SEC Charges Promoters of Offering Fraud Targeting Practitioners of Alternative Medicine and Transcendental Meditation

Litigation Release No. 25183 / August 25, 2021

Securities and Exchange Commission v. Carl Jensen and Stephen W. Gold, Defendants, and Kerry Margolis and Michael Hock, Relief Defendants, No. 2:21-civ-06817 (C.D. Cal. filed August 24, 2021)

The Securities and Exchange Commission announced that it has filed an injunctive action against Carl Jensen, a Canadian citizen residing in Brisbane, Queensland, Australia, and his associates, for an alleged offering fraud that raised more than $7 million from at least 75 retail investors in the United States and worldwide, targeting practitioners in the fields of alternative medicine and transcendental meditation, including retirees.

The SEC's complaint alleges that since at least 2015, Jensen has raised investor funds through promissory notes by claiming remarkable, rapid-fire returns, between ten to hundreds of times the investors' principal, payable in anywhere from a week to thirty days. Jensen allegedly claims to own or have percentage interests in a portfolio of lucrative investments including Chinese and Mexican bearer bonds, as to which he boasts a special expertise in selling for a profit. Rather than receive investor money in his own name, Jensen allegedly directs investors to send their funds to accounts in the name of Stephen W. Gold, Kerry Margolis, and Michael Hock. The SEC alleges that after investments were made, Jensen and Gold lulled investors by providing a litany of excuses for not paying them, including a "banking protocol, a "logistical screw," an "emergency" that arose for the supposed buyer, a "super typhoon," bank "red tape," a "bank holiday," and "riots and civil unrest." The SEC further alleges that for years Jensen's investors have received few to no returns, and the majority of the money raised from investors has been spent on Jensen, Gold, Margolis and Hock's personal expenses such as clothing, rent, online retail, and credit card payments, or simply withdrawn in cash.

The SEC's complaint, which was filed in the Central District of California, charges Jensen 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. The complaint charges Gold with aiding and abetting Jensen's violations, and Margolis and Hock as relief defendants. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against Jensen and Gold. The complaint also seeks disgorgement with prejudgment interest from Margolis and Hock.

The SEC's investigation was led by Todd Brilliant with assistance from Deborah Russell, and was supervised by Finola H. Manvelian in the Los Angeles Regional Office.  Amy J. Longo will lead the litigation.

The SEC appreciates the assistance of the Alberta Securities Commission, the Australian Securities and Investments Commission, and the Bundesanstalt fƒ¼r Finanzdienstleistungsaufsicht (BaFin).