SEC v. Justin Wallace Herman; Anthony Michael Baker; Ian Horn; and Island Capital Inc, No. 7:22-cv-00027, Eastern District of Kentucky (Apr. 12, 2022) — Complaint

1 
 
CASEY R. FRONK (Illinois Bar No. 6296535) 
[email protected]
 
TRACY S. COMBS (Cal. Bar No. 298664) 
[email protected]
  
Appearing pursuant to LR 83.2(b) 
Counsel for Plaintiff 
Securities and Exchange Commission 
351 South West Temple, Suite 6.100 
Salt Lake City, UT 84101-1950 
Tel.: (801) 524-5796 
Fax: (801) 524-3558 
 
 
UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF KENTUCKY 
SOUTHERN DIVISION - PIKEVILLE 
 
 
 
 
SECURITIES AND EXCHANGE 
COMMISSION, 
 
 Plaintiff, 
 vs. 
 
JUSTIN WALLACE HERMAN, an 
individual; ANTHONY MICHAEL BAKER, 
an individual; IAN HORN, an individual, and 
ISLAND CAPITAL INC, a corporation; 
 
                         Defendant. 
 
 
Case No.: 
 
Judge:  
 
 
 
 
 
 
 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges as follows:  
SUMMARY OF THE ACTION 
1. From at least April 2017 through at least June 2017, Justin Wallace Herman, 
Anthony Michael Baker, Ian Horn, and Island Capital Inc (“Island Capital”) (together herein, 
“Defendants”) were involved in a scheme to enable Herman and Island Capital to obtain 
unrestricted shares of a shell company, NxGen Brands, Inc. f/k/a Pyramidion Technology Group, 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 1 of 16 - Page ID#: 1

2 
 
Inc. (“PYTG”), inflate the share price of PYTG, and dump thousands of shares of PYTG into the 
market. 
2. The scheme involved four layers of deception. 
3. First, Baker took steps to conceal PYTG’s status as a shell company to create the 
appearance that PYTG had actual business. 
4. Second, Horn provided PYTG’s transfer agent with a Rule 144 opinion letter that 
falsely stated that PYTG was not a shell company, thus enabling Herman and Island Capital to 
rely on the safe harbor of Rule 144 of the Securities Act of 1933 (“Securities Act”) to obtain 
unrestricted shares of PYTG. 
5. Third, Herman and Island Capital engaged in manipulative trading to increase 
PYTG’s share price. 
6. Fourth, Herman employed investor-solicitation call centers and a complicit 
market maker to sell off his and Island Capital’s shares of PYTG to investor victims through 
coordinated trades. 
7. As a result of this conduct, Herman and Island Capital profited at least 
$810,830.78 and $353,855.37, respectively and Baker spent approximately $106,040.21 of 
Island Capital’s proceeds on personal expenses. 
8. By engaging in this conduct, as further described herein, Defendants violated and, 
unless restrained and enjoined by this Court, may continue to violate Sections 17(a)(1) and (3) of 
the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] (as to Herman, Baker, and Island Capital); 
Sections 17(a)(2) and (3) of the Securities Act  [15 U.S.C. §§ 77q(a)(2) and (3)] (as to Horn); 
Section 9(a)(2) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78i(a)(2)] 
(as to Herman and Island Capital); Sections 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] (as 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 2 of 16 - Page ID#: 2

3 
 
to Herman, Baker, and Island Capital); and Exchange Act Rule 10b–5(a) and (c) [17 C.F.R. § 
240.10b–5(a) and (c)] (as to Herman, Baker, and Island Capital). 
JURISDICTION AND VENUE 
9. The Commission brings this action pursuant to Sections 20(b) and 20(d) of the 
Securities  Act [15 U.S.C. § 77t(b) and (g)] and Sections 21(d) and (e) of the Exchange Act [15 
U.S.C. § 78u(d) and (e)] to enjoin such acts, practices, and courses of business, and to obtain 
disgorgement, prejudgment interest, civil money penalties, and such other and further relief as 
this Court may deem just and appropriate. 
10. Defendants were involved in the offer and sale of the common stock of PYTG, 
which is  a “security” as that term is defined under Section 2(a)(1) of the Securities Act [15 
U.S.C. § 77b(a)(1)] and Section 3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)].  
11. Defendants, directly or indirectly, made use of the mails or the means or 
instrumentalities of interstate commerce in connection with the conduct alleged in this 
Complaint. 
12. This Court has subject matter jurisdiction over this action pursuant to Section 22 
of the Securities Act [15 U.S.C. § 77v], Sections 21(d) and 27 of the Exchange Act [15 U.S.C. 
§§ 78u(d) and 78aa], and 28 U.S.C. § 1331. 
13. Venue in this District is proper because Defendants are found, inhabit, and/or 
transacted business in the Eastern District of Kentucky and because one or more acts or 
transactions constituting the violations occurred in the Eastern District of Kentucky. 
DEFENDANT 
14. Justin Wallace Herman, age 51, is a resident of Canonsburg, Pennsylvania. At 
the time of the alleged conduct, Herman was vice president of Island Capital. During its 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 3 of 16 - Page ID#: 3

4 
 
investigation, the Commission sought testimony from Herman, but instead of sitting for 
testimony, Herman provided a declaration in which he asserted his Fifth Amendment right 
against self-incrimination. 
15. Anthony Michael Baker, age 54, is upon information and belief a resident of 
Jenkins, Kentucky. Baker is the president and CEO of Island Capital.  
16. Ian A. Horn, age 67, is a resident of Plant City, Florida. Horn is an attorney 
licensed to practice in Florida. Horn provided opinion letters for issuance of shares of PYTG to 
Island Capital and to Herman. 
17. Island Capital Inc. is a Tennessee entity incorporated on September 15, 2014 
with its principal place of business in Pikeville, Kentucky. Baker is the president of Island 
Capital and, during the relevant period, Herman was its vice president. Baker and Herman had 
trading authority over Island Capital’s brokerage accounts, which were used to deposit and sell 
shares of PYTG. 
FACTS 
Defendants’ Acquisition and Deposit of PYTG Shares 
18. Beginning in at least 2013, PYTG—a Nevada corporation with its principal place 
of business in Davie, Florida, whose common stock is quoted on OTC Link, LLC, which is 
owned by OTC markets Group Inc. and is a national Alternative Trading System and an 
electronic inter-dealer quotation system that displays quotes from broker-dealers for many over-
the-counter (“OTC”) securities—was engaged in the business of selling an alternative energy 
storage system under the management of then CEO (referred to herein by his initials, “D.F.”).  
19. On June 2, 2015, PYTG issued D.F. a promissory note for $21,000 in exchange 
for D.F.’s loans to the company. 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 4 of 16 - Page ID#: 4

