SEC v. Christian J. Baquerizo; and Kevin Cardenas, No. 0:20-cv-61976-AHS, Southern District of Florida (Sept. 30, 2020) — Complaint

OF FLORIDA
__________________________
v.
, a/k/a “Teddy Stone,”
, a/k/a “,”
.
________________________________________________
(“Commission”)
1.
, ,n
(“NIT”), which
,  most  of  whseniors,20152019.
Defendants’y
$684,000.
2.,
company’s  research,  development,  and  efforts  to  go  public,  while  concealing  that
30.    Unbeknownst  to
, ,

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT
CASE NO.:
SECURITIES AND EXCHANGE COMMISSION,
)
)
)
)
)
)
)
)
)
)
)
)
)
I
Plaintiff,
CHRISTIAN J. BAQUERIZO
and
KEVIN CARDENAS Jacob Rosenthal
Defendants
COMPLAINT
FOR INJUNCTIVE AND OTHER RELIEF
Plaintiff Securities and Exchange Commission alleges as follows:
INTRODUCTION
The Commission brings this action against Defendants Christian J. Baquerizo and
Kevin Cardenas each
of whom acted as an unregistered broker for their participation in a
offering fraud scheme on behalf
of NIT Enterprises, Inc.
defrauded retail investors
nationwide and in Canada om were from
through November
Through the material misrepresentations and omissions, the unlawfully raised about
from investors and received more than $270,000 in undisclosed commissions In total,
NIT raised at least $4.9 million from at least 100 investors.
In investor solicitations the Defendants told investors that NIT would use investor
funds for the
they would receive %-50% in commissions from investor proceeds
these
investors in reality, NIT spent little
of the funds raised on research development, or on efforts to

2
NIT’s  CEO$1.25 ,
,,
,
.
3.Defendants’
,
.
4.Defendants’
representations  regarding  NIT’s  ,
nvestors
(“IPO”)
.
5.
of the Securities Act of 1933 (“Securities Act”)
of the Securities Exchange Act of 1934 (“Exchange Act”)
.,
6.,
$150,692

go public. Instead, misappropriated at least
million or 25%
of investor
proceeds to pay for personal expenses, while NIT and the CEO paid unregistered brokers like the
Defendants approximately 30%-50% in undisclosed commissions on the money they raised from
investors
The
roles in this multi-million dollar fraud was to cold-call potential
investors and convince them to invest in NIT stock utilizing a series
of material misrepresentations
and omissions.  The Defendants, who were not registered to sell securities, often used aliases to
conceal their identities and past criminal histories while soliciting investors
The solicitations
of investors contained baseless and false
value and future profitability while concealing that NIT was
paying them approximately 30%-50% in commissions from investor proceeds. I were also
told that NIT was preparing to engage in an initial public offering and soon would become
a publicly traded company, which created an expectation that investors would double or triple their
investment in a short amount
of time
By engaging in this conduct the Defendants each violated Sections 5(a), 5(c), and
17(a)
and Sections lO(b) and 15(a)
[15 U.S.C. §§ 77e(a),  77e(c), and 77q(a)]
[15
u.s. c.
§§ 78j(b),  78o(a)] and Rule l0b-5 thereunder [17 C.F.R. §  240.l0b-5] Unless enjoined the
Defendants are reasonably likely to continue to engage in violations
of the federal securities laws.
THE DEFENDANTS
Baquerizo
age 39, resides in Boca Raton, Florida.  Baquerizo worked for NIT as
an umegistered broker and was paid approximately in commissions. Baquerizo has
never been associated with any entity registered with the Commission and has no prior disciplinary

