2023-05-01 sec-litreleases complaint 746 KB 27,276 chars

SEC v. Carlos Eduardo Reyes Alvarez, No. 1:23-cv-03429, Southern District of New York (May 1, 2023) — Complaint

raw: SEC v. CARLOS EDUARDO REYES ALVAREZ

SEC v. CARLOS EDUARDO REYES ALVAREZ, No. 1:23-cv-03429 (May 1, 2023)

Caption: Securities and Exchange Commission v. Reyes Alvarez

summary

The SEC filed a complaint against Carlos Eduardo Reyes Alvarez for orchestrating fraudulent microcap stock manipulation schemes that netted approximately $387,000 in illicit profits.

paragraph

Carlos Eduardo Reyes Alvarez allegedly engaged in pump-and-dump and wash trading schemes involving at least 28 microcap companies between 2017 and 2019. The SEC alleges Reyes used unauthorized press releases and wash trades to inflate stock prices, generating approximately $387,000 in ill-gotten gains. The Commission is seeking permanent injunctions, disgorgement of profits, civil penalties, and bars against serving as an officer or director.

narrative

The Securities and Exchange Commission has filed a complaint in the Southern District of New York against Carlos Eduardo Reyes Alvarez for fraudulent activities occurring between November 2017 and April 2019. Reyes allegedly targeted at least 28 microcap companies, acquiring large positions in thinly-traded OTC stocks and manipulating prices through unauthorized press releases and wash trading. These schemes allowed him to sell securities at inflated prices, resulting in approximately $387,000 in ill-gotten profits. The SEC charges Reyes with violating Sections 17(a) of the Securities Act and Sections 9(a)(1), 9(a)(2), and 10(b) of the Exchange Act. The Commission seeks a final judgment to permanently enjoin Reyes from future violations, order the disgorgement of all gains with interest, and impose civil monetary penalties. Additionally, the SEC is requesting bars preventing him from serving as an officer or director of a public company and prohibiting his participation in penny stock offerings.

Enriched metadata

Scheme: pump-and-dump (95%)
Court: Southern District of New York
Case No.: 1:23-cv-03429
Victim loss: $387,000
Entity: CARLOS EDUARDO REYES ALVAREZ

Classified pump-and-dump(confidence 95%). EDGAR detection: forms S-8/S-1/424B/8-K· recall 69% / precision 12%. detection rule →

Extracted insights

Dollar amounts 44

$50.00M $50,000,000 $10M–$100M
$32.00M $32M $10M–$100M
$387K $387,000 $100K–$1M
$270K $270,099 $100K–$1M
$117K $116,846 $100K–$1M
$46K $45,645 $10K–$100K
$41K $41,258 $10K–$100K
$36K $35,852 $10K–$100K
$26K $26,158 $10K–$100K
$26K $26,044 $10K–$100K
$26K $26,044 $10K–$100K
$25K $25,460 $10K–$100K

Entities 8

person carlos eduardo reyes alvarez
person final judgment
person fraudulent activity
person fraudulent schemes
person investor interest
agency Securities and Exchange Commission
organization Securities and Exchange Commission
person this action

Triples 9

Carlos Eduardo Reyes Alvarez engaged in fraudulent schemes
Carlos Eduardo Reyes Alvarez acquired large positions in stocks
Carlos Eduardo Reyes Alvarez generated investor interest
Carlos Eduardo Reyes Alvarez violated Section 17(a) of the Securities Act
Securities And Exchange Commission brings this action
Securities And Exchange Commission seeks final judgment
Carlos Eduardo Reyes Alvarez obtained ill-gotten profits of $387,000
Carlos Eduardo Reyes Alvarez profited from securities sales
Securities And Exchange Commission alleges fraudulent activity

PDF

SEC v. CARLOS EDUARDO REYES ALVAREZ · Source

Text layers

Extracted body text (27,276c)

ANTONIA M. APPS
REGIONAL DIRECTOR
Thomas P. Smith, Jr.
Michael Paley
Jason Schall
Kristine Zaleskas
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street, Suite 20-100
New York, New York 10004-2616
(212) 336-0189 (Zaleskas)
Email: [email protected]

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE
COMMISSION,
    Plaintiff,
 v.

CARLOS EDUARDO REYES ALVAREZ,

    Defendant.

    COMPLAINT
23 Civ. _____ (   )
    ECF CASE

JURY TRIAL DEMANDED

 Plaintiff, Securities and Exchange Commission (“Commission”), for its Complaint
against Defendant Carlos Eduardo Reyes Alvarez (“Reyes”), alleges as follows:
SUMMARY OF ALLEGATIONS
1. Beginning in about November 2017 and continuing through at least April 2019,
Reyes
 engaged in numerous fraudulent schemes involving the securities of at least 28 microcap
companies.

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2. On at least 50 occasions, Reyes acquired large positions in thinly-traded over-the-
counter (“OTC”) stocks and then generated investor interest in these stocks through fraudulent
means, most often by causing the issuance of press releases that had not been authorized by the
companies.
3. In connection with at least four companies, Reyes engaged in wash trading to
create the appearance of an active market and move up the company’s stock price.
4. Reyes’s fraudulent activity increased the price of the securities he targeted, and he
profited from these schemes by selling the securities after these fraud-induced price increases.
By means of these schemes, Reyes obtained ill-gotten profits of approximately $387,000.
VIOLATIONS
5. By virtue of the conduct alleged herein, Defendant, directly or indirectly, has
violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)]; and
Sections 9(a)(1), 9(a)(2), and 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”)
[15 U.S.C. §§ 78i(a)(1), 78i(a)(2), and  78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-
5].
6. Unless Defendant is  restrained and enjoined, he will engage in the acts, practices,
transactions, and courses of business set forth in this Complaint, or in acts, practices, transactions
and courses of business of similar type and object.