5 
 
20. A year later, D.F. notified PYTG’s transfer agent that the company had no capital 
or assets and had found no sales opportunities; therefore, he was dissolving the company, 
discontinuing OTC Market listing services, and cancelling the transfer agent’s services. 
21. The transfer agent offered to locate a buyer for PYTG, and D.F. accepted the 
offer. 
22. In or around November 2016, the transfer agent located a buyer, who purchased 
D.F.’s controlling block of PYTG’s shares and became the new CEO. 
23. In or around February 2017, D.F assigned his promissory note to an apparent 
third-party buyer for $5,000. 
24. On April 10, 2017, that buyer assigned a portion of the PYTG note to Island 
Capital for $5,000, which in turn assigned a portion of the note to Herman on April 13, 2017 for 
$5,000. 
25. On April 25, 2017, Island Capital converted $374 of the note into 374,000 shares 
of PYTG common stock, and Herman converted $374 into 371,000 shares of PYTG common 
stock (collectively, the “Converted Shares”). 
26. At the time PYTG changed control, it had been delinquent in its disclosures with 
OTC Markets. In or around March 2017, however, PYTG published a series of quarterly and 
annual reports to bring its financial disclosures up to date. 
27. In its annual disclosure for the fiscal year ended December 31, 2016, PYTG 
reported no assets, no revenue, and described that it was “evaluating multiple technologies for 
commercialization and market introduction” but “[did] not have any current contracts or 
technology licenses.” 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 5 of 16 - Page ID#: 5

6 
 
28. To falsely create the appearance that PYTG—contrary to its prior annual 
disclosure—had assets and business opportunities, Baker facilitated PYTG’s sham acquisition of 
two entities: Studebaker Vending Company and Studebaker Distribution, Inc. (collectively, the 
“Studebaker Entities”). 
29. Baker retained a business associate, P.T., to create the Studebaker Entities.   
30. As P.T. acknowledged in an April 6, 2018 email discussing the Studebaker 
Entities (in which he admitted that “Baker had me set up the Corps. . . . the Corps are just private 
shells, nothing in them”), the Studebaker entities were not actual business entities but shell 
corporations with no assets.   
31. On April 25, 2017, PYTG published supplemental information on OTC Markets 
announcing an asset purchase agreement, pursuant to which it had purchased 55% of the 
Studebaker Entities for 50,000 shares and $2.2 million. 
32. The asset purchase agreement stated that PYTG was purchasing its interest in the 
Studebaker entities from J.T. of Ascamp, Kentucky, who is Baker’s nephew.  Nonetheless, and 
as J.T. himself acknowledged in a subsequent interview during the Commission’s investigation, 
J.T. had, at that time, never even heard of the Studebaker Entities or PYTG, never knowingly 
entered into any agreement with PYTG, and was never compensated in any way by PYTG for 
any “purchase” of an interest in the Studebaker Entities. 
33. On May 10, 2017, Horn signed Rule 144 opinion letters for Island Capital and 
Herman.  
34. A Rule 144 opinion letter is a letter that an attorney provides to an issuer’s 
transfer agent to opine that a company and its shareholder satisfies the conditions of Rule 144 of 
the Securities Act. Rule 144 is a safe harbor provision, which, if met, enables a shareholder to 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 6 of 16 - Page ID#: 6

7 
 
rely on the exemption from registration found in Section 4(a)(1) of the Securities Act. If an 
offering of a security qualifies for the Section 4(a)(1) exemption, then the shareholder making 
that offering can do so without registering the offering with the Commission (i.e., the 
shareholder has “free-trading shares”). 
35. Horn’s May 10, 2017 opinion letters stated that, “[b]ased on a review of all PYTG 
filings on the OTC Markets website . . . PYTG has never reported as a shell company in its past 
filings.” While the letters acknowledged that Rule 144 is unavailable to shell companies, the 
letters ultimately concluded that the Converted Shares “meet the criteria under Rule 144, and that 
all of the shares listed above may be issued as unrestricted, free trading stock.” 
36. On May 11, 2017, Horn sent the opinion letters to PYTG’s transfer agent, and the 
transfer agent thereby issued free-trading shares of PYTG to Herman and Island Capital. 
37. Herman paid Horn $1,000 for the opinion letters. 
38. On May 22, 2017, Herman deposited his 371,000 shares of PYTG into a trust 
account in his name at Huntington National Bank (the “Huntington Account”) 
39. In or around May 2017, Baker opened a brokerage account in the name of Island 
Capital at a Richmond, Kentucky branch of Investment Professionals Inc. (the “IPI Brokerage 
Account”). Baker was the signor on the IPI Brokerage Account and had trading authority. 
40. Baker also gave Herman trading authority over the IPI Brokerage Account. 
41. On May 22, 2017, Island Capital deposited its 374,000 shares of PYTG into its 
IPI account. 
42. Although both Baker and Herman had trading authority over the IPI Brokerage 
account, upon information and belief, it was Baker who placed all trades of PYTG out of the IPI 
Brokerage Account. 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 7 of 16 - Page ID#: 7

