SEC v. MICHAEL V. CHHABRA; VINEET K. CHHABRA; TORT FUND LLC; TORT FUND SPV1, LLC; and TORT FUND SPV2, LLC, No. 1:24-cv-2561, District of Columbia (Sept. 6, 2024) — Complaint

UNITED STATES DISTRICT COURT
 DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE
COMMISSION
1617 JFK Boulevard, Suite 520
Philadelphia, PA 19103,

                                                  Plaintiff,                                                     COMPLAINT
     Civil Action No. 1:24-cv-2561
v.

MICHAEL V. CHHABRA
215 SW 6th Place
Pompano Beach, FL 33060,

VINEET K. CHHABRA
225 SW 6th Court
Pompano Beach, FL 33060,

TORT FUND LLC
545 Metro Place S, Suite 100
Dublin, OH 43017-5353,

TORT FUND SPV1, LLC
545 Metro Place S, Suite 100
Dublin, OH 43017-5353, and

TORT FUND SPV2, LLC
80 M Street SE, Suite 100
Washington, DC  20003-3550

                                                  Defendants.

    JURY TRIAL DEMANDED

 Plaintiff Securities and Exchange Commission (the “Commission”) alleges as follows
against Defendants Michael V. Chhabra (“Michael Chhabra”), Vineet K. Chhabra, aka Vincent
K. Chhabra (“Vineet Chhabra”), Tort Fund LLC, Tort Fund SPV1, LLC (“Tort Fund SPV1”) and
Tort Fund SPV2, LLC (“Tort Fund SPV2”):

2

SUMMARY
1. Beginning in April 2019 and continuing through at least September 2020, Michael
Chhabra and his father, Vineet Chhabra (collectively, “the Chhabras”), engaged in a fraudulent
scheme to misappropriate money from investors by lying to them about an investment
opportunity they were offering involving litigation financing.  The Chhabras promised returns
and interest or profits from lending money to law firms to finance mass tort litigation on behalf
of victims of allegedly defective medical devices and harmful consumer products.  The Chhabras
ultimately induced three investors to purchase $125,000 in securities through entities they
controlled:  Tort Fund LLC and its “specialty purpose vehicles” -- Tort Fund SPV1 and Tort
Fund SPV2 (collectively, “the Tort Fund Entities”).
2. The Chhabras, through the Tort Fund Entities, falsely claimed that Tort Fund LLC
was actively partnering with law firms and that it “provides litigation financing for mature mass
tort cases.”  Unbeknownst to the investors, neither the Chhabras nor the Tort Fund Entities ever
provided litigation financing for mass tort cases, and there were no agreements with law firms to
do so.
3. Defendants also misled investors about the safety and security of the investments
by claiming, among other things, that the investments were collateralized and UCC1-secured
when they were not.
4. Instead of using investor funds to finance mass tort litigation as promised, the
Chhabras misappropriated the money they raised through the Tort Fund Entities for their
personal use, such as to pay off debts from the Chhabras’ prior business ventures, and for food,
travel and entertainment expenses, and otherwise used the remaining funds to perpetuate their
unlawful scheme, including to solicit additional investors.

3

5. Knowing they had not loaned any of the funds to law firms to fund litigation as
represented to investors, the Chhabras repeatedly provided investors with false information that
the Tort Fund Entities were currently providing funding to law firms and about the safety of and
return on their investments, while continuing to solicit these investors to make additional
investments with the Tort Fund Entities.
6. By engaging in the conduct described herein, Defendants violated, and unless
enjoined will continue to violate, Section 17(a) of the Securities Act of 1933 (“Securities Act”)
[15 U.S.C. § 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”)
[15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
JURISDICTION AND VENUE
7. The Commission brings this action pursuant to Sections 20(b) and 20(d) of the
Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)], and Section 21(d) of the Exchange Act [15
U.S.C. §§ 78u(d)], to enjoin such acts, transactions, practices, and courses of business, and to
obtain disgorgement, prejudgment interest, civil penalties, officer and director bars and such
other and further relief as the Court may deem just and appropriate.
8. This Court has jurisdiction over this action pursuant to Sections 20(b) and 22(a)
of the Securities Act [15 U.S.C. §§ 77t(b) and 77v(a)] and Sections 21(d), 21(e) and 27 of the
Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa].
9. Venue in this District is proper pursuant to Section 22(a) of the Securities Act [15
U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  Much of the alleged
unlawful conduct occurred in this District.  Tort Fund SPV2 is a District of Columbia limited
liability company.  During most of the relevant time period, Michael Chhabra resided in this

4

District while engaging in the offering fraud alleged, and certain transactions, acts and business
of the Tort Fund Entities that constitute the alleged violations occurred in this District.
10. In connection with the conduct alleged in this Complaint, Defendants, directly or
indirectly, singly or in concert, made use of the means or instruments of transportation or
communication in, or instrumentalities of, interstate commerce, or the mails, or the facilities of a
national securities exchange, including by providing false statements to would-be investors via
email.
DEFENDANTS
11. Michael Chhabra, age 29, currently resides in Pompano Beach, Florida, but for
much of the conduct alleged herein, resided in the District of Columbia.  He founded Tort Fund
LLC, and at all relevant times acted as its Chief Executive Officer and Manager.  In addition, at
all relevant times, he acted as a Manager for Tort Fund SPV1 and Tort Fund SPV2.  Michael
Chhabra also had an ownership interest in Law Firm A, a law firm that Tort Fund LLC claimed
to be providing funds to for the purpose of financing mass tort litigation.
12. Vineet Chhabra, age 53, resides in Pompano Beach, Florida.  At all relevant
times, he served as the Marketing Consultant for Tort Fund LLC and the Investor Relations
Coordinator for Tort Fund SPV1 and Tort Fund SPV2.  Vineet Chhabra is the father of Michael
Chhabra.
13. Tort Fund LLC is an Ohio limited liability company originally formed on or
about April 22, 2019, with a principal place of business in Dublin, Ohio.  At all relevant times,
Michael Chhabra acted as the Manager and Registered Agent for Tort Fund LLC.  In or about
June of 2019, Tort Fund LLC relocated its principal place of business to the District of Columbia

5

and subsequently to Pompano Beach, Florida, where Michael Chhabra now resides.  At all
relevant times, Tort Fund LLC has been controlled by Michael Chhabra and Vineet Chhabra.
14. Tort Fund SPV1 is an Ohio limited liability company originally formed on or
about April 22, 2019, with a principal place of business in Dublin, Ohio.  At all relevant times,
Tort Fund LLC was the Manager of Tort Fund SPV1, and Michael Chhabra, as the Manager of
Tort Fund LLC, acted as the Manager and Registered Agent for Tort Fund SPV1.  In or about
June of 2019, Tort Fund SPV1 relocated its principal place of business to the District of
Columbia and subsequently to Pompano Beach, Florida, where Michael Chhabra now resides.
15. Tort Fund SPV2 is a District of Columbia limited liability company originally
formed on or about September 30, 2019, with its principal place of business in the District of
Columbia and subsequently was operated from Michael Chhabra’s home in Pompano Beach,
Florida.  At all relevant times, Tort Fund LLC was the Manager of Tort Fund SPV2, and Michael
Chhabra, as the Manager of Tort Fund LLC, acted as the Manager for Tort Fund SPV2.  Tort
Fund SPV2 failed to file its Biennial Report and has been inactive since 2020.
FACTUAL ALLEGATIONS
16. From at least June 2019 through November 2019, the Chhabras and the Tort Fund
Entities made fraudulent representations in an attempt to attract investors -- ultimately inducing
at least three investors from across the country to purchase a total of $125,000 in securities.  As
detailed below, Defendants made numerous material misstatements in the Tort Fund Entities’
offering documents and in other written and verbal communications claiming that the investors’
money would be used to provide litigation financing to law firms handling mass tort litigation
when it was not.

6

17. Rather than using the funds for litigation financing as represented, the Chhabras
instead misappropriated the monies for the benefit of themselves and their family and to
perpetuate and attempt to expand their fraudulent scheme carried out through the Tort Fund
Entities.
18. As alleged in more detail below, Defendants made material misrepresentations
about (i) the past and current business operations of Tort Fund LLC; (ii) the safety and security
of the investments in the Tort Fund Entities; and (iii) the use of investor funds.
I. THE CHHABRAS USE THE TORT FUND ENTITIES TO RAISE FUNDS
19. In April 2019, the Chhabras formed Tort Fund LLC purportedly to engage in the
business of litigation financing -- lending money to law firms actively litigating lawsuits
involving mass tort claims against well-known manufacturers of household products and specific
medical devices.  Michael Chhabra was the Manager and Registered Agent of Tort Fund LLC,
and he opened a bank account on behalf of Tort Fund LLC in April 2019.
20. In furtherance of their fraudulent scheme, the Chhabras utilized what they
characterized as “ specialty” purpose vehicles to raise funds for Tort Fund LLC -- Tort Fund
SPV1 and Tort Fund SPV2.
21. Simultaneously with forming Tort Fund LLC, the Chhabras formed Tort Fund
SPV1 as the initial specialty purpose vehicle.  Tort Fund SPV1 was wholly owned by Tort Fund
LLC.  Michael Chhabra opened a separate bank account on behalf of Tort Fund SPV1.
22. The offering documents for Tort Fund SPV1, which included a one-page
summary of Tort Fund SPV1, a Tort Fund LLC “Executive Summary” that referenced Tort Fund
SPV1, and a “Unit Purchase Agreement” with an “Operating Agreement” attached thereto, were

7

jointly drafted by Michael Chhabra and Vineet Chhabra before they caused them to be
distributed to prospective investors.
23. The one-page summary for Tort Fund SPV1 stated that the “Revenue Model” was
to pool investor capital and lend money to partner law firms to fund mass tort cases “via fixed-
rate, high-interest debt instruments.”  Tort Fund SPV1 would then be repaid principal plus
accrued interest from legal fees the law firms realized once the mass tort cases were resolved,
which then would be distributed to the Tort Fund SPV1 investors.
24. The Tort Fund SPV1 Unit Purchase Agreement stated that it was a “sale and
purchase of securities” and included a list of “Investment Considerations and Risk Factors” that
repeatedly referred to the Unit Purchase Agreement as an investment and stated that it was
speculative.  The Tort Fund SPV1 offering documents also referred to the Unit Purchase
Agreement as an “investment.”
25. In the offering documents, Tort Fund LLC, Tort Fund SPV1 and the Chhabras
told prospective investors that investor funds would be used to make fixed-rate, high interest
loans to law firms handling mass tort cases, which purportedly would generate sufficient profits
to make profit distributions to investors.  The offering documents also stated that Tort Fund LLC
utilized strict underwriting standards for the law firm loans to “ensure payback of principal and
interest to investors.”  The offering documents also provided that investors in Tort Fund SPV1
would receive a pro rata distribution of the net profits Tort Fund SPV1 received from Tort Fund
LLC’s and Tort Fund SPV1’s litigation financing business.
26. Even though Tort Fund SPV1 was not fully subscribed, the Chhabras formed Tort
Fund SPV2 in September 2019 to raise up to an additional $20 million for Tort Fund LLC’s
purported litigation financing business through promissory notes.  Unlike Tort Fund SPV1,

