Securities and Exchange Commission

SEC Wins Judgment Against Microcap Company Executive for Fraudulent Press Releases

Litigation Release No. 25019 / January 29, 2021

Securities and Exchange Commission v. Revolutionary Concepts, Inc., et al., No. 1:18-cv-01832-RWS (N.D. Ga. filed April 27, 2018)

On January 22, 2021, the United States District Court for the Northern District of Georgia entered final judgment on the SEC's fraud and beneficial ownership reporting claims against Solomon RC Ali (a/k/a Richard M. Carter). Among other measures, the final judgment imposed penalties of $107,500 and barred Ali from acting as an officer or director of a public company for ten years.

The SEC's complaint, filed on April 27, 2018, alleges that Ali, while a Senior Vice President at Revolutionary Concepts, Inc. (REVO), arranged for REVO to enter into several sham transactions in which REVO would purportedly acquire valuable assets from companies that he portrayed in the press releases as independent. Ali then touted the sham transactions in press releases as being highly lucrative for REVO, while claiming that REVO acquired valuable assets from the deals. These claims were false. In reality, Ali had close ties to the other companies, the assets REVO acquired were essentially worthless, and Ali's claims that REVO could earn millions of dollars from the deals were baseless.

On April 10, 2020, the court awarded the SEC summary judgment on its fraud claims based on material misrepresentations and omissions Ali made in REVO's press releases. Specifically, the court concluded that Ali was, at a minimum, reckless when he made the false statements about the deals, and when he failed to inform investors that the deals were not arms-length transactions. The court also awarded the SEC summary judgment on its claim that Ali violated the beneficial ownership reporting requirements when he failed to report his ownership of more than 18 million shares of REVO stock.

In its January 22, 2021 final judgment, the court: (i) permanently enjoined Ali from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the beneficial ownership reporting provisions of Section 16(a) of the Securities Exchange Act and Rule 16a-3 thereunder; (ii) imposed a ten-year officer and director bar and a ten-year penny stock bar against Ali; and (iii) ordered Ali to pay $107,500 in civil penalties.

The SEC is represented by M. Graham Loomis, H.B. Roback, Lucy Graetz, and William P. Hicks.