The Securities and Exchange Commission today announced fraud charges against Taronis Technologies, Inc. (now known as BBHC, Inc., "Taronis Tech") and its former subsidiary, Taronis Fuels, Inc. ("Taronis Fuels"), Arizona-based distributors of industrial gas and water products, and their former chief executive and chief financial officers.

According to the SEC's complaint, Taronis Tech (from at least January 2019 to March 2020) and Taronis Fuels (from at least February 2020 to November 2020), and their former CEO, Scott Mahoney, issued materially false and misleading press releases touting agreements and relationships with customers that did not exist or were exaggerated. In addition, Mahoney and Taronis Fuels' former CFO, Tyler Wilson, created fake and backdated orders, which resulted in Taronis Fuels improperly recognizing revenue for fake unit sales in the second and third quarters of 2020. From July to November 2020, Taronis Fuels raised approximately $30 million from investors in private placements, while making representations and warranties that its financial statements in SEC filings were prepared in accordance with Generally Accepted Accounting Principles (GAAP). In an April 2021 filing, Taronis Fuels disclosed that its previously issued financial statements for the year ended December 31, 2019 and for each of the interim quarterly periods in fiscal 2020 should not be relied upon, for reasons including errors in revenue recognized from sales and under-reporting of cost of goods sold.

The SEC's complaint, filed in the U.S. District Court for the Middle District of Florida, charges Taronis Tech, Taronis Fuels, Mahoney, and Wilson with violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. It further charges Taronis Tech and Taronis Fuels with violating Exchange Act Sections 13(a) and Rules 12b-20, 13a-11, and13a-13 thereunder; Taronis Tech with violating Exchange Act Rule 13a-1 thereunder; and Taronis Fuels with violating Section 17(a) of the Securities Act of 1933 (the "Securities Act") and Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rule 12b-25 thereunder. The complaint also alleges that Mahoney and Wilson violated Section 17(a) of the Securities Act; aided and abetted Taronis Fuels' violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder; and have control person liability under Section 20(a) of the Exchange Act for Taronis Fuels' violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, and 13a-13 thereunder. Additionally, the complaint charges Mahoney and Wilson with violating Exchange Act Section 13(b)(5) and Rules 13a-14, 13b2-1, and 13b2-2 thereunder, and Section 304 of the Sarbanes-Oxley Act of 2002 (SOX). Finally, the complaint alleges that Mahoney aided and abetted Taronis Tech's violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11 thereunder and has control person liability under Section 20(a) of the Exchange Act for Taronis Tech's violations of Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 12b-20, and 13a-11 thereunder.

Taronis Fuels has consented, without admitting or denying the Commission's allegations and subject to court approval, to be permanently enjoined from violating the charged provisions of the federal securities laws and has agreed to pay disgorgement in the amount of $4,876,023, plus prejudgment interest in the amount of $231,877.50, for a total of $5,107,900.50, to be paid within one year pursuant to a payment plan.

Mahoney has consented to a bifurcated settlement, without admitting or denying the Commission's allegations and subject to court approval, under which he will be enjoined from violating the charged provisions of the federal securities laws, pay a $150,000 civil penalty to be paid within one year pursuant to a payment plan, and be subject to five-year bars prohibiting him from acting as an officer or director of a public company and from participating in an offering of penny stock. The court will determine whether disgorgement and prejudgment interest should be ordered against Mahoney and whether he should reimburse Taronis Fuels pursuant to Section 304(a) of SOX.

The SEC is seeking permanent injunctions and civil money penalties against Taronis Tech and Wilson. In addition, the SEC is seeking disgorgement of ill-gotten gains with prejudgment interest and an officer-and-director bar against Wilson, and to have Wilson reimburse Taronis Fuels pursuant to Section 304(a) of SOX.

The SEC's investigation was conducted by Michelle Bosworth with assistance from Lina Fernandez, and supervised by Thierry Olivier Desmet, Fernando Torres, and Glenn S. Gordon in the Miami Regional Office. The SEC's litigation is being led by Christine Nestor and supervised by Teresa Verges.