Robert Mueller of Deeproot Pinball Accused by SEC of Fraudulent Scheme (Ep.62)

A Pinball Podcast·podcast_episode·18m 53s·analyzed·Aug 24, 2021

Analysis

claude-haiku-4-5-20251001 · $0.026

TL;DR

SEC charges Deep Root's Robert Mueller with $59M fraud scheme targeting retirees

Summary

A Pinball Podcast host details the SEC's fraud charges against Robert Mueller, founder of Deep Root Pinball, alleging a $59 million Ponzi-like scheme involving two investment funds. Mueller allegedly misused investor money (mostly from retirees) for personal expenses, Deep Root operations, and lifestyle purchases while continuously missing product deadlines. The host contextualizes the scandal within the pinball community's trust in manufacturers and calls it a cautionary tale for hobbyist buyers.

Key Claims

Robert Mueller's Deep Root Tech received $59 million in total investor deposits across two investment funds (575 Fund and Growth Runs Deep Fund)
high confidence · Host cites SEC complaint PDF and pinballnews.com article; numbers directly from SEC filing
Mueller funneled more than $30 million to Deep Root-affiliated businesses in non-arm's-length transactions without analyzing suitability
high confidence · Direct quote from SEC filing cited by host
Less than 10% of 575 Fund assets were actually invested in life insurance policies despite promises of 50%+ allocation
high confidence · SEC complaint details cited by host
Mueller used investor money for personal expenses including daughter's private school, family vacations, two divorces, three weddings, jewelry, and Hawaii condo purchase
high confidence · SEC filing excerpts quoted by host
Mueller engaged in Ponzi-like activity, using deposits from later investors to pay interest to earlier investors
high confidence · SEC filing description of payment structure
The 575 Fund raised over $46 million from 215 investors between September 2015 and February 2021
high confidence · SEC complaint figures cited directly
Mueller blamed COVID for missing monthly interest payments to investors
high confidence · SEC filing claim quoted by host
Host claims to have played Raza pinball and describes it as 'shoots like shit'
high confidence · Direct statement by host from personal experience

Notable Quotes

“this has been years in the making and now all of a sudden the SEC from the government entity, Securities Exchange Commission, has basically filed...a complaint”
A Pinball Podcast host @ opening — Establishes the central topic and framing of the episode
“I can't honestly say it's so freaking bizarre because I don't think the vast majority of people that are paying attention to pinball. I don't think we were necessarily surprised by this.”
A Pinball Podcast host @ mid-episode — Community sentiment: many suspected something was wrong with Deep Root long before the SEC action
“That's just such a piece of shit thing to do. I don't know how else to describe it...taking money from retirees who had cash in their annuities”
A Pinball Podcast host @ discussing victims — Host's emotional reaction to victimization of elderly investors
“he was knowingly doing this, knowingly defrauding people or however you want to slice it. And yet he had no problem using people in pinball in order to gain for himself”
A Pinball Podcast host @ mid-episode — Core indictment: Mueller's intentional deception while leveraging the pinball community
“my wife...she even told me a year ago, she said, watch this end up being a Ponzi scheme”
A Pinball Podcast host @ personal anecdote — Demonstrates that skepticism about Deep Root's sustainability was present among informed observers
“This is a cautionary tale right here. If there's ever been a cautionary tale of how we should proceed as a community, as a hobby, this is exactly it.”
A Pinball Podcast host @ closing argument — Frames the scandal as a lesson for future pinball purchases and manufacturer vetting
“Less than million of income was generated from investments yet more than million was paid in interest to 575 investors”
A Pinball Podcast host (quoting SEC) @ SEC details — Demonstrates mathematical impossibility of legitimate investment structure

Entities

Robert Muellerperson Deep Root PinballcompanyDeep Root TechcompanySEC (Securities and Exchange Commission)organizationDeep Root 575 Fund LLCcompanyDeep Root Growth Runs Deep Fund LLCcompanyPolicy Servicescompany

Signals

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business_signal: SEC files fraud complaint against Deep Root Pinball founder Robert Mueller, alleging $59M Ponzi-like investment scheme involving two funds targeting retirees
high · Host cites 24-page SEC PDF complaint and pinballnews.com article with specific fund names, amounts ($46.1M+, $59M total), investor counts (215), and timeline (Sept 2015-Feb 2021)
?
community_signal: Mueller leveraged pinball media personalities and podcasts (EGP podcast, Kaneda) for credibility building while operating fraudulent scheme
high · Host criticizes Mueller for using 'the EGP podcast,' appearing with 'Kaneda multiple times' to 'further his own agenda'
?
community_signal: Pinball community had widespread suspicion about Deep Root's legitimacy years before SEC action, based on chronic deadline misses and unexplained cash burn
high · Host states 'I don't think the vast majority of people that are paying attention to pinball...were necessarily surprised' and describes wife predicting Ponzi scheme 'a year ago'
?
regulatory_signal: SEC alleges Mueller used investor deposits in mathematical impossibility: generated less than $1M in investment income while paying millions in interest; employed Ponzi-like structure and borrowed funds to continue payments
high · Host quotes SEC: 'Less than million of income was generated from investments yet more than million was paid in interest' and describes later investor deposits used for earlier investor payments
$
market_signal: Deep Root Pinball collapse and Mueller's fraud allegations create market uncertainty and damage trust in emerging/boutique manufacturers; established manufacturers (Stern, Jersey Jack, Spooky, American Pinball, Chicago Gaming) positioned as trustworthy alternatives

