On Tuesday, the Securities and Exchange Commission filed a complaint in the Southern District of California against Andrew T.E. Coldicutt for enacting a fraudulent scheme to create a “sham” public company and attempting to register it with the Securities and Exchange Committee (SEC).
Beginning in 2017, the defendant is alleged to have “made a company up out of thin air,” referred to as “Issuer A,” that was supposedly a fruit harvesting and distribution business. In order to do so, Coldicutt allegedly prepared and filed a “materially misleading” registration statement, fake business plan and business agreements. He reportedly “took steps to make the puppet CEO’s public persona appear legitimate” and arranged for an attorney to sign an opinion paper to avoid arousing suspicions from the SEC, due to two previous enforcement actions enacted against him. By 2019, Issuer A went public and began offering securities to the public. The initial public offering (IPO) offered 30 million shares at $0.01 for a total of $300,000 with the supposed intent of taking off with the money earned from the sale of penny stocks.
Unbeknownst to Coldicutt, one of his fund managers was an undercover FBI agent, and the other is currently a cooperating witness. The fund managers appointed a “puppet CEO” to run the shell company, who was also an undercover FBI agent. Furthermore, the defendant concealed the fact that “Issuer A ’s actual intended business was to eventually be a cannabis company that would be subject to a stock promotion campaign” which a reasonable investor should have been allowed to be aware of. Thus, the SEC is suing for violations of Sections 17(a)(1-3) of the Securities Act.
The SEC is seeking for the release of findings that the Defendant committed wrongdoings, permanently enjoining the Defendant, civil penalties, prohibiting the Defendant from selling or brokering penny stocks, and other relief.
