SEC v. Edward Espinal; and Cash Flow Partners, LLC, No. 2:19-cv-21616, District of New Jersey (Jan. 1, 2019) — Complaint

Marc P. Berger
L
ara
S.
Mehraban
J
udith
Weinstock
C
hristopher J.
Dunnigan
Kim
Han
Brenda
Wai Ming Chang
Att
orneys for Plaintiff
U.S.
SECURITIES
AND
EXCHANGE
COMMISSION
New York
Regional Office
200 Vesey
Street, Suite 400
New
York, NY
10281-1022
{
212)
336-0061 (Dunnigan)
U
NITED STATES
DISTRICT COURT
D
ISTRICT OF
NEW JERSEY
SECURITIES
AND EXCHANGE
COMMISSION,
Plaintiff,
-against-
EDWARD
ESPINAL, and
C
ASH
FLOW PARTNERS,
LLC,
Defendants.
COMPLAINT
2:19
Civ. 21b16
J
URY TRIAL
DEMANDED
Plaintiff Securities
and
Exchange
Commission
("Commission"), alleges
the following
a
gainst Defendants
Edward Espinal
("Espinal") an
d Cash
Flow Partners, LLC
("Cash Flow
P
artners") (collectively,
"Defendants"):
S
UMMARY OF
ALLEGATIONS
1. From at
least July 2016
until September
2019
(the "Relevant Period"),
Espinal
and
an entity he
owned and
controlled, Cash
Flow Partners,
defrauded at
least 90 investors
from
t
he
Hispanic
community out of at least $5
million.
Defendants
deceived investors into
believing
t
hey
were investing
in a pooled fund that
would
purchase and
renovate houses, and
then flip the
houses for
profit. Defendants
promised
investors a
guaranteed
investment return
that varied in

amounts
between
12~%and 4%per
month
(or
15%and
48%annually) by
means of
so-called
"
promissory
notes.'' Espinal
and Cash
Flow
Partners
advertised on
Spanish-language
television,
r
adio,
and the
Internet,
offering individuals
with savings
an
opportunity to
multiply
their money
five
to ten
times
faster than at a
bank
and inviting
them to
call or
attend an
in-person conference
for
additional information.
2. In
reality,
Cash Flow
Partners'
purported
real
estate "fund,"
Cash
Flow Capital
G
roup
LLC
("Cash Flow
Capital"),
owned only two
small properties
in
New Jersey,
neither of
w
hich
were ever sold.
Instead of receiving
returns
from
real
estate investing,
investors
received
m
onthly
"returns"
that were
paid from
new
investor
monies.
Additionally,
investor funds
were
used
to bankroll
the
personal living
expenses
of Espinal,
his
family, and a
Cash
Flow Partners'
e
mployee
("Employee A"), as
well as
to sustain
a
separate
fraudulent
bank loan scheme
run by
D
efendants
and others.
VIOLATIONS
By virtue of
the
conduct alleged
herein,
each of
the
Defendants,
directly or
i
ndirectly, singly
or in
concert, have
engaged
and are
engaging
in acts,
practices,
schemes and
c
ourses of
business
that
constitute
violations of
Sections
5(a), 5(c),
and
17(a) of the Securities
A
ct of
1933
("Securities
Act") [15. U.S.C.
~§77e(a), 77e(c),
and '77q(a)]
and Section
10(b) of the
S
ecurities
Exchange Act of
1934
("Exchange
Act") [15
U.S.C.
§78j(b)],
and Rule lOb-5
t
hereunder [17 C.F.R.
X240.1 Ob-5]. In
addition,
Espinal is
liable as
a control
person under
S
ection 20(a)
of the
Exchange Act [15
U.S.C.
§78(a)~
for
Cash Flow
Partners'
violations of
S
ection 10(b)
of the
Exchange Act
[15 U.S.C.
§78j(b)]
and
Rule
lOb-~
thereunder [17 C.F.R.
§
240.1 Ob-5].
4.
Unless
the
Defendants are
permanently
restrained
and
enjoined, they will again

engage in
the acts,
practices,
and
courses of
business set
forth in
this
Complaint
and in acts,
p
ractices,
transactions,
and courses of
business of
similar
in type
and
object.
Defendants
should
also
be
ordered to
disgorge any
ill-gotten gains
or
benefits
derived as a
result of
their violations,
w
hether
realized,
unrealized or
received,
and
prejudgment
interest
thereon,
and
ordered
to
pay
a
ppropriate
civil
penalties.
N
ATURE
OF THE
PROCEEDINGS
AND
RELIEF
SOUGHT
5.
The
Commission brings
this
action
pursuant
to
the
authority
conferred
upon.
it
by
S
ection 20(b)
of the
Securities
Act [15
U.S.C.
§77t(b)]
and
Section
21(d)(1)
of the
Exchange Act
[15
U.S.C.
§78u(d)(1)],
and
seeks to
enjoin
the
Defendants
from
engaging
in the acts,
practices
a
nd
courses
of
business
alleged
herein.
6.
The
Commission seeks
a
final
judgment
permanently
enjoining the
Defendants
f
rom
committing
violations of
the
securities
law
provisions
that
Defendants
violated as alleged in
this
Complaint, ordering
the
Defendants to
disgorge
their
ill-gotten gains
and pay
prejudgment
i
nterest
thereon and
to pay
civil
money
penalties
pursuant to
Section
20(d) of the
Securities
Act
[15
U,S.C.
§77t(d)]
and
Section
21(d)(3) of the
Exchange
Act [15
U.S.C.
§78u(d)(3)].
J
URISDICTION
AND
VENUE
7.
This
Court has
jurisdiction
over this
action
pursuant to
Section 20(b),
20(d),
and
22(a)
of the
Securities
Act
[15 U.S.C.
~§77t(b), 77t(d),
77v(a)], and
Sections 21(e)
and 27 of
the
E
xchange Act [15
U.S.C.
§§78u(e)
and 78aa].
Defendants,
directly
or
indirectly, have
made us
o
f
the
means or
instruments
of
transportation or
communication
in, and
the
means or
i
nstrumentalities of,
interstate
commerce,
or of
the mails.
8.
Venue
lies in
this District
pursuant to
Section
22(a)
of the
Securities Act
[15U.S.C.
§77v(a)] and
Section
27 of
the
Exchange
Act [15
U.S.C.
§7$aa].
Certain of
the events

