On August 21, 2017, the Commission filed a complaint against Creative Learning Corp. (“CLCN”) and Brain Pappas (“Pappas”), its former CEO and President; Daniel O’Donnell (“O’Donnell”), its former COO and director; and, Michelle Cote (“Cote”), a director and creator of its business concept (collectively, the “Defendants”). The complaint alleged that, from early 2011 and continuing into early 2015, Pappas made numerous false statements concerning payments to Pappas's family members, his business experience and personal financial history, and his evaluation of the company's disclosure and financial reporting controls. The complaint further charged Pappas with failing to timely report information about holdings and transactions in securities of publicly-traded companies that he beneficially owned, and failing to file proxy materials as part of an effort to regain control of CLCN following his ouster. The complaint also alleged that O'Donnell and Cote signed annual reports they knew, or should have known, contained false representations concerning the fees and commissions paid to Pappas's relatives and Pappas's previous personal bankruptcy. See Complaint.

O’Donnell and Cote were ordered to pay a total of $43,227.70 and $28,216.77, respectively, in disgorgement, prejudgment interest and civil penalties to the Commission. The Commission was ordered to hold all funds, together with interest and income earned thereon (collectively, the “Fund”), pending further order of the Court. See O’Donnell’s Final Judgment and Cote’s Final Judgment

Litigation is still pending in regards to all other parties.

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov