SEC v. Kris A. Swaffer; Sean K. Williams; POHIH, Inc.; and Rosalyn K. Swaffer, No. 1:22-cv-1554, Northern District of Ohio (Sept. 23, 2024) — Complaint

 
 
UNITED STATES DISTRICT COURT  
NORTHERN DISTRICT OF OHIO 
EASTERN DIVISION 
__________________________________________                                       
       ) 
SECURITIES AND EXCHANGE       ) 
COMMISSION,     ) 
       ) 
    Plaintiff,  ) 
       )    
              v.                      )    Case No. 1:22-cv-1554 
       )  
KRIS            A.            SWAFFER,                                                            )                        
SEAN            K.            WILLIAMS,            and                                                )            
POHIH,            Inc.,                                                                        )            
) Jury Trial Demanded    
Defendants,          )     
  and      ) 
       ) 
ROSALYN            K.            SWAFFER,                                                )            
       ) 
                                                Relief            Defendant.            )            
                                        )     
 
COMPLAINT 
 
Plaintiff, Securities and Exchange Commission (“SEC”), alleges: 
SUMMARY 
1. This case involves unregistered, fraudulent offerings of securities and 
misappropriation of investor funds by Kris A. Swaffer (“Swaffer”) from at least September 2016 
through February 2020, and Sean K. Williams (“Williams”) after Williams began working with 
Swaffer in early 2017.  Swaffer and Williams—through POHIH, Inc. (“POHIH”) as well as other 
entities controlled by Swaffer, including 5 Letters, LLC and MAK North America, LLC, 
(previously known as Macedonian American K North America, LLC) (collectively, the “Pure 
Organic Entities”)—raised a total of approximately $14 million from approximately 75 investors 
in at least 14 states for, ostensibly, an international marijuana business (the “Pure Organic 
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Offerings”).  To recruit prospective investors, Swaffer, and later Williams, knowingly or 
recklessly made material misrepresentations about the use of funds raised in the Pure Organic 
Offerings and the risks associated with the investments.  Swaffer and Williams each assured 
investors that their investments would be used to fund the business operations of the various Pure 
Organic Entities.  While some money raised from investors was used for that purpose, Swaffer 
misappropriated a significant amount of the investor funds for his personal use.  After 
approximately April 2017, Williams also misappropriated investor funds. 
2. Swaffer misled investors about his background, portraying himself to potential 
investors as a wealthy, successful businessman, while concealing the reality that he was deep in 
debt and at risk of losing his home.  He claimed he would benefit from the business by receiving 
distributions of profit alongside other investors.  In reality, he misappropriated investor funds 
throughout the entire time period of the Pure Organic Offerings, including by using investor 
money to pay off debts owed by him and his wife, Rosalyn K. Swaffer (“Rosalyn Swaffer”), and 
to fund their personal expenses. 
3. Williams initially became involved in the Pure Organic Offerings as an investor, 
but by November 2016, he began to participate in raising money from other investors.  In 
approximately February 2017, he became the Chief Operations Officer of one of the Pure 
Organic Entities.  His activities included overseeing the operations of the Pure Organic Entities 
and raising money from investors 
4. Beginning in at least April 2017, Swaffer paid Williams outside of regular payroll 
using investor funds.  By April 2018, after Williams and Swaffer started routing investor funds 
through an account in the name of an unrelated entity that Williams controlled, Williams began 
misappropriating investor funds himself by transferring them to his personal bank accounts.  By 
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at least August 2018, Williams was aware of Swaffer’s misappropriation of funds, yet Williams 
continued to raise money from new and existing investors and to knowingly or recklessly 
mislead them about how their funds were to be used.   
5. Swaffer and Williams also knowingly or recklessly misrepresented the risks 
associated with investing in the Pure Organic Offerings to potential investors.  Swaffer and 
Williams falsely assured potential investors that they had addressed all issues related to the 
legality of the contemplated marijuana business and its proceeds, when in fact they knew, or 
were reckless in not knowing, there was a risk that the business could be found to be in violation 
of federal laws.  Indeed, multiple financial institutions had closed accounts associated with 
Swaffer and the Pure Organic Entities due to their connection with a marijuana business. As a 
result, beginning in April 2018, Swaffer and Williams routed investor funds through an account 
in the name of an entity wholly unrelated to the Pure Organic Entities, controlled by Williams. 
6. The Pure Organic Entities never made any distributions of profits to investors or 
generated revenues.  Williams ceased working for the business by December 2019.  Though 
Swaffer continued raising funds from investors through February 2020, his communications with 
investors became infrequent and sporadic, and he ceased contact with most investors in 2021. 
7. As a result of their conduct, Swaffer and Williams knowingly or recklessly 
committed securities fraud.  Swaffer, Williams, and POHIH also violated the securities laws by 
offering and selling unregistered securities.   
8. Swaffer and Williams violated Sections 5(a), 5(c), and 17(a) of the Securities Act 
of 1933 (the “Securities Act”) [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)] and Section 10(b) of the 
Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 
thereunder [17 C.F.R. § 240.10b-5].   
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9. POHIH violated Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) 
and 77e(c)]. 
10. Rosalyn Swaffer benefited from these violations of the securities laws by 
receiving ill-gotten gains to which she has or had no legitimate claim. 
11. The SEC brings this lawsuit to prevent further harm to investors and to seek 
disgorgement and civil penalties stemming from Defendants’ wrongdoing, among other 
remedies. 
12. Unless Defendants are permanently restrained and enjoined, they will continue to 
engage in the acts, practices, and courses of business set forth in this Complaint and in acts, 
practices, and courses of business of similar type and object.  
JURISDICTION AND VENUE 
13. The SEC brings this action pursuant to Sections 20(b) and 20(d) of the Securities 
Act [15 U.S.C. §§ 77t(b) and 77t(d)], and Sections 21(d) and 21(e) of the Exchange Act [15 
U.S.C. §§ 78u(d) and 78u(e)]. 
14. This Court has jurisdiction over this action pursuant to Section 22(a) of the 
Securities Act [15 U.S.C. § 77v(a)] and Sections 21(d)(3), 21(e), and 27 of the Exchange Act [15 
U.S.C. §§ 78u(d)(3), 78u(e), and 78aa].   
15. In connection with the conduct alleged in this Complaint, Defendants have 
directly or indirectly made use of the means or instrumentalities of transportation or 
communication in interstate commerce, the facilities of a national securities exchange, or the 
mails. 
16. Venue in this District is proper under 28 U.S.C. § 1391(b), Section 22(a) of the 
Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 77aa] 
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because a substantial part of the events or omissions that give rise to claims alleged in this 
Complaint occurred in this District.  Assignment to the Eastern division (Cleveland) is 
appropriate because many of Defendants’ illegal activities occurred in Lorain County. 
17. Defendant Williams resided in and transacted business within the Northern 
District of Ohio, and Defendants Swaffer and POHIH each transacted business within the 
Northern District of Ohio. 
DEFENDANTS 
18.   Kris A. Swaffer, age 60, is a resident of Cadillac, Michigan.  Swaffer is the 
President of POHIH and owns the majority of POHIH shares indirectly through a limited liability 
company he controls.  He was the manager and Chief Executive Officer of 5 Letters, LLC (“5 
Letters”).  From November 2016 through April 2018, he was the manager of MAK North 
America, LLC, previously known as Macedonian American K North America, LLC (“MAK”) 
and owned the majority of its membership interests indirectly through 5 Letters. 
19. Sean K. Williams, age 51, is a resident of Avon, Ohio.  He was the Chief 
Operating Officer of 5 Letters and the majority owner and manager of SRTK, LLC (“SRTK”). 
20. POHIH, Inc., is a Texas corporation organized in April 2018 with its principal 
place of business in Dallas, Texas.  POHIH is the successor to MAK and is the majority owner of 
a North Macedonian entity that was engaged in the business of cultivating cannabis for 
commercial purposes.   
RELIEF DEFENDANT 
21. Rosalyn K. Swaffer, age 55, is a resident of Cadillac, Michigan and is married to 
Defendant Kris A. Swaffer.   
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FACTS 
Swaffer’s and Williams’ Foray into the Marijuana Business 
22. Prior to entering the marijuana industry, Swaffer owned and operated auto 
dealerships in the State of Michigan.   
23. By late 2013, Swaffer’s auto dealership business had collapsed, he had been sued 
in state court for hundreds of thousands of dollars in unpaid loans related to his auto dealership 
business, and the home he and his wife owned had been foreclosed on by the mortgage lender.   
24. In 2016, Swaffer began organizing and acquiring the Pure Organic Entities to 
engage in the cultivation of marijuana for commercial purposes.  Swaffer, through two of the 
Pure Organic Entities, sought but did not obtain licenses to legally cultivate and distribute 
marijuana in Texas and Michigan.  One of the Pure Organic Entities purportedly obtained a 
license in North Macedonia and began operations in late 2016 after legalization in that country.   
25. In October 2016, Williams invested in Swaffer’s marijuana business.  Soon after, 
Williams began assisting Swaffer in raising money from investors, including by preparing slide 
decks and projections that were shown to certain potential investors.   
26. In approximately February 2017, Williams became the Chief Operating Officer of 
one of the Pure Organic Entities—5 Letters.  His responsibilities included supervising business 
operations in North Macedonia and communications with potential and actual investors.   
27. Williams previously worked in logistics for a trucking company in Ohio. 
Defendants Conducted Unregistered Securities Offerings 