giving rise to
the
Commission's
claims
occurred
in the
District
of New
Jersey,
such as: (1) Cash
F
low
Partners
maintained its
principal
business
office in
this
District; (2)
Espinal
and
Cash Flow
P
artners
solicited
clients in this
District; and (3)
Espinal is a
resident of this
District.
D
EFENDANTS
9.
Espinal,
age 44,
resides in
Wayne,
New Jersey.
Espinal is
the
principal an
d
f
ounder of
Cash
Flow Partners.
10.
Cash
Flow Partners is a
New Jersey
limited
liability
company
formed in
2016. Its
p
rincipal place
of
business in
Saddle
Brook,
New
Jersey.
During
the
Relevant
Period, Cash
F
low
Partners had
satellite
offices in
New York,
New
York; Brorix,
New
York;
Newburgh,
New
Y
ork;
Miami,
Florida; Dallas,
Texas; and
Fairfax, Virginia.
During
the
Relevant Period, Cash
Flow
Partners
purported to
offer
investment
opportunities
yielding
guaranteed 15% to
48%
a
nnual returns
based on the
purchase,
remodel, an
d sale of
real
estate
properties.
Cash
Flow
P
artners also
purported to
provide
credit
repair and
assistance with
securing
bank loans.
R
ELEVANT
ENTITY
11.
Cash
Flow
Capital is
the
purported
real
estate
investment
fund
Espinal marketed
as being
"licensed'' by
the
Commission. In
reality,
Cash
Flow
Capital was
never
registered with
the
Commission
and does not
appear to be
incorporated as
a legal
entity.
F
ACTS
The
Defendants
Recruit
Investors
1
2.
Espinal and
Cash
Flow
Partners
induced
individuals to
invest
in the company's
p
urported
investment
program
through a
variety of
methods.
13.
First,
Defendants ran a
marketing
campaign
that
featured
Espinal and a
former
t
elenovela
actor as a
spokesperson on
Spanish
language
television
channels,
radio and
the
!~

Internet.
14.
Second,
Defendants
created
a
YouTube
page
called
"Cash
Flow
TV"
which
p
osted
over one
hundred
videos
touting
Cash
Flow
Partners'
loan
services an
d
investment
o
pportunity.
The
videos
encouraged
prospective
investors
to call
Cash
Flow
Partners
or to attend
live
presentations
for
further
information.
15.
Third,
Espinal met
with
potential
investors
at
Cash
Flow
Partners
offices
and at
c
onferences
where
Defendants
made live
presentations
about
their
investment
program.
16.
Fourth,
Defendants
solicited
individuals who
obtained
loans
through a
separate
b
ank fr
aud
scheme to
invest the
proceeds
of
their
loans
with
Cash
Flow Partners.l
17.
Defendants made
no
effort to
limit the
offering
to
accredited or
sophisticated
i
nvestors.
D
efendants
Sold
Investors
Promissory
Notes
18.
Cash
Flow
Partners
issued
"promissory
notes" to
investors
guaranteeing varying
m
onthly rates
of
returns
between 1.25%
and 4%.
1
9.
Earlier
investors
in the
Relevant
Period
were
offered
higher
rates of
return.
20.
In
addition,
Defendants
promised
investors
higher
guaranteed
returns
if they
i
nvested
more money.
For example,
Investor
A
was
initially
guaranteed a
monthly
return
of
1
.25%
on his
$30,000
investment. When
Investor A
agreed to
increase his
total
investment
to
$
85,000,
Cash
Flow Partners
increased
the
investor's
monthly
guaranteed
percentage
to
2%.
21.
Once
an investor
agreed to
the
terms, the
investor
signed
a
promissory
note that
s
tated
the
amount he
or she
had
invested
and
the
monthly
interest
payment he
or she
would
1
Defendants'
related
bank
fraud
scheme
is not
the
subject of this
civil
Complaint by
the
C
ommission.

receive.
The
promissory
note also
stated
that the
investor
would
receive his
or her
original
i
nvestment
back at the later
of
either one year
from
the date
of the
promissory
note or
60 days
after
written notice
demanding
payment.
22.
Espinal or
another
representative of
Cash
Flow Partners
counter
-signed each
of
the
promissory
notes.
T
he
Defendants
Made
Misrepresentations to
Investors
23.
In
the course of
soliciting
investors,
Espinal, and
under his direction,
sales
agents
of
Cash
Flow Partners
made
several
material
misrepresentations. All
of these
representations
w
ere false.
First, they told
investors
that their
investments
would be
pooled
with
other investor
f
unds to
acquire
residential real estate
properties,
remodel
them, and
sell
them at a
higher price.
H
owever,
instead of being
pooled to
purchase
and
remodel
real
estate, investor
funds
were used
to
pay
earlier investors
their monthly
"returns,"
to
bankroll the
personal
living expenses
of
E
spinal, his
family,
and Employee A,
an
d to
sustain the
related
fraudulent bank
loan
scheme
r
eferred to
in
Paragraph 16.
24.
Second,
Defendants
guaranteed
payment of
the
monthly returns,
which
they said
w
ould be
derived
from profits
earned
on flipping
Cash
Flow
Partners'
portfolio
of
houses. In
r
eality, no
profits
from fl
ipping houses
from
which
monthly returns
were
paid because no
houses
w
ere sold.
25.
Third,
Espinal marketed
Cash
Flow
Partners'
"real
estate fund"
Cash
Flow
C
apital, as being
"licensed by the SEC
(Securities
and
Exchange
Commission).''
Neither Cash
Flow
Partners,
nor
Cash Flow
Capital,
were
"licensed" by
the
Commission.
26.
Fourth, Espinal
stated
that he had
more
than 25
years
of experience
in the
i
nvestment
market.
Prior to
starting Cash
Flow
Partners
in 2016,
Espinal had
worked in a
real
C~

