Toon Goggles Inc., et al. (Release No. LR-24588; Sep. 6, 2019)
Litigation Release No. 24588 / September 6, 2019
Securities and Exchange Commission v. Toon Goggles Inc., et al., Civil Action No. 2:19-cv-07687 (U.S. District Court for the Central District of California)
The SEC's complaint, filed in the U.S. District Court for the Central District of California, alleges that from at least August 2012 through late 2016, Toon Goggles and Warkol raised over $19 million from approximately 400 retail investors. According to the SEC's complaint, Warkol, acting as an unregistered broker, set up boiler rooms inside Toon Goggles' offices and hired sales agents to cold-call investors. Warkol allegedly provided the sales agents with scripts to lure investors into purchasing the offered securities. According to the complaint, Toon Goggles also failed to maintain accurate and complete records of its investors, the number of shares sold to each investor, and the amount of money raised from each investor.
The SEC's complaint charges Toon Goggles and Warkol with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, and Warkol with also violating the broker-dealer registration provisions of Section 15(a) of the Securities Exchange Act of 1934. Without admitting or denying the allegations in the complaint, Warkol has consented to the entry of a final judgment permanently enjoining him from violating the charged provisions, ordering disgorgement plus prejudgment interest of $2 million, and imposing an $189,427 penalty. The settlement is subject to court approval. The SEC's litigation against Toon Goggles will proceed, with the SEC seeking a permanent injunction, disgorgement plus prejudgment interest, and a civil penalty.
In a separate administrative proceeding, the SEC also charged Toon Goggles' director of operations, Brendan Pollitz, for facilitating broker-dealer registration violations. Pollitz has consented to the entry of a cease-and-desist order, and agreed to pay disgorgement plus prejudgment interest of $34,117, and civil penalties of $9,472.
The SEC's investigation was conducted by Yolanda Ochoa and Christopher Conte and supervised by Spencer E. Bendell. The SEC's litigation will be handled by Douglas Miller and Amy Longo.