A federal judge entered a final judgment on May 7, 2026, against Robert Newell, the former CEO of Black Hawk Funding, ordering him to pay approximately $1.59 million for his role in a $37 million cannabis-related Ponzi scheme. The SEC is now holding those funds as it considers whether to establish a Fair Fund to return money to more than 200 affected investors. We watched these kinds of schemes proliferate during our time on Wall Street, and the pattern is depressingly familiar: promise double-digit returns, while the operator pockets the money.
What the SEC alleges
Newell raised roughly $37 million through three private funds: Verde Ventures, Verde Holdings, and Verde Partners. He told investors that their money would fund cannabis cultivation, distribution, and manufacturing operations in California’s Coachella Valley. The promised returns were about 10 percent annually. According to the SEC, those investments never materialized. Instead, Newell misappropriated investor funds, made Ponzi-like payments to earlier investors, and paid undisclosed sales commissions from investor capital. Black Hawk Funding, the entity behind the funds, had already settled separately when the SEC complaint was filed in July 2024. The company accepted a permanent injunction and bar from securities offerings, but no monetary penalty because the firm was essentially defunct and asset-free.
Breakdown of the $1.59 million judgment
| Component | Amount |
|---|---|
| Disgorgement | $668,300 |
| Prejudgment interest | $254,067 |
| Civil penalty | $668,300 |
| Total | $1,590,667 |
The judgment is non-dischargeable in bankruptcy under Section 523(a)(19) of the Bankruptcy Code. Newell must pay within 30 days of the May 7, 2026 judgment entry. He is also barred for five years from participating in the issuance or sale of any security through any entity he controls, except for trading in his own personal accounts.
What a Fair Fund means for investors
Under Section 308(a) of the Sarbanes-Oxley Act, the SEC can return collected disgorgement and penalties to harmed investors through a Fair Fund. The agency has indicated it may propose a distribution plan, but no Fair Fund has been approved or implemented as of the judgment date. If a Fair Fund is approved, the process typically involves appointing a distribution agent, setting up claims procedures, and verifying investor losses. The available $1.59 million is far below the estimated $37 million raised, meaning even full distribution would cover only a fraction of losses. Investors will need to monitor SEC enforcement pages for Fair Fund notices and claims instructions.
Red flags investors should have noticed
The Verde funds promised unusually high fixed returns from an agricultural startup in a complex regulatory environment. There was no public market for the funds, making exit difficult. The sales commissions were undisclosed, and the investments were concentrated in a single geographic area with limited operational transparency. These are classic signs of a private-placement fraud. Any offering that promises consistent double-digit returns with no apparent risk deserves immediate scrutiny.
Haselkorn & Thibaut fights for investor recovery
Haselkorn & Thibaut is a securities law firm founded by former Wall Street defense attorneys who shifted their practice to represent investors. The firm has recovered over $520 million for clients in securities matters and maintains a 98 percent success rate in resolved nontraded REIT cases. Attorneys are AV Preeminent rated through Martindale-Hubbell, designated as Super Lawyers, and hold a 5.0-star client review average. The firm operates on a contingency basis — no recovery, no fee.
Contact Haselkorn & Thibaut today
Time matters in Ponzi recovery cases. The earlier you act, the stronger your position. The firm offers a free case evaluation to assess your losses, review your account history, and explain your options under arbitration or settlement.
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Disclaimer: This article is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes. Consult with a qualified securities attorney to discuss your specific situation.