28. Beginning in September 2016, Swaffer began raising money from investors by 
offering and selling membership interests and stock in the Pure Organic Entities, including 
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MAK, a predecessor entity to POHIH, and later POHIH.  Williams joined Swaffer in offering 
and selling these securities by November 2016.   
29. Swaffer and Williams initially offered and sold membership interests in MAK.  
From at least October 2016 through April 2018, Swaffer and Williams offered and sold 
membership interests in MAK in a continuous offering, during which time they raised at least 
$5.6 million from at least 33 investors in multiple states, including at least one unaccredited 
investor. 
30. In April 2018, Swaffer formed POHIH as MAK’s successor.  All outstanding 
MAK membership interests were converted to POHIH stock, and Swaffer and Williams began 
offering and selling additional shares of POHIH stock to new and pre-existing investors.  From at 
least April 2018 through June 2019, Swaffer, Williams, and POHIH offered and sold stock in 
POHIH in a continuous offering, during which time they raised at least $5.8 million from at least 
37 investors in multiple states, including at least one unaccredited investor. 
31. In all, Swaffer, Williams, and the Pure Organic Entities, including POHIH, raised 
approximately $14 million from approximately 75 investors in at least 14 states between 
September 2016 and February 2020. 
32. Swaffer and Williams recruited investors through in-person conversations, 
through telephone calls, and through email.  
33. Swaffer and Williams made no effort to assess potential investors’ sophistication 
or accreditation status, and unaccredited investors participated in the Pure Organic Offerings.  
Many investors had no pre-existing relationship with Swaffer, Williams, or the Pure Organic 
Entities. 
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34. Swaffer and Williams represented to potential investors in the Pure Organic 
Offerings that they would pool the money raised from investors and use it to fund the operations 
of the various Pure Organic Entities.   
35. Investors in the Pure Organic Offerings did not exercise any control or authority 
over the operations of the Pure Organic Entities.  Swaffer exercised ultimate control and 
authority over the operations of the Pure Organic Entities, and investors relied on his managerial 
skills to provide a return on their investments.   
36. Swaffer, Williams, and POHIH used interstate commerce when they offered and 
sold investments in the Pure Organic Offerings in multiple states by, among other things, 
corresponding with potential investors via emails and telephone calls and receiving investor 
funds via interstate wire transfers. 
37. The investments in the Pure Organic Entities offered and sold by Swaffer, 
Williams, and POHIH were securities.   
38. No registration statement was ever filed with the SEC or has ever been in effect 
with respect to any offers and sales of investments in MAK, POHIH, or any of the Pure Organic 
Entities.   
Swaffer and William Misrepresented the Risks of the Investments 
39. Since at least January 2017, Swaffer and Williams knew, or should have known, 
there were numerous risks associated with an investment in the Pure Organic Offerings.  Among 
these were the risk of the Pure Organic Entities being deemed to be in violation of federal laws, 
which presented serious consequences related to the receipt and taxation in the United States of 
any proceeds they generated, and the related risk that financial institutions would be unwilling to 
provide services to marijuana-related businesses due to the illegality of marijuana under federal 
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law.  Swaffer and Williams described these risks in a private placement memorandum (“PPM”) 
they provided to a potential investor in January 2017. 
40. Among other things, the PPM disclosed: “Investors risk criminal liability and 
cannabis business assets are subject to forfeiture.  Because marijuana is federally illegal, 
investing in cannabis businesses could be found to violate the federal Controlled Substances Act.  
Not only can Members, Managers and the Company be indicted under federal law, all of the 
assets they contribute to the Company (and even to an ancillary cannabis business), including 
real property, cash, equipment and other goods, could be subject to asset forfeiture.” 
41. The PPM also stated: “Marijuana businesses may still not be able to secure 
bank accounts.  Though banks are providing services to marijuana businesses, most banks and 
financial institutions will not because they worry about criminal liability under the federal 
Controlled Substances Act and money laundering under the Bank Secrecy Act.” 
42. After January 2017, however, Swaffer and Williams did not distribute the PPM or 
otherwise disclose these risks to potential investors.  Instead, they assured potential investors in 
oral communications that the business was fully licensed and could legally operate in the 
marijuana industry and receive any business proceeds in the United States.   
43. Among other occasions, Swaffer made these representations to certain investors 
in telephone calls, including calls held in or about May 2018, October 2018, and April 2019.   
44. Among other occasions, Williams made these or substantially similar 
representations to certain investors who resided in the Northern District of Ohio in a telephone 
call held in or about May 2019 and during an in-person meeting with one of the same investors 
held in Avon, Ohio in or about May 2019.   
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45. These statements were false and misleading because Swaffer and Williams failed 
to disclose that the business could be found in violation of federal law and the consequences of 
such a determination.   
46. Indeed, Swaffer and Williams knew but failed to disclose to prospective investors 
after January 2017 that, given the federal laws, financial institutions could be, and indeed were, 
unwilling to provide financial services to the Pure Organic Entities’ marijuana business.   
47. Between May 2017 and May 2018, Swaffer moved investor funds through a 
succession of at least 10 accounts at different financial institutions as, one after another, accounts 
were closed due to their association with a marijuana-related business.   
48. By April 2018, one bank account on which Williams was also a signer, along with 
Swaffer and Rosalyn Swaffer, had been closed because of its association with a marijuana-
related business.  Around this time, Swaffer told Williams that he was on a watch list and unable 
to open a bank account, and Swaffer and Williams agreed to use a bank account that Williams 
controlled to receive investor money and fund the operation of the business.  This bank account 
was in the name of SRTK, an entity controlled by Williams that was not related to the Pure 
Organic Entities. 
49. Williams opened the SRTK account in April 2018, and had signatory authority 
and control over the account.  Williams maintained his own record of transactions in the account, 
which he prepared by downloading transactional data from the bank’s website and adding a 
column in which he noted the purpose of each transaction.   
50. Between April 2018 and October 2019, at Swaffer’s direction, Williams 
instructed dozens of investors to send their investment funds to the SRTK account without 
disclosing that it had no legal relationship to the Pure Organic Entities.   
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51. Williams falsely told at least one investor, in an email sent on or about May 15, 
2019, that the SRTK account was “our us [United States] clearing account managed by our 
lawyers and cpa firm,” when in reality Williams controlled the account.  
52. The false and misleading statements made by Swaffer and Williams at various 
times after September 2016 were material.  A reasonable investor would have wanted to know:  
a) about the risks arising from the legal status of Defendants’ marijuana-related operations; b) 
that Swaffer and Williams knew that the Pure Organic Entities could not conduct an ordinary 
course of business in the U.S. or have financial transactions in their own names; and c) that 
Swaffer and Williams, after April 2018, had diverted business capital (i.e., investor funds) to a 
wholly unrelated entity (STRK), increasing the risk of misuse and misappropriation.    
Swaffer and Williams Misrepresented the Use of Investment Funds 
53. Swaffer and Williams also knowingly or recklessly made false and misleading 
statements to potential investors regarding the use of proceeds raised in the Pure Organic 
Offerings.   
54. As set forth further below, from the inception of the Pure Organic Offerings until 
early 2020, Swaffer used investor funds for personal use.  Beginning in April 2017, Williams 
accepted payments of investor funds outside of payroll; and beginning in April 2018, Williams 
directly misappropriated investor funds. 
55. Swaffer and Williams provided some potential investors with documents that 
included statements about the use of proceeds raised in the Pure Organic Offerings, including 
slide decks and projections of revenues and expenses (the “Offering Materials”). 
56. Williams prepared these Offering Materials and Swaffer approved them before 
Swaffer and Williams distributed them, including by emailing them to potential investors. 
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57. The various slide decks that were part of the Offering Materials included a slide 
titled “Proposal for Investment.”  This slide stated that working capital was needed for the 
following categories of expenses:  building, land, equipment, final licensing, and employee 
background checks.  Neither this slide nor any other slide included in such investor presentations 
disclosed that working capital would be used for compensation or personal expenses of Swaffer 
and/or Williams. 
58. Swaffer displayed or distributed slide decks with the slide described above (in 
paragraph 57) to investors between at least November 2016 and April 2017, including during a 
December 2016 investor meeting in Avon, Ohio, and in a January 2017 email to another 
investor. 
59. Between at least March 2017 and May 2019, Swaffer and Williams also 
displayed, distributed, or emailed to potential investors spreadsheets with detailed labor expense 
projections that included line items for compensation to various categories of employees.  The 
spreadsheets did not include entries for compensation to the company’s officers or for personal 
expenses. 
60. In addition to making written representations in the Offering Materials about how 
investor funds would be used, Swaffer and Williams also told a number of prospective investors
 
