SEC Charges Operator of Substance Abuse Center with Securities Fraud
Litigation Release No. 24721 / January 17, 2020
Securities and Exchange Commission v. Daniel Markel, Civil Action No. 2:20-cv-00502, (C.D. Cal. Filed January 17, 2020)
The Securities and Exchange Commission today filed settled charges against Daniel Markel, whose company raised more than $7.7 million from more than 100 investors in an unregistered securities offering. During the offering, Markel and his company failed to disclose that the device it used for patient treatment was manufactured in and imported from China in violation of Federal Drug Administration regulations.
The SEC's complaint alleges that from 2013 to 2016, Sobriety & Addiction Solutions LLC, known also as MyLife Recovery Centers, a Toluca Lake, California-based company owned and operated by Markel, touted to investors its exclusive license to use a subcutaneous implant of Naltrexone to treat alcohol and opioid dependency. However, for at least one year, Markel failed to inform investors that MyLife used implants compounded and manufactured in China, in violation of FDA regulations. As alleged, MyLife's reliance on the Chinese-manufactured implants posed a direct threat to its business plan, future prospects, and value of securities, none of which was ever disclosed. MyLife is now defunct and DT Securities Ltd., the broker-dealer firm that Markel used to conduct the unregistered offerings for MyLife, was expelled from FINRA membership in 2016.
Markel has agreed to settle the matter by consenting, without admitting or denying the Commission's allegations, to the entry of a final judgment that permanently enjoins him from future violations of the antifraud provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and the registration provisions of Sections 5(a) and 5(c) of the Securities Act. In addition, the judgment orders Markel to disgorge $439,678 of commission payments, pay prejudgment interest of $65,224, and pay a civil penalty of $189,427. Markel also consented to an administrative order barring him from working in the securities industry, with the right to reapply in five years.
The SEC's investigation was conducted by Peter Del Greco and supervised by Marc Blau, of the SEC's Los Angeles office.