SEC obtains default judgement against Ponzi scheme Bar Works

Maria Nikolova

The California Northern District Court ordered that a constructive trust is imposed on the property owned by Bar Works Capital in the amount of $1.6 million.

The legal proceedings against Bar Works Capital, a Ponzi scheme operated by Renwick Haddow, also famous for his Bitcoin scam, continue in the United States. On December 18, 2017, the United States Securities and Exchange Commission (SEC) managed to secure a default judgement against Bar Works in a civil case at the California Northern District Court, captioned Securities And Exchange Commission v. Bar Works Capital, LLC (3:17-cv-04396).

Judge Edward Chen ordered that a constructive trust is imposed on Bar Works Capital’s property in San Francisco (615 Sacramento Street) in the amount of $1.61 million.

The order notes that the SEC had already obtained a Final Judgement against Bar Works Capital in a case captioned SEC v Renwick Haddow et al (1:17-cv-4950). The order provided that the defendant is liable for $1.61 million. The company, however, has failed to pay the penalty.

The SEC’s complaint charges Haddow, Bitcoin Store, Bar Works, and another Haddow-controlled company called Bar Works 7th Avenue, Inc. 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. The complaint further alleges that Haddow is liable for aiding and abetting Bitcoin Store, Bar Works, and Bar Works 7th Avenue’s violations and as a control person for the registration violations of his brokerage firm InCrowd Equity Inc.

Haddow allegedly used sales representatives to cold call potential investors and sell securities in Bitcoin Store Inc. and Bar Works Inc.

According to the SEC’s complaint, offering materials presented to investors in both companies touted the backgrounds of senior executives who do not appear to exist. The materials also misrepresented other key facts about both companies’ operations. Haddow allegedly diverted more than 80% of the funds raised by the broker-dealer for Bitcoin Store, and sent more than $4 million from the Bar Works bank accounts to one or more accounts in Mauritius and $1 million to one or more accounts in Morocco.

Earlier this week, the SEC informed the New York Southern District Court that Haddow’s time to answer (or otherwise respond to) its complaint currently expires on January 4, 2018. However, the Commission anticipates that Haddow may seek to extend his time to answer because he is currently being held in a Moroccan jail.

In connection with the parallel criminal action against Haddow, the SEC understands that the United States government is in the process of extraditing Haddow and that the United States Attorney’s Office for the Southern District of New York recently learned that Haddow has consented to extradition.

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