I
nvestors are taking action against CA Ventures and its executives, Tom Scott and John Diedrich. A group of investment firms, led by Chicago-based TCP GP Fund I Aggregator, sued in Cook County, alleging that Scott and Diedrich misrepresented how they would use investor funding to pay off personal debts instead of investing in developments as promised. The investors claim they lost nearly $14 million advanced to CA Ventures entities in 2021 and 2022.

    The lawsuit alleges that Scott and Diedrich told investors the funds would back industrial projects, but instead used them to pay off loans with personal guarantees. Investors converted over $8 million into equity in projects, which failed due to lack of funding from CA Ventures. The complaint relies on information from a former executive referred to as "CA Insider."

    Scott called the allegations "outrageous" and plans to fight them in court. His attorney, David Rammelt, attributed the firm's struggles to market forces and claimed investors ignored risks associated with real estate speculation.

    The investors also claim CA Ventures used debt restructuring to secure financing from Brigade Capital Management by misrepresenting its assets and failing to disclose personal guarantees. Brigade discovered that Scott and Diedrich diverted development fees for other purposes, violating loan covenants. To cover up the misconduct, they pledged additional assets and personal guarantees, giving Brigade control over key CA Ventures assets.

    The suit also alleges shoddy accounting practices by CA Ventures to dilute investor equity in development projects. The investors claim CA Ventures delayed negotiations with them until June 2024, when it became clear that Scott and Diedrich had personal liability for debt. This lawsuit comes as CA Ventures faces default on multiple loans and surrendered a large apartment complex to its lender last year.