Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.1 Page 1 of 18
`
`
`AMY JANE LONGO (Cal. Bar No. 198304)
`Email: longoa@sec.gov
`ROBERTO A. TERCERO (Cal. Bar No. 143760)
`Email: terceror@sec.gov
`
`Attorneys for Plaintiff
`Securities and Exchange Commission
`Michele Wein Layne, Regional Director
`Katharine Zoladz, Associate Regional Director
`444 S. Flower Street, Suite 900
`Los Angeles, California 90071
`Telephone: (323) 965-3998
`Facsimile: (213) 443-1904
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF CALIFORNIA
`
`
` Case No.
`
`
`COMPLAINT
`
`
`SECURITIES AND EXCHANGE
`COMMISSION,
`Plaintiff,
`
`
`
`vs.
`ANDREW T.E. COLDICUTT,
`Defendant.
`
`
`
`
`
`
`
`Plaintiff Securities and Exchange Commission (“SEC”) alleges:
`SUMMARY
`This case concerns violations of the federal securities laws by defendant
`1.
`Andrew T.E. Coldicutt (“Defendant” or “Coldicutt”), a self-described “Securities
`Compliance” attorney in San Diego. Beginning in 2017, Coldicutt participated in
`fraudulent scheme to create a sham public company and register an offering of its
`securities with the SEC, concealing from SEC filings the company’s true control
`persons/promoters and source of funding, and his role as its securities attorney.
`Approached by two managers of a hedge fund who sought to acquire a
`2.
`
`
`
`
`
`1
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`'22
`
`CV0274
`
`KSC
`
`MMA
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.2 Page 2 of 18
`
`
`public company whose shares they could freely trade, Coldicutt made a company up
`out of thin air (“Issuer A”), that was purportedly a fruit-harvesting and distribution
`business. Coldicutt knew that Issuer A was a total sham, run by a puppet CEO, and
`funded by the undisclosed promoters. Knowing that his clients sought to carry out a
`pump and dump of the company’s shares, Coldicutt prepared and filed with the SEC
`a materially misleading Form S-1 registration statement and several amendments
`thereto, including a fictitious business plan and fake form business agreements that he
`drafted (the “Issuer A Form S-1”). Having been previously sued by the SEC in two
`subpoena enforcement actions, to avoid arousing suspicions, Coldicutt arranged for
`another lawyer to sign the attorney opinion letter that accompanied Issuer A’s SEC
`filings, and took steps to make the puppet CEO’s public persona appear legitimate.
`By means of Coldicutt’s fraudulent conduct, Issuer A’s registration
`3.
`statement went effective in 2019, fraudulently offering its securities to the public
`markets. Defendant received attorneys’ fees and a bonus payment as a result of his
`role in the fraud.
`Unbeknownst to Coldicutt, the undisclosed control persons/promoters
`4.
`who posed as his clients were an undercover FBI agent and a cooperating witness, as
`were several of their associates with whom Coldicutt interfaced in taking Issuer A
`public. Thus, Coldicutt’s scheme to offer Issuer A’s shares to the public through
`materially misleading SEC filings and other deceptive acts was the subject of
`numerous audio recordings, which reflect both his scienter and his actions in real
`time.
`
`Through this conduct, Defendant violated Section 17(a) of the Securities
`5.
`Act, 15 U.S.C. §77q(a)(1)-(3). The SEC seeks a permanent injunction against future
`violations of Section 17(a) of the Securities Act; a permanent injunction against
`directly or indirectly providing, or receiving compensation from the provision of,
`professional legal services to any person or entity in connection with the offer or sale
`of securities by means of a registration statement, prospectus, offering circular, or
`
`
`
`
`
`2
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.3 Page 3 of 18
`
`
`private placement memorandum, including, without limitation, preparing or issuing
`any opinion letter relating to such offer or sale; a civil penalty; and a penny stock bar.
`JURISDICTION AND VENUE
`The Court has jurisdiction over this action pursuant to Sections 20(b),
`6.
`20(d)(1) and 22(a) of the Securities Act, 15 U.S.C. §77t(b), 77t(d)(1)(a).
`Defendant has, directly or indirectly, made use of the means or
`7.