estate
company
as
a realtor
brokering rental
properties,
not
as a
professional
investor or
in the
s
ecurities
industry.
27.
Fifth,
Cash
Flow
Partners'
website listed
a
portfolio
of
eight residential
p
roperties,
one
of which
Cash Flow
Partners
purported to
have
sold.
However,
of the
eight
properties
listed on its
website,
Cash
Flow
Partners
had only
purchased
two of
the
properties.
C
ollectively,
only
approximately
$355,000
was
spent to
purchase the
houses.
Moreover,
the
p
roperty
that
was listed
as
"sold" had
not,
in fact,
been
sold but
was
being used
as a
residence by
E
mployee A.
E
xamples of
Es~inal's
Fraudulent
Scheme
I
nvestor A
2
8.
Investor A
invested a
total of
$85,000
with
Cash
Flow
Partners
beginning
in or
a
round
September
2018.
29.
Investor
A
visited
Cash
Flow Partners'
offices
and
personally
spoke
with Espinal
a
nd an
employee of
Cash
Flow
Partners.
30.
Espinal and
the
employee
represented to
Investor A
that
Cash
Flow
Partners
i
nvested
in
real estate by
buying
houses
wholesale and
then
selling
them.
~1.
Investor A
initially
invested
$35,000,
which
purportedly
entitled
him to a
1.25%
m
onthly
return.
Investor A
invested
another
$50,000
over the
next six
months.
When
Investor
A's
investment
reached
$85,000, his
monthly
return for
all
of his
investment.
increased to
2%.
32.
In
May 2019,
Investor A
failed to
receive
his
monthly
payment from
Cash Flow
P
artners.
He
requested
that his
funds
be
returned to
him.
Since his
request, he has
received
n
either his
monthly
payments,
nor a
return of
his
principal.
7

Investor B
33.
In or around
August 2018,
Investor B
invested her
life savings
of
$50,000 with
C
ash
Flow Partners.
34.
Investor B first
learned
about Cash
Flow Partners fr
om
television
advertisements.
35.
Investor B
contacted Cash
Flow
Partners and
was
invited to a
conference by the
c
ompany.
36.
At the conference,
Espinal
represented
to
potential
investors that
funds
invested
w
ould be
used to
buy,
repair, and sell
homes
that were
in
foreclosure.
3
7.
Defendants
also
presented
individuals
at the
conference who
identified
t
hemselves as
existing,
satisfied
investors.
38.
At the
conference,
Espinal
personally
reassured
Investor B
that her
money would
be
"safe."
39.
Investor B was
guaranteed a
monthly
return of 2%.
40.
Investor B
received five
months of
"returns"
on
her $50,000
investment. Investor
B
became
concerned
about her
investment
when she
requested
documents from
Cash
Flow to
prepare
her tax
return and was
not
provided
with any.
On or
around
March 22,
2019,
Investor B
r
equested her
money back.
A Cash
Flow
Partners
employee
told
Investor B
that she
would get
h
er
initial
investment back in
60
days. Cash
Flow
Partners
then
stopped
making
payments to
I
nvestor A
and did
not
return her $50,000.
I
nvestor C
41.
Investor C
invested
$200,000
with Cash
Flow
Partners in
or around
January 2019.
42.
Investor C
learned
about Cash
Flow
Partners
through its
advertising
on
Spanish
l
anguage
television.

43.
Investor
C
went to Cash
Flow Partners'
offices
multiple time
before
investing,
a
nd
personally
met
with Espinal.
44.
Espinal
represented to
Investor C
that Cash
Flow
Partners
bought and
sold
p
roperties.
45.
Investor C was
purportedly
entitled
to a 1.67%
monthly
return. Defendants
c
eased
paying
Investor C his
monthly
payment in or
around
Apri12019.
D
efendants
Misappropriated
Investor
Funds
4
6.
The money
from
investors
and
from the
fraudulent
loans
was
deposited
and
c
onnmingled in
accounts
in the
name
of Cash
Flow Partners,
and then
transferred to and
from
a
ccounts
in
the names of
other entities
related to
Cash
Flow
Partners,
which
were
controlled by
E
spinal
or
other Cash
Flow
Partners
employees.
4
7.
Espinal
used
investor
funds to
pay his
personal
expenses
and the
expenses of
E
mployee A, to pay
purported
monthly
investment
returns to
earlier investors,
and to make
p
ayments on
loans
from the
related
fr
audulent
loan
scheme to
keep the
loan
scheme
going
r
eferenced in
Paragraph 16.
4
8.
Between January
2016
and June
2019,
Defendants
misappropriated over
$1.4
m
illion
dollars
out of Cash
Flow Partners,
including
for
the
following
expenses:
•
approximately
$125,000
for
car
payments,
including
payments to
M
ercedes
and
BMW;
•
approximately
$312,000 for
travel,
including a
cruise an
d a
trip to
B
russels for
Espinal and
Employee A;
•
approximately $1
million
dollars
withdrawn
in
cash;
•
at
least
$10,000
on tuition
payments to
a
university;

•
several
thousands
of dollars
spent
on spas and
retail
clothing stores.
4
9.
Investor
funds
were also
spent on
maintaining
the
Cash
Flow Partners'
daily
o
perations,
including
paying
employee
salaries and
overhead expenses.
5
0.
Although
investors
initially
received
their
monthly
"interest" payments,
in or
around
the
first
quarter
of
2019,
Cash
Flow
Partners began
defaulting on the
promissory notes.
51.
When
investors
called or
physically
went to
Cash
Flow
Partners' offices to
i
nquire
about the missing
payments
and/or to
request return of
their
initial
investment,
Espinal or
o
ther
Cash
Flow Partners
employees
falsely reassured
the
investors
that
their monies were
f
orthcoming.
52.
From
at least July
2016
until
September
2019,
Defendants
defrauded
over 90
i
nvestors
of at least $5
million by
promising a
guaranteed
return on
their
investment
that would
b
e
generated by
pooling
investor
funds to
purchase,
remodel, and
sell
residential real
estate.
F
IRST
CLAIM
FOR
RELIEF
V
iolations of
Section 5(a) and
5(c)
of the
Securities
Act
53.
The
Commission
realleges
and
incorporates by
reference
herein each and every
a
llegation
contained in
paragraphs L
through
52 of this
Complaint.
5
4. The
promissory notes
are
securities.
55.
By
engaging
in the acts
and
conduct
alleged
above, the
Defendants,
directly
or
i
ndirectly,
singly or in
concert, with
respect to
a security
for
which no
registration statement was
f
iled
or in
effect, and
in the
absence of
any
applicable
exemption
from
registration: (a)
carried or
c
aused to
be
carried through
the mails
or in
interstate commerce, by
means or
instruments
of
t
ransportation,
such security
for the
purpose
of
sale or delivery
after
sale; and (b)
made
use of a
m
eans
or
instrument of
transportation or
communication in
interstate
commerce
or of
the
mails
to
offer to
sell such
security
through the
use or
medium of
a
prospectus or
otherwise.
10