8 
 
43. After selling 45,982 of its Converted Shares between May 23, 2017 and June 6, 
2017, Island Capital transferred its remaining 328,018 Converted Shares to Herman’s 
Huntington Account on July 20, 2017. 
Defendants’ Manipulative Trading of PYTG 
44. After successfully receiving unrestricted shares of PYTG, Herman, with the 
assistance of Baker, began a campaign to liquidate his shares and Island Capital’s shares. 
45. To increase the share price at which he could sell off the Converted Shares, 
Herman engaged in manipulative trading activities in PYTG. 
46. Specifically, beginning in April 2017, before Herman and Island Capital began 
selling off their Converted Shares of PYTG, Herman began purchasing shares of PYTG—which 
had no trading volume for several months prior—in open market transactions through multiple 
brokerage accounts that he opened in his name, in the name of Island Capital, and in the name of 
another entity he controls, Intrepid Capital Holdings Corp. (the “Herman Accounts”). 
47. Throughout April and May 2017, Herman engaged in heavy trading in PYTG 
through the Herman Accounts, both buying and selling PYTG numerous times a day to create the 
appearance of market activity. 
48. Herman continued engaging in heavy trading in PYTG through the Herman 
Accounts throughout May 2017, when Herman and Island Capital (acting through Baker), began 
selling off the Converted Shares at the inflated prices. 
49. The activity in the Herman Accounts on May 25, 2017 illustrates Herman’s 
trading pattern during this timeframe. 
50. On May 25, 2017, two of the Herman Accounts engaged in heavy trading in 
PYTG. Those accounts placed market-order buys, mostly in increments of 200 or fewer shares, 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 8 of 16 - Page ID#: 8

9 
 
to periodically prop up the share price of PYTG so that Island Capital could periodically sell its 
Converted Shares of PYTG at the propped up, manipulated prices. 
51. Over the course of the day, the Herman Accounts entered 54 total trades (13 sells 
and 41 buys), resulting in a loss of $5,734.70. 
52. On the same day, Island Capital entered eight limit-order sales of the Converted 
Shares, resulting in profits of $44,891.16. 
53. Herman’s trading on that day created the appearance of activity in the market for 
PYTG and had the effect of increasing the share price from $6.76 at market opening to $7.30 at 
close. 
54. On that day, the Herman Accounts accounted for 49% of the total trading volume 
in PYTG. 
55. The Herman Accounts’ trading between May 22, 2017 and May 30, 2017 further 
demonstrates Herman’s manipulative trading. 
56. During that timeframe, the Herman Accounts accounted for between 49% and 
74% of the daily trading volume, and PYTG’s share price progressively increased from an 
opening price of $5.40 on May 22, 2017, to a closing price of $8.37 on May 30, 2017.  
57. Herman’s manipulative trading had a clear impact on the market for PYTG. For 
several months prior to April 2017, PYTG had zero trading volume. 
58. From April 10, 2017, when Herman began purchasing shares of PYTG, until 
August 24, 2017, when Herman liquidated the last of the Converted Shares, PYTG’s trading 
volume averaged 24,407 per day, peaking at 169,354 shares on August 11, 2017. 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 9 of 16 - Page ID#: 9

10 
 
59. Similarly, PYTG’s share price went from $0.60 on April 10, 2017 to a high of 
$8.83 on June 1, 2017, at which point Herman began focusing his efforts on selling off the 
Converted Shares. 
Defendants’ Fraudulent Sale of PYTG Shares through Boiler Rooms 
60. Concurrently with his efforts to manipulate the share price of PYTG, Herman 
hired boiler rooms to assist him in selling the Converted Shares. 
61. Specifically, from May to August 2017, Herman paid operators of multiple boiler 
rooms to assist him in selling his PYTG shares by promoting the stock to innocent investors. 
62. The trading initially involved only Herman and the boiler rooms and operated 
through a “matched-trading” scheme, as follows: 
63. Herman paid the boiler rooms to initiate a cold calling campaign to promote and 
sell PYTG. Sales agents, equipped with lead lists and scripts, cold-called prospective investors 
and pitched them on an investment in PYTG. If an investor decided to purchase PYTG shares, 
the boiler room coordinated with Herman to determine a price and amount of shares for the 
trade. The sales agents then instructed the investor to place a buy limit order of PYTG at the 
coordinated price and amount of shares. Simultaneously, Herman placed a sell limit order at the 
same price and amount of shares, thus making it likely the buy and sell orders would “match” 
and that Herman could sell his shares to the solicited investor. 
64. Herman and the boiler rooms operated in this manner for most of May 2017. 
However, Herman’s sales did not always match with the solicited investors’ buys. Instead, 
institutional investors with more sophisticated trading operations would sometimes capture the 
solicited investors’ buy orders before Herman could. During this time, therefore, Herman only 
had marginal success offloading the Converted Shares through his matched trading scheme. 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 10 of 16 - Page ID#: 10

11 
 
65. Beginning in June 2017, Herman began working with a trader, S.L., at the market-
making firm Ascendiant Capital Markets LLC (“Ascendiant”). 
66. The boiler rooms continued to engage in their cold calling campaign, convincing 
investors to purchase PYTG shares. 
67. But now, Ascendiant, through S.L., captured the trades by entering short sales 
throughout the day at market prices. At the end of the day, Ascendiant covered its short sales by 
purchasing shares from Herman. 
68. In total, Herman sold nearly 500,000 shares of PYTG to Ascendiant. 
69. Through this scheme, Herman succeeded in selling the majority of the Converted 
Shares and profited at least $810,830.78, while Island Capital profited at least $353,855.37. 
Baker, meanwhile, spent approximately $106,040.21 of Island Capital’s proceeds on personal 
expenses. 
70. By the end of August, 2017, when Herman, Baker, and Island Capital completed 
their scheme, the price of PYTG had plummeted to $0.22 a share, resulting in significant loss to 
investors who had purchased PYTG for up to $8.83 a share.   
 
