Litigation Releases (Kevan Casey et al.)

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26071 / August 9, 2024

Securities and Exchange Commission v. Kevan Casey et al., No. 4:24-cv-02971 (S.D. Tex. filed Aug. 9, 2024)

SEC Charges Four Individuals Behind $56 Million Multi-Year Microcap Fraud Scheme

On August 9, 2024, the Securities and Exchange Commission filed a complaint in the United States District Court for the Southern District of Texas charging four individuals with fraud in an alleged scheme to secretly acquire millions of shares of microcap stocks and generate approximately $56 million in unlawful stock sales. Texas residents Kevan Casey and Adrian James, and California residents Jonathan Friedlander and Robert Wheat, were named as defendants who allegedly engaged in the scheme.

The SEC's complaint alleges that since at least early 2018, Casey orchestrated a fraudulent scheme to secretly amass shares of stock in a series of five microcap companies at steep discounts, take the companies public so that the stocks would be readily available for purchase on a stock exchange, direct publicity campaigns for those stocks, and then sell the shares before their prices sharply declined. According to the complaint, Casey sometimes worked alone, and other times agreed with long-time friends and business associates James and Friedlander to acquire, hold, and dispose of shares. The complaint also alleges that a central part of the scheme was the concerted efforts by Casey, James, Friedlander, and Wheat to avoid being named in SEC filings notwithstanding legal requirements that they be identified as public company promoters, selling shareholders in registered securities offerings, and/or beneficial owners that had acquired more than 5% of a company's shares. According to the complaint, defendants evaded these requirements by amassing shares of stock through pass-through nominee entities (nominally controlled by friends or family members) and submitting false or materially misleading selling-shareholder questionnaires to the companies required to disclose information in SEC filings. The purported concealment is alleged to have stemmed from Casey's status as the main subject of numerous cases in ongoing private litigation about an earlier pump-and-dump scheme of another microcap stock.

Carmel Ventures, LLC, ALS Investments, LLC, Highbridge Consultants, LLC, The ASJ Living Trust, Esports Group, Inc., Oak Grove Asset Management, Inc., and YSW Holdings, Inc. The SEC seeks permanent injunctions, conduct-based injunctions, officer-and-director bars, penny stock bars, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against all defendants.

The SEC's case is being handled by Alexandra Lavin, Jeffrey Cook, Jonathan Menitove, Ryan Murphy, Richard Harper, and Celia Moore in the Boston Regional Office, with the assistance of Alex Lefferts of the Enforcement Division's Office of Investigative & Market Analytics. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.