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Sep 30, 2019

Enforcement Action Release | SEC filed charges in Federal Court in Denver against and individual and six companies: Mark Ray, et al. (Release No. LR-24627; Sep. 30, 2019)

4-5 minutes - Source: SEC

Litigation Release No. 24627 / September 30, 2019

Securities and Exchange Commission v. Mark Ray, et al., No. 1:19-cv-2789 (D. Colo.), filed September 30, 2019.

The Securities and Exchange Commission today filed charges in federal court in Denver against an individual and six companies he controls for perpetrating a multimillion-dollar fraudulent "cattle-flipping" investment scheme. The SEC also charged two individuals for aiding and abetting their scheme.
The Commission's complaint alleges that Mark Ray, a Denver resident, was the mastermind of the scheme, which promised investors extremely high rates of return on investment contracts and promissory notes. These investments were for the purported purchase and immediate resale of large numbers of cattle. The complaint alleges that Ray similarly solicited investments in his state-licensed marijuana business by promising large returns. In fact, the vast majority of investor money allegedly was used to pay returns to earlier investors. According to the complaint, at the height of the scheme, Ray moved or directed the movement of more than $140 million per month through bank accounts under his control. The complaint alleges that Ray controlled various corporate entities, including Custom Consulting and Product Services, LLC; MR Cattle Production Services, LLC; Universal Herbs, LLC; DBC Limited, LLC; RM Farm and Livestock, LLC; and Sunshine Enterprises and used them to solicit investments and/or to receive money from or send money to investors. The complaint further alleges that Reva Stachniw of Galesburg, Illinois, and Ron Throgmartin of Buford, Georgia both assisted Ray's scheme. According to the complaint, Stachniw opened bank accounts nominally in her control but permitted Ray to use them in furtherance of the scheme, ignoring red flags that Ray was not running legitimate businesses. Throgmartin assisted Ray by drafting invoices and emails reflecting fictitious cattle trades and sending them to investors.
The complaint charges Ray and the entities under his control with violating the registration provisions of Section 5 of the Securities Act of 1933 (Securities Act) and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint charges Stachniw and Throgmartin with aiding and abetting defendants' violations of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Ray, Custom Consulting, MR Cattle, Universal Herbs, and DBC Limited have consented to bifurcated judgments that enjoin them from future violations of the securities laws, freeze certain of their assets, and permit the Commission to seek disgorgement and civil penalties by motion before the court. Throgmartin also has consented to a bifurcated judgment that enjoins him from future violations of the securities laws and permits the Commission to seek disgorgement and civil penalties by motion before the court.
The SEC's investigation was conducted by Joshua Mayes and Douglas Dykhuizen, supervised by Justin Jeffries and Graham Loomis, of the SEC's Atlanta Regional Office. The SEC's litigation is being led by Joshua A. Mayes and Graham Loomis.  The SEC appreciates the cooperation and assistance of the Colorado Division of Securities and the Colorado Attorney General. The SEC also appreciates the cooperation and assistance of the Fraud Section of the United States Department of Justice, the United States Attorney for the Central District of Illinois, the Federal Bureau of Investigation, and the Federal Deposit Insurance Corporation.

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