Source: Securities and Exchange Commission
Litigation Release No. 24936 / September 30, 2020
Securities and Exchange Commission v. Mason D. Newman, No. 0:20-cv-61976-AHS (S.D. Fla filed September 29, 2020)
Securities and Exchange Commission v. Christian J. Baquerizo and Kevin Cardenas, No. 9:20-cv-81763-DMM (S.D. Fla filed September 29, 2020)
On September 29, 2020, The Securities and Exchange Commission charged three Florida residents with fraudulent sales of stock in NIT Enterprises, Inc., a South Florida technology company. The SEC previously charged NIT Enterprises, its former CEO, and two SEC-barred brokers with allegedly defrauding over 100 retail investors, many of them seniors.
In the latest action, the SEC’s complaints allege that Mason Newman, Christian Baquerizo, and Kevin Cardenas raised approximately $1.4 million selling unregistered NIT stock to retail investors, most of whom were seniors, and received nearly $500,000 in undisclosed commissions. According to the complaints, the defendants cold-called investors, making baseless promises about NIT’s future profitability and imminent public offering and leading investors to believe that NIT would use their funds primarily for research and development, while concealing that 30% or more of the funds invested would be used to pay commissions to the defendants. The SEC also alleges that Newman used an alias to conceal that the SEC had previously barred him from acting as a broker and offering penny stocks to investors.
The SEC’s complaints charge the defendants with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and rule 10b-5 thereunder and, the complaint against Newman charges him with having violated Section 15(b)(6)(B) of the Exchange Act. The SEC seeks permanent injunctive relief, disgorgement of allegedly ill-gotten gains plus prejudgment interest, and civil penalties. Baquerizo and Cardenas, without admitting or denying the SEC’s allegations, agreed to be enjoined from future violations of the charged provisions while leaving the resolution of monetary relief to a later date. The settlements are subject to court approval. Baquerizo and Cardenas also consented to industry and penny stock bars.
The SEC’s investigation was conducted by Michael J. Gonzalez and Eric E. Morales in the Miami Regional Office and supervised by Jason R. Berkowitz and Glenn S. Gordon. The SEC’s litigation is being led by Wilfredo Fernandez and Mr. Gonzalez and supervised by Andrew O. Schiff. The SEC appreciates the assistance of Florida’s Office of Financial Regulation.