~6.
By
reason
of
the
foregoing,
the
Defendants,
directly
or
indirectly,
singly
or
in
c
oncert,
have
violated
and,
unless
restrained
and
enjoined,
will
again
violate
Section
5(a)
and
(c)
o
f
the
Securities
Act
[15
U.S.C.
~§77e(a)
and
(c)].
S
ECOND
CLAIM
FOR
RELIEF
V
iolations
of
Section
17(a)
of
the
Securities
Act
5
7.
The
Commission
realleges
and
incorporates
by
reference
herein
each
and
every
a
llegation
contained
in
paragraphs
1
through
52
of
this
Complaint.
5
8.
The
promissory
notes
are
securities.
5
9.
By
engaging
in
the
acts
and
conduct
allebed
above,
the
Defendants,
directly
or
i
ndirectly,
knowingly,
recklessly,
or
negligently,
singly
or
in
concert,
in
the
offer
or
sale
of
s
ecurities
by
the
use
of
the
means
or
instruments
of
transportation
or
communication
in
interstate
c
ommerce
or
by
use
of
the
mails:
(a)
employed
devices,
schemes,
or
artifices
to
defraud;
(b)
o
btained
money
or
property
by
means
of
untrue
statements
of
material
fact
or
by
omitting
to
state
m
aterial
facts
necessary
in
order
to
make
statements
made,
in
light
of
the
circumstances
under
w
hich
they
were
made,
not
misleading;
and
(c)
engaged
in
transactions,
practices,
or
courses
of
b
usiness
which
operated
or
would
operate
as
a
fraud
or
deceit
upon
purchasers
of
securities.
6
0.
By
reason
of
the
foregoing,
the
Defendants,
directly
or
indirectly,
singly
or
in
c
oncert,
have
violated
and,
unless
restrained
and
enjoined,
will
again
violate
Section
1'7(a)
of
the
S
ecurities
Act
[15
U.S.C.
§77q(a)].
T
HIRD
CLAIM
FOR
RELIEF
V
iolations
of
Section
10(b)
of
the
Exchange
Act
and
Rule
lOb-5
6
1.
The
Commission
realleges
and
incorporates
by
reference
herein
each
and
every
a
llegation
contained
in
paragraphs
1
through
52
of
this
Complaint.
6
2.
The
promissory
notes
are
securities.
11

63.
By
engaging
in the acts
and
conduct
alleged
above,
the
Defendants,
directly
or
i
ndirectly,
knowingly or
recklessly,
singly or
in
concert, in
connection
with the
purchase
or sale
of
securities, by
the
use of
the means
or
instrumentality of
interstate
commerce, or
of the mails,
o
r of
the
facilitiy
of a
national
securities
exchange:
(a)
employed devices,
schemes, or
artifices to
d
efraud; (b)
made
untrue
statements
of
material
fact, or
omitted to
state a
material
fact
necessary
in
order to
make the
statement made, in
light of
the
circumstances
under
which it was
made,
not
m
isleading; and
(c)
engaged in
transactions,
practices, or
courses of
business
which
operated
or
w
ould
operate as
a fraud
or
deceit upon
any
person
in
connection
with the
purchase or
sale of
any
security.
64.
By
reason
of the
foregoing,
the
Defendants,
directly or
indirectly,
singly or in
c
oncert, have
violated and,
unless
restrained
and
enjoined,
will
again
violate Section
10(b)
of the
E
xchange
Act
[15 U.S.C.
§78j(b)] and
Rule lOb-5
thereunder
[17
C.F.R.
§240.1Ob-5].
FOURTH
CLAIM
FOR
RELIEF
C
ontrol
Person
Liability for
Cash
Flow
Partners'
Violation of
Section
10(b)
of the
Exchange
Act
and
Rule
lOb-5
65.
The
Commission
realleges
and
incorporates by
reference
herein
each and
every
a
llegation
contained
in
paragraphs 1
through
52
of this
Complaint.
66.
The
promissory notes
are
securities.
67.
Cash
Flow
Partners,
directly
or
indirectly,
knowingly
or
recklessly,
singly
or in
c
oncert, in
the
purchase
or
sale of
securities by
the
use of
the
means
or
instrumentality
of
i
nterstate
commerce,
or of
the mails,
or
of the
facility of a
national
securities
exchange: (a)
e
mployed devices,
schemes, or
artifices
to
defraud;
(b)
made
untrue
statements
of
material fact,
or
omitted to state
a
material fact
necessary in
order to
make
the
statement,
made, in
light of the
c
ircumstances
under
which it was
made, not
misleading;
and
(c)
engaged in
transactions,
12

practices,
or
courses
of
business
which
operated
or
would
operate
as
a
fraud
or
deceit
upon
any
p
erson
in
connection
with
the
purchase
or
sale
of
a
security.
6
8.
By
reason
of
the
foregoing,
Cash
Flow
Partners,
directly
or
indirectly,
singly
or
in
c
oncert,
has
violated
and,
unless
restrained
and
enjoined,
will
again
violate
Section
10{b)
of
the
E
xchange
Act
[15
U.S.C.
§78j(b)]
and
Rule
lOb-5
thereunder
[17
C.F.R.
§240.1Ob-5].
6
9.
At
all
times
relevant
hereto,
Espinal
was
a
controlling
person
of
Cash
Flow
P
artners
for
the
purposes
of
Section
20(a)
of
the
Exchange
Act
[15
U.S.C.
§78t(a)].
7
0.
Espinal
knowingly
or
recklessly
engaged
in
fraudulent
conduct
that
resulted
in
C
ash
Flow
Partners'
violations
of
Section
10(b)
of
the
Exchange
Act
[15
U.S.C.
~78j(b)]
and
R
ule
lOb-5
thereunder
[17
C.F.R.
§240.1Ob-5].
7
1.
By
reason
of
the
foregoing,
Espinal
is
liable
as
a
controlling
person
pursuant
to
S
ection
20(a)
of
the
Exchange
Act
[15
U.S.C.
§78t(a)]
for
Cash
Flow
Partners'
violations
of
S
ection
10(b)
of
the
Exchange
Act
[15
U.S.C.
§78j(b)]
and
Rule
lOb-5
thereunder
[17
C.F.R.
X
240.
l
Ob-5].
PRAYER
FOR
RELIEF
W
HEREFORE,
the
Commission
respectfully
requests
that
the
Court
grant
the
following
r
elief:
I.
A
Final
Judgment
finding
that
the
Defendants
violated
the
securities
laws
and
rules
p
romulgated
thereunder
as
alleged
against
them
herein;
I
I.
A
Final
Judgment
permanently
restraining
and
enjoining
the
Defendants,
and
their
a
gents,
servants,
employees
and
attorneys
and
all
persons
in
active
concert
or
participation
with
1
3

them, who
receive
actual
notice of the
injunction by
personal
service or
otherwise, and each
of
t
hem,
from future
violations
of Securities
Act Sections
5(a), 5(c),
and 17(a) [15
U.S.C.
§§77e(a),
7
7e(c),
and 77q(a)],
Exchange
Act
Section 10(b)
[15
U.S.C. §78j(b)],
and
Rule lOb-5 [17
C.F.R.
§
240.1Ob-5]
thereunder;
III.
A
Final.
Judgment
directing the
Defendants to
disgorge their
ill-gotten
gains, plus pre-
judgment
interest;
IV.
AFinal
Judgment
imposing civil
money
penalties
upon
the Defendants
pursuant to
S
ection
20(d) of
the Securities Act
[15
U.S.C.
§77t(d)] and
Section
21(d)(3) of
the Exchange Act
[15
U.S.C. ~,
78u(d)(3)];
and
14

1~
S
uch other
and
further
relief
the Court
deems just
and
proper.
JURY
DEMAND
P
laintiff
demands
that this
case be
tried by
a
jury.
D
ated: New
York,
New York
D
ecember
t ~, 2019
By:
Marc P.
Berger`
L
ara S.
Mehraban
J
udith
Weinstock
C
hristopher J.
Dunnigan*
K
im Han*
B
renda
Wai Ming
Chang*
A
ttorneys for
Plaintiff
U
.S.
Securities
and
Exchange
Commission
N
ew York
Regional
Office
2
00
Vesey
Street,
Suite 400
N
ew
York, NY
10281-1022
{212)
336-0061
(Dunnigan)
E
mail:
dunni~anci(c~r~,sec.gov
*Not
admitted in
New
Jersey
15

LOCAL
CIVIL
RULE
11.2
CERTIFICATION
P
ursuant to Local
Civil
Rule
11.2,
I
certify
that the
matter in controversy
alleged in the
f
oregoing
Complaint is
the subject of
a
criminal
complaint
pending in
the
United States
District
C
ourt for
the
District of New
Jersey
captioned
United States
v. Espinal,
19-cr.7549.
The matter
h
ere in
controversy is not
the
subject of any
other
action
pending
in any
court, or
of any pending
a
rbitration
or
administrative
proceeding, to
my
knowledge.
By:
C
istopher
J.
Dunnigan
A
tt
orney for
Plaintiff
U
.S.
Securities
and Exchange
Commission
N
ew
York.
Regional
Office
200
Vesey
Street,
Rm
400
N
ew York, NY
10281-1022
(
212)
336-0061
16

DESIGNATION
OF
AGENT FOR
SERVICE
P
ursuant to Local
Civil
Rule 101.10,
because the
Securities
and
Exchange
Commission
(the
"Commission") does
not have an
office
in this
district,
the
undersigned
designates the
U
nited States
Attorney for the
District
of New
Jersey to
receive
service
of all notices
or papers
in
the
above
captioned
action at the
following
address:
United
States
Attorney's
Office,
Civil
D
ivision, 970
Broad
Street, Ste. 700,
Newark,
New Jersey
07102, shall
constitute service
upon
the
Commission for
purposes of this
action.
~:~~ ~~
~.!
C
hristopher J.
Dunnigan
A
ttorney
for
Plaintiff
U.S.
Securities and
Exchange Commission
N
ew York
Regional
Office
2
00 Vesey
Street,
Rm 400
N
ew
York,
NY 102$1-1022
(212)
336-0061
17

Marc P. Berger
Lara S. Mehraban
Judith Weinstock
Christopher J. Dunnigan
Kim Han
Brenda Wai Ming Chang
Attorneys for Plaintiff
U.S. SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
200 Vesey Street, Suite 400
New York, NY 10281-1022
{212) 336-0061 (Dunnigan)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

-against-

EDWARD ESPINAL, and
CASH FLOW PARTNERS, LLC,

Defendants.

COMPLAINT

2:19 Civ. 21b16

JURY TRIAL
DEMANDED

Plaintiff Securities and Exchange Commission ("Commission"), alleges the following

against Defendants Edward Espinal ("Espinal") and Cash Flow Partners, LLC ("Cash Flow

Partners") (collectively, "Defendants"):

SUMMARY OF ALLEGATIONS

1. From at least July 2016 until September 2019 (the "Relevant Period"), Espinal

and an entity he owned and controlled, Cash Flow Partners, defrauded at least 90 investors from

the Hispanic community out of at least $5 million. Defendants deceived investors into believing

they were investing in a pooled fund that would purchase and renovate houses, and then flip the

houses for profit. Defendants promised investors a guaranteed investment return that varied in

Case 2:19-cv-21616 Document 1 Filed 12/19/19 Page 1 of 17 PageID: 1 



amounts between 12~%and 4%per month (or 15%and 48%annually) by means of so-called

"promissory notes.'' Espinal and Cash Flow Partners advertised on Spanish-language television,

radio, and the Internet, offering individuals with savings an opportunity to multiply their money

five to ten times faster than at a bank and inviting them to call or attend an in-person conference

for additional information.

2. In reality, Cash Flow Partners' purported real estate "fund," Cash Flow Capital

Group LLC ("Cash Flow Capital"), owned only two small properties in New Jersey, neither of

which were ever sold. Instead of receiving returns from real estate investing, investors received

monthly "returns" that were paid from new investor monies. Additionally, investor funds were

used to bankroll the personal living expenses of Espinal, his family, and a Cash Flow Partners'

employee ("Employee A"), as well as to sustain a separate fraudulent bank loan scheme run by

Defendants and others.

VIOLATIONS

By virtue of the conduct alleged herein, each of the Defendants, directly or

indirectly, singly or in concert, have engaged and are engaging in acts, practices, schemes and

courses of business that constitute violations of Sections 5(a), 5(c), and 17(a) of the Securities

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

Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §78j(b)], and Rule lOb-5

thereunder [17 C.F.R. X240.1 Ob-5]. In addition, Espinal is liable as a control person under

Section 20(a) of the Exchange Act [15 U.S.C. §78(a)~ for Cash Flow Partners' violations of

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

§240.1 Ob-5].

