Securities and Exchange Commission v. PreIPO Corp., et al.

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z    CASE NO.           éj    2g2J
ttkyt E lkgtrSECURITIES AND EXCHANGE                ç   s,
S. D. OF FLA. - MIAMICOMM ISSION
Plaintiff,
V.
PREIPO CORP., JOHN A. M ATTEM  and
DAW D P. GRZAN
Defendants, and
BOSS GLOBAL ADW SORY GROUP, INC.,
Relief Defendant.
UNDER SEAL
PLAINTIFF SECURITIES AND EXCHANGE COM M ISSION'S
EM ERGENCY EX PARTE M OTION FOR TEW ORARY RESTRAINING
ORDER.ASSET FREEZE AND OTHER RELIEF AND M EM ORANDUM  OF LAW
RUSSELL KOONIN
Senior Trial Counsel
Attorney for Plaintiff
Securities and Exchange Com mission
801 Brickell Avenue, Suite 1950
M iami, Florida 33131
Telephone: (305) 982-6300

1 1. IT,IE 17 lï III ISITF b; ?dk 121  lw115 17 1E) 12 17 12 IT//SCISI'IM ..........
,.............................................................
:!
C. Defendants Raised At Least $4.2 M illion from At Least 50 Investors Through an
D. Defendants M gde M aterial M isrepresentations and Omissions to lnvestors in
Connection with the Offering of Prelpo's Securities . . .. . .. . .. . ..... . .. . .. . .. . .. . .... . .  1 1
1. Defendants' s4isstatements Regarding Prelpo's (Management ..... .. . . . . . . . .. 1 1
2. Defendants' M isstatements and Omissions Regarding Use of Investor
A. Standard for Obtaining a Temporary Restraining Order . . .. . .. . .. '. .. . .. . .. . .. . .. . .. . .. . .13
B. The SEC has Established Prima Facie Violations of the Securities Laws . . .. . .. . ... . 14
1. . lnvestments in PreIPO are Investment Contracts and, therefore, Securities under
2. Prep o's Offering M aterials Identified the Common Shares as Securities ...... 16
3. IDefendants are using lnterstate Cornlnerce . ... . ... . . . .. . .. . ..... ... . .. . .. . .. . .. . ... .. 16
4. Defendants are violating Section 17(a) of the Securities Act and Section 10(b)
and ltule 10b-5 of the Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 16
a) Defendants' s4isrepresentations and Omissions . ... . . . . .. . .. ... . .. . .. . .. . .. . ..... 17
1. Defendants' M isstatements Regarding Prelpo's (M anagement ......... . . .17
2. Defendants' M isstatements and Omissions Regarding Use of lnvestor
1

b) The (Misrepresentations and Oml-ssl-ons were Materl-al . . . . . . . . . . . . - . .. . . . . . . . ... 19
C) I7efendants' Schen'le to l7efraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .' . . . . . . . . . . . . . . . . . . . . . 20
d) lDefendants' Acted with Scienter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1
5. Mattera is a Control Person under Section 20(a) of the Exchange Act ............22
6. Defendants are Violating Section 5 of the Securities Act. . . . . .. . . . . . . . . . . . . . . . . . . . ...23
C. An Ex Parte Temporary Restraining Order in Necessary . . .. . .. . .. . .. . . . ... . .. . .... . .. . . 25
D. . An Ex Parte Total Asset Freeze is Appropriate . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. 25
E. The Court Should Require Defendants to Provide Sworn Accountings .............. 27
F. The Court Should Prohibit the Destruction of Records . . .. . .. . .. . .. . .. . . . .... .. . .. . .. . ..27

TABLE OF AUTH ORITIES
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;?, é5 zl 1 17.55 (1 1 1 () :!, 1 1 1 zl ( 1 1 til (2 1- r. ;! () () il ) ............................................................ ;! 15 , :! t;
CFFC v. Unitedlnvestors Group, Inc-, WL 3747596, (S.D. Fla. June 9, 2005) .......................... 26
lLll.tï:: Ifl-tltlloftl 37. 45)4) trz?tzzltr ?-, -7 S$ t; 17. E; tllll). ts *7 6), t; 6) 55 (1!.1:h. 1?r Ct. 1 6) 6) () ), .........................................'... 1 ti
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o
t-tl l6léïl-, :1:! 5 l)r. S; . 1 11 15 , 1 6) S5 ( 1 6) -7 6)............................................................... :! 1
FFC v. MB  g. Associ, LP, 97l F. Supp. 2d 1307, 1313 n.3 (S.D. Fla. 2013) ................. 25, 26
JTACPtTr 3?. JT4W  j;. a!Iprprt?t?pp., 3ï1>., ''Fzl t; 17.55 (1 1 :! ;! 11, 1 :! 65 zt ( 1 1 tll (2 ir. :! () 1 21) ....................................... :! éi
FFC v. RCA Credit Services, LLC, 2008 WL 5428039, (M.D. Fla. Dec. 31, 2008) .................... 26
tltl/l t C0. 3?. 1367 14? lé?6(, 55 ;! 1 1-J. E; . 55 ;! 1 , :! S5 1 ( 1 6)2121) ........................................................................... 1 S5
In re Sunbeam Sec. L itig-, 89 F. Supp- 2d 1326, 1340 (S.D. Fla. 1999)....................................... 22
L orenzo v. SEC, l39 S. Ct. 1094, 1 101-02 (2019)............-..................................................... 16, 20
tl163 1/ 3?. uh/  , 6) S5 S9 17.:3 (1 1 ;! zl 11, 1 ;! ti () ( 1 (ltlt (2 ir. ;! () 1 6)) ................................................................. ;! 1
Jktr3/t,xç 3?. l*ll3lt  lft? lf/01;, 21 6) Zl  . E; . 15 tiy. ti 11 ( 1 6) 6) () ) ..............................-........................................... 1 t;
u
s'fc 3?. (ïalvo, S5 *7 il 17.55 cl 1 :! 1 1 , 1 ;! 1 zl ( l 1 til (2 ir. :! () () 21) ................................................................... :! S5
SEC v. Cap. Cove Bancorp, L L C, WL 9704076, (C.D. Cal. Sept. 1, 2015)................................. 19
k
s'fc 3?. (ïarrib tz a.l il-, ûr?0(l., ti El 1 17.:! (1 1 65 1 11, 1 3 :!21 ( 1 1 tll (2 ir. 1 6) éI :!) ................................................. :! l
SEC v. Complete Bus. Sols. Grp., Inc, 538. F. Supp. 3d, 1309, 1331 (S.D. Fla. 2021)............... 19
SEC k. Corporate Relations Group, WL 25570113, (M.D. Fla. Mar. 28, 2003) ......................... 17
SEC v. ETS Payphones, Inc-, 408 F.3d 727, 732 (11th Cir. 2005) ................................... 15,. 25, 26
SEC v. Friendly Power Co., L L C, 49 F. Supp. 2d 1363, 1368 (S.D. Fla. 1999) .......................... 14
SEC v. Gen. Int'l L oan Network, Inc., 770 F. Supp. 678, 688 (D.D.C. 1991).............................. 13
SEC v. Gonzalez de Castilla, 145 F. Supp. 2d 402, 4 15 (S.D.N.Y. 2001) ................................... 26
xvfc 3?. lkltl
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SEC v. f ottoNet Operating Corp-, 2017 WL 6949229, (S.D. Fla. Mar. 31, 2017) ...................... 20
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-3?!)?'tz??zf, :! () () () SIJI- f) l S5 EI 6) 21, ( E; .lT).I$I.?2r. J lzl)r t9, :! () () ()) ....................................................... :! '7
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vfc 37 Jklrtz/'l;t/ litï 1 6) 6) ;! SIJIw :! -7 6) -7 S5 15 ( E; .I!,.I$l.Air. E; (l'llt. S5 () 1 6) 6) ;!). ................................................. ;! -7*      ;          #           1
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-
........... 1 6)
S-EC v. sfonterosso, 756 F.3d 1326, 1335 (1 1th Cir. 20 14).......................................................... 21
SEC' v. uklorgan uK-eegan d: C'0., Inc-, 678 F.3d 1233, 1244 (1 1th Cir. 20 12)................................ 1 7
k
vfc 37. zJl-tzté:l-, ;! il 6) k;. 51 tlll I). 3 (1 55 6), 5 :! - (5 E5 (12,. (2 (1rlrl. ;! () () 65 ) ......................................................... 1 6)
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vFC !7. uh2j7I-??t?prtz,   ;! 6) 55 il zl EI -7, ( 6) .12). I7l ét. Jtlrlkl 65 (), :! () 1 21) ...........................s................................. l t;
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SEC v. U.S. Pension Trust Corp' ., 444 Fed. Appx. 435 (1 1th Cir. 201 1) ..................................... 13
($ 54J1L 65 El 6)21 () El :! ( E; 1T). 17 lft. 64 tlllt. S5 () :! () 1 ()) ....................... 1 65SEC v. US. Pension Trust Corp., 201        ,  .        ,
SEC v. Unique Fin. Concepts, Inc, 1 19 F. Supp. 2d 1332, 1337 (S.D. Fla. 1998) ....... 14, 15, 16
kVfc 3?. çI!..ï.  t?;lp tl
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vfc 3?. Jrtz?o t??'tf, 5 S1 15 l)r. 6) . 11 1 S5 , El :! 1 -:! :! (:! () ():! ) .............................................................................. ;! 1
U.S. v. L ochmiller, 521 Fed. Appx. 687, 691-92 (10th Cir. Apr. 15, 2013) ................................. 20
IqLUb'. 1?. ZSrtZ t6lll-l1, Zl dl 1 Ié;.64 . '2 ti 11, 1r *755 r1. 21 ( 1 6) '7 6)) ............................................................................ 1 ti
(q?lll-tkt (f u%tates !7.  tlt Itr 161, :7:!21 l7. E; tlll I). ;! (1 S5 :! 1 , 55 ;! il (1!. I).N.Y. ;! () 1 () ) ......................................... :! ()
STAT  ES
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Section 17(a) of the Securities Act, 15 U.S.C. j 77q(a)(1)-(3) ................................. 16, 17, 20, 21
Section 20(a) of the Exchange Act, 15 U.S.C. j 78t(a) .................................................................. 2
E4 (ltltl-tl 11 :! () (l) ) () f- tlltl E; kltltlrl-tl- () s kdktlt, 1 15 I-J. E4 .42. j -7 T!t .................................................................... 1 :5
E; kltltit)rl :! 1 ((1) () t- tlltl Illtt)ll Ctrléjtl yhktlt, 1 (5 I1T. E;.(2. j :r El tl (cl) ............................................................... 1 55
Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. jj 77e(a) and 77e(c).......................... 2, 22
IV

RULES
Eliminatingthe ProhibitionAgainst Generalsolicitation andGeneralAdvertising in Rule 506and
Rule 144A, ltel. '.No. 33-9415, at 26 and n.101 (Jul. 10, 20 13) .......-......................................... 23
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V

1.    INTRODUCTION
The Securities and Exchange Commission (the Sscommission'' or tESEC'') moves this Court
for a Temporary Restraining Order, Asset Freeze, and other emergency relief pursuant to Rule 65
of the Federal Rules of Civil Procedure (dfEmergency Motion'') and Local Rule 7.1 to prevent
Defendants Prelpo Corp. (çTreIPO'') John A. Mattera (6(Mat1era''), and David P. Grzan (çtGrzan'')
(collectively, ûrefendants'), from continuing to defraud investors in connection with their
fraudulent offer and sale of securities, and to prevent them from further m isuse and
misappropriation of investor funds.
Specifically, from at least M arch 2022 and continuing through the present, Defendants
have raised at least $4.2 million from at least 50 investors residing in various states, including
several in Florida, through an unregistered fraudulent securities offering. The securities are in the
form of common stock in PrelPO. PreIPO claims to have developed an online platform offering
access to shares in private companies before their initial public offerings. The purported purpose
of the offering is to fund the development of this platfoe  and the company's business operations.
PrelPO, M attera, and Grzan have made material misrepresentations and omissions to
investors and are engaging in a scheme to defraud and a course of conduct designed to deceive
investors. Specifically, Defendants have made misstatements regarding Prelpo's management and
have omitted to disclose that M attera, previously convicted for securities fraud and permanently
enjoined from committing securities fraud--charges which included using investör money to
sustain a lavish lifestyle-is acting as the de facto Chief Executive Offker (:tCEO'') of the
com pany.  Defendants have also made misstatements regarding the use of investor funds.
Specifically, investors have not been told that only a small portion of the offering proceeds were
used to fund the development of Prepo's online platfonu and that the company has generated no

revenues from any of its business ventures. Instead, PreIPO has made undisclosed payments
totaling at Ieast $1 .7 million- approximately 42% of the investorj' money- to Mattera, Grzan,
and three other oftkers of the company out of the $4.2 million of investor funds. And, once again,
M attera is pilfering investor money for his own personal use.
As a result of the conduct alleged in the Complaint, Defendants have violated Sections 5(a)
and 5(c) of the Securities Act of 1933 (G:securities Act'') (15 U.S.C. jj 77e(a) and 77e(c)1; Section
17(a) of the Securities Act (15 U.S.C. j 77q(a)1; and Section 10(b) of the Securities Exchangç Act
of 1934 ('Yxchange Act'')(15 U.S.C. j 78j(b)), and Exchange Act Rule l0b-5 g17 C.F.R. j
240.10b-54. Mattera also, directly and indirectly, violated Exchange Act Section l0(b) and Rule
10b-5 thereunder as a control person of PreIPO under Section 20(a) of the Exchange Act (15
U.S.C. j 78t(a)1. To halt this ongoing offering fraud, protect investors, and preserve investor
assets, the Commission seeks einergency relietlincluding preliminary injunctive relietl asset
freezes, an accounting, and an order prohibiting the destruction of documents.
1I.   DEFENDANTS AND RELIEF DEFENDANTS
A. Defendants
PreIPO is a W yoming corporation formed in M arch 2021, with its principal place
of business in Boca Raton, Floridml PreIPO applied as foreign corporation for authorization to
transact business in Florida in September, 2022.2 PreIPO and its securities have never been
registered with the Commission in any capacity.3 At no point from its incorporation through the
present, wàs M attera listed as an ofûcer, director, registered agent or otherwise for PreIPO.4
1 Declaration of oavid P. Staubitz (CtExhibit A''), ! 6.b.
2 Id, ! 6.a.
3 Declaration of Magaly Ordaz (ttExhibit C'').
4 Exhibit A !! 6.a., 6.b.  '
2