orally that they would use money raised from investors to fund business operations.   
61. Swaffer made such false oral representations about the use of proceeds from the 
Pure Organic Offerings to numerous investors between September 2016 and February 2020, 
including during a December 2016 meeting in Avon, Ohio, and a May 2018 telephone 
conversation.   
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62. Among other occasions, Williams made similar false representations to certain 
investors who resided in the Northern District of Ohio in a telephone call held in or about May 
2019 and during an in-person meeting with one of the same investors held in Avon, Ohio in or 
about May 2019. 
63. To induce prospective investors into believing he was worthy of their trust and 
confidence, Swaffer presented himself in oral conversations, and in written biographies included 
in the slide decks, as a successful and wealthy businessman.  Further, Swaffer claimed he stood 
in the same position as investors, and would only receive future potential distributions of profit 
alongside other investors.  Swaffer even distributed a company agreement for MAK to certain 
investors by email (the “MAK Company Agreement”), which included a provision stating that 
“[t]he Manager [Swaffer] shall not be compensated for its services as the Manager, but the 
Company [MAK] shall reimburse the Manager for all ordinary, necessary, and direct expenses 
incurred by the Manager on behalf of the Company in carrying out the Company’s business 
activities.  All reimbursements for expenses shall be reasonable in amount.” 
64. When touting his purported professional success, Swaffer failed to disclose his 
past legal and financial troubles to potential investors, and did not tell them his auto dealership 
business had collapsed, his home had been foreclosed upon, and that he was deep in debt by 
September 2016.   
65. As of the beginning of September 2016, Swaffer owed more than $800,000 to a 
financial institution, which was due at the end of the month, pursuant to an agreement he had 
signed to avoid eviction.  In October 2016, the deadline for full payment was extended to 
December 2016 in exchange for $81,000 that Swaffer paid the bank using investor funds he had 
raised in the Pure Organic Offerings.   
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66. Additionally, as of September 2016, Swaffer owed hundreds of thousands of 
dollars as a result of unpaid loans associated with his auto dealership business. 
67. After September 2016, Swaffer did not tell prospective investors that he had first 
used investor funds to pay his and his wife’s personal expenses in September 2016 or that he 
would, and did, continue to do so thereafter.  
68. A reasonable investor would have wanted to know about Swaffer’s business 
failings and lack of personal financial resources before entrusting funds to his discretion for a 
new and uncertain business venture. 
69. A reasonable investor would also have wanted to know if Swaffer, or Williams, 
had used or would use investor funds for personal expenses unrelated to the Pure Organic 
Offerings. 
Swaffer Misused Investor Funds and Williams Later Joined in the Misuse 
70. Contrary to their representations to potential investors about the intended use of 
proceeds in the Pure Organic Offerings, Defendants used only a portion of the funds raised from 
investors to finance business operations.  Instead, Swaffer, and later Williams, misappropriated a 
substantial portion of the funds raised from investors.   
71. The Pure Organic Entities were funded almost exclusively from investor deposits.  
The entities never generated revenues from operations or distributed profits to investors.  Thus, 
any monies Swaffer and Williams received from the entities were necessarily derived from 
investors in the Pure Organic Offerings.   
72. Between September 2016 and March 2020, including throughout the entire period 
he solicited investments in the Pure Organic Entities, Swaffer misappropriated at least $2.4 
million by transferring investor funds to accounts that he and his wife controlled that were 
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unrelated to the Pure Organic Entities and by directly paying his and his wife’s personal 
expenses.  He used this money for personal purposes, including to repay old debts associated 
with his foreclosed home and auto dealerships that were jointly owed with his wife, Rosalyn 
Swaffer; pay for home renovations, cars, and boats; and to pay for his and his wife’s routine 
personal expenses, such as grocery and clothing purchases.   
73. Swaffer’s misappropriation of the proceeds of the Pure Organic Offerings directly 
benefited his wife.  Between at least September 2017 and March 2020, Rosalyn Swaffer received 
over $800,000 in payments made directly to her or for her joint or individual benefit, including 
over $150,000 for personal credit cards and $35,000 in transfers to a personal bank account. 
74. Williams learned of Swaffer’s misappropriation by at least August 2018, when 
Williams saw transactions in the SRTK account with no apparent business purpose that Swaffer 
or his wife had initiated by using account information previously obtained from Williams, 
including the debit card, routing, and account numbers.  Around the same time, Williams 
initiated other transactions for Swaffer’s personal benefit at Swaffer’s direction.  Williams asked 
Swaffer about the purpose of these transactions, and Swaffer did not provide any business 
justification for the spending.  After that, Williams continued to both initiate transactions for 
Swaffer’s personal benefit at Swaffer’s direction and allow Swaffer and his wife to initiate other 
transactions for their personal benefit.  In the records that he maintained of the SRTK account, 
Williams described these transactions as expenses of Swaffer or Rosalyn Swaffer. 
75. Between April 2018 and June 2019, Williams recorded that Swaffer received or 
made approximately $99,552 in net withdrawals from the SRTK account for Swaffer and/or his 
wife’s personal expenses.   
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76. After approximately August 2018, despite his awareness of Swaffer’s 
misappropriation, Williams continued to raise money from investors and knowingly or recklessly 
mislead them about the use of their funds (as described in paragraphs 59, 60 and 62 above).   
77. Throughout the time period of the Pure Organic Offerings, Williams knew that 
the Pure Organic Entities had not generated any revenue.  Despite this knowledge, Williams 
accepted payments initiated by Swaffer from bank accounts holding investor funds raised for the 
Pure Organic Entities beginning in April 2017.  After April 2018, Williams directly took investor 
funds.   
78. After April 2018, when investor funds began to be routed through the SRTK 
account, Williams kept records and categorized the frequent transfers he made between the 
SRTK account and his own personal accounts.   
79. Williams altered his own records to conceal at least two transfers in August and 
October 2018, totaling $160,000, from the STRK account to other accounts that he controlled.  
Williams changed the transactional data from the financial institution to falsely show that the 
money had been transferred to a vendor and to a North Macedonian account used for the 
business when in reality it went into his personal accounts.  Williams also changed the entry 
showing the purpose of the transactions in his records to hide the true nature of the transactions.  
Williams provided these falsified records to an accountant who used them to start to prepare a 
general ledger for the Pure Organic Entities.   
80. Additionally, in April 2018, Williams received $200,000 in investor funds that 
were deposited directly into one of his personal bank accounts, but he only transferred $140,000 
of that amount to the SRTK account, which he recorded as a loan from himself to the company. 
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81. Between April 2017 and January 2020, Williams received hundreds of thousands 
of dollars outside of payroll and claimed reimbursements for business expenses 
The Scheme Collapses 
82. By early 2019, Swaffer began forming entities and seeking funding from investors 
to expand the marijuana business to Greece, and again misrepresented to potential investors the 
intended use of investor funds and the potential risks associated with the investment.  However, 
by mid-2019, payroll ceased to be funded on a regular basis, and Swaffer was ignoring messages 
from his employees.  Williams ceased working for the business by December 2019.   
83. Throughout the time they raised money from investors, Swaffer and Williams 
repeatedly assured investors that they were close to finalizing sales of large amounts of product 
and distributing profits.  Periodic investor newsletters described indoor and outdoor plant 
growing operations, inventory from harvests, and negotiations with multiple buyers in Europe.   
But no sales ever occurred and no profits were distributed to investors. 
84. Swaffer continued raising money from investors into February 2020, and he 
continued thereafter to send sporadic updates to investors claiming that a distribution was 
imminent.  For example, in December 2020, he emailed investors claiming millions of dollars of 
sales had closed and asked them to provide wire instructions to receive a distribution, which was 
never paid.   
85. Swaffer ceased contact with most investors in 2021, by which time several 
investors had filed lawsuits and he had become aware of the SEC’s pre-filing investigation.   
86. Swaffer asserted his Fifth Amendment privilege during the SEC’s pre-filing 
investigation in this matter and refused to answer any questions about the conduct described 
above. 
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  This Action Is Timely Filed 
87. The misconduct at issue in this Complaint occurred between September 2016 and 
February 2020. 
88. Defendants Swaffer and Williams have entered into agreements with the SEC in 
which they agreed to toll, for the period beginning on August 1, 2021 through July 31, 2022, any 
statute of limitations applicable to the conduct and claims alleged herein.  
CLAIMS FOR RELIEF 
COUNT I 
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] 
and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder 
(Against Swaffer and Williams) 
 