FIRST CLAIM FOR RELIEF 
Violations of Section 17(a)(1) and (3) of the Securities Act [15 U.S.C. § 77q(a)(1) and (3)] 
(as to Herman, Baker, and Island Capital) 
 
71. The Commission re-alleges and incorporates by reference each and every 
allegation in paragraphs 1–70, inclusive, as if they were fully set forth herein. 
72. By engaging in the conduct described above, Defendants Herman, Baker, and 
Island Capital, directly or indirectly, individually or in concert with others, in the offer and sale 
of securities, by use of the means and instruments of transportation and communication in 
interstate commerce or by use of the mails has (a) employed devices, schemes, or artifices to 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 11 of 16 - Page ID#: 11

12 
 
defraud; and (b) engaged in transactions, practices, or courses of business which operated or 
would operate as a fraud or deceit.  
73. With respect to violations of Section 17(a)(3) of the Securities Act, Defendants 
Herman, Baker, and Island Capital were at least negligent in their conduct. 
74. With respect to violations of Section 17(a)(1) of the Securities Act, Defendants 
Herman, Baker, and Island Capital engaged in the above-referenced conduct knowingly or with 
severe   recklessness. 
75. By reason of the foregoing, Defendants Herman, Baker, and Island Capital 
violated and, unless enjoined, will continue to violate Sections 17(a)(1) and (3) of the Securities 
Act [15 U.S.C. § 77q(a)(1) and (3)]. 
SECOND CLAIM FOR RELIEF 
Violations of Sections 17(a)(2) and (3) of the Securities Act [15 U.S.C. § 77q(a)(2) and (3)] 
(as to Horn) 
76. The Commission re-alleges and incorporates by reference each and every 
allegation in paragraphs 1–70, inclusive, as if they were fully set forth herein. 
77. By engaging in the conduct described above, Defendant Horn, directly or 
indirectly, individually or in concert with others, in the offer and sale of securities, by use of the 
means and instruments of transportation and communication in interstate commerce or by use of 
the mails has (1) obtained money or property by means of untrue statements of material fact or 
omissions to state material facts necessary in order to make the statements made, in light of the 
circumstances under which they were made, not misleading; and (2) engaged in transactions, 
practices, or courses of business which operated or would operate as a fraud or deceit.  
78. In so doing, Defendant Horn was at least negligent in his conduct. 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 12 of 16 - Page ID#: 12

13 
 
79. By reason of the foregoing, Defendant Horn violated and, unless enjoined, will 
continue to violate Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. § 77q(a)(1) and 
(3)]. 
THIRD CLAIM FOR RELIEF 
Violations of Section 9(a)(2) of the Exchange Act [15 U.S.C. § 78i(a)(2)] 
(as to Herman and Island Capital) 
80. The Commission re-alleges and incorporates by reference each and every 
allegation in paragraphs 1–70, inclusive, as if they were fully set forth herein.  
81. By engaging in the conduct described above, Defendants Herman and Island 
Capital, directly or indirectly, by use of the mails or any means or instrumentality of interstate 
commerce, or any facility of any national securities exchange, or for any member of a 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, any security not so registered, or in 
connection with any security-based swap or  security-based swap agreement with respect to such 
security 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. 
82. Defendants Herman and Island Capital engaged in the above-referenced conduct 
with specific intent. 
83. By reason of the foregoing, Defendants Herman and Island Capital violated and, 
unless enjoined, will continue to violate Section 9(a)(2) of the Exchange Act [15 U.S.C. § 
78i(a)(2)]. 
 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 13 of 16 - Page ID#: 13

14 
 
FOURTH CLAIM FOR RELIEF 
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule 
10b-5(a) and (c) [17 C.F.R. § 240.10b-5(a) and (c)] 
(as to Herman, Baker, and Island Capital) 
 
84. The Commission re-alleges and incorporates by reference each and every 
allegation in paragraphs 1–70, inclusive, as if they were fully set forth herein.  
85. By engaging in the conduct described above, Defendants Herman, Baker, and 
Island Capital, directly or indirectly, individually or in concert with others, in connection with 
the purchase or sale of securities, by use of the means and instrumentalities of interstate 
commerce or by use of the mails has (a) employed devices, schemes, and artifices to defraud; 
and (b) engaged in acts, practices, and course of business which operated as a fraud and deceit 
upon purchasers, prospective purchasers, and other persons. 
86. Defendants Herman, Baker, and Island Capital engaged in the above-referenced 
conduct knowingly or with severe recklessness. 
87. By reason of the foregoing, Defendants Herman, Baker, and Island Capital 
violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act [15 
U.S.C. § 78j(b)] and Exchange Act Rule 10b-5(a) and (c) [17 C.F.R. § 240.10b-5(a) and (c)]. 
PRAYER FOR RELIEF 
WHEREFORE, the Commission respectfully requests that this Court enter a final 
judgment: 
I. 
Permanently restraining and enjoining Defendants Herman, Baker, and Island Capital 
from, directly or indirectly, engaging in conduct in violation of Section 17(a) of the Securities 
Act [15 U.S.C. § 77q(a)], Sections 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and 
Exchange Act Rule 10b–5 [17 C.F.R. § 240.10b–5]; 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 14 of 16 - Page ID#: 14

15 
 
II. 
 Permanently restraining and enjoining Defendant Horn from, directly or indirectly, 
engaging in conduct in violation of Sections 17(a)(2) and (3) of the Securities Act [15 U.S.C. § 
77q(a)(2) and (3)]; 
III. 
 Permanently restraining and enjoining Defendants Herman and Island Capital from, 
directly or indirectly, engaging in conduct in violation of Section 9(a)(2) of the Exchange Act 
[15 U.S.C. § 78i(a)(2)]; 
IV. 
 Permanently restraining and enjoining Defendant Herman from, directly or indirectly, 
including, but not limited to, through any entity owned or controlled by him, participating in the 
issuance, purchase, offer, or sale of any security; provided, however, that such injunction shall 
not prevent him from purchasing or selling securities listed on a national securities exchange for 
his own personal account; 
V. 
 Barring Defendants Herman, Baker, and Island Capital from participating in an offering 
of penny stock; 
VI. 
Ordering Defendants to disgorge all ill-gotten gains or unjust enrichment derived from 
the activities set forth in this Complaint, together with prejudgment interest thereon; 
 VII.  
Ordering Defendants to pay a civil penalty 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)]; 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 15 of 16 - Page ID#: 15

