SEC.gov | SEC Charges Healthcare Company and Its Founder with Multimillion Dollar Fraud

The Securities and Exchange Commission today charged a New Jersey-based healthcare company and its founder with fraudulently raising nearly $4 million from over 130 investors nationwide through the sale of membership units in the company.

According to the SEC's complaint, since July 2017, Premier Healthcare Solution LLC and its founder, Josiah David (formerly known as Dennis Lee), an individual with felony convictions and an extensive history of regulatory violations, have been raising money from investors by selling them membership interests in Premier, a company that purported to offer employers a supplemental medical reimbursement plan. The SEC alleges that the plan consists of a tax exempt healthcare-related contribution from the employee to Premier, a loan from a lender to repay the employee’s contribution, and an insurance policy obtained by Premier payable at the employee's death to repay the loan. The SEC's complaint alleges that Premier and David defrauded investors by making misrepresentations about Premier having secured a bank loan necessary for its business plan to succeed, when, in fact, it had not done so and also making misrepresentations that the concept underlying Premier's business model was either patent-pending or patented, when, in fact, the U.S. Patent and Trademark Office had repeatedly denied Premier's applications. The complaint further alleges that David deceived investors by failing to disclose and lying about his prior criminal and regulatory history when he was known as Dennis Lee.

"Investors deserve accurate and complete information about a business's performance and assets, and about its key persons' criminal or regulatory histories, if any," said Richard R. Best, Director of the SEC's New York Regional Office. "We will vigorously pursue those who fail to provide this information to investors."

The SEC's complaint, filed in federal district court in New Jersey, charges Premier and David with violating the antifraud provisions of the federal securities laws and seeks disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and permanent injunctive relief. The complaint also names two parties, Denis Joachim and Provision Corporation LLC, as relief defendants and seeks to recover from them investor monies they received from Premier.

The SEC's investigation, which is ongoing, is being conducted by Kenneth Byrne, Rhonda Jung, Debbie Chan, and Adam Grace, and the litigation will be led by Todd D. Brody, Mr. Byrne, and Ms. Jung of the New York Regional Office.  The case is being supervised by Sanjay Wadhwa. The SEC acknowledges the assistance of the U.S. Department of Labor and the U.S. Attorney's Office for the Eastern District of Louisiana.

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SEC.gov | SEC Charges Under Armour Inc. With Disclosure Failures

The Securities and Exchange Commission today charged sports apparel manufacturer Under Armour Inc. with misleading investors as to the bases of its revenue growth and failing to disclose known uncertainties concerning its future revenue prospects. Under Armour has agreed to pay $9 million to settle the action.

According to the SEC's order, by the second half of 2015, Under Armour's internal revenue and revenue growth forecasts for the third and fourth quarters of 2015 began to indicate shortfalls from analysts' revenue estimates. The order finds, for example, that the company was not meeting internal sales projections for North America, and warm winter weather was negatively impacting sales of Under Armour's higher-priced cold weather apparel. The order further finds that in response, for six consecutive quarters beginning in the third quarter of 2015, Under Armour accelerated, or "pulled forward," a total of $408 million in existing orders that customers had requested be shipped in future quarters. As stated in the order, Under Armour misleadingly attributed its revenue growth during this period to various factors without disclosing to investors material information about the impacts of its pull forward practices. The order finds that Under Armour failed to disclose that its increasing reliance on pull forwards raised significant uncertainty as to whether the company would meet its revenue guidance in future quarters. According to the order, using these undisclosed pull forwards, Under Armour was able to meet analysts' revenue estimates.

"When public companies describe how they achieved financial results, they must not misstate any information that is material to investors," said Kurt Gottschall, Director of the SEC's Denver Regional Office. "By using pull forwards for several consecutive quarters to meet analysts' revenue targets while attributing its revenue growth to other factors, Under Armour created a misleading picture of the drivers of its financial results and concealed known uncertainties concerning its business."

The SEC's order finds that Under Armour violated the antifraud provisions of Section 17(a)(2) and (3) of the Securities Act of 1933, as well as certain reporting provisions of the federal securities laws. Without admitting or denying the findings in the SEC's order, Under Armour agreed to cease and desist from further violations and to pay a $9 million penalty.

The SEC's investigation was conducted by L. James Lyman, Jeffrey Lyons, and Donna Walker, with assistance from Gregory Kasper and Nicholas Heinke of the Trial Unit, and supervised by Ian Karpel, Jason Burt, and Kurt Gottschall.

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