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SEC v. Henry Ford f/k/a Cleothus Lefty Jackson, et al. Case No. 2:19-cv-02214-PD (E.D. Pa.)

Oct. 7, 2022

On May 22, 2019, the Commission filed a complaint (the “Complaint”) against Henry Ford f/k/a Cleothus Lefty Jackson (“Ford”) and Fallcatcher, Inc. (“Fallcatcher”) (collectively, the “Defendants”). The Complaint alleged that between approximately August and September 2018, the Defendants violated the federal securities laws by making material misrepresentations to investors about large insurers’ and state governments’ purported interest in software technology created by Fallcatcher, which would track patients receiving drug addiction treatment in order to prevent medical billing fraud. Ford made these statements knowing that at no point had any insurance company or any state health agencies expressed any interest in Fallcatcher’s purported technology or in establishing any business relationship with Ford or Fallcatcher. Based on these misrepresentations, Fallcatcher raised approximately $5 million from approximately 50 investors. See the Commission’s Complaint.

The Defendants were ordered to pay a total of $3,386,964.53 in disgorgement, prejudgment interest, and penalties to the Commission pursuant to the payment plan detailed therein. 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 Judgment Order and Ford and Fallcatcher’s Final Judgments.

On July 14, 2020, in a related proceeding, the Commission instituted and simultaneously settled an administrative and cease-and-desist proceeding (the “Order”) against, LLC, d/b/a A Better Financial Plan and Dean J. Vagnozzi (collectively, the “Respondents”) finding that the Respondents raised over $4.9 million for Fallcatcher from August through September 2018 from their advisory clients in violation of the federal securities laws. The Commission ordered the Respondents to pay a total of $599,429.33 of disgorgement, prejudgment interest and penalties. The Commission created a Fair Fund, so penalties, along with the disgorgement and prejudgment interest, collected can be distributed to harmed investors (the “Vagnozzi Fair Fund”). The Order provides that the Vagnozzi Fair Fund may receive the funds from and/or be combined with the funds paid by other respondents or defendants, including without limitation defendants in SEC v. Ford, et al., 19-cv-2214 (E.D. Pa). See the Commission’s Order: Release No. 33-10802.

On October 29, 2020, the Commission filed a motion for an order establishing a Fair Fund (the “Fair Fund”) for the $2,267,805.27 collected from the Defendants, along with any future funds received from the Defendants, and the $599,429.33 in the Vagnozzi Fair Fund, and appointing Miller Kaplan Arase LLP as the Tax Administrator to oversee the tax obligations of the Fair Fund. See the Commission’s Motion and Memorandum.

On November 6, 2020, the Commission filed a motion for an order appointing a Distribution Agent and approving a Proposed Plan of Distribution (the “Plan”). See the Commission’s Motion and the Plan

On November 12, 2020, the Court entered an order granting the Commission’s motion and established the Fair Fund and appointed the Tax Administrator. See the Court’s Order.

The Fair Fund consists of $2,867,234.60 comprised of $2,267,805.27 recovered to date from the Defendants plus the $599,429.33 recovered from the Respondents. Any future funds paid pursuant to the Defendants’ judgments will be added to the Fair Fund. The Fair Fund has been deposited into an interest-bearing account and all interest accrued will be for the benefit of the Fair Fund.

One objection to the Plan has been submitted to the Court. See the Objection.

On February 22, 2021, the Court entered an Order denying the Objection and approving the Plan of Distribution. See the Court’s Order Approving the Plan.

The Distribution Plan provides that the distribution of the Distribution Fund will be distributed on a pro rata basis to the 61 eligible investors who were harmed by Defendants’ conduct and suffered a net loss.

For more information, please contact the Commission:

Office of Distributions

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