3
aliases, among them “Teddy Stone,”
.
7.,
.
es,  among  them  “Jacob  Rosenthal,”
.
8.
May 2014,
, incorporated in Florida in June 2016.  NIT’s principal place of business
vant period, NIT’s securities qualified as a “penny stock” because
they  did  not  meet  any  of  the  exceptions  from  the  definition  of  a  “penny  stock,”  as  defined  by
ities  were  equity  securities:  (1)  that  were  not  an  “NMS  stock,”  as  defined  in  17  CFR

history with the Commission. In May 2000, Baquerizo was convicted of state felony charges of
aggravated assault and was sentenced to probation. When he solicited investors on behalf of NIT,
Baquerizo at times used
history
in part to help conceal his criminal
Cardenas age 33, resides in Fort Lauderdale, Florida. Cardenas worked for NIT
as an unregistered broker and was paid approximately $121,690 in commissions. Cardenas has
never been associated with any entity registered with the Commission and has no prior disciplinary
history with the Commission. In March 2015, Cardenas was convicted
of state felony charges of
burglary of an unoccupied dwelling and grand theft and was sentenced to probation When he
solicited investors on behalf of NIT, Cardenas used alias
part to help conceal his criminal history
Ill
Inc.
RELATED ENTITY
NIT
consisted of three entities: NIT Enterprises, Inc., incorporated in Delaware in
NIT Enterprises, Inc., incorporated in Florida in May 2014, and NIT Enterprises FL,
was in Palm Beach
Gardens, Florida. NIT and its investment offerings were not registered with the Commission in
any capacity. During the rele
Section 3(a)(51)
of the Exchange Act and Rule 3a51-1 thereunder. Among other things, the
secur
242.600(b )( 47); (2) traded below five dollars per share during the relevant period; (3) whose issuer
had net tangible assets and average revenue below the thresholds
of Rule 3a51-1 (g)(l );  and ( 4) did

4
not meet any of the other exceptions from the definition of “penny stock” contained in Rule 3a51
9.
.
10.
’
.
11.
12.2015, , ,
4.9
.
,
.., 1924822.
13.“genetic material solutions” in order to, among other
,.

1 under the Exchange Act.
JURISDICTION AND VENUE
This Court has jurisdiction over this action pursuant to Sections 20(b ),  20( d) and
22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d) and 77v(a)], and Sections 21(d), 21(e), and
27(a)
of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa(a)]
This Court has personal jurisdiction over the Defendants and venue is proper in the
Southern District
of Florida because many of the Defendants acts and transactions constituting
the violations
of the Securities Act and Exchange Act occurred in the Southern District of Florida
Moreover, the Defendants reside in the Southern District of Florida.
In connection with the conduct alleged in this Complaint, the Defendants, directly
or indirectly, singly or in concert with others, made use
of the means or instruments of
transportation and communication in interstate commerce, and the mails.
FACTUAL ALLEGATIONS
A. NIT Fraudulent Scheme
Beginning at least as early as March
NIT the Defendants and others
executed a fraudulent scheme through which they obtained at least
$ million from investors in
the Southern District
of Florida and nationwide The NIT fraud scheme did not cease until
November 2019 when the Commission filed a  complaint charging NIT, its CEO and two other
unregistered brokers, with securities fraud on an emergency basis in order to stop the ongoing
fraud.
SEC v NIT Enterprises, et.al
-CV--CMA (S.D.
Fla).
NIT claimed to be developing
things, produce lightweight protection garments that would protect against exposure to damaging
radiation with medical and military applications NIT claimed to have several agreements or

5
,
capital for design production efforts and materials, “until profits break even with
costs as production grows.”
14.by
NIT’s  website.
company, its directors and management, NIT’s technology and various business relationships to
15.NIT’s   website   and   Executive   Sum
regarding  NIT’s  timing  for  going  public.    For  example,  a  June  2016  investor  update  stated  that
NIT “plans to enter the public market, filing Form S2, 2016.”
2019, NIT’s website statedthe company “has prepared an S
company.”
16.NIT’s  subscription  agreement  d
.
.
Defendants’ Solicitation of Investors

