Former The Ticket Reserve Inc. CEO and COO Settle SEC Fraud Charges
Litigation Release No. 24030 / January 22, 2018
Securities and Exchange Commission v. Ash Narayan, The Ticket Reserve Inc. a/k/a Forward Market Media, Inc., Richard M. Harmon, and John A. Kaptrosky, Civil Action No. 16-CV-1417-M (N.D. Tex. filed May 24, 2016)
The U.S. District Court for the Northern District of Texas last week entered consent judgments in a fraud case brought by the Securities and Exchange Commission against The Ticket Reserve Inc.'s (TTR) former CEO, Richard Harmon, and former COO, John Kaptrosky. The final judgment against Harmon, who was also Chairman of TTR's Board of Directors, ordered him to pay $945,078.22, including $620,078.22 in disgorgement and prejudgment interest and a $325,000 civil penalty. Monetary remedies against Kaptrosky will be determined by the Court at a later time.
As alleged in the SEC's First Amended Complaint, filed contemporaneously with the proposed consent judgments, Harmon and Kaptrosky engaged in a fraudulent scheme by raising funds from investors through TTR without disclosing that TTR was in severe financial distress. Harmon misappropriated more than $500,000 from individual investors for his own benefit, including for lease payments on a vacation home and his personal residence. The SEC further alleged that Ash Narayan, who previously settled the SEC's charges, misappropriated more than $2 million from individual investors. The defendants also made material misrepresentations to investors regarding the financial health of TTR and prolonged their fraudulent scheme by backdating documents and making Ponzi-like payments to keep the scheme from collapsing.
Without admitting or denying the allegations in the SEC's First Amended Complaint, Harmon and Kaptrosky also consented to be enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933.
These settlements follow an emergency action initiated on May 24, 2016 and announced on June 21, 2016. In the emergency action, the SEC obtained a temporary restraining order halting the fraud along with an order appointing a receiver over TTR.
The SEC's litigation is being led by Chris Davis in the SEC's Fort Worth office. The investigation was conducted by Keith J. Hunter and Carol J. Hahn and supervised by Eric R. Werner. Jessica B. Magee and B. David Fraser are supervising the matter.