`instrumentalities of transportation or communication in interstate commerce, or by
`use of the mails, to engage in the transactions, acts, practices and courses of business
`alleged in this complaint.
`Venue is proper in this district pursuant to Section 22(a) of the Securities
`8.
`Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a),
`because certain of the transactions, acts, practices and courses of conduct constituting
`violations of the federal securities laws occurred within this district. In addition,
`venue is proper in this district because Defendant resides in this district.
`THE DEFENDANT
`Andrew T.E. Coldicutt, age 41, is a Canadian citizen residing in San
`9.
`Diego, California. He is a securities attorney licensed to practice law in the State of
`California, and founder of the Law Offices of Andrew Coldicutt.
`10. On May 4, 2017, the SEC filed a subpoena enforcement application
`against Coldicutt and his law firm in connection with investigative subpoenas issued
`by the SEC staff. SEC v. Andrew T.E. Coldicutt, et al., Case No. 2:17-cv-03401
`(C.D. Cal. May 4, 2017), Case No. 2:17-mc-00068 (CAS) AFMx, Case No. 2:17-cv-
`03888 (CAS) AFMx. The Court issued an order to show cause on May 11, 2017
`(Dkt. No. 8), followed by an order compelling compliance on June 8, 2017 (Dkt. No.
`15). The SEC filed a supplemental subpoena enforcement application against
`Coldicutt and his law firm on July 7, 2017 (Dkt. No. 16), which likewise resulted in
`an order to show cause (Dkt. No. 17), followed by an order compelling compliance.
`SEC v. Coldicutt, No. 2:17-cv-03888 (CAS) AFMx, 2017 U.S. Dist. LEXIS 121056
`
`
`
`
`
`3
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.4 Page 4 of 18
`
`
`(C.D. Cal. Jul. 31, 2017).
`RELATED ENTITIES AND INDIVIDUALS
`Issuer A is a Wyoming corporation, located in San Diego, California.
`11.
`According to its registration statement, it is a development stage company, planning
`to harvest and distribute surplus fruit from homeowners’ backyards. Through its June
`17, 2019 registration statement and three amendments thereto, Issuer A registered an
`initial public offering of 30 million shares of its common stock for $0.01 per share,
`for a total of $300,000. The registration statement went effective on September 11,
`2019, and Issuer A is now a reporting company obligated to file reports pursuant to
`Sections 13 and 15(d) of the Exchange Act.
`12. Consulting Company B is a Delaware limited liability company, which
`Issuer A’s registration statement identifies as providing loans to Issuer A.
`THE ALLEGATIONS
`A. Coldicutt is Hired by the “Fund Managers”
`13. On or about May 8, 2017, two purported hedge fund managers (“Fund
`Manager 1” and “Fund Manager 2,” collectively the “Fund Managers”) contacted
`Coldicutt to inquire about potential legal representation for their supposed hedge fund
`(the “Fund”).
`14. Fund Manager 1 was in fact an undercover FBI agent.
`15. Fund Manager 2 was in fact a cooperating witness.
`16. The Fund Managers told Coldicutt they were seeking representation as
`to, among other things, creating new companies and taking them public.
`17. Coldicutt set up a meeting with the Fund Managers for on or about
`May 16, 2017, in Del Mar, California.
`18. During their initial May 16 meeting, the Fund Managers told Coldicutt
`that they wanted to create a company and take it public.
`19. Subsequently, on or about June 13, 2017, Fund Manager 1 emailed
`Coldicutt that he and Fund Manager 2 wanted to retain Coldicutt.
`
`
`
`
`
`4
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.5 Page 5 of 18
`
`
`20. On or about June 14, 2017, Coldicutt provided the Fund Managers his
`estimate of legal fees, including that he charged $25,000 to create a company and
`take it public.
`21. On or about June 15, 2017, Fund Manager 2 emailed Coldicutt asking
`for information about the fees charged by various third party associates that he had
`mentioned to the Fund Managers, including accountants, an auditor, and transfer
`agents.
`22. On or about June 21, 2017, Fund Manager 1 signed Coldicutt’s
`engagement letter on behalf of the Fund and wired $5,000 to Coldicutt’s attorney
`trust account as a retainer.
