The Commission filed a complaint against Anthony Banas, co-founder and former Chief Technology Officer of privately held Canopy Financial, Inc. Canopy is a Chicago based company which assists clients in administering and managing their employees’ health savings and flexible spending accounts. SEC v. Banas, Civil Action No. 10 cv 3977 (N.D. Ill. June 22, 2010).

The case against Mr. Banas is based on an alleged fraud in connection with a $75 million private placement. Specifically, the complaint alleges that Mr. Banas and co-founder Jeremy Blackburn, defrauded investors by furnishing them with forged bank statements misrepresenting the financial condition of the company, not informing them about the true financial condition of the company and misappropriating investor funds. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b).

The fraud was discovered when the newly hired General Counsel of the company contacted a friend at KPMG for assistance with a search for a new CFO in November 2009. At that time he learned that the audit opinion had not been issued by KPMG. Rather, it had been forged. The Commission subsequently filed SEC v. Canopy Financial, Inc., Case No. 09 cv 7429 (N.D. Ill. Filed Nov. 30, 2009) and obtained emergency relief as discussed here.

Mr. Banas has offered to settle the action brought against him by consenting to the entry of a permanent injunction prohibiting future violations of each section cited in the complaint. In addition, he agreed to pay $975,548.25 in disgorgement along with prejudgment interest and a civil penalty to be determined by the court. See also Litig. Rel. 21565 (June 22, 2010).