8

however, the Chhabras did not open a bank account for Tort Fund SPV2.  Instead, investments in
Tort Fund SPV2 were sent to the bank account for Tort Fund LLC.
27. The Chhabras solicited investors to purchase Tort Fund SPV2 securities using a
set of written offering documents that they authored together, as they had done for Tort Fund
SPV1.  The Tort Fund SPV2 offering documents included a one-page summary of Tort Fund
SPV2, a separate Tort Fund LLC “Executive Summary” that referenced Tort Fund SPV2, a
“Note Purchase Agreement,” and a “Loan Agreement and Promissory Note.”  The terms of the
Loan Agreement and Promissory Note stated that the lender would make a single balloon
payment of the principal to the borrower plus an amount equal to 60% of the principal 48 months
from the date of the investment.
28. The offering documents for Tort Fund SPV2 stated that investor funds would be
used to make fixed-rate, high interest loans to law firms handling mass tort cases, which
purportedly would generate sufficient profits to repay the investor’s principal investment plus
interest.
29. The header of the Tort Fund SPV2 Loan Agreement and Promissory Note clearly
stated that it represented securities and included a list of “Investment Considerations and Risk
Factors” that stated the investment was speculative.  The Tort Fund SPV2 offering documents
also repeatedly referred to the Loan Agreement and Promissory Note as an “investment.”
30. While the investments in Tort Fund SPV1 and Tort Fund SPV2 were structured
differently, the stated purpose of both investments was the same -- to pool investor capital and
lend it to “partner” law firms handling mass tort cases through a fixed-rate, high-interest debt
instrument.

9

31. In the Executive Summaries that were part of the Tort Fund Entities offering
documents, the Chhabras touted the investments as a lucrative social impact investing
opportunity that would benefit the victims of allegedly defective medical devices and harmful
consumer products.  The Executive Summaries further purported to offer “collateralized, UCC1-
secured investments to investors via specialty purpose vehicles.”
32. The Tort Fund SPV1 and Tort Fund SPV2 offering documents also stated that law
firms handling mass tort cases “earn substantial legal fees, typically 33% of the amount awarded,
which often relates to tens if not hundreds of thousands of dollars per case.”
33. The offering documents promised that those fees would be used to repay Tort
Fund LLC’s loans to the law firms and that Tort Fund LLC would use the proceeds to make
profit distributions to the Tort Fund SPV1 investors and to repay the Tort Fund SPV2 investors’
principal investments plus interest.
34. At the time the Chhabras formed Tort Fund LLC, the Chhabras had no prior
experience in operating a litigation financing business or providing litigation financing to law
firms.
35. The Executive Summaries that the Chhabras distributed to Tort Fund SPV1 and
Tort Fund SPV2 investors falsely stated that Tort Fund LLC had entered into an agreement with
Law Firm A  to exclusively fund its case docket to replicate the success previously achieved in
mass tort cases against well-known manufacturers of household products and specific medical
devices.  The Executive Summaries further stated that Tort Fund LLC was working with not just
Law Firm A , but with a network of “partner” law firms.  These claims were not true.
36. In reality, there was never any agreement with Law Firm A or with any law firm
that was litigating tort cases.  Law Firm A did not litigate mass tort cases or have any need for

10

litigation funding.  At no time did Tort Fund LLC work with a network of law firms to provide
litigation funding.  Rather, Tort Fund LLC never provided litigation funding to any law firms
litigating mass tort cases.
37. The Chhabras marketed the Tort Fund SPV1 and Tort Fund SPV2 securities
directly and indirectly through Tort Fund LLC employees and independent contractors,
Facebook ads, Tort Fund LLC’s website, and telephone and email solicitations with prospective
investors.
38. The Chhabras had control over and jointly drafted the content available on the
Tort Fund website and the investor portal.
39. Vineet Chhabra and Michael Chhabra both had email addresses with the Tort
Fund Entities, which they used to communicate with prospective and actual investors.
40. From at least June 2019 through August 2021, Michael Chhabra emailed directly
and indirectly with prospective and actual investors to, among other things, explain how to
access the investor portal, send offering documents for the Tort Fund Entities, and provide
updates on the status of the investments.
41. From at least June 2019 through October 2020, Vineet Chhabra also emailed
directly and indirectly with prospective and actual investors to, among other things, provide
updates on the purported status of the investments.
A. The Chhabras and Tort Fund LLC Sell    One Investment in Tort Fund SPV1
42. In the summer of 2019, Tort Fund LLC, Tort Fund SPV1 and the Chhabras
solicited investors for Tort Fund SPV1.  At the outset of the scheme, the Chhabras utilized
individuals from Company A to find potential investors for Tort Fund LLC and Tort Fund SPV1.

11

43. In or about June 2019, an individual from Company A, acting on behalf of Tort
Fund LLC, reached out to Investor 1, who resided in Colorado, to discuss the potential
investment opportunity in Tort Fund SPV1.
44. On June 11, 2019, Michael Chhabra emailed Investor 1 to explain how to access
the investor portal to access documents relating to the Tort Fund SPV1 investment opportunity.
The investor portal contained the offering documents for Tort Fund SPV1.
45. On July 15, 2019, Michael Chhabra emailed Investor 1 the Unit Purchase
Agreement for Tort Fund SPV1 and separately emailed Investor 1 instructions to make payment
for an investment in Tort Fund SPV1.
46. That same day, Investor 1 executed the Unit Purchase Agreement for Tort Fund
SPV1 and, in accordance with the instructions Michael Chhabra provided, mailed a $50,000
check payable to Tort Fund SPV1 to its address in Dublin, Ohio.
47. Investor 1’s $50,000 check was deposited in the bank account for Tort Fund
SPV1 with a transaction date posting of July 17, 2019.
48. In exchange for his funds, Investor 1 then received a fully executed Unit Purchase
Agreement for 200,000 Common Units of Tort Fund SPV1, which was signed by Michael
Chhabra on behalf of Tort Fund SPV1.  As a result, the Chhabras, Tort Fund LLC and Tort Fund
SPV1 sold $50,000 in securities to Investor 1.
B. The Chhabras and Tort Fund LLC Sell    Two Investments i  n Tort Fund SPV2

49. In the fall of 2019, Tort Fund LLC, Tort Fund SPV2 and the Chhabras solicited
investors for Tort Fund SPV2 through Facebook advertisements and Employee 1 and Employee
2, who were hired by Tort Fund LLC for the purpose of finding investors.

12

1. Investor 2 Makes a $50,000 Investment in Tort Fund SPV2
50. In or about August or September 2019, Investor 2, who resided in New York at
the time, saw one of Tort Fund LLC’s advertisements on Facebook for an investment
opportunity in Tort Fund LLC and sent an inquiry for additional information.
51. On September 16, 2019, Investor 2 received a call from Employee 1, who was
hired by Michael Chhabra.  Employee 1 provided Investor 2 with additional information on the
investment.  Following the call, Tort Fund LLC emailed Investor 2 the one-page summary for
Tort Fund SPV2 and invited him to visit the Tort Fund website for the latest information on
verdicts from mass tort cases.  The Chhabras were blind copied on the email to Investor 2.
52. On September 24, 2019, Employee 1 spoke with Investor 2 on the telephone and
followed up with an email to Investor 2 attaching “the legal documents and disclosures for the
Tort Fund SPV-2 15% debt offering.”
53. In subsequent email communications on September 24, 2019, Employee 1
forwarded questions from Investor 2 to Michael Chhabra, who drafted responses to send back to
Investor 2.   In those responses, Michael Chhabra stated: “we currently have significant demand
at the 30% level and only project that we would lend above that rate, not below.”  This statement
was false, as the Tort Fund Entities had not lent one dollar to a law firm to finance mass tort
litigation and had not entered into any agreements with any law firm to do so.
54. Michael Chhabra also stated that the Tort Fund Entities took steps to mitigate
potential risk, including “(1) collateralizing every loan we make by placing a UCC-1 lien directly
on the filed cases, (2) ensuring that borrower law firms have a docket of cases where legal fees
are projected to be at least 5 times greater than the amount we lend to them ..., (3) ensuring that
our partner law firm [Law Firm A] is named on every client retainer agreement as oversight

13

counsel..., and (4) ensuring that funds are properly distributed among different litigations ....”
None of this was true.
55. On September 24, 2019, Employee 1 then sent the response that Michael Chhabra
drafted to Investor 2 and attached the Tort Fund SPV2 one-page summary, a Tort Fund LLC
Executive Summary, the Note Purchase Agreement and the wire instructions for payment.
56. On October 4, 2019, Employee 1 emailed Investor 2 the Note Purchase
Agreement, with the Loan Agreement and Promissory Note, to make an investment in Tort Fund
SPV2.  The email was drafted by Michael Chhabra.
57. On October 8, 2019, Investor 2 made a $50,000 investment in Tort Fund SPV2 by
wiring the funds directly to the account for Tort Fund LLC in Ohio.
2. Investor 3 Makes a $25,000 Investment in Tort Fund SPV2
58. In or about September 2019, Employee 2, an individual hired by Michael Chhabra
to work for Tort Fund LLC, approached Investor 3, who resided in California and was an
acquaintance of Employee 2, about investing in Tort Fund SPV2.
59. On September 20, 2019, at the request of Employee 2, Employee 1 emailed
Investor 3 an Executive Summary that referenced Tort Fund SPV2 and requested a phone call to
discuss further.
60. Later that day, Employee 1 spoke with Investor 3 on the phone and then followed
up with another email attaching the Tort Fund SPV2 one-page summary.
61. On September 27, 2019, Employee 2 emailed Investor 3 the Tort Fund SPV2
Note Purchase Agreement, which included the Loan Agreement and Promissory Note, as well as
the wire payment instructions.  Both Michael Chhabra and Vineet Chhabra were blind copied on
the email.