4. Unless the Defendants are permanently restrained and enjoined, they will again

Case 2:19-cv-21616 Document 1 Filed 12/19/19 Page 2 of 17 PageID: 2 



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

practices, transactions, and courses of business of similar in type and object. Defendants should

also be ordered to disgorge any ill-gotten gains or benefits derived as a result of their violations,

whether realized, unrealized or received, and prejudgment interest thereon, and ordered to pay

appropriate civil penalties.

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT

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

Section 20(b) of the Securities Act [15 U.S.C. §77t(b)] and Section 21(d)(1) of the Exchange Act

[15 U.S.C. §78u(d)(1)], and seeks to enjoin the Defendants from engaging in the acts, practices

and courses of business alleged herein.

6. The Commission seeks a final judgment permanently enjoining the Defendants

from committing violations of the securities law provisions that Defendants violated as alleged in

this Complaint, ordering the Defendants to disgorge their ill-gotten gains and pay prejudgment

interest thereon and to pay civil money penalties pursuant to Section 20(d) of the Securities Act

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

JURISDICTION AND VENUE

7. This Court has jurisdiction over this action pursuant to Section 20(b), 20(d), and

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

Exchange Act [15 U.S.C. §§78u(e) and 78aa]. Defendants, directly or indirectly, have made us

of the means or instruments of transportation or communication in, and the means or

instrumentalities of, interstate commerce, or of the mails.

8. Venue lies in this District pursuant to Section 22(a) of the Securities Act

[15U.S.C. §77v(a)] and Section 27 of the Exchange Act [15 U.S.C. §7$aa]. Certain of the events

Case 2:19-cv-21616 Document 1 Filed 12/19/19 Page 3 of 17 PageID: 3 



giving rise to the Commission's claims occurred in the District of New Jersey, such as: (1) Cash

Flow Partners maintained its principal business office in this District; (2) Espinal and Cash Flow

Partners solicited clients in this District; and (3) Espinal is a resident of this District.

DEFENDANTS

9. Espinal, age 44, resides in Wayne, New Jersey. Espinal is the principal and

founder of Cash Flow Partners.

10. Cash Flow Partners is a New Jersey limited liability company formed in 2016. Its

principal place of business in Saddle Brook, New Jersey. During the Relevant Period, Cash

Flow Partners had satellite offices in New York, New York; Brorix, New York; Newburgh, New

York; Miami, Florida; Dallas, Texas; and Fairfax, Virginia. During the Relevant Period, Cash

Flow Partners purported to offer investment opportunities yielding guaranteed 15% to 48%

annual returns based on the purchase, remodel, and sale of real estate properties. Cash Flow

Partners also purported to provide credit repair and assistance with securing bank loans.

RELEVANT ENTITY

11. Cash Flow Capital is the purported real estate investment fund Espinal marketed

as being "licensed'' by the Commission. In reality, Cash Flow Capital was never registered with

the Commission and does not appear to be incorporated as a legal entity.

FACTS

The Defendants Recruit Investors

12. Espinal and Cash Flow Partners induced individuals to invest in the company's

purported investment program through a variety of methods.

13. First, Defendants ran a marketing campaign that featured Espinal and a former

telenovela actor as a spokesperson on Spanish language television channels, radio and the

!~

Case 2:19-cv-21616 Document 1 Filed 12/19/19 Page 4 of 17 PageID: 4 



 

Internet.

14. Second, Defendants created a YouTube page called "Cash Flow TV" which

posted over one hundred videos touting Cash Flow Partners' loan services and investment

opportunity. The videos encouraged prospective investors to call Cash Flow Partners or to attend

live presentations for further information.

15. Third, Espinal met with potential investors at Cash Flow Partners offices and at

conferences where Defendants made live presentations about their investment program.

16. Fourth, Defendants solicited individuals who obtained loans through a separate

bank fraud scheme to invest the proceeds of their loans with Cash Flow Partners.l

17. Defendants made no effort to limit the offering to accredited or sophisticated

investors.

Defendants Sold Investors Promissory Notes

18. Cash Flow Partners issued "promissory notes" to investors guaranteeing varying

monthly rates of returns between 1.25% and 4%.

19. Earlier investors in the Relevant Period were offered higher rates of return.

20. In addition, Defendants promised investors higher guaranteed returns if they

invested more money. For example, Investor A was initially guaranteed a monthly return of

1.25% on his $30,000 investment. When Investor A agreed to increase his total investment to

$85,000, Cash Flow Partners increased the investor's monthly guaranteed percentage to 2%.

21. Once an investor agreed to the terms, the investor signed a promissory note that

stated the amount he or she had invested and the monthly interest payment he or she would

1 Defendants' related bank fraud scheme is not the subject of this civil Complaint by the

Commission.

Case 2:19-cv-21616 Document 1 Filed 12/19/19 Page 5 of 17 PageID: 5 



receive. The promissory note also stated that the investor would receive his or her original

investment back at the later of either one year from the date of the promissory note or 60 days

after written notice demanding payment.

22. Espinal or another representative of Cash Flow Partners counter-signed each of

the promissory notes.

The Defendants Made Misrepresentations to Investors

23. In the course of soliciting investors, Espinal, and under his direction, sales agents

of Cash Flow Partners made several material misrepresentations. All of these representations

were false. First, they told investors that their investments would be pooled with other investor

funds to acquire residential real estate properties, remodel them, and sell them at a higher price.

However, instead of being pooled to purchase and remodel real estate, investor funds were used

to pay earlier investors their monthly "returns," to bankroll the personal living expenses of

Espinal, his family, and Employee A, and to sustain the related fraudulent bank loan scheme

referred to in Paragraph 16.

24. Second, Defendants guaranteed payment of the monthly returns, which they said

would be derived from profits earned on flipping Cash Flow Partners' portfolio of houses. In

reality, no profits from flipping houses from which monthly returns were paid because no houses

were sold.

25. Third, Espinal marketed Cash Flow Partners' "real estate fund" Cash Flow

Capital, as being "licensed by the SEC (Securities and Exchange Commission).'' Neither Cash

Flow Partners, nor Cash Flow Capital, were "licensed" by the Commission.

