Updated List/INFO:
Toxic Funders are a common manipulative force in penny stocks trading. Hundreds of penny stocks are currently using toxic financing to fund operations and pay for insider expenses. These toxic instruments lead to massive amounts of dilution which is often accompanied by paid promotions (some with disclosed compensation and some without), social media pumps, and misleading/exaggerated/fraudulent press releases and public disclosures by the public Issuers.
The financiers target public Issuers that are rarely able to afford the funding and charge extremely high interest rates, processing fees, and penalties, but that’s the least of their clients’ problems. Upon conversion, the lenders enjoy a discount to market price that may be as high as 60 percent, and much higher in the event of default by the issuer. As the funder converts portions of the note and sells the resulting stock into the market in a series of tranches, the stock’s price plummets. That is why these kinds of instruments are called “death spiral convertibles.” Eventually, the dilution caused by the conversions may force the issuer to reverse split the company’s stock or even drive the company into bankruptcy.
Toxic funders have wreaked havoc with OTC companies for decades, but they’ve proved difficult for the SEC to rein in. In the past three years or so, however, the SEC has begun to pursue a new theory of these kinds of cases, invoking the funders’ failure to register as dealers. The SEC defines a dealer as “any person engaged in the business of buying and selling securities for his own account, through a broker or otherwise.” Individuals who buy and sell securities for themselves are usually considered to be “traders,” and are excepted from the dealer definition. What distinguishes a dealer from a trader is that the dealer “buys and sells as part of a regular business,” while a trader does not.
The bottom line is that toxic funders (i) don’t register as dealers, (ii) commit fraud by not making disclosures that they are not registered, (iii) wreak great harm on investors - (After all who buys the shares the funders dump?) and (iv) put thousands of businesses (including legitimate ones) out of business and/or force them into bankruptcy.
A handful of penny stock law firms have been involved in facilitating the sale of billions of shares of stock by the unregistered dealers, participating in both the preparation of the convertible notes and related agreements and arranging for other lawyers to provide legal opinions to facilitate the public sale of the shares.
This forum will be used to keep a list of some of the most active toxic funders, the attorneys they use (when the information is available), and any SEC action taken against the toxic funders. Unfortunately, because many of the most common toxic funders purchase Notes from over 100 Issuers and not all Issuers disclose the names of the lenders they use, it would be an impossible task to track all the Issuers involved.
The Funders:
Adar Bay LLC / Adar Alef LLC - Aryeh Goldstein and Samuel Eisenberg
Alpha Capital Anstalt - Konrad Ackerman
Armada Investment Fund LLC / Armada Capital Partners LLC / Emunah Funding LLC - Gabriel Berkowitz aka Charles Gabriel Berkowitz and Andrew Avitan
Auctus Fund LLC - Alfred Sollami and Lou Posner
Bellridge Capital LP - Robert Klimov
BHP Capital NY Inc - Bryan Pantofel
Black Ice Advisors LLC - Brent Fouch
Blue Citi LLC - Robert Malin and Linda Malin
Bridgeview Capital Partners LLC - Michael Dobbs
Cavalry Fund I LP - Thomas Walsh
CareBourn Capital LP - Chip Rice
Cereberus Finance Group Ltd - Alberto Dayan
Chicago Venture Partners, LP / Iliad Research and Trading, LP / St. George Investments LLC / Tonaquint, Inc / Typenex Co-Investment LLC - John Fife - (sued by the SEC on September 3, 2020)
Concord Holding Group LLC / APG Capital Holdings LLC - Nochum Greenberg
Coventry Enterprises LLC / BNA Investment Capital LLC / Heritage Ventures Ltd - Jack Bodenstein
Crown Bridge Partners LLC - Seth Ahdoot
Crossover Capital Fund I LLC - Ken Lustig
Eagle Equities LLC / Union Capital LLC - Yanky Borenstein
EMA Financial LLC - Felicia Preston
EROP Capital LLC - Vince Sballa
Essex Global Investment Group - Benjamin Conde
FirstFire Global Opportunities Fund LLC - Eli Fireman
Fourth Man LLC - Edward Deese and Kenneth Hall
GHS Investments LLC / Panache Capital LLC - Mark Grober, Matthew L Schissler, and Sarfraz Hajee