`The Fund Managers and Coldicutt Plan to Take Issuer A Public
`B.
`23. On or about July 18, 2017, the Fund Managers held a planning meeting
`with Coldicutt in Del Mar, California.
`24. During the July 18 meeting, Coldicutt described to the Fund Managers
`how he could create the façade of a bona fide business, take it public, and obtain
`quotation clearance for its stock to trade on the over-the-counter market.
`25. During the July 18 meeting, Coldicutt offered to provide the Fund
`Managers with information about stock promoters in whom they were interested.
`26. Coldicutt stated during the July 18 meeting that he did not get involved
`in stock promotions; instead, he found it best to remain on the periphery of the
`microcap market because it meant that he “dodged bullets.”
`27. During the July 18 meeting, Coldicutt suggested to the Fund Managers
`several ways to avoid regulatory scrutiny when creating a public shell company.
`28. First, the Fund Managers had to come up with a strong business plan for
`the shell company from which to prepare a registration statement, to persuade the
`SEC that the shell company was a real business.
`29. Coldicutt stated that he was good at writing business plans and could do
`so for any type of business. There was a peach on the table where the meeting took
`
`
`
`
`
`5
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.6 Page 6 of 18
`
`
`place, which had come from a nearby tree in the Fund Managers’ yard. Coldicutt
`joked that he could write a plan for a company that would pick surplus peaches from
`homeowners’ backyards. Throughout the meeting, the Fund Managers and Coldicutt
`joked about a peach picking business, which ultimately became Issuer A.
`30. Second, Coldicutt stated that to give the appearance of legitimacy, the
`shell company would need initial startup money.
`31. Coldicutt suggested documenting the initial funding in the form of a
`loan.
`32. Third, Coldicutt stated that the Fund Managers should select a CEO with
`a business background for the shell company, and “not a Starbucks barista.”
`33. Fourth, Coldicutt stated that the Fund Managers would need an outside
`CFO or bookkeeper to prepare the financial statements, as well as an outside auditor.
`34. Coldicutt offered to suggest accountants and auditing firms for the Fund
`Managers’ consideration.
`35. To avoid regulatory scrutiny, Coldicutt suggested selecting an audit firm
`that had previously conducted audits in the business sector of the shell company.
`36. Fifth, Coldicutt stated that the Fund Managers should find 25 to 30
`shareholders to invest in a private offering.
` Coldicutt advised documenting the private offering with private
`37.
`placement memoranda and copies of investor checks.
`38. Coldicutt advised that the investors should be “friendly” with the Fund
`Managers so that they would hold or trade the stock as the Fund Managers chose.
`39. Coldicutt explained that, in order to get quotation clearance, FINRA
`would want to see a shareholder base, with actual investors who put their own money
`into the company.
`40. Coldicutt cautioned that the investors had to be “real” because their
`names would appear in the S-1.
`41. The Fund Managers expressed concern to Coldicutt about the names of
`
`
`
`
`
`6
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.7 Page 7 of 18
`
`
`the private offering shareholders, particularly their own names or the Fund’s names,
`appearing in the Form S-1.
`42. Coldicutt suggested instead having the 25 to 30 shareholders buy the
`shares from the Form S-1 once it was effective.
`43. During the July 18 meeting, the Fund Managers asked about the status of
`the SEC’s subpoena enforcement action against Coldicutt.
`44. Fund Manager 1 asked if “things got difficult” for Coldicutt, whether
`they would still be able to work with him.
`45. Coldicutt responded that he could still do the legwork but that he would
`have another microcap attorney “do the rest.”
`46. During the July 18 meeting, the Fund Managers told Coldicutt that they
`would proceed with taking a shell company public.
`47. Fund Manager 1 told Coldicutt that the Fund Managers planned to pivot
`the shell company into the cannabis business, and run a stock promotional campaign.
`48. Coldicutt replied that “we” should come up with a business idea.
`49. Coldicutt stated that he could write the business plan.
`50. Coldicutt suggested that the shell company be a peach-picking company,
`and the Fund Managers agreed.
`51. Coldicutt advised the Fund Managers to start looking for a CEO for the
`shell company.
