Bitconnect habit supported by seniors?

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario and Stephen Palley. They are not legal advice. These are our opinions only, aren’t authorized by any past, present or future client or employer. Also we might change our minds. We contain multitudes.

As always, Rosario summaries are “NMR” and Palley summaries are “SDP".

[related id=1]Garrison and Garrison v. Ringgold et al., ‘19CV0244 CAB RBB (S.D. Cal., February 4, 2019) [NRM]

Let me be the first to say that I’m a Grandparent Maximalist. Grandparents are superheros. You don’t mess with grandparents. It’s a bad idea, and a bad look. The same should be said about the elderly in general. It’s unclear whether this newly filed lawsuit deals with someone’s grandparents, but it does deal with allegedly messing with the elderly, which is a bad look.

This case is an action brought under three counts: violation of federal securities laws, violation of California’s securities laws, and financial abuse of a senior citizen. Ultimately though, this case is about misrepresentations, which is a common theme we cover on this blog.

Tommy and Christine Garrison are residents and citizens of the State of California. In this lawsuit they allege that the defendant, Reginald Buddy Ringgold III aka Rasool Abdul Rahem El, fraudulently induced them to invest their money with him in a variety of crypto ventures. What is somewhat striking about the allegations is the sheer amount of contact that Ringgold supposedly had with the Garrisons. Over the course of the interactions the Garrisons allegedly invested $819,784 with Ringgold. That number is pretty shocking, but what is really shocking is what Ringgold allegedly did with the money, and the lengths he went to to get it.

It’s hard to figure out where to even begin with this case. Perhaps, the best place to start is with how Ringgold held himself out to the public. As we’ve discussed in the past, you can’t just lie about your credentials/business and then take people's money. Supposedly, that is what happened here. Ringgold claims to have 17 years of experience in the financial industry, and according to his LinkedIn profile is the principal of five different entities, one of which is allegedly incorporated in Wyoming. He also claimed to be a credentialed with multiple financial authorities in a variety of capacities. This turned out to be false.

The first contact between the parties was at an investment seminar run by Ringgold in September 2016. Then in mid-2017, allegedly, Ringgold began pressuring the Garrisons to give him their money by doing such things as following them into their bank, crying when his requests were not endorsed, and yelling and screaming at the Plaintiffs. Now, one would think such behavior would deter the Garrisons from ever speaking to this person again, but that is not what happened. Instead they started to give Ringgold money.

Allegedly, Ringgold managed to get the Garrisons to put their retirement funds into cash, and then, somehow, instructed them to use localbitcoins.com to convert the cash into bitcoin. Why would Ringgold allegedly do this? Well, turns out he wanted their money in bitcoin, so that he could invest in…. Bitconnect. Yep. As if putting the money into Bitconnect was not bad enough, but Ringgold also convinced the Garrisons to invest in some ICOs, which leads to one of the greatest lines I’ve seen in an ICO related lawsuit. The Plaintiff’s counsel states “Ringgold misleadingly failed to disclose that ICO tokens are the crypto-version of penny stocks, but worse.” Rekt.

There are tons of allegations in the lawsuit. The elderly can be very sympathetic plaintiffs, so unless there is a ton more to this story not in the lawsuit, Ringgold and the other defendants are in a bad position.

The Block is pleased to bring you expert cryptocurrency legal analysis courtesy of Stephen Palley (@stephendpalley) and Nelson M. Rosario (@nelsonmrosario). They summarize three cryptocurrency-related cases on a weekly basis and have given The Block permission to republish their commentary and analysis in full. Part III of this week's analysis, Crypto Caselaw Minute, is above.