partnerships with other entities that were assisting with the testing and production of its protection
garments. In offering materials intended to lure prospective investors into investing NIT made it
appear that funds raised from investors would be directed to research and development efforts.
For example, in 2018 and 2019, NIT sent investors several updates that referenced the need to
raise additional
NIT followed up on investor solicitations providing prospective investors with
an NIT Executive Summary, a  stock subscription agreement and a link to further information on
The Executive Summary purported to provide general information about the
further its research and development, and ultimate production,
of its protection garments and
materials.
mary made inconsistent representations
-1 (IPO) in Q-
As late as November
-1 registration for the SEC. With this
filing expected in 2018, NIT would become an independent full reporting, audited, public
state that the investor had a  substantive and pre-
existing relationship with NIT before investing, however, this was far from the truth
In fact, most
investors solicited had never heard
of NIT before the initial cold-call solicitation they received
from the Defendants or another NIT unregistered broker
B. The
-=--------------------

6
17.
NIT’s CEOn
“cold call” scripts as well as sales materials to
,
.
18.u
NIT’s value and business prospects,.
no.
19.
by
,
.  ,
no 1
.
20.NIT’s  website  and
tations  regarding  NIT’s  timing  for  going  public.    For  example,
2019,  NIT’s  website  (which  was  not  updated),  stated  the  company  “has  prepared  an  S1
2018
l reporting, audited, public company.” (emphasis added).  The NIT 2017 Executive Summary

The Defendants were hired by to solicit potential i  vestors on behalf
of NIT. The CEO provided the Defendants with
use when soliciting investors. The Defendants acted as unregistered brokers by soliciting
investors participating in the sale
of NIT stock, and receiving undisclosed commissions.
C
Material Misrepresentations and Omissions to Investors and Other Deceptive
Conduct
The Defendants sold NIT stock to investors sing high-pressure sales tactics that
misrepresented such as claims that an NIT IPO was imminent
The Defendants made baseless claims that the NIT shares were discounted for varying reasons and
that the true value
of the shares were much higher, when in fact, they were t
In their solicitations
of investors, the Defendants misrepresented that an NIT IPO
would occur in the near future. This misrepresentation was made NIT, its CEO, and
unregistered brokers like the Defendants orally and through the use
of written offering materials
which the Defendants had NIT send to investors after the Defendants had solicited them In fact
NIT made effort to take the company public and never filed an
S-registration statement with
the Commission
inconsistent represen
the Executive Summary provided to investors also contained
in October
registration for the SEC. With this filing expected in , NIT would become an independent
ful
sent to investors contained the same statement with a 2017 expected filing date. Ultimately, NIT
never filed a registration statement with the Commission for a public offering
of securities, much
less had such a registration statement declared effective.

7
21.
misrepresentations  about  the  timing  of  NIT’s  purported  IPO.
that NIT would be “going public” in six months a
.
22.
5
23.22
24.
no
25.

The Defendants also made baseless price projections in conjunction with their
Numerous investors were falsely
told that they needed to purchase shares immediately because NIT was about to go public and the
price would go up to between $2.00 and
$3.00 per share. Baquerizo informed at least one investor
t which time the current $1.00 per share price
would increase to between $3.00 and $5.00. For his part, Cardenas told at least one investor that
he stood to make a lot
of money when NIT went public in the near future
NIT and its CEO paid the Defendants transaction-based compensation in the form
of commissions of approximately 30% (to Cardenas) and approximately 50% (to Baquerizo) of
the investor funds they raised. Defendants did not disclose to investors that they would be
receiving such large commissions. Furthermore, the Defendants used aliases to conceal their prior
criminal convictions when soliciting investors.
CLAIMS FOR RELIEF
COUNTI
Violations of Sections (a) and S(c) of the Securities Act
The Commission repeats and realleges Paragraphs 1 through
of this Complaint
as
if fully set forth herein.
No registration statement was filed or in effect with the Commission pursuant to
the Securities Act with respect to the securities and transactions described in this Complaint and
exemption from registration existed with respect to these securities and transactions.
Beginning in or about February 2017 and continuing through September 2018, for
Cardenas, and in or about April 2019 through August 2019, for Baquerizo, the Defendants, directly
and indirectly:

