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SUPREME COURT OF THE STATE OF NEW YORK
NEW YORK COUNTY

• – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x
  PURSUIT CREDIT SPECIAL OPPORTUNITY
  FUND, L.P.,
  Plaintiff,
• against –
  KRUNCHCASH, LLC, KC PCRD FUND, LLC,
  KC CA FUND, LLC, and JEFFREY HACKMAN,
  Defendants.
  
  Index No. 651070/2022
  RULE 19-a STATEMENT OF
  MATERIAL FACTS
• – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x
  Pursuant to Commercial Division Rule 19-a, Plaintiff Pursuit Credit Special Opportunity
  Fund, L.P. submits the following material facts in the record:
  A. Pursuit’s Arrangements with the KrunchCash Entities

1. The KrunchCash Entities were specialty finance entities. (Cohen Aff. ¶¶ 2, 8, 107.)
2. KrunchCash was an investor into legal funding assets, including law firm, plaintiff,
   and medical lien funding, and advances backed by pharmaceutical receivables (“Advances”).
   (Ex. 3 (KrunchCash Dep. 1/8/2025) at 13:01–16:25; 148:13–149:23; Ex. 1 at 49:14–51:16.)
3. Pursuit invested with KrunchCash and KC PCRD through 2021. (Cohen Aff. ¶¶ 2,
   71-78, Ex. 3 at 13:01–16:25.) Pursuit invested into KrunchCash-related opportunities through
   revenue-sharing arrangements wherein Pursuit would hold the right to revenues from particular
   Advances. (Cohen Aff. ¶¶ 4-11, Ex. 3 at 14:20–15:6; 42:3–7.)
4. From 2015 through early-2018, Pursuit and KrunchCash were parties to an Investor
   Funding Agreement dated April 2015 (the “Original IFA,” as amended) and a Purchase Agreement
   dated September 2017. (Ex. 7 (Investor Funding Agreement dated 1/15/2015); Ex. 8 (Purchase
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   Agreement dated 9/29/2017); see also Ex. 1 at 26:9-27:4, 46:10-14 (authenticating Original IFA)
   and 116:14-117:3, 117:18-118:9 (authenticating Purchase Agreement); Ex. 3 at 15:4–24.)
5. On April 10, 2018, Pursuit and KC PCRD entered into the Amended and Restated
   Funding Agreement (the “Amended IFA”), which supplanted the Original IFA. (Ex. 9 (Amended
   IFA dated 4/10/2018); see Ex. 1 43:7-44:22 (authenticating Amended IFA).)
6. The claims at issue here pertain to Pursuit’s investment from the date of the
   Amended IFA through November 26, 2019 (the “Investment Period”). (Ex. 10 (Expert Report of
   Graham Rogers dated 5/22/2025) ¶¶ 61–64.)
7. With the Amended IFA, KrunchCash created a new entity—KC PCRD—to hold
   the monies that Pursuit invested. (Ex. 9; Ex. 1 at 22:13–18.)
8. The Amended IFA contemplates that KC PCRD would make Advances to and recollect monies from third-party Recipients. (See Ex. 9 § 3, Cohen Aff. ¶¶ 6-11.)
9. In practice, KrunchCash would receive investor funds, route those funds back to
   KC PCRD, and then KC PCRD would transfer monies back to KrunchCash. KrunchCash would
   then make Advances and receive repayments from Advances from a KrunchCash account that
   Hackman referred to as the “cash management account,” and KrunchCash would then remit
   Pursuit’s portion of Advances back to KC PCRD. (See Ex. 1 at 65:16–68:21; Ex. 4 (KrunchCash
   Dep. 1/9/2025) at 16:08–19:24; Cohen Aff. ¶¶ 8-9.) From the KC PCRD account, monies could
   be distributed to Pursuit or, as was the case here, were consistently reinvested into additional
   Advances. (See id.)
10. Paragraph 6 of the Amended IFA contains the waterfall pursuant to which Pursuit
    and KC PCRD would split proceeds from Advances:
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11. Allocations and Disbursements. The proceeds from each
    Advance provided with the Investor Funding will be allocated and
    disbursed as follows:
    (i) First, the amount repaid by the funding recipient will be
    deposited into the Bank Account1 (“Repayment Amount”).
    (ii) Second, the Advance will be deducted from the Repayment
    Amount and left in the Bank Account to be re-advanced.
    (iii) Third, the difference between the Repayment Amount and the
    Advance (net of the Servicing Fee payable to Company pursuant to
    Section 4) will be allocated and disbursed as follows: (A) Fifty
    percent (50%) of the proceeds will be allocated and disbursed to
    Investor; and (B) Fifty percent (50%) of the proceeds will be
    allocated and disbursed to Company [KC PCRD]. Company will
    disburse such proceeds no more than once per calendar month to the
    extent of cash available.
    (Ex. 9, Ex. 1 at 76:15–22.)
12. Thus, per Paragraph 6(i) of the Amended IFA, the “Repayment Amount,” i.e., the
    principal advanced using Pursuit’s capital and repaid to KrunchCash, was to be repaid into the
    dedicated KC PCRD bank account as a first step for safekeeping. (See id.)
13. Paragraph 6(iii) contemplates a profit-share, calculated as 50% of the “Repayment
    Amount” minus the “Advance,” to Defendants. (Id., Cohen Aff. ¶¶ 10-11.)
14. There is no upfront “Servicing Fee” and the Amended IFA explicitly states that the
    “Servicing Fee” is equal to “zero percent (0%)[.]” (Ex. 9 § 4, 6(iii).)
    B. The Advances
15. Pursuit’s investments were supposedly tied to and backed by proceeds from the
    underlying claims that served as collateral to KrunchCash’s Advances to third-party recipients
    (“Recipients”). (Ex. 9 § 2, 3.)
    1 The Amended IFA defines “Bank Account” as the KC PCRD account.
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16. Pursuit was granted a first-lien security interest in all proceeds from Advances it
    funded, and KrunchCash agreed to assign all “right, title and interest” in all proceeds received
    from Advances to KC PCRD for such purpose. (Id. § 7, 2.)
17. The “Resnick” or “Maryland” Advances were a series of Advances to related
    personal injury firms The Law Offices of Jonathan S. Resnick LLC (owned by Jonathan Resnick)
    and The Law Offices of Perry A. Resnick (owned by Perry Resnick, son of Jonathan Resnick), and
    the Law Offices of Louis Glick (collectively the “Resnick Firms”). (Ex. 1 at 146:01-152:13.)
    Additionally, there were Advances made to healthcare provider American Wellness Health Center
    Inc., a medical provider to clients of the Resnick Firms (collectively, the “Maryland Firms”). (See
    Ex. 1 at 52:11-17.)
18. Defendants represented that the Advances by KrunchCash to the Resnick Firms
    were secured and repaid by a portion of each firm’s one-third contingency fee and entitlement to
    recoup out-of-pocket expenses from underlying litigations. (See Ex. 1 at 29:07–21; 35:19–36:04,
    52:02–53:19, Cohen Aff. ¶¶ 18-21.) The anticipated proceeds from the Resnick Firms’ injury cases
    were under $20,000 per litigation and averaged around $5,000. (Ex. 1 at 150:05–20; Ex. 23 (Perry
    Resnick Dep. 3/28/2024) 15:08-15.) The amount the Resnick Firms were entitled to receive as a
    contingency fee was a percentage of the total proceeds, typically around 33 percent if no lawsuit
    was filed, and 40 percent if an action was commenced. (Ex. 23, 15:21-16:05.) KrunchCash
    purported to provide several forms of funding to the Resnick Firms including pre-settlement,
    expense, post-settlement, and medical funding. (Ex. 11 (KrunchCash Funding Summary
    10/12/2017), Ex. 1 at 150:05–162:17.)
19. Defendants represented that KrunchCash’s entitlement from the Resnick Firms was
    the amount of the Advance—i.e., the principal funded to the firm—plus a “Use Fee.” (Ex. 1 at
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    217:8-17; 219:7-220:8, 35:19-36:4.) The “Use Fee” was an amount equal to 4% per month from
    the time the monies were funded, subject to a six-month minimum equal to 24%. (See id.) At least,
    these were the terms represented to Pursuit when Hackman described the nature of the Advances.
    (Ex. 11.)
20. Thus, based on the waterfall described above, if KrunchCash successfully
    recollected an Advance that had accrued a minimum six-month “Use Fee” then Pursuit would
    receive 112%—equal to return of the Advance (100%) plus half of the Use Fee (12%)—and the
    KrunchCash Entities would receive 12%—equal to the other 50% of the Use Fee. (Ex. 1 at 29:7–
    21, 219:7–220:8, 164:5–165:4, 242:18–243:5; 294:4–295:9, Cohen Aff. ¶ 22.)
21. The “LB Pharma” Advances were monies KrunchCash funded to a Texas-based
    pharmaceutical business, LB Pharma and its affiliates. (Ex. 1 at 52:18–24; Ex. 3 at 14:1–19, Ex.
    12 (Email Hackman to Pursuit 10/25/2018).) Defendants represented that the receivables to
    LB Pharma were adjudicated pharmaceutical insurance claims that would be expected to pay off
    in 30-45 or 45-60 days. (Cohen Aff. ¶¶ 23-25, Ex. 12, Ex. 3 at 57:8–17, 69:16–70:4, 162:12–25,
    164:3–7, 165:1–3.)
22. Pertinently, Pursuit also provided $872,000 in capital to Defendants to advance to
    a Connecticut-based law firm, Berkowitz Hanna LLC (“BH”), secured by that firm’s receivables.
    (See Ex. 4 at 259:24–261:19.)
23. KrunchCash claimed to have invested in other Advances, unrelated to Pursuit, such
    as Advances secured by ex-NFL players’ recoveries from the litigation against the NFL (the “NFL
    Advances”). (Ex. 4 at 189:2-4; Ex. 1 at 42:24–43:6, Ex. 4 at 189:2–4.) Defendants refused,
    however, to produce information to substantiate other Advances. (Docs. 655, 735, 717 (Motion
    Seq. 18).)
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    C. Defendants’ Representations Concerning the Advances and Ledgers
24. Hackman shared with Pursuit a spreadsheet “Ledger” that Hackman manually
    created and maintained on Microsoft Excel. (See Ex. 1 83:16–88:2, Ex. 4 at 106:12–17; 156:16–
    22; 157:16–23, Cohen Aff. ¶¶ 29-33, Ex. 13 (Pursuit Ledger).) Hackman had a trusting relationship
    with Pursuit’s manager, Mitchell Cohen (“Cohen”). (Cohen Aff. ¶ 27.) The two spoke multiple
    times weekly concerning the Advances, and Hackman attempted to befriend Cohen. (See id. ¶¶
    27-30.)
25. The Ledger reflected the supposed balances and performance of the Advances on
    an overall and claim-by-claim (i.e., plaintiff-by-plaintiff) level. (Ex. 1 at 83:16–88:2; Ex. 4 at
    100:2–102:19.) The Ledgers then tabulate the monies invested by Pursuit into the KrunchCash
    Entities, supposedly funded by KrunchCash to the end-Recipients using Pursuit’s capital, and
    supposedly collected, along with the “Use Fee”, from Recipients. (Ex. 1 83:16–88:2, Ex. 4 at
    106:12–17, 200:12–202:16 (the parties “relied” on the Ledger to monitor performance).) The
    Ledger then tracks the “waterfall” and presents calculations of Pursuit’s investment balance and
    Defendants’ profit-share. (Ex. 1 83:16–88:2, See Ex. 13, Ex. 1 at 71:12–77:2, 83:16-88:2, 132:8–
    133:14, Ex. 4 at 100:2–106:17.) The Ledgers also provided various performance-related data
    concerning the Advances, including the date of funding, date of repayment, and duration of each
    claim. (Ex. 1 at 83:7–24.)
26. Hackman shared the Ledger live through a cloud account. (Ex. 1 at 84:19–85:3,
    231:23–234:25.) Though the Ledger was cloud-based, Pursuit’s principals would periodically
    download and date-lock the Ledger for internal record-keeping purposes. (Cohen Aff. ¶ 29, Ex.
    13.)
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27. Hackman and the KrunchCash Entities represented, in the Ledger and throughout
    Pursuit’s investment and reinvestment, information concerning the Resnick Advances. (Ex. 1 at
    231:23–234:25.) Such representations included that:

• Each Advance on the Ledger reflected new monies that KrunchCash
  actually advanced to the Recipient in cash based on the Recipient’s new
  need for monies. (Ex. 1 at 231:23–234:25, 225:23–226:16.) The Ledger
  represented that, during the Investment Period, KrunchCash advanced over
  $45 million to the Maryland Recipients. (Ex. 13, at Tabs LAW.LG,
  LAW.PR, PIP, Post, and LOP (sum of “Gross” amounts funded on or after
  Apr. 10, 2018); Ex. 4 at 106:9–11 (over $63 million over time).)
• Claims reflecting “collected” values on the Ledger were successfully repaid
  by the Maryland Recipients from settlement proceeds. (Ex. 10 ¶ 31.)2 The
  Ledgers reflected that, during the Investment Period, the Maryland
  Recipients repaid $7.2 million to KrunchCash. (Id. ¶ 158.)
• When Pursuit dedicated capital to a particular Advance, each of the claims
  within that Advance was unencumbered, such that Pursuit was the only
  investor with an interest in that receivable. (Cohen Aff. ¶ 34, Ex. 9 § 2, 7;
  Ex. 1 at 29:7–21, 35:19–36:4).)
• Each Advance was collateralized 2-to-1, meaning that for each “claim”
  backing an Advance, there was another unencumbered claim handled by the
  Resnick Firm that could serve as replacement collateral. (See Ex. 2 at
  472:2–6, Cohen Aff. ¶ 34, Ex. 1 at 29:7–21, 35:19–36:4.) This gave Pursuit
  comfort that there was value in the Resnick Firms beyond the claims that it
  was funding. (Cohen Aff. ¶ 34.)

1. Defendants also made representations concerning the LB Pharma Advances, which
   included that:

• The Advances were being made to pharmacies that held portfolios of
  adjudicated—i.e., resolved—reimbursement claims that would be repaid
  within 30-45 or 45-60 days. (See Ex. 3 at 18:6–24, Ex. 4 at 162:12–25,
  164:3–165:3; 69:16–70:4, Ex. 12.)
  2 There is one exception wherein, in the month prior to execution of the Amended IFA,
  Pursuit permitted Hackman to sell one portfolio of receivables to which Pursuit had an interest to
  another then-unknown investor for $1 million. (Cohen Aff. ¶ 34.)
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• Advances were being repaid on a timely basis—i.e., each “tranche” and
  “claim” within than tranche—was repaid profitably from insurance
  proceeds. (Ex. 4 at 161:17–19.)
• When Pursuit dedicated funding to an LB Pharma Advance, KrunchCash
  was actually funding such amounts to LB Pharma in cash. (Ex. 14–16 (Text
  Messages Hackman and Cohen 9/9/2018, Text Messages Hackman and
  Cohen 8/22/2018, Text Messages Hackman and Cohen 10/19/2018).) The
  Ledger represented that more than $41 million had been advanced to LB
  Pharma. (Ex. 4 at 105:20–106:11 (Q: Does the $41 million represent actual
  funds out to the advance recipient? A: Yes.).)
• LB Pharma had repaid approximately $35.5 million in total before
  defaulting. (Ex. 13, TAB “RX” (showing amounts “Collected”).)

1. Hackman provided read-only access to Pursuit to the bank account held in the name
   of KC PCRD. (Cohen Aff. ¶ 36.) Each time that he reflected claims as “collected” on the Ledger,
   Hackman moved monies to the KC PCRD account to mirror such transactions—thus giving the
   illusion that cash was being collected. (Id., Compare Ex. 13 (Ledger) at “Register” Tab with Ex.
   35-1 (Bank Statement).) But, as discussed below, Pursuit is now aware that the cash that Hackman
   temporarily deposited into the KC PCRD account, and which Hackman quickly transferred back
   to KrunchCash for supposed reinvestment, was not cash actually received from the end-Recipients.
   (Ex. 10.)
2. Hackman testified he had unfettered authority, power, and discretion to invest
   Pursuit’s capital however he wished. (Ex. 1 at 39:32–42:23.) Pursuit did not need to agree on how
   funds would be reinvested “because Pursuit had no input on the business per the agreement. No
   participation.” (Ex. 1 at 74:5–75:7.) There were “no limits” on Hackman’s latitude, including
   theoretically, gambling Pursuit’s money in Las Vegas. (Ex. 1 at 74:5–75:7, 108:18–109:16.)