M attera, 61, is a resident of Boca Raton, Florida. In August 2010, M attera' was
permanently enjoined from violating the registration and antifraud provisions of the Securities Act
of 1933 (lssecurities Act'') and the antifraud provisions of the Securities Exchange Act of 1934
(GsExchange Act'') and a permanent penny stock bar was imposed against him in a civil action
brought by the Comm ission alleging that he engaged in a fraudulent scheme involving the issuance
of bogus promisjory notes and unregistered stock distributions.s
ln June 2013, M attera was sentenced based on his conviction aûer pleading guilty
to securities fraud, wire fraud, and money laundering charges in a criminal action alleging that he
defrauded investors out of $13 million through false claims of ownership of stock in various private
companies before their initial public offerings6- a very close cousin to the conduct M attera is
?
.
engaging in now. He was accused of spending nearly $4 million on personal items for him and
his family, such as expensivejewelry, interior decorating, and luxury cars.? Mattera was sentenced
to 1 1. years in prison, and an Order of Forfeiture was also thereaûer entered against him for
$1 1,800,000.8 M attera completed his sentence on March 12, 2021, and is currently in the midst
of serving three years of supervisbd release.g Based on that same conduct to which he pled guilty
,
in December 2013, Mattera was again permanently enjoined 9om violating the registration and
antifraud provisions of both the Securities Act and the Exchange Act in a parallel civil action
brought by the Commission.lo
5 1d, ! 9.a.
6 1d, ! 7.b.
7 1d , ! 7.a.
8 1d, !! 7.b., 7.c.
9 1i, !! 7.b., 7.d.
10 I6l lf 7.f. #
3

Grzan, 62, is a resident of W est Palm Beach, Florida. Grzan has held the titles of
President, chairman and cEO of PreIPO since August 2022.11 Between July 1986 and July 2016
,
Grzan was previously associated with various registered broker-dealers as a registered
h
representative.lz From approximately November 2022 through June 2023, Grzan was associated
with a registered broker dealer based in Connecticut.l3
B. Relief Defendant
Boss Global is a Florida corporation with its principal place of business in Boca
Raton, Florida-l4  M attera owns and controls Boss Global, and he and his wife are its sole
officers-ls Boss Global received at least $859,000 in ill-gotten gains in the form of proceeds from
Prelpo's securities offering-l6 Boss Global serves no business function, provides no products or
services, and its predominant source of funding is that 9om PreIPO.l?
111.  VENUE
This Court has personal jurisdiction over the Defendants, and veflue lies in the
Southern District of Florida because most of the transactions and acts constituting violations of the
Securities Act and the Exchange Act occurred in this District. Further, M attera and Grzan reside
in the District, and Prelpo- the company through which the M attera and Grzan defrauded
investors- has its principal place of business in the District.l'
1 1 1d, !! 6.a., 10.
12 Exhibit C, ! 6.
13 1d.
14 Exhibit A, ! 6.c.
1 5 Ia
16 Declaration of Mark Dee (KtExhibit B'') !9.
17 Exhibit A, ! 13-, Exhibit C, ! 9.
18 Exhibit A, !! 6.a., 6.b., 1 1.b.
4

IV.  FACTUAL ALLEGATIONS
A.   Background
PreIPO purports to operate an online platfonn that offers investors access to shares
in private companies before their initial public offerings:lg
8.    In marketing materials, Prelpo claims that it expects to receive revenue in the form
of subscription fees paid for use of its trading platform and proprietary rating software by
instimtional investors and broker dealer finn's
,
as well as from trading the private company shares
on the secondary market on Prelpo's own account.zo
9.   Further, on Prelpo's website, on its (sseed Round'' tab, PreIPO is actively soliciting
investors for its Series A funding as follows:zl
19 1t1 ! 10. J
20 Id
.
! 1 1 .a.J
2 1 Id j 1 0 .
5

Prelpo @ forSeed Investors
Invest in PreIPO@
Get in on the ground floor of this dynamic company by investing in the PreIPO
.
Corporation's rotlnd for seed investors.
*UPDATE: PreIPO* will begin Series A round funding starting April 15, 2023. There's still
an early-stage opportunity for savvy investors to take part in the growth of the
platform that is changing the future of private equity investments.
10.
(
Grzan is referenced as CEO in various locations on Pre-lpo's website, for example
in recent press releases and its tscompany Deck'' where it seeks funding as indicated here:22
M attera's inv'olvement in Pre1PO is not disclosed anywhere on its website nor was
it disclosed in any orits ofrering or marketing materials.za Further
,
no publicly tiled incorporation
documents or required annual reports filed with either the states of W yoming or Florida contain
M attera's name.24 It is impossible for an investor to learn that M attera is involved with PreIPO.
22 Ié
23 Id. ! l2.  J
24 Id, !! 6.a., 6.b.
6

B. M attera Controls PreIPO
Prelpo was incorporated in M arch 2021
.
which was approximately nine months
after M attera completed an 1 1 year sentence in federal prison.25  The indictment alleged that
M attera and his co-conspirators made misrepresentations to investors by offering
,
the chande to
invest in special purposç entities controlled by M attera, which falsely represented they owned
shares in the stock of then-private companies such as Facebook and Groupon.26 However, M attera
knew that the entities he controlled did not own such stock.27 Instead of holding the investors'
money in escrow, Mattera pilfered their funds, spending millions on pèrsonal items for himself
and his family.28
13.  Yet, a mere nine months aûer coinpleting his prison sentence, while still in the
m idst of his three-years of supervised release period, and also under the constraints of a permanent
injunaiontonotengage in securities eaudagain-vaueracreatedprelpo.zg Matteraknewbecause
of his past that he would not be able to attract investors if his name was associated with PreIPO,
SO UC Xcftlited SOZt-XC11 to bc thC listed folmders and Public faces Of the company.3o
14.  W hile M attera's name was hidden from public view, this was only form over
substance, as M attera controls PreIPO, the company he founded.  In fact, in Prelpo's
Capitalization Table (tlcap Table''), which is a spreadsheet or table showing the equity ownership
capitalization for a company, nearly 57% of the pre-financing equity in Prelpo is owned by
Testudo Trust LTD (ûl-l-estudo Trusf), and 51% of the post-tinancing equity is owned by Testudo
25 1d., !! 6.b., 8
26 Id j 7.a.
27 1d, !! 7.a., 7.b.
28 Id
29
.
Jt;I !g 7.b.
30 1d., j 1 8, pp. 93:25-94: 1 8.
7

Trust.  Testudo Trust is listed as the GTounder'' on the Cap Tab1i.31 Testudo Trust's sole
beneficiary is M attera.32 The next closest equities for pre-financing and post-financing are 17%
and l5% respectively.33
15.  Consistent with his equity share of PreIP0, M attera is responsible for making every
major decision of PreIPO, including'.
Having the sole power to hire and fire employees at PreIPO, including its CEO;34
*  Requiring his approval for any expenditure of funds, including compensation,
expense reimbursements, as well as payments to outside vendorsi3s
.  Requiring that he be contçmporaneously supplied with copies of al1 company bank
tatements and tinancial information for his review,'36s
Reviewing a11 marketing materials and offering memoranda prior to them being
t out to investors.rsen
16.  PreIPO is Mattera's company-the investing public just does not know it and they
are being deceived. To wit, for every dollar that investors give to PreV o, within 24 hours, at least
13.6% and up to 14.9% of their contribution are wired directly to either M attera's personal account
or to Relieroefendant Boss Global, his alter ego.38 Grzan and aII the other om cers each receive at
least 4.5%.39
31 Id ! 1 1 .a.
32 1d, j 1 8, pp. 47 :23-48 : 12-, 152 : 1 5- 1 54: 1 2.
33 1d. j 1 1.a. l
34 Id , !j 1 8, pp . 33 : 1 -9-, 34:22-35:9.
35 J#! 1 1 .c., 1 1 .d., 1 1 .e., 1 1 .f., 1 1 .g.
36 1d., ! 1 1.h; ! 18, pp.76:24-77:23.
37 1d., ! 1 1.a; ! 18, pp.145:16-146:3.
38 1d, !( 1 1 .c., 1 1 .d.; ! 1 8, pp.37:19-40:10.
39 Id
8

C. Defendants Raised At Least $4.2 M illion from At Least 50 Investors Through an
Unregistered Securities Offering
17.   From at least M arch 2022 and continuing through the present, PreIPO, through
,
i
Mattera and Grzan have raised at least $4.2 million from at least 50 investors residiltg in various
states, including several in
PreIPO describes an investment into it as an offering of shares of common stock in Prelpo, and
asserts that these securities being offered are exempt from registration.4l
18.   This offering has not been registered with the Comm ission.'o Instead
,
Prelpo filed
a Form D Notice of Exempt Offering of Securities in April 2022 (Torm D'') and a slightly
amended Form D in October 2022, claiming exemption from registration, with the intent to raise
Florida, through sales of securities in an unregistered offering.4o
up to $8.75 million from investors.o Prelpo offered its common stock to investors at a price of
$5.33 per share.44
19.   Through April 2023, PreIPO has not generated any revenues from its business
operations.o
20.
GGconfidential private placement memorandumy'' other marketing materials, a Sssubscription
,
/
agreement,'' and a itpurchaser questionnaire,'' which is a tscheck-the-box'' type self-certification
The offering materials that Pre1PO has distributed to investors include a
accredited investor questionnaire. 46 In reality
,
Defendants have taken no steps to verify whether
40 1d., ! 1 1.b., Exhibit B, ! 6.
41 Exhibit A, ! 1 1 .b.
42 Exhibit C, !! 3-5.
43 Exhibit C, ! 7.
44 I6L
45 Exhibit B, ! 7
46 Exhibit A, ! 1 1.b.
9

investors actually qualify as accredited investors and are simply relying on the representations
d
.
from investors who merely check the box that they are accredited.o
21.   Grzan held sole responsibility for draAing al1 offering materials, including the
private placement memoranda, business plan, and other marketing materials sent to investors.4'
Grzan provided these documents to Mattera, who confirmed that Grzan had done a ûçgreat jobr''
before they Were used in Soliciting investOrS.49
22.   Pre1PO has solicited investors through various methods, including an in-house team
of sales agents who are (ûcold calling'' prospective investors.so Grzan supervised the sales agents
and acted as the dicloser'' on calls with potential investors.sl Specifically, sales agents have been
instructed to pass the phone to Grzan to complete sales of securities to interested investors.sz
23.   In addition to using sales agents, Prelpo has also solicited investors through its
website. On the website, investors are told that lllalfter completing the $8.75M Seed round,
PreIPO Corp. will be ideally positioned to fund massive growth through revenue generation'' and
that the company ttis ready to transact its E>pproximately) $1B of private investment deals for
revenue generation.''s3
24.   lnvestors sent their money to Pte1PO predominantly via wire transfer, otherwise
via check.54 Investor funds were then deposited into Prelpo's bank accounts, on which Grzan is
a signatory.ss M attera is not a named as a signatory on any of Prelpo's bank accounts.s6 Yet, in
47 1d, !! 1 1.b, !1 8, pp 158: 17-160:3.
48 1d, 1d, jg 18, pp 144:1 1-146:2 1; 157:24-158:6.
49 Id !( 1 1 .a.  #
50 1d, ! 18, pp 78-12-8 1 :5.
s 1 Ia
52 Id
53 Id j I 0.  #
54 Exhibit B, ! 6.
55 Exhibit A, !! 14, 15, 17-, Exhibit B, ! 6.
56 Exhibit A, !! 14, 15, 17.
10

M arch 2023, M attera's wife, who had never been an officer or director of PreIPO, was added as a
signatory on Prep o's primary Bank of America account.s?
D.   Defendants M ade M aterial M isrepresentations and Omissionj to Investors in
.
Connection with the Offering of Prelpo 's Securities
(1) Defendants' Misstatements Regarding Prelpo's Management
25.   Defendants PreP O, M attera, and Grzan have made misstatements and omissions
to investors and prospective investors regarding the identity of Prelpo's highest-ranking executive
'    i    terials and website identify Grzan as betng theofticer.  Specifcally, PreIPO s offer ng ma
company's CEO and include a biography that touts Grzan's experience as a çtserial C-suite
executive in the investment banking, private equity, and commercial banking sectors.''s' Prior
iterations of the offering materials used until August 31, 2022, identified a different ihdividual as
the company's CEO'.59
26.   These statements m'ade to investors regarding the company's management are false
and misleading. ln reality, Mattera, a securities recidivist, is and has been at all times, the defacto
CEO of Preœ o. M attera has exercised complete control over all aspects of Prepo's business and
operations and he is responsible for making or approving every major decision for the company.
In fact, M attera fired the former purported CEO of Pre1PO aûer a disagreement and replaced him
with Grzan.6o
(2) Defendants' M isstatements and Omissions Regardlng Use oflnvestor Funds
27.    Defendants PrelPO, M attera, and Grzan have made misstatements and omissions
regarding the use of investor proceeds and are misusinj investor funds. The privàte placement
57 1d, !! 6.a., 6.b., 14.
58 1d., !! 10, 1 1 .a.
59 1d. ! 1 1 a     -'
60 1d, !( 1 8, pp. 33:1-9-, 34:22-35:9.

memoranda (PPM) provided to investors include a Eduse of Proceeds'' section that specitically
states:
Proceeds from the Offering will be used to pay the costs of the
Offerihg,  for working capital,  including,  expansion of the
management team development of the operating platform and
b  iness-related costs and expenses.6l    'us
28.   This representations are false and misleading. Prelpo's PPM  and other offering
materials fail to disclose to investors that of the $4.2 million raised from investors, $1.76 million
'     62  hof investor funds--c %- was paid to M attera
,
Glyan and three other Pre1PO officers.  T e
payments specific to Mattera and Grzan totaled approximatçly $875,750 and $270,000,
respectively.63 Out of Mattera's $875,750, Boss Global, which has no apparent business function
and acts as Mattera's alter-ego, received approximately $859,000 ?or no apparent legitimate
pumose.64 And, true to M attera's modus operandi for which he has been criminally convicted and
also subject to a pennanent injunction from the Commission, Mattera has used investor money for
his own personal use, spending at least $450,000 towards credit card bills and also spending toward
financing high-end vehicles, amongst other expenditures.6s
29.   Finally, only about $244,000 has been spent on trying to develop Prelpo's online
platform, which amounts to less than 6% of investor funds received.  lndeed, M attera s actua
business plan appears to be to continue to raise investor money for his own personal consumption
'  tual functionality.6?while spending minimum amounts on Prelpo s ac
63Id, ! 1 1.b.
62 Exhibit B, ! 8.
63
.I'd
64 1d
.,
! 9-, Exhibit A, ! 13.
65 Exhibit B, ! 9.
66 Id. ! 10.
67 Id, jf 18, pp 6 1 :7-65:7.
12

V.  M EM ORANDUM  OF LAW
Standard for Obtainine a Temporarv Restrainina Order
Section 20(b) of the Securities Act, 15 U.S.C. j 77t, and Section 21(d) of the Exchange
Act, 15 U.S.C. j 78u(d), provide that in Commission actions the Court shall grant injunctive relief
upon a proper showing. SEC v. Shiner, 268 F. Supp. 2d 1333, 1340 (S.D. Fla. 2003). This Ssproper
showing'' has been described as çlajustifiable basis for believing, derived from reasonable inquiry
or other credible information, that such a state of facts probably existed as reasonably would lead
the SEC to believe that the defendants were engaged in violations of the stamtes involved.'' SEC
v. Gen. Int'l L oan Network, Inc, 770 F. Supp. 678, 688 (D.D.C. 1991).
The Commission is entitled to a temporary restraining order if it establishes (1) a prima
facie case showing the Defendants have violated the securities laws, and (2) a reasonable
likelihood they will repeat the wrong. Shiner, 268 F. Supp. 2d at 1340. The Commission appears
Ssnot as an ordinary litigant, but as a st>tutory guardian charged with safeguarding the public
interest in enforcing the securities laws.'' SEC v. f auer, No. 03-80612-CIV-MARRA, 2008 W L
4372896, at *24 (S.D. Fla. Sept. 24, 2008), aff'd, 478 Fed. Appx. 550 (11th Cir. 2012). The
.
'
Commission, therefore, faces a Iower burden than a private litigant when seeking an injunction,
and need not meet the requirements for an injunction imposed by traditional equityjurisprudence.
Hecht Co. v. Bowles, 32l U.S. 321, 331 (1944); SEC v. J I'FC Korth (Q Co., 991 F. Supp. 1468, 1472
(s.D. Fla. 1998). Unlike private litigants, the Commission need not demonstrate irreparable hal'm
or the unavailability of an adequate remedy at law. Hecht, 321 U.S. at 331; J rFI Korth, 991 F.
Supp. at 1473. Nor is it required to show a balance of equities in its favor. SEC v. US. Pension
Fmx/ Corp., No. 07-22570-ClV-MARTINEZ, 20l 0 WL 3894082, at *22 (S.D. Fla. Sept. 30, 2010)
affdsub nom.; SEC v. US. Pension Trust Corp., 444 Fed. Appx. 435 (1 1th Cir. 2011).
13

The Commission's evidence in this case warrants entry of the requested injunctive relief
on al1 applicable grounds. The declarations and their supporting exhibits attached to this
Emergency M otion demonstrate that Defendants are violating the anti-fraud and registration
provisions of the federal securities laws, and will continue to violate them if the Court does not
immediately restrain and enjo'in them.
B.   The SEC has Established Prima Facie Violations of the Securities Laws
The Commission has met its burden of establishing aprimafacie showing of violations of
the antifraud and registration provisions of the securities laws as alleged in the Complaint and this
motion. As an initiàl matter, the alleged violations al1 require that the investm ent in question be a
ççsecurity'' and that interstate commerce (or the mails) have been used.
1.    Investm ents in Pre1PO are Investment Contracts and are therefore
Securities under Howey
The investments in Prelpo constitute investment contracts and are, therefore, securities
under SEC v. WJ Howey Co., 328 U.S. 293, 298-99 (1946). Under the Howey test, an investment
contract exists irthe' re is: (a) an investment of money; (b) in a common enterprise; (c) based on
the expectation of profits to be derivrd from the entrepreneurial or managerial efforts of others.
See SEC v. Friendly Power Co., LLC, 49 F. Supp. 2d 1363, 1368 (S.D. Fla. 1999).
The investments in PreIPO satisfy all three elements of the Howey test. First, investors
committed f'unds to participate in an investment opportunity-68 See SEC v
. Unique Fin. Concepts,
Inc, 1 19 F. Sdpp. 2d 1332, 1337 (S.D. Fla. 1998), aftnd, 196 F.3d 1 195 (1 1th Cir. 1999) (CGA11
l        .
that is required is that the investor give up some tangible and definable consideration.'). Ttle
68 section IV.C !! 17, 18, 20, 23.
14

first element is satisfied because investors committed funds to participate in an investment
opportunity.
For the second prong, the Eleventh Circuit has held that tsbroad vertical commonality'' is
sufficient to satisfy Howey's common enterprise element. Unique, l96 F.3d at 1200 n.4. Broad
vertical commonality requires only a finding that investors' fortunes are linked to the efforts of the
promoter or third parties. f#.; see also SEC v. ETS Payphones, Inc, 408 F.3d 727, 732 (11th Cir.
2005).
Here, broad vertical commonality exists because the investors' fortunes were inextricably
tied to the success or failure of Prelpo's management.  lnvestors were simply investing in
Prep o's platform, and it was up to PreIPO management to grow the platform and to attract private
companies, customers and website traffic.69 Investors had no input or control. See Unique, 196
F.3d at 1199-1200 (finding commonality where defendant's clients Cûwere not in a position to
assume or maintain any substantial degreq of control over their investment-'').
The third Howey prong is met because investors were led to expect profits from the investor
agreements based on the efforts of Defendants. Thç inquiry is Glwhether the efforts made by others
are the undeniably significant ones, those essential managerial efforts which affect the failure or
success of the enterprise.'' Unique, 196 F.3d at 1201. Here, investors expected a return on their
investment based solely on Prelpo and its management to generate profits. The role of investors
here was limited to simply investing money into Prelpo's business venture and expecting a
subsequent return-7o
69 section IV.A. !! 8-1 1.
7osection IV.D !!g 25-29.
15

Prelpo 's Offering M aterials Identised the Common Shares as
Securities
Defendants' own characterization of investments into Prelpo as an offering of shares of
common stock in PreIPO being are exempt from registration under the federal securities laws is
further indication that Prelpo was offering securities.'/l  W here
,
as here, there are Ssno
countervailing factors that would (lead) a reasonable person to question this characterization,'' the
offering should be considered a security. Diaz Vicente v. Obenauer, 136 F. Supp. 679, 693 (E.D.
Va. 1990), quoting Reves v. Ernst 4 Young, 494 U.S. 56, 68 (1990).
Defendants are using Interstate Commerce
The interstate commerce requirement is satisfied by Prelpo's sale of its investment
programs to individuals in several states and thek use of the internet to solicit investors. SEC v.
Spinosa, No. 13-62066-C1V, 2014 WL 2938487, at *4 (S.D. Fla. June 30, 2014) (use of internet
satisfied interstate commerce requirement).
Defendants are violating Section 17(a) of the Securities Act and Section
10(b) and Rule 10b-5 of the Exchange Act
Section 17(a) of the Securities Act and Section 10(b) and Rules 10b-5(a)-(c) of the
Exchange Act prohibit essentially the same type of conduct. US. v. Najtalin, 441 U.S. 768, 773 n.
4 (1979); Unique, 1 19 F. Supp. 2d at 1339. The language of these provisions is Csexpansive'' and
Gicapture a wide range of conduct.'' f orenzo v. SEC, 139 S. Ct. 1094, 1 101-02 (2019). In f orenzo,
the Supreme Court recognized that there is (sconsiderable overlap among the subsections of Rule
10b-5 and Section 17(a), and thus the same underlying conduct may establish a violation of more
than one subsection.
7lsection IV.C !! 17-24.
16

Section 17(a) of the Securities Act makes it unlawful in the ççoffer or sale'' of securities to:
(a) çGemploy any device, scheme, or artitice to defraudi'' (b) Eçobtain money or property by means
of any untrue statement of a material fact or any (material) omissioni'' or (c) GGengage in any
transaction, practice, or course of business which operates or would operate ws a fraud or deceit
upon the purchaser-'' 15 U.S.C. j 77q(a)(1)-(3). A showing of scienter is required under Section
17(a)(1), but Sections 17(a)(2) and (a)(3) require only a showing of negligence.Wlma v. SEC, 446
U.S. 680, 697 (1980).
Section 10(b) of the Exchange Act and Rule 10b-5 render it unlawful, Rin connection with
the purchase or sale'' of securities, to: (a) employ any device, scheme, or artitke to defraud; (b)
l
make any untrue statement or omission of material fact; or (c) engage in any act, practice, or course
of business which operates or would operate as a fraud or deceit on any person. 15 U.S.C. j 78j(b);
17 C.F.R. j 240.10b-5. A showing of scienter is required under Section 10(b) and Rule 10b-5
thereunder. SEC v. Corporate Relations Group, No. 6:99-cv-1222, 2003 W L 255701 13, at *7
(M.D. Fla. Mar. 28, 2003).
Unlike private securities actions, the SEC need not prove reliance or injury under Section
17(a), Section 10(b), or Rule 10b-5. SEC v. Morgan Keegan (f Co., Inc, 678 F.3d 1233, 1244
(1 1th Cir. 2012).
a) Defendants' Misrepresentations and Omissions
(1) Defendants' Misstatements Regardlng PreIP0'q% Management
Defendants PreP O, M attera, and Grzan have made misstatements and om issions to
investors and prospective investors regarding the identity of Prelpo's highest-ranking executive
officer.?z  M attera
,
previously convicted of securities gaud, and under the constraints of a
72 Section IV.A ! 1 1; Section IV, B ! 14; Section IV, D ! 25.
17

permanent injunction, was completely hidden from public view'.73 Front-men such as Grzan
indicated to the public that he was the CEO, when in truth and in fact, M attera was calling all the
shots.74 M attera
,
through his trust, owned a majority of the equity in Pre1PO.?5 And Grzan
perpetuated this fraud, acting as the EGcloser'' on investor cal1s.?6
(2) Defendants' Misstatements and Omissions Regarding Use oflnvestor
Funds
Defendants PrelPO, M attera, and Grzan have made misstatements and omissions regarding
the use of investor proceeds and are misusing investor funds. The private placement memoranda
(PPM) provided to investors include a dsuse of Proceeds'' section that specifically made false and
misleading representations.
Prelpo's PPM and other offering materials fail to disclose to investors that of the $4.2
million raised from investors, $1.76 million of investor funds--dzl- was paid to Mattera, Grzan
and three other PreIPO ofticers.x  The payments specific to M attera and Grzan totaled
approximately $875,750 and $270,000, respectively.?B And, true to Mattera's rrfodus operandi for
which he hâs been criminally convicted and also subject to a permanent injunction from the
Commission, M attera has used investor money for his own 'personal use, spending at least
$450,000 towards credit card bills and also spending toward tinancing high-end vehicles, amongst
other expenditures.7g
73 Section II.A., !! 2, 3; Section IV.B !! 12-13.
74 Section IV.B !!f 14-15., Section lV, D ! 26.
75 Section IV.B !jf 14 16.
76 Section IV.C !21-24.
77 Section IV.D ! 28.
78 Section IV.D !! 28, 29.
79 section IV.D ! 28.
1 8

I
'
Finally, only about $244,000, a mere 6% of money raised, has been spent on trying to
devèlop its online platform despite representations that investor ftmds would be dedicated to
developing Prelpo's platform.Bo
b) The Misrepresentations and Omissions were Material
A false statement or omission must be material for a defendant to be liable for it. The test
for materiality is Gtwhether a reasonable man would attach importance to the fact misrepresented
or omitted in determining his course of action.'' SEC v. M erch. Capital, L L C, 483 F.3d 747, 766
(1 1th Cir. 2007) (citation omitted). In other words, information is material if a reasonable investor
would consider it significant to making an investment decision. Basic v. L evinsoh, 485 U.S. 224,
230 (1988).
M attera's criminal history as someone who was in federal prison for 1 1 years and is still
on supervised release for securities fraud and is subject to an $1 1.8 million forfeiture, is certainly
material. See, SEC v. Complete Bus. Sols. Grp., Inc, 538. F. Supp. 3d, 1309, 1331 (S.D. Fla. 2021)
(holding that reasonable minds could conclude that the defendant's criminal history was material
to investors) citing SEC v. 'rl/cr, 289 F. Supp. 3d 39, 52-53 (D. Conn. 2003) (çThe failure to
disclose anywhere on the websites or in other materials any information about (Defendanfs)
extensive criminal history, including convictions for fraud, would certainly constitute a material
omission which a reasonable investor might view as important in deciding whether to trust their
:
money with (Defendant) or his company.'); SEC v. Cap. Cove Bancorp, LL C, No. 15-00980, 2015
WL 9704076, at *6 (U.D. Cal. Sept. 1, 2015) (Gnding that in using an alias, defendant GGomit'ted
and never disclosed (hisl criminal history when soliciting investments'' and that this omission was
80 Section IV.D ! 29.
19

material); Unitedstates v. Ha@el4 724 F. Supp. 2d 321, 328 (E.D.N.Y. 2010) (t&It is well-settled
that information impugning management's integrity is material to shareholders,').
Further, EGlmjisrepresentations regarding the use of investors' funds are material.'' SEC v.
LottoNet Operating Corp., No. 17-21033-CIV-LENARD/GOODM AN, 2017 W L 6949289, at * 13
(S.D. Fla. Mar. 31, 2017) (report and recommendation), adopted 2017 WL 6989148 (S.D. Fla.
'
'
t'l f t money was not beingApr. 6, 2017); SEC v. Smart, 678 17.3d.850, 857 (10th Cir. 2012) (t e ac
used as represented would be material to a reasonable investor). Misappropriation of funds by the
issuer's principal are material. US. v. f ochmiller, 521 Fed. Appx. 687, 691-92 (10th Cir. Apr. 15,
2013) (upholding conspiracy to commit securities fraud conviction because, among other things,
defendant made material misrepresentations when he told investors he would use money for low-
income housing but instead used it for personal gain); f ottoNet, 2017 WL 6949289, at * 14 (G1Any
reasonable investor would want to know that Defendants were not, as Defendants represented,
spending invgstor funds to develop the Company, but were instead using 35 percent of investors'
money to pay sales agents for soliciting their investments.').
Prep o's officers, siphoning 42% of investor inoney for themselves, including M attera
who took up to nearly 15% , without disclosure they were doing so, is material. Furthermore,
M attera using investors' money as his own personal piggy bank without disclosure is similarly
material.
c) Defendants' Scheme to Defraud
Defendants perpetuated their scheme to defraud investors through their material
misstatements and omissions discussed above. See L orenzo, 139 S. Ct. at 1 101-02 (knowing
dissemination of misrepresentations with an intent to deceive violates Rule 10b-5(a) and (c) and
20

Section 17(a)(1)); see also Maloufv. SEC, 933 F.3d 1248, 1260 (10th Cir. 2019) (applying f orenzo
to Section 17(a)(3) because it ltis virtually identical to Rule 10b-5(c)'').
The Defendants' scheme was executed by holding out Pre1PO as a legitimate investment
with a legitimate and highly qualified executikes in place to steer Prelpo's success.8l Howevek,
,
'
82Defendants schemed to completely hide M attera s involvement and association with PreIPO
.
And Mattera's involvement was not peripheral-Mattera was in charge of all major functions of
PreIPO and in-fact owned a majority equity share in PreIPO through his trust. Grzan not only
allowed this charade to continue to the detriment of investors, but helped secure investors for
PrelPO.83
M oreover, the Defendants and three other Pre1PO officers diverted an exorbitant amount
of money for themselves, including M attera's up to nearly 15?/o- a11 done with Grzan's knowledge
ZS thC CCO 0f W CIPO, WhO had access and Fas a Signatory to Prelpo's bank accounts.B4 See e
.
g.,
SEC V. Ztm/orfl 535 U.S. 8 13, 82 1-22 (2002) (misappropriation of client's securities for personal
use states a claim for scheme to defraud).
d) Defendants Acted wlth Scienter
Scienter is a state of mind embracing intent to deceive, manipulate, or defraud. Ernst tt
Ernst v. Hoch#lder, 425 U.S. 185, 193 (1976). The Commission may establish scienter for
violations of Section 17(a)(1) of the Securities Act and Rule 10b-5 of the Exchange Act by GGa
showing of knowing misconduct or severe recklessness.'' SEC v. M onterosso, 156 F.3d 1326, 1335
(1 lth Cir. 2014) (quoting SEC v. Carriba Air, Inc, 681 F.2d 1318, 1324 (11th Cir. 1982)). As
noted above, Section 17(a)(2) and (3) of the Securities Act require a showing of negligence.
81 Section IV.A !! 7-10,* Section IV.D. ! 25.  ,
82 Section IV.A !! 10, 1 1,' Section IV.C !! 21 , 24,. Section IV.D. ! 25.
85 Section IV.C !! 15, 21, 22.
84 Section IV.C. ! 24.
2 1

The Defendants knew or were reckless in not knowing that the omissions and
representations made tand not made) to investors were false. Grzan prepared a1l Pre1PO offering
material to investors, and M attera reviewed them all before investors received them. 85 Yet none
of these materials gave investors any indiciathat Mattera, previously convicted for securities fraud,
was in charge of Prepo. Grzan was a signatory on al1 of Prelpo's bank accounts.86 And M attera
had access to these accounts and reviewed them and his wife was added to Prelpo's primary Bank
of America accountW A11 of this was done to enhance the chances that individuals would invest
in Pre1PO. See e.g., In re Sunbeam Sec. L itig., 89 F. Supp. 2d 1326, 1340 (S.D. Fla. 1999) (finding
that the scienter of corporate oftkers is properly imputed to the corporation). Scienter is present
here.
5.   Mattera is a Control Person under Section 20(a) of the Exchange Act
A defendant is liable as a controlling person where the contrqlled person violated the
securities laws, if the defendant, dshad the power to control the general affairs of the entity primarily
liable at the time the entity violated the securities laws. . .land) had the requisite power to directly
or indirectly control or influence the specifk corporate policy which resulted in the primary
liability.'' Brown v. The Enstar Grp., 84 F. 3d 393, 397 (1 1th Cir. 1986). As the Court pointed out
in SEC v. Huff 758 F.supp.zd 1288, 1344 (S.D. Fla.), ttgtlhe legislative pupose in enacting a
control liability provision was to prevent people and entities from using straw parties, subsidiaries,
or other agents acting on their behalf to accomplish ends that would be forbidden directly by the
securities laws.'' (citing H.R. Rep.'No. 73-152, at 12 (1933). This is precisely what Mattera is
doing.
85 Section IV.C ! 21 .
86 Section IV.C ! 24.
87 Section IV.C.! 24.
22

Mattera controls PreIPO from the shadows. He has the majority equity stake in PrelPO,
he has the sole power to hire and fire employees, controls al1 expendimres, has unfettered access
to its bank accounts, and reviews all marketing materials and offering memoranda before being
sent,out to investors, and receives the highest percentage of investors' funds- that being triple any
other officer.88 Yet
,
he is nowhere to be found in any publicly filed documents, in Prep o's
89      ' li bility as a control person under Sectionwebsite
,
nor in any its marketing materials.  M attera s a
20(a) of the Exchange Act is textbook. See ffzf.f/; 758 F.2d at 1344 (finding control person liability
where the defendant, in addition to being described as the dpuppet m aster' by co-workers,
appointed board members, entered into a contract with the company with an entity the defendant
controlled that served no business purposes, received weekly reports regarding the company's
business, reviewed and approved the company's public tilings, and participated in the marketing
of the company's securities).
6.    Defendants are Violating Section 5 of the Securities Act
Sections 5(a) and Section 5(c) of the Securities Act require that every offer and sale of
securities must be either registered or validly exempted from registration. To establish a prima
facie case for a Section 5 violation, the Commission must prove that the defendant, directly or
indirectly, (a) offered or sold a security; (b) using interstate commerce; while (c) no registration
statement was filed or in effect as to.the transaction. SEC v. Calvo, 378 F.3d 121 1, 1214 (11th Cir.
2004). The Commission is not required to prove scienter. f#. Once the Commission has established
aprimafacie casè, the burden of proof shiûs to the defendant to show that an exemption or safe
harbor from registration is available for the offer or sale of the security. SEC v. Ralston Purina
Co., 346 U.S. 1 19, 126 (1953).
88 Section III.A. !! 14-16-, Section III.D. jf 26.
89 Section II.A. !! 10, 1 1, 13, 24.
23

Defendants are violating this provision because investments in PreIPO are not registered
and no exemption from registration is in effect.go The exemptions from registration pursuant to
Section 4(a)(2) of the Securities Act and Rules 504, 505, and 506(b) of Regulation D thereunder
were unavailable to Pre1PO for the sale of its securities because of the general solicitation by
Defendants through their website and other marketing materials where they advertised Prelpo's
business and investors' ability to make money through their investments with PreP O.91
The intrastate offering exemptions of 3(a)(1 1), Rule 147, and Rule 147A are likewise not
available because Defendants sold the securities in several states.92 Furthennore
,
the exem ption
under Rule 506(c) is unavailable because there is no indication that Defendants took reasonable
steps to verify that investors were accredited. This exemption from registration requires both that
Gtall purchasers of securities sold gpursuant to this exemption) ...are accredited investors'' and,
separately, that issuers ûGtake reasonable steps to' verify that the purchasers of the securities are
gccredited investors.'' Rule 506(c) of Regulation D, 17 C.F.R. j 230.506((9. As a result, and as
the Commission explicitly indicated in its adoption of Rule 506(c), the exemption is not satisfied
if reasonable steps to verify are not taken, even if all investors happen to be accredited. See
Eliminating the Prohibition Against General Solicitation and General Advertising in Rule 506.and
Rule 144A, Rel. No. 33-9415, at 26 and n.101 (Jul. 10, 2013) (adopting release) (explaining that
the two requirements are separate and independent and that treating them as such will avoid
diminishing the incentive for issuers to undertake the reasonable verification steps envisioned by
the statute).
No other exemption from registration was available for investments into Pre1PO.
90 section IV.C ! 18
91 section IV.A !! 7-9; Section IV.D. ! 23.
92 section IV.C !17.
24

An Ex Parte Temporarv Restrainine Order in Necessal'v
Based on the facts and 1aw set forth above, the Commission has met its burden of showing:
(1) there isprimafacie evidence the Defendants are violating the securities laws; and (2) there is
a reasonable likelihood they will continue to violate the 1aw unless the Court immediately issues
an ex parte temporary restraining order against Defendants. As the accompanying Certification
Under Rule 65 explains in detail, the Commission has concerns the Defendants will dissipate
investor assets if notice is provided. M attera has already misappropriated hundreds of thousands
of dollars for his personal use. And, given that the fraud is ongoing, the Commission respectfully
requests that the Court enter the attached proposed order granting this temporary restraining order
and entering the asset freeze without notice to the Defendants to prevent them from further
m isappropriating investor funds. The Commission will serve the Defendants with the pleadings
and orders expeditiously, and the attached proposed order requests that the Court set a show cause
hearing at which time the Defendants can appear and argue why the Court should not enter a
preliminary injunction and further extend the asset freeze.
D.   An Ex Parte Total Asset Freeze is Appropriate
The Court may order an asset freeze to ensure that a disgorgement award can be satistied
and to prevent further dissipation of investor funds. ETS Payphones, 408 F.3d at 734; accord
CFTC v. f cvy', 541 F.3d 1 102, 1 1 14 (1 1th Cir. 2008). EThe SEC'S burden for showing the amount
of assets subject to disgorgement (and therefore available for freeze) is light: a reasonable
approximation of a defendant's ill-gotten gains is required. Exactitude is not . . . .'' ETspayphones,
408 F.3d at 735 (cleaned upl; accord FTC v. 1AB Mk/g. Assocs., L P., 746 F.3d 1228, 1234 (1 1th
Cir. 2014). The Commission's burden to demonstrate the potential for dissipation of funds is even
lighter. S& FTC v. IABMkW. Assocs., L P, 97l F. Supp. 2d 1307, 1313 n.3 (S.D. Fla. 2013) (çThere
25

does not need to be evidence that assets will likely be dissipated in 'order to impose an asset
freeze.'') (citing ETS Payphones, 408 F.3d at 734, and SEC v. f auer, 445 F. Supp. 2d 1362, 1367,
1370 (S.D. Fla. 200$); SEC v. Gonzalez de Castilla, 145 F. Supp. 2d 402, 415 (S.D.N.Y. 2001)
(:$rT1he SEC must demonstrate only . . ; 4. concern that defendants will dissipate their assets . . .
A total asset freeze is warranted when the assets to be frozen are worth' less than the likely
disgorgement award. See SEC v. L auer, 478 F. App'x 550, 554 (1 1th Cir. 2012) (unpublished)
(çt(1)f potential disgorgement is greater than the value of the defendant's assets, the district court
can order a full asset freeze''); ETS Payphones, 408 F.3d at 735-36 (affirming order that dlfroze all
of Edefendant's) assets'' when estimated disgorgement and value of frozen assets were
.
comparable); IAB Marketing, 972 F. Supp. 2d at 13 13 (denying defendants' motion to GGunfreeze''
funds for living expenses where Gr efendants' monetary liability greatly exceeds the frozen
funds'). Furthermore, Defendants should not be pennitted to use ill-gotten gains they have
received to pay attorney's fees or living expenses. See FTC v. RCA Creditservices, LL C, No. 8:08-
cv-2062-T-27MAP, 2008 WL 5428039, at *4 (M.D. Fla. Dec. 31, 2008) (defendants tsmay not use
their victims' assets to hire counsel to help them retain the fruits of their violations''); CFFC v.
Unitedlnvestors Group, Inc., No. 05-80002-CIV 2005 WL 3747596, at * 1 n.1 (S.D. Fla. June 9,
2005) (refusing to except living expenses and counsel fees from asset freeze), aff'd on other
grounds sub nbm. L cvy, 541 F.3d at 1 102.
Here, the Commission has no information indicating that Defendants have assets in exceps
of the likely disgorgement award. Therefore, a total freeze is appropriate. If, in fact, Defendants
have liquid assets in excess of the disgorgement amount, the freeze can be adjusted accordingly.
26

E.   The Court Should Require Defendants to Provide Sworn Accountines
The Court should require Defendants to provide sworn accountings, which enable the
Commission and the Court to determine the Defendants' profits, the present location of proceeds,
and the Defendants' ability to repay. See SEC v. Tannenbaum, No. 99-CV-6050, 2007 W L
2089326, at *4 (E.D.N.Y. July 19, 2007); SEC v. Lybrand, No. 00-Civ.l387(SHS), 2000 WL
913894, at * 12 (S.D.N.Y. July 6, 2000); SEC v. Margolin, No. t92 Civ 6307 (PKL), 1992 WL
î
,
279735, at *7 (S.D.N.Y. Sept. 30, 1992):
The Court Should Prohibit the Destruction of Records
An Order against Defendants prohibiting the destruction of records is appropriate to
prevent the destruction of documents before this Court can adjudicate the Commission's claims,
and to ensure that whatever equitable relief might ultimately be appropriate is available. Shiner,
268 F. Supp. 2d at 1345-46.
W .   CONCLUSION
For the forgoing reasons, the Court should grant the Commission's Emergency M otion.
LOCAL RULE 7.1(d) CERTIFICATION
After reviewing the facts and researching applicable legal principles, I certify that this
motion in fact pre'sents a true emergency (as opposed to a matter that may need only expedited
treatment) and requires an immediate ruling because the Court would not be able to provide
meaningful relief to a critical, non-routine issue after the expiration of seven days. l understand
that an unwarranted certification may lead to sanctions.
27

Dated: August 14, 2023            Respectfully submitted,
x
.
X,   . '.'.w->A
By:
Russell Koonin
Senior Trial Counsel
Fla. Bar No. 474479
Direct Dial: (305) 982-6390
Email: [email protected]
Attorneypr Plainhy
Securities and Exchange Comm ission
801 Brickell Avenue, Suite 1950
M iami, FL 33131
Telephone: (305) 982-6300
INDEX IN SUPPORT
Exhibit A : Declaration of David P. Staubitz, Senior Counsel, SEC, with attachments No. 1 - 249
Exhibit B: Declaration of M ark Dee, SEC Accounànt; and
Exhibit C: Declaration of M agaly Ordaz, SEC Paralegal, with attachm ents Nos. 1 - 4.
28

SqALEZ

CNITED STATES m sw lc'r cotm
soc'ruEltx olsrrltlc'r oF Fl-oRm  FILED Y D

.c.
. 

'

p I
z CASE NO. éj 2g2J

ttkyt E lkgtrSECURITIES AND EXCHANGE ç s,
S. D. OF FLA. - MIAMICOMM ISSION

Plaintiff,

V.

PREIPO CORP., JOHN A. M ATTEM  and

DAW D P. GRZAN

Defendants, and

BOSS GLOBAL ADW SORY GROUP, INC.,

Relief Defendant.

UNDER SEAL

PLAINTIFF SECURITIES AND EXCHANGE COM M ISSION'S

EM ERGENCY EX PARTE M OTION FOR TEW ORARY RESTRAINING

ORDER.ASSET FREEZE AND OTHER RELIEF AND M EM ORANDUM  OF LAW

RUSSELL KOONIN

Senior Trial Counsel

Attorney for Plaintiff

Securities and Exchange Com mission

801 Brickell Avenue, Suite 1950

M iami, Florida 33131

Telephone: (305) 982-6300

Case 9:23-cv-81141-DMM   Document 6   Entered on FLSD Docket 08/14/2023   Page 1 of 34



1 1. IT,IE 17 lï III ISITF b; ?dk 121 lw115 17 1E) 12 17 12 IT//SCISI'IM ..........,............................................................. :!