Granite Global Value Investments Ltd - Tony Toffolon
GPL Ventuves Inc / Black Bridge Capital - Alexander Dillon
GS Capital Partners LLC - Gabe Sayegh
JDF Capital Inc - John D Fierro (sued by the SEC on February 26, 2020)
Jefferson Street Capital LLC - Brain Goldberg
JMJ Financial - Justin Keener (sued by the SEC on March 24, 2020)
JSJ Investments Inc - Sameer Hirji
L2 Capital LLC / Oasis Capital LLC / Old Main Capital LLC - Adam Long
Labrys Fund LP - G Lane Murphy and Thomas John Silverman
LG Capital Funding LLC - Joseph Lerman
Livingston Asset Management / Oscelata Partners LLC / Tarpon Bay Partners LLC / Trillium Partners LLC - Stephen Hicks
M2B Funding Corp - Daniel Kordash
More Capital LLC - Mike Wruck
MorningView Financial LLC - Max Riccio
NorthBridge Financial LLC - Samuel Oshana
Odyssey Capital Funding LLC / One44 Capital LLC - Ahrom Fraiman
Osher Capital Partners LLC - Ari Kluger aka Yisroel Kluger
Peak One Opportunity Fund LLC - Jason Goldstein
Power Up Lending Group Ltd / Geneva Roth Remark Holdings Inc / Vis Vires Group LLC - Curt Kramer
Quarum Holdings LLC - Dennis Ringer
RedStart Holdings Corp / Geneva Roth Remark Holdings Inc - Gregg Solomon
Redwood Management LLC / RDW Capital LLC / Red Diamond Partners LLC - John DeNobile
River North Equity LLC - Edward M Liceaga
SBI Investments LLC (aka Sea Otter Global Ventures LLC) - Peter Wisniewski, Hammin Abdullah, and Jonathan Juchno
SpotFin Funding LLC - Sean Evan Wright
TCA Global Fund / TCA Fund Management Group - Robert Press (sued by the SEC on May 11, 2020 - now in Bankruptcy)
Tiger Trout Capital LLC - Alan Masley
TKF Investments LLC - Chad Friend
Tri-Bridge Ventures LLC - John Forsythe III
World Market Ventures LLC - Chad Curtis
Recent SEC Actions:
9/3/20 - John M Fife (Chicago Venture Partners, LP, Iliad Research and Trading, LP, St. George Investments LLC, Tonaquint Inc., and Typenex Co-Investment LLC - https://www.sec.gov/litigation/litreleases/2020/lr24886.htm
5/11/20 - TCA Global Fund - https://www.sec.gov/litigation/complaints/2020/comp-pr2020-110.pdf
3/24/20 - Justin W Keener (JMJ Financial) - https://www.sec.gov/litigation/litreleases/2020/lr24779.htm
2/26/20 - John D Feiro - (JDF Capital Inc) - https://www.sec.gov/litigation/litreleases/2020/lr24748.htm
The Attorneys:
Anthony LG - (Laura Anthony, Chad Friend) - Auctus Fund LLC, Crown Bridge Partners LLC, Power Up Lending/Vis Vires Group LLC, TKF Investments LLC, L2 Capital LLC
Tomer Taj (New Venture Attorneys / Investors Counsel Attorneys PC) - LG Capital Funding LLC, Adar Bay LLC/Adar Alef LLC, GS Capital Partners LLC, Eagle Equities LLC/Union Capital LLC, JDF Capital Inc, Coventry Enterprises LLC/BNA Investment Capital LLC/Heritage Ventures Ltd, RY Capital LLC
Lucosky Brookman LLP - TCA Global Fund, BHP Capital NY Inc, Armada Capital Partners LLC, Jefferson Street Capital LLC,
Mattheau Stout - Livingston Asset Management/Oscelata Partners LLC/Trillium Partners LLC
We define the financing as "TOXIC" because:
1) Most of these Issuer have no ability or means of paying back the Notes, and the lender knows this before providing the funding, making these Notes predatory in nature.
2) The Notes come with interest rates that often increase through multiple instances of default that represent abusive lending practices and in some cases violations of usury laws.
3) The Notes often include fees disguised as service fees though no services are provided (for instance, the lender gets a $100,000 Note but only provides $75,000 in actual funding).
4) The Notes often contain clauses that dictate how the Issuer must conduct their business, which result in further penalties if not followed, arguably making the lender an insider.
5) The Notes often include default penalties if not repaid before the default date, even though the Issuer and lender both know the Issuer has no real means of paying back the loan in cash.
6) The Notes all contain toxic-dilutive terms for conversion of the Note into discounted free trading stock, often 50% - 60% or more below the lowest trading (or bid) price over the past 10 - 30 days.
In the end, a company borrowing $75,000 can result in a balance owed to the lender many times higher than the original Note ($150,000 - $400,000 or more) because of interest and fees, which, after being converted at a huge discount to the market price, ends up resulting in losses of $400,000 - $900,000 or more to retail shareholders.