14

62. On or about October 21, 2019, Investor 3 executed the Note Purchase Agreement
and the Loan Agreement and Promissory Note for his investment in Tort Fund SPV2.
63. On or about November 6, 2019, $25,000 was wired from an IRA account for the
benefit of Investor 3 to the account for Tort Fund LLC for Investor 3’s investment in Tort Fund
SPV2.
64. The securities that Tort Fund LLC, Tort Fund SPV2 and the Chhabras sold to
Investors 2 and 3 took the form of a Loan Agreement and Promissory Note, in which Tort Fund
LLC, Tort Fund SPV2 and the Chhabras promised investors that they would receive a balloon
payment of 60% accrued interest on the principal amount of their investment as well as the return
of their principal within 48 months.
65. Investors 2 and 3 each received a Loan Agreement and Promissory Note signed
by Michael Chhabra on behalf of Tort Fund SPV2.
66. The Chhabras, Tort Fund LLC and Tort Fund SPV2 sold $75,000 in securities to
Investors 2 and 3.
II. DEFENDANTS MAKE MATERIAL MISREPRESENTATIONS
  TO INVESTORS IN THE TORT FUND ENTITIES

67. The Chhabras knowingly misled prospective investors by promising that their
investments would be used by Tort Fund SPV1 and Tort Fund SPV2 for the purpose of making
loans to law firms handling mass tort litigation on behalf of victims of defective medical devices
or harmful consumer products.
68. The Chhabras misled investors into believing that they already were funding mass
tort cases and actively engaging in litigation financing.  In reality, at no time did the Chhabras
provide any law firm with litigation financing relating to mass tort claims or any other cases and
had no viable plans or agreements to do so.

15

69. Yet, the offering documents falsely stated that Tort Fund LLC “provides litigation
financing for mature mass tort cases with established liability and a precedent for settlement.”
These written offering documents for the Tort Fund Entities were distributed via email from the
Chhabras or individuals working on behalf of the Tort Fund Entities to engage prospective
investors to induce them to invest in the Tort Fund Entities.
70. In the written offering documents for Tort Fund SPV1 and Tort Fund SPV2, the
Chhabras also falsely stated that Tort Fund LLC “ works with a network of partner law firms,”
that its “network of attorneys are committed to ensuring that plaintiffs get the best possible deal
from the justice system” and that Tort Fund LLC “pools investor capital and lends to its partner
law firms.”
71. Further, Defendants falsely claimed in the Tort Fund SPV1 and Tort Fund SPV2
written offering documents that Tort Fund LLC “has entered into an agreement with” Law Firm
A “to exclusively fund its case dockets” and that Tort Fund LLC has financed “the acquisition of
mass tort cases” against well-known manufacturers of specific medical devices and consumer
household products.
72. Defendants also falsely claimed on Tort Fund LLC’s website that the “Current
Tort Fund Investment Portfolio” included cases involving specific manufacturers of medical
devices and consumer products and that “Tort Fund is Currently Funding” cases involving the
identified manufacturers, medical devices and consumer products.
73. In or about July 2019, Tort Fund LLC, Tort Fund SPV1, Michael Chhabra and
Vineet Chhabra made material misrepresentations to Investor 1 in emails and phone calls to
induce him to invest in Tort Fund LLC and Tort Fund SPV1 relating to the companies’
operations, the safety and security of the investments and how the investor funds would be used.

16

74. In or about August through November 2019, Tort Fund LLC, Tort Fund SPV2,
Michael Chhabra and Vineet Chhabra, directly and indirectly, made material misrepresentations
to Investors 2 and 3 in emails and phone calls, including through communications drafted by
Michael Chhabra, to induce them to invest in Tort Fund LLC and Tort Fund SPV2, relating to
the companies’ past and current operations, the safety and security of the investments and how
the investor funds would be used.
75. For instance, on November 6, 2019, Investor 2 began asking whether he could
have his $50,000 investment in Tort Fund SPV2 returned.  In response, on November 7, 2019, in
an email drafted by Michael Chhabra, Employee 1 advised that the money was “promptly lent to
borrower law firms” and could not be returned.  Employee 1 further advised Investor 2 that it had
“already earned you just shy of $600 to date!”  In response, Investor 2 agreed to allow the
investment to continue.
76. These representations were false because the Tort Fund Entities had not invested
in any cases involving the identified manufacturers or the specified medical devices or consumer
products.  Further, the Chhabras did not loan Investor 2’s money to law firms, but rather used it
to pay for their personal expenses, among other things, as discussed below.
77. Contrary to these representations, the Tort Fund Entities also did not have a
“network of partner law firms” or a “network of attorneys” to fund any litigation.  The Tort Fund
Entities never had any agreements with law firms to lend money to finance mass tort litigation
and did not finance the acquisition of tort cases involving the identified manufacturers or the
specified medical devices and consumer household products.

17

78. Defendants also falsely claimed that investments in Tort Fund SPV1 and Tort
Fund SPV2 were “collateralized, UCC1-secured investments” and that the investments were
“low-risk.”
79. In reality, t  he Tort Fund SPV1 and Tort Fund SPV2 investments were not
collateralized or UCC1-secured investments and not guaranteed in any way.  Because
Defendants did not lend any money to any law firms or obtain the promised high-interest debt
instruments, there was no collateral for the Tort Fund SPV1 and Tort Fund SPV2 investments,
and no UCC1s were filed.
80. The Chhabras knew that Tort Fund LLC had made no loans to any law firms
handling mass tort litigation so there was no fixed-rate high interest debt instrument to use as
collateral to secure the Tort Fund SPV1 and Tort Fund SPV2 investments.
81. In addition, Defendants perpetuated their fraudulent scheme by knowingly
sending misleading spreadsheets and email updates to the investors in Tort Fund SPV1 and Tort
Fund SPV2 from July 2019 through at least August 2021, which purported to identify the
amounts of interest earned on their investments and falsely promised investors that they would
not lose their principal.  In reality, the Chhabras knew there was never any litigation financing
provided to law firms that could have generated profits to pay interest to investors.
82. Defendants also solicited Tort Fund SPV1 and Tort Fund SPV2 investors in
emails and phone calls to make additional investments and to refer friends, family members or
others claiming falsely that Tort Fund LLC planned to close out the Tort Fund SPV2 investment
on December 20, 2019, as well as an additional special purpose vehicle, Tort Fund SPV3.
83. For example, on December 2, 2019, Michael Chhabra emailed Investor 2 and
Investor 3 that the “[Tort Fund] SPVs we manage have continued to deploy capital on an

18

immediate basis as investors place capital,” that “funds are currently being deployed” in
litigation against specific manufacturers of specific medical devices and consumer products and
that Tort Fund LLC’s business “continues to grow and perform within our expected range of
results.”  None of this was true.
84. Michael Chhabra made these misrepresentations in an attempt to further induce
Investor 2 and Investor 3 to invest additional funds with Defendants.  Contrary to the false
representations, there was no additional money raised for Tort Fund SPV2 beyond what Investor
2 and Investor 3 had provided, and the Chhabras never closed out Tort Fund SPV2 on December
20, 2019.  Further, upon information and belief, the Chhabras never took action to form “Tort
Fund SPV3” despite the representations that it would provide another investment opportunity to
engage in litigation funding.
85. And on January 14, 2020, Employee 1 emailed Investor 2 a spreadsheet
purporting to show Investor 2’s account balance with interest accrued on his $50,000 investment
in the amount of $965.75.
86. On April 16, 2020, Michael Chhabra emailed Investor 1 with an update on his
investment, which was drafted by Vineet Chhabra.  In the email, the Chhabras claimed that they
were in the process of finalizing a $50-100 million investment in “Tort Fund” by a New York
investment firm.  This investment never materialized.
87. On June 8, 2020, Michael Chhabra emailed Investor 2 that Investor 2’s
investment had accrued interest in the amount of $4,993.13.
88. On October 20, 2020, Vineet Chhabra emailed Investor 2 that Employee 1 was no
longer with Tort Fund LLC and that Investor 2’s “$50,000 investment has accrued $7,726.03 in
interest, for a total of $57,726.00.”  Investor 2 then asked to redeem his investment, to which

19

Vineet Chhabra replied that Investor 2 would need to wait until October 9, 2023, when his
investment would mature.
89. On August 20, 2021, Vineet Chhabra emailed Investor 1 “you will not lose your
investment,” as he had been telling Investor 1 for several months.
90. In stark contrast to these false representations, the Tort Fund Entities did not make
any loans to law firms handling mass tort litigation, did not deploy any funds for litigation
financing and no interest accrued on any of the investments.  Instead, the Chhabras
misappropriated the investor funds for their own personal expenses and to perpetuate their
fraudulent scheme as discussed in more detail below.
III. THE CHHABRAS MISUSE INVESTOR FUNDS
91. Contrary to what investors were told in writing and orally, the Chhabras used
investor funds to (i) pay unrelated business expenses from the Chhabras’ prior business ventures,
(ii) fund the Chhabras’ personal expenses, and (iii) perpetuate the fraud.  The personal expenses
included, among other things, rent on the Chhabras’ homes; legal fees for litigation against
Michael Chhabra and some of his family members relating to a company in bankruptcy
proceedings for which Michael Chhabra served as the Chief Operating Officer; expenses to clean
up Michael Chhabra’s online reputation; payment for debts the Chhabras owed from prior
unrelated business ventures; household, travel and entertainment expenses for their families; and
frequent purchases at restaurants, grocery, convenience and retail stores.
92. For example, on July 17, 2019, the $50,000 in funds from Investor 1 were
deposited in the Tort Fund SPV1 bank account, which had a balance of $10.00 at the time of the
deposit.  The next day Michael Chhabra transferred $20,000 to Company A to pay debts owed by
the Chhabras from a prior business relationship with Company A.  Also on July 18, 2019,

20

Michael Chhabra transferred $25,000 from the Tort Fund SPV 1 account to a bank account for
Law Firm A.  Michael Chhabra previously opened the Law Firm A bank account and he had
signature authority over that account.  Michael Chhabra then transferred money from the Law
Firm A bank account to his personal bank account, and to bank accounts for companies that were
owned and controlled by Vineet Chhabra.  In addition, Michael Chhabra wrote checks,
transferred funds and made debit card purchases for various other expenditures unrelated to the
business of Tort Fund LLC or Tort Fund SPV1, including for food, entertainment and the
Chhabras’ prior business ventures, as well as to perpetuate the fraudulent scheme, including for
office space and to solicit additional investors.
93. Similarly, on October 8, 2019, the same day that Investor 2 wired $50,000 to the
bank account for Tort Fund LLC, Michael Chhabra transferred $30,000 from the Tort Fund LLC
account, which was overdrawn at the time, to the bank account for Law Firm A, over which
Michael Chhabra had control.  Michael Chhabra then transferred $5,000 from the Law Firm A
account to his personal bank account.  Michael Chhabra also transferred $12,000 from the Law
Firm A bank account to the companies owned or controlled by Vineet Chhabra.  The remaining
amounts from Investor 2’s funds were used to pay the Chhabras’ personal expenses and for
expenses to perpetuate the fraud as discussed herein.
94. In total, the Chhabras transferred over $80,000 of the investor funds to their own
accounts and to fund activities to benefit themselves and other family members.
95. The Chhabras spent the remainder of the money raised from investors -- over
$40,000 – to perpetuate the fraud, including to compensate individuals for soliciting investors
and providing office space for that purpose.

