MIL-OSI USA: VerdeGroup Investment Partners, Inc., Thomas Gaffney, and Lisa Gordon

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Source: Securities and Exchange Commission

The Securities and Exchange Commission today announced that it has filed a litigated action against defendants VerdeGroup Investment Partners, Inc. (VerdeGroup), its principal Thomas Gaffney (Gaffney), and its investor relations contact Lisa Gordon in connection with an alleged offering fraud that raised more than $600,000 from over two dozen investors. Gaffney is a recidivist, having been previously charged by the SEC and prosecuted by criminal authorities for securities fraud. See SEC v. Gaffney, et al, Case No.: 13-cv-61765-RNS (S.D. Fl.); U.S. v. Thomas Gaffney, Case No. 12-60224-CR-Dimitrouleas (S.D. Fl.).

The SEC’s complaint alleges that, from January 2018 through July 2019, VerdeGroup and Gaffney raised funds from investors to ostensibly finance legal marijuana businesses. The complaint alleges that Gaffney and VerdeGroup misled investors about how their monies would be used, about VerdeGroup’s business partners, and about VerdeGroup’s initial public offering. As alleged in the complaint, to help disguise his involvement, Gaffney directed investors to send their funds to a third party account, from which investor funds were transferred to an account in the name of relief defendant Tommy’s Pizza, founded and operated by Gaffney and his wife Cynthia Gaffney. The SEC alleges that investor funds were then used for a variety of Gaffney’s personal expenses, including jewelry, travel, and his pizza parlor business. According to the complaint, defendant Lisa Gordon, hired to handle VerdeGroup investor relations, acted as an unregistered broker-dealer in connection with the unregistered offering.

The SEC’s complaint, which was filed in the Central District of California, charges VerdeGroup and Gaffney 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, as well as the registration provisions of Section 5 of the Securities Act. The complaint also charges Gaffney, as the control person of VerdeGroup under Section 20(a) of the Exchange Act, for VerdeGroup’s violations of the antifraud provisions of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Gordon is charged with violating the registration provisions of Section 5 of the Securities Act and Section 15(a) of the Exchange Act. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against VerdeGroup, Gaffney, and Gordon. The complaint also seeks disgorgement from relief defendants Cynthia Gaffney and Tommy’s Pizza.

The SEC’s investigation was conducted by Tony Regenstreif and Roberto Grasso and supervised by Victoria A. Levin. The litigation will be led by Michael Sew Hoy and supervised by Amy J. Longo.

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