Toxic Funders are a common manipulative force in penny stocks trading. Hundreds of penny stocks are currently using toxic financing to fund operations and pay for insider expenses. These toxic instruments lead to massive amounts of dilution which is often accompanied by paid promotions (some with disclosed compensation and some without), social media pumps, and misleading/exaggerated/fraudulent press releases and public disclosures by the public Issuers.
The financiers target public Issuers that are rarely able to afford the funding and charge extremely high interest rates, processing fees, and penalties, but that’s the least of their clients’ problems. Upon conversion, the lenders enjoy a discount to market price that may be as high as 60 percent, and much higher in the event of default by the issuer. As the funder converts portions of the note and sells the resulting stock into the market in a series of tranches, the stock’s price plummets. That is why these kinds of instruments are called “death spiral convertibles.” Eventually, the dilution caused by the conversions may force the issuer to reverse split the company’s stock or even drive the company into bankruptcy.
Toxic funders have wreaked havoc with OTC companies for decades, but they’ve proved difficult for the SEC to rein in. In the past three years or so, however, the SEC has begun to pursue a new theory of these kinds of cases, invoking the funders’ failure to register as dealers. The SEC defines a dealer as “any person engaged in the business of buying and selling securities for his own account, through a broker or otherwise.” Individuals who buy and sell securities for themselves are usually considered to be “traders,” and are excepted from the dealer definition. What distinguishes a dealer from a trader is that the dealer “buys and sells as part of a regular business,” while a trader does not.
The bottom line is that toxic funders (i) don’t register as dealers, (ii) commit fraud by not making disclosures that they are not registered, (iii) wreak great harm on investors - (After all who buys the shares the funders dump?) and (iv) put thousands of businesses (including legitimate ones) out of business and/or force them into bankruptcy.
A handful of penny stock law firms have been involved in facilitating the sale of billions of shares of stock by the unregistered dealers, participating in both the preparation of the convertible notes and related agreements and arranging for other lawyers to provide legal opinions to facilitate the public sale of the shares.
This forum will be used to keep a list of some of the most active toxic funders, the attorneys they use (when the information is available), and any SEC action taken against the toxic funders. Unfortunately, because many of the most common toxic funders purchase Notes from over 100 Issuers and not all Issuers disclose the names of the lenders they use, it would be an impossible task to track all the Issuers involved.
The Funders:
Adar Bay LLC / Adar Alef LLC - Aryeh Goldstein and Samuel Eisenberg
Alpha Capital Anstalt - Konrad Ackerman
Armada Investment Fund LLC / Armada Capital Partners LLC / Emunah Funding LLC - Gabriel Berkowitz aka Charles Gabriel Berkowitz and Andrew Avitan
Auctus Fund LLC - Alfred Sollami and Lou Posner
Bellridge Capital LP - Robert Klimov
BHP Capital NY Inc - Bryan Pantofel
Black Ice Advisors LLC - Brent Fouch
Blue Citi LLC - Robert Malin and Linda Malin
Bridgeview Capital Partners LLC - Michael Dobbs
Cavalry Fund I LP - Thomas Walsh
CareBourn Capital LP - Chip Rice
Cereberus Finance Group Ltd - Alberto Dayan
Chicago Venture Partners, LP / Iliad Research and Trading, LP / St. George Investments LLC / Tonaquint, Inc / Typenex Co-Investment LLC - John Fife - (sued by the SEC on September 3, 2020)
Concord Holding Group LLC / APG Capital Holdings LLC - Nochum Greenberg
Coventry Enterprises LLC / BNA Investment Capital LLC / Heritage Ventures Ltd - Jack Bodenstein
Crown Bridge Partners LLC - Seth Ahdoot
Crossover Capital Fund I LLC - Ken Lustig
Eagle Equities LLC / Union Capital LLC - Yanky Borenstein
EMA Financial LLC - Felicia Preston
EROP Capital LLC - Vince Sballa
Essex Global Investment Group - Benjamin Conde
FirstFire Global Opportunities Fund LLC - Eli Fireman
Fourth Man LLC - Edward Deese and Kenneth Hall
GHS Investments LLC / Panache Capital LLC - Mark Grober, Matthew L Schissler, and Sarfraz Hajee
Granite Global Value Investments Ltd - Tony Toffolon