3. Pursuit invested and reinvested based on Hackman’s representations in the Ledgers
   and otherwise as to the nature of the Advances and Defendants stewardship of Pursuit’s funds. As
   of the date of the Amended IFA, Pursuit had invested $2.8 million with KrunchCash. (Ex. 9 § 1,
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   Ex. 13, Ex. 10 ¶¶ 21.) Following execution of the Amended IFA, Pursuit invested an additional
   $8.2 million—bringing Pursuit’s total investment to approximately $11 million. (Ex. 9 § 1, Ex. 13,
   Ex. 10 ¶¶ 192.) Hackman made some distributions to Pursuit—which Pursuit now understands to
   have been false-profit distributions—such that Pursuit’s net out-of-pocket investment was $7.16
   million. (Ex. 9 § 1, Ex. 13, Ex. 10 ¶¶ 191-192.)
4. Based on the represented success of the LB Pharma Advances, specifically, Pursuit
   invested approximately $8 million in new cash into KC PCRD for LB Pharma between July 2018
   and April 2019. (Cohen Aff. ¶ 40; Ex. 10 ¶ 187.) In the summer and fall of 2018, Hackman spent
   considerable effort inducing Pursuit to invest additional capital. (Cohen Aff. ¶¶ 41-45; Ex. 1 at
   334:13-336:4; Ex. 38 (Text Messages 8/22/2018); Ex. 14; Ex. 15; Ex. 16.) Hackman travelled to
   New York and met with Pursuit’s two managers and one of its limited partners to solicit new
   investment. (Cohen Aff. ¶ 41; Fergang Aff. ¶¶ 8-9, Ex. 1 at 334:13-336:4, Ex. 38, Ex. 14, Ex. 16.)
   Hackman represented that the LB Pharma opportunity required nearly $4 million in new cash
   funding based and warned that, if Pursuit did not act quickly, another investor might seize the
   opportunity. (Cohen Aff. ¶¶ 41-45; Ex. 1 at 334:13-336:4); Ex. 38 (“Need a large commitment
   from [substantial investor] so [Pursuit] can stay in the game[.]”); Ex. 14 (affirming that LB Pharma
   was seeking $3.3 million and “it is going to get bigger every week thereafter” and that Hackman
   “need[ed] the investors to keep up with me”); Ex. 16.) When Pursuit’s limited partner, enthralled
   by the false returns that Hackman had been indicating on paper, inquired if Hackman could scale
   his Advances, Hackman responded that LB Pharma had endless inventory that KrunchCash could
   fund, limited only by Pursuit’s willingness to invest new capital. (Fergang Aff. ¶¶ 10-16, Cohen
   Aff. ¶¶ 42-46.) Based on such representations, Pursuit wired a new tranche of $3.25 million in
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   cash, adding to the other monies Pursuit had already invested in LB Pharma. (Ex. 1 at 334:13-
   336:4).)
5. As of December 31, 2018, Pursuit’s investment balance as reflected on the Ledger
   was $9.5 million. (Ex. 17 (Email Hackman to Pursuit 6/4/2019) (“As of 12.31.18 PCRD investor
   funding account balance was $9,510,000.”); Ex. 4 at 183:1–183:10.)
6. The Ledgers represented that, based on KrunchCash’s supposed successful
   recoveries from Advances, that they were entitled to $2,935,060.88 in profit-share compensation
   during the Investment Period. (Ex. 13.)
7. Hackman also issued bulk advances to the Maryland Recipients for “litigation
   expenses” and advances supposedly backed by “Letters of Protection”, however there are no
   corresponding transfers to the Maryland Recipients evidencing this. (Compare Ex. 13 (Ledger) at
   “LOP” Tab (representing $300,000 purportedly advanced against Letters of Protection for 1500
   cases on 5/11/2018) and Ex. 34 (Signal Ledger) at “EXP” Tab (representing $300,000 purportedly
   advanced for medical expenses against 1000 cases on 5/11/2018) with Ex. 35-2 (KrunchCash Bank
   Statements) May 2018 at pp. 153-155 (showing no corresponding KrunchCash advance to the
   Maryland Recipients on or around 5/11/2018, but a transfer from KC-PCRD’s account to
   KrunchCash of $300,000 on 5/15/2018). According to the Ledger, $1.1 million in “bulk” advances
   were funded using Pursuit’s investment capital, and another $2.6 million in “bulk” advances were
   either funded or purchased using Signal Fund’s investment capital, each time without a
   corresponding transfer to the Maryland Recipients. (See Ex. 13 (Ledger) at “LOP” Tab, F:5 and
   Ex. 34 (Signal Ledger) at “EXP” and “MED” Tabs, F:7; see generally Ex. 35-2 (KrunchCash’s
   Bank Statements).)
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   D. The Default Actions and Discovery of Other Investors
8. In 2019, matter shifted. Pursuit attempted to redeem some of its capital, but
   Hackman denied Pursuit such right. (Ex. 18 (Email Hackman to Pursuit 6/4/2019); Ex. 19 (Email
   Cohen to Hackman 8/8/2019).)
9. In mid-2019, Pursuit also attempted to conduct a financial “review” of Pursuit’s
   investment, so that Pursuit could substantiate the supposed success of its investment as set forth in
   the Ledgers. (Ex. 20 (Email Hackman to Pursuit 11/13/2019), Ex. 4 at 183:21–186:19.) Pursuit
   was unable to do so because, when Pursuit’s outside accountant sought access to bank records for
   the “cash management” account in the name of KrunchCash—to tie out actual cash flows between
   KrunchCash and the Advance recipients—Hackman refused to provide sufficient data. (Ex. 20;
   Ex. 4 at 183:21–186:19; Doc. 110 (Parzygnat Affidavit) ¶¶ 4-6.) No review was ever completed
   on Pursuit’s investments (or the KrunchCash Entities, which was never the subject of the review
   in any event) because KrunchCash would not provide such records. (See id.) While Pursuit had
   access to the KC PCRD bank statements, until such records were compelled through discovery in
   this action, Pursuit never possessed KrunchCash’s bank statements. (Cohen Aff. ¶ 55.)
10. Instead, Hackman revealed that KrunchCash had become a party to various
    litigations with the Resnick Firms and with LB Pharma (the “Default Actions”). (Ex. 3 at 84:2–8.)
    The Default Actions sparked new issues among the parties.
11. Hackman explained that that Resnick Firms had abruptly stopped making
    repayments to KrunchCash, and insisted that the Resnicks—Jonathan Resnick, in particular—had
    stolen millions that KrunchCash had funded. (Ex. 21 (Hough Dep. 6/7/2024) at 162:19–163:24.)
    Hackman could not explain, however, where Jonathan Resnick supposedly directed these monies.
    (Ex. 21 at 210:7–212:13; Ex. 29 (Overview of Resnick Default Actions to Signal); Ex. 30
    (Overview of Resnick Default Actions to Pursuit).) Hackman claimed that there were thousands
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    of missing files at the Resnick Firms that could not be located. (Ex. 29; Ex. 30.) Though Hackman
    initially suppressed such facts from Pursuit, the Recipients asserted—and maintain today—that
    Hackman falsely inflated the amounts funded to the Recipients. (See Ex. 22 (Jonathan Resnick
    Dep. 3/27/2024) at 146:1-147-5, Ex. 23 at 50:2-21.)
12. With respect to LB Pharma, Hackman explained that LB Pharma was entangled in
    a convoluted audit and that repayments would resume once LB Pharma surpassed the obstacle.
    (Cohen Aff. ¶ 59.)
13. Initially, Defendants aggressively pressed Pursuit to invest new extra-contractual
    capital to support legal fees and KrunchCash’s operational expenses—including compensation to
    Hackman—as the Default Actions progressed. (Ex. 2 at 487:9–18.)
14. Through these discussions, Defendants divulged that there were in fact (at least)
    three investors—Pursuit, Signal Funding LLC (“Signal”), and KrunchCash (purportedly using
    KrunchCash’s capital)—that had invested alongside one another into the Resnick Advances.
    (Ex. 21 at 158:15–161:19; Ex. 24 (Email Hackman to Pursuit 4/1/2020) (“As discussed, there are
    3 investors who have provided funding to the Resnicks, and 2 investors who have provided funding
    to LB Pharma.”).) Hackman insisted that each of Pursuit and Signal contribute additional capital
    to support the Default Actions, falsely stating that the other investor had already funded. (Ex. 21
    at 216:17-217:10; Ex. 24.)
