SEC Obtains Asset Freeze to Halt Alleged Reg D Offering Fraud
The Securities and Exchange Commission today announced that it has obtained a temporary restraining order and asset freeze against a California solar panel company and three executives who allegedly defrauded more than 100 investors.
The Securities and Exchange Commission has obtained a temporary restraining order and asset freeze against a California solar panel company and three executives who allegedly defrauded more than 100 investors.
The SEC claims that Nanotech Engineering Inc., its chief financial officer Michael James Sweaney, also known as Michael Hatton, chief executive officer David Sweaney, and chief operating officer Jeffery Gange were engaged in an ongoing fraudulent offering of Nanotech’s securities.
Over the last two years, the defendants and others solicited more than $9.4 million from investors and allegedly misrepresented and omitted material facts in filings with the SEC and in private placement memoranda.
According to a recent Reg D filing, the fund was structured as a 506(c) offering, sought to raise $67.2 million in equity, and had a $28,000 investment minimum. Equity was raised by unlicensed sales agents who cold called investors in a boiler room-type setting, the SEC said.
While raising capital to purportedly fund the firm’s development of solar panels using nanotechnology, the defendants allegedly spent more than $2.4 million of investor funds for personal expenses, including luxury vehicles, a yacht named the Bella Vita, and cosmetic surgery. The complaint also alleges that the defendants actively concealed Michael Sweaney’s prior felony securities fraud conviction from investors.
“The SEC acted quickly to stop what we allege is an egregious fraud,” said Antonia Chion, associate director of the SEC’s division of enforcement. “The emergency relief we obtained on behalf of investors prevents the dissipation of the defendants’ assets.”
The SEC’s complaint, filed in federal court in the District of Columbia, charges Nanotech Engineering and the three executives with violating the antifraud provisions of the federal securities laws and seeks emergency relief as well as permanent injunctions, return of allegedly ill-gotten gains with prejudgment interest, and civil penalties. The complaint also names entities controlled by the defendants, Nanotech Finance LLC, Omni Golf LLC, and 3 Dragons LLC, as relief defendants.
