El Capitan Advisors founder and CEO Andrew Nash is close to settling an enforcement action led by the Securities and Exchange Commission, according to sources who spoke with the SEC. The case, which is being handled by the SEC’s Los Angeles office, centers on the alleged fraud in which Nash’s cannabis-focused cash management company misappropriated millions of clients’ dollars.
What’s unknown is if a Fair Fund or investment advisor ban is part of the settlement. CRB Monitor News has previously reported on multiple lawsuits involving Snoop Dog’s venture capital fund Casa Verde and publicly traded Planet 13, which have been in a competitive race to find and claw back money that was funneled out of El Capitan.
During CRB Monitor News’ year-long investigation, multiple whistleblowers who once worked with Nash or were personally involved with him have come forward telling stories of years of deception centered on Nash’s goal to provide better banking alternatives for the cannabis market.
Nash, 48, grew up in Texas and settled his family in Southern California’s scenic Santa Barbara to launch his business from the wealthy enclave. He initially attended Texas Tech, dropped out, and then finished college at the University of Phoenix with a B.S. in Business Management, according to his form ADV and friends.
Prior to founding El Capitan, Nash founded a consulting company called Green Fund Investment Holdings, with a focus on sourcing debt, equity and bank accounts for companies in multiple states, according to his form ADV filed with the SEC in 2023. Nash’s initial business was using his commercial real estate experience to help cannabis dispensaries get a bank account so they could sign a commercial property lease, according to a former business partner.
El Capitan’s credit union clients
Besides holding cannabis companies’ cash in El Capitan’s Bridge Bank account, for a fee of 10 basis points, with promises of skirting Know Your Customer laws and offering a safer way to store the money than cash sitting in a dispensary safe, Nash also had credit unions as clients, according to a former business partner and third-party individual who’s familiar with Nash’s business plan.
According to three people who worked with Nash, he would pitch his services as a way for banks to move money into his account to avoid regulator questions. The limit under the Dodd Frank Act says a bank can’t have more than 10% of a business sector in deposits. Credit union clients of El Capitan were offered, for a fee, to move their deposits at the end of each month to the Bridge Bank account and then transfer them back a few days into the following month. This allowed the credit unions to avoid reporting a concentration of cannabis money in their monthly call reports, according to a former business partner and third-party consultant.
According to three people who worked with Nash, North Bay Credit Union in Sonoma County, Calif., was one of the clients.
Chris Call, CEO of North Bay Credit Union, told CRB Monitor News it did use El Capitan in the past to hold its members’ deposits. Call described the relationship as part of its “balance sheet management” and said it had not done business with Nash for a few years.
Nash’s former clients and business associates have said they are waiting to see what kind of civil charges and penalties the SEC will announce and if it will mean a claw back of any of the millions of dollars swept up in litigation in the last year. Others who worked with Nash are waiting on criminal charges to be brought for wire fraud by the DOJ.
Nash surprisingly showed up in person at the last hearing in Los Angeles Superior Court, West District, on April 8 to give testimony in the Casa Verde/Planet 13 litigation, a signal that he is more confident to talk on the court record given the looming SEC settlement.
Nash’s failed bank acquisition
Around the time Nash was starting El Capitan, he attempted to raise $82 million to buy Summit Bank in Oakland, Calif., in order to secure a banking license for cannabis companies, according to emails and interviews with people who worked with him from 2018 to 2022.
Faciam Holdings, which is latin for “I Will Do,” was established to acquire the state-chartered bank, and Nash was the chief executive and sole principal owner, according to an escrow agreement and SEC filings. A buyout agreement was signed with Summit Bank in November 2018.
Nash had to identify legitimate business partners on his FDIC application along with listing initial investors in the bank who could pass an FDIC due-diligence check. Summit Bank charged him a $1 million deal breakup fee, and Partner Colorado Credit Union’s cannabis fintech partner Safe Harbor Financial charged a $500,000 fee for the initial application. Summit Bank would be Safe Harbor’s exclusive California commercial bank, according to the investment presentation.
A former business partner told CRB Monitor News that Andrew was always claiming he had plenty of initial money already committed to fund the bank purchase. Emails Nash sent to potential investors claimed a few large private equity groups and a studio executive at Paramount were committed, but he wouldn’t share names of those investors.
According to an email Nash sent to an interested high-net-worth individual in 2019, he also would promise to personally guarantee the bank deal with his shares and revenues in El Capitan Advisors if the investor made a $500,000 investment.
In one email reviewed by CRB Monitor News, Nash wrote, ”FYI I am liquidating my personal funds I have set aside for my son’s kidney transplant and will use those funds if I have to,” to get the deal with Summit bank done.
Eventually, Daniel T. Nero of Atwood Consortium came in at the last minute to aid Nash to raise at least the $1.5 million break-up fees so the application could be submitted to the FDIC.
Nash even met with the head of the FDIC in San Francisco, Kathy Moe, to get a feel for the chance of approval and had a verbal commitment from her to approve it, according to a person at the meeting. He thought it would fly through federal approval, but once the application was submitted to the FDIC, it got turned down on Dec. 19, 2019. That same day, Summit backed out of the deal and kept its breakup fee. One of Nash’s former business partners told CRB Monitor News he thinks part of the FDIC’s rejection was because the agency didn’t think Nash had legitimate investors to buy the bank.
According to a desist and refrain order issued in April 2023 by the California Department of Financial Protection and Innovation, Nero and Atwood had not registered as an investment advisor to take fees and raise money from 2017 through 2021 and was ordered to pay around $700,000 in fees collected as part of the fines and penalty.
It’s unknown if Nash’s actions during fundraising for the Summit Bank deal are part of the SEC case.
Andrew Nash, Daniel Nero and Summit Bank did not return requests for comment. The SEC will not comment on the investigation.