GPL Ventuves Inc / Black Bridge Capital - Alexander Dillon
GS Capital Partners LLC - Gabe Sayegh
JDF Capital Inc - John D Fierro (sued by the SEC on February 26, 2020)
Jefferson Street Capital LLC - Brain Goldberg
JMJ Financial - Justin Keener (sued by the SEC on March 24, 2020)
JSJ Investments Inc - Sameer Hirji
L2 Capital LLC / Oasis Capital LLC / Old Main Capital LLC - Adam Long
Labrys Fund LP - G Lane Murphy and Thomas John Silverman
LG Capital Funding LLC - Joseph Lerman
Livingston Asset Management / Oscelata Partners LLC / Tarpon Bay Partners LLC / Trillium Partners LLC - Stephen Hicks
M2B Funding Corp - Daniel Kordash
More Capital LLC - Mike Wruck
MorningView Financial LLC - Max Riccio
NorthBridge Financial LLC - Samuel Oshana
Odyssey Capital Funding LLC / One44 Capital LLC - Ahrom Fraiman
Osher Capital Partners LLC - Ari Kluger aka Yisroel Kluger
Peak One Opportunity Fund LLC - Jason Goldstein
Power Up Lending Group Ltd / Geneva Roth Remark Holdings Inc / Vis Vires Group LLC - Curt Kramer
Quarum Holdings LLC - Dennis Ringer
RedStart Holdings Corp / Geneva Roth Remark Holdings Inc - Gregg Solomon
Redwood Management LLC / RDW Capital LLC / Red Diamond Partners LLC - John DeNobile
River North Equity LLC - Edward M Liceaga
SBI Investments LLC (aka Sea Otter Global Ventures LLC) - Peter Wisniewski, Hammin Abdullah, and Jonathan Juchno
SpotFin Funding LLC - Sean Evan Wright
TCA Global Fund / TCA Fund Management Group - Robert Press (sued by the SEC on May 11, 2020 - now in Bankruptcy)
Tiger Trout Capital LLC - Alan Masley
TKF Investments LLC - Chad Friend
Tri-Bridge Ventures LLC - John Forsythe III
World Market Ventures LLC - Chad Curtis
Recent SEC Actions:
9/3/20 - John M Fife (Chicago Venture Partners, LP, Iliad Research and Trading, LP, St. George Investments LLC, Tonaquint Inc., and Typenex Co-Investment LLC - https://www.sec.gov/litigation/litreleases/2020/lr24886.htm
5/11/20 - TCA Global Fund - https://www.sec.gov/litigation/complaints/2020/comp-pr2020-110.pdf
3/24/20 - Justin W Keener (JMJ Financial) - https://www.sec.gov/litigation/litreleases/2020/lr24779.htm
2/26/20 - John D Feiro - (JDF Capital Inc) - https://www.sec.gov/litigation/litreleases/2020/lr24748.htm
The Attorneys:
Anthony LG - (Laura Anthony, Chad Friend) - Auctus Fund LLC, Crown Bridge Partners LLC, Power Up Lending/Vis Vires Group LLC, TKF Investments LLC, L2 Capital LLC
Tomer Taj (New Venture Attorneys / Investors Counsel Attorneys PC) - LG Capital Funding LLC, Adar Bay LLC/Adar Alef LLC, GS Capital Partners LLC, Eagle Equities LLC/Union Capital LLC, JDF Capital Inc, Coventry Enterprises LLC/BNA Investment Capital LLC/Heritage Ventures Ltd, RY Capital LLC
Lucosky Brookman LLP - TCA Global Fund, BHP Capital NY Inc, Armada Capital Partners LLC, Jefferson Street Capital LLC,
Mattheau Stout - Livingston Asset Management/Oscelata Partners LLC/Trillium Partners LLC
We define the financing as "TOXIC" because:
1) Most of these Issuer have no ability or means of paying back the Notes, and the lender knows this before providing the funding, making these Notes predatory in nature.
2) The Notes come with interest rates that often increase through multiple instances of default that represent abusive lending practices and in some cases violations of usury laws.
3) The Notes often include fees disguised as service fees though no services are provided (for instance, the lender gets a $100,000 Note but only provides $75,000 in actual funding).
4) The Notes often contain clauses that dictate how the Issuer must conduct their business, which result in further penalties if not followed, arguably making the lender an insider.
5) The Notes often include default penalties if not repaid before the default date, even though the Issuer and lender both know the Issuer has no real means of paying back the loan in cash.
6) The Notes all contain toxic-dilutive terms for conversion of the Note into discounted free trading stock, often 50% - 60% or more below the lowest trading (or bid) price over the past 10 - 30 days.
In the end, a company borrowing $75,000 can result in a balance owed to the lender many times higher than the original Note ($150,000 - $400,000 or more) because of interest and fees, which, after being converted at a huge discount to the market price, ends up resulting in losses of $400,000 - $900,000 or more to retail shareholders.
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