The Securities and Exchange Commission charged Native American Energy Group Inc., its chief executive officer, Joseph D’Arrigo, and one of its former consultants, David Hudzik, with violating antifraud and registration provisions of the federal securities laws in connection with a multi-million dollar offering fraud.
The SEC’s complaint alleges that defendants deceived investors regarding the use of investor proceeds. According to the complaint, defendants solicited investors with a misleading subscription agreement that described the subscription as an “investment in the company.”
According to the complaint, D’Arrigo and the company’s stock salespersons, including Hudzik, pocketed approximately 70% of the $3.43 million raised from investors between October 2014 and August 2020. The complaint further alleges that Hudzik falsely told investors that he would only receive a commission on any profits earned after an investor sold their Native American Energy shares when, in fact, Hudzik received commissions of 20% to 30% within days of the investments he sold while acting as an unregistered broker.
In addition, the complaint alleges that D’Arrigo misappropriated approximately $958,500 in investor proceeds for his personal benefit, using the proceeds to withdraw cash for himself, to wire money to himself and his wife, to pay personal credit card bills, and to make numerous purchases at restaurants, gas stations, grocery stores, drug stores and other retailers.
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of New York, charges Native American Energy Group, D’Arrigo, and Hudzik with violating SEC rules. The complaint further charges Hudzik with violating Section 15(a) of the Exchange Act. The SEC seeks permanent injunctive relief, disgorgement of allegedly ill-gotten gains plus prejudgment interest, and civil money penalties against each defendant. The SEC also seeks officer and director bars and penny stock bars against D’Arrigo and Hudzik.