SEC Moves Quickly Against Alleged Farm Loan Ponzi

1. Defendants Veros Partners, Inc. ("Veros"), an SEC-registered investment adviser located in Indianapolis, Indiana, and Matthew D. Haab, its president, have fraudulently raised at least $15 million from at least 80 investors. Veros and Haab raised those funds, mostly from Veros' own clients, in two separate farm loan offerings.

2. In each offering, the investors purchased securities issued, in 2013, by Defendant Veros Farm Loan Holding LLC ("VFLH" or the "2013 Offering"), and in 2014, by Defendant FarmGrowCap LLC ("FarmGrowCap" or the "2014 Offering"). VFLH and FarmGrowCap are controlled and operated by Haab and two associates, Defendants Jeffery B. Risinger and Tobin J. Senefeld.

3. The investors in the 2013 and 2014 Offerings were informed, orally and in writing by Haab, and in the written offering documents, that investor funds would be used to make short term operating loans to farmers for the 2013 and 2014 growing seasons. Contrary to these representations, although some investor money was loaned to the farms, significant portions of the loan proceeds were not used for current farming operations but were used to cover the farms' prior, unpaid debt. In addition, Haab, Risinger, and Senefeld used money from the 2013 and 2014 Offerings to make at least $7 million in payments to investors in other offerings and to pay themselves over $800,000 in undisclosed "success" and "interest rate spread" fees. They also repeatedly misled investors about the risks, nature, and performance of the investments and underlying farm loans. Among other things:

(a) During 2013, Haab used approximately $2.8 million of investor funds from the 2013 Offering to pay off investors in earlier farm loan offerings when those farms did not fully repay their 2012 loans, without informing investors that they intended to do so. Haab and Risinger did not disclose the 2012 loan defaults to the 2013 investors, nor did they disclose that the 2012 unpaid loan balances were included in loans involved in the 2013 offering. Without disclosure to investors, they also transferred more than $1.9 million in repayments on farm loans made under the 2013 Offering to repay investors in a 2014 "Bridge Loan" Offering that was set to mature on the same date.

(b) In 2014, after Haab learned that several of the farms involved in the 2013 Offering would not repay their 2013 loans on time, Haab, with the assistance of Risinger, used over $2.4 million of investor funds from the 2014 Offering to repay investors in the 2013 Offering and in the earlier 2014 Bridge Loan Offering, without informing investors that they intended to do so.

(c) Knowing that the actual amounts repaid by the farmers on the 2013 loans would be far less than what was necessary to fully repay all of the 2013 investors, Haab urged many of those investors to "roll over" their principal into the 2014 Offering. Haab falsely represented to them that both the 2013 investors and the 2013 loans had been repaid in full.

(d) Haab and Risinger then "rolled" over $7.5 million of unpaid investor principal from the 2013 and 2014 Bridge Loan Offerings into the 2014 Offering, and raised approximately $3.7 million in new investor funds.

4. To date, less than $5 million of the approximately $12 million in loans owed in connection with the 2014 Offering have been repaid. All but one of the loans in the 2014 Offering are past due and, according to the Defendants, the loans, most of which included unpaid balances from prior years, will not be repaid in the near future. In addition, the approximately $7 million still owed on those loans ($3 million of which is the subject of a recently filed collection action) is not sufficient to repay the 2014 investors, who are owed a total of approximately $9 million in principal and interest, and are due to be repaid on April 30, 2015.

5. However, the farm loan defaults and looming investment shortfall were not disclosed to the investors in the 2014 Offering. Defendants Haab, Risinger, and Senefeld have advised the Commission that their only recourse to repay the investors is by fees they expect to receive from other existing or planned offerings, including at least two 2015 farm loan offerings to Veros clients through which they are seeking to raise almost $25 million. 

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