21

96. None of the $125,000 Defendants raised from investors was used to provide
litigation financing to law firms that were handling tort litigation.
97. The Chhabras did not have any agreement with Law Firm A or any other law firm
to fund litigation.
98. The Chhabras and the Tort Fund Entities did not disclose to investors that they
planned to, or did in fact, use investor money for the Chhabras’ personal benefit or that investor
money would be used to try to find additional investors for the Tort Fund Entities.
IV. TORT FUND LLC GOES DARK AND THE CHHABRAS IGNORE INVESTORS
99. As communication from Defendants became less frequent, eventually some of the
investors questioned the status of their investments and the viability of the business of Tort Fund
LLC.
100. Upon information and belief, the last communication between Vineet Chhabra
and Investor 1 was August 20, 2021, in which Vineet Chhabra assured Investor 1 that he would
not lose his investment.
101. Investor 1 expected to receive a return on his investment in 5 years, which would
have been in July 2024.  To date, he has received no payments relating to his investment in Tort
Fund SPV1.
102. Following the October 20, 2020 email from Vineet Chhabra, Investor 2 received
minimal information from the Chhabras about the status of his investment.
103. On April 22, 2021, Investor 2 emailed Michael Chhabra asking if Tort Fund LLC
was still in business.
104. On or about April 28, 2021, Investor 2 attempted to ask for information on the
Tort Fund Facebook page and received no response.

22

105. Investor 2 then attempted to log into his account on the TortFund.com website on
or about June 25, 2021 and was unable to access any information.
106. The Promissory Note for Tort Fund SPV2 was due to Investor 2 in October 2023
and to Investor 3 in November 2023.  To date, Investor 2 and Investor 3 have not received any
payments relating to their investments in Tort Fund SPV2.
107. Tort Fund LLC no longer maintains an active website, social media presence or
functioning email address.
108. Upon information and belief, Tort Fund LLC currently has no employees or
independent contractors acting on its behalf, and it has ceased any business function.  Although
Tort Fund LLC remains active as a limited liability company, mail cannot be accepted at the
address on file for its registered agent, which is no longer a correct address.
109. Tort Fund SPV1 is an active entity, although mail cannot be accepted at the
address on file for its registered agent, which is no longer a correct address.
110. Tort Fund SPV2 is no longer an active entity, and its license was revoked in 2020
for failing to file a Biennial Report.
V. DEFENDANTS’ VIOLATIONS OF THE FEDERAL SECURITIES LAWS
111. During the relevant period, Michael Chhabra and Vineet Chhabra owned,
operated, and controlled Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2.
112. The Tort Fund SPV1 Unit Purchase Agreement and Tort Fund SPV2 Loan
Agreement and Promissory Notes offered and sold to investors are securities within the meaning
of both the Securities Act and the Exchange Act.
113. In connection with the sales or offers to sell securities, the Chhabras and the Tort
Fund Entities made use of means or instruments of interstate transportation or communication in

23

interstate commerce or of the mails, including using the internet, interstate phone calls, and the
United States mail.  The conduct described herein was in the offer or sale of securities and in
connection with the purchase or sale of securities.
114. The misrepresentations and omissions set forth herein, individually and in the
aggregate, are material.  A reasonable investor would have considered the misrepresented facts
and omitted information—including, among other items, misrepresentations about Tort Fund
LLC’s operations, the safety and security of the investments and the use of investor funds—
important in deciding whether to invest in Tort Fund SPV1 and Tort Fund SPV2.  Disclosure of
the accurate facts or omitted information would have altered the “total mix” of information
available to investors.
115. In connection with the conduct described herein, the Chhabras and the Tort Fund
Entities acted knowingly, recklessly, or negligently.
116. The Chhabras and the Tort Fund Entities were each makers of false and
misleading statements made in writing and orally regarding the Tort Fund Entities.  Michael
Chhabra and Vineet Chhabra prepared the offering documents for Tort Fund LLC, Tort Fund
SPV1 and Tort Fund SPV2, including the Tort Fund SPV1 Unit Purchase Agreement and the
Tort Fund SPV2 Loan Agreement and Promissory Note provided to investors on behalf of the
Tort Fund Entities.  Michael Chhabra signed the Unit Purchase Agreement for the $50,000
investment in Tort Fund SPV1.  Michael Chhabra also signed the Loan Agreement and
Promissory Note for each of the two investments in Tort Fund SPV2.  Michael and Vineet
Chhabra also had ultimate authority over all statements made on behalf of the Tort Fund Entities,
including in advertisements and on the Tort Fund website.

24

117. Through their material misrepresentations and omissions, Michael Chhabra,
Vineet Chhabra and the Tort Fund Entities each obtained money or property from investors.
118. Through this scheme, the Chhabras and the Tort Fund Entities each engaged in
acts, transactions or courses of business that operated as a fraud or deceit upon offerees,
purchasers and prospective purchasers of the securities described herein.
CLAIMS FOR RELIEF
FIRST CLAIM
Violations of Section 17(a) of the Securities Act
119. The Commission realleges and incorporates by reference the previous allegations
as if fully set forth herein.
120. By engaging in the conduct described above, Defendants Michael Chhabra,
Vineet Chhabra, Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2 in the offer or sale of
securities, directly or indirectly, by the use of any means or instruments of transportation or
communication in interstate commerce or by use of the mails:
a. knowingly or recklessly employed one or more devices, schemes, or artifices to
defraud;
b. knowingly, recklessly, or negligently obtained money or property by means of
one or more untrue statements of a material fact or omissions of a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading; or
c. knowingly, recklessly, or negligently engaged in transactions, practices, or
courses of business which operated or would operate as a fraud or deceit upon the
purchaser.

25

121. By engaging in the foregoing conduct, Defendants Michael Chhabra, Vineet
Chhabra, Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2, directly or indirectly, singly or
in concert, violated, and unless enjoined will continue to violate, Section 17(a) of the Securities
Act [15 U.S.C. § 77q(a)].
SECOND CLAIM
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
122. The Commission realleges and incorporates by reference the previous allegations
as if fully set forth herein.
123. By engaging in the conduct described above, Defendants Michael Chhabra,
Vineet Chhabra, Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2, directly or indirectly,
singly or in concert, knowingly or recklessly, in connection with the purchase or sale of
securities and by the use of any means or instrumentalities of interstate commerce, or the mails,
or the facilities of a national securities exchange:
a. employed one or more devices, schemes, or artifices to defraud;
b. made one or more untrue statements of material fact or omitted to state one or
more material facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; or
c. engaged in one or more acts, practices, or courses of business which operated or
would operate as a fraud or deceit upon any person in connection with the
purchase or sale of any security.
124. By engaging in the foregoing conduct, Defendants Michael Chhabra, Vineet
Chhabra, Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2, directly or indirectly, singly or

26

in concert, violated, and unless enjoined will continue to violate, Section 10(b) of the Exchange
Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court enter a final
judgment:
I.
Permanently restraining and enjoining Defendants Michael Chhabra, Vineet Chhabra,
Tort Fund LLC, Tort Fund SPV1 LLC and Tort Fund SPV2 LLC and their agents, servants,
employees and attorneys and all persons in active concert or participation with any of them from
violating, directly or indirectly, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] and
Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5];
II.
Ordering Defendants Michael Chhabra and Vineet Chhabra to disgorge any and all ill-
gotten gains derived from the activities set forth in this Complaint, together with prejudgment
interest thereon pursuant to Exchange Act Sections 21(d)(3), 21(d)(5), and 21(d)(7) [15 U.S.C.
§§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)];
III.
Ordering Defendants Michael Chhabra and Vineet Chhabra to pay civil penalties under
Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act
[15 U.S.C. § 78u(d)];

27

IV.
Pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] and Section
20(e) of the Securities Act [15 U.S.C. § 77t(e)], permanently prohibiting Michael Chhabra and
Vineet Chhabra from serving as an officer or director of any company that has a class of
securities registered under Section 12 of the Exchange Act [15 U.S.C. §78l] or that is required to
file reports under Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]; and
V.
Granting such other and further relief as the Court may deem just and appropriate.
JURY DEMAND
Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the Commission demands a
trial by jury in this action of all issues so triable.
Dated:  September 6, 2024
Respectfully submitted,
SECURITIES AND EXCHANGE COMMISSION

  /s/ Gregory R. Bockin
            Gregory R. Bockin (DC Bar No. 450885)
Kara F. Sweet
Judson T. Mihok
Kingdon Kase
Patricia A. Kuzma Trujillo
Philadelphia Regional Office
1617 JFK Blvd., Suite 520
 Philadelphia, PA 19103
 (215) 597-3100
 (215) 597-2740 (fax)
 [email protected]
 [email protected]
                                                            [email protected]
 [email protected]
 [email protected]

Counsel for Plaintiff
Securities and Exchange Commission

UNITED STATES DISTRICT COURT 
 DISTRICT OF COLUMBIA 

 
  
SECURITIES AND EXCHANGE 
COMMISSION 
1617 JFK Boulevard, Suite 520 
Philadelphia, PA 19103, 

 

  
                                                  Plaintiff,                                                     COMPLAINT 

     Civil Action No. 1:24-cv-2561 
v. 
 

MICHAEL V. CHHABRA 
215 SW 6th Place 
Pompano Beach, FL 33060, 
 
VINEET K. CHHABRA 
225 SW 6th Court 
Pompano Beach, FL 33060, 
 
TORT FUND LLC  
545 Metro Place S, Suite 100 
Dublin, OH 43017-5353, 
 
TORT FUND SPV1, LLC  
545 Metro Place S, Suite 100 
Dublin, OH 43017-5353, and 
 
TORT FUND SPV2, LLC 
80 M Street SE, Suite 100 
Washington, DC  20003-3550 
 
                                                  Defendants. 
 

