A Florida family has filed a federal lawsuit accusing the operators of a $1 billion private equity fund of running a Ponzi-like scheme and then forcing investors into restricted stock they never agreed to hold. The complaint, lodged October 12, 2026, in the U.S. District Court for the Southern District of Florida, names Broad Street Global Management LLC, Broadstreet, Inc., and three individuals who allegedly controlled the fund. The case, Parbhoo et al. v. Feingold et al., No. 1:26-cv-27140, seeks treble damages, rescission, and a court-appointed receiver.
According to the filing, the Broad Street Global Fund raised more than $1 billion from over 1,000 investors, promising annual returns between 7% and 28% depending on the series. But the plaintiffs allege those returns were not generated by the underlying investments. Instead, the complaint claims, the fund used money from its merchant cash advance portfolio to pay distributions to investors across all series, regardless of what they had actually invested in. At one point, the filing asserts, "as much as 80% of those distributions" were funded this way, a structure the plaintiffs describe as "Ponzi-like."
The three individual defendants are the fund's CEO and two brothers who served as managing members. The complaint alleges they collectively extracted more than $170 million from the fund, using the money to finance "a lavish lifestyle including purchasing multiple homes, yachts, an aviation company and maintaining a private jet." In addition, the filing says the fund immediately pocketed 30% of every dollar raised—over $305 million in total—as upfront fees for five years of management services. Those fees never appeared on investor statements, the plaintiffs claim, and the fund is now pushing investors out before the five-year service period has been completed.
The exit strategy unfolded in two waves, according to the complaint. In March 2025, investors in the fund's altcoin mining series were asked to convert their holdings into restricted shares of Z Squared Inc. (ZSQR), a company formed through a merger with a money-losing biotech firm. The complaint alleges that an appraisal valued the transferred mining machines at $660 million, but 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 company's own financial statements later recorded the fleet at approximately $12.4 million, the filing says.
Then, in November 2025, all remaining investors received a binding redemption notice offering two options: cash within 180 days, or restricted stock in Soulpower Acquisition Corp. (SOUL), a Cayman Island SPAC, valued at three times their capital account. The plaintiffs chose cash. But five days before the payment deadline, the fund allegedly withdrew the cash option and informed investors they would be forced into SOUL stock—shares that could be locked up for as long as 42 months. According to the filing, approximately 687 investors had elected cash, representing about $148 million in redemption obligations. The fund allegedly needed approximately $2.45 billion in SOUL stock to redeem all investors, but only 30% of its infrastructure assets were being transferred to the SPAC. The filing alleges the operators are keeping the remaining 70%—along with hotels, auto dealerships, self-storage facilities, and other assets acquired with investor money—for themselves.
The complaint references a parallel SEC enforcement action filed January 29, 2025, which resulted in the appointment of a court monitor. That monitor reported that from January through May 2025, approximately 79.7% of the fund's incoming money came from liquidating the merchant cash advance portfolio, according to the filing. The monitor also reported that the fund's infrastructure development projects had generated only approximately $300,000 in realized profits through the end of 2024. The filing further notes that the fund's management entity was not registered as an investment advisor with the SEC, despite acting as one and exercising control over how investor money was deployed.
The plaintiffs bring 13 counts, including breach of contract, civil theft under Florida law, fraud, fraud in the inducement, breach of fiduciary duty, and federal securities violations. They are asking for compensatory and treble damages, rescission, an injunction to freeze fund assets, dissolution of the fund, and a court-appointed receiver. The family's retirement savings are tied up in the fund, and they allege they "have been forced to continue working longer than planned and have postponed their retirement" as a result.
This case highlights the risks of alternative investments and the importance of due diligence. For advisors, it underscores the need to scrutinize fund structures and fee disclosures. As retirement assets hit $51.2 trillion, clients may be increasingly exposed to such vehicles. The SEC's parallel action and the court monitor's findings suggest regulatory scrutiny is intensifying, a trend also seen in recent SEC enforcement actions.