C. Defendants Raised At Least $4.2 M illion from At Least 50 Investors Through an

D. Defendants M gde M aterial M isrepresentations and Omissions to lnvestors in

Connection with the Offering of Prelpo's Securities . . .. . .. . .. . ..... . .. . .. . .. . .. . .... . . 1 1

1. Defendants' s4isstatements Regarding Prelpo's (M anagement ..... .. . . . . . . . .. 1 1

2. Defendants' M isstatements and Omissions Regarding Use of Investor

A. Standard for Obtaining a Temporary Restraining Order . . .. . .. . .. '. .. . .. . .. . .. . .. . .. . .. . .13

B. The SEC has Established Prima Facie Violations of the Securities Laws . . .. . .. . ... . 14

1. . lnvestments in PreIPO are Investment Contracts and, therefore, Securities under

2. Prep o's Offering M aterials Identified the Common Shares as Securities ...... 16

3. IDefendants are using lnterstate Cornlnerce . ... . ... . . . .. . .. . ..... ... . .. . .. . .. . .. . ... .. 16

4. Defendants are violating Section 17(a) of the Securities Act and Section 10(b)

and ltule 10b-5 of the Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 16

a) Defendants' s4isrepresentations and Omissions . ... . . . . .. . .. ... . .. . .. . .. . .. . ..... 17

1. Defendants' M isstatements Regarding Prelpo's (M anagement ......... . . .17

2. Defendants' M isstatements and Omissions Regarding Use of lnvestor

1

Case 9:23-cv-81141-DMM   Document 6   Entered on FLSD Docket 08/14/2023   Page 2 of 34



b) The (Misrepresentations and Oml-ssl-ons were Materl-al . . . . . . . . . . . . - . .. . . . . . . . ... 19

C) I7efendants' Schen'le to l7efraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .' . . . . . . . . . . . . . . . . . . . . . 20

d) lDefendants' Acted with Scienter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1

5. Mattera is a Control Person under Section 20(a) of the Exchange Act ............22

6. Defendants are Violating Section 5 of the Securities Act. . . . . .. . . . . . . . . . . . . . . . . . . . ...23

C. An Ex Parte Temporary Restraining Order in Necessary . . .. . .. . .. . .. . . . ... . .. . .... . .. . . 25

D. . An Ex Parte Total Asset Freeze is Appropriate . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. 25

E. The Court Should Require Defendants to Provide Sworn Accountings .............. 27

F. The Court Should Prohibit the Destruction of Records . . .. . .. . .. . .. . .. . . . .... .. . .. . .. . ..27

Case 9:23-cv-81141-DMM   Document 6   Entered on FLSD Docket 08/14/2023   Page 3 of 34



TABLE OF AUTH ORITIES
%

ky/'tl T4??o !?. Cn/ztl lïlltittzl- (5//-/7., 1121 I7. S5 (1 S; 6) :! , 55 6) :r ( 1 1 til (2 1- ç. 1 6) 11 t; ) .................................................... ;! :!

(TIJS-COIE/ !7. kTtr3?.;?, é5 zl 1 17.55 (1 1 1 () :!, 1 1 1 zl ( 1 1 til (2 1- r. ;! () () il ) ............................................................ ;! 15 , :! t;

CFFC v. Unitedlnvestors Group, Inc-, WL 3747596, (S.D. Fla. June 9, 2005) .......................... 26

lLll.tï:: Ifl-tltlloftl 37. 45)4) trz?tzzltr ?-, -7 S$ t; 17. E; tllll). ts *7 6), t; 6) 55 (1!.1:h. 1?r Ct. 1 6) 6) () ), .........................................'... 1 ti

lïl.llk;t (jL Ernst' 3?. Jhrt/ tl//
ot-tl l6léïl-, :1:! 5 l)r. S; . 1 11 15 , 1 6) S5 ( 1 6) -7 6)............................................................... :! 1

FFC v. MB g. Associ, LP, 97l F. Supp. 2d 1307, 1313 n.3 (S.D. Fla. 2013) ................. 25, 26

JTACPtTr 3?. JT4W j;. a!Iprprt?t?pp., 3ï1>., ''Fzl t; 17.55 (1 1 :! ;! 11, 1 :! 65 zt ( 1 1 tll (2 ir. :! () 1 21) ....................................... :! éi

FFC v. RCA Credit Services, LLC, 2008 WL 5428039, (M.D. Fla. Dec. 31, 2008) .................... 26

tltl/l t C0. 3?. 1367 14? lé?6(, 55 ;! 1 1-J. E; . 55 ;! 1 , :! S5 1 ( 1 6)2121) ........................................................................... 1 S5

In re Sunbeam Sec. L itig-, 89 F. Supp- 2d 1326, 1340 (S.D. Fla. 1999)....................................... 22

L orenzo v. SEC, l39 S. Ct. 1094, 1 101-02 (2019)............-..................................................... 16, 20

tl163 1/ 3?. uh/ , 6) S5 S9 17.:3 (1 1 ;! zl 11, 1 ;! ti () ( 1 (ltlt (2 ir. ;! () 1 6)) ................................................................. ;! 1

Jktr3/t,xç 3?. l*ll3lt lft? lf/01;, 21 6) Zl . E; . 15 tiy. ti 11 ( 1 6) 6) () ) ..............................-........................................... 1 t;

us'fc 3?. (ïalvo, S5 *7 il 17.55 cl 1 :! 1 1 , 1 ;! 1 zl ( l 1 til (2 ir. :! () () 21) ................................................................... :! S5

SEC v. Cap. Cove Bancorp, L L C, WL 9704076, (C.D. Cal. Sept. 1, 2015)................................. 19

ks'fc 3?. (ïarrib tz a.l il-, ûr?0(l., ti El 1 17.:! (1 1 65 1 11, 1 3 :!21 ( 1 1 tll (2 ir. 1 6) éI :!) ................................................. :! l

SEC v. Complete Bus. Sols. Grp., Inc, 538. F. Supp. 3d, 1309, 1331 (S.D. Fla. 2021)............... 19

SEC k. Corporate Relations Group, WL 25570113, (M.D. Fla. Mar. 28, 2003) ......................... 17

SEC v. ETS Payphones, Inc-, 408 F.3d 727, 732 (11th Cir. 2005) ................................... 15,. 25, 26

SEC v. Friendly Power Co., L L C, 49 F. Supp. 2d 1363, 1368 (S.D. Fla. 1999) .......................... 14

SEC v. Gen. Int'l L oan Network, Inc., 770 F. Supp. 678, 688 (D.D.C. 1991).............................. 13

SEC v. Gonzalez de Castilla, 145 F. Supp. 2d 402, 4 15 (S.D.N.Y. 2001) ................................... 26

xvfc 3?. lkltlot-ot-, e/ 5 EI I7. 6) tlll ë).:! (1 1 ;! EI 11, 1 :5 Zl Zl ( E; .12). 17 lët.), ..........................................,.......................... :! ;!

uvfc 3?. .I. l$F. 447t7 l-tll (fr tTrt?., 6) 6) 1 l7. E; tl111). 1 Zl t; iI, 1 21 ,7:3 ( E; .D. 17 lft. 1 6) 6) il ) .......................................... 1 S5

kvfc 37. J: t7zltr/-, zl zl 15 l7. E; tlll I). :! (1 1 55 ti :!, 1 S5 t; -2, 1 55 -7 () ( E;.lE). l7lét. :! () () (9) .............................................. ;! ti

us'lït:r 17. JTt7zltr/', 21 -7 il l7. zàkl)ll ' 1( 5 5 (), 5 15 zl ( 1 1 tll (2 ir. ;! () 1 :!) ................................................................ :! t;

ks'fc A7. JT(:lftl,', ;! () () El lw 21 55 -7:! il 6) t9, ( E4. I2h. I71 Ct. E; (lllt. ;! 21, ;! () () EI ) ...................................................... 1 S5

Case 9:23-cv-81141-DMM   Document 6   Entered on FLSD Docket 08/14/2023   Page 4 of 34



SEC v. f ottoNet Operating Corp-, 2017 WL 6949229, (S.D. Fla. Mar. 31, 2017) ...................... 20

xvfc !7. JT-3?!)?'tz??zf, :! () () () SIJI- f) l S5 EI 6) 21, ( E; .lT).I$I.?2r. J lzl)r t9, :! () () ()) ....................................................... :! '7

uvfc 37 Jklrtz/'l;t/ litï 1 6) 6) ;! SIJIw :! -7 6) -7 S5 15 ( E; .I!,.I$l.Air. E; (l'llt. S5 () 1 6) 6) ;!). ................................................. ;! -7* ; # 1

<62#C 3?. Jklrtr '-L)l1. tT>tz?p it6ll, kTkT (E7, zl 11 :5 17.3 (1 -721 -/, -F t; t; ( 1 1 tll (2 ir. :! () () :4) .....................................
-
........... 1 6)

S-EC v. sfonterosso, 756 F.3d 1326, 1335 (1 1th Cir. 20 14).......................................................... 21

SEC' v. uklorgan uK-eegan d: C'0., Inc-, 678 F.3d 1233, 1244 (1 1th Cir. 20 12)................................ 1 7

kvfc 37. zJl-tzté:l-, ;! il 6) k;. 51 tlll I). 3 (1 55 6), 5 :! - (5 E5 (12,. (2 (1rlrl. ;! () () 65 ) ......................................................... 1 6)

kvfc !?. zïtlltitlïlz JDz/?-I-z?tz (E7t7., 65 zl t; I-J. E; . 1 1 6), 1 :! t; ( 1 6) 15 S5 ) ................................................................. ;! :5
k

xvfc jl.'<$Il3l-l13?l., :! t; il I7. E; tllll). :5 (1 1 65 3 E9 , l 55 zl () ( E; .1E). 17 11t. ;! () () 3 ) ................................................. 1 E5 , ;! -7

uvFC !7. uh2j7I-??t?prtz, ;! 6) 55 il zl EI -7, ( 6) .12). I7l ét. Jtlrlkl 65 (), :! () 1 21) ...........................s................................. l t;

xvfc 3?. jptzzzpotllodltzzlzz,, TSJIw :! () EI 6) é5 :! t5, ( Iï.I:h.IN;.!kr. July 1 6), :! () () :p ) .................................................... :! -7

SEC v. U.S. Pension Trust Corp' ., 444 Fed. Appx. 435 (1 1th Cir. 201 1) ..................................... 13

($ 54J1L 65 El 6)21 () El :! ( E; 1T). 17 lft. 64 tlllt. S5 () :! () 1 ()) ....................... 1 65SEC v. US. Pension Trust Corp., 201 , . ,

SEC v. Unique Fin. Concepts, Inc, 1 19 F. Supp. 2d 1332, 1337 (S.D. Fla. 1998) ....... 14, 15, 16

kVfc 3?. çI!..ï. t?;lp tl
.)/ tTrt?., S5 :! 11 I-T. E; . :! î' E5 , :! 6) EI - 6) 6) ( 1 6) k1 t; ) ........................................................... 1 01, 1 éi

xvfc 3?. Jrtz?o t??'tf, 5 S1 15 l)r. 6) . 11 1 S5 , El :! 1 -:! :! (:! () ():! ) .............................................................................. ;! 1

U.S. v. L ochmiller, 521 Fed. Appx. 687, 691-92 (10th Cir. Apr. 15, 2013) ................................. 20

IqLUb'. 1?. ZSrtZ t6lll-l1, Zl dl 1 Ié;.64 . '2 ti 11, 1r *755 r1. 21 ( 1 6) '7 6)) ............................................................................ 1 ti

(q?lll-tkt (f u%tates !7. tlt Itr 161, :7:!21 l7. E; tlll I). ;! (1 S5 :! 1 , 55 ;! il (1!. I).N.Y. ;! () 1 () ) ......................................... :! ()

STAT ES

E; kltltl- ()rl 1 () (1)) () f- tlltl !; () tltlrl-ti kl s Illttlllltllé;tl 21k (lt, 1 15 1-$. E; .(2 . j -7 iIJ- (1,) ..................................... :3, 1 (9, 1 ,7

Section 17(a) of the Securities Act, 15 U.S.C. j 77q(a)(1)-(3) ................................. 16, 17, 20, 21

Section 20(a) of the Exchange Act, 15 U.S.C. j 78t(a) .................................................................. 2

E4 (ltltl-tl 11 :! () (l) ) () f- tlltl E; kltltlrl-tl- () s kdktlt, 1 15 I-J. E4 .42. j -7 T!t .................................................................... 1 :5

E; kltltit)rl :! 1 ((1) () t- tlltl Illtt)ll Ctrléjtl yhktlt, 1 (5 I1T. E;.(2. j :r El tl (cl) ............................................................... 1 55

Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. jj 77e(a) and 77e(c).......................... 2, 22

IV

Case 9:23-cv-81141-DMM   Document 6   Entered on FLSD Docket 08/14/2023   Page 5 of 34



RULES

Eliminatingthe ProhibitionAgainst Generalsolicitation andGeneralAdvertising in Rule 506and

Rule 144A, ltel. '.No. 33-9415, at 26 and n.101 (Jul. 10, 20 13) .......-......................................... 23
x

l?Ltl1 kl 1 ()1,- 15 (Ct) -(()) () t- tlltl IElttlilltrléjkr kdk ct....................................................................... 1 (1, 1 *7, ;! (), ;! 1

liLtllkl 15 () t; (()) () f- lk:kl éjtllitti () rl ITh, 1 -7 (2.I7.l?L. . j ;! 3 (). 15 () t; (()) .................................................................. :! E5

V

Case 9:23-cv-81141-DMM   Document 6   Entered on FLSD Docket 08/14/2023   Page 6 of 34



1. INTRODUCTION

The Securities and Exchange Commission (the Sscommission'' or tESEC'') moves this Court

for a Temporary Restraining Order, Asset Freeze, and other emergency relief pursuant to Rule 65

of the Federal Rules of Civil Procedure (dfEmergency Motion'') and Local Rule 7.1 to prevent

Defendants Prelpo Corp. (çTreIPO'') John A. Mattera (6(Mat1era''), and David P. Grzan (çtGrzan'')

(collectively, ûrefendants'), from continuing to defraud investors in connection with their

fraudulent offer and sale of securities, and to prevent them from further m isuse and

misappropriation of investor funds.

Specifically, from at least M arch 2022 and continuing through the present, Defendants

have raised at least $4.2 million from at least 50 investors residing in various states, including

several in Florida, through an unregistered fraudulent securities offering. The securities are in the

form of common stock in PrelPO. PreIPO claims to have developed an online platform offering

access to shares in private companies before their initial public offerings. The purported purpose

of the offering is to fund the development of this platfoe  and the company's business operations.

PrelPO, M attera, and Grzan have made material misrepresentations and omissions to

investors and are engaging in a scheme to defraud and a course of conduct designed to deceive

investors. Specifically, Defendants have made misstatements regarding Prelpo's management and

have omitted to disclose that M attera, previously convicted for securities fraud and permanently

enjoined from committing securities fraud--charges which included using investör money to

sustain a lavish lifestyle-is acting as the de facto Chief Executive Offker (:tCEO'') of the

com pany. Defendants have also made misstatements regarding the use of investor funds.

Specifically, investors have not been told that only a small portion of the offering proceeds were

used to fund the development of Prepo's online platfonu and that the company has generated no

Case 9:23-cv-81141-DMM   Document 6   Entered on FLSD Docket 08/14/2023   Page 7 of 34



revenues from any of its business ventures. Instead, PreIPO has made undisclosed payments

totaling at Ieast $1 .7 million- approximately 42% of the investorj' money- to Mattera, Grzan,

and three other oftkers of the company out of the $4.2 million of investor funds. And, once again,

M attera is pilfering investor money for his own personal use.

As a result of the conduct alleged in the Complaint, Defendants have violated Sections 5(a)

and 5(c) of the Securities Act of 1933 (G:securities Act'') (15 U.S.C. jj 77e(a) and 77e(c)1; Section

17(a) of the Securities Act (15 U.S.C. j 77q(a)1; and Section 10(b) of the Securities Exchangç Act

of 1934 ('Yxchange Act'')(15 U.S.C. j 78j(b)), and Exchange Act Rule l0b-5 g17 C.F.R. j

240.10b-54. Mattera also, directly and indirectly, violated Exchange Act Section l0(b) and Rule

10b-5 thereunder as a control person of PreIPO under Section 20(a) of the Exchange Act (15

U.S.C. j 78t(a)1. To halt this ongoing offering fraud, protect investors, and preserve investor

assets, the Commission seeks einergency relietlincluding preliminary injunctive relietl asset

freezes, an accounting, and an order prohibiting the destruction of documents.

1I. DEFENDANTS AND RELIEF DEFENDANTS

A. Defendants

PreIPO is a W yoming corporation formed in M arch 2021, with its principal place

of business in Boca Raton, Floridml PreIPO applied as foreign corporation for authorization to

transact business in Florida in September, 2022.2 PreIPO and its securities have never been

registered with the Commission in any capacity.3 At no point from its incorporation through the

present, wàs M attera listed as an ofûcer, director, registered agent or otherwise for PreIPO.4

1 Declaration of oavid P. Staubitz (CtExhibit A''), ! 6.b.
2 Id, ! 6.a.
3 Declaration of Magaly Ordaz (ttExhibit C'').
4 Exhibit A !! 6.a., 6.b. '

2

Case 9:23-cv-81141-DMM   Document 6   Entered on FLSD Docket 08/14/2023   Page 8 of 34



M attera, 61, is a resident of Boca Raton, Florida. In August 2010, M attera' was

permanently enjoined from violating the registration and antifraud provisions of the Securities Act

of 1933 (lssecurities Act'') and the antifraud provisions of the Securities Exchange Act of 1934

(GsExchange Act'') and a permanent penny stock bar was imposed against him in a civil action

brought by the Comm ission alleging that he engaged in a fraudulent scheme involving the issuance

of bogus promisjory notes and unregistered stock distributions.s

ln June 2013, M attera was sentenced based on his conviction aûer pleading guilty

to securities fraud, wire fraud, and money laundering charges in a criminal action alleging that he

defrauded investors out of $13 million through false claims of ownership of stock in various private

companies before their initial public offerings6- a very close cousin to the conduct M attera is

? .

engaging in now. He was accused of spending nearly $4 million on personal items for him and

his family, such as expensivejewelry, interior decorating, and luxury cars.? Mattera was sentenced

to 1 1. years in prison, and an Order of Forfeiture was also thereaûer entered against him for

$1 1,800,000.8 M attera completed his sentence on March 12, 2021, and is currently in the midst

of serving three years of supervisbd release.g Based on that same conduct to which he pled guilty,

in December 2013, Mattera was again permanently enjoined 9om violating the registration and

antifraud provisions of both the Securities Act and the Exchange Act in a parallel civil action

brought by the Commission.lo

5 1d, ! 9.a.
6 1d, ! 7.b.
7 1d , ! 7.a.
8 1d, !! 7.b., 7.c.
9 1i, !! 7.b., 7.d.
10 I6l lf 7.f.#

3

Case 9:23-cv-81141-DMM   Document 6   Entered on FLSD Docket 08/14/2023   Page 9 of 34



Grzan, 62, is a resident of W est Palm Beach, Florida. Grzan has held the titles of

President, chairman and cEO of PreIPO since August 2022.11 Between July 1986 and July 2016
,

Grzan was previously associated with various registered broker-dealers as a registered
h

representative.lz From approximately November 2022 through June 2023, Grzan was associated

with a registered broker dealer based in Connecticut.l3

B. Relief Defendant

Boss Global is a Florida corporation with its principal place of business in Boca

Raton, Florida-l4 M attera owns and controls Boss Global, and he and his wife are its sole

officers-ls Boss Global received at least $859,000 in ill-gotten gains in the form of proceeds from

Prelpo's securities offering-l6 Boss Global serves no business function, provides no products or

services, and its predominant source of funding is that 9om PreIPO.l?

111. VENUE

This Court has personal jurisdiction over the Defendants, and veflue lies in the

Southern District of Florida because most of the transactions and acts constituting violations of the

Securities Act and the Exchange Act occurred in this District. Further, M attera and Grzan reside

in the District, and Prelpo- the company through which the M attera and Grzan defrauded

investors- has its principal place of business in the District.l'

1 1 1d, !! 6.a., 10.
12 Exhibit C, ! 6.
13 1d.

14 Exhibit A, ! 6.c.
1 5 Ia

16 Declaration of Mark Dee (KtExhibit B'') !9.
17 Exhibit A, ! 13-, Exhibit C, ! 9.
18 Exhibit A, !! 6.a., 6.b., 1 1.b.

4

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IV. FACTUAL ALLEGATIONS

A. Background

PreIPO purports to operate an online platfonn that offers investors access to shares

in private companies before their initial public offerings:lg

8. In marketing materials, Prelpo claims that it expects to receive revenue in the form

of subscription fees paid for use of its trading platform and proprietary rating software by

instimtional investors and broker dealer finn's, as well as from trading the private company shares

on the secondary market on Prelpo's own account.zo

9. Further, on Prelpo's website, on its (sseed Round'' tab, PreIPO is actively soliciting

investors for its Series A funding as follows:zl

19 1t1 ! 10.J
20 Id. ! 1 1 .a.J
2 1 Id j 1 0 .

5

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Prelpo @ forSeed Investors

Invest in PreIPO@

Get in on the ground floor of this dynamic company by investing in the PreIPO
. Corporation's rotlnd for seed investors.

*UPDATE: PreIPO* will begin Series A round funding starting April 15, 2023. There's still

an early-stage opportunity for savvy investors to take part in the growth of the

platform that is changing the future of private equity investments.

10. 
(
Grzan is referenced as CEO in various locations on Pre-lpo's website, for example

in recent press releases and its tscompany Deck'' where it seeks funding as indicated here:22

M attera's inv'olvement in Pre1PO is not disclosed anywhere on its website nor was

it disclosed in any orits ofrering or marketing materials.za Further, no publicly tiled incorporation

documents or required annual reports filed with either the states of W yoming or Florida contain

M attera's name.24 It is impossible for an investor to learn that M attera is involved with PreIPO.

22 Ié

23 Id. ! l2.J
24 Id, !! 6.a., 6.b.

6

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B. M attera Controls PreIPO

Prelpo was incorporated in M arch 2021 .which was approximately nine months

after M attera completed an 1 1 year sentence in federal prison.25 The indictment alleged that

M attera and his co-conspirators made misrepresentations to investors by offering,the chande to

invest in special purposç entities controlled by M attera, which falsely represented they owned

shares in the stock of then-private companies such as Facebook and Groupon.26 However, M attera

knew that the entities he controlled did not own such stock.27 Instead of holding the investors'

money in escrow, Mattera pilfered their funds, spending millions on pèrsonal items for himself

and his family.28

13. Yet, a mere nine months aûer coinpleting his prison sentence, while still in the

m idst of his three-years of supervised release period, and also under the constraints of a permanent

injunaiontonotengage in securities eaudagain-vaueracreatedprelpo.zg Matteraknewbecause

of his past that he would not be able to attract investors if his name was associated with PreIPO,

SO UC Xcftlited SOZt-XC11 to bc thC listed folmders and Public faces Of the company.3o

14. W hile M attera's name was hidden from public view, this was only form over

substance, as M attera controls PreIPO, the company he founded. In fact, in Prelpo's

Capitalization Table (tlcap Table''), which is a spreadsheet or table showing the equity ownership

capitalization for a company, nearly 57% of the pre-financing equity in Prelpo is owned by

Testudo Trust LTD (ûl-l-estudo Trusf), and 51% of the post-tinancing equity is owned by Testudo

25 1d., !! 6.b., 8
26 Id j 7.a.
27 1d, !! 7.a., 7.b.
28 Id
29 

.Jt;I !g 7.b.
30 1d., j 1 8, pp. 93:25-94: 1 8.

7

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Trust. Testudo Trust is listed as the GTounder'' on the Cap Tab1i.31 Testudo Trust's sole

beneficiary is M attera.32 The next closest equities for pre-financing and post-financing are 17%

and l5% respectively.33

15. Consistent with his equity share of PreIP0, M attera is responsible for making every

major decision of PreIPO, including'.

Having the sole power to hire and fire employees at PreIPO, including its CEO;34

* Requiring his approval for any expenditure of funds, including compensation,

expense reimbursements, as well as payments to outside vendorsi3s

. Requiring that he be contçmporaneously supplied with copies of al1 company bank

tatements and tinancial information for his review,'36s

Reviewing a11 marketing materials and offering memoranda prior to them being

t out to investors.rsen

16. PreIPO is Mattera's company-the investing public just does not know it and they

are being deceived. To wit, for every dollar that investors give to PreV o, within 24 hours, at least

13.6% and up to 14.9% of their contribution are wired directly to either M attera's personal account

or to Relieroefendant Boss Global, his alter ego.38 Grzan and aII the other om cers each receive at

least 4.5%.39

31 Id ! 1 1 .a.
32 1d, j 1 8, pp. 47 :23-48 : 12-, 152 : 1 5- 1 54: 1 2.
33 1d. j 1 1.a.l
34 Id , !j 1 8, pp . 33 : 1 -9-, 34:22-35:9.
35 J#! 1 1 .c., 1 1 .d., 1 1 .e., 1 1 .f., 1 1 .g.
36 1d., ! 1 1.h; ! 18, pp.76:24-77:23.
37 1d., ! 1 1.a; ! 18, pp.145:16-146:3.
38 1d, !( 1 1 .c., 1 1 .d.; ! 1 8, pp.37:19-40:10.
39 Id

8

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C. Defendants Raised At Least $4.2 M illion from At Least 50 Investors Through an
Unregistered Securities Offering

17. From at least M arch 2022 and continuing through the present, PreIPO, through
, i

Mattera and Grzan have raised at least $4.2 million from at least 50 investors residiltg in various

states, including several in

PreIPO describes an investment into it as an offering of shares of common stock in Prelpo, and

asserts that these securities being offered are exempt from registration.4l

18. This offering has not been registered with the Comm ission.'o Instead, Prelpo filed

a Form D Notice of Exempt Offering of Securities in April 2022 (Torm D'') and a slightly

amended Form D in October 2022, claiming exemption from registration, with the intent to raise

Florida, through sales of securities in an unregistered offering.4o

up to $8.75 million from investors.o Prelpo offered its common stock to investors at a price of

$5.33 per share.44

19. Through April 2023, PreIPO has not generated any revenues from its business

operations.o

20.

GGconfidential private placement memorandumy'' other marketing materials, a Sssubscription
,/

agreement,'' and a itpurchaser questionnaire,'' which is a tscheck-the-box'' type self-certification

The offering materials that Pre1PO has distributed to investors include a

accredited investor questionnaire. 46 In reality, Defendants have taken no steps to verify whether

40 1d., ! 1 1.b., Exhibit B, ! 6.
41 Exhibit A, ! 1 1 .b.
42 Exhibit C, !! 3-5.
43 Exhibit C, ! 7.
44 I6L

45 Exhibit B, ! 7
46 Exhibit A, ! 1 1.b.

9

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investors actually qualify as accredited investors and are simply relying on the representations
d.

from investors who merely check the box that they are accredited.o

21. Grzan held sole responsibility for draAing al1 offering materials, including the

private placement memoranda, business plan, and other marketing materials sent to investors.4'

Grzan provided these documents to Mattera, who confirmed that Grzan had done a ûçgreat jobr''

before they Were used in Soliciting investOrS.49

22. Pre1PO has solicited investors through various methods, including an in-house team

of sales agents who are (ûcold calling'' prospective investors.so Grzan supervised the sales agents

and acted as the dicloser'' on calls with potential investors.sl Specifically, sales agents have been

instructed to pass the phone to Grzan to complete sales of securities to interested investors.sz

23. In addition to using sales agents, Prelpo has also solicited investors through its

website. On the website, investors are told that lllalfter completing the $8.75M Seed round,

PreIPO Corp. will be ideally positioned to fund massive growth through revenue generation'' and

that the company ttis ready to transact its E>pproximately) $1B of private investment deals for

revenue generation.''s3

24. lnvestors sent their money to Pte1PO predominantly via wire transfer, otherwise

via check.54 Investor funds were then deposited into Prelpo's bank accounts, on which Grzan is

a signatory.ss M attera is not a named as a signatory on any of Prelpo's bank accounts.s6 Yet, in

47 1d, !! 1 1.b, !1 8, pp 158: 17-160:3.
48 1d, 1d, jg 18, pp 144:1 1-146:2 1; 157:24-158:6.
49 Id !( 1 1 .a.#
50 1d, ! 18, pp 78-12-8 1 :5.
s 1 Ia

52 Id

53 Id j I 0.#
54 Exhibit B, ! 6.
55 Exhibit A, !! 14, 15, 17-, Exhibit B, ! 6.
56 Exhibit A, !! 14, 15, 17.

10

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M arch 2023, M attera's wife, who had never been an officer or director of PreIPO, was added as a

signatory on Prep o's primary Bank of America account.s?

D. Defendants M ade M aterial M isrepresentations and Omissionj to Investors in
. Connection with the Offering of Prelpo 's Securities

(1) Defendants' Misstatements Regarding Prelpo's Management

25. Defendants PreP O, M attera, and Grzan have made misstatements and omissions

to investors and prospective investors regarding the identity of Prelpo's highest-ranking executive

' i terials and website identify Grzan as betng theofticer. Specifcally, PreIPO s offer ng ma

company's CEO and include a biography that touts Grzan's experience as a çtserial C-suite

executive in the investment banking, private equity, and commercial banking sectors.''s' Prior

iterations of the offering materials used until August 31, 2022, identified a different ihdividual as

the company's CEO'.59

26. These statements m'ade to investors regarding the company's management are false

and misleading. ln reality, Mattera, a securities recidivist, is and has been at all times, the defacto

CEO of Preœ o. M attera has exercised complete control over all aspects of Prepo's business and

operations and he is responsible for making or approving every major decision for the company.

In fact, M attera fired the former purported CEO of Pre1PO aûer a disagreement and replaced him

with Grzan.6o

(2) Defendants' M isstatements and Omissions Regardlng Use oflnvestor Funds

27. Defendants PrelPO, M attera, and Grzan have made misstatements and omissions

regarding the use of investor proceeds and are misusinj investor funds. The privàte placement

57 1d, !! 6.a., 6.b., 14.
58 1d., !! 10, 1 1 .a.
59 1d. ! 1 1 a -'
60 1d, !( 1 8, pp. 33:1-9-, 34:22-35:9.

