SEC Charges Issuer for Misleading Investors in the Sale of Unregistered Securities
Litigation Release No. 24571 / August 19, 2019
Securities and Exchange Commission v. Crystal World Holdings, Inc., et al., No. 1:19-cv-2490 (D.D.C. filed August 19, 2019)
The Securities and Exchange Commission today charged Crystal World Holdings, Inc., The New Sports Economy Institute, and Christopher Paul Rabalais with misleading investors in the unregistered offer and sale of securities of Crystal World to investors in the United States and around the world.
The SEC's Complaint alleges that Rabalais and his alter ego entities, Crystal World and The New Sports Economy Institute, solicited over $1.5 million from retail investors from 2014 through 2019 by misleadingly describing the Crystal World stock as "gifts" offered in exchange for "donations" to The New Sports Economy Institute, a nonprofit entity that Rabalais founded and controlled. According to the Complaint, throughout the fundraising period, Rabalais and his entities further misled investors and prospective investors by repeatedly promising that the Crystal World stock would soon be registered with the SEC, stressing the importance of buying the stock before registration made it valuable. In fact, Rabalais and his entities never took any steps to register the stock and, for much of the fundraising period, did not understand how to achieve such registration.
The Complaint, filed in the U.S. District Court for the District of Columbia, charges the Defendants with violating the registration and antifraud provisions of Sections 5(a), 5(c), 17(a)(2), and 17(a)(3) of the Securities Act of 1933. The SEC seeks permanent and conduct-based injunctions, disgorgement, interest, and civil money penalties.
The SEC's investigation was conducted by Michael Flanagan and Charles Davis, and was supervised by Ivonia Slade. The litigation will be conducted by Patrick Costello and supervised by Frederick Block.