`C. Coldicutt Prepares a Fictitious Business Plan for Issuer A
`52. After the July 18 meeting, Coldicutt drafted a business plan for Issuer A.
`53. The business plan described Issuer A as a company that would collect
`unpicked fruit from homeowners in the Southern California area, consolidate it, and
`sell it to grocery stores and the public generally.
`54. Coldicutt knew, when he drafted the business plan, that it was fictitious.
`55. Coldicutt knew, when he drafted the business plan, that the Fund
`Managers planned for Issuer A to operate in the cannabis industry and run a stock
`
`
`
`
`
`7
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.8 Page 8 of 18
`
`
`promotion campaign.
`D. Coldicutt and the Fund Managers Discuss Issuer A’s Source of
`Funding
`56. Coldicutt met with the Fund Managers on or about September 27, 2017
`in Del Mar, California.
`57. At the September 27 meeting, the Fund Managers introduced Coldicutt
`to a consultant who would purportedly provide funding for Issuer A (the
`“Consultant”).
`58. The Fund Managers told Coldicutt that Consulting Company B was the
`Consultant’s company.
`59. At the September 27 meeting, the Fund Managers and the Consultant
`discussed, in front of Coldicutt, that Fund Manager 1’s money would go to
`Consulting Company B, and would then be loaned to Issuer A.
`60. Coldicutt suggested at the September 27 meeting that Consulting
`Company B’s loans would become convertible to Issuer A stock, which would
`generate more free trading shares.
`61. At the September 27 meeting, Coldicutt provided a copy of the Issuer A
`business plan to the Fund Managers and the Consultant.
`62. On or about October 16, 2017, the Fund Managers informed Coldicutt
`that they had selected a puppet CEO (“the Puppet”), to serve as Issuer A’s CEO.
`63. Coldicutt understood that the Puppet was controlled by the Fund
`Managers.
`64. The Puppet was, unbeknownst to Coldicutt, an undercover FBI agent.
`65. Although the Puppet was the nominal CEO, Coldicutt communicated on
`decisions concerning Issuer A with the Fund Managers and the Consultant,
`sometimes including the Puppet and sometimes not including him.
`
`
`
`
`
`8
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.9 Page 9 of 18
`
`
`E. Coldicutt Takes Additional Steps to Make Issuer A Appear
`Legitimate and Avoid Arousing Regulatory Suspicion
`66. Between late 2017 and approximately mid-August of 2018, Coldicutt
`periodically contacted the Fund Managers about Issuer A.
`67. On or about November 14, 2017, in Del Mar, California, Fund
`Manager 1 introduced Coldicutt to an associate of his (the “Associate”), whose role
`he indicated was to help make Fund Manager 1’s new companies appear legitimate
`and to organize stock promotions.
`68. On November 20, 2017, Coldicutt incorporated Issuer A in Wyoming.
`69. The Associate, unbeknownst to Coldicutt, was a cooperating witness.
`70. From that point in time, the Associate became Coldicutt’s main point of
`contact regarding Issuer A.
`In or about May 10, 2019, Coldicutt recommended to the Associate an
`71.
`audit firm (“Audit Firm C”), to serve as the outside auditor for Issuer A.
`72. Coldicutt explained to the Associate that Audit Firm C had experience
`with microcap issuers, but did not audit so many microcap firms that it might arouse
`regulatory suspicion.
`73. Coldicutt explained to the Associate that if the audit fee for Issuer A was
`too low, that could arouse regulatory suspicion.
`74. During the same call, Coldicutt suggested to the Associate that the
`Puppet update his social media profile.
`75. Coldicutt stated he had done some internet searches on the Puppet and
`found very little information.
`76. Coldicutt told the Associate that most people have a biographical profile
`on social media, and the lack of one for the Puppet “looked strange.”
`77. Coldicutt recommended that the Puppet’s profile go back five years and
`that it should show him “doing something.”
`78. The Associate later told Coldicutt that the Puppet had created a social
`
`
`
`
`
`9
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.10 Page 10 of 18
`
`
`media profile, per his suggestion.
`In or about January 19, 2018, the Fund Managers told Coldicutt that a
`79.
`stock promoter with whom they had met was leery of working with Coldicutt, due to
`the SEC subpoena enforcement actions against him.
