U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23817 / April 27, 2017
Securities and Exchange Commission v. Michael Andre Jones, No. 17-cv-02413 (C.D. Cal. filed Mar. 29, 2017)
SEC Refiles Action Charging Michael Andre Jones with Fraudulent Offering and Sales of Unregistered Securities
On March 29, 2017, the Securities and Exchange Commission filed a settled civil enforcement action in the U.S. District Court for the Central District of California against Michael Andre Jones, alleging that he conducted a fraudulent offering and sales of unregistered securities. The SEC's action against Jones is identical to the civil enforcement action previously filed in federal court in the District of Columbia on August 19, 2016, which was voluntarily dismissed without prejudice on January 13, 2107.
The SEC's complaint alleges that, from at least April of 2010 through July of 2013, Jones sold more than $700,000 worth of convertible promissory notes to twenty investors in twelve states. According to the complaint, in connection with the offer and sales of the notes, Jones knowingly or recklessly made multiple fraudulent statements and otherwise engaged in a scheme and practices to defraud investors. The complaint also alleges that the promissory notes were neither registered with the SEC nor subject to any exemption from registration and that Jones acted as an unregistered broker in conducting the offering. Finally, the complaint alleges that Jones separately defrauded two investors by selling them his restricted stock in a small unrelated biotechnology company and, when he was unable to obtain an opinion letter lifting the restrictions on the stock, conveniently keeping both the restricted stock and the funds the investors had paid him for the stock.
The SEC's complaint charges Jones with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. Without admitting or denying the allegations in the SEC's complaint, Jones agreed to settle the civil action by consenting to entry of a proposed final judgment that included permanent injunctions from future violations of the charged provisions of the federal securities laws and a conduct-based injunction, and that ordered him to pay disgorgement of $709,645, prejudgment interest of $77,673, and a civil penalty of $709,645. On April 5, 2017, the District Court entered the final judgment against Jones.