Litigation Releases (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

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.

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