SEC Settles Case Against Gary Pryor and Two Arizona-Based Financial Technology Companies
Litigation Release No. 25317 / January 26, 2022
Securities and Exchange Commission v. Gary Pryor, et al, No. 2:20-cv-01782-DJH (D. Ariz. filed September 14, 2020)
The Securities and Exchange Commission announced today the entry of final judgments against two Arizona-based financial technology companies and their chief executive officer, Gary Pryor an Arizona resident, for defrauding investors of millions by making false and misleading statements about the revenue and business prospects of the two companies.
The SEC's complaint, filed on September 14, 2020 in the United States District for the District of Arizona, alleged that from at least 2013 through 2019 Pryor, founder and CEO of ZipRemit, Inc. and Lendaily, Inc., private companies that claimed to offer merchant branded consumer credit at the point-of-sale, raised at least $4.3 million from investors while repeatedly misrepresenting the companies' technological capabilities and revenues. According to the complaint, Pryor allegedly falsely told investors that ZipRemit and Lendaily earned revenue from interest and loan origination fees and that the companies had several large nationally-recognized brands including Keurig and Bridgestone/Firestone as customers. Pryor allegedly repeatedly misrepresented that his companies had developed proprietary software that had been tested, approved, and launched, or was about to be launched, with customers, when, in fact, the companies had not generated any revenue and no customers had ever used their software, as it was not fully developed. In addition, Pryor allegedly diverted at least $1.2 million of investor funds for his own personal use.
Without admitting or denying the allegations of the amended complaint, Pryor, ZipRemit, and Lendaily have consented to the entry of judgments permanently enjoining them from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, ordering a conduct-based injunction against Pryor, and ordering: (i) Pryor to pay disgorgement of $2,666,705 (of which $180,519 would be joint and several with Relief Defendant Rebecca Pryor), with prejudgment interest of $753,137 (of which $13,508 would be joint and several with Relief Defendant Rebecca Pryor), and a civil penalty of $2,666,705; (ii) ZipRemit to pay disgorgement of $1,564,534, with prejudgment interest of $426,917, and a civil penalty of $975,230; (iii) Lendaily to pay disgorgement of $311,615, with prejudgment interest of $52,388, and a civil penalty of $975,230. Relief defendant, Rebecca Pryor, has also consented to the entry of a judgment ordering her to pay, on a joint and several basis with Pryor, disgorgement of $180,519 with prejudgment interest of $13,508.
The SEC's investigation was conducted by Emily Rothblatt, Jake Schmidt, Angela Dodd and Scott Hlavacek of the Chicago Regional Office, and was supervised by Jeffrey Shank. The litigation was led by Timothy Leiman.