SEC considers $1.4m distribution to victims of fraudulent ICO scheme PlexCoin
Following the entry of the final judgment against PlexCorps and the individuals associated with it, the entities that the Court directed to turnover assets formerly belonging to Dominic Lacroix have done so.
About three months after the United States Securities and Exchange Commission (SEC) obtained a final judgment against fraudulent initial coin offering (ICO) scheme PlexCorps, aka PlexCoin, and its proprietors Dominic Lacroix and Sabrina Paradis-Royer, the regulator has filed a Letter providing a status update.
The document, submitted at the New York Eastern District Court on January 2, 2020, informs the Court that, following the entry of the final judgment in this matter, the entities that the Court directed to turnover assets formerly belonging to Lacroix have done so, resulting in the SEC collecting approximately $1.4 million as US Assets. The SEC is considering recommending to the Court that the US Assets be sent to the Receiver to effect one, single distribution to harmed investors.
Before making such a recommendation, the SEC is ascertaining whether the Proposed Plan, and the accompanying claims process, is fair and reasonable and whether investors would be better served by one distribution as opposed to a second, separate distribution in the United States. Regarding this, with the cooperation of the Receiver, the SEC has been monitoring and, as an interested party recognized by the Superior Court, participating in the Canadian Proceedings.
On November 20, 2019, the US regulator sent notice of the possibility of a coordinated distribution to more than 91,000 possible PlexCoin investors. In the Notice, the SEC provided U.S. investors with the opportunity to comment on and object to the coordination of distribution and, through such objection, to the Proposed Plan. The SEC also established a public webpage for this matter.
In response to the Notice, the SEC has received inquiries about the claims process from investors worldwide, responded to those inquiries individually, and maintained a contact list. The SEC has sent the list of investors that have contacted the SEC, and their contact information, to the Receiver, to ensure that the responding investors are included in any claims process.
Let’s recall that the SEC’s action against PlexCorps, aka PlexCoin, and its proprietors Dominic Lacroix and Sabrina Paradis-Royer, was launched in December 2017. According to the complaint, the defendants fraudulently raised millions of dollars in virtual and fiat currency from the unregistered sales of so-called “PlexCoin”. The operations of PlexCorps were based on false and misleading statements to potential and actual investors, including misrepresentations about the size and scale of PlexCorps’ operations, the use of funds raised in the PlexCoin ICO, and the amount of funds raised in the PlexCoin ICO.
On October 2, 2019, the New York Eastern District Court entered a final judgment against PlexCorps, Lacroix, and Paradis-Royer. In the final judgment, the defendants did not admit or deny the allegations in the SEC’s complaint.
The defendants are enjoined from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule l0b-5 thereunder, and Lacroix and Paradis-Royer are additionally enjoined from participating in any digital-securities offerings. All defendants are ordered to disgorge, on a joint and several basis, $4,563,468 in ill-gotten gains from the PlexCoin ICO plus $348,145 in prejudgment interest, and Lacroix and Paradis-Royer are ordered to each pay a $1,000,000 civil penalty. Lacroix also is permanently barred from serving as an officer or director of a publicly traded entity.