89. The SEC realleges and reincorporates by reference the allegations set forth in 
paragraphs 1 through 88 above as though fully set forth herein. 
90. By engaging in the conduct described above, Swaffer and Williams, directly or 
indirectly, singly or in concert with others, by use of the means or instrumentality of interstate 
commerce, or by the use of the mails, or of the facilities of a national securities exchange, in 
connection with the purchase or sale of securities, have: (a) employed devices, schemes and 
artifices to defraud; (b) made untrue statements of material facts and omitted to state material 
facts necessary in order to make statements made, in the light of the circumstances under which 
they were made, not misleading; and/or (c) engaged in acts, practices and courses of business 
which operated or would have operated as a fraud or deceit upon purchasers of securities and 
upon other persons. 
91. Swaffer and Williams intentionally, knowingly, or recklessly engaged in the 
fraudulent conduct described above. 
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92. By reason of the foregoing, Swaffer and Williams violated, and unless enjoined 
will likely again violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 
thereunder [17 C.F.R. § 240.10b-5]. 
COUNT II 
Violations of Section 17(a)(1) of the Securities Act  
[15 U.S.C. § 77q(a)(1)]  
(Against Swaffer and Williams) 
93. The SEC realleges and reincorporates by reference the allegations set forth in 
paragraphs 1 through 88 above as though fully set forth herein. 
94. By engaging in the conduct described above, Swaffer and Williams, directly or 
indirectly, singly or in concert with others, in the offer and sale of securities, by use of the means 
and instruments of transportation and communication in interstate commerce and by use of the 
mails, have employed devices, schemes or artifices to defraud.  
95. Swaffer and Williams intentionally, knowingly, or recklessly engaged in the 
devices, schemes, and artifices described above.   
96. By reason of the foregoing, Swaffer and Williams violated, and unless enjoined 
will likely again violate, Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)]. 
COUNT III 
Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act 
[15 U.S.C. § 77q(a)(2) and (3)] 
(Against Swaffer and Williams) 
 
97. The SEC realleges and reincorporates by reference the allegations set forth in 
paragraphs 1 through 88 above as though fully set forth herein. 
98. By engaging in the conduct described above, Swaffer and Williams, directly or 
indirectly, singly or in concert with others, in the offer and sale of securities, by use of the means 
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and instruments of transportation and communication in interstate commerce and by use of the 
mails, have: (a) obtained money or property by means of untrue statements of material fact or 
omissions to state material facts necessary in order to make the statements made, in light of the 
circumstances under which they were made, not misleading; and (b) engaged in transactions, 
practices or courses of business which operate or would operate as a fraud or deceit upon the 
purchaser. 
99. Swaffer and Williams intentionally, knowingly, recklessly, or at least negligently 
engaged in the activities described in this Count. 
100. By reason of the foregoing, Swaffer and Williams violated, and unless enjoined 
will likely again violate, Sections 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 
77q(a)(2) and 77q(a)(3)]. 
COUNT IV 
Violations of Sections 5(a) and 5(c) of the Securities Act  
[15 U.S.C. §§ 77e(a) and 77e(c)] 
(Against Swaffer, Williams, and POHIH) 
101. The SEC realleges and reincorporates by reference the allegations set forth in 
paragraphs 1 through 88 above as though fully set forth herein. 
102. By engaging in the conduct described above, Swaffer, Williams, and POHIH:  (a) 
without a registration statement in effect, directly and indirectly, made use of the means and 
instruments of transportation or communications in interstate commerce or of the mails to sell 
securities through the use or medium of a prospectus or otherwise, and (b) without a registration 
statement in effect, directly and indirectly, made use of the means and instruments of 
transportation or communication in interstate commerce or of the mails to offer to sell through 
the use or medium of a prospectus or otherwise, securities as to which no registration statement 
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had been filed; all in violation of Securities Act Sections 5(a) and 5(c) [15 U.S.C. §§ 77e(a) and 
77e(c)]. 
103. By reason of the conduct described above, Swaffer, Williams, and POHIH, 
directly or indirectly, violated, and, unless enjoined, will likely again violate, Sections 5(a) and 
5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)]. 
COUNT V 
Unjust Enrichment of Relief Defendant 
(Against Rosalyn Swaffer) 
 
104. The SEC realleges and reincorporates by reference the allegations set forth in 
paragraphs 1 through 88 above as though fully set forth herein. 
105. As described above, Rosalyn Swaffer received or benefitted from transfers of 
investor funds, derived from the Pure Organic Offerings, to accounts in her name, for the 
payment of joint debts she owed with Swaffer, or for her personal benefit or use. 
106. Rosalyn Swaffer was unjustly enriched by, and has no legitimate claim to, such 
funds as they are the proceeds of the securities law violations committed by Defendants Swaffer, 
Williams, and POHIH described in this Complaint.  As a result, she should be required to return 
her ill-gotten gains in an amount to be determined by the Court. 
RELIEF REQUESTED  
WHEREFORE, the SEC respectfully requests that the Court:  
A. Issue findings of fact and conclusions of law that Defendants committed the 
violations charged and alleged herein. 
B. Enter an Order of Permanent Injunction restraining and enjoining: 
i. Defendants Swaffer and Williams, their officers, agents, servants, 
employees, attorneys, and all persons in active concert or participation 
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with them, and each of them, who receive actual notice of the Order, by 
personal service or otherwise, from, directly or indirectly, engaging in the 
transactions, acts, practices or courses of business described above, or in 
conduct of similar purport and object, in violation of Sections 5(a), 5(c), 
and 17(a) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c), 77q(a)] and 
Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 
thereunder [17 C.F.R. § 240.10b-5(a), (b), and (c)]. 
ii. Defendant POHIH, its officers, agents, servants, employees, attorneys, and 
all persons in active concert or participation with them, and each of them, 
who receive actual notice of the Order, by personal service or otherwise, 
from, directly or indirectly, engaging in the transactions, acts, practices or 
courses of business described above, or in conduct of similar purport and 
object, in violation of Sections 5(a) and 5(c) of the Securities Act [15 
U.S.C. §§ 77e(a) and77e(c)]. 
C. Enter an Order requiring Defendants and Relief Defendant to disgorge the ill-
gotten gains that they received, directly or indirectly, from the violations alleged herein, 
including prejudgment interest pursuant to Sections 21(d)(5) and 21(d)(7) of the Exchange Act 
[15 U.S.C. §§ 78u(d)(5), (7)]. 
D. Enter an Order imposing appropriate civil penalties upon Defendants pursuant to 
Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange 
Act [15 U.S.C. § 78u(d)(3)]. 
E. Enter an Order barring Swaffer and Williams from serving as an officer or 
director of any entity having a class of securities registered with the SEC pursuant to Section 12 
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of the Exchange Act [15 U.S.C § 78l] or that is required to file reports pursuant to Section 15(d) 
of the Exchange Act [15 U.S.C § 78o(d)], pursuant to Section 20(e) of the Securities Act [15 
U.S.C. §  77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C § 78u(d)(2)]. 
F. Grant such orders for further relief the Court deems appropriate. 
JURY DEMAND 
The SEC requests that this case be tried before a jury.  
 
