On May 31, 2022, the Securities and Exchange Commission charged iFresh, Inc. (iFresh), a public issuer and a grocer that operates wholesale businesses and retail supermarkets across New York, Massachusetts, and Florida, with repeatedly filing materially inaccurate financial statements that failed to fully disclose related party transactions connected to its CEO, Long Deng (Deng). The SEC also charged Deng for his alleged misconduct related to the scheme.

According to the SEC's complaint, from August 10, 2016 through August 13, 2020, iFresh failed to properly disclose numerous transactions with entities related to Deng and his brother. The complaint alleges that iFresh's financial statements were allegedly materially misstated in 2016, 2017, 2018, 2019, and 2020. As alleged in the complaint, between 2017 and 2020, from 18% to 54% of iFresh's accounts receivable were from undisclosed related party transactions. The complaint further alleges that between 2016 and 2020, iFresh failed to disclose over $12 million in payments to a company owned by Deng's brother. Finally, the complaint alleges that by misrepresenting information about iFresh's related party transactions, iFresh deprived investors of the true scope of iFresh and Deng's intertwined business interests.

The SEC's complaint, filed in the Eastern District of New York, charges iFresh with violating Section 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 12b-20 and 13a-1 thereunder, and Deng with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, or, in the alternative, that he aided and abetted iFresh's violations of Section 17(a)(2) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder, and that he aided and abetted iFresh's violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder. The SEC seeks a permanent injunction against iFresh and Deng, disgorgement with prejudgment interest, and a civil penalty. The SEC also seeks an officer and director bar against Deng.

The SEC's investigation was conducted by Ruta G. Dudenas and Ann Tushaus. The investigation was supervised by Amy S. Cotter. The SEC's litigation will be led by Ariella O. Guardi. The SEC appreciates the assistance in this matter of Craig Phillips of the SEC's Office of Market Intelligence.