16 
 
VIII. 
Retaining jurisdiction of this action in accordance with the principles of equity and the 
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and 
decrees that may be entered, or to entertain any suitable application or motion for additional 
relief within the jurisdiction of this Court; and, 
IX. 
Granting such other and further relief as this Court may deem just, equitable, or necessary 
in connection with the enforcement of the federal securities laws and for the protection of 
investors. 
Dated:  April 7, 2022.    
     Respectfully submitted, 
 
     SECURITIES AND EXCHANGE COMMISSION 
 
     
      /s/ Casey R. Fronk                    
     Casey R. Fronk 
     Tracy S. Combs 
     Attorneys for Plaintiff 
     Securities and Exchange Commission 
Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 16 of 16 - Page ID#: 16

1 

 

CASEY R. FRONK (Illinois Bar No. 6296535) 
[email protected] 
TRACY S. COMBS (Cal. Bar No. 298664) 
[email protected]  
Appearing pursuant to LR 83.2(b) 
Counsel for Plaintiff 
Securities and Exchange Commission 
351 South West Temple, Suite 6.100 
Salt Lake City, UT 84101-1950 
Tel.: (801) 524-5796 
Fax: (801) 524-3558 
 
 

UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF KENTUCKY 

SOUTHERN DIVISION - PIKEVILLE 
 
 
 

 
SECURITIES AND EXCHANGE 
COMMISSION, 
 
 Plaintiff, 
 vs. 
 
JUSTIN WALLACE HERMAN, an 
individual; ANTHONY MICHAEL BAKER, 
an individual; IAN HORN, an individual, and 
ISLAND CAPITAL INC, a corporation; 
 
                         Defendant. 

 

 
Case No.: 
 
Judge:  
 
 
 
 

 
 
 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges as follows:  

SUMMARY OF THE ACTION 

1. From at least April 2017 through at least June 2017, Justin Wallace Herman, 

Anthony Michael Baker, Ian Horn, and Island Capital Inc (“Island Capital”) (together herein, 

“Defendants”) were involved in a scheme to enable Herman and Island Capital to obtain 

unrestricted shares of a shell company, NxGen Brands, Inc. f/k/a Pyramidion Technology Group, 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 1 of 16 - Page ID#: 1

mailto:[email protected]
mailto:[email protected]


2 

 

Inc. (“PYTG”), inflate the share price of PYTG, and dump thousands of shares of PYTG into the 

market. 

2. The scheme involved four layers of deception. 

3. First, Baker took steps to conceal PYTG’s status as a shell company to create the 

appearance that PYTG had actual business. 

4. Second, Horn provided PYTG’s transfer agent with a Rule 144 opinion letter that 

falsely stated that PYTG was not a shell company, thus enabling Herman and Island Capital to 

rely on the safe harbor of Rule 144 of the Securities Act of 1933 (“Securities Act”) to obtain 

unrestricted shares of PYTG. 

5. Third, Herman and Island Capital engaged in manipulative trading to increase 

PYTG’s share price. 

6. Fourth, Herman employed investor-solicitation call centers and a complicit 

market maker to sell off his and Island Capital’s shares of PYTG to investor victims through 

coordinated trades. 

7. As a result of this conduct, Herman and Island Capital profited at least 

$810,830.78 and $353,855.37, respectively and Baker spent approximately $106,040.21 of 

Island Capital’s proceeds on personal expenses. 

8. By engaging in this conduct, as further described herein, Defendants violated and, 

unless restrained and enjoined by this Court, may continue to violate Sections 17(a)(1) and (3) of 

the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] (as to Herman, Baker, and Island Capital); 

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

Section 9(a)(2) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78i(a)(2)] 

(as to Herman and Island Capital); Sections 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] (as 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 2 of 16 - Page ID#: 2



3 

 

to Herman, Baker, and Island Capital); and Exchange Act Rule 10b–5(a) and (c) [17 C.F.R. § 

240.10b–5(a) and (c)] (as to Herman, Baker, and Island Capital). 

JURISDICTION AND VENUE 

9. The Commission brings this action pursuant to Sections 20(b) and 20(d) of the 

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

U.S.C. § 78u(d) and (e)] to enjoin such acts, practices, and courses of business, and to obtain 

disgorgement, prejudgment interest, civil money penalties, and such other and further relief as 

this Court may deem just and appropriate. 

10. Defendants were involved in the offer and sale of the common stock of PYTG, 

which is a “security” as that term is defined under Section 2(a)(1) of the Securities Act [15 

U.S.C. § 77b(a)(1)] and Section 3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)].  

11. Defendants, directly or indirectly, made use of the mails or the means or 

instrumentalities of interstate commerce in connection with the conduct alleged in this 

Complaint. 

12. This Court has subject matter jurisdiction over this action pursuant to Section 22 

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

§§ 78u(d) and 78aa], and 28 U.S.C. § 1331. 

13. Venue in this District is proper because Defendants are found, inhabit, and/or 

transacted business in the Eastern District of Kentucky and because one or more acts or 

transactions constituting the violations occurred in the Eastern District of Kentucky. 

DEFENDANT 

14. Justin Wallace Herman, age 51, is a resident of Canonsburg, Pennsylvania. At 

the time of the alleged conduct, Herman was vice president of Island Capital. During its 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 3 of 16 - Page ID#: 3



4 

 

investigation, the Commission sought testimony from Herman, but instead of sitting for 

testimony, Herman provided a declaration in which he asserted his Fifth Amendment right 

against self-incrimination. 

15. Anthony Michael Baker, age 54, is upon information and belief a resident of 

Jenkins, Kentucky. Baker is the president and CEO of Island Capital.  

16. Ian A. Horn, age 67, is a resident of Plant City, Florida. Horn is an attorney 

licensed to practice in Florida. Horn provided opinion letters for issuance of shares of PYTG to 

Island Capital and to Herman. 

17. Island Capital Inc. is a Tennessee entity incorporated on September 15, 2014 

with its principal place of business in Pikeville, Kentucky. Baker is the president of Island 

Capital and, during the relevant period, Herman was its vice president. Baker and Herman had 

trading authority over Island Capital’s brokerage accounts, which were used to deposit and sell 

shares of PYTG. 