 
                                                                            Respectfully            submitted,            
 
 
Dated:  September 1, 2022   s/   Michael D. Foster                                       
      Michael D. Foster (IL Bar # 6257063) 
      Meredith J. Laval (IL Bar # 6294356) 
      Matthew T. Wissa (IL Bar # 6324860) 
                                                                            Attorneys            for            Plaintiff            
U.S. SECURITIES AND EXCHANGE 
COMMISSION 
175 West Jackson Boulevard, Suite 1450 
                                                                            Chicago,            Illinois            60604            
                                                                            Telephone:            (312)            353-7390            
                                                                            Facsimile:                                    (312)            353-7398            
                                                                            Email:            [email protected]            
                                                                            Email:            [email protected]            
                                                                            Email:            [email protected]            
           
 
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UNITED STATES DISTRICT COURT  
NORTHERN DISTRICT OF OHIO 

EASTERN DIVISION 
__________________________________________                                       
       ) 
SECURITIES AND EXCHANGE   ) 
COMMISSION,     ) 
       ) 
    Plaintiff,  ) 
       )    
              v.                      )    Case No. 1:22-cv-1554 
       )  
KRIS A. SWAFFER,     )  
SEAN K. WILLIAMS, and    ) 
POHIH, Inc.,      ) 

) Jury Trial Demanded   
Defendants,  ) 

  and      ) 
       ) 
ROSALYN K. SWAFFER,    ) 
       ) 
    Relief Defendant. ) 
                                        )     
 

COMPLAINT 
 

Plaintiff, Securities and Exchange Commission (“SEC”), alleges: 

SUMMARY 

1. This case involves unregistered, fraudulent offerings of securities and 

misappropriation of investor funds by Kris A. Swaffer (“Swaffer”) from at least September 2016 

through February 2020, and Sean K. Williams (“Williams”) after Williams began working with 

Swaffer in early 2017.  Swaffer and Williams—through POHIH, Inc. (“POHIH”) as well as other 

entities controlled by Swaffer, including 5 Letters, LLC and MAK North America, LLC, 

(previously known as Macedonian American K North America, LLC) (collectively, the “Pure 

Organic Entities”)—raised a total of approximately $14 million from approximately 75 investors 

in at least 14 states for, ostensibly, an international marijuana business (the “Pure Organic 

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Offerings”).  To recruit prospective investors, Swaffer, and later Williams, knowingly or 

recklessly made material misrepresentations about the use of funds raised in the Pure Organic 

Offerings and the risks associated with the investments.  Swaffer and Williams each assured 

investors that their investments would be used to fund the business operations of the various Pure 

Organic Entities.  While some money raised from investors was used for that purpose, Swaffer 

misappropriated a significant amount of the investor funds for his personal use.  After 

approximately April 2017, Williams also misappropriated investor funds. 

2. Swaffer misled investors about his background, portraying himself to potential 

investors as a wealthy, successful businessman, while concealing the reality that he was deep in 

debt and at risk of losing his home.  He claimed he would benefit from the business by receiving 

distributions of profit alongside other investors.  In reality, he misappropriated investor funds 

throughout the entire time period of the Pure Organic Offerings, including by using investor 

money to pay off debts owed by him and his wife, Rosalyn K. Swaffer (“Rosalyn Swaffer”), and 

to fund their personal expenses. 

3. Williams initially became involved in the Pure Organic Offerings as an investor, 

but by November 2016, he began to participate in raising money from other investors.  In 

approximately February 2017, he became the Chief Operations Officer of one of the Pure 

Organic Entities.  His activities included overseeing the operations of the Pure Organic Entities 

and raising money from investors 

4. Beginning in at least April 2017, Swaffer paid Williams outside of regular payroll 

using investor funds.  By April 2018, after Williams and Swaffer started routing investor funds 

through an account in the name of an unrelated entity that Williams controlled, Williams began 

misappropriating investor funds himself by transferring them to his personal bank accounts.  By 

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at least August 2018, Williams was aware of Swaffer’s misappropriation of funds, yet Williams 

continued to raise money from new and existing investors and to knowingly or recklessly 

mislead them about how their funds were to be used.   

5. Swaffer and Williams also knowingly or recklessly misrepresented the risks 

associated with investing in the Pure Organic Offerings to potential investors.  Swaffer and 

Williams falsely assured potential investors that they had addressed all issues related to the 

legality of the contemplated marijuana business and its proceeds, when in fact they knew, or 

were reckless in not knowing, there was a risk that the business could be found to be in violation 

of federal laws.  Indeed, multiple financial institutions had closed accounts associated with 

Swaffer and the Pure Organic Entities due to their connection with a marijuana business. As a 

result, beginning in April 2018, Swaffer and Williams routed investor funds through an account 

in the name of an entity wholly unrelated to the Pure Organic Entities, controlled by Williams. 

6. The Pure Organic Entities never made any distributions of profits to investors or 

generated revenues.  Williams ceased working for the business by December 2019.  Though 

Swaffer continued raising funds from investors through February 2020, his communications with 

investors became infrequent and sporadic, and he ceased contact with most investors in 2021. 

7. As a result of their conduct, Swaffer and Williams knowingly or recklessly 

committed securities fraud.  Swaffer, Williams, and POHIH also violated the securities laws by 

offering and selling unregistered securities.   

8. Swaffer and Williams violated Sections 5(a), 5(c), and 17(a) of the Securities Act 

of 1933 (the “Securities Act”) [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)] and Section 10(b) of the 

Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5].   

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9. POHIH violated Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) 

and 77e(c)]. 

10. Rosalyn Swaffer benefited from these violations of the securities laws by 

receiving ill-gotten gains to which she has or had no legitimate claim. 

11. The SEC brings this lawsuit to prevent further harm to investors and to seek 

disgorgement and civil penalties stemming from Defendants’ wrongdoing, among other 

remedies. 

12. Unless Defendants are permanently restrained and enjoined, they will continue to 

engage in the acts, practices, and courses of business set forth in this Complaint and in acts, 

practices, and courses of business of similar type and object.  

JURISDICTION AND VENUE 

13. The SEC brings this action pursuant to Sections 20(b) and 20(d) of the Securities 

Act [15 U.S.C. §§ 77t(b) and 77t(d)], and Sections 21(d) and 21(e) of the Exchange Act [15 

U.S.C. §§ 78u(d) and 78u(e)]. 

14. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)] and Sections 21(d)(3), 21(e), and 27 of the Exchange Act [15 

U.S.C. §§ 78u(d)(3), 78u(e), and 78aa].   

15. In connection with the conduct alleged in this Complaint, Defendants have 

directly or indirectly made use of the means or instrumentalities of transportation or 

communication in interstate commerce, the facilities of a national securities exchange, or the 

mails. 

16. Venue in this District is proper under 28 U.S.C. § 1391(b), Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 77aa] 

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because a substantial part of the events or omissions that give rise to claims alleged in this 

Complaint occurred in this District.  Assignment to the Eastern division (Cleveland) is 

appropriate because many of Defendants’ illegal activities occurred in Lorain County. 

17. Defendant Williams resided in and transacted business within the Northern 

District of Ohio, and Defendants Swaffer and POHIH each transacted business within the 

Northern District of Ohio. 

DEFENDANTS 

18.   Kris A. Swaffer, age 60, is a resident of Cadillac, Michigan.  Swaffer is the 

President of POHIH and owns the majority of POHIH shares indirectly through a limited liability 

company he controls.  He was the manager and Chief Executive Officer of 5 Letters, LLC (“5 

Letters”).  From November 2016 through April 2018, he was the manager of MAK North 

America, LLC, previously known as Macedonian American K North America, LLC (“MAK”) 

and owned the majority of its membership interests indirectly through 5 Letters. 

19. Sean K. Williams, age 51, is a resident of Avon, Ohio.  He was the Chief 

Operating Officer of 5 Letters and the majority owner and manager of SRTK, LLC (“SRTK”). 

20. POHIH, Inc., is a Texas corporation organized in April 2018 with its principal 

place of business in Dallas, Texas.  POHIH is the successor to MAK and is the majority owner of 

a North Macedonian entity that was engaged in the business of cultivating cannabis for 

commercial purposes.   

RELIEF DEFENDANT 

21. Rosalyn K. Swaffer, age 55, is a resident of Cadillac, Michigan and is married to 

Defendant Kris A. Swaffer.   

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FACTS 

Swaffer’s and Williams’ Foray into the Marijuana Business 

22. Prior to entering the marijuana industry, Swaffer owned and operated auto 

dealerships in the State of Michigan.   

23. By late 2013, Swaffer’s auto dealership business had collapsed, he had been sued 

in state court for hundreds of thousands of dollars in unpaid loans related to his auto dealership 

business, and the home he and his wife owned had been foreclosed on by the mortgage lender.   