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memoranda (PPM) provided to investors include a Eduse of Proceeds'' section that specitically

states:

Proceeds from the Offering will be used to pay the costs of the
Offerihg, for working capital, including, expansion of the
management team development of the operating platform and
b iness-related costs and expenses.6l 'us

28. This representations are false and misleading. Prelpo's PPM  and other offering

materials fail to disclose to investors that of the $4.2 million raised from investors, $1.76 million

' 62 hof investor funds--c %- was paid to M attera
, Glyan and three other Pre1PO officers. T e

payments specific to Mattera and Grzan totaled approximatçly $875,750 and $270,000,

respectively.63 Out of Mattera's $875,750, Boss Global, which has no apparent business function

and acts as Mattera's alter-ego, received approximately $859,000 ?or no apparent legitimate

pumose.64 And, true to M attera's modus operandi for which he has been criminally convicted and

also subject to a pennanent injunction from the Commission, Mattera has used investor money for

his own personal use, spending at least $450,000 towards credit card bills and also spending toward

financing high-end vehicles, amongst other expenditures.6s

29. Finally, only about $244,000 has been spent on trying to develop Prelpo's online

platform, which amounts to less than 6% of investor funds received. lndeed, M attera s actua

business plan appears to be to continue to raise investor money for his own personal consumption

' tual functionality.6?while spending minimum amounts on Prelpo s ac

63Id, ! 1 1.b.
62 Exhibit B, ! 8.
63 

.I'd
64 1d., ! 9-, Exhibit A, ! 13.
65 Exhibit B, ! 9.
66 Id. ! 10.
67 Id, jf 18, pp 6 1 :7-65:7.

12

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V. M EM ORANDUM  OF LAW

Standard for Obtainine a Temporarv Restrainina Order

Section 20(b) of the Securities Act, 15 U.S.C. j 77t, and Section 21(d) of the Exchange

Act, 15 U.S.C. j 78u(d), provide that in Commission actions the Court shall grant injunctive relief

upon a proper showing. SEC v. Shiner, 268 F. Supp. 2d 1333, 1340 (S.D. Fla. 2003). This Ssproper

showing'' has been described as çlajustifiable basis for believing, derived from reasonable inquiry

or other credible information, that such a state of facts probably existed as reasonably would lead

the SEC to believe that the defendants were engaged in violations of the stamtes involved.'' SEC

v. Gen. Int'l L oan Network, Inc, 770 F. Supp. 678, 688 (D.D.C. 1991).

The Commission is entitled to a temporary restraining order if it establishes (1) a prima

facie case showing the Defendants have violated the securities laws, and (2) a reasonable

likelihood they will repeat the wrong. Shiner, 268 F. Supp. 2d at 1340. The Commission appears

Ssnot as an ordinary litigant, but as a st>tutory guardian charged with safeguarding the public

interest in enforcing the securities laws.'' SEC v. f auer, No. 03-80612-CIV-MARRA, 2008 W L

4372896, at *24 (S.D. Fla. Sept. 24, 2008), aff'd, 478 Fed. Appx. 550 (11th Cir. 2012). The
. 

'

Commission, therefore, faces a Iower burden than a private litigant when seeking an injunction,

and need not meet the requirements for an injunction imposed by traditional equityjurisprudence.

Hecht Co. v. Bowles, 32l U.S. 321, 331 (1944); SEC v. J I'FC Korth (Q Co., 991 F. Supp. 1468, 1472

(s.D. Fla. 1998). Unlike private litigants, the Commission need not demonstrate irreparable hal'm

or the unavailability of an adequate remedy at law. Hecht, 321 U.S. at 331; J rFI Korth, 991 F.

Supp. at 1473. Nor is it required to show a balance of equities in its favor. SEC v. US. Pension

Fmx/ Corp., No. 07-22570-ClV-MARTINEZ, 20l 0 WL 3894082, at *22 (S.D. Fla. Sept. 30, 2010)

affdsub nom.; SEC v. US. Pension Trust Corp., 444 Fed. Appx. 435 (1 1th Cir. 2011).

13

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The Commission's evidence in this case warrants entry of the requested injunctive relief

on al1 applicable grounds. The declarations and their supporting exhibits attached to this

Emergency M otion demonstrate that Defendants are violating the anti-fraud and registration

provisions of the federal securities laws, and will continue to violate them if the Court does not

immediately restrain and enjo'in them.

B. The SEC has Established Prima Facie Violations of the Securities Laws

The Commission has met its burden of establishing aprimafacie showing of violations of

the antifraud and registration provisions of the securities laws as alleged in the Complaint and this

motion. As an initiàl matter, the alleged violations al1 require that the investm ent in question be a

ççsecurity'' and that interstate commerce (or the mails) have been used.

1. Investm ents in Pre1PO are Investment Contracts and are therefore

Securities under Howey

The investments in Prelpo constitute investment contracts and are, therefore, securities

under SEC v. WJ Howey Co., 328 U.S. 293, 298-99 (1946). Under the Howey test, an investment

contract exists irthe' re is: (a) an investment of money; (b) in a common enterprise; (c) based on

the expectation of profits to be derivrd from the entrepreneurial or managerial efforts of others.

See SEC v. Friendly Power Co., LLC, 49 F. Supp. 2d 1363, 1368 (S.D. Fla. 1999).

The investments in PreIPO satisfy all three elements of the Howey test. First, investors

committed f'unds to participate in an investment opportunity-68 See SEC v. Unique Fin. Concepts,

Inc, 1 19 F. Sdpp. 2d 1332, 1337 (S.D. Fla. 1998), aftnd, 196 F.3d 1 195 (1 1th Cir. 1999) (CGA11
l .

that is required is that the investor give up some tangible and definable consideration.'). Ttle

68 section IV.C !! 17, 18, 20, 23.

14

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first element is satisfied because investors committed funds to participate in an investment

opportunity.

For the second prong, the Eleventh Circuit has held that tsbroad vertical commonality'' is

sufficient to satisfy Howey's common enterprise element. Unique, l96 F.3d at 1200 n.4. Broad

vertical commonality requires only a finding that investors' fortunes are linked to the efforts of the

promoter or third parties. f#.; see also SEC v. ETS Payphones, Inc, 408 F.3d 727, 732 (11th Cir.

2005).

Here, broad vertical commonality exists because the investors' fortunes were inextricably

tied to the success or failure of Prelpo's management. lnvestors were simply investing in

Prep o's platform, and it was up to PreIPO management to grow the platform and to attract private

companies, customers and website traffic.69 Investors had no input or control. See Unique, 196

F.3d at 1199-1200 (finding commonality where defendant's clients Cûwere not in a position to

assume or maintain any substantial degreq of control over their investment-'').

The third Howey prong is met because investors were led to expect profits from the investor

agreements based on the efforts of Defendants. Thç inquiry is Glwhether the efforts made by others

are the undeniably significant ones, those essential managerial efforts which affect the failure or

success of the enterprise.'' Unique, 196 F.3d at 1201. Here, investors expected a return on their

investment based solely on Prelpo and its management to generate profits. The role of investors

here was limited to simply investing money into Prelpo's business venture and expecting a

subsequent return-7o

69 section IV.A. !! 8-1 1.

7osection IV.D !!g 25-29.

15

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Prelpo 's Offering M aterials Identised the Common Shares as

Securities

Defendants' own characterization of investments into Prelpo as an offering of shares of

common stock in PreIPO being are exempt from registration under the federal securities laws is

further indication that Prelpo was offering securities.'/l W here, as here, there are Ssno

countervailing factors that would (lead) a reasonable person to question this characterization,'' the

offering should be considered a security. Diaz Vicente v. Obenauer, 136 F. Supp. 679, 693 (E.D.

Va. 1990), quoting Reves v. Ernst 4 Young, 494 U.S. 56, 68 (1990).

Defendants are using Interstate Commerce

The interstate commerce requirement is satisfied by Prelpo's sale of its investment

programs to individuals in several states and thek use of the internet to solicit investors. SEC v.

Spinosa, No. 13-62066-C1V, 2014 WL 2938487, at *4 (S.D. Fla. June 30, 2014) (use of internet

satisfied interstate commerce requirement).

Defendants are violating Section 17(a) of the Securities Act and Section
10(b) and Rule 10b-5 of the Exchange Act

Section 17(a) of the Securities Act and Section 10(b) and Rules 10b-5(a)-(c) of the

Exchange Act prohibit essentially the same type of conduct. US. v. Najtalin, 441 U.S. 768, 773 n.

4 (1979); Unique, 1 19 F. Supp. 2d at 1339. The language of these provisions is Csexpansive'' and

Gicapture a wide range of conduct.'' f orenzo v. SEC, 139 S. Ct. 1094, 1 101-02 (2019). In f orenzo,

the Supreme Court recognized that there is (sconsiderable overlap among the subsections of Rule

10b-5 and Section 17(a), and thus the same underlying conduct may establish a violation of more

than one subsection.

7lsection IV.C !! 17-24.

16

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Section 17(a) of the Securities Act makes it unlawful in the ççoffer or sale'' of securities to:

(a) çGemploy any device, scheme, or artitice to defraudi'' (b) Eçobtain money or property by means

of any untrue statement of a material fact or any (material) omissioni'' or (c) GGengage in any

transaction, practice, or course of business which operates or would operate ws a fraud or deceit

upon the purchaser-'' 15 U.S.C. j 77q(a)(1)-(3). A showing of scienter is required under Section

17(a)(1), but Sections 17(a)(2) and (a)(3) require only a showing of negligence.Wlma v. SEC, 446

U.S. 680, 697 (1980).

Section 10(b) of the Exchange Act and Rule 10b-5 render it unlawful, Rin connection with

the purchase or sale'' of securities, to: (a) employ any device, scheme, or artitke to defraud; (b)
l

make any untrue statement or omission of material fact; or (c) engage in any act, practice, or course

of business which operates or would operate as a fraud or deceit on any person. 15 U.S.C. j 78j(b);

17 C.F.R. j 240.10b-5. A showing of scienter is required under Section 10(b) and Rule 10b-5

thereunder. SEC v. Corporate Relations Group, No. 6:99-cv-1222, 2003 W L 255701 13, at *7

(M.D. Fla. Mar. 28, 2003).

Unlike private securities actions, the SEC need not prove reliance or injury under Section

17(a), Section 10(b), or Rule 10b-5. SEC v. Morgan Keegan (f Co., Inc, 678 F.3d 1233, 1244

(1 1th Cir. 2012).

a) Defendants' Misrepresentations and Omissions

(1) Defendants' Misstatements Regardlng PreIP0'q% Management

Defendants PreP O, M attera, and Grzan have made misstatements and om issions to

investors and prospective investors regarding the identity of Prelpo's highest-ranking executive

officer.?z M attera, previously convicted of securities gaud, and under the constraints of a

72 Section IV.A ! 1 1; Section IV, B ! 14; Section IV, D ! 25.

17

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permanent injunction, was completely hidden from public view'.73 Front-men such as Grzan

indicated to the public that he was the CEO, when in truth and in fact, M attera was calling all the

shots.74 M attera
, through his trust, owned a majority of the equity in Pre1PO.?5 And Grzan

perpetuated this fraud, acting as the EGcloser'' on investor cal1s.?6

(2) Defendants' Misstatements and Omissions Regarding Use oflnvestor
Funds

Defendants PrelPO, M attera, and Grzan have made misstatements and omissions regarding

the use of investor proceeds and are misusing investor funds. The private placement memoranda

(PPM) provided to investors include a dsuse of Proceeds'' section that specifically made false and

misleading representations.

Prelpo's PPM and other offering materials fail to disclose to investors that of the $4.2

million raised from investors, $1.76 million of investor funds--dzl- was paid to Mattera, Grzan

and three other PreIPO ofticers.x The payments specific to M attera and Grzan totaled

approximately $875,750 and $270,000, respectively.?B And, true to Mattera's rrfodus operandi for

which he hâs been criminally convicted and also subject to a permanent injunction from the

Commission, M attera has used investor money for his own 'personal use, spending at least

$450,000 towards credit card bills and also spending toward tinancing high-end vehicles, amongst

other expenditures.7g

73 Section II.A., !! 2, 3; Section IV.B !! 12-13.
74 Section IV.B !!f 14-15., Section lV, D ! 26.
75 Section IV.B !jf 14 16.
76 Section IV.C !21-24.
77 Section IV.D ! 28.
78 Section IV.D !! 28, 29.
79 section IV.D ! 28.

1 8

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I '

Finally, only about $244,000, a mere 6% of money raised, has been spent on trying to

devèlop its online platform despite representations that investor ftmds would be dedicated to

developing Prelpo's platform.Bo

b) The Misrepresentations and Omissions were Material

A false statement or omission must be material for a defendant to be liable for it. The test

for materiality is Gtwhether a reasonable man would attach importance to the fact misrepresented

or omitted in determining his course of action.'' SEC v. M erch. Capital, L L C, 483 F.3d 747, 766

(1 1th Cir. 2007) (citation omitted). In other words, information is material if a reasonable investor

would consider it significant to making an investment decision. Basic v. L evinsoh, 485 U.S. 224,

230 (1988).

M attera's criminal history as someone who was in federal prison for 1 1 years and is still

on supervised release for securities fraud and is subject to an $1 1.8 million forfeiture, is certainly

material. See, SEC v. Complete Bus. Sols. Grp., Inc, 538. F. Supp. 3d, 1309, 1331 (S.D. Fla. 2021)

(holding that reasonable minds could conclude that the defendant's criminal history was material

to investors) citing SEC v. 'rl/cr, 289 F. Supp. 3d 39, 52-53 (D. Conn. 2003) (çThe failure to

disclose anywhere on the websites or in other materials any information about (Defendanfs)

extensive criminal history, including convictions for fraud, would certainly constitute a material

omission which a reasonable investor might view as important in deciding whether to trust their
:

money with (Defendant) or his company.'); SEC v. Cap. Cove Bancorp, LL C, No. 15-00980, 2015

WL 9704076, at *6 (U.D. Cal. Sept. 1, 2015) (Gnding that in using an alias, defendant GGomit'ted

and never disclosed (hisl criminal history when soliciting investments'' and that this omission was

80 Section IV.D ! 29.

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material); Unitedstates v. Ha@el4 724 F. Supp. 2d 321, 328 (E.D.N.Y. 2010) (t&It is well-settled

that information impugning management's integrity is material to shareholders,').

Further, EGlmjisrepresentations regarding the use of investors' funds are material.'' SEC v.