8
26.
§§
1
27.22
.
28.
2017
,, d
,
,

(a) made use of means or instruments of transportation or communication in
interstate commerce or
of the mails to sell securities as described herein, through the use or
medium
of a prospectus or otherwise;
(b) carried securities or caused such securities, as described herein, to be carried
through the mails or in interstate commerce, by any means or instruments
of transportation, for the
purpose
of sale or delivery after sale; or
( c) made use
of means or instruments of transportation or communication in
interstate commerce or
of the mails to offer to sell or offer to buy through the use or medium of a
prospectus or otherwise, as described herein, without a registration statement having been filed or
being in effect with the Commission
as to such securities.
By reason
of the foregoing, the Defendants violated and, unless enjoined, are
reasonably likely to continue to violate, Sections 5(a) and 5(c)
of the Securities Act [15 U.S.C
77e(a) and 77e(c)].
COUNT II
Fraud in the Offer or Sale of Securities in Violation of
Section 17(a)( ) of the Securities Act
The Commission repeats and realleges Paragraphs 1 through of this Complaint
as
if fully set forth herein
Beginning in or about February and continuing through September 2018, for
Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants irectly
and indirectly, in the offer or sale
of securities by use of the means or instruments of transportation
or communication in interstate commerce or
of the mails knowingly or recklessly employed
devices, schemes or artifices to defraud.

9
29.
v
§
2
30.22
31.2017
,
,
32.
2
15772.
33.22
34.2017
,
,

By reason of the foregoing, the Defendants iolated, and, unless enjoined are
reasonably likely to continue to violate, Section 17(a)(l)
of the Securities Act [15 U.S.C.
77q(a)(l)].
COUNT
III
Fraud in the Offer or Sale of Securities in
Violation
of Section 17(a)( ) of the Securities Act
The Commission repeats and realleges Paragraphs 1 through
of this Complaint
as
if fully set forth herein.
Beginning in or about February
and continuing through September 2018, for
Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants, directly
and indirectly, in the offer or sale
of securities by use of the means or instruments of transportation
or communication in interstate commerce or
of the mails, negligently obtained money or property
by means
of untrue statements of material facts and omissions to state material facts necessary in
order to make the statements made, in the light
of the circumstances under which they were made,
not misleading.
By reason of the foregoing, the Defendants directly and indirectly violated, and
unless enjoined, are reasonably likely to continue to violate, Section 17(a)( )
of the Securities Act
[ U.S.C. § q(a)( )]
COUNT IV
Fraud in the Offer or Sale
of Securities in
Violation
of Section 17(a)(3) of the Securities Act
The Commission repeats and realleges Paragraphs 1 through
of this Complaint
as
if fully set forth herein.
Beginning in or about February and continuing through September 2018, for
Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants, directly
and indirectly, in the offer or sale
of securities by use of any means or instruments of transportation