24. In 2016, Swaffer began organizing and acquiring the Pure Organic Entities to 

engage in the cultivation of marijuana for commercial purposes.  Swaffer, through two of the 

Pure Organic Entities, sought but did not obtain licenses to legally cultivate and distribute 

marijuana in Texas and Michigan.  One of the Pure Organic Entities purportedly obtained a 

license in North Macedonia and began operations in late 2016 after legalization in that country.   

25. In October 2016, Williams invested in Swaffer’s marijuana business.  Soon after, 

Williams began assisting Swaffer in raising money from investors, including by preparing slide 

decks and projections that were shown to certain potential investors.   

26. In approximately February 2017, Williams became the Chief Operating Officer of 

one of the Pure Organic Entities—5 Letters.  His responsibilities included supervising business 

operations in North Macedonia and communications with potential and actual investors.   

27. Williams previously worked in logistics for a trucking company in Ohio. 

Defendants Conducted Unregistered Securities Offerings 

28. Beginning in September 2016, Swaffer began raising money from investors by 

offering and selling membership interests and stock in the Pure Organic Entities, including 

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MAK, a predecessor entity to POHIH, and later POHIH.  Williams joined Swaffer in offering 

and selling these securities by November 2016.   

29. Swaffer and Williams initially offered and sold membership interests in MAK.  

From at least October 2016 through April 2018, Swaffer and Williams offered and sold 

membership interests in MAK in a continuous offering, during which time they raised at least 

$5.6 million from at least 33 investors in multiple states, including at least one unaccredited 

investor. 

30. In April 2018, Swaffer formed POHIH as MAK’s successor.  All outstanding 

MAK membership interests were converted to POHIH stock, and Swaffer and Williams began 

offering and selling additional shares of POHIH stock to new and pre-existing investors.  From at 

least April 2018 through June 2019, Swaffer, Williams, and POHIH offered and sold stock in 

POHIH in a continuous offering, during which time they raised at least $5.8 million from at least 

37 investors in multiple states, including at least one unaccredited investor. 

31. In all, Swaffer, Williams, and the Pure Organic Entities, including POHIH, raised 

approximately $14 million from approximately 75 investors in at least 14 states between 

September 2016 and February 2020. 

32. Swaffer and Williams recruited investors through in-person conversations, 

through telephone calls, and through email.  

33. Swaffer and Williams made no effort to assess potential investors’ sophistication 

or accreditation status, and unaccredited investors participated in the Pure Organic Offerings.  

Many investors had no pre-existing relationship with Swaffer, Williams, or the Pure Organic 

Entities. 

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34. Swaffer and Williams represented to potential investors in the Pure Organic 

Offerings that they would pool the money raised from investors and use it to fund the operations 

of the various Pure Organic Entities.   

35. Investors in the Pure Organic Offerings did not exercise any control or authority 

over the operations of the Pure Organic Entities.  Swaffer exercised ultimate control and 

authority over the operations of the Pure Organic Entities, and investors relied on his managerial 

skills to provide a return on their investments.   

36. Swaffer, Williams, and POHIH used interstate commerce when they offered and 

sold investments in the Pure Organic Offerings in multiple states by, among other things, 

corresponding with potential investors via emails and telephone calls and receiving investor 

funds via interstate wire transfers. 

37. The investments in the Pure Organic Entities offered and sold by Swaffer, 

Williams, and POHIH were securities.   

38. No registration statement was ever filed with the SEC or has ever been in effect 

with respect to any offers and sales of investments in MAK, POHIH, or any of the Pure Organic 

Entities.   

Swaffer and William Misrepresented the Risks of the Investments 

39. Since at least January 2017, Swaffer and Williams knew, or should have known, 

there were numerous risks associated with an investment in the Pure Organic Offerings.  Among 

these were the risk of the Pure Organic Entities being deemed to be in violation of federal laws, 

which presented serious consequences related to the receipt and taxation in the United States of 

any proceeds they generated, and the related risk that financial institutions would be unwilling to 

provide services to marijuana-related businesses due to the illegality of marijuana under federal 

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law.  Swaffer and Williams described these risks in a private placement memorandum (“PPM”) 

they provided to a potential investor in January 2017. 

40. Among other things, the PPM disclosed: “Investors risk criminal liability and 

cannabis business assets are subject to forfeiture.  Because marijuana is federally illegal, 

investing in cannabis businesses could be found to violate the federal Controlled Substances Act.  

Not only can Members, Managers and the Company be indicted under federal law, all of the 

assets they contribute to the Company (and even to an ancillary cannabis business), including 

real property, cash, equipment and other goods, could be subject to asset forfeiture.” 

41. The PPM also stated: “Marijuana businesses may still not be able to secure 

bank accounts.  Though banks are providing services to marijuana businesses, most banks and 

financial institutions will not because they worry about criminal liability under the federal 

Controlled Substances Act and money laundering under the Bank Secrecy Act.” 

42. After January 2017, however, Swaffer and Williams did not distribute the PPM or 

otherwise disclose these risks to potential investors.  Instead, they assured potential investors in 

oral communications that the business was fully licensed and could legally operate in the 

marijuana industry and receive any business proceeds in the United States.   

43. Among other occasions, Swaffer made these representations to certain investors 

in telephone calls, including calls held in or about May 2018, October 2018, and April 2019.   

44. Among other occasions, Williams made these or substantially similar 

representations to certain investors who resided in the Northern District of Ohio in a telephone 

call held in or about May 2019 and during an in-person meeting with one of the same investors 

held in Avon, Ohio in or about May 2019.   

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45. These statements were false and misleading because Swaffer and Williams failed 

to disclose that the business could be found in violation of federal law and the consequences of 

such a determination.   

46. Indeed, Swaffer and Williams knew but failed to disclose to prospective investors 

after January 2017 that, given the federal laws, financial institutions could be, and indeed were, 

unwilling to provide financial services to the Pure Organic Entities’ marijuana business.   

47. Between May 2017 and May 2018, Swaffer moved investor funds through a 

succession of at least 10 accounts at different financial institutions as, one after another, accounts 

were closed due to their association with a marijuana-related business.   

48. By April 2018, one bank account on which Williams was also a signer, along with 

Swaffer and Rosalyn Swaffer, had been closed because of its association with a marijuana-

related business.  Around this time, Swaffer told Williams that he was on a watch list and unable 

to open a bank account, and Swaffer and Williams agreed to use a bank account that Williams 

controlled to receive investor money and fund the operation of the business.  This bank account 

was in the name of SRTK, an entity controlled by Williams that was not related to the Pure 

Organic Entities. 

49. Williams opened the SRTK account in April 2018, and had signatory authority 

and control over the account.  Williams maintained his own record of transactions in the account, 

which he prepared by downloading transactional data from the bank’s website and adding a 

column in which he noted the purpose of each transaction.   

50. Between April 2018 and October 2019, at Swaffer’s direction, Williams 

instructed dozens of investors to send their investment funds to the SRTK account without 

disclosing that it had no legal relationship to the Pure Organic Entities.   

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51. Williams falsely told at least one investor, in an email sent on or about May 15, 

2019, that the SRTK account was “our us [United States] clearing account managed by our 

lawyers and cpa firm,” when in reality Williams controlled the account.  

52. The false and misleading statements made by Swaffer and Williams at various 

times after September 2016 were material.  A reasonable investor would have wanted to know:  

a) about the risks arising from the legal status of Defendants’ marijuana-related operations; b) 

that Swaffer and Williams knew that the Pure Organic Entities could not conduct an ordinary 

course of business in the U.S. or have financial transactions in their own names; and c) that 

Swaffer and Williams, after April 2018, had diverted business capital (i.e., investor funds) to a 

wholly unrelated entity (STRK), increasing the risk of misuse and misappropriation.    

Swaffer and Williams Misrepresented the Use of Investment Funds 

53. Swaffer and Williams also knowingly or recklessly made false and misleading 

statements to potential investors regarding the use of proceeds raised in the Pure Organic 

Offerings.   

54. As set forth further below, from the inception of the Pure Organic Offerings until 

early 2020, Swaffer used investor funds for personal use.  Beginning in April 2017, Williams 

accepted payments of investor funds outside of payroll; and beginning in April 2018, Williams 

directly misappropriated investor funds. 

55. Swaffer and Williams provided some potential investors with documents that 

included statements about the use of proceeds raised in the Pure Organic Offerings, including 

slide decks and projections of revenues and expenses (the “Offering Materials”). 

56. Williams prepared these Offering Materials and Swaffer approved them before 

Swaffer and Williams distributed them, including by emailing them to potential investors. 