FACTS 

Defendants’ Acquisition and Deposit of PYTG Shares 

18. Beginning in at least 2013, PYTG—a Nevada corporation with its principal place 

of business in Davie, Florida, whose common stock is quoted on OTC Link, LLC, which is 

owned by OTC markets Group Inc. and is a national Alternative Trading System and an 

electronic inter-dealer quotation system that displays quotes from broker-dealers for many over-

the-counter (“OTC”) securities—was engaged in the business of selling an alternative energy 

storage system under the management of then CEO (referred to herein by his initials, “D.F.”).  

19. On June 2, 2015, PYTG issued D.F. a promissory note for $21,000 in exchange 

for D.F.’s loans to the company. 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 4 of 16 - Page ID#: 4



5 

 

20. A year later, D.F. notified PYTG’s transfer agent that the company had no capital 

or assets and had found no sales opportunities; therefore, he was dissolving the company, 

discontinuing OTC Market listing services, and cancelling the transfer agent’s services. 

21. The transfer agent offered to locate a buyer for PYTG, and D.F. accepted the 

offer. 

22. In or around November 2016, the transfer agent located a buyer, who purchased 

D.F.’s controlling block of PYTG’s shares and became the new CEO. 

23. In or around February 2017, D.F assigned his promissory note to an apparent 

third-party buyer for $5,000. 

24. On April 10, 2017, that buyer assigned a portion of the PYTG note to Island 

Capital for $5,000, which in turn assigned a portion of the note to Herman on April 13, 2017 for 

$5,000. 

25. On April 25, 2017, Island Capital converted $374 of the note into 374,000 shares 

of PYTG common stock, and Herman converted $374 into 371,000 shares of PYTG common 

stock (collectively, the “Converted Shares”). 

26. At the time PYTG changed control, it had been delinquent in its disclosures with 

OTC Markets. In or around March 2017, however, PYTG published a series of quarterly and 

annual reports to bring its financial disclosures up to date. 

27. In its annual disclosure for the fiscal year ended December 31, 2016, PYTG 

reported no assets, no revenue, and described that it was “evaluating multiple technologies for 

commercialization and market introduction” but “[did] not have any current contracts or 

technology licenses.” 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 5 of 16 - Page ID#: 5



6 

 

28. To falsely create the appearance that PYTG—contrary to its prior annual 

disclosure—had assets and business opportunities, Baker facilitated PYTG’s sham acquisition of 

two entities: Studebaker Vending Company and Studebaker Distribution, Inc. (collectively, the 

“Studebaker Entities”). 

29. Baker retained a business associate, P.T., to create the Studebaker Entities.   

30. As P.T. acknowledged in an April 6, 2018 email discussing the Studebaker 

Entities (in which he admitted that “Baker had me set up the Corps. . . . the Corps are just private 

shells, nothing in them”), the Studebaker entities were not actual business entities but shell 

corporations with no assets.   

31. On April 25, 2017, PYTG published supplemental information on OTC Markets 

announcing an asset purchase agreement, pursuant to which it had purchased 55% of the 

Studebaker Entities for 50,000 shares and $2.2 million. 

32. The asset purchase agreement stated that PYTG was purchasing its interest in the 

Studebaker entities from J.T. of Ascamp, Kentucky, who is Baker’s nephew.  Nonetheless, and 

as J.T. himself acknowledged in a subsequent interview during the Commission’s investigation, 

J.T. had, at that time, never even heard of the Studebaker Entities or PYTG, never knowingly 

entered into any agreement with PYTG, and was never compensated in any way by PYTG for 

any “purchase” of an interest in the Studebaker Entities. 

33. On May 10, 2017, Horn signed Rule 144 opinion letters for Island Capital and 

Herman.  

34. A Rule 144 opinion letter is a letter that an attorney provides to an issuer’s 

transfer agent to opine that a company and its shareholder satisfies the conditions of Rule 144 of 

the Securities Act. Rule 144 is a safe harbor provision, which, if met, enables a shareholder to 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 6 of 16 - Page ID#: 6



7 

 

rely on the exemption from registration found in Section 4(a)(1) of the Securities Act. If an 

offering of a security qualifies for the Section 4(a)(1) exemption, then the shareholder making 

that offering can do so without registering the offering with the Commission (i.e., the 

shareholder has “free-trading shares”). 

35. Horn’s May 10, 2017 opinion letters stated that, “[b]ased on a review of all PYTG 

filings on the OTC Markets website . . . PYTG has never reported as a shell company in its past 

filings.” While the letters acknowledged that Rule 144 is unavailable to shell companies, the 

letters ultimately concluded that the Converted Shares “meet the criteria under Rule 144, and that 

all of the shares listed above may be issued as unrestricted, free trading stock.” 

36. On May 11, 2017, Horn sent the opinion letters to PYTG’s transfer agent, and the 

transfer agent thereby issued free-trading shares of PYTG to Herman and Island Capital. 

37. Herman paid Horn $1,000 for the opinion letters. 

38. On May 22, 2017, Herman deposited his 371,000 shares of PYTG into a trust 

account in his name at Huntington National Bank (the “Huntington Account”) 

39. In or around May 2017, Baker opened a brokerage account in the name of Island 

Capital at a Richmond, Kentucky branch of Investment Professionals Inc. (the “IPI Brokerage 

Account”). Baker was the signor on the IPI Brokerage Account and had trading authority. 

40. Baker also gave Herman trading authority over the IPI Brokerage Account. 

41. On May 22, 2017, Island Capital deposited its 374,000 shares of PYTG into its 

IPI account. 

42. Although both Baker and Herman had trading authority over the IPI Brokerage 

account, upon information and belief, it was Baker who placed all trades of PYTG out of the IPI 

Brokerage Account. 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 7 of 16 - Page ID#: 7



8 

 

43. After selling 45,982 of its Converted Shares between May 23, 2017 and June 6, 

2017, Island Capital transferred its remaining 328,018 Converted Shares to Herman’s 

Huntington Account on July 20, 2017. 

Defendants’ Manipulative Trading of PYTG 

44. After successfully receiving unrestricted shares of PYTG, Herman, with the 

assistance of Baker, began a campaign to liquidate his shares and Island Capital’s shares. 

