SEC Files Charges Seeking to Halt Recidivist and Associates in Scheme to Defraud Small Businesses
The SEC’s complaint, which was filed in federal court in Los Angeles, also charges Muehler with violating a cease-and-desist order issued by the Commission in 2016 barring Muehler from associating with any broker-dealer. The SEC has filed a parallel action in the same court to enforce that Commission order.
According to the complaint, Muehler’s companies are not registered as broker-dealers. But since at least November 2015, Muehler and his companies have nonetheless agreed to provide broker-dealers services to more than 20 small businesses, including identifying and soliciting investors and utilizing a purportedly proprietary online securities exchange to help raise funds from investors. In return, Muehler and his companies received fees, the right to a percentage of any funds raised from investors, and the right to an equity stake in each small business customer.
The SEC also alleges that in offering broker-dealer services, Muehler and his companies made numerous fraudulent claims to potential customers, including that Muehler and his companies had $50 million on-hand to invest in their customers’ securities, that they had previously helped customers raise millions of dollars, and that their proprietary online exchange was registered with the SEC. They also concealed that Muehler is subject to a Commission cease-and-desist order and has been sanctioned by California and Minnesota securities regulators.
The SEC’s complaint alleges that Claudia Muehler and Danny Rahimi helped Muehler carry out this scheme.
“As alleged in our complaint, Muehler tells small businesses that he runs a successful broker-dealer enterprise that can raise millions of dollars from investors. In truth, Muehler is a repeat securities-law violator who already admitted to defrauding small businesses the last time the Commission brought an enforcement action against him. The complaint demonstrates the Commission’s vigilance in enforcing its orders and dealing with recidivist violators,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.
The SEC’s complaint charges Muehler and the three companies he controls (AltaVista Capital Markets, LLC, AltaVista Private Client, LLC, and AltaVista Securities, LLC) with violating Section 5(c) of the Securities Act of 1933 and Section 15(a), Section 10(b), and Rule 10b-5 of the Securities Exchange Act of 1934, and also charges Muehler with violating Section 15(b)(6) of the Securities Exchange Act of 1934. It charges Claudia Muehler with aiding and abetting Muehler’s and the AltaVista Companies’ violations of the Securities Exchange Act of 1934, and charges Rahimi with violating Section 15(a) of the Securities Exchange Act of 1934.
The complaint also seeks permanent injunctions, disgorgement plus interest, and penalties.
The SEC’s investigation, which is ongoing, has been conducted by M. Lance Jasper and Benjamin Faulkner, and supervised by Spencer E. Bendell. The litigation will be led by Donald W. Searles and supervised by Amy J. Longo.