SEC Halts Fraudulent Hi-Tech Scam
Litigation Release No. 24199 / July 16, 2018
Securities and Exchange Commission v. Moddha Interactive, Inc., Marianne Veronika Sandor, Edward Michael Porrazzo, and Spar Street, Civil Action No. 18-00264-DKW-RLP (D. Haw.)
The Securities and Exchange Commission obtained an emergency asset freeze and a temporary restraining order to halt an ongoing offering fraud carried out by Marianne Veronika Sandor, her husband Edward Michael Porrazzo and their company, Moddha Interactive, Inc.
The SEC's complaint, which was unsealed on July 13, in U.S. District Court for the District of Hawaii, alleges that Sandor and Porrazzo told investors that Moddha Interactive had a valuable portfolio of patents for a supposed 3-D technology that can be used with tablet devices. As alleged in the complaint, however, this was false because Moddha Interactive's patents had expired and were worthless, and the technology they promoted either did not exist or was developed by other, unrelated companies. Also, according to the SEC's complaint, in an effort to promote the safety of the investment in Moddha Interactive, Sandor and Porrazzo lied about a share dividend buy-back program and how they would use the investor funds they raised. The complaint alleges that Sandor and Porrazzo misappropriated hundreds of thousands of dollars in investor funds to support their lifestyle. In addition, the SEC's complaint alleges that Moddha Interactive paid over $200,000 in sales commissions to their co-defendant, Spar Street, who illegally acted as an unregistered broker in selling Moddha Interactive's shares to investors.
The SEC's complaint, filed under seal on July 9, 2018, charges Sandor, Porrazzo and Moddha Interactive with violations 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 SEC's complaint also charges Street with acting as an unregistered broker-dealer in violation of Section 15(a) of the Exchange Act. The court granted the SEC's request for an asset freeze and a temporary restraining order against the defendants from further violations of the federal securities laws, as well as other emergency relief. The SEC's complaint also seeks preliminary and permanent injunctions, conduct-based injunctions, disgorgement of ill-gotten gains with interest, and penalties.
The SEC's investigation was conducted by Jasmine M. Starr and Carol Shau and supervised by Victoria A. Levin of the SEC's Los Angeles Regional Office. The litigation will be led by Gary Leung and supervised by Amy J. Longo.
HNN: Also named in the lawsuit is Maui-based artist and sculptor Spar Street, who the SEC says received investor money as commissions for indentifying and recruiting new investors.
MN: SEC gets asset freeze, restraining order on Maui company
PDF: Complaint SEC vs Moddha and Street