Transcript

groq_whisper · $0.057

0:00

all right so if you've been living under a rock basically what has happened is robert j muller of Deep Root. That's the principal guy that owns the whole ship bang. The one that's been, so I guess the word would be boisterous or just really out in your face about what Deep Root pinball is and how Deep Root pinball is going to change the game. Went after Stern, Jersey Jack, went after P3. The list goes on and on. Anyhow, this has been years in the making and now all of a sudden the SEC from the government entity, Securities Exchange Commission, has basically filed, I guess, a complaint. I don't know what you would call it. I haven't watched much Law and Order. I didn't take any law school, anything like that. But there is obviously a complaint going on. So if you have been living under a rock, now you know, but I'm pretty sure if you're watching this video, you're well aware of what's going on. So I'm not going to necessarily bore you with this. If you haven't seen this particular document yet, I'll have a link down below and you can go check it out. It's basically 24 pages of a PDF explaining what the complaint is and who the defendants are and all this and that. Now, the key thing about all this is that if you notice, and hopefully this is showing up right up here, this is who they're mainly going against, like 100%. Because if you're dealing with relief defendants, that's basically just people that, or entities that benefited from it, but aren't necessarily held, I guess they didn't do anything illegal is what I want to get out there. So that's the way that I understand it. But the vultures are circling around here. Robert J. Mueller did indeed appear allegedly to do something illegal until they go to court and all this and that. So let's go ahead and just to make this a little bit more digestible, let's go over to pinballnews.com. And again, just with this article, we'll go over it and I'll leave a link down below as well. So as you can tell, it's titled Game Over for Deep Root pinball question mark i think it is it could be game over for deep root pinball after the company's founder and principal and architect of all things deep root pinball robert muller was charged by the securities and exchange commission with fraud in relation to two investment schemes which funded the company now of course they picked out a great picture to pretty much explain who robert muller is but here we are so deep root pinball was the sole subsidiary of deep root tech a technology company funded by two investment funds the deep root 575 fund llc and the deep root growth runs deep fund llc all right the growth runs deep that it did the 575 fund received investment of 46 million one hundred seventy five thousand five hundred and forty six thousand dollars from 215 investors between september 2015 and february 2021 the 575 fund was so called because it promised either a five percent annual return paid monthly or a seven percent annual return paid at the end of the five-year lock-in period so basically what is happening here is he basically told people hey invest in this. This is the return you'll get. And he told them what it was going to be for. And it turns out the money was not going for there. So one of the things about this, about all this, and we all pretty much question this a lot. Like if you're one of those that said, and they're watching this video and saying right now, or listening to this, this audio, and you're saying to yourself, Hey, I called this, I thought something was weird. Literally the majority of us thought something was off and something seemed way off just a couple of years ago when all this started coming out to where just missed in deadlines, imposed, self-imposed deadlines were continuously missed. And it was just really bizarre. And then what really made it even more bizarre is the fact that the burn through cash that they were just going through and nothing, no product was coming out. And so that left us all to wonder how exactly is this sustainable or sustainable. And obviously, there's a reason why that is now. And it was floated a lot to whether people were thinking oh this could be a Ponzi scheme whether people thought money laundering is involved Like all those rumors circulated People were just debating on that back and forth. I know for a fact my wife was laughing her ass off when this all came out because she even told me a year ago, she said, watch this end up being a Ponzi scheme. When we went over everything, we were kind of seeing, okay, this goes here, this goes there. This isn't making sense. That's exactly what she told me. And then, of course, you know, she's just gloating a couple of days ago when all this came out. But I can't honestly say it's so freaking bizarre because I don't think the vast majority of people that are paying attention to pinball. I don't think we were necessarily surprised by this. I think the surprise comes that this was just so this is so much bigger than what we thought when you're talking about millions and millions of dollars. But I don't think people are necessarily surprised that there was something, you know, a little sketch going on. And obviously this turns out to be a lot sketch. So, all right, moving forward. It says between them, the two funds received a total of basically $59 million in investor deposits, mostly coming from retirees who had cash in their annuities and personal retirement accounts. So I can't underscore this enough, a little language here. That's just such a piece of shit thing to do. I don't know how else to describe it. I really don't. And when we're dealing with a hobby in which, I mean, everybody knows this that's in the hobby. It amazes me. The one thing that amazes me about pinball compared to other things I used to be in, such as baseball, the gaming community, everything, the egos in pinball are massive. It's bigger than any other hobby I've ever seen. And that's across the board. Whether it's people in the industry, whether it's podcasters, whether it's YouTubers, whether it's commentators like myself, whether it's tournament people, everybody, hobbyist collectors, there is massive egos every which direction. And that's fine. That's fine. I'm not even going to rail on that. It's no big deal. That's life. But the craziest part about it is it always seemed like homeboy right here had the biggest ego of everybody and pounded his chest more than anybody. And he did that knowing, knowing what he was doing for years at a time. And that's the most amazing thing about it to me, that he was knowingly doing this, knowingly defrauding people or however you want to slice it. And yet he had no problem using people in pinball in order to gain for himself, in order to gain for himself. And we'll talk about a little bit more. All right, the 575 Fund was supposed to invest more than 50% of its money in life insurance policies. The SEC claims any life insurance policies it did invest in were through the DGRD Fund, or I believe that was the Growth Runs Deep Fund, LLC, which itself bought life insurance policies through another company run by Robert Mueller, Policy Services. The SEC also claims that the monies from the 575 fund and the DGRD fund were combined along with that from policy services. So are you guys following this thread so far? Everything was starting to get commingled. And that, in fact, less than 10% was actually spent on life insurance policies. And any spending that did happen took place before September 2017, despite raising more than $43 million for those funds after that point.

“he used the EGP podcast when he was on there. He used Kaneda multiple times when he went on there...to further his own agenda”

A Pinball Podcast host @ mid-episode — Mueller's exploitation of media figures and pinball personalities for credibility

A Pinball Podcastorganization

Stern Pinballcompany

Spooky Pinballcompany

Chicago Gamingcompany

pinballnews.comorganization

EGP podcastorganization

high · Host contrasts Mueller's actions with legitimate manufacturers who 'deserve our respect because they're at least trying to produce pinball...the correct way'

community_signal: Mueller cultivated aggressive public persona, boastfully attacking competitors (Stern, Jersey Jack, P3) and using media platforms (EGP podcast, Kaneda appearances) to build credibility while secretly running fraudulent investment scheme

high · Host describes Mueller as 'boisterous' and 'really out in your face' with 'biggest ego of everybody,' used media figures to 'further his own agenda'

personnel_signal: Deep Root staff may have been unaware of fraudulent investment schemes; host expresses empathy for employees and hopes they find continued employment in pinball

medium · Host states 'I've had several bosses...I never pried what their personal business was' and 'We need to stop...blaming people that probably didn't have any clue'

product_concern: Raza pinball prototype has significant playfield design issues affecting shootability

medium · Host who has played prototype states 'the game shoots like shit...I don't know how else to say it'

sentiment_shift: Community sentiment hardening against pre-orders and deposits with unproven manufacturers; host calls Deep Root 'cautionary tale' and urges buyer skepticism

high · Host directly states: 'this is a cautionary tale...we should proceed as a community' and criticizes buyers who made full pre-payments as 'categorically insane'

