SEC Charges Principals of Music Entertainment Company with Multi-Million Dollar Offering Frauds and Ponzi Schemes
Litigation Release No. 24619 / September 25, 2019
Securities and Exchange Commission v. Andres Fernandez and Edison Denizard, Case No. 6:19-cv-01843 (M.D. Fla. Filed September 25, 2019)
The Securities and Exchange Commission announced today that it filed charges against the Florida-based principals of several music entertainment companies for conducting two multi-million dollar offering frauds and Ponzi schemes.
According to the SEC's complaint, from January 2015 through March 2017, Andres Fernandez ("Fernandez") and his companies, Kadaae, LLC and Kadaae Entertainment Corp. (together, "Kadaae"), raised $20.7 million from at least 56 investors through an unregistered offering of securities. Over the same two-year period, the complaint alleges, Edison Denizard ("Denizard") and his company, Ahead of the Game, LLC, conducted an unregistered offering of securities, raising approximately $10.4 million from at least 78 investors. Defendants allegedly told prospective investors in both offerings that their money would be used to fund music concert events for major artists at large venues across the U.S. In truth, however, only a small portion of investor money was used by Kadaae to produce a handful of concert events. Instead, the complaint asserts that defendants operated Ponzi schemes -- using new investor money to pay earlier investors -- and each misappropriated more than $1 million in investor money for his own use.
The SEC's complaint, filed in federal district court in Orlando, charges Fernandez and Denizard with violating the antifraud provisions of 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, and the registration provisions of Sections 5(a) and 5(c) of the Securities Act. The complaint seeks permanent injunctions, disgorgement plus prejudgment interest, and civil monetary penalties.
The SEC's investigation was conducted by Shan Chang, Trisha Sindler Fuchs, and Lina Fernandez of the SEC's Miami Regional Office, and supervised by Chedly C. Dumornay. The SEC's litigation will be handled by Andrew Schiff. The SEC appreciates the assistance of the Federal Bureau of Investigation and the U.S. Attorney's Office for the Middle District of Florida.