`80. On May 20, 2019, Coldicutt emailed the Puppet and the Associate,
`attaching an engagement letter for another attorney (“Attorney D”) who would
`provide the opinion letter for Issuer A’s Form S-1, instead of Coldicutt providing it.
`In an email dated June 5, 2019 from Coldicutt to Audit Firm C, Issuer
`81.
`A’s bookkeeper, and the Puppet, Coldicutt falsely stated that changing attorneys had
`been the Puppet’s idea.
`82. Coldicutt however continued to perform legal work for Issuer A.
`In conversations with the Associate between at least May 15, 2019 and
`83.
`July 30, 2019, the Associate reiterated to Coldicutt that the Fund Managers intended
`to rebrand Issuer A as a cannabis company and then run a promotional campaign in
`order to sell its shares at a profit.
`84. The Associate also told Coldicutt he was working on other similar deals
`with the Fund Manager, which Coldicutt said he would be interested in working on.
`F. Coldicutt Prepares and Files with the SEC Issuer A’s Materially
`False and Misleading Registration Statement and Amendments
`thereto
`85. Coldicutt had begun to prepare Issuer A’s draft Form S-1 as early as
`October 2017.
`86. On or about May 10, 2019, Coldicutt sent the draft S-1 by email for
`review by Issuer A’s auditor, bookkeeper, and the Puppet.
`87. On June 17, 2019, Coldicutt filed Issuer A’s initial Form S-1 with the
`SEC.
`88. Between June and August, 2019, Coldicutt, on behalf of Issuer A,
`subsequently responded to several comments on the S-1 from the SEC’s Division of
`
`
`
`
`
`10
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.11 Page 11 of 18
`
`
`Corporation Finance.
`89. Coldicutt prepared and filed Issuer A’s amended Forms S-1 on July 25,
`August 5, and August 27, 2019.
`90. The Issuer A Form S-1 went effective on September 11, 2019.
`91. The Issuer A Form S-1 was materially false and misleading in several
`aspects, and gave the false impression that Issuer A was an actual fruit harvesting and
`distribution business, whereas it was a sham company.
`a. Misstatements regarding Issuer A’s business
`92. The Issuer A Form S-1 characterized Issuer A as a development stage
`company that would go into the fruit harvesting and distribution industry.
`In reality, Coldicutt had simply made up the company.
`93.
`94. Coldicutt had been told, by the time he prepared the Form S-1, that the
`Fund Managers’ actual plan for Issuer A’s business was to convert it into a cannabis
`company and carry out a stock promotion campaign.
`95. Coldicutt knew, or was reckless or negligent in not knowing, that the
`description of the business plan in Issuer A’s Form S-1 was false and misleading.
`It would have been important to a reasonable investor to know the true
`96.
`nature of the business that they were investing in and thus important for them to
`know that Issuer A’s actual intended business was to eventually be a cannabis
`company that would be subject to a stock promotion campaign.
`Deceptive sham form agreements
`b.
`97. The Issuer A Form S-1 had, as attachments, purported form agreements
`with third parties, for the fruit harvesting and distribution business.
`98. Coldicutt created the sham form agreements.
`99. One of the sham agreements purported to be between Issuer A and a
`homeowner, to allow the company to harvest the latter’s surplus fruit.
`100. The other sham agreement purported to be between Issuer A and a fruit
`picker.
`
`
`
`
`
`11
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.12 Page 12 of 18
`
`
`101. The form agreements deceptive, because, they gave the impression that
`Issuer A was focused upon developing as a fruit harvesting and distribution business,
`even though, and as Coldicutt had been told, the Fund Managers planned to rebrand
`Issuer A as a cannabis company.
`102. Coldicutt knew, or was reckless or negligent in not knowing, that the
`form agreements were deceptive.
`103. It would have been important to a reasonable investor to know that the
`agreements did not reflect actual intended business operations of Issuer A.
`Undisclosed control person/promoter
`c.
`104. The Issuer A Form S-1 stated that the Puppet was Issuer A’s sole
`officer, director, promoter, and control person.
`105. The Fund Managers were not mentioned in the S-1.
