Securities and Exchange Commission v. iFresh, Inc. and Long Deng, No. 1:22-cv-03200 (E.D.N.Y. filed May 31, 2022)
Litigation Release No. 25735 / May 25, 2023
SEC Resolves Fraud Case Against Former CEO of New York-Based iFresh, Inc.
The Securities and Exchange Commission today announced a settlement in its fraud action against Long Deng, the former CEO of iFresh, Inc. Deng agreed, without admitting or denying the allegations, to the entry of a final judgment that requires him to pay $44,706 in disgorgement and prejudgment interest, a $90,000 civil penalty, and bars him from acting as an officer or director of a public company for a period of five years.
The SEC's complaint alleged iFresh, Inc., a public issuer, repeatedly filed materially inaccurate financial statements that failed to fully disclose related party transactions from August 10, 2016 through August 13, 2020 that were related to Deng. During that time iFresh failed to properly disclose numerous transactions with entities related to Deng and his brother. iFresh's financial statements were allegedly materially misstated in the each of the years 2016 through 2020. In addition, between 2017 and 2020, from 18% to 54% of iFresh's accounts receivable allegedly were from undisclosed related party transactions. The complaint further alleged 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 alleged 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.
Deng, without admitting or denying the SEC's allegations, consented to the entry of a final judgment in which he agreed to be permanently enjoined from 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, or from aiding and abetting 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. Deng also agreed to pay $44,706 in disgorgement and prejudgment interest, a $90,000 civil penalty, and to be barred from acting as an officer or director of any public company for a period of five years.
The litigation against iFresh is ongoing.
The SEC's investigation was conducted by Ruta G. Dudenas and Ann Tushaus, CPA, and supervised by Amy S. Cotter of the Chicago Regional Office. The litigation is being conducted by Ariella O. Guardi.