26. Fourth, Espinal stated that he had more than 25 years of experience in the

investment market. Prior to starting Cash Flow Partners in 2016, Espinal had worked in a real

C~

Case 2:19-cv-21616 Document 1 Filed 12/19/19 Page 6 of 17 PageID: 6 



 

estate company as a realtor brokering rental properties, not as a professional investor or in the

securities industry.

27. Fifth, Cash Flow Partners' website listed a portfolio of eight residential

properties, one of which Cash Flow Partners purported to have sold. However, of the eight

properties listed on its website, Cash Flow Partners had only purchased two of the properties.

Collectively, only approximately $355,000 was spent to purchase the houses. Moreover, the

property that was listed as "sold" had not, in fact, been sold but was being used as a residence by

Employee A.

Examples of Es~inal's Fraudulent Scheme

Investor A

28. Investor A invested a total of $85,000 with Cash Flow Partners beginning in or

around September 2018.

29. Investor A visited Cash Flow Partners' offices and personally spoke with Espinal

and an employee of Cash Flow Partners.

30. Espinal and the employee represented to Investor A that Cash Flow Partners

invested in real estate by buying houses wholesale and then selling them.

~1. Investor A initially invested $35,000, which purportedly entitled him to a 1.25%

monthly return. Investor A invested another $50,000 over the next six months. When Investor

A's investment reached $85,000, his monthly return for all of his investment. increased to 2%.

32. In May 2019, Investor A failed to receive his monthly payment from Cash Flow

Partners. He requested that his funds be returned to him. Since his request, he has received

neither his monthly payments, nor a return of his principal.

7

Case 2:19-cv-21616 Document 1 Filed 12/19/19 Page 7 of 17 PageID: 7 



 

Investor B

33. In or around August 2018, Investor B invested her life savings of $50,000 with

Cash Flow Partners.

34. Investor B first learned about Cash Flow Partners from television advertisements.

35. Investor B contacted Cash Flow Partners and was invited to a conference by the

company.

36. At the conference, Espinal represented to potential investors that funds invested

would be used to buy, repair, and sell homes that were in foreclosure.

37. Defendants also presented individuals at the conference who identified

themselves as existing, satisfied investors.

38. At the conference, Espinal personally reassured Investor B that her money would

be "safe."

39. Investor B was guaranteed a monthly return of 2%.

40. Investor B received five months of "returns" on her $50,000 investment. Investor

B became concerned about her investment when she requested documents from Cash Flow to

prepare her tax return and was not provided with any. On or around March 22, 2019, Investor B

requested her money back. A Cash Flow Partners employee told Investor B that she would get

her initial investment back in 60 days. Cash Flow Partners then stopped making payments to

Investor A and did not return her $50,000.

Investor C

41. Investor C invested $200,000 with Cash Flow Partners in or around January 2019.

42. Investor C learned about Cash Flow Partners through its advertising on Spanish

language television.

Case 2:19-cv-21616 Document 1 Filed 12/19/19 Page 8 of 17 PageID: 8 



 

 

 

 

43. Investor C went to Cash Flow Partners' offices multiple time before investing,

and personally met with Espinal.

44. Espinal represented to Investor C that Cash Flow Partners bought and sold

properties.

45. Investor C was purportedly entitled to a 1.67% monthly return. Defendants

ceased paying Investor C his monthly payment in or around Apri12019.

Defendants Misappropriated Investor Funds

46. The money from investors and from the fraudulent loans was deposited and

connmingled in accounts in the name of Cash Flow Partners, and then transferred to and from

accounts in the names of other entities related to Cash Flow Partners, which were controlled by

Espinal or other Cash Flow Partners employees.

47. Espinal used investor funds to pay his personal expenses and the expenses of

Employee A, to pay purported monthly investment returns to earlier investors, and to make

payments on loans from the related fraudulent loan scheme to keep the loan scheme going

referenced in Paragraph 16.

48. Between January 2016 and June 2019, Defendants misappropriated over $1.4

million dollars out of Cash Flow Partners, including for the following expenses:

• approximately $125,000 for car payments, including payments to

Mercedes and BMW;

• approximately $312,000 for travel, including a cruise and a trip to

Brussels for Espinal and Employee A;

• approximately $1 million dollars withdrawn in cash;

• at least $10,000 on tuition payments to a university;

Case 2:19-cv-21616 Document 1 Filed 12/19/19 Page 9 of 17 PageID: 9 



• several thousands of dollars spent on spas and retail clothing stores.

49. Investor funds were also spent on maintaining the Cash Flow Partners' daily

operations, including paying employee salaries and overhead expenses.

50. Although investors initially received their monthly "interest" payments, in or

around the first quarter of 2019, Cash Flow Partners began defaulting on the promissory notes.

51. When investors called or physically went to Cash Flow Partners' offices to

inquire about the missing payments and/or to request return of their initial investment, Espinal or

other Cash Flow Partners employees falsely reassured the investors that their monies were

forthcoming.

52. From at least July 2016 until September 2019, Defendants defrauded over 90

investors of at least $5 million by promising a guaranteed return on their investment that would

be generated by pooling investor funds to purchase, remodel, and sell residential real estate.

FIRST CLAIM FOR RELIEF
Violations of Section 5(a) and 5(c) of the Securities Act

53. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs L through 52 of this Complaint.

54. The promissory notes are securities.

55. By engaging in the acts and conduct alleged above, the Defendants, directly or

indirectly, singly or in concert, with respect to a security for which no registration statement was

filed or in effect, and in the absence of any applicable exemption from registration: (a) carried or

caused to be carried through the mails or in interstate commerce, by means or instruments of

transportation, such security for the purpose of sale or delivery after sale; and (b) made use of a

means or instrument of transportation or communication in interstate commerce or of the mails

to offer to sell such security through the use or medium of a prospectus or otherwise.

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~6. By reason of the foregoing, the Defendants, directly or indirectly, singly or in

concert, have violated and, unless restrained and enjoined, will again violate Section 5(a) and (c)

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

SECOND CLAIM FOR RELIEF

Violations of Section 17(a) of the Securities Act

57. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 52 of this Complaint.