`106. Coldicutt knew the Fund Managers were in control of both Issuer A and
`the Puppet.
`107. The identification of solely the Puppet as Issuer A’s control person and
`promoter was false and misleading, given Fund Manager 1’s control of the company.
`108. Coldicutt knew, or was reckless or negligent in not knowing, that the
`Form S-1 was false or misleading in its description of Issuer A’s control
`persons/promoters.
`109. It would have been important to a reasonable investor to know who was
`running the company in which they were considering an investment and thus that
`Issuer A was actually controlled/promoted by the Fund Managers rather than the
`Puppet.
`
`d. Misleading statements re: funding by the Puppet
`110. The Issuer A Form S-1 stated that in 2017, the Puppet provided Issuer A
`$5,000 in initial funding for 5 million shares of its common stock.
`111. This description of Issuer A’s funding was false.
`112. In reality, Coldicutt recharacterized the $5,000 retainer that he had
`
`
`
`
`
`12
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.13 Page 13 of 18
`
`
`received from Fund Manager 1 on behalf of the Fund as funding by the Puppet.
`113. Contrary to the statement in the S-1, the Puppet did not provide any
`initial funding to Issuer A.
`114. Coldicutt knew, or was reckless or negligent in not knowing, that the
`Puppet had not provided the $5,000 referenced in the Form S-1.
`115. It would have been important to a reasonable investor to know that
`Issuer A’s undisclosed control persons/promoters had actually provided it the $5,000
`referenced, rather than its disclosed CEO.
`e. Misleading statements re: funding from Consulting Company B
`116. The Issuer A Form S-1 stated that, from November 20, 2017 to May 20,
`2019, Consulting Company B had provided $29,000 in funding to Issuer A, in return
`for promissory notes.
`117. The statement regarding Issuer A’s receipt of funding from Consulting
`Company B was false and misleading.
`118. Coldicutt had been told that Consulting Company B was merely a front
`for Fund Manager 1’s financing of the company.
`119. Coldicutt knew, or was reckless or negligent in not knowing, that the
`description of the source of Issuer A’s startup funding from Consulting Company B
`was false and misleading.
`120. It would have been important to investors to know that Issuer A’s actual
`startup funding came from its undisclosed control persons/promoters.
`Concealment of Coldicutt’s identity
`f.
`121. Issuer A’s Form S-1 included an attorney opinion letter concluding that
`the shares to be issued in the offering were validly issued, fully paid, and non-
`assessable.
`122. Attorney D signed the opinion letter.
`123. Coldicutt had Attorney D sign the opinion letter in order to hide
`Coldicutt’s name from Issuer A’s Form S-1 filed with the SEC.
`
`
`
`
`
`13
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.14 Page 14 of 18
`
`
`124. Coldicutt wanted to keep his name out of the Form S-1 to avoid arousing
`the SEC’s suspicion, since he was the subject of the two prior subpoena enforcement
`applications.
`G. Coldicutt’s Receipt of Funds
`125. Coldicutt received at least $39,500 for his role in Issuer A’s fraudulent
`Form S-1.
`126. First, Coldicutt received approximately $37,000 in attorneys’ fees for
`preparing the Issuer A Form S-1 and reviewing and answering follow-up questions
`from the SEC.
`127. This included, among other fees paid to him, Coldicutt’s $5,000 retainer
`and the $5,000 received from Consulting Company B.
`128. Second, Coldicutt received a bonus or “progress payment” from the
`Associate, which was paid by Fund Manager 1, and which was tied to the filing of
`Issuer A’s Form S-1.
`129. On or about May 15, 2019, the Associate told Coldicutt that Fund
`Manager 1 was going to pay him $100,000, once Issuer A’s registration statement
`was declared effective and its stock received a trading symbol.
`130. The Associate also stated to Coldicutt that he was going to try to get
`progress payments from Fund Manager 1, so he could receive some of the money as
`soon as Issuer A’s registration was filed, and some when it went effective.
`131. The Associate offered to share a portion of the progress payments with
`Coldicutt.
`132. On or about June 28, 2019, approximately one week after Issuer A’s
`initial Form S-1 was filed with the SEC, Coldicutt received $2,500 from the
`Associate, half of the first such progress payment.