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NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
7. The Commission brings this action pursuant to the authority conferred upon it by
Securities Act Sections 20(b) and (d) [15 U.S.C. §§ 77t(b) and (d)], and Exchange Act Section
21(d) [15 U.S.C. § 78u(d)].
8. The Commission seeks a final judgment: (a) permanently restraining and
enjoining Defendant from violating the federal securities laws and rules this Complaint alleges
he has violated; (b) ordering Defendant to disgorge all ill-gotten gains he received as a result of
the violations alleged here and to pay prejudgment interest thereon pursuant to Exchange Act
Sections 21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)]; (c)
ordering Defendant to pay civil money penalties pursuant to Securities Act Section 20(d) [15
U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; (d) permanently
prohibiting Reyes from serving as an officer or director of any company that has a class of
securities registered under Exchange Act Section 12 [15 U.S.C. § 78l] or that is required to file
reports under Exchange Act Section 15(d) [15 U.S.C. § 78o(d)], pursuant to Securities Act
Section 20(e) [15 U.S.C. § 77t(e)] and Exchange Act Section 21(d) of the Exchange Act [15
U.S.C. § 78u(d)(2)]; (e) permanently prohibiting Reyes from participating in any offering of a
penny stock, pursuant to Securities Act Section 20(g) [15 U.S.C. § 77t(g)] and Exchange Act
Section 21(d)(6)  [15 U.S.C.§ 78u(d)(6)]; (f) enjoining Defendant from engaging in any activity
for the purpose of inducing or attempting to induce the purchase or sale of any security; causing
any person or entity to engage in any activity for the purpose of inducing or attempting to induce
the purchase or sale of any security; or deriving compensation from any activity engaged in for
the purpose of inducing or attempting to induce the purchase or sale of any security, pursuant to
Exchange Act Section 21(d)(5) [15 U.S.C. § 78u(d)(5)], unless that security is: (i) listed on a

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national securities exchange; and (ii) has had a market capitalization of at least $50,000,000 for
90 consecutive days; and (g) ordering any other and further relief that the Court may deem just
and proper.
JURISDICTION AND VENUE
9. This Court has jurisdiction over this action pursuant to Securities Act Section
22(a) [15 U.S.C. § 77v(a)] and Exchange Act Section  27 [15 U.S.C. §78aa].
10. Defendant, directly and indirectly, has made use of the means or instrumentalities
of interstate commerce or of the mails in connection with the transactions, acts, practices, and
courses of business alleged herein.
11. Venue lies in this district pursuant to Securities Act Section 22(a) [15 U.S.C.
§ 77v(a)] and Exchange Act Section 27 [15 U.S.C. § 78aa].  Certain of the acts, practices,
transactions and courses of business alleged in this Complaint occurred within the Southern
District of New York, and were affected, directly or indirectly, by making use of means or
instrumentalities of transportation or communication in interstate commerce, or the mails.
Among other things, Reyes distributed fraudulent press releases to one or more entities located in
this district, and at all relevant times Reyes traded securities via an alternative trading system
based in this district.
DEFENDANT
12. Reyes, born in 1988, is a resident of Port Saint Lucie, Florida.
FACTS
13. Reyes engaged in two types of schemes.  The first type was a “pump-and dump”
scheme wherein Reyes, sometimes within a matter of days, purchased shares of a thinly-traded
stock, caused a newswire service to put out a press release concerning the issuer, and then sold

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all the shares he had just bought at a profit.
14. In the second type of scheme, Reyes engaged in wash trading to move up the
share price of an OTC issuer.  While engaged in this trading, Reyes would also buy and sell
additional shares as the price increased.
I. THE PUMP-AND-DUMP SCHEMES
A. Overview
15. On at least 50 occasions from late 2017 through about April 2019, involving the
stock of 25 companies, Reyes engaged in a pump-and-dump scheme.
16. On all 50 occasions, Reyes (i) acquired shares of a microcap issuer; (ii) caused a
press release, appearing to originate from the issuer, to be submitted to a newswire service for
dissemination, and after the press release was issued, the microcap issuer’s stock price and
trading volume increased; and (iii) immediately sold his shares for a profit.
17. For his scheme, Reyes consistently identified thinly-traded stocks of issuers that
were not traded on an exchange, were financially precarious, and on occasion were dormant or
defunct.  These characteristics made it easier for Reyes to manipulate the stock price and
generate investor demand, by issuing press releases to generate interest.
18. Initially, Reyes used an account in his own name to purchase shares of the
targeted issuer prior to promoting it.
19. After a broker-dealer closed one of Reyes’s accounts, Reyes opened accounts that
he controlled that were in the names of family and friends to acquire and sell stock.  Reyes
opened such accounts in the name of his mother-in-law, stepfather, wife, and the brother-in-law
of his wife, among others.
20. Thereafter, Reyes used these accounts to engage in each of the pump-and-dump

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schemes.
21.  Notwithstanding the names on these accounts, the accounts belonged to Reyes
and he alone controlled them.
22. In connection with at least four of the pump-and-dump schemes, Reyes purchased
websites and email domains in the names of, or with names confusingly similar to the name of,
an issuer.
23. He used emails with those domain names to communicate with newswire services
about disseminating press releases, as though he were an authorized representative of the issuer.
24. Reyes sometimes used his wife’s name to register the misleading websites and
domains.
25. In connection with each of the 25 issuers, Reyes, through entities he controlled or
other intermediaries, caused one or more press releases to be issued in the name of the issuer.
26.  Reyes frequently had no prior relationship with the issuer and merely hijacked
the issuer’s name for the purposes and duration of his scheme.
27. On at least ten occasions, involving at least nine of the issuers, the newswire
service, an internet message board, or the issuer published a notice to disregard the unauthorized
press release, soon after the Reyes press release was disseminated.
28. Reyes used at least four different newswire services to forestall these services
from associating him with a pattern of unauthorized press releases.
29. In each instance, the trading volume and price of the targeted security rose
following Reyes’s press releases and touting, and Reyes immediately sold his shares at a profit.

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B. Nexus Energy Services, Inc. (“Nexus”)
30. One of the securities Reyes manipulated was the stock of Nexus Energy Services,
Inc., which traded under the symbol “IBGR.”
31. On November 28, 2017, Reyes purchased the email domain name
nexusenergyservicesinc.com.  The company did not have an official web site or email domain.
32. At that time, Nexus was “dark,” having not published any disclosures for
approximately 18 months.
33. A few weeks later, on December 18, 2017, accounts controlled by Reyes
purchased 18,676,729 Nexus shares for approximately $26,158.
34. Later that day, after purchasing the Nexus shares, Reyes paid for a newswire
service to disseminate a press release he had provided, purporting to be from Nexus.
35. The press release falsely announced: “Nexus Energy Services, Inc. Announces
Bitcoin Implementation to its Oil Business.”
36. Reyes deceived the newswire service into distributing the false and unauthorized
press release by sending the newswire service an email purporting to be from the CFO of Nexus
and coming from an email address Reyes created, with the name of the purported CFO followed
by “@nexusenergyservicesinc.com,” the domain name that Reyes created.
37.  Unbeknownst to the newswire service, the CFO who supposedly authorized the
issuance of the December 18, 2017 press release was no longer employed by the company.
38. After the press release was distributed, the actual CEO of Nexus contacted the
newswire service, informing them that the press release had not been authorized and that the
person who supposedly authorized the press release had not worked at the company for two
years.

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39. In the meantime, following the bogus press release, Nexus’s stock price rose to an
intraday high of $0.0052 per share, ten times its previous closing price of $0.0005 per share.  The
share price at closing was $0.0025 per share.
40. By the end of the day, Reyes sold all his shares that day for about $35,852, for a
profit of approximately $9,694 and a one-day gain of more than 37 percent.
41. After the market closed, the newswire service issued a statement, informing the
public that they should disregard the December 18, 2017 Nexus press release.
42. On the following day, the closing share price dropped sharply to $0.0007 per
share.
C. Aim Exploration Inc. (“Aim”)
43. In the case of Aim, Reyes conducted the scam twice, first in February 2018 and
again in March 2018.
44. From February 16, 2018 through February 21, 2018, Reyes accumulated
approximately 14.9 million Aim shares, for approximately $20,988, in a brokerage account he
owned that was in the name of a friend.
45. On February 21, Reyes purchased the domain name “aimexxploration.com” with
an extra “X” in the name of the domain.  AIM’s actual website address was
www.AIMExploration.com
.
46. Later that day, Reyes used an email address he created with the
aimexxploration.com domain to communicate with a newswire service, and to pretend that Aim
itself was authorizing the issuance of a press release.
47. On February 22, 2018, a newswire service disseminated a press release that Reyes
had provided to the service and paid for.

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48. The press release, purporting to be from Aim, announced “AIM Exploration
Cancels Reverse Split and Initiates Cryptocurrency Coal Coin Project.”
49. After the press release, Aim’s stock price rose to an intraday high of $0.0023 per
share, 1.5 times its previous closing price of $0.0015 per share.
50. Reyes sold his entire position in Aim stock for approximately $25,460, a profit of
approximately $4,472, for a gain of more than 21 percent.  A couple of hours after the press
release was circulated, but after Reyes’s sales, the newswire service issued a statement, saying
that it had been informed by Aim that the public should disregard the press release from earlier
in the day.
51. Thereafter, the share price fell, closing lower than the closing price on the day
before.
52. The following month, Reyes manipulated the stock again, using the same account,
in the name of his friend, to accumulate a position of approximately 5.4 million shares, for
approximately $6,469, early in the day on March 15, 2018.
53. At 2:34pm on March 15, 2018, a newswire service disseminated a press release
that Reyes had arranged.
54. The press release, purporting to be from Aim, announced “Aim Exploration
(AEXE) and U.S. Highland, Inc. Raised $32M Investment From Kroger.”
55. On that day, Aim’s stock price rose to an intraday high of $0.0021 per share, 1.75
times its previous close of $0.0012 per share.
56. By the end of that day, Reyes sold his entire position in Aim stock for
approximately $10,483, a profit of approximately $4,015, a one-day gain of more than 61
percent.

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57. After the market close, the newswire service issued a statement, saying that it had
been informed by Aim that the public should disregard the press release from earlier in the day.
D. Total Profit
58. From December 2017 to April 2019, Reyes repeated this scheme—buying shares
of an issuer; getting a newswire service to issue a press release, prompting a rise in the stock
price; and then immediately dumping his shares for a profit—at least 50 times, manipulating the
securities of 25 microcap companies.
59. The 50 iterations of this scheme are summarized in the following chart:
Dates of Press
Releases
No. of Press
Releases
Issuer / Security Name

Approximate
Net Profits
December 13, 2017 -
April 4, 2018
11 Com-Gard Inc. $23,630
December 18, 2017 1 Nexus Energy Services, Inc. $9,744

December 14, 2017 -
March 2, 2018
3 TGI Solar Power Group, Inc. $7,038
January 5, 2018 1 PMX Communities, Inc. $7,599

January 8, 2018 1 ERHC Energy Inc. $8,000

January 9, 2018 1 Golden Matrix Group, Inc. $13,715

January 9, 2018 -
January 10, 2018
2 Elayaway, Inc. $8,122

January 11, 2018 1 Discovery Minerals Ltd. $10,837

January 12, 2018 1 Strategic Asset Leasing Inc. $9,589

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Dates of Press
Releases
No. of Press
Releases
Issuer / Security Name

Approximate
Net Profits
January 16, 2018 1 Embarr Downs, Inc. $9,843

January 17, 2018 1 Arcis Resources Corp. $953

January 17, 2018 1 Turbodyne Technologies Inc. $4,215

January 25, 2018 1 Falconridge Oil Technologies
Corp.
$5,043

January 25, 2018 1 PTA Holdings, Inc. $18,710

January 26, 2018 1 Dakshidin Corp. $10,262

February 20, 2018 -
March 28, 2018
7 Quantum Medical Transport,
aka A Clean Slate, Inc.
$23,906

February 22, 2018 -
March 15, 2018
2 AIM Exploration, Inc. $8,487

March 8, 2018 1 HPIL Holding $14,820

April 2, 2018 1 Tonner-One World Holdings,
Inc.
$9,506

April 18, 2018 2 Neuro-Hitech, Inc. $15,110

May 30, 2018 1 Bemax Inc. $22,754

July 17, 2018 -
August 9, 2018
5 SOHM Inc. $12,149

April 3, 2019 1 AVEW Holdings Inc. $2,833

April 4, 2019 1 Dutch Gold Resources, Inc. $3,355

April 9, 2019 1 Southcore Capital, Inc. $9,879

TOTAL: 50

TOTAL: $270,099

60. Reyes’s total profit from these schemes was approximately $270,099.

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II. THE WASH TRADING SCHEMES
A. Overview
61. With respect to at least four issuers, Reyes used accounts under his control to
engage in wash trading.
62. A “wash trade” is an order to buy or sell securities resulting in no change of
beneficial ownership for the purpose of (1) creating a false or misleading appearance of active
trading in any publicly traded security; or (2) creating false or misleading appearance with
respect to the market for any such security.
63. Reyes used at least nine accounts he controlled for wash trading, including
accounts in the name of his wife, mother-in-law and friends.
64. While engaging in wash trades, Reyes also purchased additional shares in the
manipulated stocks while the price was still low, and then sold those shares after he had
manipulated the price higher.
B. Dana Resources (“Dana”)
65. An example of this type of scheme involved the securities of Dana Resources
(ticker symbol: DANR), and occurred over the course of two days in August 2018.
66. On August 9 and 10, 2018, using two accounts he controlled, one in the name of
his stepfather and one in the name of friends, Reyes engaged in more than 50 wash trades.
67. In each instance Reyes simultaneously bought a specific number of shares in one
of these accounts and sold the same amount of shares in the other account.
68. Reyes entered each buy order from one account within a few minutes, and often
within seconds, of entering each matching sell order from the other account.
69. On August 9, 2018, by means of the unlawful wash trading, Reyes “walked up”

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the share price of Dana stock from $0.0014 to $0.0022 per share.  At about 12:25pm, Reyes
traded over 2.3 million Dana shares between these two accounts at $0.0014 per share.  About 10
minutes later, he traded 400,000 Dana shares between these accounts at $0.0015 per share.
About 20 minutes after that, he traded over a million Dana shares between these accounts at
$0.0017 per share.  Several minutes after that, he traded between these accounts at $0.0019 per
share.
70. Reyes continued in this fashion, raising the share price by about one-hundredth of
a penny at a time, until about 1:21 pm, when he traded 210,000 Dana shares between these
accounts at $0.0022 per share.
71. Reyes had also purchased additional Dana stock throughout the day, for the
purpose of selling after his wash sales had raised the price of the stock.
72. On August 9, 2018, Reyes’s trading accounted for about 97% of the trading
volume in the market for Dana stock that day. At the end of the day, the two Reyes-controlled
accounts held more than 17 million Dana shares.
73. By the end of the day on August 10, 2018, Reyes had sold virtually every Dana
share held in his accounts, for a profit from this trading of approximately $26,044.
C. Total Profit
74. Reyes engaged in wash trading schemes on six occasions from October 2017 to
October 2018, manipulating the stock of four microcap issuers.
75. The six iterations of this scheme are summarized in the following chart:
Dates Issuer / Security
Name
Approximate
Net Profits
October 19, 2017 – October
2, 2018 (Three instances
during this period)
Com-Gard Inc. $45,645

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Dates Issuer / Security
Name
Approximate
Net Profits
March 1, 2018 – March 14,
2018
Tonner-One World
Holdings, Inc.
$41,258
August 9, 2018 – August
10, 2018
Dana Resources $26,044
August 14, 2018 – August
15, 2018
Get Fugu, Inc. $3,899

TOTAL: $116,846

76. Reyes’ total profits from the six wash trading schemes totaled approximately
$116,846.
FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
77. The Commission re-alleges and incorporates by reference here the allegations
contained in paragraphs 1 through 76.
78. Reyes, directly or indirectly, singly or in concert, in connection with the purchase
or sale of securities and by the use of means or instrumentalities of interstate commerce, or the
mails, or the facilities of a national securities exchange, knowingly or recklessly has: (i)
employed one or more devices, schemes, or artifices to defraud, (  ii) made one or more untrue
statements of a material fact or omitted to state one or more material facts necessary in order to
make the statements made, in light of the circumstances under which they were made, not
misleading, and/or (iii) engaged in one or more acts, practices, or courses of business which
operated or would operate as a fraud or deceit upon any person.
79. By reason of the foregoing, Reyes, directly or indirectly, singly or in concert,
violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]

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and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
SECOND CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act
80. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 76.
81. Reyes, directly or indirectly, singly or in concert, in the offer or sale of securities
and by use of the means or instruments of transportation or communication in interstate
commerce or the mails: (1) knowingly or recklessly has employed one or more devices, schemes,
or artifices to defraud, (2) knowingly, recklessly or negligently has obtained money or property
by means of one or more untrue statements of a material fact or omissions of a material fact
necessary in order to make the statements made, in the light of the circumstances under which
they were made, not misleading, and/or (3) knowingly, recklessly or negligently has engaged in
one or more transactions, practices, or courses of business which operated or would operate as a
fraud or deceit upon the purchaser.
82. By reason of the foregoing, Reyes, directly or indirectly, singly or in concert,
have violated and, unless enjoined, will again violate Securities Act Section 17(a) [15 U.S.C. §
77q(a)].
THIRD CLAIM FOR RELIEF
Violations of Section 9(a)(1) of the Exchange Act

83. The Commission re-alleges and incorporates by reference here the allegations
contained in paragraphs 1 through 76.
84. Reyes directly or indirectly, by use of the mails or any means or instrumentality
of interstate commerce, or of any facility of any national securities exchange, for the purpose of
creating a false or misleading appearance of active trading in any security other than a
government security, or a false or misleading appearance with respect to the market for any such

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security (A) effected transactions in such security which involved no change in the beneficial
ownership thereof, or (B) entered an order or orders for the purchase of such security with the
knowledge that an order or orders of substantially the same size, at substantially the same time,
and at substantially the same price, for the sale of such security had been or would be entered by
or for the same or different parties, or (C) entered any order or orders for the sale of such security
with the knowledge that an order or orders of substantially the same size, at substantially the
same time, and at substantially the same price, for the purchase of such security had been or
would be entered by or for the same or different parties.
85. By reason of the foregoing, Reyes directly or indirectly, singly or in concert, has
violated and, unless enjoined, will again violate Exchange Act Section 9(a)(1) [15 U.S.C. §
78i(a)(1)].
FOURTH CLAIM FOR RELIEF
Violations of Section 9(a)(2) of the Exchange Act

86. The Commission re-alleges and incorporates by reference here the allegations
contained in paragraphs 1 through 76.
87. Reyes directly or indirectly, by the use of the mails or any means or
instrumentality of interstate commerce, or of any facility of any national securities exchange,
effected, alone or with one or more other persons, a series of transactions in any security
registered on a national securities exchange, or any security not so registered, creating actual or
apparent active trading in such security, or raising or depressing the price of such security, for
the purpose of inducing the purchase or sale of such security by others.
88. By reason of the foregoing, Reyes directly or indirectly, singly or in concert, has
violated and, unless enjoined, will again violate Exchange Act Section 9(a)(2) [15 U.S.C. §
78i(a)(2)].

17

PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
Permanently enjoining Reyes, his agents, servants, employees and attorneys, and those
persons in active concert or participation with him, from violating, directly or indirectly,
Securities Act Section 17(a) [15 U.S.C. § 77q(a)], Exchange Act Sections 9(a)(1),
9(a)(2), and 10(b) [15 U.S.C. §§ 78i(a)(1), 78i(a)(2), and 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
II.
Ordering Reyes to disgorge all ill-gotten gains he received directly or indirectly, with
prejudgment interest thereon, as a result of the alleged violations, pursuant to Exchange
Act Sections 21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and
78u(d)(7)].
III.
Ordering Reyes to pay civil monetary penalties under Securities Act Section 20(d) [15
U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)].
IV.
Permanently prohibiting Reyes from serving as an officer or director of any company that
has a class of securities registered under Exchange Act Section 12 [15 U.S.C. § 78l] or
that is required to file reports under Exchange Act Section 15(d) [15 U.S.C. § 78o(d)],
pursuant to Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and Exchange Act Section
21(d)(2) [15 U.S.C. § 78u(d)(2)].

18

V.
Permanently prohibiting Reyes from participating in any offering of a penny stock,
including engaging in activities with a broker, dealer, or issuer for purposes of issuing,
trading, or inducing or attempting to induce the purchase or sale of any penny stock,
pursuant to Exchange Act Section 21(d)(6) of the Exchange Act [15 U.S.C.§ 78u(d)(6)].
VI.
Permanently enjoining Reyes, pursuant to Exchange Act Section 21(d)(5) [15 U.S.C. §
78u(d)(5)], from directly or indirectly: engaging in any activity for the purpose of
inducing or attempting to induce the purchase or sale of any security; causing any person
or entity to engage in any activity for the purpose of inducing or attempting to induce the
purchase or sale of any security; or deriving compensation from any activity engaged in
for the purpose of inducing or attempting to induce the purchase or sale of any security;
unless that security is: (i) listed on a national securities exchange; and (ii) has had a
market capitalization of at least $50,000,000 for 90 consecutive days; and
VII.
Granting such other and further relief as this Court may deem just and proper.

19

JURY DEMAND
The Commission demands a trial by jury.
Dated: New York, New York
April 24, 2023
     By:     /s/ Antonia M. Apps_______
      ANTONIA M. APPS
      REGIONAL DIRECTOR
      Thomas P. Smith, Jr.
      Michael D. Paley
      Jason Schall
      Kristine Zaleskas
      Attorneys for Plaintiff
      SECURITIES AND EXCHANGE COMMISSION
      New York Regional Office
      100 Pearl Street, Suite 20-100
      New York, New York 10004-2616
      (212) 336-0189 (Zaleskas)
      Email: [email protected]

OCR text (30,071c · tika · 95% conf)

ANTONIA M. APPS
REGIONAL DIRECTOR
Thomas P. Smith, Jr.
Michael Paley
Jason Schall
Kristine Zaleskas
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street, Suite 20-100
New York, New York 10004-2616
(212) 336-0189 (Zaleskas)
Email: [email protected]

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,

CARLOS EDUARDO REYES ALVAREZ,

Defendant.

COMPLAINT

23 Civ. _____ ( )

ECF CASE

JURY TRIAL DEMANDED

Plaintiff, Securities and Exchange Commission (“Commission”), for its Complaint

against Defendant Carlos Eduardo Reyes Alvarez (“Reyes”), alleges as follows:

SUMMARY OF ALLEGATIONS

1. Beginning in about November 2017 and continuing through at least April 2019,

Reyes engaged in numerous fraudulent schemes involving the securities of at least 28 microcap

companies.

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 1 of 19

2. On at least 50 occasions, Reyes acquired large positions in thinly-traded over-the-

counter (“OTC”) stocks and then generated investor interest in these stocks through fraudulent

means, most often by causing the issuance of press releases that had not been authorized by the

companies.

3. In connection with at least four companies, Reyes engaged in wash trading to

create the appearance of an active market and move up the company’s stock price.

4. Reyes’s fraudulent activity increased the price of the securities he targeted, and he

profited from these schemes by selling the securities after these fraud-induced price increases.

By means of these schemes, Reyes obtained ill-gotten profits of approximately $387,000.

VIOLATIONS

5. By virtue of the conduct alleged herein, Defendant, directly or indirectly, has

violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)]; and

Sections 9(a)(1), 9(a)(2), and 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”)

[15 U.S.C. §§ 78i(a)(1), 78i(a)(2), and 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-

5].

6. Unless Defendant is restrained and enjoined, he will engage in the acts, practices,

transactions, and courses of business set forth in this Complaint, or in acts, practices, transactions

and courses of business of similar type and object.

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 2 of 19

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT

7. The Commission brings this action pursuant to the authority conferred upon it by

Securities Act Sections 20(b) and (d) [15 U.S.C. §§ 77t(b) and (d)], and Exchange Act Section

21(d) [15 U.S.C. § 78u(d)].

8. The Commission seeks a final judgment: (a) permanently restraining and

enjoining Defendant from violating the federal securities laws and rules this Complaint alleges

he has violated; (b) ordering Defendant to disgorge all ill-gotten gains he received as a result of

the violations alleged here and to pay prejudgment interest thereon pursuant to Exchange Act

Sections 21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)]; (c)

ordering Defendant to pay civil money penalties pursuant to Securities Act Section 20(d) [15

U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; (d) permanently

prohibiting Reyes from serving as an officer or director of any company that has a class of

securities registered under Exchange Act Section 12 [15 U.S.C. § 78l] or that is required to file

reports under Exchange Act Section 15(d) [15 U.S.C. § 78o(d)], pursuant to Securities Act

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

U.S.C. § 78u(d)(2)]; (e) permanently prohibiting Reyes from participating in any offering of a

penny stock, pursuant to Securities Act Section 20(g) [15 U.S.C. § 77t(g)] and Exchange Act

Section 21(d)(6) [15 U.S.C.§ 78u(d)(6)]; (f) enjoining Defendant from engaging in any activity

for the purpose of inducing or attempting to induce the purchase or sale of any security; causing

any person or entity to engage in any activity for the purpose of inducing or attempting to induce

the purchase or sale of any security; or deriving compensation from any activity engaged in for

the purpose of inducing or attempting to induce the purchase or sale of any security, pursuant to

Exchange Act Section 21(d)(5) [15 U.S.C. § 78u(d)(5)], unless that security is: (i) listed on a

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 3 of 19

national securities exchange; and (ii) has had a market capitalization of at least $50,000,000 for

90 consecutive days; and (g) ordering any other and further relief that the Court may deem just

and proper.

JURISDICTION AND VENUE

9. This Court has jurisdiction over this action pursuant to Securities Act Section

22(a) [15 U.S.C. § 77v(a)] and Exchange Act Section 27 [15 U.S.C. §78aa].

10. Defendant, directly and indirectly, has made use of the means or instrumentalities

of interstate commerce or of the mails in connection with the transactions, acts, practices, and

courses of business alleged herein.

11. Venue lies in this district pursuant to Securities Act Section 22(a) [15 U.S.C.

§ 77v(a)] and Exchange Act Section 27 [15 U.S.C. § 78aa]. Certain of the acts, practices,

transactions and courses of business alleged in this Complaint occurred within the Southern

District of New York, and were affected, directly or indirectly, by making use of means or

instrumentalities of transportation or communication in interstate commerce, or the mails.

Among other things, Reyes distributed fraudulent press releases to one or more entities located in

this district, and at all relevant times Reyes traded securities via an alternative trading system

based in this district.

DEFENDANT

12. Reyes, born in 1988, is a resident of Port Saint Lucie, Florida.

FACTS

13. Reyes engaged in two types of schemes. The first type was a “pump-and dump”

scheme wherein Reyes, sometimes within a matter of days, purchased shares of a thinly-traded

stock, caused a newswire service to put out a press release concerning the issuer, and then sold

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 4 of 19

all the shares he had just bought at a profit.

14. In the second type of scheme, Reyes engaged in wash trading to move up the

share price of an OTC issuer. While engaged in this trading, Reyes would also buy and sell

additional shares as the price increased.

I. THE PUMP-AND-DUMP SCHEMES

A. Overview

15. On at least 50 occasions from late 2017 through about April 2019, involving the

stock of 25 companies, Reyes engaged in a pump-and-dump scheme.

16. On all 50 occasions, Reyes (i) acquired shares of a microcap issuer; (ii) caused a

press release, appearing to originate from the issuer, to be submitted to a newswire service for

dissemination, and after the press release was issued, the microcap issuer’s stock price and

trading volume increased; and (iii) immediately sold his shares for a profit.

17. For his scheme, Reyes consistently identified thinly-traded stocks of issuers that

were not traded on an exchange, were financially precarious, and on occasion were dormant or

defunct. These characteristics made it easier for Reyes to manipulate the stock price and

generate investor demand, by issuing press releases to generate interest.

18. Initially, Reyes used an account in his own name to purchase shares of the

targeted issuer prior to promoting it.

19. After a broker-dealer closed one of Reyes’s accounts, Reyes opened accounts that

he controlled that were in the names of family and friends to acquire and sell stock. Reyes

opened such accounts in the name of his mother-in-law, stepfather, wife, and the brother-in-law

of his wife, among others.

20. Thereafter, Reyes used these accounts to engage in each of the pump-and-dump

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 5 of 19

schemes.

21. Notwithstanding the names on these accounts, the accounts belonged to Reyes

and he alone controlled them.

22. In connection with at least four of the pump-and-dump schemes, Reyes purchased

websites and email domains in the names of, or with names confusingly similar to the name of,

an issuer.

23. He used emails with those domain names to communicate with newswire services

about disseminating press releases, as though he were an authorized representative of the issuer.

24. Reyes sometimes used his wife’s name to register the misleading websites and

domains.

25. In connection with each of the 25 issuers, Reyes, through entities he controlled or

other intermediaries, caused one or more press releases to be issued in the name of the issuer.

26. Reyes frequently had no prior relationship with the issuer and merely hijacked

the issuer’s name for the purposes and duration of his scheme.

27. On at least ten occasions, involving at least nine of the issuers, the newswire

service, an internet message board, or the issuer published a notice to disregard the unauthorized

press release, soon after the Reyes press release was disseminated.

28. Reyes used at least four different newswire services to forestall these services

from associating him with a pattern of unauthorized press releases.

29. In each instance, the trading volume and price of the targeted security rose

following Reyes’s press releases and touting, and Reyes immediately sold his shares at a profit.

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 6 of 19

B. Nexus Energy Services, Inc. (“Nexus”)

30. One of the securities Reyes manipulated was the stock of Nexus Energy Services,

Inc., which traded under the symbol “IBGR.”

31. On November 28, 2017, Reyes purchased the email domain name

nexusenergyservicesinc.com. The company did not have an official web site or email domain.

32. At that time, Nexus was “dark,” having not published any disclosures for

approximately 18 months.

33. A few weeks later, on December 18, 2017, accounts controlled by Reyes

purchased 18,676,729 Nexus shares for approximately $26,158.

34. Later that day, after purchasing the Nexus shares, Reyes paid for a newswire

service to disseminate a press release he had provided, purporting to be from Nexus.

35. The press release falsely announced: “Nexus Energy Services, Inc. Announces

Bitcoin Implementation to its Oil Business.”

36. Reyes deceived the newswire service into distributing the false and unauthorized

press release by sending the newswire service an email purporting to be from the CFO of Nexus

and coming from an email address Reyes created, with the name of the purported CFO followed

by “@nexusenergyservicesinc.com,” the domain name that Reyes created.

37. Unbeknownst to the newswire service, the CFO who supposedly authorized the

issuance of the December 18, 2017 press release was no longer employed by the company.

38. After the press release was distributed, the actual CEO of Nexus contacted the

newswire service, informing them that the press release had not been authorized and that the

person who supposedly authorized the press release had not worked at the company for two

years.

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 7 of 19

39. In the meantime, following the bogus press release, Nexus’s stock price rose to an

intraday high of $0.0052 per share, ten times its previous closing price of $0.0005 per share. The

share price at closing was $0.0025 per share.

40. By the end of the day, Reyes sold all his shares that day for about $35,852, for a

profit of approximately $9,694 and a one-day gain of more than 37 percent.

41. After the market closed, the newswire service issued a statement, informing the

public that they should disregard the December 18, 2017 Nexus press release.

42. On the following day, the closing share price dropped sharply to $0.0007 per

share.

C. Aim Exploration Inc. (“Aim”)

43. In the case of Aim, Reyes conducted the scam twice, first in February 2018 and

again in March 2018.

44. From February 16, 2018 through February 21, 2018, Reyes accumulated

approximately 14.9 million Aim shares, for approximately $20,988, in a brokerage account he

owned that was in the name of a friend.

45. On February 21, Reyes purchased the domain name “aimexxploration.com” with

an extra “X” in the name of the domain. AIM’s actual website address was

www.AIMExploration.com.

46. Later that day, Reyes used an email address he created with the

aimexxploration.com domain to communicate with a newswire service, and to pretend that Aim

itself was authorizing the issuance of a press release.

47. On February 22, 2018, a newswire service disseminated a press release that Reyes

had provided to the service and paid for.

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 8 of 19

http://www.aimexploration.com/

48. The press release, purporting to be from Aim, announced “AIM Exploration

Cancels Reverse Split and Initiates Cryptocurrency Coal Coin Project.”

49. After the press release, Aim’s stock price rose to an intraday high of $0.0023 per

share, 1.5 times its previous closing price of $0.0015 per share.

50. Reyes sold his entire position in Aim stock for approximately $25,460, a profit of

approximately $4,472, for a gain of more than 21 percent. A couple of hours after the press

release was circulated, but after Reyes’s sales, the newswire service issued a statement, saying

that it had been informed by Aim that the public should disregard the press release from earlier

in the day.

51. Thereafter, the share price fell, closing lower than the closing price on the day

before.