45. To increase the share price at which he could sell off the Converted Shares, 

Herman engaged in manipulative trading activities in PYTG. 

46. Specifically, beginning in April 2017, before Herman and Island Capital began 

selling off their Converted Shares of PYTG, Herman began purchasing shares of PYTG—which 

had no trading volume for several months prior—in open market transactions through multiple 

brokerage accounts that he opened in his name, in the name of Island Capital, and in the name of 

another entity he controls, Intrepid Capital Holdings Corp. (the “Herman Accounts”). 

47. Throughout April and May 2017, Herman engaged in heavy trading in PYTG 

through the Herman Accounts, both buying and selling PYTG numerous times a day to create the 

appearance of market activity. 

48. Herman continued engaging in heavy trading in PYTG through the Herman 

Accounts throughout May 2017, when Herman and Island Capital (acting through Baker), began 

selling off the Converted Shares at the inflated prices. 

49. The activity in the Herman Accounts on May 25, 2017 illustrates Herman’s 

trading pattern during this timeframe. 

50. On May 25, 2017, two of the Herman Accounts engaged in heavy trading in 

PYTG. Those accounts placed market-order buys, mostly in increments of 200 or fewer shares, 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 8 of 16 - Page ID#: 8



9 

 

to periodically prop up the share price of PYTG so that Island Capital could periodically sell its 

Converted Shares of PYTG at the propped up, manipulated prices. 

51. Over the course of the day, the Herman Accounts entered 54 total trades (13 sells 

and 41 buys), resulting in a loss of $5,734.70. 

52. On the same day, Island Capital entered eight limit-order sales of the Converted 

Shares, resulting in profits of $44,891.16. 

53. Herman’s trading on that day created the appearance of activity in the market for 

PYTG and had the effect of increasing the share price from $6.76 at market opening to $7.30 at 

close. 

54. On that day, the Herman Accounts accounted for 49% of the total trading volume 

in PYTG. 

55. The Herman Accounts’ trading between May 22, 2017 and May 30, 2017 further 

demonstrates Herman’s manipulative trading. 

56. During that timeframe, the Herman Accounts accounted for between 49% and 

74% of the daily trading volume, and PYTG’s share price progressively increased from an 

opening price of $5.40 on May 22, 2017, to a closing price of $8.37 on May 30, 2017.  

57. Herman’s manipulative trading had a clear impact on the market for PYTG. For 

several months prior to April 2017, PYTG had zero trading volume. 

58. From April 10, 2017, when Herman began purchasing shares of PYTG, until 

August 24, 2017, when Herman liquidated the last of the Converted Shares, PYTG’s trading 

volume averaged 24,407 per day, peaking at 169,354 shares on August 11, 2017. 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 9 of 16 - Page ID#: 9



10 

 

59. Similarly, PYTG’s share price went from $0.60 on April 10, 2017 to a high of 

$8.83 on June 1, 2017, at which point Herman began focusing his efforts on selling off the 

Converted Shares. 

Defendants’ Fraudulent Sale of PYTG Shares through Boiler Rooms 

60. Concurrently with his efforts to manipulate the share price of PYTG, Herman 

hired boiler rooms to assist him in selling the Converted Shares. 

61. Specifically, from May to August 2017, Herman paid operators of multiple boiler 

rooms to assist him in selling his PYTG shares by promoting the stock to innocent investors. 

62. The trading initially involved only Herman and the boiler rooms and operated 

through a “matched-trading” scheme, as follows: 

63. Herman paid the boiler rooms to initiate a cold calling campaign to promote and 

sell PYTG. Sales agents, equipped with lead lists and scripts, cold-called prospective investors 

and pitched them on an investment in PYTG. If an investor decided to purchase PYTG shares, 

the boiler room coordinated with Herman to determine a price and amount of shares for the 

trade. The sales agents then instructed the investor to place a buy limit order of PYTG at the 

coordinated price and amount of shares. Simultaneously, Herman placed a sell limit order at the 

same price and amount of shares, thus making it likely the buy and sell orders would “match” 

and that Herman could sell his shares to the solicited investor. 

64. Herman and the boiler rooms operated in this manner for most of May 2017. 

However, Herman’s sales did not always match with the solicited investors’ buys. Instead, 

institutional investors with more sophisticated trading operations would sometimes capture the 

solicited investors’ buy orders before Herman could. During this time, therefore, Herman only 

had marginal success offloading the Converted Shares through his matched trading scheme. 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 10 of 16 - Page ID#: 10



11 

 

65. Beginning in June 2017, Herman began working with a trader, S.L., at the market-

making firm Ascendiant Capital Markets LLC (“Ascendiant”). 

66. The boiler rooms continued to engage in their cold calling campaign, convincing 

investors to purchase PYTG shares. 

67. But now, Ascendiant, through S.L., captured the trades by entering short sales 

throughout the day at market prices. At the end of the day, Ascendiant covered its short sales by 

purchasing shares from Herman. 

68. In total, Herman sold nearly 500,000 shares of PYTG to Ascendiant. 

69. Through this scheme, Herman succeeded in selling the majority of the Converted 

Shares and profited at least $810,830.78, while Island Capital profited at least $353,855.37. 

Baker, meanwhile, spent approximately $106,040.21 of Island Capital’s proceeds on personal 

expenses. 

70. By the end of August, 2017, when Herman, Baker, and Island Capital completed 

their scheme, the price of PYTG had plummeted to $0.22 a share, resulting in significant loss to 

investors who had purchased PYTG for up to $8.83 a share.   

 
FIRST CLAIM FOR RELIEF 

Violations of Section 17(a)(1) and (3) of the Securities Act [15 U.S.C. § 77q(a)(1) and (3)] 
(as to Herman, Baker, and Island Capital) 

 
71. The Commission re-alleges and incorporates by reference each and every 

allegation in paragraphs 1–70, inclusive, as if they were fully set forth herein. 