`
`
`
`
`
`14
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.15 Page 15 of 18
`
`
`FIRST CLAIM FOR RELIEF
`Fraud in the Offer or Sale of Securities
`Violations of Sections 17(a)(1) and (3) of the Securities Act
`133. The SEC realleges and incorporates by reference paragraphs 1 through
`132 above.
`134. Defendant Coldicutt, a securities attorney, intentionally created a
`fictitious company with a sham business plan and fake form agreements; prepared
`and filed with the SEC its Form S-1 registration statement and amendments thereto,
`which concealed the issuer’s true control, business nature and source of funding; and
`hid his role in the offering, while undertaking other deceptive acts to buttress the
`company’s purported legitimacy and avoid arousing regulatory suspicion.
`135. By engaging in the conduct described above, Defendant Coldicutt,
`directly or indirectly, in the offer or sale of securities, and by the use of means or
`instruments of transportation or communication in interstate commerce or by use of
`the mails directly or indirectly: (a) employed devices, schemes, or artifices to
`defraud; and (b) engaged in transactions, practices, or courses of business which
`operated or would operate as a fraud or deceit upon the purchaser.
`136. Defendant Coldicutt, with scienter, employed devices, schemes and
`artifices to defraud; and, with scienter or negligence, engaged in transactions,
`practices, or courses of business which operated or would operate as a fraud or deceit
`upon the purchaser.
`137. By engaging in the conduct described above, Defendant Coldicutt
`violated, and unless restrained and enjoined will continue to violate, Sections 17(a)(1)
`and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77q(a)(1), 77q(a)(3).
`SECOND CLAIM FOR RELIEF
`Fraud in the Offer or Sale of Securities
`Violations of Section 17(a)(2) of the Securities Act
`138. The SEC realleges and incorporates by reference paragraphs 1 through
`
`
`
`
`
`15
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.16 Page 16 of 18
`
`
`132 above.
`139. Defendant Coldicutt, a securities attorney, obtained money by means of
`materially misleading statements in Issuer A’s Form S-1 registration statements and
`the amendments thereto. The registration statement falsely portrayed the company’s
`business; its true control and sources of funding; fictitious form agreements for its
`business operations; and it omitted Coldicutt’s role as the company’s securities
`attorney. As a result of his conduct, Coldicutt obtained attorneys fees and a bonus
`payment.
`140. By engaging in the conduct described above, Defendant Coldicutt,
`directly or indirectly, in the offer or sale of securities, and by the use of means or
`instruments of transportation or communication in interstate commerce or by use of
`the mails directly or indirectly: (b) obtained money or property by means of untrue
`statements of a material fact or by omitting to state a material fact necessary in order
`to make the statements made, in light of the circumstances under which they were
`made, not misleading.
`141. Defendant Coldicutt, with scienter or negligence, obtained money or
`property by means of untrue statements of a material fact or by omitting to state a
`material fact necessary in order to make the statements made, in light of the
`circumstances under which they were made, not misleading.
`142. By engaging in the conduct described above, Defendant Coldicutt
`violated, and unless restrained and enjoined will continue to violate, Section 17(a)(2)
`of the Securities Act, 15 U.S.C. § 77q(a)(2).
`PRAYER FOR RELIEF
`WHEREFORE, the SEC respectfully requests that the Court:
`I.
`Issue findings of fact and conclusions of law that Defendant committed the
`alleged violations.
`
`
`
`
`
`16
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`

`

`Case 3:22-cv-00274-MMA-KSC Document 1 Filed 03/01/22 PageID.17 Page 17 of 18
`
`
`II.
`Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of
`Civil Procedure, permanently enjoining Defendant, and his officers, agents, servants,
`employees and attorneys, and those persons in active concert or participation with
`any of them, who receive actual notice of the judgment by personal service or
`otherwise, and each of them, from violating Section 17(a) of the Securities Act [15
`U.S.C. §77q(a)].
`
`III.
`Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of
`Civil Procedure, permanently enjoining Defendant, and his officers, agents, servants,
`employees and attorneys, and those persons in active concert or participation with
`any of them, who receive actual notice of the judgment by personal service or
`otherwise, and each of