58. The promissory notes are securities.

59. By engaging in the acts and conduct allebed above, the Defendants, directly or

indirectly, knowingly, recklessly, or negligently, singly or in concert, in the offer or sale of

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

commerce or by use of the mails: (a) employed devices, schemes, or artifices to defraud; (b)

obtained money or property by means of untrue statements of material fact or by omitting to state

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

which they were made, not misleading; and (c) engaged in transactions, practices, or courses of

business which operated or would operate as a fraud or deceit upon purchasers of securities.

60. By reason of the foregoing, the Defendants, directly or indirectly, singly or in

concert, have violated and, unless restrained and enjoined, will again violate Section 1'7(a) of the

Securities Act [15 U.S.C. §77q(a)].

THIRD CLAIM FOR RELIEF

Violations of Section 10(b) of the Exchange Act and Rule lOb-5

61. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 52 of this Complaint.

62. The promissory notes are securities.

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63. By engaging in the acts and conduct alleged above, the Defendants, directly or

indirectly, knowingly or recklessly, singly or in concert, in connection with the purchase or sale

of securities, by the use of the means or instrumentality of interstate commerce, or of the mails,

or of the facilitiy of a national securities exchange: (a) employed devices, schemes, or artifices to

defraud; (b) made untrue statements of material fact, or omitted to state a material fact necessary

in order to make the statement made, in light of the circumstances under which it was made, not

misleading; and (c) engaged in transactions, practices, or courses of business which operated or

would operate as a fraud or deceit upon any person in connection with the purchase or sale of

any security.

64. By reason of the foregoing, the Defendants, directly or indirectly, singly or in

concert, have violated and, unless restrained and enjoined, will again violate Section 10(b) of the

Exchange Act [15 U.S.C. §78j(b)] and Rule lOb-5 thereunder [17 C.F.R. §240.1Ob-5].

FOURTH CLAIM FOR RELIEF

Control Person Liability for Cash Flow Partners' Violation of Section 10(b)

of the Exchange Act and Rule lOb-5

65. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 52 of this Complaint.

66. The promissory notes are securities.

67. Cash Flow Partners, directly or indirectly, knowingly or recklessly, singly or in

concert, in the purchase or sale of securities by the use of the means or instrumentality of

interstate commerce, or of the mails, or of the facility of a national securities exchange: (a)

employed devices, schemes, or artifices to defraud; (b) made untrue statements of material fact,

or omitted to state a material fact necessary in order to make the statement, made, in light of the

circumstances under which it was made, not misleading; and (c) engaged in transactions,

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practices, or courses of business which operated or would operate as a fraud or deceit upon any

person in connection with the purchase or sale of a security.

68. By reason of the foregoing, Cash Flow Partners, directly or indirectly, singly or in

concert, has violated and, unless restrained and enjoined, will again violate Section 10{b) of the

Exchange Act [15 U.S.C. §78j(b)] and Rule lOb-5 thereunder [17 C.F.R. §240.1Ob-5].

69. At all times relevant hereto, Espinal was a controlling person of Cash Flow

Partners for the purposes of Section 20(a) of the Exchange Act [15 U.S.C. §78t(a)].

70. Espinal knowingly or recklessly engaged in fraudulent conduct that resulted in

Cash Flow Partners' violations of Section 10(b) of the Exchange Act [15 U.S.C. ~78j(b)] and

Rule lOb-5 thereunder [17 C.F.R. §240.1Ob-5].

71. By reason of the foregoing, Espinal is liable as a controlling person pursuant to

Section 20(a) of the Exchange Act [15 U.S.C. §78t(a)] for Cash Flow Partners' violations of

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

X240. l Ob-5].

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court grant the following

relief:

I.

A Final Judgment finding that the Defendants violated the securities laws and rules

promulgated thereunder as alleged against them herein;

II.

A Final Judgment permanently restraining and enjoining the Defendants, and their

agents, servants, employees and attorneys and all persons in active concert or participation with

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them, who receive actual notice of the injunction by personal service or otherwise, and each of

them, from future violations of Securities Act Sections 5(a), 5(c), and 17(a) [15 U.S.C. §§77e(a),

77e(c), and 77q(a)], Exchange Act Section 10(b) [15 U.S.C. §78j(b)], and Rule lOb-5 [17 C.F.R.

§240.1Ob-5] thereunder;

III.

A Final. Judgment directing the Defendants to disgorge their ill-gotten gains, plus pre-

judgment interest;

IV.

A Final Judgment imposing civil money penalties upon the Defendants pursuant to

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

[15 U.S.C. ~,78u(d)(3)]; and

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1~

Such other and further relief the Court deems just and proper.

JURY DEMAND

Plaintiff demands that this case be tried by a jury.

Dated: New York, New York
December t ~ , 2019

By:
Marc P. Berger`
Lara S. Mehraban
Judith Weinstock
Christopher J. Dunnigan*
Kim Han*
Brenda Wai Ming Chang*
Attorneys for Plaintiff
U.S. Securities and Exchange Commission
New York Regional Office
200 Vesey Street, Suite 400
New York, NY 10281-1022
{212) 336-0061 (Dunnigan)
Email: dunni~anci(c~r~,sec.gov
* Not admitted in New Jersey

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LOCAL CIVIL RULE 11.2 CERTIFICATION

Pursuant to Local Civil Rule 11.2, I certify that the matter in controversy alleged in the

foregoing Complaint is the subject of a criminal complaint pending in the United States District

Court for the District of New Jersey captioned United States v. Espinal, 19-cr.7549. The matter

here in controversy is not the subject of any other action pending in any court, or of any pending

arbitration or administrative proceeding, to my knowledge.

By:
C istopher J. Dunnigan
Attorney for Plaintiff
U.S. Securities and Exchange Commission
New York. Regional Office
200 Vesey Street, Rm 400
New York, NY 10281-1022
(212) 336-0061

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DESIGNATION OF AGENT FOR SERVICE

Pursuant to Local Civil Rule 101.10, because the Securities and Exchange Commission

(the "Commission") does not have an office in this district, the undersigned designates the

United States Attorney for the District of New Jersey to receive service of all notices or papers in

the above captioned action at the following address: United States Attorney's Office, Civil

Division, 970 Broad Street, Ste. 700, Newark, New Jersey 07102, shall constitute service upon

the Commission for purposes of this action.

~: ~~ ~~~.!
Christopher J. Dunnigan
Attorney for Plaintiff
U.S. Securities and Exchange Commission
New York Regional Office
200 Vesey Street, Rm 400
New York, NY 102$1-1022
(212) 336-0061

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