10
35.
15
.
5
36.22
37.2017
,
,
,
38.v
5b5.
Section 10(b)
39.22
40.2017
,

or communication m interstate commerce or by use of the mails, negligently engaged in
transactions, practices, or courses
of business which have operated, are now operating or will
operate as a fraud or deceit upon the purchasers.
By reason
of the foregoing the Defendants violated and, unless enjoined, are
reasonably likely to continue to violate Section l 7(a)(3)
of the Securities Act [     U.S.C.  §
77q(a)(3)]
COUNTV
Fraud in Connection with the Purchase or Sale of Securities in
Violation
of Section 1 O{b) and Rule 1 Ob-{a) of the Exchange Act
The Commission repeats and realleges Paragraphs 1 through of this Complaint
as
if fully set forth herein.
Beginning in or about February and continuing through September 2018, for
Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants, directly
and indirectly, in connection with the purchase or sale
of securities by use of any means and
instrumentalities
of interstate commerce or by use of the mails knowingly or recklessly employed
devices, schemes or artifices to defraud in connection with the purchase or sale
of securities.
By reason
of the foregoing, the Defendants iolated, and unless enjoined, are
reasonably likely to continue to violate, Section lO(b)
of the Exchange Act [15 U.S.C. § 78j(b)]
and Exchange Act Rule lOb-(a) [17 C.F.R. § 240.10 -  (a)]
COUNT VI
Fraud in Connection with the Purchase or Sale of Securities in Violation of
and Rule 1 Ob-S(b) of the Exchange Act
The Commission realleges and incorporates paragraphs 1  through
Complaint as
if fully set forth herein.
of this
Beginning in or about February and continuing through September 2018, for
Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants directly

11
,
41.
bb.
Section 10(b)
5
42.22
43.2017
,
44.v
,1
0b.§ 240.10b.
45.22
.

and indirectly, in connection with the purchase or sale of securities by use of any means and
instrumentalities
of interstate commerce or of the mails knowingly or recklessly made untrue
statements
of material facts or omitted to state material facts in order to make the statements made,
in light
of the circumstance in which they were made, not misleading.
By reason
of the foregoing, the Defendants violated, and unless enjoined, are
reasonably likely to continue to violate, Section lO(b)
of the Exchange Act [15 U.S.C. § 78j(b)]
and Exchange Act Rule lOb-5( ) [17 C.F.R. § 240.lOb-5(
)]
COUNT VII
Fraud in Connection with the Purchase or Sale
of Securities in Violation of
and Rule lOb-(c) of the Exchange Act
The Commission repeats and realleges paragraphs 1 through of this Complaint
as
if fully set forth herein.
Beginning in or about February and continuing through September 2018, for
Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants directly
or indirectly, in connection with the purchase or sale
of securities by the use of the means or
instrumentalities
of interstate commerce, or of the mails, knowingly or recklessly engaged in acts,
practices,  and course
of business which have operated, are now operating, and will operate as a
fraud upon the purchasers
of such securities.
By reason
of the foregoing, the Defendants iolated, and unless enjoined, are
reasonably likely to continue to violate Section 0(b)
of the Exchange Act [15 U.S.C. § 78j(b)
and Exchange Act Rule 1 -5(c) [17 C.F
R. -5(c)]
COUNT VIII
Unregistered Broker-Dealer Conduct in Violation
of
Section 15(a)(l) of the Exchange Act
The Commission repeats and realleges paragraphs 1 through of this Complaint
as
if fully set forth herein

12
46.
2017
, , d
.
47.
,
,
5
15
.

Beginning in or about February and continuing through September 2018, for
Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants irectly
and indirectly, by the use
of the mails or the means and instrumentalities of interstate commerce,
effected transactions in, or induced or attempted to induce the purchase and sale
of securities, while
they were not registered with the Commission as a  broker or dealer or when they were not
associated with an entity registered with the Commission as a broker or dealer in accordance with
Section 15(b)
of the Exchange Act [15 U.S.C. § 78o(b)]
By reason
of the foregoing,  the Defendants violated and,  unless enjoined,  are
reasonably likely to continue to violate Section 15(a)(l)
of the Exchange Act [15 U.S.C.
§78o(a)(l)].
RELIEF REQUESTED
WHEREFORE,
the Commission respectfully  requests the Court find the Defendants
committed the violations alleged, and:
I.
Permanent Injunction
Issue a  Permanent Injunction restraining  and enjoining the Defendants,  their officers,
agents, servants, employees, attorneys, and all persons in active concert or participation with them,
and each
of them, from violating Sections 5(a), 5(c), and 17(a) of the Securities Act [15 U.S.C. §§
77e(a), 77e(c), and 77q(a)] and Sections l0(b) and 15(a)(l) of the Exchange Act [15 U.S.C. §§
78j(b), 78o(a)] and Rule lOb-thereunder [17 C.F.R. § 240.lOb-5].
II.
Civil Money Penalties
Issue an Order directing each of the Defendants to pay civil money penalties pursuant to
Section 20(d)
of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [
U.S.
C. § 78(d)]

