SEC.gov | SEC Halts Alleged Ongoing Offering Fraud Involving Cycling Companies

The Securities and Exchange Commission today announced an emergency action including a temporary restraining order and asset freeze to stop an alleged fraudulent offering of securities and misappropriation of investor assets by Outdoor Capital Partners LLC and its director Samuel J. Mancini of Denver, Colorado.  The SEC alleges that the defendants made false statements in raising millions of dollars for an investment fund ostensibly to purchase controlling interests in three Italian cycling companies, but never made the acquisitions and instead fraudulently diverted money raised.

According to the SEC’s complaint unsealed today, the defendants raised approximately $11.5 million from at least 40 investors beginning in late 2019 by selling membership units in an investment fund and short-term, high-interest loan contracts.  The complaint alleges that the defendants told investors that they had sufficient funds to acquire three Italian cycling-related companies and that Mancini had invested millions of dollars of his own money in the offerings when neither statement was true.  According to the complaint, Mancini misappropriated almost $400,000 of investor funds and made at least $800,000 in Ponzi-like payments to other investors.  The complaint also alleges that Mancini hid from investors that Outdoor Capital Partners had failed to make the cycling company acquisitions and created and sent investors numerous false documents in response to various redemption requests, including false fund financial statements, bank statements, and emails from banks.

“As we allege, Mancini repeatedly lied to investors, sent investors falsified bank documents, and misappropriated investor funds,” said Kurt L. Gottschall, Director of the SEC’s Denver Regional Office.  “The SEC has significant expertise in rooting out investment fraud by tracing the uses of investor funds even where, as we allege happened here, some funds were transferred to foreign accounts.”

The complaint, filed in U.S. District Court for the District of New Jersey, charges Mancini and Outdoor Capital Partners with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  The SEC seeks emergency relief as well as permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.  The SEC also seeks a conduct-based injunction and an officer-and-director bar against Mancini.  In addition, the complaint seeks disgorgement of ill-gotten gains with prejudgment interest from several relief defendants, including the OCP Italia Fund LLC, OCPITALUS LLC, and Mancini’s wife.

The SEC’s investigation was conducted by Jennifer R. Turner and supervised by Mary S. Brady and Jason J. Burt.  The litigation will be led by Polly A. Atkinson and supervised by Gregory A. Kasper.

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SEC.gov | SEC Charges Three Individuals with Insider Trading

The Securities and Exchange Commission today charged three individuals with insider trading in advance of an announcement by Long Blockchain Company (formerly known as Long Island Iced Tea Co.) that it was going to "pivot" from its existing beverage business to blockchain technology, which caused the company’s stock price to soar.

According to the SEC's complaint, filed in the U.S. District Court for the Southern District of New York, Eric Watson, an undisclosed control person of Long Blockchain who helped drive this business change within the company and signed a confidentiality agreement not to disclose the company's business plans, tipped his friend and broker, Oliver Barret-Lindsay, of such plans, including by sharing with him a draft of the company's press release. Barret-Lindsay, in turn, allegedly passed the material nonpublic information on to his friend, Gannon Giguiere. Within hours of receiving this confidential information, Giguiere purchased 35,000 shares of Long Blockchain stock. According to the complaint, the company's stock price skyrocketed after the press release was issued, spiking more than 380% intraday.  Within two hours of the announcement, Giguiere sold his shares for over $160,000 in illicit profits.

"The SEC remains committed to preventing all types of fraudulent conduct in connection with purported 'crypto' companies, including profiting from trading on material non-public information," said Richard R. Best, Director of the SEC's New York Regional Office.

The SEC's complaint charges Watson, Barret-Lindsay, and Giguiere with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions and civil penalties as to all defendants, and, additionally, an officer and director bar as to Watson.

The SEC previously charged Barret-Lindsay and Giguiere in connection with their alleged role in a stock manipulation scheme, which is currently in litigation. Both Lindsay and Giguiere pled guilty to criminal charges in connection with that matter.  Additionally, the Commission revoked the registration of Long Blockchain's securities on Feb. 19, 2021, pursuant to Section 12(j) of the Exchange Act.

The SEC's investigation has been conducted by Lindsay S. Moilanen, Mark R. Sylvester, Diego Bruccule, John O. Enright, and Sheldon L. Pollock, and the litigation will be led by Ms. Moilanen and Mr. Sylvester. The case is being supervised by Sanjay Wadhwa.

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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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Tyler Tysdal is the world's best business broker. Tyler is the managing partner and cofounder at Freedom Factory. Tyler Tysdal Will Help You Sell Your Business in Hampton-Virginia or anywhere else in the United States.

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