SEC Charges Man with Fraud, Unregistered Brokerage Activity, and Unregistered Offering
Litigation Release No. 24642 / October 11, 2019
Securities and Exchange Commission v. Mallion, No. 0:19-cv-62532 (S.D. Florida filed October 10, 2019)
The Securities and Exchange Commission charged Richard Andrew Mallion with engaging in fraud, acting as an unregistered broker, and participating in an unregistered securities offering in connection with two issuers, Virtual MediClinic USA LLC ("Virtual MediClinic") and The Luxurious Travel Corp./US Lighting Group, Inc. ("LXRT/USLG").
According to the SEC's complaint, from at least May 2016 until October 2018, Mallion solicited individual investors throughout the United States to invest in securities issued by Virtual MediClinic and LXRT/USLG. Mallion, who used the alias Richard Burnstein when soliciting investors, allegedly earned transaction-based compensation for his solicitation activities and was not registered with the Commission as a broker or dealer. In connection with his promotion of Virtual MediClinic, Mallion allegedly misled at least one investor into believing the company would soon be going public and that investor proceeds would be used to fund the offering. Mallion also allegedly personally obtained and sold LXRT/USLG shares by hiring solicitors to call prospective investors and convince them to purchase LXRT/USLG shares in their own brokerage accounts at prices that were coordinated between Mallion and the solicitors.
The SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, charges Mallion with violating the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934, the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and the registration provisions of Section 5 of the Securities Act.
Mallion has consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment that permanently enjoins him from violations of the charged provisions, permanently enjoins him from soliciting the purchase or sale of any security, and orders him to pay $634,511 in disgorgement, $18,606 in pre-judgment interest, and a civil monetary penalty of $150,000. The settlement is subject to court approval.
The SEC's investigation was conducted by James Thibodeau and Laurie Abbott, was assisted by Amy Oliver and David Whipple, and was supervised by Daniel Wadley, Regional Director of the Salt Lake Regional Office.
The SEC's Office of Investor Education and Advocacy has issued an Investor Alert to encourage investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov.