SEC Charges Two Corporations, Four Individuals, and an Estate Over Allegedly Fraudulent Investment Offerings
Litigation Release No. 25386 / May 9, 2022
Securities and Exchange Commission v. TKO Farms, Inc., et al., No. 8:22-cv-00941 (C.D. California filed May 6, 2022)
The Securities and Exchange Commission charged securities issuers TKO Farms, Inc., and Agravitae, Inc.; individuals Kenneth Dewayne Owen, Reynaldo Aguilar, James Brian Blaylock, and Ross Gregory Erskine; and the Estate of Gilbert Allan Penhollow, all of the Los Angeles area, in connection with allegedly unregistered and fraudulent offerings of securities effected through unregistered telephone solicitors.
According to the allegations in the SEC's complaint, which was filed in the U.S. District Court for the Central District of California, between May 2017 and March 2021, TKO Farms and Agravitae raised nearly $20 million from investors through offerings of their securities. The SEC alleges that Owen, who had a history of criminal convictions, regulatory actions, government liens, and a bankruptcy, possessed undisclosed de facto control over both companies and, acting on the two companies' behalf, directly or indirectly recruited and engaged Aguilar, Blaylock, Erskine, and Penhollow, none of whom were registered as a broker or dealer, to solicit investors for the securities offerings. As further alleged, defendants TKO Farms, Agravitae, and Owen misrepresented Owen's history and control over the two companies and the use of investor funds.
The SEC's complaint charges each defendant with violations of the registration provisions of Section 5 of the Securities Act of 1933 and the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934. Additionally, TKO Farms, Agravitae, and Owen are each charged with violating the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. The SEC's suit seeks, as remedies, permanent injunctions, disgorgement plus prejudgment interest, and civil penalties.
The SEC's investigation was conducted by James Thibodeau and was supervised by Tanya Beard. The litigation will be led by Casey Fronk and Tracy Combs.
The SEC's Office of Investor Education and Advocacy has issued investor alerts concerning the red flags of investment fraud and the checking of the background of anyone selling investments through the SEC's Investor.gov website so as to quickly identify whether they are registered professionals. There are various ways to report a potential investment fraud set forth on the Office's website.