Numerous alleged improprieties at Argon Credit, possibly including fraud

Numerous alleged improprieties at Argon Credit, possibly including fraud

Just hours after Lending Times reported that Argon Credit filed for Chapter 11 bankruptcy, an anonymous source told us about improprieties at Argon Credit. According to the anonymous source, which wishes to remain confidential, Argon Credit has demonstrated a number of improprieties. Argon, allegedly according to our source, misrepresented data in due diligence for lending capital […]

Numerous alleged improprieties at Argon Credit, possibly including fraud

Just hours after Lending Times reported that Argon Credit filed for Chapter 11 bankruptcy, an anonymous source told us about improprieties at Argon Credit.

According to the anonymous source, which wishes to remain confidential, Argon Credit has demonstrated a number of improprieties. Argon, allegedly according to our source, misrepresented data in due diligence for lending capital and then used the money to buy personal items such as clothes.

Furthermore, our previous article mentioned Princeton and Fintech LLC as the main investors in Argon. We have since found out that Spartan Specialty Finance was also an investor in Argon. Details of the relationship can be found in a Master Consumer Loan Purchase Agreement dated May 1, 2015, Argon Credit lists Fintech Financial LLC as the lender of certain loans. The document can be found here. We were told that due to these improprieties the Federal Bureau of Investigation is conducting an investigation for financial fraud.

Our source also mentions that Argon Credit pledged the same loans to both Princeton Alternative Income Fund, LP and Spartan Specialty Finance I SPV, LLC. Spartan has subsequently filed for bankruptcy (document can be found here) and Princeton’s assignee, Fund Recovery Services, LLC (FRS), has filed a motion in the New York Southern Bankruptcy Court (which can be found here) to prohibit Spartan from using property FRS claims belongs to them.

Argon Credit, a provider of consumer loans, was founded in 2014. By May 2015, the company had raised more than $90 million in five rounds of funding. The Chicago Tribune reported in August 2015 that the company received $75 million in debt funding from Princeton. Arakelian left the company not long before then, The Tribune reported, but the reason for his leaving was not reported.

Both Raviv Wolfe, CEO of Argon Credit, and Jack Cook, chief operating officer of Princeton Alternative Income Fund denied commenting on this story.

It appears that these improprieties were not completely unexpected. One of the company’s founders, former Chief Operating Officer Berj Arakelian, has allegedly been previously convicted and jailed for a financial felony.

“They refused to let him go, which prevented reputable organizations from working with Argon Credit,” the source said.

 

There will be a hearing regarding FRS’s motion on December 29, 2016.

Authors:

Allen Taylor
George Popescu