by T. GormanPosted on Posted in SECActions

Some defendants believe that they can avoid liability by refusing service and then ducking the delivery of the papers.  Not so.  The Commission has more than sufficient avenues to secure effective service of process on those who believe that if they only evade service long enough the agency will ultimately give up. A good example is SEC v. Watson,  Civil Action No. 1:21cv-05923 (S.D.N.Y. Decision filed June 30, 2025).

Named as defendants in the action are: Eric J. Watson, Oliver-Barret Lindsay and Gannon Giguiere. Mr. Watson is alleged to have violated the securities laws in connection with his role as the controlling shareholder of Long Island Iced Tea Corp.  Specifically, he is alleged to have participated in an insider trading scheme by tipping a business associated regarding the then forth coming announce that the firm was about to pivot its business.

Prior to being served with process, the Commission made repeated efforts to serve Mr. Watson with its complaint. Mr. Watson, a citizen of New Zealand, had been residing in London. While Mr. Watson was apparently told in July, 2021 about the filing of a complaint against him by the Commission, he was not served despite repeated efforts by the Commission. Those included two made through the Hague Convention at his purported address in Ibiza, Spain.  Ultimately, the agency requested that a court permit service by publication. The request was granted.

Following the completion of the process, Defendant was served.  He defaulted.  The Commission obtained a default judgment in early February 2023.

In mid-June, 2024 Mr. Watson emailed the staff, advising that he would appear in court pro se. On July 1, 2024, after having a default judgment previously granted against him set aside and his motion to dismiss rejected Defendant appeared and filed a counterclaim against the agency. The court rejected Defendant’s claims in an opinion issued on June 30, 2025.    See  Lit. Rel. No. 26350 (July 15, 2025). Today the saga continues.

 

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by T. GormanPosted on Posted in SECActions

When responding to a solicitation by a new adviser it is critical that the investor undertake a careful review of the person making the solicitation.  This requires more than a casual conversation or simply listening to the would-be adviser talk about his or her background.  While such a conversation may be informative, and at least appear to provide useful and critical information, in far too many instances the facts offered by the would-be adviser are inaccurate, incomplete or both. That was clearly the case in the Commission’s most recent action in this area.  SEC v. Gomez,  Civil Action No. 5:25-cv-805 (W.D. Tx. Filed July 14, 2025).

Named as defendants in the action are: Imer Gomez, d/b/a K&GF Investment Solutions, LLC and Helios Venture Fund, LLC. Mr. Gomez is a citizen of Mexico as well as a U.S. resident and the President and CFO of Helios. That firm  is a limited liability company based in San Antonio.

Over a two-year period, beginning in August 2021, Mr. Gomez used K&G and Helios, entities he controlled, to solicit clients to open investment advisory accounts he would manage. During the solicitations Helios was referred to as a “fund.”  In fact, neither Helios nor K&G were funds.

Potential investors were told that Mr. Gomez was an experienced trader who would monthly generate double-digit returns from investing in funds such as Helios. Mr. Gomez also claimed that K&G and Helios were insured for up to 75% of the value of each client’s account.  The solicitations were primarily focused on soliciting investments from Hispanic clients. Over the period about $9 million was entrusted to Mr. Gomez.

The funds obtained from investors were never used to trade securities or to create accounts.  Rather, the investor funds were used for unrelated business matters. Defendant also loaned about $666,000 to his ex-girlfriend’s father, Eric Claxton and his family.  The funds were used to purchase real estate.

In an effort to conceal the fraud, Defendants sent clients fake account statements. The papers reflected fictitious gains. When Mr. Gomez ran short of assets, he claimed there was a “sudden liquidation that destroyed the business and prevented him from returning the investments. He also claimed that Helios was finalizing a guaranteed bailout loan so he could repay clients. The claim was false.  The complaint alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5 and Advisers Act Sections 206(1) and (2). The complaint names as relief defendants Eric and Heather Claxton. See  Lit. Rel. No. 26349 (July 14, 2025).

 

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