Phoenix Capital Group Lawsuit: SEC Investigation and Forbes Suit

The Phoenix Capital Group lawsuit that generated the most headlines was the defamation case the company and CEO Adam Ferrari filed against Forbes Media in Delaware federal court, and it was dismissed on August 1, 2025.¹ That case is only one piece of the legal picture around the Denver-founded oil and gas bond issuer, now doing business as Phoenix Energy. A reported SEC inquiry, a FINRA sanction against its broker-dealer, a Montana Supreme Court loss over mineral rights, and the CEO’s prior felony guilty plea all sit alongside it.

The Defamation Suit Against Forbes

In October 2024, Forbes published an investigative article questioning Phoenix’s bond offerings, its leverage, the background of its CEO, and a reported SEC investigation. Phoenix and Ferrari sued Forbes Media LLC in the U.S. District Court for the District of Delaware, alleging the article implied the company was operating a Ponzi scheme.¹

Judge Gregory B. Williams dismissed the case on August 1, 2025. He found that the “inferential leaps required to sustain such an implication are simply untenable,” meaning the article’s language did not carry the defamatory meaning the plaintiffs claimed.¹ The dismissal does not resolve the underlying questions Forbes raised; it resolves only Phoenix’s claim that Forbes defamed the company by raising them.

The Reported SEC Investigation

Forbes reported that three people familiar with Phoenix’s operations said the SEC had been investigating the firm for potentially misleading statements in its bond offerings. Ferrari acknowledged having “regular communication with the SEC for three years” but described that as normal business and declined to say whether a formal investigation existed. An SEC spokesperson said the agency does not comment on the existence of investigations.²

Forbes also reported that Phoenix’s $135 million loan from Fortress Investment Group required the company to attest that it had no knowledge of any governmental investigations, creating a tension with the reported inquiry.² No public SEC enforcement action has been confirmed in the available research.

Adam Ferrari’s 2019 Felony Guilty Plea

Before founding Phoenix Capital Group, Ferrari ran a company called Ferrari Energy. In July 2019, he pleaded guilty in Denver District Court to one felony count of theft of $100,000 to $1 million. Prosecutors described forged deeds used to divert roughly $300,000 in royalty payments that belonged to a mineral rights holder and Anadarko Petroleum. Thirteen other charges were dismissed under the plea agreement.³

Ferrari received a deferred sentence: the conviction would not become final if he completed three years of unsupervised probation. He was ordered to pay $30,000 in restitution.³ His record was sealed in May 2022 and later expunged. Ferrari has said he was never convicted of a crime and that the guilty plea was a strategic decision to resolve the matter quickly. Forbes raised the question of whether the history was adequately disclosed to bondholders, and Phoenix has responded that risks are disclosed in its private placement memorandum.²

FINRA Sanctions Against Dalmore Group

Dalmore Group LLC, the FINRA-member broker-dealer that has handled Phoenix’s bond sales since its first Regulation A offering in 2021, was censured and fined $375,000 by FINRA in September 2024.⁴ Dalmore consented to findings, without admitting or denying them, covering violations between January 2019 and September 2024. The FINRA findings did not name Phoenix specifically, but they cover the period and product type relevant to Phoenix’s retail bond sales. Key findings included:

Supervisory failures around suitability and best-interest obligations for private placements, with written procedures that did not even reference Regulation Best Interest until eight months after that rule took effect.
Release of approximately $3 million in investor funds for a private offering while the raise was still $2 million or more short of its stated minimum.
Exaggerated or promissory statements in web-based videos and on websites for securities offerings.
Failure to fingerprint non-registered staff, failure to report outside business activities, and inaccurate or incomplete responses to FINRA requests.

Dalmore was required to certify within 90 days that it had corrected these problems and implemented compliant supervisory procedures.⁵

The Montana Mineral Rights Case

Phoenix has also been on the losing end of state court litigation over mineral interests it purchased. In February 2021, the company bought a small mineral interest in Richland County, Montana, from the Solis family. The operator in the area, Kraken Oil and Gas, had spent years trying to lease or secure participation from the prior owner, Katherine Solis, who either refused or did not respond. After she failed to participate, the Montana Board of Oil and Gas Conservation issued a forced-pooling order imposing non-consent penalties on the interest. Phoenix inherited those penalties when it bought the minerals.⁶

Phoenix challenged the Board’s order. The Thirteenth Judicial District Court in Yellowstone County granted summary judgment for the Board and Kraken in April 2023. On April 30, 2024, the Montana Supreme Court affirmed, holding that Phoenix, as successor in interest, was bound by the previous owner’s non-consent status and the statutory risk penalties that came with it.⁷

The dispute has since moved to federal court. In May 2025, Phoenix Energy One, LLC (the company’s current legal name) filed a new lawsuit against Kraken Oil and Gas, Kraken Operating, and the U.S. Bureau of Land Management in Montana federal court. As of June 2026, that case remains active, with ongoing motion practice including a motion to stay and a motion for mediation.⁸ Ferrari has said his companies have been involved in “numerous lawsuits” over the past eight years, calling them an “unfortunate, but common occurrence” in the mineral rights business.²

The Financial Picture Behind the Legal Fights

The legal disputes matter most to the people who lent Phoenix the money it uses to buy minerals: retail bond investors. By the time Forbes reported on the company in October 2024, Phoenix had sold roughly $700 million of a planned $750 million offering, with about half of those bonds carrying payment-in-kind provisions that pay interest in additional bonds rather than cash.² The bonds are unsecured and subordinated. As of the October 2024 S-1 filing, roughly $325.2 million in senior debt ranked ahead of them, including the $135 million Fortress loan secured by company assets and equity at roughly 12% annually.⁹ According to Forbes, nothing prevents Phoenix from using retail bondholder capital to meet its obligations to Fortress.

Phoenix’s debt-to-EBITDA ratio stood at 19 to 1 at the end of 2023. Thomas Watters of S&P Global Ratings told Forbes that industrial-company ratios above 3 are considered speculative and anything above 8 or 9 is “very, very risky credit.”² Phoenix has marketed $1.8 billion in reserves to investors, but roughly 70% consists of “probable reserves,” a category experts told Forbes is not typically accepted by banks as collateral. The company’s own filings confirm the split: as of June 30, 2023, Phoenix reported proved reserves with a present value of approximately $408 million alongside probable undeveloped reserves valued at roughly $912 million.¹⁰

The buyers are largely retail. About 95% of bond sales have gone to individuals over the age of 55, and roughly half of the money has come from retirement accounts such as 401(k)s and IRAs, according to Forbes. Phoenix solicits these investors through daily webinars and advertising on conservative talk radio programs.²

1
Bloomberg Law. Forbes Defeats Phoenix Capital CEO’s Defamation Allegations
2
Forbes. Buyer Beware: These Yield-Gushing Oil Bonds Could Derail Your Retirement
3
Greeley Tribune. Mineral Rights Case a Warning to Others
4
SEC. Phoenix Capital Group Holdings Offering Circular
5
FINRA. Disciplinary Actions – November 2024
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Montana Judiciary. Phoenix Capital Group Holdings v. Board of Oil and Gas Conservation
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vLex. Phx. Cap. Grp. Holdings v. Bd. of Oil and Gas Conservation, 547 P.3d 1260
8
PACER Monitor. Phoenix Energy One, LLC v. Kraken Oil and Gas, LLC et al
9
SEC. Phoenix Capital Group Holdings Form S-1 Registration Statement
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SEC. Phoenix Capital Group Holdings Form 1-SA/A