15. This was a red flag. Neither investor knew that the other had invested in the same
    Advances. (Ex. 21 at 90:9-15, 109:18-112:9, 158:15–161:19, 151:23–152:24, 114:10–13, 78:4–9;
    Cohen Aff. ¶¶ 61-65.) Pursuit and Signal each sought clarification as to how proceeds from the
    Advances and/or Default Actions would be reconciled and distributed—as between three intercreditors—were they to be received. (Ex. 27, Ex. 21 at 124:11-125:22, 206:17-210:3; 124:11-
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    125:22; Cohen Aff. ¶ 64.) Each questioned how the Advances could realistically be parsed or
    prioritized. (Id.) When Pursuit attempted to contact Signal to discuss these issues, Hackman lashed
    out and threatened to sue Pursuit based on nonsensical confidentiality concerns. (Ex. 56.) The
    revelation of three inter-creditors suggests irreconcilable competing liens over the same
    collateral—i.e., double-pledging. (Ex. 10.)
16. Defendants’ representations about the Default Actions and multiple intercreditor
    issues raised deepened red flags concerning the monies KrunchCash had funded to the Resnick
    Firms. The Pursuit Ledger stated that, immediately prior to the Resnick Firms’ purported breach,
    KrunchCash had outstanding Advances of approximately, $4.1 million (and $45 million funded
    over the Investment Period), an amount that could have reasonably substantiated the coverage
    ratios Pursuit understood to exist. (Ex. 13; Ex. 10 ¶¶ 34, 67, 97.) However, Hackman now claimed
    that Signal and Hackman had an outstanding additional $13 million to the Resnick Firms—above
    Pursuit’s amount—such that the total amount invested was $17.5 million. (Ex. 25 (Email Hackman
    to Pursuit 3/20/2020).) By all accounts, Hackman’s representation of 2-to-1 collateralization was
    false, and neither Pursuit nor Signal could have a first lien to the same receivables.
17. Likewise, contrary to Defendants’ representation that Pursuit was the only investor
    in LB Pharma, Hackman also divulged that there was an additional investor in LB Pharma, thus
    creating an irreconcilable double-pledging of the LB Pharma proceeds, as well. (Ex. 26 (Email
    Hackman to Pursuit 3/20/2020).)
18. In April 2021, Pursuit sent a demand letter, seeking to satisfy the foregoing
    concerns, so that Pursuit could continue protecting its investment with ample guardrails. (Ex. 27
    (Ltr. Pursuit to Hackman 4/16/2021).) Defendants responded with a scathing attack. (Ex. 28 (Ltr.
    Defendants to Pursuit 5/8/2021).) Instead of answering Pursuit’s request for an accounting,
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    Defendants gaslit Pursuit. (See id.) Because neither Pursuit nor Signal had access to the
    KrunchCash bank account records—from which Hackman made and collected the Advances—
    neither investor could verify the monies funded or owed. (Ex. 21 at 139:18–140:2, 145:22–146:10,
    148:9–149:6.) Nor did Pursuit or Signal have access to the other’s Ledger showing the claims to
    which each had an interest. (Ex. 1 at 272:24–273:8.)
19. Defendants became increasingly aggressive. After originally explaining that to
    Pursuit that the Resnick Firms and LB Pharma owed and had stolen millions—and that Pursuit
    should invest to protect such investment—Defendants threatened to scuttle the Default Actions in
    bad faith if Pursuit did not capitulate. (Ex. 20; Ex. 24; Ex. 26; Ex. 30; Ex. 25.)
20. As Pursuit pressed, Pursuit learned that Defendants had been collecting and
    intercepting receivables in which Pursuit had an interest. Defendants refused to turn over
    approximately $270,000 from the BH Advance (Ex. 1 at 258:10–268:25, Ex. 31 (Ltr. to Pursuit
    1/11/2022)) and refused to pay $275,000 indisputably owed on unrelated Advances. (Ex. 18.)
    Defendants admitted Hackman had collected monies throughout the Default Actions, including
    approximately $700,0003 by intercepting funds from an LB Pharma insurance payor (EPIC) and
    approximately $2.5 million in additional collections from the Resnick Firms, but Hackman refused
    to fully pay over such funds to Pursuit. (Ex. 32 (Payment EPIQ to KrunchCash 1/16/2020).)
    Instead, Defendants began claiming that Pursuit waived its right to any proceeds based on their
    refusal to blindly fund more monies to Defendants. (See Ex. 1 at 99:5–100:23.)
    3 Upon learning that KrunchCash had intercepted these funds, Pursuit was able to negotiate a
    partial repayment from the $700,000 intercepted from EPIC. (Cohen Aff. ¶ 75.)
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21. Ultimately, Hackman cut off Pursuit’s and Signal’s access to the shared cloud
    accounts, the Ledgers, and the accounts to each investor’s dedicated entity (KC PCRD or KC SF).
    (Ex. 21 at 33:3–35:22, 137:6–139:17, Cohen Aff. ¶¶ 77-78.)
    E. Rogers’ Early Identification of Churning, Double-Pledging, and Siphoning of Funds
    to KC CA
22. Early in this action, Pursuit and counsel engaged Graham Rogers of Eisner
    Advisors Group, LLC (“Rogers”) to examine Defendants’ records. (Doc. 91.)
23. Rogers analyzed available data, including the Pursuit Ledger and the ledger that
    Defendants provided to Signal (the “Signal Ledger”), which Signal produced in discovery. (Ex. 10
    ¶¶ 42, Ex. 34 (Signal Ledger); see Ex. 21 at 125:23-126:21 (authenticating Signal Ledger).) Rogers
    observed substantial overlap between the claims listed on the Pursuit and Signal Ledgers,
    indicative of churning and double pledging. (See id. ¶¶ 121-125, 147-164.) Specifically, there was
    a pattern wherein:
    First, KrunchCash sold proceeds from one Advance to Pursuit and
    reflected the principal and “Use Fee” charged to the Resnick Firm
    on the Pursuit Ledger. For example, the Pursuit Ledger would reflect
    an $800 Advance plus a $192 minimum repayment amount, which
    included the embedded (24%) “Use Fee.”
    Second, KrunchCash would sell that claim from the Pursuit Ledger
    to the Signal Ledger and reflect the Pursuit Ledger as paid off in the
    “collected” column. This gave Pursuit the impression that a claim
    was successfully repaid by the Resnick Firm and triggered
    KrunchCash’s entitlement to 50% of profit share. But, in fact, the
    claim was being sold from one ledger to the other without any actual
    cash flow from the Resnick Firm.
    In this step, the Signal Ledger would reflect an artificially increased
    Advance amount above the $992 (e.g. $1,000) although, as is now
    clear, there is no evidence that additional monies were funded to the
    Resnick Firm. The Signal Ledger would then reflect a minimum
    repayment amount that embedded an additional 24% “Use Fee”
    (e.g. $1,240) supposedly owed by the Resnick Firms.
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    Third, KrunchCash would then engage in a third similar transaction
    following the pattern above, reflecting the same false resolution of
    the claim on Signal’s Ledger, and a corresponding artificial increase
    in lending basis to the Resnick Firm as the claim was transferred to
    Pursuit’s Ledger as a post-settlement Advance. As discussed below,
    this third transaction often occurred after the underlying personal
    injury lawsuit had resolved.
    (Id. ¶¶ 123-124.)
24. The Court granted Pursuit’s motion to compel access to KrunchCash’s and KC
    PCRD’s records at First Citizens Bank. (Doc. 115.)
25. Rogers’ early analysis of those records indicated that Defendants had
    surreptitiously transferred over $5 million to KC CA, another Hackman entity. (Doc. 214.)
    Hackman resisted production of the KC CA records, but explained that he was entitled to use such
    proceeds because such account was a repository for his profits. (Ex. 33 (KC CA Interrogatory
    R&O 7/31/2023); Ex. 1 at 76:22–79:21.) Pursuit ultimately obtained such records, which Rogers
    then analyzed.