    
    JURY TRIAL DEMANDED 
 

   
 
 Plaintiff Securities and Exchange Commission (the “Commission”) alleges as follows 

against Defendants Michael V. Chhabra (“Michael Chhabra”), Vineet K. Chhabra, aka Vincent 

K. Chhabra (“Vineet Chhabra”), Tort Fund LLC, Tort Fund SPV1, LLC (“Tort Fund SPV1”) and 

Tort Fund SPV2, LLC (“Tort Fund SPV2”): 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 1 of 27



2 
 

SUMMARY 

1. Beginning in April 2019 and continuing through at least September 2020, Michael 

Chhabra and his father, Vineet Chhabra (collectively, “the Chhabras”), engaged in a fraudulent 

scheme to misappropriate money from investors by lying to them about an investment 

opportunity they were offering involving litigation financing.  The Chhabras promised returns 

and interest or profits from lending money to law firms to finance mass tort litigation on behalf 

of victims of allegedly defective medical devices and harmful consumer products.  The Chhabras 

ultimately induced three investors to purchase $125,000 in securities through entities they 

controlled:  Tort Fund LLC and its “specialty purpose vehicles” -- Tort Fund SPV1 and Tort 

Fund SPV2 (collectively, “the Tort Fund Entities”).   

2. The Chhabras, through the Tort Fund Entities, falsely claimed that Tort Fund LLC 

was actively partnering with law firms and that it “provides litigation financing for mature mass 

tort cases.”  Unbeknownst to the investors, neither the Chhabras nor the Tort Fund Entities ever 

provided litigation financing for mass tort cases, and there were no agreements with law firms to 

do so.  

3. Defendants also misled investors about the safety and security of the investments 

by claiming, among other things, that the investments were collateralized and UCC1-secured 

when they were not. 

4. Instead of using investor funds to finance mass tort litigation as promised, the 

Chhabras misappropriated the money they raised through the Tort Fund Entities for their 

personal use, such as to pay off debts from the Chhabras’ prior business ventures, and for food, 

travel and entertainment expenses, and otherwise used the remaining funds to perpetuate their 

unlawful scheme, including to solicit additional investors.   

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 2 of 27



3 
 

5. Knowing they had not loaned any of the funds to law firms to fund litigation as 

represented to investors, the Chhabras repeatedly provided investors with false information that 

the Tort Fund Entities were currently providing funding to law firms and about the safety of and 

return on their investments, while continuing to solicit these investors to make additional 

investments with the Tort Fund Entities.     

6. By engaging in the conduct described herein, Defendants violated, and unless 

enjoined will continue to violate, Section 17(a) of the Securities Act of 1933 (“Securities Act”) 

[15 U.S.C. § 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) 

[15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].  

JURISDICTION AND VENUE 

7. The Commission brings this action pursuant to Sections 20(b) and 20(d) of the 

Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)], and Section 21(d) of the Exchange Act [15 

U.S.C. §§ 78u(d)], to enjoin such acts, transactions, practices, and courses of business, and to 

obtain disgorgement, prejudgment interest, civil penalties, officer and director bars and such 

other and further relief as the Court may deem just and appropriate. 

8. This Court has jurisdiction over this action pursuant to Sections 20(b) and 22(a) 

of the Securities Act [15 U.S.C. §§ 77t(b) and 77v(a)] and Sections 21(d), 21(e) and 27 of the 

Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa]. 

9. Venue in this District is proper pursuant to Section 22(a) of the Securities Act [15 

U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  Much of the alleged 

unlawful conduct occurred in this District.  Tort Fund SPV2 is a District of Columbia limited 

liability company.  During most of the relevant time period, Michael Chhabra resided in this 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 3 of 27



4 
 

District while engaging in the offering fraud alleged, and certain transactions, acts and business 

of the Tort Fund Entities that constitute the alleged violations occurred in this District.   

10. In connection with the conduct alleged in this Complaint, Defendants, directly or 

indirectly, singly or in concert, made use of the means or instruments of transportation or 

communication in, or instrumentalities of, interstate commerce, or the mails, or the facilities of a 

national securities exchange, including by providing false statements to would-be investors via 

email. 

DEFENDANTS 

11. Michael Chhabra, age 29, currently resides in Pompano Beach, Florida, but for 

much of the conduct alleged herein, resided in the District of Columbia.  He founded Tort Fund 

LLC, and at all relevant times acted as its Chief Executive Officer and Manager.  In addition, at 

all relevant times, he acted as a Manager for Tort Fund SPV1 and Tort Fund SPV2.  Michael 

Chhabra also had an ownership interest in Law Firm A, a law firm that Tort Fund LLC claimed 

to be providing funds to for the purpose of financing mass tort litigation.   

12. Vineet Chhabra, age 53, resides in Pompano Beach, Florida.  At all relevant 

times, he served as the Marketing Consultant for Tort Fund LLC and the Investor Relations 

Coordinator for Tort Fund SPV1 and Tort Fund SPV2.  Vineet Chhabra is the father of Michael 

Chhabra. 

13. Tort Fund LLC is an Ohio limited liability company originally formed on or 

about April 22, 2019, with a principal place of business in Dublin, Ohio.  At all relevant times, 

Michael Chhabra acted as the Manager and Registered Agent for Tort Fund LLC.  In or about 

June of 2019, Tort Fund LLC relocated its principal place of business to the District of Columbia 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 4 of 27



5 
 

and subsequently to Pompano Beach, Florida, where Michael Chhabra now resides.  At all 

relevant times, Tort Fund LLC has been controlled by Michael Chhabra and Vineet Chhabra. 

14. Tort Fund SPV1 is an Ohio limited liability company originally formed on or 

about April 22, 2019, with a principal place of business in Dublin, Ohio.  At all relevant times, 

Tort Fund LLC was the Manager of Tort Fund SPV1, and Michael Chhabra, as the Manager of 

Tort Fund LLC, acted as the Manager and Registered Agent for Tort Fund SPV1.  In or about 

June of 2019, Tort Fund SPV1 relocated its principal place of business to the District of 

Columbia and subsequently to Pompano Beach, Florida, where Michael Chhabra now resides.   

15. Tort Fund SPV2 is a District of Columbia limited liability company originally 

formed on or about September 30, 2019, with its principal place of business in the District of 

Columbia and subsequently was operated from Michael Chhabra’s home in Pompano Beach, 

Florida.  At all relevant times, Tort Fund LLC was the Manager of Tort Fund SPV2, and Michael 

Chhabra, as the Manager of Tort Fund LLC, acted as the Manager for Tort Fund SPV2.  Tort 

Fund SPV2 failed to file its Biennial Report and has been inactive since 2020.   

FACTUAL ALLEGATIONS 

16. From at least June 2019 through November 2019, the Chhabras and the Tort Fund 

Entities made fraudulent representations in an attempt to attract investors -- ultimately inducing 

at least three investors from across the country to purchase a total of $125,000 in securities.  As 

detailed below, Defendants made numerous material misstatements in the Tort Fund Entities’ 

offering documents and in other written and verbal communications claiming that the investors’ 

money would be used to provide litigation financing to law firms handling mass tort litigation 

when it was not.   

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 5 of 27



6 
 

17. Rather than using the funds for litigation financing as represented, the Chhabras 

instead misappropriated the monies for the benefit of themselves and their family and to 

perpetuate and attempt to expand their fraudulent scheme carried out through the Tort Fund 

Entities.   

18. As alleged in more detail below, Defendants made material misrepresentations 

about (i) the past and current business operations of Tort Fund LLC; (ii) the safety and security 

of the investments in the Tort Fund Entities; and (iii) the use of investor funds. 

I. THE CHHABRAS USE THE TORT FUND ENTITIES TO RAISE FUNDS 

19. In April 2019, the Chhabras formed Tort Fund LLC purportedly to engage in the 

business of litigation financing -- lending money to law firms actively litigating lawsuits 

involving mass tort claims against well-known manufacturers of household products and specific 

medical devices.  Michael Chhabra was the Manager and Registered Agent of Tort Fund LLC, 

and he opened a bank account on behalf of Tort Fund LLC in April 2019.   

20. In furtherance of their fraudulent scheme, the Chhabras utilized what they 

characterized as “specialty” purpose vehicles to raise funds for Tort Fund LLC -- Tort Fund 

SPV1 and Tort Fund SPV2.  

21. Simultaneously with forming Tort Fund LLC, the Chhabras formed Tort Fund 

SPV1 as the initial specialty purpose vehicle.  Tort Fund SPV1 was wholly owned by Tort Fund 

LLC.  Michael Chhabra opened a separate bank account on behalf of Tort Fund SPV1.   

22. The offering documents for Tort Fund SPV1, which included a one-page 

summary of Tort Fund SPV1, a Tort Fund LLC “Executive Summary” that referenced Tort Fund 

SPV1, and a “Unit Purchase Agreement” with an “Operating Agreement” attached thereto, were 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 6 of 27



7 
 

jointly drafted by Michael Chhabra and Vineet Chhabra before they caused them to be 

distributed to prospective investors.   

23. The one-page summary for Tort Fund SPV1 stated that the “Revenue Model” was 

to pool investor capital and lend money to partner law firms to fund mass tort cases “via fixed-

rate, high-interest debt instruments.”  Tort Fund SPV1 would then be repaid principal plus 

accrued interest from legal fees the law firms realized once the mass tort cases were resolved, 

which then would be distributed to the Tort Fund SPV1 investors. 

24. The Tort Fund SPV1 Unit Purchase Agreement stated that it was a “sale and 

purchase of securities” and included a list of “Investment Considerations and Risk Factors” that 

repeatedly referred to the Unit Purchase Agreement as an investment and stated that it was 

speculative.  The Tort Fund SPV1 offering documents also referred to the Unit Purchase 

Agreement as an “investment.” 

25. In the offering documents, Tort Fund LLC, Tort Fund SPV1 and the Chhabras 

told prospective investors that investor funds would be used to make fixed-rate, high interest 

loans to law firms handling mass tort cases, which purportedly would generate sufficient profits 

to make profit distributions to investors.  The offering documents also stated that Tort Fund LLC 

utilized strict underwriting standards for the law firm loans to “ensure payback of principal and 

interest to investors.”  The offering documents also provided that investors in Tort Fund SPV1 

would receive a pro rata distribution of the net profits Tort Fund SPV1 received from Tort Fund 

LLC’s and Tort Fund SPV1’s litigation financing business. 

26. Even though Tort Fund SPV1 was not fully subscribed, the Chhabras formed Tort 

Fund SPV2 in September 2019 to raise up to an additional $20 million for Tort Fund LLC’s 

purported litigation financing business through promissory notes.  Unlike Tort Fund SPV1, 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 7 of 27



8 
 

however, the Chhabras did not open a bank account for Tort Fund SPV2.  Instead, investments in 

Tort Fund SPV2 were sent to the bank account for Tort Fund LLC. 

