ventures and Verde Holdings. Newell also admitted that these shares rightfully 

belonged to Verde Ventures and Verde Holdings.  

C. Newell and Black Hawk Were Investment Advisers. 

29. Black Hawk and Newell were investment advisers to the Verde Funds. 

Newell, as Black Hawk’s then CEO, managed the affairs of the Verde Funds, 

including the investments the Verde Funds made in the securities of cannabis startups.  

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 9 of 16   Page ID #:9



 

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30. Additionally, Black Hawk received compensation for its services in the 

form of a four percent management fee paid by Verde Partners as disclosed in its PPM. 

Black Hawk also received compensation from Verde Ventures and Verde Holdings, 

because those two funds paid Black Hawk’s expenses, such as rent for the La Quinta 

office, utilities, and salaries that otherwise would have been paid by Black Hawk.  

31. Newell was compensated in the form of a salary and dividends from 

Black Hawk.  

32. As both Newell and Black Hawk provided advice to the Verde Funds 

regarding investments in securities and were compensated for their advice, they both 

acted as investment advisers. 

D. Newell and Black Hawk Acted With Scienter. 

33. Newell drafted, reviewed, and had final authority over the Executive Loan 

Summaries and PPM provided by Black Hawk to the Verde Funds’ investors. 

Additionally, Newell himself engaged in the misuse of investors’ funds. His actions 

included:  making the Ponzi-like payments, which he knew came from investors’ 

capital; transferring Verde Ventures and Verde Holdings investor money at his 

discretion for other uses unrelated to those funds; and misappropriating investors’ 

money. Newell knew, or was reckless in not knowing, that the Verde Funds’ Executive 

Loan Summaries and PPM contained materially false statements and omissions, and 

were misleading. 

34. In addition, 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. Newell knew, or was 

reckless in not knowing, that he engaged in a scheme to defraud investors and potential 

investors. 

35. As Newell was during the relevant period the CEO and control person of 

Black Hawk, Newell’s scienter is imputed to Black Hawk. 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 10 of 16   Page ID #:10



 

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FIRST CLAIM FOR RELIEF 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 

36. The SEC realleges and incorporates by reference paragraphs 1 through 35. 

37. Newell and Black Hawk, by engaging in the acts and conduct described 

above, directly or indirectly, in connection with the purchase or sale of securities, by 

use of means or instrumentalities of interstate commerce, or of the mails, with scienter: 

a. Employed devices, schemes, or artifices to defraud; 

b. Made untrue statements of material facts or omitted to state 

material facts necessary in order to make the statements made, in 

light of the circumstances under which they were made, not 

misleading; and 

c. Engaged in acts, practices, or courses of business which operated or 

would operate as a fraud or deceit upon other persons, including 

purchasers of securities. 

38. By reason of the foregoing, Newell and Black Hawk violated, and unless 

restrained and enjoined, are reasonably likely to continue to violate, Section 10(b) of 

the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 

240.10b-5]. 

 

SECOND CLAIM FOR RELIEF 

Violations of Section 17(a) of the Securities Act 

39. The SEC realleges and incorporates by reference paragraphs 1 through 35. 

40. Newell and Black Hawk, by engaging in the acts and conduct described 

above, directly or indirectly, in the offer or sale of securities, by use of the means or 

instruments of transportation or communication in interstate commerce or by use of the 

mails: 

a. With scienter, employed devices, schemes, or artifices to defraud; 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 11 of 16   Page ID #:11



 

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b. Obtained money or property by means of untrue statements of 

material fact or by omitting to state a material fact necessary in 

order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and 

c. Engaged in transactions, practices, or courses of business which 

operated or would operate as a fraud or deceit upon purchasers. 

41. By reason of the foregoing, Defendants Newell and Black Hawk violated, 

and unless restrained and enjoined, are reasonably likely to continue to violate, Section 

17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

 

THIRD CLAIM FOR RELIEF 

Violations of Sections 206(1) and 206(2) of the Advisers Act 

42. The SEC realleges and incorporates by reference paragraphs 1 through 35. 

43. During the relevant period, Defendants Newell and Black Hawk were 

engaged in the business of advising others, specifically the Verde Funds, as to the 

value of securities or as to the advisability of investing in, purchasing, or selling 

securities, which they did in exchange for compensation. Newell and Black Hawk 

were therefore investment advisers to the Verde Funds.  

44. As set forth above, Defendants, by use of the mails or any means or 

instrumentality of interstate commerce, directly or indirectly (a) employed devices, 

schemes, or artifices to defraud clients or prospective clients; and (b) engaged in 

transactions, practices, or courses of business which operated as a fraud or deceit upon 

clients or prospective clients. 

45. By reason of the foregoing, Defendants Newell and Black Hawk have 

violated, and unless restrained and enjoined, are reasonably likely to continue to 

violate, Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-6(1) & 80b-

6(2). 