    F. Rogers’ Final Report Demonstrates Fraud
26. In May 2025, Rogers submitted his final report. (See Ex. 10.) In addition to
    analyzing the KrunchCash Entities’ bank statements and the Ledgers, Rogers analyzed “Settlement
    Sheets” shared by the Resnick Firms with Hackman which showed each law client’s settlement,
    date of accident, date of resolution, and the distribution proceeds, which Pursuit obtained in
    litigation. (See id. ¶¶ 42, Exs. 35-1–35-7 (Bank Statements), Ex. 36-1–36-5 (Compilation of
    Settlement Sheets).) Rogers conducted (1) a “Transaction Reconstruction” to normalize and
    analyze the bank statements, (2) a “Forensic Analysis” to determine whether Defendants’ data met
    forensic patterns of a Ponzi scheme, false entries, churning, double-pledging, and other fraud, and
    (3) calculations of damages. (See id. ¶¶ 45-100, 111-189, 190-198.)
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    G. The Transaction Reconstruction Demonstrates Commingling, Misappropriation,
    Use of Investor Funds for Personal Purposes, Missing Monies for Advances, and
    that New Investors’ Monies were Used to Satisfy Debts to Previous Investors
27. In the Transaction Reconstruction, Rogers analyzed bank accounts in the name of
    KrunchCash, KC PCRD, KC CA, and KC SF Fund LLC (“KC SF,” the entity Hackman devised
    for Signal). (See id. ¶¶ 47-59.) Hackman confirmed that no bank accounts other than those
    analyzed by Rogers, including the KrunchCash cash management account, were used to fund
    advances sent to LB Pharma or the Maryland Recipients and that all relevant funds were tracked
    through KC PCRD’s bank statements and the KrunchCash cash management account statements.
    (Ex. 1 (KC CPRD Dep. 7/17/2024) at 347:18–348:10.)
    i. Investor Funds – Inflows and Outflow
28. Rogers determined that three investors—Pursuit, Signal, and 1939 Capital, LLC
    (“1939”)—invested during the “Investment Period.” (See id. ¶¶ 61-64.) Collectively, those
    investors funded $14.65 million into the KrunchCash Entities, and $5.11 million was returned to
    investors, for a net of $9.536 million invested. (Id. ¶¶ 62-63.) Additionally, as of the date of the
    Amended IFA, Pursuit had a balance of $2.8 million and, one month prior, Signal invested $1.48
    million. (See id. ¶¶ 63.) Thus, there was nearly $14 million of net new capital injected into the
    KrunchCash Entities during the Investment Period. (See id.)
    ii. Payments to Previous Investors
29. During the same period, in addition to remitting approximately $5.11 million to
    present investors, the KrunchCash Entities remitted several million dollars to at least three prior
    investors. (See id. ¶¶ 65-66.)4
    4 Hackman repaid in excess of $5 million to prior investors during and immediately prior to the
    Investment Period. (Ex. 10 ¶ 65, n.56.) Like Pursuit, Hackman owes millions in unpaid
    receivables and cut off transparency. (E.g., Ex. 54 (Email with Xynergy 1/14/2025).)
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    iii. Commingling/Transfer of Investor Funds
30. Rogers determined that although Pursuit, Signal, and 1939 had its own Hackmanowned entity—KC PCRD, KC SF, and KC 1939—Hackman commingled the vast majority of
    monies in the account in the name of KrunchCash, and not in the investor entities. (See id. ¶¶ 67-
    72.) Monies were momentarily moved to the special-entity account (KC PCRD, in the case of
    Pursuit)—to give the illusion that of repayments and profits—but those monies did not correspond
    to actual repayments and Hackman immediately transferred such funds back to the KrunchCash
    account. (See id.)
    iv. Misappropriation of Investor Funds
31. Rogers determined that Defendants used investor funding for non-Advance
    purposes. (See id. ¶¶ 73-88.) The Amended IFA provides that Pursuit’s monies were only to
    “provide Advances,” (Ex. 9 § 2, 5, 6), that Defendants’ compensation was the 50% profit-split (id.
    § 5-6), and that the “Servicing Fee” was “zero.” (Id. § 4.) Thus, the only monies legitimately
    available to fund Defendants’ operations were profit-shares from Advances or Defendants’ own
    capital.
32. Rogers analyzed (1) the amounts Defendants deployed on uses other than
    Advances, such as non-Advance overhead of KrunchCash or Hackman’s personal expenses, and
    (2) compared those figures to potential legitimate sources of funds. (Ex. 10 ¶¶ 76-77.)
33. Legitimate sources of capital include legitimate profit-shares from Advances and
    independent retained capital. (Id. ¶¶ 80-81.) The cash across the KrunchCash Entities as of the
    Amended IFA date was $1.1 million, which Rogers conservatively assumed to be the maximum
    retained earnings (although there is evidence that there were no retained earnings at all). (See id.
    ¶¶ 81.)
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34. As for Advance profits, during the Investment Period, there was a net outflow of
    $1.62 million from the KrunchCash Entities to the Maryland Recipients and a net outflow of
    $4.947 million across all Advances; thus there were no cash profits. (See id. ¶¶ 83.) As a different
    measure, as a check, Rogers performed a similar calculation of alleged profits by examining the
    profit-shares as claimed on the Ledgers, assuming for purpose of the analysis that such Ledgers
    accurately reflected profits (though they do not). (See id. ¶¶ 84-87.) Under both calculations, there
    were insufficient legitimate sources—retained capital and profits—to fund Defendants’ expenses
    incurred during that period. (See id.) Accordingly, Rogers concludes that, because there are
    insufficient legitimate sources to support Hackman’s non-Advance spending, but over $14 million
    of new capital received from investors during the same time period, Defendants misappropriated
    Pursuit, Signal, and 1939 investor funds for such non-Advance uses. (See id. ¶¶ 87-88.)
    v. Use of Funds for Personal Purposes
35. Rogers further demonstrated how Defendants misused investors’ capital. (See id.
    ¶¶ 89-94.) From the Investment Period onward, Defendants spent over $2.4 million on nonAdvance business expenses and an additional $3.945 million on personal expenses. (Id. ¶¶ 91, 77.)
    Notable amounts included over $1.8 million to American Express, payments to prior KrunchCash
    investors, nearly $1 million to Hackman’s asset protection attorney (Kahan & Kligler LLP
    (“K&K”)), private tuition for Hackman’s children, and payments for Porsche, BMW, and Volvo.
    (See id. ¶¶ 91.) Hackman admitted that these were personal expenses. (Ex. 6 at 45:2–49:18.)
    Notably, Hackman siphoned $650,000 to K&K on April 23, 2021—seven days after Pursuit sent
    its initial attorney letter demanding transparency into the Advances. (Ex. 6 at 133:15–145:4, Ex.
    27, Ex. 37 (Bank Excerpts 4/23/2021), see also Ex. 6 at 3:21; 134:1-137:24.)
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    vi. Missing Monies for Advances
36. Rogers next analyzed whether and to what extent Defendants had under-funded
    Advances. (See id. ¶¶ 95-101.) The Pursuit and Signal Ledgers indicate $51.7 million funded to
    the Resnick Firms and $43.2 million collected from those entities, i.e., $8.49 million net outflow.
    (See id. ¶¶ 97.)5 Hackman represented that such monies were being funded to the Recipients for
    Advances. (Ex. 21 at 61:4–62:3, 111:21–112:9.) And Hackman represented that the Resnick Firms
    had received, and stolen, far more money than repaid. (Ex. 21 at 202:6-18, Ex. 1 at 329:4–330:13.)
37. The bank records, however, indicate that only $6.8 million—not $51.7 million—
    was funded to the Maryland Recipients. (See id. ¶¶ 99.) The records also indicate that, contrary to
    Hackman’s statements, Jonathan Resnick had repaid more capital than he received. (See id., (Ex.
    21 at 202:6–18.) Thus, Hackman overstated—by many multiples—the cash funded to the
    Maryland Firms and caused investors to invest capital never used for Advances. (See id. ¶¶ 101.)
    vii. Sources of Payments to Investors
38. Finally, Rogers analyzed whether funding invested during the Investment Period
    from Pursuit, Signal, and 1939 was used to repay previous and current KrunchCash investors. (See
    id. ¶¶ 102-108.) Rogers concluded there were insufficient legitimate sources of funds—profits or
    unrelated capital—to repay investors from the KrunchCash Entities bank accounts. (See id.) Thus,
    Hackman necessarily used investor capital—not profits—to repay investors. (See id.)