27. The Chhabras solicited investors to purchase Tort Fund SPV2 securities using a 

set of written offering documents that they authored together, as they had done for Tort Fund 

SPV1.  The Tort Fund SPV2 offering documents included a one-page summary of Tort Fund 

SPV2, a separate Tort Fund LLC “Executive Summary” that referenced Tort Fund SPV2, a 

“Note Purchase Agreement,” and a “Loan Agreement and Promissory Note.”  The terms of the 

Loan Agreement and Promissory Note stated that the lender would make a single balloon 

payment of the principal to the borrower plus an amount equal to 60% of the principal 48 months 

from the date of the investment.    

28. The offering documents for Tort Fund SPV2 stated that investor funds would be 

used to make fixed-rate, high interest loans to law firms handling mass tort cases, which 

purportedly would generate sufficient profits to repay the investor’s principal investment plus 

interest.   

29. The header of the Tort Fund SPV2 Loan Agreement and Promissory Note clearly 

stated that it represented securities and included a list of “Investment Considerations and Risk 

Factors” that stated the investment was speculative.  The Tort Fund SPV2 offering documents 

also repeatedly referred to the Loan Agreement and Promissory Note as an “investment.” 

30. While the investments in Tort Fund SPV1 and Tort Fund SPV2 were structured 

differently, the stated purpose of both investments was the same -- to pool investor capital and 

lend it to “partner” law firms handling mass tort cases through a fixed-rate, high-interest debt 

instrument.   

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 8 of 27



9 
 

31. In the Executive Summaries that were part of the Tort Fund Entities offering 

documents, the Chhabras touted the investments as a lucrative social impact investing 

opportunity that would benefit the victims of allegedly defective medical devices and harmful 

consumer products.  The Executive Summaries further purported to offer “collateralized, UCC1-

secured investments to investors via specialty purpose vehicles.” 

32. The Tort Fund SPV1 and Tort Fund SPV2 offering documents also stated that law 

firms handling mass tort cases “earn substantial legal fees, typically 33% of the amount awarded, 

which often relates to tens if not hundreds of thousands of dollars per case.”   

33. The offering documents promised that those fees would be used to repay Tort 

Fund LLC’s loans to the law firms and that Tort Fund LLC would use the proceeds to make 

profit distributions to the Tort Fund SPV1 investors and to repay the Tort Fund SPV2 investors’ 

principal investments plus interest. 

34. At the time the Chhabras formed Tort Fund LLC, the Chhabras had no prior 

experience in operating a litigation financing business or providing litigation financing to law 

firms.  

35. The Executive Summaries that the Chhabras distributed to Tort Fund SPV1 and 

Tort Fund SPV2 investors falsely stated that Tort Fund LLC had entered into an agreement with 

Law Firm A to exclusively fund its case docket to replicate the success previously achieved in 

mass tort cases against well-known manufacturers of household products and specific medical 

devices.  The Executive Summaries further stated that Tort Fund LLC was working with not just 

Law Firm A, but with a network of “partner” law firms.  These claims were not true.   

36. In reality, there was never any agreement with Law Firm A or with any law firm 

that was litigating tort cases.  Law Firm A did not litigate mass tort cases or have any need for 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 9 of 27



10 
 

litigation funding.  At no time did Tort Fund LLC work with a network of law firms to provide 

litigation funding.  Rather, Tort Fund LLC never provided litigation funding to any law firms 

litigating mass tort cases. 

37. The Chhabras marketed the Tort Fund SPV1 and Tort Fund SPV2 securities 

directly and indirectly through Tort Fund LLC employees and independent contractors, 

Facebook ads, Tort Fund LLC’s website, and telephone and email solicitations with prospective 

investors.   

38. The Chhabras had control over and jointly drafted the content available on the 

Tort Fund website and the investor portal. 

39. Vineet Chhabra and Michael Chhabra both had email addresses with the Tort 

Fund Entities, which they used to communicate with prospective and actual investors.   

40. From at least June 2019 through August 2021, Michael Chhabra emailed directly 

and indirectly with prospective and actual investors to, among other things, explain how to 

access the investor portal, send offering documents for the Tort Fund Entities, and provide 

updates on the status of the investments.   

41. From at least June 2019 through October 2020, Vineet Chhabra also emailed 

directly and indirectly with prospective and actual investors to, among other things, provide 

updates on the purported status of the investments.  

A. The Chhabras and Tort Fund LLC Sell One Investment in Tort Fund SPV1 

42. In the summer of 2019, Tort Fund LLC, Tort Fund SPV1 and the Chhabras 

solicited investors for Tort Fund SPV1.  At the outset of the scheme, the Chhabras utilized 

individuals from Company A to find potential investors for Tort Fund LLC and Tort Fund SPV1.    

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 10 of 27



11 
 

43. In or about June 2019, an individual from Company A, acting on behalf of Tort 

Fund LLC, reached out to Investor 1, who resided in Colorado, to discuss the potential 

investment opportunity in Tort Fund SPV1. 

44. On June 11, 2019, Michael Chhabra emailed Investor 1 to explain how to access 

the investor portal to access documents relating to the Tort Fund SPV1 investment opportunity.  

The investor portal contained the offering documents for Tort Fund SPV1. 

45. On July 15, 2019, Michael Chhabra emailed Investor 1 the Unit Purchase 

Agreement for Tort Fund SPV1 and separately emailed Investor 1 instructions to make payment 

for an investment in Tort Fund SPV1. 

46. That same day, Investor 1 executed the Unit Purchase Agreement for Tort Fund 

SPV1 and, in accordance with the instructions Michael Chhabra provided, mailed a $50,000 

check payable to Tort Fund SPV1 to its address in Dublin, Ohio.   

47. Investor 1’s $50,000 check was deposited in the bank account for Tort Fund 

SPV1 with a transaction date posting of July 17, 2019.   

48. In exchange for his funds, Investor 1 then received a fully executed Unit Purchase 

Agreement for 200,000 Common Units of Tort Fund SPV1, which was signed by Michael 

Chhabra on behalf of Tort Fund SPV1.  As a result, the Chhabras, Tort Fund LLC and Tort Fund 

SPV1 sold $50,000 in securities to Investor 1. 

B. The Chhabras and Tort Fund LLC Sell Two Investments in Tort Fund SPV2 
 
49. In the fall of 2019, Tort Fund LLC, Tort Fund SPV2 and the Chhabras solicited 

investors for Tort Fund SPV2 through Facebook advertisements and Employee 1 and Employee 

2, who were hired by Tort Fund LLC for the purpose of finding investors.   

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 11 of 27



12 
 

1. Investor 2 Makes a $50,000 Investment in Tort Fund SPV2 

50. In or about August or September 2019, Investor 2, who resided in New York at 

the time, saw one of Tort Fund LLC’s advertisements on Facebook for an investment 

opportunity in Tort Fund LLC and sent an inquiry for additional information. 

51. On September 16, 2019, Investor 2 received a call from Employee 1, who was 

hired by Michael Chhabra.  Employee 1 provided Investor 2 with additional information on the 

investment.  Following the call, Tort Fund LLC emailed Investor 2 the one-page summary for 

Tort Fund SPV2 and invited him to visit the Tort Fund website for the latest information on 

verdicts from mass tort cases.  The Chhabras were blind copied on the email to Investor 2. 

52. On September 24, 2019, Employee 1 spoke with Investor 2 on the telephone and 

followed up with an email to Investor 2 attaching “the legal documents and disclosures for the 

Tort Fund SPV-2 15% debt offering.”   

53. In subsequent email communications on September 24, 2019, Employee 1 

forwarded questions from Investor 2 to Michael Chhabra, who drafted responses to send back to 

Investor 2.   In those responses, Michael Chhabra stated: “we currently have significant demand 

at the 30% level and only project that we would lend above that rate, not below.”  This statement 

was false, as the Tort Fund Entities had not lent one dollar to a law firm to finance mass tort 

litigation and had not entered into any agreements with any law firm to do so.   

54. Michael Chhabra also stated that the Tort Fund Entities took steps to mitigate 

potential risk, including “(1) collateralizing every loan we make by placing a UCC-1 lien directly 

on the filed cases, (2) ensuring that borrower law firms have a docket of cases where legal fees 

are projected to be at least 5 times greater than the amount we lend to them …, (3) ensuring that 

our partner law firm [Law Firm A] is named on every client retainer agreement as oversight 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 12 of 27



13 
 

counsel…, and (4) ensuring that funds are properly distributed among different litigations ….”  

None of this was true. 

55. On September 24, 2019, Employee 1 then sent the response that Michael Chhabra 

drafted to Investor 2 and attached the Tort Fund SPV2 one-page summary, a Tort Fund LLC 

Executive Summary, the Note Purchase Agreement and the wire instructions for payment.   

56. On October 4, 2019, Employee 1 emailed Investor 2 the Note Purchase 

Agreement, with the Loan Agreement and Promissory Note, to make an investment in Tort Fund 

SPV2.  The email was drafted by Michael Chhabra. 

57. On October 8, 2019, Investor 2 made a $50,000 investment in Tort Fund SPV2 by 

wiring the funds directly to the account for Tort Fund LLC in Ohio.   

2. Investor 3 Makes a $25,000 Investment in Tort Fund SPV2 

58. In or about September 2019, Employee 2, an individual hired by Michael Chhabra 

to work for Tort Fund LLC, approached Investor 3, who resided in California and was an 

acquaintance of Employee 2, about investing in Tort Fund SPV2.   

59. On September 20, 2019, at the request of Employee 2, Employee 1 emailed 

Investor 3 an Executive Summary that referenced Tort Fund SPV2 and requested a phone call to 

discuss further. 

60. Later that day, Employee 1 spoke with Investor 3 on the phone and then followed 

up with another email attaching the Tort Fund SPV2 one-page summary.   

61. On September 27, 2019, Employee 2 emailed Investor 3 the Tort Fund SPV2 

Note Purchase Agreement, which included the Loan Agreement and Promissory Note, as well as 

the wire payment instructions.  Both Michael Chhabra and Vineet Chhabra were blind copied on 

the email. 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 13 of 27



14 
 

62. On or about October 21, 2019, Investor 3 executed the Note Purchase Agreement 

and the Loan Agreement and Promissory Note for his investment in Tort Fund SPV2.   

63. On or about November 6, 2019, $25,000 was wired from an IRA account for the 

benefit of Investor 3 to the account for Tort Fund LLC for Investor 3’s investment in Tort Fund 

SPV2. 

