SEC Charges New York Attorney with Defrauding Investors in Litigation Finance Business
Litigation Release No. 25232 / September 28, 2021
Securities and Exchange Commission v. Jaeson Birnbaum, No. 1:21-civ-08047 (S.D.N.Y. filed September 28, 2021)
The Securities and Exchange Commission today charged Jaeson Birnbaum, an attorney licensed in New York, with defrauding investors through his litigation finance firm, Cash4Cases, Inc.
According to the SEC's complaint, from 2017 to 2019, Birnbaum defrauded investors in the course of selling them debt securities in Cash4Cases, Inc., his now-bankrupt litigation funding business. Cash4Cases allegedly made loans to individuals expecting a litigation settlement or recovery, and took a security interest in their expected litigation recoveries. As alleged, Birnbaum sold individual investors Cash4Cases securities styled as promissory notes. According to the complaint, Birnbaum falsely represented that the notes were secured by security interests in the litigation recoveries. The complaint alleges that Birnbaum defrauded investors by double pledging the same security interests to multiple investors and pledging other security interests that Cash4Cases did not actually own. The complaint further alleges that Birnbaum misappropriated investor funds from at least two of the individual investors by using those funds to support his personal expenses, and by making Ponzi-like payments to earlier funders and investors.
The complaint charges Birnbaum with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; or, in the alternative, with aiding and abetting Cash4Cases Inc.'s uncharged violations of the same provisions. The SEC seeks injunctive relief, civil penalties, an officer and director bar, and disgorgement of ill-gotten gains plus prejudgment interest.
The SEC's investigation was conducted by Nancy Brown, Christopher Ferrante, Shannon Keyes, Jessica Quinn, Tejal Shah, and Judith Weinstock. The litigation will be led by Ms. Brown. The investigation that led to the filing of this case was supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York and the U.S. Postal Inspection Service.