    H. The Forensic Analysis Demonstrates Several Varieties of Fraud
39. Rogers also performed a forensic analysis. (See id. ¶¶ 111-189.)
    5 Such amounts are conservative because they do not include 1939’s investment. (See id.)
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    i. The KrunchCash Entities’ Records Meet the Red Flags of a Ponzi Scheme
40. Rogers explained that there are forensic definitions of a Ponzi scheme promulgated
    by The Fraud Examiner Manual, 2020 U.S. Edition (the “Fraud Examiners Manual”) and by the
    Securities and Exchange Commission (SEC). (See id. ¶¶ 112-120.) A Ponzi scheme is defined as:
    A Ponzi scheme is generally defined as an illegal business practice
    in which new investors’ money is used to make payments to earlier
    investors The investment opportunity is typically presented with the
    promise of uncommonly high returns. Everyone involved in
    promoting the scheme pretends to represent a legitimate
    organization, but little or no commercial activity takes place. The
    Ponzi scheme usually unravels either when the operators keep all of
    the proceeds for themselves or when the number of new investors
    declines and dividends cannot be paid to investors. These scheme
    usually run for a short period of time (e.g., one or two years),
    although some Ponzi scheme had flourished for a decade or more.
    In accounting terms, money paid to Ponzi investors is described as
    income, but it is actually distribution of capital. Instead of receiving
    investment profits, investors receive cash reserves.
    (Id. ¶ 116 (citing the Fraud Examiners Manual §1.336).)
41. The Fraud Examiners Manual contains a test for “red flags” of a Ponzi scheme,
    which Rogers opined were met: (1) 48% annualized returns “[s]ounds too good to be true,” (2) the
    Ledgers indicating consistent repayment of claims constitute “[p]romises of low risk or high
    returns,” (3) “[p]ressure to reinvest” indicated by Pursuit’s consistent reinvestment into alleged
    new deployments into Advances, (4) litigation funding is generally considered a “[c]omplex
    trading strateg[y]”, (5) there is “[l]ack of transparency or access” because Pursuit did not have
    access to the end-Recipients, the lawsuits, or the KrunchCash bank records, and (6) Hackman’s
    complete dominion over the entities constituted “[l]ack of separation of duties[.]” (Id. ¶ 117-118.)
42. Most significantly, the fact that “(1) investor funds are used to pay earlier investors
    and (2) lack of profits requires increased investor funds,” as discussed above, warrants the
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    conclusion that Defendants met the forensic accounting definition of a Ponzi scheme. (See id. ¶¶
    119-120.)
    ii. The KrunchCash Entities’ Records Indicate False Entries, Churning, and
    Double-Pledging
43. Rogers also continued analyzing the Ledgers, Settlement Sheets, and other data to
    diagnose fraud. (Id. ¶¶ 121-172.) He identified three noteworthy fraudulent patterns:
44. First, in comparing the Pursuit and Signal Ledgers, Rogers observed that certain
    names existed on each Ledger in near-identical names and during the same periods. (See id. ¶¶
    126-146.) For example, “Jamshidy, Shiraz” was on the Pursuit Ledger, but “Jamshidy, Shirraz” –
    the same name, but with an extra “r” – was on the Signal Ledger. (See id.) Elsewhere, the two
    ledgers contained the same name, but inverted a hyphenated last name (e.g., “Whitfield-Welborn”
    versus “Welborn-Whitfield”). (See id. ¶¶ 130.) Rogers thus tested the data for entries with 95%
    (but less than 100%) similarity, i.e., “fuzzy” entries. (See id.) Rogers identified 866 fuzzy entries,
    and concluded such entries were significant and not random because they were concentrated on
    seven days. (See id ¶¶ 137.) Because KrunchCash could not have made two advances secured by
    the same client, it necessarily means that Hackman created false entries within the Ledgers. (See
    id. ¶¶ 145-146 (citing the Fraud Examiners Manual § 19.05).)
45. Second, Rogers continued his analysis of apparent “churning” of claims, wherein
    Hackman sold claims back-and-forth between the Pursuit and Signal Ledgers. (See id. ¶¶ 121-125,
    147-164.) “Churning” is defined as:
    … the excessive trading of a customer account to generate
    commissions while disregarding the customer’s interests.
    Specifically, churning occurs when an investment professional
    excessively trades an account for the purpose of increasing their
    commissions instead of furthering the customer’s investment goals.
    (Id. ¶ 147 (citing the Fraud Examiners’ Manual § 2.561).)
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46. Per the Fraud Examiners’ Manual, churning is determined by two metrics:
    “turnover” and “cost-to-equity” ratios. (Id. ¶¶ 152.) Both are met. 2,749 individual names appeared
    on both Ledgers, with approximately half overlapping simultaneously. (See id. ¶¶ 153.) As a result
    of Defendants’ selling collateral back-and-forth, the investors paid multiple fees to Hackman
    despite there being no economic activity between KrunchCash and the end-Recipient—i.e., no
    additional cash was paid to the firm. (See id. ¶¶ 153-156.) The “turnover” was extremely high.
    (See id.)
47. The “cost-to-equity” was even more staggering. (See id. ¶¶ 157-164.) Cost-toequity measures the ratio of cost (fees to Hackman) versus equity (the value from the claims). (See
    id.) Rogers measured this in two ways. For one, KrunchCash, in fact, funded $6.8 million to the
    Resnick Firms and the total repaid was $5.2 million, i.e., a $1.62 million loss during the Investment
    Period. (See id. ¶¶ 158.) Defendants’ profit-share—created through Hackman’s selling claims
    back-and-forth—however, was over $2 million for Pursuit alone (and additional including Signal).
    (Id. ¶¶ 159.) Thus, the cost-to-equity ratio on these metrics was $2 million versus a $1.2 million
    loss, i.e., a cost-to-equity of infinity. (See id. ¶¶ 161-162.)
48. More conservatively, Rogers measured the same $2 million profits against the $6.8
    deployed to the Resnick Firms or the $5.2 million collected from the Resnick Firms. (See id. ¶¶
    161-162.) This resulted in a cost-to-equity ratio of 30.44% or 39.27%. (Id.) Given that Defendants’
    profit-share was to be set at 12% (calculated as half of one 24% “Use Fee”) and payable only if
    the investment succeeded, a cost-to-equity ratio of 30.44%–39.27% is nonsensical. (See id. ¶¶ 162-
    164.) Thus, Defendants’ behavior meets the forensic test of churning. (See id.)
49. Third, Rogers’ fraud examination identified fraudulent dates that could not have
    existed. (See id. ¶¶ 165-172.) The Ledgers that Hackman presented indicate a date a claim—an
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    injury lawsuit—began and ended. (See id.) Rogers compared the data in the Ledgers to the date in
    the Settlement Sheets—i.e., the actual data—and determined that the beginning and end dates in
    the Ledgers overstated that duration and existence of claims. (See id. ¶¶ 170-172.)
50. For instance, of the claims where Rogers had complete data, over 70% of such
    entries reflected start dates on the Pursuit or Signal Ledger that predated the date of accident
    reflected on the Settlement Sheets. (See id. ¶¶ 170.) This is impossible. In the case of Perry Resnick,
    the start date on Hackman’s Ledgers sometimes pre-dated Perry Resnick’s formation of his law
    firm or admittance to the practice of law. (Ex. 23 at 85:16–90:16 (discussing example of “claim”
    on Pursuit Ledger dated March 1, 2016, which was prior to Perry Resnick’s practice of law or
    formation of his law firm), Ex. 52 (Email Hackman to Perry Resnick 6/27/2019), see Ex. 23 at
    85:16-86:7).) This too was impossible. (Ex. 23 at 13:15-15:20, 136:10-137:25.)
51. The same is true for the end of the end-date of the claim. In numerous instances,
    Hackman reflected funded dates on Pursuit’s Ledger after the date—as reflected on the Settlement
    Sheet—that the lawsuit as resolved and paid. (See Ex. 10 ¶¶ 165-172; Ex. 23 at 129:9–130:5,
    41:14–23, Ex. 22 at 92:23–93:5, Ex. 36-1–36-5.) Jonathan and Perry Resnick testified this was
    impossible, as well. (See id.)
