Rhino Onward International, or ROI as it called itself, launched in 2022 with some big promises. The renewables development firm claimed that its “proprietary process and technology” put it in position “to assume the leading role in Green Hydrogen production.” The company said it was building a green hydrogen plant in Arizona that would be worth about $530 million within 5 years, according to marketing materials it shared with investors.
ROI raised $31 million from over 200 investors but apparently only invested $200,000 in the business; the firm’s promoters Paul Croft and J.D. Frost diverted the rest of the investors’ money to themselves and entities they control, according to an investor lawsuit filed in Illinois last month, which cited bank records obtained through subpoenas. Beginning in 2021 until last year, Croft, a 42-year-old entrepreneur living in Chicago, and Frost, a 40-year-old accountant based in Chattanooga, Tennessee, raised approximately $46 million from a series of phony renewables investment schemes, which the pair used to live extravagantly, pay employees at their tax advisory business, pay down short-term loans and even lend money to embattled professional hockey player Robin Lehner, according to allegations in lawsuits, bankruptcy filings, former investors and ex-employees of Croft’s and Frost’s businesses who spoke with Forbes on the record, and others with knowledge of the matter who spoke on the condition of anonymity in order to speak about sensitive information.
0:00 Introduction
0:28 The Founding Of Rhino Onward International
3:34 Who Was Scammed By Croft And Frost?
6:11 Who Are Croft And Frost?
9:21 When Did Investors Figure Out The Scam?
12:17 Embellishing Wealth And Origin Stories
14:26 What's Next?
Read the full story on Forbes: https://www.forbes.com/sites/johnhyatt/2024/04/23/anatomy-of-a-46-million-renewable-energy-swindle/?sh=767c07c23c4b
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ROI raised $31 million from over 200 investors but apparently only invested $200,000 in the business; the firm’s promoters Paul Croft and J.D. Frost diverted the rest of the investors’ money to themselves and entities they control, according to an investor lawsuit filed in Illinois last month, which cited bank records obtained through subpoenas. Beginning in 2021 until last year, Croft, a 42-year-old entrepreneur living in Chicago, and Frost, a 40-year-old accountant based in Chattanooga, Tennessee, raised approximately $46 million from a series of phony renewables investment schemes, which the pair used to live extravagantly, pay employees at their tax advisory business, pay down short-term loans and even lend money to embattled professional hockey player Robin Lehner, according to allegations in lawsuits, bankruptcy filings, former investors and ex-employees of Croft’s and Frost’s businesses who spoke with Forbes on the record, and others with knowledge of the matter who spoke on the condition of anonymity in order to speak about sensitive information.
0:00 Introduction
0:28 The Founding Of Rhino Onward International
3:34 Who Was Scammed By Croft And Frost?
6:11 Who Are Croft And Frost?
9:21 When Did Investors Figure Out The Scam?
12:17 Embellishing Wealth And Origin Stories
14:26 What's Next?
Read the full story on Forbes: https://www.forbes.com/sites/johnhyatt/2024/04/23/anatomy-of-a-46-million-renewable-energy-swindle/?sh=767c07c23c4b
Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1
Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:
https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript
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More From Forbes: http://forbes.com
Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.
Category
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LifestyleTranscript
00:00Rhino Onward International launched in 2022, claiming that its cutting-edge tech would make it a major player in green hydrogen.
00:07Instead, investors claim the founders used their funds to collect luxury cars, pay off bills, and otherwise fuel their extravagant lifestyles.
00:19Hi, everybody. I'm Brittany Lewis, a reporter here at Forbes. Joining me now is my colleague, Forbes staff writer John Hyatt.
00:26John, thanks for coming in.
00:27Thanks for having me, Brittany.
00:28You reported a really interesting piece. Two founders, Paul Croft and J.D. Frost, said their startup would be the next big thing when it comes to the green hydrogen space.
00:39Turns out that wasn't really the case. Instead, they bamboozled investors, took their money to fund their lavish lifestyle.
00:46Take us back to the beginning here in 2022 when ROI, Rhino Onward International, launched. Take us back there.
00:54Sure. So, Paul Croft and J.D. Frost became business partners in 2019. They combined businesses.
01:03So, Croft, his background is in insurance, and Frost is an accountant.
01:08So, these were two guys who were running a small but moderately successful tax advisory firm, helping their clients, typically doctors, lawyers, small business owners, get more money back in their tax refunds.
01:22And in 2022, they created this entity called Rhino Onward International, short for ROI.
01:29And as you said, they claimed it was going to be the next big thing in green hydrogen, that they possess proprietary technologies to create this next generation plant in Arizona on tribal land.
01:42And they had this really elaborate story that seemed so detailed that it had to be true.
01:48But in reality, they were taking money from investors and using it to buy cars, run up large credit card bills, pay down hard money loans that they'd taken out from lenders in New York, and otherwise fuel their extravagant lifestyles.
02:03And now, Paul Croft and J.D. Frost are under criminal investigation, according to multiple sources I've spoken to.
02:13And they face class action lawsuits. They face investor lawsuits in various states. They're in a world of trouble.