64. The securities that Tort Fund LLC, Tort Fund SPV2 and the Chhabras sold to 

Investors 2 and 3 took the form of a Loan Agreement and Promissory Note, in which Tort Fund 

LLC, Tort Fund SPV2 and the Chhabras promised investors that they would receive a balloon 

payment of 60% accrued interest on the principal amount of their investment as well as the return 

of their principal within 48 months. 

65. Investors 2 and 3 each received a Loan Agreement and Promissory Note signed 

by Michael Chhabra on behalf of Tort Fund SPV2. 

66. The Chhabras, Tort Fund LLC and Tort Fund SPV2 sold $75,000 in securities to 

Investors 2 and 3. 

II. DEFENDANTS MAKE MATERIAL MISREPRESENTATIONS 
  TO INVESTORS IN THE TORT FUND ENTITIES      
 

67. The Chhabras knowingly misled prospective investors by promising that their 

investments would be used by Tort Fund SPV1 and Tort Fund SPV2 for the purpose of making 

loans to law firms handling mass tort litigation on behalf of victims of defective medical devices 

or harmful consumer products.   

68. The Chhabras misled investors into believing that they already were funding mass 

tort cases and actively engaging in litigation financing.  In reality, at no time did the Chhabras 

provide any law firm with litigation financing relating to mass tort claims or any other cases and 

had no viable plans or agreements to do so.  

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 14 of 27



15 
 

69. Yet, the offering documents falsely stated that Tort Fund LLC “provides litigation 

financing for mature mass tort cases with established liability and a precedent for settlement.” 

These written offering documents for the Tort Fund Entities were distributed via email from the 

Chhabras or individuals working on behalf of the Tort Fund Entities to engage prospective 

investors to induce them to invest in the Tort Fund Entities. 

70. In the written offering documents for Tort Fund SPV1 and Tort Fund SPV2, the 

Chhabras also falsely stated that Tort Fund LLC “works with a network of partner law firms,” 

that its “network of attorneys are committed to ensuring that plaintiffs get the best possible deal 

from the justice system” and that Tort Fund LLC “pools investor capital and lends to its partner 

law firms.” 

71. Further, Defendants falsely claimed in the Tort Fund SPV1 and Tort Fund SPV2 

written offering documents that Tort Fund LLC “has entered into an agreement with” Law Firm 

A “to exclusively fund its case dockets” and that Tort Fund LLC has financed “the acquisition of 

mass tort cases” against well-known manufacturers of specific medical devices and consumer 

household products. 

72. Defendants also falsely claimed on Tort Fund LLC’s website that the “Current 

Tort Fund Investment Portfolio” included cases involving specific manufacturers of medical 

devices and consumer products and that “Tort Fund is Currently Funding” cases involving the 

identified manufacturers, medical devices and consumer products. 

73. In or about July 2019, Tort Fund LLC, Tort Fund SPV1, Michael Chhabra and 

Vineet Chhabra made material misrepresentations to Investor 1 in emails and phone calls to 

induce him to invest in Tort Fund LLC and Tort Fund SPV1 relating to the companies’ 

operations, the safety and security of the investments and how the investor funds would be used. 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 15 of 27



16 
 

74. In or about August through November 2019, Tort Fund LLC, Tort Fund SPV2, 

Michael Chhabra and Vineet Chhabra, directly and indirectly, made material misrepresentations 

to Investors 2 and 3 in emails and phone calls, including through communications drafted by 

Michael Chhabra, to induce them to invest in Tort Fund LLC and Tort Fund SPV2, relating to 

the companies’ past and current operations, the safety and security of the investments and how 

the investor funds would be used. 

75. For instance, on November 6, 2019, Investor 2 began asking whether he could 

have his $50,000 investment in Tort Fund SPV2 returned.  In response, on November 7, 2019, in 

an email drafted by Michael Chhabra, Employee 1 advised that the money was “promptly lent to 

borrower law firms” and could not be returned.  Employee 1 further advised Investor 2 that it had 

“already earned you just shy of $600 to date!”  In response, Investor 2 agreed to allow the 

investment to continue. 

76. These representations were false because the Tort Fund Entities had not invested 

in any cases involving the identified manufacturers or the specified medical devices or consumer 

products.  Further, the Chhabras did not loan Investor 2’s money to law firms, but rather used it 

to pay for their personal expenses, among other things, as discussed below.  

77. Contrary to these representations, the Tort Fund Entities also did not have a 

“network of partner law firms” or a “network of attorneys” to fund any litigation.  The Tort Fund 

Entities never had any agreements with law firms to lend money to finance mass tort litigation 

and did not finance the acquisition of tort cases involving the identified manufacturers or the 

specified medical devices and consumer household products. 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 16 of 27



17 
 

78. Defendants also falsely claimed that investments in Tort Fund SPV1 and Tort 

Fund SPV2 were “collateralized, UCC1-secured investments” and that the investments were 

“low-risk.” 

79. In reality, the Tort Fund SPV1 and Tort Fund SPV2 investments were not 

collateralized or UCC1-secured investments and not guaranteed in any way.  Because 

Defendants did not lend any money to any law firms or obtain the promised high-interest debt 

instruments, there was no collateral for the Tort Fund SPV1 and Tort Fund SPV2 investments, 

and no UCC1s were filed. 

80. The Chhabras knew that Tort Fund LLC had made no loans to any law firms 

handling mass tort litigation so there was no fixed-rate high interest debt instrument to use as 

collateral to secure the Tort Fund SPV1 and Tort Fund SPV2 investments. 

81. In addition, Defendants perpetuated their fraudulent scheme by knowingly 

sending misleading spreadsheets and email updates to the investors in Tort Fund SPV1 and Tort 

Fund SPV2 from July 2019 through at least August 2021, which purported to identify the 

amounts of interest earned on their investments and falsely promised investors that they would 

not lose their principal.  In reality, the Chhabras knew there was never any litigation financing 

provided to law firms that could have generated profits to pay interest to investors. 

82. Defendants also solicited Tort Fund SPV1 and Tort Fund SPV2 investors in 

emails and phone calls to make additional investments and to refer friends, family members or 

others claiming falsely that Tort Fund LLC planned to close out the Tort Fund SPV2 investment 

on December 20, 2019, as well as an additional special purpose vehicle, Tort Fund SPV3. 

83. For example, on December 2, 2019, Michael Chhabra emailed Investor 2 and 

Investor 3 that the “[Tort Fund] SPVs we manage have continued to deploy capital on an 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 17 of 27



18 
 

immediate basis as investors place capital,” that “funds are currently being deployed” in 

litigation against specific manufacturers of specific medical devices and consumer products and 

that Tort Fund LLC’s business “continues to grow and perform within our expected range of 

results.”  None of this was true. 

84. Michael Chhabra made these misrepresentations in an attempt to further induce 

Investor 2 and Investor 3 to invest additional funds with Defendants.  Contrary to the false 

representations, there was no additional money raised for Tort Fund SPV2 beyond what Investor 

2 and Investor 3 had provided, and the Chhabras never closed out Tort Fund SPV2 on December 

20, 2019.  Further, upon information and belief, the Chhabras never took action to form “Tort 

Fund SPV3” despite the representations that it would provide another investment opportunity to 

engage in litigation funding. 

85. And on January 14, 2020, Employee 1 emailed Investor 2 a spreadsheet 

purporting to show Investor 2’s account balance with interest accrued on his $50,000 investment 

in the amount of $965.75. 

86. On April 16, 2020, Michael Chhabra emailed Investor 1 with an update on his 

investment, which was drafted by Vineet Chhabra.  In the email, the Chhabras claimed that they 

were in the process of finalizing a $50-100 million investment in “Tort Fund” by a New York 

investment firm.  This investment never materialized.   

87. On June 8, 2020, Michael Chhabra emailed Investor 2 that Investor 2’s 

investment had accrued interest in the amount of $4,993.13. 

88. On October 20, 2020, Vineet Chhabra emailed Investor 2 that Employee 1 was no 

longer with Tort Fund LLC and that Investor 2’s “$50,000 investment has accrued $7,726.03 in 

interest, for a total of $57,726.00.”  Investor 2 then asked to redeem his investment, to which 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 18 of 27



19 
 

Vineet Chhabra replied that Investor 2 would need to wait until October 9, 2023, when his 

investment would mature. 

89. On August 20, 2021, Vineet Chhabra emailed Investor 1 “you will not lose your 

investment,” as he had been telling Investor 1 for several months. 

90. In stark contrast to these false representations, the Tort Fund Entities did not make 

any loans to law firms handling mass tort litigation, did not deploy any funds for litigation 

financing and no interest accrued on any of the investments.  Instead, the Chhabras 

misappropriated the investor funds for their own personal expenses and to perpetuate their 

fraudulent scheme as discussed in more detail below.  

III. THE CHHABRAS MISUSE INVESTOR FUNDS 

91. Contrary to what investors were told in writing and orally, the Chhabras used 

investor funds to (i) pay unrelated business expenses from the Chhabras’ prior business ventures, 

(ii) fund the Chhabras’ personal expenses, and (iii) perpetuate the fraud.  The personal expenses 

included, among other things, rent on the Chhabras’ homes; legal fees for litigation against 

Michael Chhabra and some of his family members relating to a company in bankruptcy 

proceedings for which Michael Chhabra served as the Chief Operating Officer; expenses to clean 

up Michael Chhabra’s online reputation; payment for debts the Chhabras owed from prior 

unrelated business ventures; household, travel and entertainment expenses for their families; and 

frequent purchases at restaurants, grocery, convenience and retail stores.   

92. For example, on July 17, 2019, the $50,000 in funds from Investor 1 were 

deposited in the Tort Fund SPV1 bank account, which had a balance of $10.00 at the time of the 

deposit.  The next day Michael Chhabra transferred $20,000 to Company A to pay debts owed by 

the Chhabras from a prior business relationship with Company A.  Also on July 18, 2019, 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 19 of 27



20 
 

Michael Chhabra transferred $25,000 from the Tort Fund SPV 1 account to a bank account for 

Law Firm A.  Michael Chhabra previously opened the Law Firm A bank account and he had 

signature authority over that account.  Michael Chhabra then transferred money from the Law 

Firm A bank account to his personal bank account, and to bank accounts for companies that were 

owned and controlled by Vineet Chhabra.  In addition, Michael Chhabra wrote checks, 

transferred funds and made debit card purchases for various other expenditures unrelated to the 

business of Tort Fund LLC or Tort Fund SPV1, including for food, entertainment and the 

Chhabras’ prior business ventures, as well as to perpetuate the fraudulent scheme, including for 

office space and to solicit additional investors. 

