A Chicago businessman has been sued over allegedly misappropriating more than $2 million in funds ostensibly for cryptocurrency trading.
A trust has sued businessman, Brock Flagstad, over allegedly misappropriating over $2 million in funds that were purportedly designated for cryptocurrency trading.
Despite Flagstad soliciting the funds for the purpose of digital asset trading, the James Streibich Revocable Trust accuses the businessman of siphoning money from the investment to fuel an exorbitant lifestyle involving private jets and luxury vehicles.
Businessman accused of misappropriating over $2M
The complaint has been brought against both Flagstad individually, and against seven companies operated by the businessman — levying allegations of fraud, theft, conspiracy, breach of contract, and breach of fiduciary duty.
The trust asserts that Flagstad reached out to its trustee, James Streibich, in May 2018 to pitch an investment that would be used by his firm Folding Light’s “proprietary financial trading platform.”
In exchange for a $2 million investment, Streibich claims the trust was assured a preferred interest in Folding Light and informed by Flagstad’s attorney that the funds would exclusively be used for trading.
However, the trust claims that within just weeks of its investment, Flagstad began “siphoning trading capital the trust invested with Folding Light to outside banking accounts and his other ventures.”
Flagstad allegedly requested $200K loan and fled to Georgia
After Folding Light’s trading team left the firm in 2018 to start a new company, the trust states it accepted a request from Flagstad for a $200,000 line of credit.
In the Summer of 2019, the trust claims that Flagstad stopped making interest payments on the loan, moved to the state of Georgia, and became “increasingly unavailable.”
Flagstad allegedly operates 17 companies from the same address in Chicago, with the plaintiffs accusing him of perpetrating similar schemes targeting other Chicago-based investors.
“Flagstad has solicited millions of dollars in private equity funds for Flagstad companies from numerous prominent Chicago-area investors,” the complaint reads.
Investment capital possibly used to fund lavish lifestyle
Streibich claims to possess banking documents showing at least $849,000 that had been wired from Folding Light to his personal bank account.
The trust insinuates that some of the funds it invested may have been used to support exorbitant purchases, with the claim asserting that “Flagstad has a rapacious personal need for cash to support his lavish lifestyle of private jets and expensive cars.”
The trust is seeking injunctive relief and compensation for damages.
Flagstad denies allegations
The businessman’s attorney, Stan Sneeringer, told Law360 that the allegations against Flagstad are false and they intend to defend the case “vigorously.”
“Anyone can allege anything they want in a complaint, particularly where, as here, the allegations are made ‘on information and belief.’ It is another matter to prove those allegations in a court of law,” he added.