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U.S. Securities and Exchange Commission


Litigation Release No. 23909 / August 16, 2017

Securities and Exchange Commission v. Vergeous LLC, et al., No. 1:17-cv-23116-CMA (S.D. Fla. filed Aug. 16, 2017)

Video Game Companies and Their Principal Charged With Offering Fraud

The Securities and Exchange Commission today announced that two Florida-based video game development companies and their principal have agreed to pay approximately $293,000 for misleading investors in video game projects.

According to the SEC's complaint, through a series of unregistered securities offerings during a three-year period, Vergeous LLC, Dream Team Partners LLC, and Paul E. Renfroe raised about $1.2 million from approximately 33 investors in several states, many of whom were elderly clients of Renfroe's other businesses. The SEC alleges that Vergeous and Renfroe told investors that their money would be used to develop "free-to-play" video game projects. Instead, the SEC alleges that more than $150,000 raised from investors was used to pay undisclosed company debts and back salaries to Renfroe and others. Renfroe also allegedly touted his experience as a "long time financial advisor" and told investors that he "voluntarily" gave up his securities licenses because placing customers' investments at risk "caused a real conflict of conscience." In reality, as alleged in the complaint, Renfroe was permanently barred from the securities industry by the NASD (now FINRA) for misusing customer funds. The SEC also alleges that Vergeous and Renfroe misled investors by failing to disclose that Dream Team held complete control over all intellectual property rights associated with any joint video game projects and that Renfroe had a 30 percent ownership stake in Dream Team, despite stating that "no conflicts of interest exist."

The SEC's complaint further alleges that Renfroe was not registered with the SEC as a broker-dealer. Investors can quickly and easily check the credentials of people selling investments and determine whether they are registered by usingĀ the SEC's investor.gov website.

The SEC's complaint filed in the U.S. District Court for the Southern District of Florida charges Vergeous, Dream Team, and Renfroe with violating Sections 5(a), 5(c), and 17(a)(2) of the Securities Act of 1933, and charges Renfroe with violating Section 15(a)(1) of the Securities Exchange Act of 1934. Without admitting or denying the allegations in the SEC's complaint, Vergeous, Dream Team, and Renfroe consented to the entry of final judgments permanently enjoining each of them from violating the charged provisions of the federal securities laws, ordering Vergeous and Renfroe to pay $203,950 in disgorgement and interest, and Renfroe to pay an $89,078 penalty. The settlements are subject to approval by the court.

The SEC's investigation was conducted by David Staubitz and Mark Dee in the Miami Regional Office, and supervised by Chedly C. Dumornay.

SEC Complaint



Modified: 08/16/2017