Risk & Compliance

‘Bar Works’ Founder Charged with Fraud

As of Friday, Renwick Haddow, who also founded a scam bitcoin platform, was on the run and considered a fugitive.
William SprouseJuly 10, 2017
‘Bar Works’ Founder Charged with Fraud

A U.K. citizen living in New York, Renwick Haddow, has been charged with fraud over a scheme involving co-working spaces in former bars and restaurants. Haddow allegedly sent more than $4 million from investments in Bar Works to one or more bank accounts he controls in Mauritius, an island nation in the Indian Ocean. He allegedly sent another $1 million to Morocco, according to a statement by the Securities and Exchange Commission, which says Haddow also founded a purported bitcoin platform but failed to register as a broker-dealer, as required by federal securities laws.

In a parallel move, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Haddow over the Bar Works and Bitcoin Store schemes.

As of Friday, Haddow was at large and his whereabouts were unknown to prosecutors, a spokesman for the U.S. attorney’s office told Crain’s New York Business.

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Haddow was being sued by investigators in the United Kingdom over his role in an alleged Ponzi scheme when he decamped for New York. He began the Bar Works and Bitcoin Store scams in 2014, hiding his own involvement. Bar Works lists the name of its supposed CEO as “Jonathan Black,” allegedly an alias for Haddow.

“Haddow created two trendy companies and misled investors into believing that highly-qualified executives were leading them to quick profitability. In reality, Haddow controlled the companies from behind the scenes and they were far from profitable,” the director of the SEC’s New York Office, Andrew Calamari, said.

Bar Works claimed to bring “real vibrancy to the flexible working scene by adding full-service workspaces to former bar and restaurant premises in central city locations.”  Bar Works primarily sold leases coupled with sub-leases that together functioned like investment notes, the SEC said. The company also allegedly sold leases for more workspaces than actually existed in at least two locations.  Among false claims made to investors, who invested more than $37 million in the Bar Works scheme, were that a location was profitable within months of opening and that Bar Works had engaged an auditor.

Two Bar Works locations in Midtown Manhattan had been shuttered, Crain’s reported. The landlord of a planned Bar Works spot on 16th Street and Eighth Avenue said he’d begun eviction proceedings after Bar Works stopped paying rent.

The SEC alleges that materials provided to Bitcoin Store investors claimed it was “an easy-to-use and secure way of holding and trading bitcoin.” The bitcoin platform touted several million dollars in gross sales, when in fact it had no operations and did not generate any gross sales, according to the SEC.

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