52. Hackman’s actions (i) inflated claim values, (ii) created multiple false claims that
    did not reflect fundings to the Resnick Firms, and (iii) created irreconcilable double-pledging
    concerns.6
    6 While not pertinent to this action, Hackman’s falsely inflating the Resnicks’ debts better explains
    Hackman’s fraud against the Resnick Firms and in the Default Actions. There is evidence that, as
    part of Hackman’s coverup, Hackman (i) created and submitted false ledgers with false
    information as to the monies funded to the Resnick Firms, (ii) fraudulently backdated contracts
    with the Resnick Firms, and (iii) for the claims reflected as being handled by Perry Resnick,
    reflected claims that predated Perry’s formation of his law firm or admittance to the practice of
    law, or after Perry stopped practicing law because he was incapacitated and too ill to practice law
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53. The process at the Maryland Law Firms was to obtain an advance from KrunchCash
    for every new case, resulting in all incoming cases being routinely encumbered. (Ex. 57, (Norfolk
    Dep. 11/22/2024) at 88:20-21, 89:4-5, 111:11.)
    iii. Defendants Extracted Excess Capital from Pursuit Based on False LB Pharma
    Ledger Entries
54. Finally, Rogers concluded that Hackman extracted millions in extra capital from
    Pursuit based on false data of the amounts deployed to LB Pharma. (See id ¶¶ 173-189.) Pursuit
    reinvested existing capital to LB Pharma and also invested $1.5 million and $3.8 million in cash
    in July and October 2018, respectively. (See id. ¶¶ 177.) The Ledger indicates that full tranches
    funded to LB Pharma was successfully repaid on certain dates, that Hackman was due a fee, and
    that new capital was needed to be deployed into new tranches. (See id. ¶¶ 175-178.)
55. In fact, the actual LB Pharma transactions, indicate that what were reflected cashflows on the Ledgers were not so. (See id. ¶¶ 179-181.) In the Default Actions, Hackman admitted
    that LB Pharma did not actually fully repay tranches; rather, from the very first tranche, there were
    shortfalls that Defendants resolved by “rolling forward” prior unsuccessful tranches into new
    tranches. (See id.) Hackman, however, reflected the old tranches as repaid and the new tranches as
    requiring new cash capital. (See id.)
56. Rogers explained that, economically, Hackman drew capital from Pursuit that was
    never actually fund to LB Pharma. (See id. ¶¶ 181-183.) Rogers quantified the overfunding, which
    included $621,071, $925,185, $1.165 million, and over $3 million in each of August, September,
    October, and December 2018, respectively. (Id. ¶ 183.) These transactions created an everin February/March 2019. (Ex. 23 at 128:9–130:5, 41:14–23, 143:8–23, 139:5–7, 85:16–90:16, Ex.
    22 at 145:18–148:4, Ex. 21 at 172:21–19.)
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    increasing difference between the cash Pursuit dedicated versus the monies funded; with Hackman
    thus collecting millions from Pursuit it did not use as represented. (See id.)
57. The October 2018 funding is particularly notable. (See id. ¶¶ 185-189.) The Ledger
    indicates that approximately $4 million was to be funded to LB Pharma in October, and that Pursuit
    wired $3.8 million in new capital for such purpose. (See id. ¶ 185.) In fact, however, only $2.127
    million was funded to LB Pharma. (Id.) Hackman admitted that $4 million was not sent to LB
    Pharma. (Ex. 1 at 335:23-336:4 (“We didn’t actually send $4 million.”).)
58. October 2018 was an important month. As can now be deciphered, Pursuit infused
    $3.8 million within days of Defendants’ payment of a substantial sum to an outgoing investor. (Ex.
    1 at 146:16–153:23 (Q: That was the final settlement payment that KrunchCash owed to Coach
    house; right? A: Uh-huh.), Ex. 39 (Bank Excerpts 10/12/2018); Ex. 6 at 151:20-152:22
    (authenticating Exhibit 39).)
59. Also in October 2018, Hackman attempted to re-sell LB Pharma receivables to
    Signal for $50 million, which Signal declined. (Ex. 21 at 219:20–232:6, Ex. 40 (Term Sheet to
    Signal 11/2018); Ex. 21 at 229:4-229:20 (authenticating Exhibit 40); Ex. 41 (Email to Signal
    4/19/2019); Ex. 21 at 234:10-235:9 (authenticating Exhibit 41); Ex. 42 (Spreadsheet to Signal
    4/2019); Ex. 21 at 235:10-236:14 (authenticating Exhibit 42); Ex. 1 at 190:1–216:22, Ex. 43
    (Email to Signal 10/10/2018); Ex. 4 at 190:10-24 (authenticating Exhibit 43); Ex. 44 (Email to
    Signal 12/17/2018); Ex. 4 at 195:8-197:19 (authenticating Exhibit 44); Ex. 45 (Spreadsheet to
    Signal 12/17/2018); Ex. 4 at 195:8-197:19 (authenticating Exhibit 45); Ex. 46 (Email to Signal
    1/8/2019); Ex. 4 at 198:21-199:6 (authenticating Exhibit 46); Ex. 47 (Email to Signal 1/23/2019);
    Ex. 4 at 202:16-203:6 (authenticating Exhibit 47); Ex. 48 (Term Sheet to Signal 12/2018); Ex. 4
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    at 211:12-23 (authenticating Exhibit 48).) As is now clear, Hackman’s Ponzi scheme crashed when
    Hackman was unable to attract new capital to support the false profits. (Ex. 10 ¶¶ 112-120.)
    I. Defendants Waive or Decline to Produce Categories of Information Defendants
    Have No Financial Statements, and Refuse to Provide Tax Returns
    a. Defendants Have No Financial Statements and Refuse Tax Returns
60. Defendants have vehemently opposed any inquiry into the finances of the
    KrunchEntities. (Ex. 5 at 44:25–54:25 (Hackman “refus[ing] to answer the question” concerning
    finances, claiming it was none of Pursuit’s business).)
61. In April 2024, Pursuit moved to compel production of the KrunchCash Entities’ tax
    returns. (Doc. 421.) The Court denied Pursuit’s request without prejudice, but acknowledged the
    possibility that tax returns might be the only available records reflecting Defendants’ financial
    performance. (Doc. 511 at 12:05–12, 57:06–15.)
62. In deposition, Defendants confirmed they did not maintain balance sheets, profitand-loss statements, general ledgers, or other contemporaneous financial records against which to
    test the veracity of the “Ledgers.” (Ex. 5 at 43:12–24, 50:6–53:23.) Pursuit renewed its request for
    the tax returns, which the Court granted. (Doc. 645.)
63. When Defendants numerous times refused to comply (Doc. 693, 733), Pursuit
    moved for contempt. (Doc. 740.) The Court granted that motion and struck Defendants’ answer
    with an opportunity to cure were they to produce the entity tax returns. (Doc. 749.)
64. Following such order, Defendants produced redacted excerpts of tax returns for an
    unknown entity for 2018-2020. (Ex. 49–51 (2018 Schedule 1120 (Unknown Entity), 2019
    Schedule 1120 (Unknown Entity), 2020 Schedule 1120 (Unknown Entity).) Though Defendants
    redacted the filer of such returns, the Schedule G indicates that the filer was owned by—and thus
    cannot be—KrunchCash. (Ex. 49–51; Ex. 55 (Hackman Dep. 7/31/2025) at 108:24-109:18, 154:3-
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    16, 170:25-171:25 (authenticating 2018, 2019 and 2020 Schedule 1120).). Defendants explained
    that that Defendants did not have the KrunchCash Entities’ returns in their possession. (Doc. 793
    (Defendants “produc[ed] what they represent are the tax returns in their possession”).) The Court
    found that Defendants purged the contempt. (Doc. 793.)
65. The redacted filer had, in each of 2018, 2019, and 2020, respectively, (1) losses of
    $378,146, $381,621, and $856,160, (2) assets of $1,000, and (3) negative retained earnings of
    $137,324, $570,431, and $1.8 million (Ex. 49–51.)
    b. Defendants Waive the Right to Present Evidence on the NFL Profits
66. In December 2024, Defendants moved to quash a subpoena Pursuit served upon
    American Express to obtain records concerning Hackman’s millions in expenses. (Doc. 626.)
    Pursuit presented an affidavit from Rogers explaining that, as discussed above, there is a multimillion-dollar gap between Defendants’ expenses and legitimate sources—profits and capital—
    such that Hackman used investor money for expenses. (Doc. 634 ¶¶ 8-10.)
