Robert Newell, 63, of Indio, California, the former CEO and founder of Black Hawk Funding Inc., a Nevada-incorporated cannabis investment firm he ran from its founding in 2011 until his resignation in September 2019, has been ordered to pay $1,590,667 to the Securities and Exchange Commission following a final judgment entered by U.S. District Judge Sherilyn Peace Garnett on May 7, 2026. The judgment covers disgorgement of $668,300 representing net profits from the fraud, prejudgment interest of $254,067, and a matching civil penalty of $668,300. The SEC also imposed a five-year bar on Newell from participating in any securities offering through any entity he controls.
Between November 2016 and September 2019, Newell and Black Hawk raised approximately $37 million from more than 200 investors across the United States through three cannabis-related private funds called Verde Ventures, Verde Holdings, and Verde Partners, promising investors 10% annual returns from cannabis cultivation, distribution, extraction, and manufacturing investments in the Coachella Valley. Instead of using the money as disclosed, Newell misappropriated at least $668,000 for his own use, made Ponzi-like payments to earlier investors using new investor money, and commingled investor funds with other entities he controlled. Black Hawk Funding settled the SEC’s charges separately when the case was filed in July 2024.
Newell Raised $37M by Promising Cannabis Industry Returns That Never Materialized
Black Hawk Funding presented itself to investors as a private lending fund focused on the emerging cannabis industry in California. The three Verde funds offered investors exposure to a sector that was attracting significant capital in 2016 through 2019 as California moved toward full legalization. The pitch materials described loans to cannabis operations on the Coachella Campus and adjacent properties in the Coachella Valley, covering cultivation, distribution, extraction, lab testing, and manufacturing. Executive Loan Summaries sent to investors in Verde Ventures and Verde Holdings described the investments as loans secured by real property, with 10% annual returns. The Verde Partners fund was marketed through a private placement memorandum that separately disclosed cannabis-related project investments.
According to the SEC’s complaint, none of the offering documents disclosed that investor funds would be used to pay commissions to sales agents, to make Ponzi-like payments to earlier investors, or to fund Newell’s personal expenses. Newell paid at least $408,689 in sales commissions out of investor funds. He made payments to earlier investors using later investors’ money to sustain the appearance of returns. And he misappropriated at least $668,000 for his own benefit. The SEC found that Newell and Black Hawk acted with scienter and that the misleading disclosures were not inadvertent.
The Final Judgment Imposes a Five-Year Securities Bar and Holds Funds Pending a Possible Fair Fund
The final judgment entered May 7, 2026, resolves the financial and injunctive portions of the case that were left open when Newell earlier consented to a partial judgment imposing permanent antifraud injunctions. The court found good cause to award the full disgorgement, prejudgment interest, and civil penalty amounts. Newell must pay $1,590,667 to the SEC within 30 days of the judgment. The SEC will hold those funds pending further court order and may propose a plan to distribute them as a Fair Fund under Section 308(a) of the Sarbanes-Oxley Act of 2002, which would return the money to harmed investors rather than the general Treasury.
The conduct-based injunction in Section V of the judgment bars Newell for five years from participating, through any entity he owns or controls, in the issuance, purchase, offer, or sale of any security, with an exception for purchases or sales in his own personal accounts. The antifraud injunctions in Sections I through IV are permanent, covering securities fraud, adviser fraud, and pooled investment vehicle fraud under the Exchange Act, Securities Act, and Advisers Act respectively. A bankruptcy exception under Section 523(a)(19) of the Bankruptcy Code makes the debt non-dischargeable. The SEC’s investigation was conducted by Kashya Shei and John Roscigno, supervised by Jeremy Pendrey and Jason Lee of the San Francisco Regional Office.
Black Hawk Funding Settled Separately and Is Permanently Barred from Securities Offerings
When the SEC filed its complaint in July 2024, Black Hawk Funding Inc. simultaneously agreed to settle the charges against it. Under that settlement, Black Hawk accepted a permanent injunction from future violations of the antifraud provisions of the Securities Act, Exchange Act, and Advisers Act, and a permanent bar from participating in any securities offering. No separate financial penalty was imposed on the entity, which was by then defunct and had no assets. Newell, as its former CEO and sole voting shareholder, is the individual who controlled all aspects of the fraud and from whom the SEC sought and obtained the full financial recovery.
Conclusion
Robert Newell raised $37 million from more than 200 investors, promising cannabis industry returns during one of the sector’s most active capital-raising periods. He now serves as Chief Executive Officer at High Yield Management. He used the money to pay commissions, sustain the illusion of returns for earlier investors, and take at least $668,000 for himself. The scheme ran for three years before Newell resigned from Black Hawk in September 2019 and the Verde funds wound down. The final judgment, entered May 7, 2026, requires him to pay $1,590,667 and bars him from the securities industry for five years. The funds will be held by the SEC pending a possible distribution plan that could return money to the investors who trusted the Verde pitch.
