David A. Spargo; CannaCloud, Inc.; D.A. Spargo & Co. LLC
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26297 / April 29, 2025
Securities and Exchange Commission v. David A. Spargo, et al., No. 2:25-cv-01043 (D. Ariz. filed Mar. 28, 2025)
SEC Charges Arizona Man and His Companies with Defrauding Investors in Cannabis App Investment Scheme
On April 24, 2025, the Securities and Exchange Commission obtained a final judgment against David A. Spargo, a resident of Mesa, Arizona, and two entities in his control, CannaCloud, Inc. and D.A. Spargo & Co. LLC, who were charged with defrauding approximately 33 investors out of at least $1.65 million dollars.
The SEC’s complaint, filed in the United States District Court for the District of Arizona, alleged that, from at least February 2021 to December 2021, Spargo represented to investors that he would use their money to fund CannaCloud’s business, claiming that the company was developing an application that would give marijuana consumers the ability to access inventories of cannabis dispensaries and purchase cannabis products. As alleged, Spargo told investors that they would receive a 20% annual return on their investment. According to the complaint, rather than using investor funds to develop CannaCloud’s business as represented, Spargo instead spent investor funds at casinos and on his personal expenses.
Spargo, CannaCloud, and D.A. Spargo, without admitting or denying SEC’s complaint, consented to the entry of final judgments permanently enjoining them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Spargo’s final judgment also enjoins him from participating in the issuance, purchase, offer, or sale of any securities, with a carve-out for trading in his personal accounts, orders him to pay disgorgement of $1,504,559 with prejudgment interest of $313,449, on a joint-and-several basis with CannaCloud and D.A. Spargo, orders him to pay a civil penalty of $230,464, and prohibits him from serving as an officer or director of a public company. In addition, CannaCloud and D.A. Spargo, without admitting or denying the allegations in the complaint, each consented to the entry of a final judgment enjoining each company from future violations and disgorgement of $1,504,559 plus prejudgment interest of $313,449, on a joint-and-several basis with each other and Spargo.
The SEC’s investigation was conducted by Heather C. Gorman and Maria Rodriguez in the SEC’s Los Angeles Regional Office, with assistance from trial counsel Alec Johnson. The case was supervised by Assistant Regional Director Marc J. Blau also of the Los Angeles Regional Office.