CANNABIS CASH GOES POOF! Fund Manager Spent $668K On Himself!

SEC v. Robert Newell — U.S. Securities and Exchange Commission Litigation Release No. 26553, dated May 14, 2026.

Robert Newell, a fund manager, and his firm Black Hawk Funding, Inc. raised approximately $37.7 million from over 200 investors for cannabis industry investments. Instead of investing as promised, Newell allegedly used the funds for Ponzi-like payments and personal benefit, misappropriating about $668,000. He has consented to a final judgment permanently enjoining him from securities law violations and ordering him to pay disgorgement, prejudgment interest, and a civil penalty.

In Plain English

Imagine you give money to a friend to invest in a special project, like opening a cool new store. Your friend promises to use the money only for that store. But instead, your friend uses some of the money to pay off other people they owe, and takes a chunk for themselves. That's what happened here: a fund manager took money from investors for a specific purpose but used it for other things, including his own expenses.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Raise Funds for Cannabis Investments Robert Newell and his firm, Black Hawk Funding, Inc., solicited investments from the public. They specifically told investors their money would be used to invest in the cannabis industry.
2. Misappropriate Investor Funds Instead of investing the money as promised, Newell allegedly diverted funds for unauthorized purposes. This included making payments that resembled a Ponzi scheme, where new investor money pays off earlier investors.
3. Fund Unrelated Entities The defendants allegedly used investor money to pay for the expenses of businesses or entities that were not disclosed to the investors. This was a direct violation of the stated investment purpose.
4. Personal Misappropriation Newell is accused of personally taking approximately $668,000 of the investor funds. This money was allegedly used for his own personal benefit, unrelated to the promised investments.
5. SEC Investigation and Complaint The Securities and Exchange Commission (SEC) investigated these activities. The SEC filed a complaint on July 22, 2024, detailing the alleged fraud and misappropriation of funds.
6. Consent to Judgment Without admitting or denying the SEC's allegations, Robert Newell agreed to a judgment. This consent was signed and entered by the court on August 11, 2025, for injunctive relief.
7. Final Judgment Entered On May 7, 2026, the U.S. District Court for the Central District of California entered a final judgment against Newell. This judgment resolved the remaining issues of disgorgement, interest, and penalties.
8. Permanent Injunction Newell is permanently prohibited from violating key provisions of securities laws, including those related to fraud and misrepresentation in the offer or sale of securities.
9. Monetary Sanctions Ordered The final judgment orders Newell to pay disgorgement of $668,300, plus $254,067 in prejudgment interest, and a civil penalty of $668,300, totaling over $1.59 million.
10. Participation Bar Newell is also barred for five years from participating in the issuance, purchase, offer, or sale of any security, except for his own personal investment activities.

The Enforcement Action

SEC obtains final judgment against fund manager Robert Newell who misappropriated investor money. Newell and his firm, Black Hawk Funding, Inc., raised approximately $37.7 million from over 200 investors for cannabis industry investments. The SEC's complaint alleged that instead of investing as disclosed, defendants engaged in Ponzi-like payments and paid expenses for unrelated entities. Newell also misappropriated approximately $668,000 for personal benefit. Without admitting or denying the allegations, Newell consented to a bifurcated judgment permanently enjoining him from violating Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5; and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8. The final judgment orders Newell liable for disgorgement of $668,300, plus prejudgment interest of $254,067, and a civil penalty of $668,300. Newell is also enjoined for five years from participating in the issuance, purchase, offer, or sale of any security, except for his own personal accounts.

Named in this action: Robert Newell.

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