Inside an Alleged $1.2B Ponzi Scheme That Left Investors Holding Crashed Stock

Z Squared began trading on Nasdaq in April, part of a plan to get investors out of a private-equity fund `

The SEC has alleged that Broadstreet used new investors’ money to pay inflated returns to investors in strategies that were actually unprofitable. The fund denies the charges. (Daniel Heuer/Bloomberg)

Key Points

• The SEC accused Broadstreet’s top three executives of raising $1.2 billion in a Ponzi-like scheme, which the executives categorically deny.
• Broadstreet redeemed more than 1,300 investors with Z Squared stock and is trying to redeem remaining investors with Soulpower Acquisition shares.
• The SEC asked a federal judge to appoint a receiver to take control of Broadstreet’s investments to prevent insiders from keeping cash and assets.

Two days after Z Squared began trading on Nasdaq in April, its executives rang the closing bell, joined by trader and television commentator Jon Najarian. A month later, the new stock got tapped for the FTSE Russell 2000 index.

That April debut was part of a plan to get unhappy investors out of a private-equity fund called Broadstreet and, in so doing, refute fraud charges that the Securities and Exchange Commission is pressing against Broadstreet’s leaders. In Miami’s federal court, the SEC accuses Broadstreet’s top three executives of raising $1.2 billion from more than 1,000 investors in a “Ponzi-like” scheme that promised annual returns as high as 28% from things like real estate development, small-business lending, and Dogecoin mining.

While fighting the SEC fraud charges, which they “categorically deny,” the Broadstreet executives redeemed more than 1,300 investors by giving them most of Z Squared’s stock before it started trading. Broadstreet is now trying to redeem its remaining investors with shares in Soulpower Acquisition , a New York Stock Exchange–listed blind-pool special purpose acquisition company run by a self-improvement author.

In July, Broadstreet told the Miami federal court that these shares in the two public companies were worth $3.6 billion and that investors had suffered no losses.

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Yet since their April redemption, the Broadstreet holders have seen their Z Squared shares crash more than 75%. The two stocks’ combined market value is less than $600 million. I nvestors tell the SEC that they went into Broadstreet expecting quarterly distributions of cash income. Those payouts halted last year for many investors.

“I did not want speculative stock,” said 64-year old Broadstreet investor Nikhil Patel, in a federal court declaration filed in August, after Broadstreet sued him and other investors who asked for cash instead of stock.

“I am retired and disabled,” Patel told the court. “[M]y Broadstreet investments represented a substantial portion of my retirement savings.”

Broadstreet says its investors signed releases, agreeing to everything the private-equity firm has done.

“This is a case about ultrarich investors who have now enlisted the government’s help to try to have them get their money back in an investment where they self-described themselves as wealthy risk takers,” Lorne Berkeley, a lawyer who represents Broadstreet and its executives, told Barron’s. “Broadstreet is proud of the two public company exits presented to its investors who overwhelmingly approved the exits.”

Two brothers, Joseph and Steven Baldassarra, created the Broadstreet private-equity fund in Greenville, S.C., in 2020.

In 2022, they brought in attorney David J. Feingold as Broadstreet’s CEO. In 2011, he and two co-defendants paid $18.8 million to settle—without admitting—charges by the Federal Trade Commission that the First Universal mortgage modification business deceived indebted homeowners by charging thousands of dollars in upfront fees while doing little to relieve the customers’ debts.

Apart from his SEC case, Feingold is fighting the Internal Revenue Service in a Greenville federal court, after it assessed fraud penalties and alleged that he dodged taxes on millions he got from Broadstreet affiliates.

Neither Feingold nor the Baldassarras responded to Barron’s’ questions beyond their lawyer’s statement.

Working out of a Greenville building owned by Feingold, Broadstreet salespeople recruited investors with the help of outside stockbrokers. Most of the investors’ declarations in the Miami federal court docket said they had learned of the firm through friends and family.

The firm told investors they were putting their money in any of 14 separate strategies, from home-building to crypto mining.

In a first-quarter 2024 report to investors, Broadstreet boasted that its Dogecoin mining operation was on track to double that year. “The Manager has targeted a 28% annual return,” it told investors.

The SEC started investigating Broadstreet in 2022, and in January 2025 the agency filed a sealed complaint alleging that the Broadstreet bosses used new investors’ money to pay inflated returns to those in strategies that were actually unprofitable. Two days after the SEC filed suit, a federal judge ordered Broadstreet to stop soliciting new money.