LottoNet Operating Corp., No. 17-21033-CIV-LENARD/GOODM AN, 2017 W L 6949289, at * 13

(S.D. Fla. Mar. 31, 2017) (report and recommendation), adopted 2017 WL 6989148 (S.D. Fla.
'
' t'l f t money was not beingApr. 6, 2017); SEC v. Smart, 678 17.3d.850, 857 (10th Cir. 2012) (t e ac

used as represented would be material to a reasonable investor). Misappropriation of funds by the

issuer's principal are material. US. v. f ochmiller, 521 Fed. Appx. 687, 691-92 (10th Cir. Apr. 15,

2013) (upholding conspiracy to commit securities fraud conviction because, among other things,

defendant made material misrepresentations when he told investors he would use money for low-

income housing but instead used it for personal gain); f ottoNet, 2017 WL 6949289, at * 14 (G1Any

reasonable investor would want to know that Defendants were not, as Defendants represented,

spending invgstor funds to develop the Company, but were instead using 35 percent of investors'

money to pay sales agents for soliciting their investments.').

Prep o's officers, siphoning 42% of investor inoney for themselves, including M attera

who took up to nearly 15% , without disclosure they were doing so, is material. Furthermore,

M attera using investors' money as his own personal piggy bank without disclosure is similarly

material.

c) Defendants' Scheme to Defraud

Defendants perpetuated their scheme to defraud investors through their material

misstatements and omissions discussed above. See L orenzo, 139 S. Ct. at 1 101-02 (knowing

dissemination of misrepresentations with an intent to deceive violates Rule 10b-5(a) and (c) and

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Section 17(a)(1)); see also Maloufv. SEC, 933 F.3d 1248, 1260 (10th Cir. 2019) (applying f orenzo

to Section 17(a)(3) because it ltis virtually identical to Rule 10b-5(c)'').

The Defendants' scheme was executed by holding out Pre1PO as a legitimate investment

with a legitimate and highly qualified executikes in place to steer Prelpo's success.8l Howevek,

, 
' 

82Defendants schemed to completely hide M attera s involvement and association with PreIPO .

And Mattera's involvement was not peripheral-Mattera was in charge of all major functions of

PreIPO and in-fact owned a majority equity share in PreIPO through his trust. Grzan not only

allowed this charade to continue to the detriment of investors, but helped secure investors for

PrelPO.83

M oreover, the Defendants and three other Pre1PO officers diverted an exorbitant amount

of money for themselves, including M attera's up to nearly 15?/o- a11 done with Grzan's knowledge

ZS thC CCO 0f W CIPO, WhO had access and Fas a Signatory to Prelpo's bank accounts.B4 See e.g.,

SEC V. Ztm/orfl 535 U.S. 8 13, 82 1-22 (2002) (misappropriation of client's securities for personal

use states a claim for scheme to defraud).

d) Defendants Acted wlth Scienter

Scienter is a state of mind embracing intent to deceive, manipulate, or defraud. Ernst tt

Ernst v. Hoch#lder, 425 U.S. 185, 193 (1976). The Commission may establish scienter for

violations of Section 17(a)(1) of the Securities Act and Rule 10b-5 of the Exchange Act by GGa

showing of knowing misconduct or severe recklessness.'' SEC v. M onterosso, 156 F.3d 1326, 1335

(1 lth Cir. 2014) (quoting SEC v. Carriba Air, Inc, 681 F.2d 1318, 1324 (11th Cir. 1982)). As

noted above, Section 17(a)(2) and (3) of the Securities Act require a showing of negligence.

81 Section IV.A !! 7-10,* Section IV.D. ! 25. ,
82 Section IV.A !! 10, 1 1,' Section IV.C !! 21 , 24,. Section IV.D. ! 25.
85 Section IV.C !! 15, 21, 22.
84 Section IV.C. ! 24.

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The Defendants knew or were reckless in not knowing that the omissions and

representations made tand not made) to investors were false. Grzan prepared a1l Pre1PO offering

material to investors, and M attera reviewed them all before investors received them. 85 Yet none

of these materials gave investors any indiciathat M attera, previously convicted for securities fraud,

was in charge of Prepo. Grzan was a signatory on al1 of Prelpo's bank accounts.86 And M attera

had access to these accounts and reviewed them and his wife was added to Prelpo's primary Bank

of America accountW A11 of this was done to enhance the chances that individuals would invest

in Pre1PO. See e.g., In re Sunbeam Sec. L itig., 89 F. Supp. 2d 1326, 1340 (S.D. Fla. 1999) (finding

that the scienter of corporate oftkers is properly imputed to the corporation). Scienter is present

here.

5. Mattera is a Control Person under Section 20(a) of the Exchange Act

A defendant is liable as a controlling person where the contrqlled person violated the

securities laws, if the defendant, dshad the power to control the general affairs of the entity primarily

liable at the time the entity violated the securities laws. . .land) had the requisite power to directly

or indirectly control or influence the specifk corporate policy which resulted in the primary

liability.'' Brown v. The Enstar Grp., 84 F. 3d 393, 397 (1 1th Cir. 1986). As the Court pointed out

in SEC v. Huff 758 F.supp.zd 1288, 1344 (S.D. Fla.), ttgtlhe legislative pupose in enacting a

control liability provision was to prevent people and entities from using straw parties, subsidiaries,

or other agents acting on their behalf to accomplish ends that would be forbidden directly by the

securities laws.'' (citing H.R. Rep.'No. 73-152, at 12 (1933). This is precisely what Mattera is

doing.

85 Section IV.C ! 21 .
86 Section IV.C ! 24.
87 Section IV.C.! 24.

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Mattera controls PreIPO from the shadows. He has the majority equity stake in PrelPO,

he has the sole power to hire and fire employees, controls al1 expendimres, has unfettered access

to its bank accounts, and reviews all marketing materials and offering memoranda before being

sent,out to investors, and receives the highest percentage of investors' funds- that being triple any

other officer.88 Yet
, he is nowhere to be found in any publicly filed documents, in Prep o's

89 ' li bility as a control person under Sectionwebsite
, nor in any its marketing materials. M attera s a

20(a) of the Exchange Act is textbook. See ffzf.f/; 758 F.2d at 1344 (finding control person liability

where the defendant, in addition to being described as the dpuppet m aster' by co-workers,

appointed board members, entered into a contract with the company with an entity the defendant

controlled that served no business purposes, received weekly reports regarding the company's

business, reviewed and approved the company's public tilings, and participated in the marketing

of the company's securities).

6. Defendants are Violating Section 5 of the Securities Act

Sections 5(a) and Section 5(c) of the Securities Act require that every offer and sale of

securities must be either registered or validly exempted from registration. To establish a prima

facie case for a Section 5 violation, the Commission must prove that the defendant, directly or

indirectly, (a) offered or sold a security; (b) using interstate commerce; while (c) no registration

statement was filed or in effect as to.the transaction. SEC v. Calvo, 378 F.3d 121 1, 1214 (11th Cir.

2004). The Commission is not required to prove scienter. f#. Once the Commission has established

aprimafacie casè, the burden of proof shiûs to the defendant to show that an exemption or safe

harbor from registration is available for the offer or sale of the security. SEC v. Ralston Purina

Co., 346 U.S. 1 19, 126 (1953).

88 Section III.A. !! 14-16-, Section III.D. jf 26.
89 Section II.A. !! 10, 1 1, 13, 24.

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Defendants are violating this provision because investments in PreIPO are not registered

and no exemption from registration is in effect.go The exemptions from registration pursuant to

Section 4(a)(2) of the Securities Act and Rules 504, 505, and 506(b) of Regulation D thereunder

were unavailable to Pre1PO for the sale of its securities because of the general solicitation by

Defendants through their website and other marketing materials where they advertised Prelpo's

business and investors' ability to make money through their investments with PreP O.91

The intrastate offering exemptions of 3(a)(1 1), Rule 147, and Rule 147A are likewise not

available because Defendants sold the securities in several states.92 Furthennore
, the exem ption

under Rule 506(c) is unavailable because there is no indication that Defendants took reasonable

steps to verify that investors were accredited. This exemption from registration requires both that

Gtall purchasers of securities sold gpursuant to this exemption) ...are accredited investors'' and,

separately, that issuers ûGtake reasonable steps to' verify that the purchasers of the securities are

gccredited investors.'' Rule 506(c) of Regulation D, 17 C.F.R. j 230.506((9. As a result, and as

the Commission explicitly indicated in its adoption of Rule 506(c), the exemption is not satisfied

if reasonable steps to verify are not taken, even if all investors happen to be accredited. See

Eliminating the Prohibition Against General Solicitation and General Advertising in Rule 506.and

Rule 144A, Rel. No. 33-9415, at 26 and n.101 (Jul. 10, 2013) (adopting release) (explaining that

the two requirements are separate and independent and that treating them as such will avoid

diminishing the incentive for issuers to undertake the reasonable verification steps envisioned by

the statute).

No other exemption from registration was available for investments into Pre1PO.

90 section IV.C ! 18
91 section IV.A !! 7-9; Section IV.D. ! 23.
92 section IV.C !17.

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An Ex Parte Temporarv Restrainine Order in Necessal'v

Based on the facts and 1aw set forth above, the Commission has met its burden of showing:

(1) there isprimafacie evidence the Defendants are violating the securities laws; and (2) there is

a reasonable likelihood they will continue to violate the 1aw unless the Court immediately issues

an ex parte temporary restraining order against Defendants. As the accompanying Certification

Under Rule 65 explains in detail, the Commission has concerns the Defendants will dissipate

investor assets if notice is provided. M attera has already misappropriated hundreds of thousands

of dollars for his personal use. And, given that the fraud is ongoing, the Commission respectfully

requests that the Court enter the attached proposed order granting this temporary restraining order

and entering the asset freeze without notice to the Defendants to prevent them from further

m isappropriating investor funds. The Commission will serve the Defendants with the pleadings

and orders expeditiously, and the attached proposed order requests that the Court set a show cause

hearing at which time the Defendants can appear and argue why the Court should not enter a

preliminary injunction and further extend the asset freeze.

D. An Ex Parte Total Asset Freeze is Appropriate

The Court may order an asset freeze to ensure that a disgorgement award can be satistied

and to prevent further dissipation of investor funds. ETS Payphones, 408 F.3d at 734; accord

CFTC v. f cvy', 541 F.3d 1 102, 1 1 14 (1 1th Cir. 2008). EThe SEC'S burden for showing the amount

of assets subject to disgorgement (and therefore available for freeze) is light: a reasonable

approximation of a defendant's ill-gotten gains is required. Exactitude is not . . . .'' ETspayphones,

408 F.3d at 735 (cleaned upl; accord FTC v. 1AB Mk/g. Assocs., L P., 746 F.3d 1228, 1234 (1 1th

Cir. 2014). The Commission's burden to demonstrate the potential for dissipation of funds is even

lighter. S& FTC v. IABMkW. Assocs., L P, 97l F. Supp. 2d 1307, 1313 n.3 (S.D. Fla. 2013) (çThere

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does not need to be evidence that assets will likely be dissipated in 'order to impose an asset

freeze.'') (citing ETS Payphones, 408 F.3d at 734, and SEC v. f auer, 445 F. Supp. 2d 1362, 1367,

1370 (S.D. Fla. 200$); SEC v. Gonzalez de Castilla, 145 F. Supp. 2d 402, 415 (S.D.N.Y. 2001)

(:$rT1he SEC must demonstrate only . . ; 4. concern that defendants will dissipate their assets . . .

A total asset freeze is warranted when the assets to be frozen are worth' less than the likely

disgorgement award. See SEC v. L auer, 478 F. App'x 550, 554 (1 1th Cir. 2012) (unpublished)

(çt(1)f potential disgorgement is greater than the value of the defendant's assets, the district court

can order a full asset freeze''); ETS Payphones, 408 F.3d at 735-36 (affirming order that dlfroze all

of Edefendant's) assets'' when estimated disgorgement and value of frozen assets were

.comparable); IAB Marketing, 972 F. Supp. 2d at 13 13 (denying defendants' motion to GGunfreeze''

funds for living expenses where Gr efendants' monetary liability greatly exceeds the frozen

funds'). Furthermore, Defendants should not be pennitted to use ill-gotten gains they have

received to pay attorney's fees or living expenses. See FTC v. RCA Creditservices, LL C, No. 8:08-

cv-2062-T-27MAP, 2008 WL 5428039, at *4 (M.D. Fla. Dec. 31, 2008) (defendants tsmay not use

their victims' assets to hire counsel to help them retain the fruits of their violations''); CFFC v.

Unitedlnvestors Group, Inc., No. 05-80002-CIV 2005 WL 3747596, at * 1 n.1 (S.D. Fla. June 9,

2005) (refusing to except living expenses and counsel fees from asset freeze), aff'd on other

grounds sub nbm. L cvy, 541 F.3d at 1 102.

Here, the Commission has no information indicating that Defendants have assets in exceps

of the likely disgorgement award. Therefore, a total freeze is appropriate. If, in fact, Defendants

have liquid assets in excess of the disgorgement amount, the freeze can be adjusted accordingly.

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E. The Court Should Require Defendants to Provide Sworn Accountines

The Court should require Defendants to provide sworn accountings, which enable the

Commission and the Court to determine the Defendants' profits, the present location of proceeds,

and the Defendants' ability to repay. See SEC v. Tannenbaum, No. 99-CV-6050, 2007 W L

2089326, at *4 (E.D.N.Y. July 19, 2007); SEC v. Lybrand, No. 00-Civ.l387(SHS), 2000 WL

913894, at * 12 (S.D.N.Y. July 6, 2000); SEC v. Margolin, No. t92 Civ 6307 (PKL), 1992 WL
î,

279735, at *7 (S.D.N.Y. Sept. 30, 1992):

The Court Should Prohibit the Destruction of Records

An Order against Defendants prohibiting the destruction of records is appropriate to

prevent the destruction of documents before this Court can adjudicate the Commission's claims,

and to ensure that whatever equitable relief might ultimately be appropriate is available. Shiner,

268 F. Supp. 2d at 1345-46.

W . CONCLUSION

For the forgoing reasons, the Court should grant the Commission's Emergency M otion.

LOCAL RULE 7.1(d) CERTIFICATION

After reviewing the facts and researching applicable legal principles, I certify that this

motion in fact pre'sents a true emergency (as opposed to a matter that may need only expedited

treatment) and requires an immediate ruling because the Court would not be able to provide

meaningful relief to a critical, non-routine issue after the expiration of seven days. l understand

that an unwarranted certification may lead to sanctions.

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Dated: August 14, 2023 Respectfully submitted,

x  . X, . '.'.w->A
By:

Russell Koonin
Senior Trial Counsel

Fla. Bar No. 474479

Direct Dial: (305) 982-6390
Email: [email protected]

Attorneypr Plainhy
Securities and Exchange Comm ission
801 Brickell Avenue, Suite 1950

M iami, FL 33131

Telephone: (305) 982-6300

INDEX IN SUPPORT

Exhibit A : Declaration of David P. Staubitz, Senior Counsel, SEC, with attachments No. 1 - 249

Exhibit B: Declaration of M ark Dee, SEC Accounànt; and

Exhibit C: Declaration of M agaly Ordaz, SEC Paralegal, with attachm ents Nos. 1 - 4.

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