72. By engaging in the conduct described above, Defendants Herman, Baker, and 

Island Capital, directly or indirectly, individually or in concert with others, in the offer and sale 

of securities, by use of the means and instruments of transportation and communication in 

interstate commerce or by use of the mails has (a) employed devices, schemes, or artifices to 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 11 of 16 - Page ID#: 11



12 

 

defraud; and (b) engaged in transactions, practices, or courses of business which operated or 

would operate as a fraud or deceit.  

73. With respect to violations of Section 17(a)(3) of the Securities Act, Defendants 

Herman, Baker, and Island Capital were at least negligent in their conduct. 

74. With respect to violations of Section 17(a)(1) of the Securities Act, Defendants 

Herman, Baker, and Island Capital engaged in the above-referenced conduct knowingly or with 

severe recklessness. 

75. By reason of the foregoing, Defendants Herman, Baker, and Island Capital 

violated and, unless enjoined, will continue to violate Sections 17(a)(1) and (3) of the Securities 

Act [15 U.S.C. § 77q(a)(1) and (3)]. 

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

(as to Horn) 

76. The Commission re-alleges and incorporates by reference each and every 

allegation in paragraphs 1–70, inclusive, as if they were fully set forth herein. 

77. By engaging in the conduct described above, Defendant Horn, directly or 

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

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

the mails has (1) obtained money or property by means of untrue statements of material fact or 

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

circumstances under which they were made, not misleading; and (2) engaged in transactions, 

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

78. In so doing, Defendant Horn was at least negligent in his conduct. 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 12 of 16 - Page ID#: 12



13 

 

79. By reason of the foregoing, Defendant Horn violated and, unless enjoined, will 

continue to violate Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. § 77q(a)(1) and 

(3)]. 

THIRD CLAIM FOR RELIEF 
Violations of Section 9(a)(2) of the Exchange Act [15 U.S.C. § 78i(a)(2)] 

(as to Herman and Island Capital) 

80. The Commission re-alleges and incorporates by reference each and every 

allegation in paragraphs 1–70, inclusive, as if they were fully set forth herein.  

81. By engaging in the conduct described above, Defendants Herman and Island 

Capital, directly or indirectly, by use of the mails or any means or instrumentality of interstate 

commerce, or any facility of any national securities exchange, or for any member of a 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, any security not so registered, or in 

connection with any security-based swap or  security-based swap agreement with respect to such 

security 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. 

82. Defendants Herman and Island Capital engaged in the above-referenced conduct 

with specific intent. 

83. By reason of the foregoing, Defendants Herman and Island Capital violated and, 

unless enjoined, will continue to violate Section 9(a)(2) of the Exchange Act [15 U.S.C. § 

78i(a)(2)]. 

 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 13 of 16 - Page ID#: 13



14 

 

FOURTH CLAIM FOR RELIEF 
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule 

10b-5(a) and (c) [17 C.F.R. § 240.10b-5(a) and (c)] 
(as to Herman, Baker, and Island Capital) 

 
84. The Commission re-alleges and incorporates by reference each and every 

allegation in paragraphs 1–70, inclusive, as if they were fully set forth herein.  

85. By engaging in the conduct described above, Defendants Herman, Baker, and 

Island Capital, directly or indirectly, individually or in concert with others, in connection with 

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

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

and (b) engaged in acts, practices, and course of business which operated as a fraud and deceit 

upon purchasers, prospective purchasers, and other persons. 

86. Defendants Herman, Baker, and Island Capital engaged in the above-referenced 

conduct knowingly or with severe recklessness. 

87. By reason of the foregoing, Defendants Herman, Baker, and Island Capital 

violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act [15 

U.S.C. § 78j(b)] and Exchange Act Rule 10b-5(a) and (c) [17 C.F.R. § 240.10b-5(a) and (c)]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court enter a final 

judgment: 

I. 

Permanently restraining and enjoining Defendants Herman, Baker, and Island Capital 

from, directly or indirectly, engaging in conduct in violation of Section 17(a) of the Securities 

Act [15 U.S.C. § 77q(a)], Sections 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and 

Exchange Act Rule 10b–5 [17 C.F.R. § 240.10b–5]; 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 14 of 16 - Page ID#: 14



15 

 

II. 

 Permanently restraining and enjoining Defendant Horn from, directly or indirectly, 

engaging in conduct in violation of Sections 17(a)(2) and (3) of the Securities Act [15 U.S.C. § 

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

III. 

 Permanently restraining and enjoining Defendants Herman and Island Capital from, 

directly or indirectly, engaging in conduct in violation of Section 9(a)(2) of the Exchange Act 

[15 U.S.C. § 78i(a)(2)]; 

IV. 

 Permanently restraining and enjoining Defendant Herman from, directly or indirectly, 

including, but not limited to, through any entity owned or controlled by him, participating in the 

issuance, purchase, offer, or sale of any security; provided, however, that such injunction shall 

not prevent him from purchasing or selling securities listed on a national securities exchange for 

his own personal account; 

V. 

 Barring Defendants Herman, Baker, and Island Capital from participating in an offering 

of penny stock; 

VI. 

Ordering Defendants to disgorge all ill-gotten gains or unjust enrichment derived from 

the activities set forth in this Complaint, together with prejudgment interest thereon; 

 VII.  

Ordering Defendants to pay a civil penalty 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)]; 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 15 of 16 - Page ID#: 15



16 

 

VIII. 

Retaining jurisdiction of this action in accordance with the principles of equity and the 

Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and 

decrees that may be entered, or to entertain any suitable application or motion for additional 

relief within the jurisdiction of this Court; and, 

IX. 

Granting such other and further relief as this Court may deem just, equitable, or necessary 

in connection with the enforcement of the federal securities laws and for the protection of 

investors. 

Dated:  April 7, 2022.    

     Respectfully submitted, 
 
     SECURITIES AND EXCHANGE COMMISSION 
 
     
      /s/ Casey R. Fronk                    
     Casey R. Fronk 
     Tracy S. Combs 
     Attorneys for Plaintiff 
     Securities and Exchange Commission 

Case: 7:22-cv-00027-REW-EBA   Doc #: 1   Filed: 04/07/22   Page: 16 of 16 - Page ID#: 16