A lawyer and his firm are among a group that schemed to raise $449 million for investments in purported litigation settlements, then misappropriated funds for boats and a private jet, the SEC alleges in federal court in Nevada.
Matthew Wade Beasley, Beasley Law Group PC, and nine other defendants took part in the scheme, which convinced more than 600 investors to purchase interests in insurance tort settlements with a promised annual return of 50% or more, according to the Securities and Exchange Commission complaint filed in the U.S. District Court for the District of Nevada.
FBI agents executed search warrants on the homes of Beasley and two other defendants in March. “When agents arrived at Beasley’s home, Beasley brandished a pistol and the agents shot him twice,” the complaint says. He then “locked himself inside his home for nearly four hours” and “repeatedly confessed” that the investments were part of a Ponzi scheme.
He faces a separate criminal case over that incident.
Beasley and Jeffrey Judd acted as “business partners” in the three entities that offered investments, and Beasley also purported to act as a lawyer for the entities, the SEC says. “It appears that at least $449 million in investor funds flowed into the scheme through Beasley Law Group’s attorney trust” account.
Judd and Christopher Humphries, who promoted the scheme, told investors their funds would go toward advance payments to tort plaintiffs who settled their claims with insurance companies and “were willing to pay a premium to receive a portion of their settlement in advance rather than wait” for the insurance companies to pay, the complaint says.
Judd, Humphries, Shane M. Jager, Jason M. Jongeward, Denny Seybert, and Roland Tanner “recruited dozens, if not hundreds, of investors into the scheme and received transaction-based compensation for bringing in additional investors and more money from existing investors, even though none of them was a registered broker or dealer.”
Some of the defendants also claimed Beasley and his firm “managed relationships with numerous personal injury attorneys around the country to maintain a supply of purchase agreements,” according to the SEC.
But the purchase agreements didn’t actually exist, and the defendants instead spent investor funds on luxury homes, cars, and all-terrain vehicles in addition to the boats and private jet, the agency says. It’s “unknown” how much of the money went toward Ponzi payments to earlier investors.
Causes of Action: Securities Act §5(a) and (c)—Unregistered sale and offering of securities (15 U.S.C. §77e(a) and (c)) (against all defendants); Securities Act §17(a)—Employing a device, scheme, or artifice to defraud, making untrue statements or omitting material facts, or engaging in a transaction, practice, or course of business which operates as a fraud in an interstate offering or sale of securities (15 U.S.C. §77q(a)) (against Beasley, Beasley Law Group, Judd, the J&J entities, and Humphries); Exchange Act §10(b)—Using a manipulative or deceptive device or contrivance for a securities transaction in violation of SEC rules (15 U.S.C. §78j) (against Beasley, Beasley Law Group, Judd, the J&J entities, and Humphries); SEC Rule 10b-5—Employing a device, scheme, or artifice to defraud, making untrue statements or omitting facts, or engaging in any act, practice, or course of business which operates as a fraud or deceit (17 C.F.R. §240.10b-5) (against Beasley, Beasley Law Group, Judd, the J&J entities, and Humphries); Exchange Act §15(a)(1)—Acting as an unregistered broker-dealer or without associating with a registered broker-dealer (15 U.S.C. §78o(a)(1)) (against Judd, Humphries, Jager, Jongeward, Seybert, and Tanner).
Relief: Permanent injunctions prohibiting defendants from violating the federal securities laws at issue; permanent injunction prohibiting Beasley, Beasley Law Group, Judd, and the J&J entities from “the issuance, purchase, or sale of any security related to settled litigation claims,” with exceptions for their personal accounts; permanent injunction prohibiting Judd, Humphries, Jager, Jongeward, Seybert, and Tanner from “soliciting any person or entity to purchase or sell any security"; disgorgement with interest; civil fines.
Response: Peter S. Christiansen, founding partner at Christiansen Trial Lawyers who represents Humphries, declined to comment Wednesday. Attorneys believed to represent Jager and Jongeward didn’t immediately respond to Wednesday requests for comment. Attorneys for the other defendants weren’t listed on the docket and couldn’t be identified for comment.
The case is SEC v. Beasley, D. Nev., No. 2:22-cv-00612, complaint filed 4/12/22.