 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 12 of 16   Page ID #:12



 

COMPLAINT 13  
 

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FOURTH CLAIM FOR RELIEF 

Violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 Thereunder 

46. The SEC realleges and incorporates by reference paragraphs 1 through 35. 

47. During the relevant time period, the Verde Funds were pooled investment 

vehicles and Defendants acted as the pooled investment vehicles’ investment adviser.  

48. By engaging in the conduct described above, Defendants, directly or 

indirectly, while acting as an investment adviser to a pooled investment vehicle, by use 

of the mails or means or instrumentalities of interstate commerce: (a) made untrue 

statements of a material fact or omitted to state a material fact necessary in order to 

make the statements made, in the light of the circumstances under which they were 

made, not misleading, to any investor or prospective investor in the pooled investment 

vehicle; or (b) engaged in acts, practices, or courses of business that were fraudulent, 

deceptive, or manipulative with respect to any investor or prospective investor in the 

pooled investment vehicle. 

49. By engaging in the conduct described above, Defendants Newell and 

Black Hawk have violated, and unless restrained and enjoined, are reasonably likely to 

continue to violate, Section 206(4) of the Advisers Act [15 U.S.C. § 80b-6(4)] and 

Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

 

FIFTH CLAIM FOR RELIEF AGAINST NEWELL ONLY 

In the Alternative, Newell Aided and Abetted Black Hawk’s Violations of 
Antifraud Provisions of the Federal Securities Laws 

  
50. The SEC realleges and incorporates by reference paragraphs 1 through 35. 

51. By engaging in the conduct described above, Black Hawk, directly or 

indirectly, violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; 

Section 17(a) of the Securities; and Sections 206(1), 206(2) and 206(4) of the Advisers 

Act and Rule 206(4)-8 thereunder. 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 13 of 16   Page ID #:13



 

COMPLAINT 14  
 

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52. By engaging in the acts and conduct alleged above, Newell knowingly or 

recklessly provided substantial assistance to Black Hawk in violation of Section 10(b) 

of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 

240.10b-5]; Section 17(a) of the Securities [15 U.S.C. § 77q(a)]; and Sections 206(1), 

(2), and (4) of the Advisers Act [15 U.S.C. §§ 80b-6(1), 80b-6(2), and 80b-6(4)] and 

Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8] and thereby aided and abetted 

such violations, and unless restrained and enjoined, will continue to violate these 

provisions. 

 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court,   

as to Defendant Newell: 

I. 

Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Newell, and his agents, servants, employees 

and attorneys, and those persons in active concert or participation with any of them, 

who receive actual notice of the judgment by personal service or otherwise, and each 

of them, from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]; 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 

C.F.R. § 240.10b-5]; and Sections 206(1), (2), and (4) of the Advisers Act [15 U.S.C. 

§§ 80b-6(1), 80b-6(2), and 80b-6(4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 

275.206(4)-8]. 

II. 

Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendant Newell from, directly or indirectly, 

including, but not limited to, through any entity owned or controlled by him, 

participating in the issuance, purchase, offer, or sale of any security, provided, 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 14 of 16   Page ID #:14



 

COMPLAINT 15  
 

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however, that such injunction shall not prevent him from purchasing or selling 

securities for his own personal accounts.  

III. 

Order Defendant Newell to disgorge all monies received from his illegal 

conduct, together with prejudgment interest thereon, pursuant to Sections 21(d)(3), 

21(d)(5), and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and 

78u(d)(7)]. 

IV. 

Order Defendant Newell to pay civil penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)], Section 21(d) of the Exchange Act [15 U.S.C. § 

78u(d)], and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)].  

V. 

 Order pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 78t(e)] and 

Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(a)(d)] that Defendant Newell is 

prohibited from serving as an officer or director of any company that has a class of 

securities registered with the Commission pursuant to Section 12 of the Exchange Act 

[15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the 

Exchange Act [15 U.S.C. § 78o(d)]. 

VI. 

Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of 

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

VII. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

 

 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 15 of 16   Page ID #:15



 

COMPLAINT 16  
 

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WHEREFORE, the SEC respectfully requests that the Court,   

as to Defendant Black Hawk: 

VIII. 

Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Black Hawk and its officers, agents, servants, 

employees and attorneys, and those persons in active concert or participation with any 

of them, who receive actual notice of the judgment by personal service or otherwise, 

and each of them, from violating Section 17(a) of the Securities Act [15 U.S.C. § 

77q(a)]; Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5]; and Sections 206(1), (2), and (4) of the Advisers 

Act [15 U.S.C. §§ 80b-6(1), 80b-6(2), and 80b-6(4)] and Rule 206(4)-8 thereunder [17 

C.F.R. § 275.206(4)-8]. 

IX. 

Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendant Black Hawk from, directly or 

indirectly, including, but not limited to, through any entity owned or controlled by it, 

participating in the issuance, purchase, offer, or sale of any security.  

 

Dated: July 22, 2024  Respectfully submitted, 

 
/s/  Kashya Shei   
 
Kashya Shei 
Attorney for Plaintiff 
SECURITIES AND EXCHANGE 
COMMISSION 

Case 5:24-cv-01524   Document 1   Filed 07/22/24   Page 16 of 16   Page ID #:16