8:18

That's rough. So the details of how the monies were invested might be troubling to investors, but it is what happened to the rest that is of potentially greater concern. According to the SEC, Robert used the vast majority of the fund's assets, virtually all of which came from investors in the 575 Fund and the DGRD Fund. Like a piggy bank to fund Mueller's Deep Root-affiliated businesses, the relief defendants. So that's the important part right there that we were talking about earlier. Indeed, Mueller funneled more than $30 million of the fund's assets to the relief defendants in non-arm's-length transactions whenever he determined the relief defendant business had expenses that needed to be paid, and he did so without any analysis as to whether such transfers constituted suitable investments for his client funds. Basically what that means is he used it for reasons that he should not be using it for. The SEC continues, claiming nothing of substance was obtained in return for more than million spent and no records were kept of how the money was allocated Less than million of income was generated from investments yet more than million was paid in interest to 575 investors The SEC claims deposit money from later investors was being used to pay earlier investors in what it describes as a Ponzi-like. And when that ran out, he started borrowing money to pay investors using the funds as collateral. When that ran out too, or when that too ran out, the SEC say, he wrote to certain 575 fund investors blaming COVID for missing their monthly interest payments. So yeah, it just goes on and on and it goes deeper. And this is just like this part. Okay, I'll finish up with this part. And this is the part that's just wow, just totally wow. Additionally, the SEC's filing claims Robert used investor money like his personal account to pay hundreds of personal expenses, including his daughter's private school tuition, vacations for his family, his second wedding, his second divorce, his third wedding, jewelry for both his second and third wives, including engagement rings, wedding bands for both wives, other lifestyle spending for and by his family, and to buy a condominium in Hawaii.