02:20So, was there a business plan from the beginning, or was this a scheme from the start?
02:26It's hard to tell. There were people that they brought on to try to essentially build this company.
02:35They paid an architect to sort of design the plant. So, there was some money that went into the actual operations of this company.
02:44Of course, they did not get very far. There was no proprietary tech. A lot of it was trumped up stuff that they had made up.
02:52But to understand sort of where this ROI venture came from, we have to consider it in the context of what Frost and Croft were doing before that.
03:02So, in 2021, they were pitching an investment in a renewable venture called Solar Code.
03:10And they were pitching it to various investors and clients that were in their networks and trying to get them to invest in this other solar venture.
03:20So, it seems like the sort of alleged fraud that was going on had actually begun before ROI was incorporated.
03:29And ROI was sort of the bigger version of what they were already doing.
03:34You mentioned there's a class action lawsuit, over 200 investors. Who were these investors, and how much did Paul and JD raise?
03:44So, over the course of 2021 through last year, they raised $46 million, according to bank records that were subpoenaed by the lawyers in Illinois who brought the first class action lawsuit against Croft and Frost.
04:01Who were these people? They were, by and large, unaccredited investors.
04:06So, people with money, but not experts in the world of finance and investing in private companies.
04:13They were small business owners who were clients of Croft and Frost's accounting tax advisory business.
04:21They were family and friends of people who knew Croft and Frost and who heard about this great renewable investment opportunity.
04:31They were just normal people who thought that they had identified a great opportunity to grow their wealth when, in fact, their money was being used on fancy cars, jet skis, you name it.
04:45Normal people who some of them invested their entire life savings. You've had conversations with some of these investors. Can you talk to us about those?
04:54I spoke with one woman who she had actually worked with Croft since 2019, 2018, I believe.
05:02So, she trusted him. She helped build their business, Croft and Frost.
05:07And she invested $50,000 of her money, but even more heartbreaking, her boyfriend, who had accumulated a savings in his construction business.
05:21He put $500,000, all of his savings, into ROI, and now all of that's gone.
05:27Other folks I spoke with were also introduced to Frost and Cross through various intermediaries.
05:36One woman I spoke with said that her financial coach had heard about Frost somehow and had introduced the pair, and she really grew to trust him.
05:45I mean, Frost was somebody who talked a lot about his Christianity. He talked about the importance of prayer.
05:52He talked about how he was an Alcoholics Anonymous and how he was a recovering alcoholic.
05:58So, he really did build connections with investors, or at least connections that those investors thought were real.
06:06It's not clear that they were real or if they were part of his ruse to get more money out of them.
06:11Talk to us about who Croft and Frost were personally, because we see them on Instagram.
06:17There's some flashy posts. You mentioned Frost kind of leaned on his Christianity a bit. Talk to us about that.
06:23Sure. So, to begin with Croft.
06:27So, Paul Croft, raised in Duluth, Minnesota, became an insurance salesman at Northwestern Mutual, claimed to be one of their top salesmen.
06:40An advisory disclosure that we found shows that he was permitted to actually resign from Northwestern in 2008,
06:48while he was under internal review for allegedly fabricating information on insurance applications for a customer and himself.
06:58So, he has a bit of a dodgy background there.
07:01Frost, he comes from a wealthy family in Chattanooga, Tennessee.
07:06His dad, Stephen Frost, owns a carpet mill machinery supplier called Tuftco.
07:11It employs over 250 people. It's a large regional company.
07:17You know, his family are millionaires, no doubt about that.
07:20And the two, it's not clear how they met, but when they partnered together, that's when all of these sort of investment schemes started in 2020, 2021.
07:33And what seems to have happened is that they just let it get out of hand.
07:38They were taking out loans from usurious payday lenders with sketchy backgrounds in New York.
07:44They were lending money to professional hockey player Robin Leonard.
07:49Robin Leonard is sort of his own sad case of somebody who's mismanaged his finances.
07:54He declared for bankruptcy in 2022, I believe, claiming $27 million in liabilities.
08:01So, they got Robin Leonard into their orbit and they were lending him money and they were using him and his dad's company, Solar Code, as affiliates through which they could essentially keep their sort of Ponzi train going, according to the various allegations and folks I spoke to.
08:21And ROI really sort of grew out of that.
08:25They had debts they had to pay down.
08:27They had huge credit card bills.
08:28They were borrowing millions of dollars.
08:30And so, ROI, they had to think big to keep the money train going.
08:34And they were able to through 2022 and largely through 2023.
08:38But what happened in September, last September, is the gig was finally up.
08:44Their accounting business shut down and laid everyone off.
08:47And this followed a period during which many of their employees at Croft and Frost, their tax advisory accounting business, they hadn't been paid in weeks.
08:58Some of these employees would go for weeks without getting paid.
09:01And then all of a sudden, they'd have money come through.
09:04And what's interesting is that in December of 2022, the first time this happened, once employees were paid after the fact, the money came from Rhino onward international.
09:16So, they were already sort of commingling different companies and different bank accounts.
