SEC goes after Hypur Ventures founder Christopher Galvin

The Securities and Exchange Commission filed its case against Christopher Galvin, who created an investment fund called Hypur Ventures II LP, and alleges that he misappropriated $500,000 from two investors.

The SEC alleges that Galvin took the investor’s money to pay for operating expenses for the fund even though the investors were told that Hypur Ventures would cover those costs.

The SEC also claims that Galvin told the investors that their money would be invested in cannabis-related companies. Instead, after paying for the fund’s operating expenses, Galvin transferred money to a company he owned and where he served as the chief executive officer.

While the SEC document only referred to the company as “Company X”, Galvin was CEO of Hypur Inc. In 2018, he was named chairman of cannabis company Blue Line Protection Group (OTC: BLPG), which lists Daniel Allen as CEO.

The Hypur Ventures fund did not receive any shares from Galvin’s company in exchange for the money it received. Hypur Inc. was acquired by POSaBIT (OTC: POSAF) in April 2023 in a deal valued at $7.5 million.

According to the court document, Galvin created Hypur Ventures in 2019. He asked investors to sign a Private Placement Memorandum, titled “Business Overview,” a Limited Partnership Agreement, and a Subscription Agreement. The Subscription Agreement outlined the terms and conditions of the exchange of the investor’s capital for a limited partnership interest in Hypur Ventures II.

The SEC claims that Galvin either knew the documents were misleading or was negligent in not knowing. The court document states that the fund had no start-up capital to pay its overhead expenses, while the documents the investors signed said their money would only go towards investment purposes – not operating expenses.

The SEC alleges that Galvin also created the role of general partner, which was supposed to manage and operate Hypur Ventures II. Although the general partner had three other directors, Galvin, its founder and managing director, controlled both it and, by extension, Hypur Ventures II L.P.

The complaint alleges that Galvin received $400,000 in investor money and almost immediately transferred it to Company X. The remaining $50,000 was given to the general partner for personal expenses.

Galvin then met a second investor and received another $100,000 from them. The SEC claims that money was misappropriated as well.

The court document stated:

By on or about November 2019, despite the representations in the PPM, LPA, the press release, and other documents he created or caused to be created, Galvin had not invested any of the investors’ money. Hypur Ventures II, L.P. had no assets after Galvin spent or misappropriated all of the investors’ money. As a result of Galvin’s misrepresentations and fraudulent scheme, Investors A and B lost the entire amount of their investments.

The SEC wants Galvin to disgorge his ill-gotten gains, pay a civil penalty, be barred from serving as an officer of a company that has securities, and be barred from participating in securities deals.