93. Similarly, on October 8, 2019, the same day that Investor 2 wired $50,000 to the 

bank account for Tort Fund LLC, Michael Chhabra transferred $30,000 from the Tort Fund LLC 

account, which was overdrawn at the time, to the bank account for Law Firm A, over which 

Michael Chhabra had control.  Michael Chhabra then transferred $5,000 from the Law Firm A 

account to his personal bank account.  Michael Chhabra also transferred $12,000 from the Law 

Firm A bank account to the companies owned or controlled by Vineet Chhabra.  The remaining 

amounts from Investor 2’s funds were used to pay the Chhabras’ personal expenses and for 

expenses to perpetuate the fraud as discussed herein. 

94. In total, the Chhabras transferred over $80,000 of the investor funds to their own 

accounts and to fund activities to benefit themselves and other family members. 

95. The Chhabras spent the remainder of the money raised from investors -- over 

$40,000 – to perpetuate the fraud, including to compensate individuals for soliciting investors 

and providing office space for that purpose.   

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 20 of 27



21 
 

96. None of the $125,000 Defendants raised from investors was used to provide 

litigation financing to law firms that were handling tort litigation. 

97. The Chhabras did not have any agreement with Law Firm A or any other law firm 

to fund litigation. 

98. The Chhabras and the Tort Fund Entities did not disclose to investors that they 

planned to, or did in fact, use investor money for the Chhabras’ personal benefit or that investor 

money would be used to try to find additional investors for the Tort Fund Entities. 

IV. TORT FUND LLC GOES DARK AND THE CHHABRAS IGNORE INVESTORS 

99. As communication from Defendants became less frequent, eventually some of the 

investors questioned the status of their investments and the viability of the business of Tort Fund 

LLC.   

100. Upon information and belief, the last communication between Vineet Chhabra 

and Investor 1 was August 20, 2021, in which Vineet Chhabra assured Investor 1 that he would 

not lose his investment. 

101. Investor 1 expected to receive a return on his investment in 5 years, which would 

have been in July 2024.  To date, he has received no payments relating to his investment in Tort 

Fund SPV1. 

102. Following the October 20, 2020 email from Vineet Chhabra, Investor 2 received 

minimal information from the Chhabras about the status of his investment.   

103. On April 22, 2021, Investor 2 emailed Michael Chhabra asking if Tort Fund LLC 

was still in business. 

104. On or about April 28, 2021, Investor 2 attempted to ask for information on the 

Tort Fund Facebook page and received no response. 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 21 of 27



22 
 

105. Investor 2 then attempted to log into his account on the TortFund.com website on 

or about June 25, 2021 and was unable to access any information.  

106. The Promissory Note for Tort Fund SPV2 was due to Investor 2 in October 2023 

and to Investor 3 in November 2023.  To date, Investor 2 and Investor 3 have not received any 

payments relating to their investments in Tort Fund SPV2. 

107. Tort Fund LLC no longer maintains an active website, social media presence or 

functioning email address.   

108. Upon information and belief, Tort Fund LLC currently has no employees or 

independent contractors acting on its behalf, and it has ceased any business function.  Although 

Tort Fund LLC remains active as a limited liability company, mail cannot be accepted at the 

address on file for its registered agent, which is no longer a correct address. 

109. Tort Fund SPV1 is an active entity, although mail cannot be accepted at the 

address on file for its registered agent, which is no longer a correct address. 

110. Tort Fund SPV2 is no longer an active entity, and its license was revoked in 2020 

for failing to file a Biennial Report.  

V. DEFENDANTS’ VIOLATIONS OF THE FEDERAL SECURITIES LAWS 

111. During the relevant period, Michael Chhabra and Vineet Chhabra owned, 

operated, and controlled Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2. 

112. The Tort Fund SPV1 Unit Purchase Agreement and Tort Fund SPV2 Loan 

Agreement and Promissory Notes offered and sold to investors are securities within the meaning 

of both the Securities Act and the Exchange Act. 

113. In connection with the sales or offers to sell securities, the Chhabras and the Tort 

Fund Entities made use of means or instruments of interstate transportation or communication in 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 22 of 27



23 
 

interstate commerce or of the mails, including using the internet, interstate phone calls, and the 

United States mail.  The conduct described herein was in the offer or sale of securities and in 

connection with the purchase or sale of securities.   

114. The misrepresentations and omissions set forth herein, individually and in the 

aggregate, are material.  A reasonable investor would have considered the misrepresented facts 

and omitted information—including, among other items, misrepresentations about Tort Fund 

LLC’s operations, the safety and security of the investments and the use of investor funds—

important in deciding whether to invest in Tort Fund SPV1 and Tort Fund SPV2.  Disclosure of 

the accurate facts or omitted information would have altered the “total mix” of information 

available to investors. 

115. In connection with the conduct described herein, the Chhabras and the Tort Fund 

Entities acted knowingly, recklessly, or negligently.   

116. The Chhabras and the Tort Fund Entities were each makers of false and 

misleading statements made in writing and orally regarding the Tort Fund Entities.  Michael 

Chhabra and Vineet Chhabra prepared the offering documents for Tort Fund LLC, Tort Fund 

SPV1 and Tort Fund SPV2, including the Tort Fund SPV1 Unit Purchase Agreement and the 

Tort Fund SPV2 Loan Agreement and Promissory Note provided to investors on behalf of the 

Tort Fund Entities.  Michael Chhabra signed the Unit Purchase Agreement for the $50,000 

investment in Tort Fund SPV1.  Michael Chhabra also signed the Loan Agreement and 

Promissory Note for each of the two investments in Tort Fund SPV2.  Michael and Vineet 

Chhabra also had ultimate authority over all statements made on behalf of the Tort Fund Entities, 

including in advertisements and on the Tort Fund website.   

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 23 of 27



24 
 

117. Through their material misrepresentations and omissions, Michael Chhabra, 

Vineet Chhabra and the Tort Fund Entities each obtained money or property from investors.   

118. Through this scheme, the Chhabras and the Tort Fund Entities each engaged in 

acts, transactions or courses of business that operated as a fraud or deceit upon offerees, 

purchasers and prospective purchasers of the securities described herein. 

CLAIMS FOR RELIEF 

FIRST CLAIM 

Violations of Section 17(a) of the Securities Act 

119. The Commission realleges and incorporates by reference the previous allegations 

as if fully set forth herein.  

120. By engaging in the conduct described above, Defendants Michael Chhabra, 

Vineet Chhabra, Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2 in the offer or sale of 

securities, directly or indirectly, by the use of any means or instruments of transportation or 

communication in interstate commerce or by use of the mails: 

a. knowingly or recklessly employed one or more devices, schemes, or artifices to 

defraud; 

b. knowingly, recklessly, or negligently obtained money or property by means of 

one or more untrue statements of a material fact or omissions of a material fact 

necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; or 

c. knowingly, recklessly, or negligently engaged in transactions, practices, or 

courses of business which operated or would operate as a fraud or deceit upon the 

purchaser. 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 24 of 27



25 
 

121. By engaging in the foregoing conduct, Defendants Michael Chhabra, Vineet 

Chhabra, Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2, directly or indirectly, singly or 

in concert, violated, and unless enjoined will continue to violate, Section 17(a) of the Securities 

Act [15 U.S.C. § 77q(a)]. 

SECOND CLAIM 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 

122. The Commission realleges and incorporates by reference the previous allegations 

as if fully set forth herein.  

123. By engaging in the conduct described above, Defendants Michael Chhabra, 

Vineet Chhabra, Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2, directly or indirectly, 

singly or in concert, knowingly or recklessly, in connection with the purchase or sale of 

securities and by the use of any means or instrumentalities of interstate commerce, or the mails, 

or the facilities of a national securities exchange:   

a. employed one or more devices, schemes, or artifices to defraud; 

b. made one or more untrue statements of material fact or omitted to state one or 

more material facts necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; or 

c. engaged in one or more acts, practices, or courses of business which operated or 

would operate as a fraud or deceit upon any person in connection with the 

purchase or sale of any security.  

124. By engaging in the foregoing conduct, Defendants Michael Chhabra, Vineet 

Chhabra, Tort Fund LLC, Tort Fund SPV1 and Tort Fund SPV2, directly or indirectly, singly or 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 25 of 27



26 
 

in concert, violated, and unless enjoined will continue to violate, Section 10(b) of the Exchange 

Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].   

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court enter a final 

judgment: 

I. 

Permanently restraining and enjoining Defendants Michael Chhabra, Vineet Chhabra, 

Tort Fund LLC, Tort Fund SPV1 LLC and Tort Fund SPV2 LLC and their agents, servants, 

employees and attorneys and all persons in active concert or participation with any of them from 

violating, directly or indirectly, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] and 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 

240.10b-5]; 

II. 

Ordering Defendants Michael Chhabra and Vineet Chhabra to disgorge any and all ill-

gotten gains derived from the activities set forth in this Complaint, together with prejudgment 

interest thereon pursuant to Exchange Act Sections 21(d)(3), 21(d)(5), and 21(d)(7) [15 U.S.C. 

§§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)]; 

III. 

Ordering Defendants Michael Chhabra and Vineet Chhabra to pay civil penalties under 

Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act 

[15 U.S.C. § 78u(d)]; 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 26 of 27



27 
 

IV. 

Pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] and Section 

20(e) of the Securities Act [15 U.S.C. § 77t(e)], permanently prohibiting Michael Chhabra and 

Vineet Chhabra from serving as an officer or director of any company that has a class of 

securities registered under Section 12 of the Exchange Act [15 U.S.C. §78l] or that is required to 

file reports under Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]; and 

V. 

Granting such other and further relief as the Court may deem just and appropriate. 

JURY DEMAND 

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the Commission demands a 

trial by jury in this action of all issues so triable. 

Dated:  September 6, 2024 

Respectfully submitted, 

SECURITIES AND EXCHANGE COMMISSION  
        
  /s/ Gregory R. Bockin   
            Gregory R. Bockin (DC Bar No. 450885) 

Kara F. Sweet 
Judson T. Mihok 
Kingdon Kase 
Patricia A. Kuzma Trujillo 
Philadelphia Regional Office 
1617 JFK Blvd., Suite 520 

 Philadelphia, PA 19103 
 (215) 597-3100 
 (215) 597-2740 (fax) 
 [email protected] 
 [email protected] 
                                                            [email protected] 
 [email protected] 

 [email protected] 
  

Counsel for Plaintiff  
Securities and Exchange Commission 

Case 1:24-cv-02561   Document 1   Filed 09/06/24   Page 27 of 27