10:36

That just, I have no words for that. I have no words for just somebody that is so narcissistic, that is so self-absorbed, that you're willing to basically look at different people and take their money. Just flat out criminal, take their money and decide to use it for ways that benefit yourself. And meanwhile, you're trying to run, obviously, all these other different companies. I'm sure there was dozens of people employed at one point. But then at one time, you're basically selling them a bill of goods. That obviously isn't true. And I can't say I blame anybody that is employed because it's not like you know somebody's personal business. I've had several bosses over the years, and I never pried what their personal business was. So I think we need to stop full. We need to full stop just not blaming people that probably didn't have any clue. I'm sure more stuff will come out with this. I'm sure everybody is getting investigated. I'm sure everybody's getting questioned that needs to be questioned. And I think the details of this will eventually start trickling out. But just knowing that this person was running these businesses and just basically had no intention really on anything running. You know, the only intention was is just going from A to B, A to B, A to B, and just skipping back and forth, trying to keep everything afloat just as a way to keep himself going through his own narcissistic tendencies, just a way to pay however many wives that he has, however many vacations he has, taking personal fun. It just amazes me. And what also amazes me about this is pinball, of course, seems to be a very small part of this. But since we are a pinball commentary, we're going to talk about that when we are a pinball podcast. We're going to talk about that a little bit more. And what really bothers me about this is the fact that this dude, this total a-hole, used multiple people in the pinball industry to further his own agenda. I mean, let's face facts. He used the EGP podcast when he was on there. He used Kaneda multiple times when he went on there. He obviously used people that are in the pinball industry to come work for him, to come help him develop something that was just doomed to fail from the start. Just because when you have somebody that's leading the ship, that obviously their intentions aren't correct. Let's just put it that way. Their intentions aren't necessarily noble. Their intentions aren't necessarily to make sure that they're providing the best product. Their intentions is to cover their own ass and their own ass only. It's that much is obvious. and so in the greater scheme of things I think it's just it's one of those things that I just I can't believe that somebody is that deep into just screwing everybody over for their own good and that's the part that just it disgusts me it quite frankly just disgusts me and this probably I'm hoping that this will be one of the last times I talk about Deep Root it just it bums me out for the people that work there It bums me out for the good people that actually put blood, sweat, and tears trying to make something go out of pinball. It bums me out for a lot of different reasons, for the people that got defrauded from their money, that lost their money. I mean everybody It sucks all around for everybody But this is just wild And I sure that there more that going to come out about this I know for a fact that there is other things that has to do with this story that is just downright hilarious, if you can find some dark comedy out of this, that nobody else realizes has gone on yet. I haven't heard anybody else talk about it yet. And hopefully, maybe I can talk about it here. in a few months, because it's a hellaciously hilarious story. But it just, yeah, I just, I wish I could come up with the proper words that I want to say about this. But, you know, this isn't something that I could just get prepared on my notes and just go from there. I just, my mind is going a thousand miles an hour. And I think mainly it's based on a lot of anger, too. I'm extremely angry whenever I know that somebody has taken advantage of numerous amounts of people, from obviously all walks of life, obviously these people that gave him money. They're obviously somewhat well off to have that much money, but I'm also just angry that he took advantage of so many people in the pinball world itself to further his agenda, to be able to put Raza out there in front of people to say, hey, give me your pre-deposit money. And yeah, of course, if you put down a deposit for that, I mean, more power to you. We all agreed back in December, it's probably not the smartest thing to do. Some of you out there decided to do it, took a flyer. I know there's some people out there that took a complete flyer and paid in full, which, I mean, it's categorically insane. Let's just call it what it is. And I think it gets to the point that it's really a commentary on pinball itself that we as buyers and we as people that potentially want to help different companies to succeed,

16:06

that we want to help our friends, that we also need to take a step back and make sure that there are results to draw from, make sure that some of these companies are going to be able to produce what they say they're going to produce. It's one thing to say, I'm going to do X, Y, Z. It's a whole nother thing to actually do X, Y, Z. And when we get to this point that we're giving money to these companies and enabling them, this is a cautionary tale right here. If there's ever been a cautionary tale of how we should proceed as a community, as a hobby, this is exactly it. And this is why people like American Pinball, Stern, Jersey Jack, Spooky, Chicago Gaming, Haggis, I might even be missing a few other companies. That's why those companies at least deserve our respect, because they're at least trying to produce pinball, and they're at least trying to put pinball out. And as far as we know, they're trying to do it the correct way, as opposed to this yo-yo that obviously really didn't have any intention on doing it. And even if he did have intention on doing it, let's face facts. He had his mind in irons in the fire. Elsewhere, he was pulled in all different directions, and it was just a house of cards. just waiting to come down and man that house of cards definitely came down hardcore but anyhow i'm going to finish it up right there let me know down in the comments down below or email to a pinball podcast at gmail.com what do you guys think i really don't know what else to say about the saga i've talked about rosa pinball itself because i've been able to play it and yeah spoiler alert the game shoots like shit i don't know how else to say it i really don't but i hope everybody there at Deep Root that are the good guys that they are able to get back on their feet. They're able to figure this out because I know this is probably just, obviously, if you're working in a place, you kind of know what the company culture is, but at the same time, you don't know everything. And when you don't know everything and you're in the dark about some things and then all of a sudden that rears its ugly head and it slaps you across the face, it is definitely jarring. and I do feel bad and I hope that the people down there are able to get back up on their feet. I hope people are able to find jobs to stay in age. Of course, there's lots of jobs available. I just hope that they're able to stay in pinball if they're wanting to stay in pinball and I hope that there's opportunities out there for those people and I hope that the people that got screwed over by this person, as it appears from all these complaints and everything, hopefully everybody gets made whole the best that they can get made whole. But yeah, cautionary tale. I feel bad for everybody I don't know there's not much else to say about that so I'll end it right there I'll talk to you guys later guys