A Lone Tree man has reached a settlement for his accused role in multiple schemes to defraud investors, the Securities and Exchange Commission announced Tuesday.
The SEC's order found that between January 2014 and October 2016, Tyler T. Tysdal and his business partner Grant M. Carter of Johns Creek, Georgia, defrauded investors of Cobalt Sports Capital, LLC, an entity they formed to make loans to athletes and sports agencies.
Tysdal is required to pay disgorgement and prejudgment interest totaling $843,099 and a civil penalty of $320,000. Carter has to pay a civil penalty of $160,000.
Luke Ritchie, a partner at Moye White who represents the respondents in the SEC investigation, said, “As is typical, the terms of settlement confirm that we neither admit nor deny the SEC’s findings. Suffice it to say, having cooperated with the SEC from the very beginning in its time-consuming and costly investigation, my clients are very pleased to put the matter to rest so they can focus on the future.”
According to the SEC's order, rather than using investor proceeds to make loans to athletes, Tysdal and Carter diverted over $15 million to the cash-strapped startup portfolio companies of Impact Opportunities Fund, L.P., a private fund that Tysdal managed through his investment adviser Impact Opportunities Fund Management, LLC (IOFM) and concealed those loans from debt investors in Cobalt. Ultimately, each of the portfolio companies failed, resulting in significant losses to debt investors in Cobalt.
The order also found that Tysdal and IOFM defrauded the Impact Opportunities Fund and its investors by, among other things, charging the fund undisclosed monitoring fees, a portion of which went to Tysdal.
Tysdal also defrauded private fund TitleCard Capital 1Fund, L.P. and its investors through two advisers that he controlled, TitleCard Capital Management, LLC (TCCM) and TitleCard Capital Group, LLC (TCCG). According to the order, Tysdal and the two advisers breached the fund's concentration limits by causing the fund to purchase Cobalt from Impact Opportunities Fund at the end of 2015. The order finds that TCCG and Tysdal defrauded the fund and its investors by falsely valuing the fund's investment in Cobalt in reports to investors, effectively concealing the concentration limit breaches.
The SEC also announced settled charges against two other individuals, Britt J. Haugland and Michael A. DeJager, for their roles in Tysdal and Carter's fraudulent schemes. The SEC's order related to Haugland finds that she assisted Tysdal and Carter's scheme to divert investor funds from Cobalt to the portfolio companies, while the SEC order related to DeJager finds that he was a cause of TCCG's violations. Haugland and DeJager each must pay a civil penalty of $15,000.
The SEC's investigation was conducted by Noel M. Franklin and supervised by Ian S. Karpel of the Denver Regional Office.
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