SEC Charges Man for Defrauding Investors in Surfboard Scheme
Litigation Release No. 24662 / November 8, 2019
Securities and Exchange Commission v. KRM Services, LLC and Roberto J. Clark, Jr., No. 1:19-cv-1424 (E.D. Va. filed November 8, 2019)
The Securities and Exchange Commission today announced charges against a Florida man and his wholly-owned company for a multiyear scheme that defrauded multiple investors out of at least $350,000.
According to the SEC's complaint, filed in U.S. District Court in Alexandria, Virginia, Roberto J. Clark, Jr. of Palm Bay, Florida and his company KRM Services, LLC raised hundreds of thousands of dollars from retail investors by falsely telling them the money would be used to develop and market motorized surfboards. The SEC alleges that to facilitate the scheme Clark showed investors a forged contract for surfboard orders from a major cruise line, made misrepresentations about purported orders from water sports vendors in Florida, and marketed the investment in his company using baseless revenue projections. In fact, the complaint alleges, Clark misappropriated most of the investors' money and used it for personal expenses including high-end apparel, a luxury automobile, event tickets, and patronage of adult entertainment establishments.
The SEC's complaint charges defendants with violations of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. The SEC seeks permanent injunctions, disgorgement, prejudgment interest, and civil money penalties against defendants.
In a parallel case, the U.S. Attorney's Office for the Eastern District of Virginia today announced criminal charges against Clark.
The SEC's investigation has been conducted by David P. Bloom and David Neuman and supervised by David A. Becker of the SEC's Asset Management Unit. The litigation will be led by Samantha Williams, Timothy Halloran, and Mr. Bloom and supervised by Jan Folena. The SEC appreciates the assistance of the Federal Bureau of Investigation, the United States Secret Service, the Alexandria Police Department, the Fairfax Police Department, and the U.S. Attorney's Office for the Eastern District of Virginia.