Feingold denied the charges and asked the federal judge to let Broadstreet keep raising money. He told the court in February 2025 that he ran the 14 businesses, while the Baldassarras ran the funds. Broadstreet’s real estate ventures provided thousands of jobs in the Carolinas, said Feingold, and it ran 16,000 Dogecoin mining computers in five data centers and had five more centers coming on-line.

“We have nearly $225 million worth of machines that consume 100 Megawatts of power or enough energy to power nearly 120,000 homes,” Feingold told the court. “It is a massive business.”

Dallas-based Kinjalkumar Patel, who invested in the crypto mining offering in May 2023, later told the court that Broadstreet cash payments on his investment came to a halt in March 2025. He said he and his wife had put all of their savings into Broadstreet.

That’s when Feingold and the Baldassarras began telling investors that Broadstreet would let them exit their investments for cash, or for shares in a couple of public companies.

Investors in the Dogecoin business learned the next month that they would get shares in a money-losing biotech company called Coeptis Therapeutics Holdings, as a swap for 9,800 of Broadstreet’s crypto mining computers.

SEC filings by Coeptis in June 2025 said that accounting firm CohnReznick’s partners Anthony Doughty and Jake Wright appraised the mining systems in March 2025 at a value of $660 million, or $67,378 per unit. The filings said the valuation had assumed the machines were all Antminer L9 systems when, in fact, 84% of the fleet were L7s—an older, less-powerful system.

The $660 million CohnReznick valuation led to Broadstreet investors getting 85% of the merged company’s shares when the deal went effective in April 2026. A pro forma balance sheet in the merger proxy filing showed that the Broadstreet business had carried the mining systems at only $35.3 million.

The CohnReznick partners didn’t respond to Barron’s queries about their valuation.

Nearly 700 Broadstreet investors had elected to take cash, the SEC later told a court. Broadstreet said it would distribute the cash and stock this year. When the time came in May 2026, Broadstreet took the cash option off the table, telling every investor that the fund could force them to take stock.

When it was tapped for the Russell 2000 in May, Z Squared had yet to report any financial statements. FTSE Russell told Barron’s that the information available at the time satisfied Russell’s eligibility and investibility criteria.

Z Squared’s June-quarter financial statements did appear on Aug. 13. The balance sheet carried the crypto mining fleet at $12.4 million, or $1,269 per unit.

That was less than 1/50th the value ascribed in the merger, two months before.

Z Squared CEO David Halabu told Barron’s that CohnReznick estimated the fair market value of the company’s crypto mining operations, not the cost or resale value of the machines.

A large market value is hard to see in Z Square’s only public financials. In the June period, it lost money on its Doge mining activities.

“Altcoin mining economics have deteriorated sharply with underlying token prices falling precipitously,” Halabu said. “Some miners have shut down operations entirely.”

As a new initiative, Z Squared hopes to develop data centers for artificial-intelligence computing. The crypto mining fleet isn’t suited for AI modeling, says Halabu.

Z Squared shares have plummeted to $4.54 from $18.80 since their April debut, even though company filings say it gave slugs of stock to Najarian and others, under contracts to promote the stock at the NYSE, in broadcasts, and online. Inquiries to Najarian’s investor relations business weren’t answered.

Broadstreet, meanwhile, has been working to redeem most of its remaining investors by giving them stock in Soulpower, a SPAC that said in November of last year it will merge with a business that would contribute a British Virgin Islands banking license, land and mines in places like Mexico and South Africa, and 23 properties in the Carolinas from Contender Development, a company that Feingold told the court he partly owns. Drawing on another CohnReznick appraisal, Soulpower said the resulting company would be worth over $8 billion.

“SOUL will be the most loved bank on earth,” said Soulpower CEO Justin Lafazan in that November deal announcement. He declined to discuss the Broadstreet exchange deal with Barron’s.

At the same time, Broadstreet is suing five investors who continued demanding cash instead of Soulpower stock. The firm seeks a court ruling that it can redeem them with stock. It is also suing an investor for defamation over comments she posted on X.

As Broadstreet executes its plans to rid itself of outside investors, the SEC has renewed its request for the judge to appoint a receiver who would take control of the private-equity investments. If not stopped, the agency told the court on Sept. 10, the investors will end up with locked-up shares of Z Squared and Soulpower, while Feingold, the Baldassarra brothers, and other Broadstreet insiders end up with the remaining cash and assets.

“The manager does not have the power to redeem investors with anything it wants, like bags of rocks,” said the SEC in its September court filing. “All of this is the natural result of a fund that promised and paid returns it could not afford to pay.”

Write to Bill Alpert at william.alpert@barrons.com

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