A Lone Tree man who agreed to a $1.1 million settlement with the Securities and Exchange Commission earlier this year is now facing dozens of state charges for allegedly defrauding investors, including multiple professional athletes.
Tyler Tysdal and business partner Grant Carter were indicted by a grand jury last week on 64 criminal counts of securities fraud, as well as one count each of theft, conspiracy to commit securities fraud and violating the Colorado Organized Crime Control Act. The Denver District Attorney’s Office worked with the grand jury.
An attorney for Tysdal did not respond to a request for comment.
A copy of the indictment obtained by BusinessDen states that approximately 77 investors put $46 million into Cobalt Sports Capital, an entity Tysdal and Carter formed to make loans to athletes and sports agencies.
Tysdal and Carter failed to disclose a host of material facts to those investors, including that, due to a lack of profits, Cobalt was paying early investors with money put up by new investors, the indictment alleges.
Ultimately, “nearly all of the investors sustained losses, with a total loss to all investors of several million dollars,” the indictment reads.
A receiver appointed in October 2016 to oversee entities overseen by Tysdal previously said in court records that Cobalt “was run as a Ponzi scheme,” and repaid loans from relatives and close associates, including his parents and wife’s grandparents, ahead of other lenders.
Alleged victims include current NFL free agent Matt Cassell, who with his wife invested $1 million in 2013 and 2014, and retired quarterback Carson Palmer, who with his wife invested $2.05 million between 2014 and 2016.
Others named as investors include NFL free agent Marcel Reece, former USC quarterback Michael Van Raaphorst, Robert Awalt and Everson Griffen.
According to the indictment, Tysdal and Carter formed Impact Opportunities Fund LP, a private equity fund that would invest in various companies, in September 2011. About two months later, they formed lending company Cobalt Sports Capital, in which IOF invested.
Tysdal and Carter previously had been associated with lending company Gibraltar Sports Capital, and were subject to noncompete agreements, according to the indictment.
In March 2012, Gibraltar became aware of Cobalt and threatened legal action, according to the indictment. As a settlement, Tysdal and Carter agreed to pay $7.6 million for a portion of Gibraltar’s loan portfolio — $2.2 million more than it was worth.
The pair “represented to investors that this transaction was a success” and failed to disclose the settlement component, according to the indictment.
Approximately 48 investors in Cobalt, who cumulatively put up $22 million, invested after a recommendation from staff at Denver-based IWP Wealth Management LLC, who were acting based on the claims made by Tysdal and Carter, according to the indictment.
Those investors were promised interest of 10 percent quarterly, according to the indictment. While Cobalt was formed to make loans to professional athletes, Tysdal and Carter later began using the cash — at least $15 million — to fund other companies in their IOF portfolio that were losing money. This “significantly hindered Cobalt’s primary business activity as represented to investors,” the indictment states.
Nine limited partners in IOF sued Tysdal and entities he controlled in 2016, leading to the appointment of a receiver who later used the “Ponzi scheme” framing.
The SEC announced in September that Tysdal had agreed to pay $843,099 in disgorgement and prejudgment interest to former investors, as well as $320,000 in civil penalties. He accepted the settlement without admitting to or denying the wrongdoing outlined by the SEC.
Carter, who the SEC said lives in Georgia, also agreed at the time to pay a civil penalty of $160,000.