Founder of litigation finance company pleads guilty to securities fraud

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The founder of a bankrupt New York City litigation finance company pleaded guilty to securities fraud and admitted to using investor funds for his personal use and twice promising the same case recovery as a guarantee to several parties.

According to court documents filed with the U.S. District Court for the Southern District of New York, Jaeson Birnbaum solicited and obtained over $ 3 million in promissory notes for Cash4Cases based on fraudulent misrepresentation between 2017 and 2019. The Notes , called “Investor Security Agreements” (ISAs), purported to provide investors with collateral over the recoveries associated with lawsuits which were ostensibly purchased by Cash4Cases. The ISAs also provided that Cash4Cases would reimburse investors with interest, regardless of the outcome of the collateral claims.

However, Birnbaum entered into collateral lawsuits that it had already promised to other investors or lenders, or that it had previously assigned or sold. He also ordered an employee to falsify the company’s books and records to make it appear that some cases were available to be pledged as collateral to new investors, when they had in fact already been concluded or terminated and all the related settlement payments had already been paid. .

Birnbaum also admitted to embezzling much of investor funds for his personal use and to make promised payments to previous investors. For example, an investor gave Birnbaum $ 1 million under the mistaken belief that Cash4Cases would use the money exclusively for advances to litigants. But on the day Cash4Cases received the $ 1 million investment, Birnbaum used the money to send a $ 530,000 transfer to buy a home in New Jersey.

“Jaeson Birnbaum has fooled investors through a series of lies about his litigation finance company, Cash4Cases,” Audrey Strauss, United States attorney for the Southern District of New York, said in a statement. “He used Cash4Cases to steal money for himself, then tried to cover up his scheme by getting a subordinate to forge books and records.”

Birnbaum, 47, is expected to be sentenced in January 2022 and faces a maximum of 20 years in prison.

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Tags: Audrey Strauss, Cash4Cases, Jaeson Birnbaum, litigation finance firm, securities fraud


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