Robert Newell, the founder and former CEO of Black Hawk Funding Inc., has been ordered to pay more than $1.59 million following an SEC enforcement action tied to a cannabis-focused investment scheme that raised roughly $37 million from investors across the United States.
The final judgment, entered May 7, 2026, by U.S. District Judge Sherilyn Peace Garnett, requires Newell to pay $668,300 in disgorgement, $254,067 in prejudgment interest, and a matching civil penalty of $668,300. The court also imposed a five-year bar preventing Newell from participating in securities offerings through entities he owns or controls.
According to the Securities and Exchange Commission, Newell and Black Hawk Funding raised money between 2016 and 2019 through three private cannabis-related funds called Verde Ventures, Verde Holdings, and Verde Partners. Investors were told the funds would finance cannabis cultivation, extraction, manufacturing, and distribution projects tied to properties in California’s Coachella Valley, with some materials promising annual returns of 10%.
The cannabis sector was attracting significant investor enthusiasm during that period as California moved further into legalized commercial cannabis operations. Black Hawk positioned itself as a lending and investment vehicle designed to capitalize on the rapid expansion of the industry.
But regulators said investor money was not used in the way the funds’ marketing materials described.
The SEC alleged Newell misappropriated at least $668,000 for personal use while also using investor funds to pay commissions and make Ponzi-like payments to earlier investors. According to the complaint, Black Hawk paid more than $408,000 in sales commissions using investor capital, and offering documents failed to disclose that investor money could be diverted toward commissions, prior investor payments, or Newell’s personal expenses.
The Commission additionally alleged that investor funds were commingled among various entities controlled by Newell and that the misleading disclosures were made knowingly rather than accidentally.
Black Hawk Funding itself settled with the SEC when the case was originally filed in July 2024. The company agreed to permanent injunctions and a permanent bar from participating in securities offerings, though no separate financial penalty was imposed because the firm was defunct and reportedly lacked assets by that point.
Newell previously consented to partial judgments imposing permanent antifraud injunctions under federal securities laws. The May 2026 order finalized the remaining financial penalties and conduct-based restrictions.
Under the judgment, Newell must pay the full $1.59 million within 30 days. The SEC said the funds may ultimately be distributed back to harmed investors through a Fair Fund established under the Sarbanes-Oxley Act, rather than being transferred directly into the U.S. Treasury.
The judgment also makes the debt non-dischargeable in bankruptcy.
The SEC’s complaint described Newell as the individual who controlled all aspects of Black Hawk Funding and the Verde funds during the relevant period. He resigned from the company in September 2019 as the funds unraveled.
The case represents another example of regulators targeting investment schemes that emerged during the early years of large-scale cannabis industry fundraising, when private cannabis ventures were attracting substantial investor interest but often operated with limited oversight and aggressive return projections.
More than 200 investors participated in the Verde funds before the operation collapsed.
