January 15, 2019
SEC Enforcement Action
On December 7, 2018, the SEC filed an enforcement action against NVC Fund LLC and its principal, Frank Ekejija, seeking an order to get them to provide documents and information regarding an investigative subpoena.
On November 30, 2018, the U.S. District Court for the Central District of California launched an investigation into whether individuals or entities engaged in a pump-and-dump scheme involving stock in three companies—Cherubim Interests, Inc., PDX Partners, Inc., and Victura Construction Group, Inc. Two months into the investigation, the SEC was concerned about the accuracy of the companies’ disclosures, so they suspended trading in their securities on February 15, 2018 for ten business days.
Based on the ongoing investigation, the SEC believes that the companies made false statements to perpetuate a pump-and-dump scheme in which they issued false statements hyping their stock in order to “pump” the stock price. The companies allegedly claimed that NVC Fund owned “trillions” of dollars in “AAA-rated” assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology among other things, and that each company acquired hundreds of millions of dollars of these assets from NVC Fund. The SEC believes that once the trading volume and the price of the stocks increased, an entity affiliated with the companies may have “dumped” their overvalued shares for large profits.
In June and September 2018, the SEC subpoenaed Ekejija and NVC Fund to produce documents and appear for testimony. Both Ekejija and NVC Fund refused to produce key documents in response to the subpoenas. The SEC is now seeking an order from the court that Ekejija and NVC Fund fully cooperate with the subpoenas. The SEC continues to investigate this potential pump-and-dump scheme without their testimony.
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