09:21And it was just a mess, Brittany.
09:23So, the irony really isn't lost on me.
09:26You called ROI, return on investment.
09:28When did investors realize, hey, where's my money going?
09:33This is a scam.
09:35It really came to a crescendo in September when their business, Croft and Frost, abruptly shut down, firing everyone with immediate effect.
09:46That's when many of these at least 10 employees of Croft and Frost were also investors in ROI.
09:54So, they were saying what's going on.
09:57The clients of Croft and Frost who relied on them for filing quarterly taxes and relied on them for financial advisory services, many of them were investors.
10:10And so, when Croft and Frost shut down, they said, well, what's going on?
10:15What about ROI?
10:16Like, is any of this real?
10:19And, you know, from there, Croft and Frost have largely kind of gone silent.
10:24I tried to call both of them multiple times, went straight to voicemail.
10:28Both of their lawyers issued a simple no comment.
10:31And what's interesting is in several of the investor lawsuits, they actually haven't formally responded to the allegations against them.
10:38Oftentimes, you'll see parties accused of wrongdoing say, you know, they'll file in court, no, we, you know, we, this is wrong.
10:46We deny these allegations.
10:47They haven't even done that.
10:48So, is there clear cut and dry evidence of fraud here?
10:52According to the subpoenaed bank records cited in the Illinois complaint, the class action investor complaint, money that was raised for ROI and affiliated solar renewable ventures, purported renewable ventures.
11:12It's not clear that any of it was real.
11:15That money flowed directly into the bank accounts of Croft and Frost.
11:21It was used to fund Croft's car collection, which included three Ferraris, one Bentley with a customized license plate that read Croft, a Maserati, and a Range Rover.
11:33And it was also used to pay employees of Croft and Frost, their business.
11:40So, they were making payroll with investor money.
11:43And they also transferred millions of dollars to these hard money payday lenders in New York that I had mentioned.
11:50They had borrowed millions of dollars from these New York lenders at obscenely high interest rates.
11:57And so, according to the subpoenaed bank records, according to the allegations made in the various investor lawsuits and the people I spoke to, this does seem to be a pretty clear cut case of fraud.
12:09Again, they have not responded to my request for a comment or interview and their lawyers simply issued a no comment.
12:17What's interesting is I believe in 2022 you're reporting Croft said he was a billionaire, kind of boasted about that on a podcast.
12:25Your reporting says that that's not the case. Can you elaborate on that?
12:29Yeah. So, I mean, Croft especially, you know, we talked about how Frost leaned into the sort of Christian persona as, you know, the recovering alcoholic who was a trustworthy guy.
12:40Croft also sort of leaned into his Christianity, but he was really a flashy guy.
12:47And, you know, as of yesterday when our story went live, his Instagram is still up.
12:51There are still photos of him with his cars, of him enjoying the high life allegedly on investor funds.
12:57So he claimed on this podcast in 2022 that his net worth was somewhere between 1.8 billion and 3.8 billion, according to the CFOs he spoke to.
13:07I mean, first of all, a range of 1.8 to 3.8 is insane.
13:13You cover, you are a wealth reporter, you cover people's net worths, you report on the world's wealthiest.
13:19Is that something that people claim, like a two billion dollar range is absurd?
13:24No, it is absurd. And especially what's especially absurd about it in this case is that he has small businesses like these, like he had another life insurance business because that was sort of part of his scheme.
13:37Actually, was that in addition to Croft and Frost, he had this small life insurance business called Emerald.
13:42It employed six people, according to one of the former employees I spoke with.
13:46His companies were not large. These were not multi billion dollar companies that he controlled.
13:52So it's quite clear that he was not as wealthy as he claims.
13:57Property records show he took a six hundred thousand dollar mortgage on an eight hundred thousand dollar home in Chicago in 2021.
14:05So, you know, most billionaires buy their homes in cash. They don't take out six hundred thousand dollar mortgages.
14:11But, you know, this was part of his shtick. Part of his shtick was I came from nothing and now I'm an absurdly wealthy person and you should invest in me because I'm going to make you that way, too.
14:22And unfortunately, it worked.
14:24That's a shame. But what's next for A, the investors?
14:28Are they ever going to see their money? And B, what's next for Croft and Frost?
14:32Is there legal trouble on the horizon, potentially jail time?
14:36According to the sources I spoke to, the two are under federal criminal investigation.
14:42One source I spoke to said they recently met with IRS agents who were asking them questions.
14:49Somebody who is intimately familiar with the case said there is an extreme likelihood that Croft is going to get indicted.
14:56I don't know when, you know, we have to wait and see.
15:00As for the investors, you know, there are various channels through which, you know, potentially they can get some money back at some point.
15:08I'm not sure how that will all work, but, you know, there's over 200 investors.
15:15There's about 230 different people who invested tons of money.
15:18And so, you know, hopefully there will be channels through which they can recoup some of their investments.
15:25John Hyatt, per usual, thanks for the conversation. Thanks for your reporting.
15:29Thanks, Brittany.