U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23618 / August 12, 2016
Securities and Exchange Commission v. Global Digital Solutions, Inc. et al, No. 16-cv-81413 (S.D. Fla. filed August 11, 2016)
SEC Charges Florida-Based Company and its Former CEO and CFO with Fraud
The Securities and Exchange Commission has charged West Palm Beach-based Global Digital Solutions, former chairman and CEO Richard J. Sullivan, and former CFO David A. Loppert with defrauding investors by issuing false and misleading press releases purporting that the company was a budding leader in cyber arms manufacturing and security technology solutions.
According to the SEC's complaint, Sullivan and Loppert were behind the press releases and corporate filings that falsified Global Digital's operations and revenue projections when in reality it had no customers, never manufactured any cyber arms, and never provided any security technology services or solutions.
The SEC's complaint alleges:
In fact, as alleged in the SEC's complaint, all of these statements were false; the private label agreement announced in October 2013 did not exist, there was no basis for Global Digital's November 2013 future annual revenue projection, and Global Digital operated out of a virtual office, had only $509,224 in cash and a $1.4 million note receivable, had no revenues or operations, lacked any credible, imminent, financing options and its offer to purchase the arms manufacturer announced in March 2014 had been immediately rejected.
The SEC's complaint alleges that Global Digital, Sullivan and Loppert violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b) thereunder, and Section 17(a)(2) of the Securities Act of 1933. The complaint also alleges that Global Digital violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11 thereunder and that Sullivan and Loppert aided and abetted these violations. The complaint also alleges that Sullivan and Loppert violated Rule 13a-14 of the Exchange Act and Section 16(a) of the Exchange Act and Rule16a-3 thereunder. The Commission's complaint seeks permanent injunctions and civil penalties against all defendants, disgorgement with prejudgment interest against Global Digital, and officer and director bars and penny stock bars against Sullivan and Loppert.
The SEC's investigation was conducted by Jacqueline M. O'Reilly and supervised by Thierry Olivier Desmet in the SEC's Miami Regional Office. The litigation will be led by Russell Koonin and Christine Nestor. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.