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57. The various slide decks that were part of the Offering Materials included a slide 

titled “Proposal for Investment.”  This slide stated that working capital was needed for the 

following categories of expenses:  building, land, equipment, final licensing, and employee 

background checks.  Neither this slide nor any other slide included in such investor presentations 

disclosed that working capital would be used for compensation or personal expenses of Swaffer 

and/or Williams. 

58. Swaffer displayed or distributed slide decks with the slide described above (in 

paragraph 57) to investors between at least November 2016 and April 2017, including during a 

December 2016 investor meeting in Avon, Ohio, and in a January 2017 email to another 

investor. 

59. Between at least March 2017 and May 2019, Swaffer and Williams also 

displayed, distributed, or emailed to potential investors spreadsheets with detailed labor expense 

projections that included line items for compensation to various categories of employees.  The 

spreadsheets did not include entries for compensation to the company’s officers or for personal 

expenses. 

60. In addition to making written representations in the Offering Materials about how 

investor funds would be used, Swaffer and Williams also told a number of prospective investors 

orally that they would use money raised from investors to fund business operations.   

61. Swaffer made such false oral representations about the use of proceeds from the 

Pure Organic Offerings to numerous investors between September 2016 and February 2020, 

including during a December 2016 meeting in Avon, Ohio, and a May 2018 telephone 

conversation.   

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62. Among other occasions, Williams made similar false representations to certain 

investors who resided in the Northern District of Ohio in a telephone call held in or about May 

2019 and during an in-person meeting with one of the same investors held in Avon, Ohio in or 

about May 2019. 

63. To induce prospective investors into believing he was worthy of their trust and 

confidence, Swaffer presented himself in oral conversations, and in written biographies included 

in the slide decks, as a successful and wealthy businessman.  Further, Swaffer claimed he stood 

in the same position as investors, and would only receive future potential distributions of profit 

alongside other investors.  Swaffer even distributed a company agreement for MAK to certain 

investors by email (the “MAK Company Agreement”), which included a provision stating that 

“[t]he Manager [Swaffer] shall not be compensated for its services as the Manager, but the 

Company [MAK] shall reimburse the Manager for all ordinary, necessary, and direct expenses 

incurred by the Manager on behalf of the Company in carrying out the Company’s business 

activities.  All reimbursements for expenses shall be reasonable in amount.” 

64. When touting his purported professional success, Swaffer failed to disclose his 

past legal and financial troubles to potential investors, and did not tell them his auto dealership 

business had collapsed, his home had been foreclosed upon, and that he was deep in debt by 

September 2016.   

65. As of the beginning of September 2016, Swaffer owed more than $800,000 to a 

financial institution, which was due at the end of the month, pursuant to an agreement he had 

signed to avoid eviction.  In October 2016, the deadline for full payment was extended to 

December 2016 in exchange for $81,000 that Swaffer paid the bank using investor funds he had 

raised in the Pure Organic Offerings.   

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66. Additionally, as of September 2016, Swaffer owed hundreds of thousands of 

dollars as a result of unpaid loans associated with his auto dealership business. 

67. After September 2016, Swaffer did not tell prospective investors that he had first 

used investor funds to pay his and his wife’s personal expenses in September 2016 or that he 

would, and did, continue to do so thereafter.  

68. A reasonable investor would have wanted to know about Swaffer’s business 

failings and lack of personal financial resources before entrusting funds to his discretion for a 

new and uncertain business venture. 

69. A reasonable investor would also have wanted to know if Swaffer, or Williams, 

had used or would use investor funds for personal expenses unrelated to the Pure Organic 

Offerings. 

Swaffer Misused Investor Funds and Williams Later Joined in the Misuse 

70. Contrary to their representations to potential investors about the intended use of 

proceeds in the Pure Organic Offerings, Defendants used only a portion of the funds raised from 

investors to finance business operations.  Instead, Swaffer, and later Williams, misappropriated a 

substantial portion of the funds raised from investors.   

71. The Pure Organic Entities were funded almost exclusively from investor deposits.  

The entities never generated revenues from operations or distributed profits to investors.  Thus, 

any monies Swaffer and Williams received from the entities were necessarily derived from 

investors in the Pure Organic Offerings.   

72. Between September 2016 and March 2020, including throughout the entire period 

he solicited investments in the Pure Organic Entities, Swaffer misappropriated at least $2.4 

million by transferring investor funds to accounts that he and his wife controlled that were 

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unrelated to the Pure Organic Entities and by directly paying his and his wife’s personal 

expenses.  He used this money for personal purposes, including to repay old debts associated 

with his foreclosed home and auto dealerships that were jointly owed with his wife, Rosalyn 

Swaffer; pay for home renovations, cars, and boats; and to pay for his and his wife’s routine 

personal expenses, such as grocery and clothing purchases.   

73. Swaffer’s misappropriation of the proceeds of the Pure Organic Offerings directly 

benefited his wife.  Between at least September 2017 and March 2020, Rosalyn Swaffer received 

over $800,000 in payments made directly to her or for her joint or individual benefit, including 

over $150,000 for personal credit cards and $35,000 in transfers to a personal bank account. 

74. Williams learned of Swaffer’s misappropriation by at least August 2018, when 

Williams saw transactions in the SRTK account with no apparent business purpose that Swaffer 

or his wife had initiated by using account information previously obtained from Williams, 

including the debit card, routing, and account numbers.  Around the same time, Williams 

initiated other transactions for Swaffer’s personal benefit at Swaffer’s direction.  Williams asked 

Swaffer about the purpose of these transactions, and Swaffer did not provide any business 

justification for the spending.  After that, Williams continued to both initiate transactions for 

Swaffer’s personal benefit at Swaffer’s direction and allow Swaffer and his wife to initiate other 

transactions for their personal benefit.  In the records that he maintained of the SRTK account, 

Williams described these transactions as expenses of Swaffer or Rosalyn Swaffer. 

75. Between April 2018 and June 2019, Williams recorded that Swaffer received or 

made approximately $99,552 in net withdrawals from the SRTK account for Swaffer and/or his 

wife’s personal expenses.   

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76. After approximately August 2018, despite his awareness of Swaffer’s 

misappropriation, Williams continued to raise money from investors and knowingly or recklessly 

mislead them about the use of their funds (as described in paragraphs 59, 60 and 62 above).   

77. Throughout the time period of the Pure Organic Offerings, Williams knew that 

the Pure Organic Entities had not generated any revenue.  Despite this knowledge, Williams 

accepted payments initiated by Swaffer from bank accounts holding investor funds raised for the 

Pure Organic Entities beginning in April 2017.  After April 2018, Williams directly took investor 

funds.   

78. After April 2018, when investor funds began to be routed through the SRTK 

account, Williams kept records and categorized the frequent transfers he made between the 

SRTK account and his own personal accounts.   

79. Williams altered his own records to conceal at least two transfers in August and 

October 2018, totaling $160,000, from the STRK account to other accounts that he controlled.  

Williams changed the transactional data from the financial institution to falsely show that the 

money had been transferred to a vendor and to a North Macedonian account used for the 

business when in reality it went into his personal accounts.  Williams also changed the entry 

showing the purpose of the transactions in his records to hide the true nature of the transactions.  

Williams provided these falsified records to an accountant who used them to start to prepare a 

general ledger for the Pure Organic Entities.   

80. Additionally, in April 2018, Williams received $200,000 in investor funds that 

were deposited directly into one of his personal bank accounts, but he only transferred $140,000 

of that amount to the SRTK account, which he recorded as a loan from himself to the company. 

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81. Between April 2017 and January 2020, Williams received hundreds of thousands 

of dollars outside of payroll and claimed reimbursements for business expenses 

The Scheme Collapses 

82. By early 2019, Swaffer began forming entities and seeking funding from investors 

to expand the marijuana business to Greece, and again misrepresented to potential investors the 

intended use of investor funds and the potential risks associated with the investment.  However, 

by mid-2019, payroll ceased to be funded on a regular basis, and Swaffer was ignoring messages 

from his employees.  Williams ceased working for the business by December 2019.   

83. Throughout the time they raised money from investors, Swaffer and Williams 

repeatedly assured investors that they were close to finalizing sales of large amounts of product 

and distributing profits.  Periodic investor newsletters described indoor and outdoor plant 

growing operations, inventory from harvests, and negotiations with multiple buyers in Europe.   

But no sales ever occurred and no profits were distributed to investors. 

84. Swaffer continued raising money from investors into February 2020, and he 

continued thereafter to send sporadic updates to investors claiming that a distribution was 

imminent.  For example, in December 2020, he emailed investors claiming millions of dollars of 

sales had closed and asked them to provide wire instructions to receive a distribution, which was 

never paid.   