67. On reply, Hackman maintained his excuse—that KC CA was a repository for
    profits—and now attested, specifically, that:
    In 2015, 2016 & 2017, unrelated to any investment funding provided
    by [Pursuit], KrunchCash advanced funds to NFL players in the
    NFL Class Concussion Litigation along with other investments. In
    2017, KrunchCash began receiving profit distribution through May
    2021, KrunchCash has received over $4.5M in distributed profits,
    which was deposited into KC CA.
    (Doc. 639 ¶ 7.)
68. Days later, Pursuit deposed Hackman, as representative of KC CA. Hackman was
    unable to reconcile his claim of profits from the NFL Advances, testified that he could not recall
    details of the purported NFL returns, and stated that to provide information concerning NFL
    Advances that “I would have to go back into my record, for the umpteen millionth time.” (Ex. 1 at
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    64:18–102:4, 89:18–23.) Hackman did testify, however, that he maintained “spreadsheets” with
    respect to the NFL Advances. (Id. at 69:2–8, 72:17–24, 74:18–75:15.)
69. In an attempt to understand Defendants’ apparent defense, Pursuit thus demanded
    such spreadsheets and Defendants moved to quash. (Doc. 655.) At argument, Defendants
    maintained their objection. (Doc. 735.) The Court gave Defendants the option to produce the
    spreadsheets or waive the right to present evidence:
    The Court: Let’s be clear, right? They are objecting to producing
    this information [the NFL ledgers].
    Mr. Fried [counsel for Pursuit]: Yes.
    The Court: That means that if they try to introduce it at trial I will
    exclude it.
    Mr. Fried: If Your Honor is willing to make that ruling now?
    The Court: Well, I assume that Ms. Roy [counsel for Defendants]
    would understand that. Maybe I should ask you [to Ms. Roy]. I
    always find this interesting dynamic when people are asking for
    production of things. If they don’t produce it, and they object to
    producing it, they can’t use it.
    So, Ms. Roy, are you comfortable with the idea, on the record, that,
    you know, when we get to trial or even Summary Judgment, if your
    client wants to bring in evidence of some of this NFL income or the
    like, I think I would be correct to prohibit that from coming in if you
    have resisted discovery on it.
    Ms. Roy: That’s correct. I believe that the NFL records would not
    in any way effect the outcome of this litigation or my client’s claims.
    The Court: Despite the fact that there is going to be an expert report
    coming in, presumably, purporting to establish that there was no
    apparent source, legitimate source for some of these expenditures,
    your client might, as some point, want to say: Well, here is the
    source and if you blocked discovery into them, I think you may be
    precluded from doing that.
    Ms. Roy: Again, within the contract Pursuit has already
    acknowledged that KrunchCash has had other businesses and other
    investors.
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    The Court: I get all that. I’m just saying: This is the real world. We
    are at trial. You are about to ask Mr. Hackman on the stand to
    explain what the source was for his, you know, using “X” funds to
    do “Y” thing and if he is going to testify about this topic, you know,
    whether it’s the NFL contracts or whatever, I might well preclude
    him from doing that based on the position taken by Defendant that
    this is all irrelevant.
    It’s a two-way swinging door; right? It’s either in or it’s out. It
    sounds to me like the Plaintiffs are only seeking it to potentially
    respond to an affirmative argument that the defendant might make.
    Before I make my decision on all of that, I just want to make sure
    that you are aware that, at least presumptively, if I agree with the
    Defendant on this and preclude them from getting it, that means I
    will hold Defendant to the argument that the NFL revenues are
    irrelevant, including at trial.
    Ms. Roy: That’s correct.
    The Court: Okay.
    Mr. Fried: Okay, Your Honor. I would just ask that that winds up in
    an Order somewhere.
    The Court: That’s on the record.
    (Doc. 735 at 30:4-32:11.) The Court so-ordered the stipulation on the record. (Doc. 717.)
    J. Defendants Waive any Expert Report
70. On March 19, 2025, the Court so-ordered a final discovery stipulation. (Doc. 728.)
    Whereas Pursuit agreed to a deadline to submit its expert report, which it did, “Defendants
    waive[d] any expert report.” (Id. ¶ 7.)7
71. Hackman testified repeatedly that he does not practice accounting or provide
    accounting for the KrunchCash Entities. (Ex. 1 at 142:5–143 (“I am not a tax accountant”), 229:10-
    17 (Q: And you never practiced [accounting] a day in your life? A: No.), 230:24-231:4 (no
    7 Hackman testified that his counsel previously engaged an expert, but that such expert was
    disengaged without any work product. (Ex. 6 at 44:4–23.)
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    accounting certification or professional licenses), 231:17–20 (Q: Would you consider the work
    that you did for KrunchCash practicing any accounting? A: No.).)
    K. Hackman is the Alter Ego of the KrunchCash Entities
72. Each of the KrunchCash Entities is owned, controlled, and operated by Hackman
    without regard for corporate formalities and in a manner commingled with Hackman’s personal
    finances. (See Ex. 1 (KC PCRD Dep. 7/17/2024) at 21:23–22:12; Ex. 2 (KC PCRD Dep. 1/8/2025)
    at 10:1–19; Ex. 5 (Hackman Dep.) at 4:15-4:22; Ex. 6 (KC CA Dep. 1/17/2025) at 10:2–11:13.)
73. None of the KrunchCash Entities has an operating agreement, financial statement
    or written policy. (Ex. 1 at 23:13–24:8.) Hackman is the manager of each KrunchCash Entity. (See
    id. at 24:6–25:25, 47:6–21.) There are no written agreements among any of the Defendants. (See
    id. at 25:2–26:4, 205:22–207:24.) KC PCRD never issued 1099s or K-1s to another Defendant or
    to Pursuit. (Id. at 138:17–141:19.) KC PCRD’s sole member was KrunchCash, and Hackman has
    stated he is sole member of KrunchCash. (See id. at 139:2–25.)
74. Hackman claims that the KrunchCash Entities’ finances were consolidated in one
    tax return, which was consolidated with Hackman’s personal returns. (See id. at 142:13–147:25.)
    Hackman unilaterally controls all books and records and bank accounts for the KrunchCash
    Entities. (Ex. 5 (Hackman Dep. 1/9/2025) at 8:22–9:24, 43:12–24.)
75. Hackman admitted that he makes all decisions concerning the KrunchCash Entities
    he wholly owns. (Ex. 6: 14:18-17:23 (“Is it fair to say you make all decisions concerning KC CA?
    A: It’s fair to say that. Q: You don’t answer to anybody, right, Mr. Hackman? A” I do not answer
    to anybody.”).)
76. All calculations and determinations of amounts owed to KrunchCash from the
    Maryland Recipients were controlled by Hackman, who provided the figures for repayment and
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    issued instructions regarding settlement reconciliations and spreadsheets (Ex. 57 (Norfolk Dep.
    11/22/2024) at 109:14-18, 113:15-17, 116:7-19, 117:1-19, 119:6, 120:14-15.)
77. The record is also rife with Hackman’s admissions that he did little to respect or
    observe corporate formalities. (Ex. 6: 18:24-19:25 (confirming KC CA, KC PCRD, and
    KrunchCash’s place of business is Hackman’s home).)
78. Hackman commingled all investors’ capital in the KrunchCash “cash management
    account,” (Ex. 10 ¶¶67-72) and transferred millions to KC CA for personal uses, including for his
    daughter’s high school and college tuition and payments for a family Porsche Macan and unknown
    model Volvo. (Ex. 33; Ex. 1 at 76:22–79:21; Ex. 6 at 60:4-61:20). Hackman testified that, to the
    extent the KrunchCash Entities made tax filings (which Hackman refuses to provide), they are
    “consolidated” with Hackman’s personal returns. (Ex. 1 at 142:13–147:25.)
    Dated: October 17, 2025
    New York, NY
    SLARSKEY LLC
    By: /s/Evan Fried
    Evan Fried
    767 Third Ave., 14th Floor
    New York, NY 10017
    Counsel for Plaintiff
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    NYSCEF DOC. NO. 814 RECEIVED NYSCEF: 10/17/2025
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Litigation Release No. 25688 / April 4, 2023

Securities and Exchange Commission v. Michael J. French, et al., No. 1:23-cv-01443-JPB (N.D. Ga. filed April 3, 2023)

The Securities and Exchange Commission today announced charges against Michael J. French, of Pendleton, South Carolina, and two companies controlled by him, MJF Holdings, LLC (“MJF Holdings”) and MJF Capital, LLC (“MJF Capital”), for defrauding investors and misappropriating millions in investor funds.