Facts

Plaintiff Securities and Exchange Commission filed a complaint against defendant Michael R. Gregory, chief executive officer of C-Quadrant LLC, along with other defendants GPA Enterprises LLC, RJ Holdings Group, LLC, and Extraction Capital Tier 1, LLC alleging securities offering fraud that raised approximately $13.2 million from approximately 211 investors for the purpose of developing C-Quadrant, a startup cannabidiol extraction facility.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that defendant Gregory misled and deceived investors about a business loan that would be used to develop C-Quadrant's CBD extraction facility. Plaintiff contended that Gregory used the loans to pay off investors in an unrelated entity instead of using that loan for C-Quadrant's benefit. In addition, plaintiff contended that Gregory misled and deceived investors by making material misrepresentations to investors about his business and financial background. None of the C-Quadrants' securities offering, to which Gregory had control, were properly registered with the Securities and Exchange Commission as required by the Securities Act. As such, plaintiff argued that defendants violated Section 5 of the Securities Act, the antifraud provisions of Section 17(a) of the Securities Act, Section 10b of the Exchange Act and Rule 10b-5 and the broker registration provisions of Section 15 of Exchange Act.

DEFENDANT'S CONTENTIONS: Defendant denied plaintiff's contentions.

Result

The court entered a final judgment as to Gregory ordering Gregory permanently restrained and enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 under 17 C.F.R. Section 240.10b-5. Defendant was also permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 and Section 5 of the Securities Act. In addition, defendant was ordered to pay a civil penalty of $192,768 to the Securities and Exchange Commission.