85. Swaffer ceased contact with most investors in 2021, by which time several 

investors had filed lawsuits and he had become aware of the SEC’s pre-filing investigation.   

86. Swaffer asserted his Fifth Amendment privilege during the SEC’s pre-filing 

investigation in this matter and refused to answer any questions about the conduct described 

above. 

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  This Action Is Timely Filed 

87. The misconduct at issue in this Complaint occurred between September 2016 and 

February 2020. 

88. Defendants Swaffer and Williams have entered into agreements with the SEC in 

which they agreed to toll, for the period beginning on August 1, 2021 through July 31, 2022, any 

statute of limitations applicable to the conduct and claims alleged herein.  

CLAIMS FOR RELIEF 

COUNT I 

Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] 
and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder 

(Against Swaffer and Williams) 
 

89. The SEC realleges and reincorporates by reference the allegations set forth in 

paragraphs 1 through 88 above as though fully set forth herein. 

90. By engaging in the conduct described above, Swaffer and Williams, directly or 

indirectly, singly or in concert with others, by use of the means or instrumentality of interstate 

commerce, or by the use of the mails, or of the facilities of a national securities exchange, in 

connection with the purchase or sale of securities, have: (a) employed devices, schemes and 

artifices to defraud; (b) made untrue statements of material facts and omitted to state material 

facts necessary in order to make statements made, in the light of the circumstances under which 

they were made, not misleading; and/or (c) engaged in acts, practices and courses of business 

which operated or would have operated as a fraud or deceit upon purchasers of securities and 

upon other persons. 

91. Swaffer and Williams intentionally, knowingly, or recklessly engaged in the 

fraudulent conduct described above. 

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92. By reason of the foregoing, Swaffer and Williams violated, and unless enjoined 

will likely again violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5]. 

COUNT II 

Violations of Section 17(a)(1) of the Securities Act  
[15 U.S.C. § 77q(a)(1)]  

(Against Swaffer and Williams) 

93. The SEC realleges and reincorporates by reference the allegations set forth in 

paragraphs 1 through 88 above as though fully set forth herein. 

94. By engaging in the conduct described above, Swaffer and Williams, directly or 

indirectly, singly or in concert with others, in the offer and sale of securities, by use of the means 

and instruments of transportation and communication in interstate commerce and by use of the 

mails, have employed devices, schemes or artifices to defraud.  

95. Swaffer and Williams intentionally, knowingly, or recklessly engaged in the 

devices, schemes, and artifices described above.   

96. By reason of the foregoing, Swaffer and Williams violated, and unless enjoined 

will likely again violate, Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)]. 

COUNT III 

Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act 
[15 U.S.C. § 77q(a)(2) and (3)] 

(Against Swaffer and Williams) 
 

97. The SEC realleges and reincorporates by reference the allegations set forth in 

paragraphs 1 through 88 above as though fully set forth herein. 

98. By engaging in the conduct described above, Swaffer and Williams, directly or 

indirectly, singly or in concert with others, in the offer and sale of securities, by use of the means 

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and instruments of transportation and communication in interstate commerce and by use of the 

mails, have: (a) obtained money or property by means of untrue statements of material fact or 

omissions to state material facts necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; and (b) engaged in transactions, 

practices or courses of business which operate or would operate as a fraud or deceit upon the 

purchaser. 

99. Swaffer and Williams intentionally, knowingly, recklessly, or at least negligently 

engaged in the activities described in this Count. 

100. By reason of the foregoing, Swaffer and Williams violated, and unless enjoined 

will likely again violate, Sections 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 

77q(a)(2) and 77q(a)(3)]. 

COUNT IV 

Violations of Sections 5(a) and 5(c) of the Securities Act  
[15 U.S.C. §§ 77e(a) and 77e(c)] 

(Against Swaffer, Williams, and POHIH) 

101. The SEC realleges and reincorporates by reference the allegations set forth in 

paragraphs 1 through 88 above as though fully set forth herein. 

102. By engaging in the conduct described above, Swaffer, Williams, and POHIH:  (a) 

without a registration statement in effect, directly and indirectly, made use of the means and 

instruments of transportation or communications in interstate commerce or of the mails to sell 

securities through the use or medium of a prospectus or otherwise, and (b) without a registration 

statement in effect, directly and indirectly, made use of the means and instruments of 

transportation or communication in interstate commerce or of the mails to offer to sell through 

the use or medium of a prospectus or otherwise, securities as to which no registration statement 

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had been filed; all in violation of Securities Act Sections 5(a) and 5(c) [15 U.S.C. §§ 77e(a) and 

77e(c)]. 

103. By reason of the conduct described above, Swaffer, Williams, and POHIH, 

directly or indirectly, violated, and, unless enjoined, will likely again violate, Sections 5(a) and 

5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)]. 

COUNT V 

Unjust Enrichment of Relief Defendant 
(Against Rosalyn Swaffer) 

 
104. The SEC realleges and reincorporates by reference the allegations set forth in 

paragraphs 1 through 88 above as though fully set forth herein. 

105. As described above, Rosalyn Swaffer received or benefitted from transfers of 

investor funds, derived from the Pure Organic Offerings, to accounts in her name, for the 

payment of joint debts she owed with Swaffer, or for her personal benefit or use. 

106. Rosalyn Swaffer was unjustly enriched by, and has no legitimate claim to, such 

funds as they are the proceeds of the securities law violations committed by Defendants Swaffer, 

Williams, and POHIH described in this Complaint.  As a result, she should be required to return 

her ill-gotten gains in an amount to be determined by the Court. 

RELIEF REQUESTED  

WHEREFORE, the SEC respectfully requests that the Court:  

A. Issue findings of fact and conclusions of law that Defendants committed the 

violations charged and alleged herein. 

B. Enter an Order of Permanent Injunction restraining and enjoining: 

i. Defendants Swaffer and Williams, their officers, agents, servants, 

employees, attorneys, and all persons in active concert or participation 

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with them, and each of them, who receive actual notice of the Order, by 

personal service or otherwise, from, directly or indirectly, engaging in the 

transactions, acts, practices or courses of business described above, or in 

conduct of similar purport and object, in violation of Sections 5(a), 5(c), 

and 17(a) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c), 77q(a)] and 

Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5(a), (b), and (c)]. 

ii. Defendant POHIH, its officers, agents, servants, employees, attorneys, and 

all persons in active concert or participation with them, and each of them, 

who receive actual notice of the Order, by personal service or otherwise, 

from, directly or indirectly, engaging in the transactions, acts, practices or 

courses of business described above, or in conduct of similar purport and 

object, in violation of Sections 5(a) and 5(c) of the Securities Act [15 

U.S.C. §§ 77e(a) and77e(c)]. 

C. Enter an Order requiring Defendants and Relief Defendant to disgorge the ill-

gotten gains that they received, directly or indirectly, from the violations alleged herein, 

including prejudgment interest pursuant to Sections 21(d)(5) and 21(d)(7) of the Exchange Act 

[15 U.S.C. §§ 78u(d)(5), (7)]. 

D. Enter an Order imposing appropriate civil penalties upon Defendants pursuant to 

Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange 

Act [15 U.S.C. § 78u(d)(3)]. 

E. Enter an Order barring Swaffer and Williams from serving as an officer or 

director of any entity having a class of securities registered with the SEC pursuant to Section 12 

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of the Exchange Act [15 U.S.C § 78l] or that is required to file reports pursuant to Section 15(d) 

of the Exchange Act [15 U.S.C § 78o(d)], pursuant to Section 20(e) of the Securities Act [15 

U.S.C. §  77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C § 78u(d)(2)]. 

F. Grant such orders for further relief the Court deems appropriate. 

JURY DEMAND 

The SEC requests that this case be tried before a jury.  

 
 
      Respectfully submitted, 
 
 
Dated:  September 1, 2022   s/   Michael D. Foster                                       
      Michael D. Foster (IL Bar # 6257063) 
      Meredith J. Laval (IL Bar # 6294356) 
      Matthew T. Wissa (IL Bar # 6324860) 
      Attorneys for Plaintiff 

U.S. SECURITIES AND EXCHANGE 
COMMISSION 
175 West Jackson Boulevard, Suite 1450 

      Chicago, Illinois 60604 
      Telephone: (312) 353-7390 
      Facsimile:   (312) 353-7398 
      Email: [email protected] 
      Email: [email protected] 
      Email: [email protected] 
       

 

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