52. The following month, Reyes manipulated the stock again, using the same account,

in the name of his friend, to accumulate a position of approximately 5.4 million shares, for

approximately $6,469, early in the day on March 15, 2018.

53. At 2:34pm on March 15, 2018, a newswire service disseminated a press release

that Reyes had arranged.

54. The press release, purporting to be from Aim, announced “Aim Exploration

(AEXE) and U.S. Highland, Inc. Raised $32M Investment From Kroger.”

55. On that day, Aim’s stock price rose to an intraday high of $0.0021 per share, 1.75

times its previous close of $0.0012 per share.

56. By the end of that day, Reyes sold his entire position in Aim stock for

approximately $10,483, a profit of approximately $4,015, a one-day gain of more than 61

percent.

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 9 of 19

57. After the market close, the newswire service issued a statement, saying that it had

been informed by Aim that the public should disregard the press release from earlier in the day.

D. Total Profit

58. From December 2017 to April 2019, Reyes repeated this scheme—buying shares

of an issuer; getting a newswire service to issue a press release, prompting a rise in the stock

price; and then immediately dumping his shares for a profit—at least 50 times, manipulating the

securities of 25 microcap companies.

59. The 50 iterations of this scheme are summarized in the following chart:

Dates of Press
Releases

No. of Press
Releases

Issuer / Security Name

Approximate
Net Profits

December 13, 2017 -
April 4, 2018

11 Com-Gard Inc. $23,630

December 18, 2017 1 Nexus Energy Services, Inc. $9,744

December 14, 2017 -
March 2, 2018

3 TGI Solar Power Group, Inc. $7,038

January 5, 2018 1 PMX Communities, Inc. $7,599

January 8, 2018 1 ERHC Energy Inc. $8,000

January 9, 2018 1 Golden Matrix Group, Inc. $13,715

January 9, 2018 -
January 10, 2018

2 Elayaway, Inc. $8,122

January 11, 2018 1 Discovery Minerals Ltd. $10,837

January 12, 2018 1 Strategic Asset Leasing Inc. $9,589

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 10 of 19

Dates of Press
Releases

No. of Press
Releases

Issuer / Security Name

Approximate
Net Profits

January 16, 2018 1 Embarr Downs, Inc. $9,843

January 17, 2018 1 Arcis Resources Corp. $953

January 17, 2018 1 Turbodyne Technologies Inc. $4,215

January 25, 2018 1 Falconridge Oil Technologies
Corp.

$5,043

January 25, 2018 1 PTA Holdings, Inc. $18,710

January 26, 2018 1 Dakshidin Corp. $10,262

February 20, 2018 -
March 28, 2018

7 Quantum Medical Transport,
aka A Clean Slate, Inc.

$23,906

February 22, 2018 -
March 15, 2018

2 AIM Exploration, Inc. $8,487

March 8, 2018 1 HPIL Holding $14,820

April 2, 2018 1 Tonner-One World Holdings,
Inc.

$9,506

April 18, 2018 2 Neuro-Hitech, Inc. $15,110

May 30, 2018 1 Bemax Inc. $22,754

July 17, 2018 -
August 9, 2018

5 SOHM Inc. $12,149

April 3, 2019 1 AVEW Holdings Inc. $2,833

April 4, 2019 1 Dutch Gold Resources, Inc. $3,355

April 9, 2019 1 Southcore Capital, Inc. $9,879

TOTAL: 50 TOTAL: $270,099

60. Reyes’s total profit from these schemes was approximately $270,099.

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 11 of 19

II. THE WASH TRADING SCHEMES

A. Overview

61. With respect to at least four issuers, Reyes used accounts under his control to

engage in wash trading.

62. A “wash trade” is an order to buy or sell securities resulting in no change of

beneficial ownership for the purpose of (1) creating a false or misleading appearance of active

trading in any publicly traded security; or (2) creating false or misleading appearance with

respect to the market for any such security.

63. Reyes used at least nine accounts he controlled for wash trading, including

accounts in the name of his wife, mother-in-law and friends.

64. While engaging in wash trades, Reyes also purchased additional shares in the

manipulated stocks while the price was still low, and then sold those shares after he had

manipulated the price higher.

B. Dana Resources (“Dana”)

65. An example of this type of scheme involved the securities of Dana Resources

(ticker symbol: DANR), and occurred over the course of two days in August 2018.

66. On August 9 and 10, 2018, using two accounts he controlled, one in the name of

his stepfather and one in the name of friends, Reyes engaged in more than 50 wash trades.

67. In each instance Reyes simultaneously bought a specific number of shares in one

of these accounts and sold the same amount of shares in the other account.

68. Reyes entered each buy order from one account within a few minutes, and often

within seconds, of entering each matching sell order from the other account.

69. On August 9, 2018, by means of the unlawful wash trading, Reyes “walked up”

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 12 of 19

the share price of Dana stock from $0.0014 to $0.0022 per share. At about 12:25pm, Reyes

traded over 2.3 million Dana shares between these two accounts at $0.0014 per share. About 10

minutes later, he traded 400,000 Dana shares between these accounts at $0.0015 per share.

About 20 minutes after that, he traded over a million Dana shares between these accounts at

$0.0017 per share. Several minutes after that, he traded between these accounts at $0.0019 per

share.

70. Reyes continued in this fashion, raising the share price by about one-hundredth of

a penny at a time, until about 1:21 pm, when he traded 210,000 Dana shares between these

accounts at $0.0022 per share.

71. Reyes had also purchased additional Dana stock throughout the day, for the

purpose of selling after his wash sales had raised the price of the stock.

72. On August 9, 2018, Reyes’s trading accounted for about 97% of the trading

volume in the market for Dana stock that day. At the end of the day, the two Reyes-controlled

accounts held more than 17 million Dana shares.

73. By the end of the day on August 10, 2018, Reyes had sold virtually every Dana

share held in his accounts, for a profit from this trading of approximately $26,044.

C. Total Profit

74. Reyes engaged in wash trading schemes on six occasions from October 2017 to

October 2018, manipulating the stock of four microcap issuers.

75. The six iterations of this scheme are summarized in the following chart:

Dates Issuer / Security
Name

Approximate
Net Profits

October 19, 2017 – October
2, 2018 (Three instances
during this period)

Com-Gard Inc. $45,645

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 13 of 19

Dates Issuer / Security
Name

Approximate
Net Profits

March 1, 2018 – March 14,
2018

Tonner-One World
Holdings, Inc.

$41,258

August 9, 2018 – August
10, 2018

Dana Resources $26,044

August 14, 2018 – August
15, 2018

Get Fugu, Inc. $3,899

TOTAL: $116,846

76. Reyes’ total profits from the six wash trading schemes totaled approximately

$116,846.

FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder

77. The Commission re-alleges and incorporates by reference here the allegations

contained in paragraphs 1 through 76.

78. Reyes, directly or indirectly, singly or in concert, in connection with the purchase

or sale of securities and by the use of means or instrumentalities of interstate commerce, or the

mails, or the facilities of a national securities exchange, knowingly or recklessly has: (i)

employed one or more devices, schemes, or artifices to defraud, (ii) made one or more untrue

statements of a material fact or omitted to state one or more material facts necessary in order to

make the statements made, in light of the circumstances under which they were made, not

misleading, and/or (iii) engaged in one or more acts, practices, or courses of business which

operated or would operate as a fraud or deceit upon any person.

79. By reason of the foregoing, Reyes, directly or indirectly, singly or in concert,

violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 14 of 19

and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

SECOND CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act

80. The Commission re-alleges and incorporates by reference here the allegations in

paragraphs 1 through 76.

81. Reyes, directly or indirectly, singly or in concert, in the offer or sale of securities

and by use of the means or instruments of transportation or communication in interstate

commerce or the mails: (1) knowingly or recklessly has employed one or more devices, schemes,

or artifices to defraud, (2) knowingly, recklessly or negligently has obtained money or property

by means of one or more untrue statements of a material fact or omissions of a material fact

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

they were made, not misleading, and/or (3) knowingly, recklessly or negligently has engaged in

one or more transactions, practices, or courses of business which operated or would operate as a

fraud or deceit upon the purchaser.

82. By reason of the foregoing, Reyes, directly or indirectly, singly or in concert,

have violated and, unless enjoined, will again violate Securities Act Section 17(a) [15 U.S.C. §

77q(a)].

THIRD CLAIM FOR RELIEF
Violations of Section 9(a)(1) of the Exchange Act

83. The Commission re-alleges and incorporates by reference here the allegations

contained in paragraphs 1 through 76.

84. Reyes directly or indirectly, by use of the mails or any means or instrumentality

of interstate commerce, or of any facility of any national securities exchange, for the purpose of

creating a false or misleading appearance of active trading in any security other than a

government security, or a false or misleading appearance with respect to the market for any such

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 15 of 19

security (A) effected transactions in such security which involved no change in the beneficial

ownership thereof, or (B) entered an order or orders for the purchase of such security with the

knowledge that an order or orders of substantially the same size, at substantially the same time,

and at substantially the same price, for the sale of such security had been or would be entered by

or for the same or different parties, or (C) entered any order or orders for the sale of such security

with the knowledge that an order or orders of substantially the same size, at substantially the

same time, and at substantially the same price, for the purchase of such security had been or

would be entered by or for the same or different parties.

85. By reason of the foregoing, Reyes directly or indirectly, singly or in concert, has

violated and, unless enjoined, will again violate Exchange Act Section 9(a)(1) [15 U.S.C. §

78i(a)(1)].

FOURTH CLAIM FOR RELIEF
Violations of Section 9(a)(2) of the Exchange Act

86. The Commission re-alleges and incorporates by reference here the allegations

contained in paragraphs 1 through 76.

87. Reyes directly or indirectly, by the use of the mails or any means or

instrumentality of interstate commerce, or of any facility of any national securities exchange,

effected, alone or with one or more other persons, a series of transactions in any security

registered on a national securities exchange, or any security not so registered, creating actual or

apparent active trading in such security, or raising or depressing the price of such security, for

the purpose of inducing the purchase or sale of such security by others.

88. By reason of the foregoing, Reyes directly or indirectly, singly or in concert, has

violated and, unless enjoined, will again violate Exchange Act Section 9(a)(2) [15 U.S.C. §

78i(a)(2)].

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 16 of 19

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court enter a Final

Judgment:

Permanently enjoining Reyes, his agents, servants, employees and attorneys, and those

persons in active concert or participation with him, from violating, directly or indirectly,

Securities Act Section 17(a) [15 U.S.C. § 77q(a)], Exchange Act Sections 9(a)(1),

9(a)(2), and 10(b) [15 U.S.C. §§ 78i(a)(1), 78i(a)(2), and 78j(b)] and Rule 10b-5

thereunder [17 C.F.R. § 240.10b-5].

II.

Ordering Reyes to disgorge all ill-gotten gains he received directly or indirectly, with

prejudgment interest thereon, as a result of the alleged violations, pursuant to Exchange

Act Sections 21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and

78u(d)(7)].

III.

Ordering Reyes to pay civil monetary penalties under Securities Act Section 20(d) [15

U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)].

IV.

Permanently prohibiting Reyes from serving as an officer or director of any company that

has a class of securities registered under Exchange Act Section 12 [15 U.S.C. § 78l] or

that is required to file reports under Exchange Act Section 15(d) [15 U.S.C. § 78o(d)],

pursuant to Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and Exchange Act Section

21(d)(2) [15 U.S.C. § 78u(d)(2)].

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 17 of 19

Permanently prohibiting Reyes from participating in any offering of a penny stock,

including engaging in activities with a broker, dealer, or issuer for purposes of issuing,

trading, or inducing or attempting to induce the purchase or sale of any penny stock,

pursuant to Exchange Act Section 21(d)(6) of the Exchange Act [15 U.S.C.§ 78u(d)(6)].

VI.

Permanently enjoining Reyes, pursuant to Exchange Act Section 21(d)(5) [15 U.S.C. §

78u(d)(5)], from directly or indirectly: engaging in any activity for the purpose of

inducing or attempting to induce the purchase or sale of any security; causing any person

or entity to engage in any activity for the purpose of inducing or attempting to induce the

purchase or sale of any security; or deriving compensation from any activity engaged in

for the purpose of inducing or attempting to induce the purchase or sale of any security;

unless that security is: (i) listed on a national securities exchange; and (ii) has had a

market capitalization of at least $50,000,000 for 90 consecutive days; and

VII.

Granting such other and further relief as this Court may deem just and proper.

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 18 of 19

JURY DEMAND

The Commission demands a trial by jury.

Dated: New York, New York
April 24, 2023

By: /s/ Antonia M. Apps_______

ANTONIA M. APPS
REGIONAL DIRECTOR
Thomas P. Smith, Jr.
Michael D. Paley
Jason Schall
Kristine Zaleskas
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street, Suite 20-100
New York, New York 10004-2616
(212) 336-0189 (Zaleskas)
Email: [email protected]

Case 1:23-cv-03429-DLC Document 1 Filed 04/24/23 Page 19 of 19