13
.
.
.
29, 2020
0142859
6376
9826318
6300

III
Disgorgement and Prejudgment Interest
Issue an Order directing the Defendants to disgorge all ill-gotten gams, including
prejudgment interest, resulting from the acts and/or courses
of conduct complained of herein.
IV
Further Relief
Grant such other and further relief as may be necessary and appropriate.
V
Retention of Jurisdiction
Further, the Commission respectfully requests that the Court retain jurisdiction over this
action in order to implement and carry out the terms
of all orders and decrees that may hereby be
entered, or to entertain any suitable application
or motion by the Commission for additional relief
within the jurisdiction
of this Court.
Dated: September Respectfully submitted,
By: s/Wilfredo Fernandez
Wilfredo Fernandez
Senior Trial Counsel
Florida Bar
No.
Telephone: (305) 982-
Email: [email protected]
Michael
J. Gonzalez
Senior Counsel
Florida Bar
No. 110598
Telephone: (305)
Email: [email protected]
Attorneys for Plaintiff
SECURITIES AND EXCHANGE
COMMISSION
801 Brickell A venue, Suite 1950
Miami, Florida 33131
Telephone: (305) 982-

14

Of Counsel:
Eric E. Morales, Senior Counsel
Securities and Exchange Commission
801 Brickell Avenue, Suite 1950
Miami, Florida 33131

OF FLORIDA

__________________________

v.

, a/k/a “Teddy Stone,”

, a/k/a “ ,”

.
________________________________________________

(“Commission”) 

1.

, , n 

(“NIT”), which

, most of wh seniors, 2015 2019.

Defendants’ y

$684,000 .

2. ,

company’s research, development, and efforts to go public, while concealing that 

30 .  Unbeknownst to 

, , 

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 1 of 14 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT 

CASE NO.: 

SECURITIES AND EXCHANGE COMMISSION, ) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
I 

Plaintiff, 

CHRISTIAN J. BAQUERIZO 

and 

KEVIN CARDENAS Jacob Rosenthal 

Defendants 

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF 

Plaintiff Securities and Exchange Commission alleges as follows: 

INTRODUCTION 

The Commission brings this action against Defendants Christian J. Baquerizo and 

Kevin Cardenas each of whom acted as an unregistered broker for their participation in a 

offering fraud scheme on behalf of NIT Enterprises, Inc. defrauded retail investors 

nationwide and in Canada om were from through November 

Through the material misrepresentations and omissions, the unlawfully raised about 

from investors and received more than $270,000 in undisclosed commissions In total, 

NIT raised at least $4.9 million from at least 100 investors. 

In investor solicitations the Defendants told investors that NIT would use investor 

funds for the 

they would receive %-50% in commissions from investor proceeds these 

investors in reality, NIT spent little of the funds raised on research development, or on efforts to 



2

NIT’s CEO $1.25 ,

, ,

,

.  

3. Defendants’

,

.

4. Defendants’

representations regarding NIT’s ,

nvestors

(“IPO”) 

.

5.

of the Securities Act of 1933 (“Securities Act”)

of the Securities Exchange Act of 1934 (“Exchange Act”)

. , 

6. , 

$150,692

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 2 of 14 

go public. Instead, misappropriated at least million or 25% of investor 

proceeds to pay for personal expenses, while NIT and the CEO paid unregistered brokers like the 

Defendants approximately 30%-50% in undisclosed commissions on the money they raised from 

investors 

The roles in this multi-million dollar fraud was to cold-call potential 

investors and convince them to invest in NIT stock utilizing a series of material misrepresentations 

and omissions. The Defendants, who were not registered to sell securities, often used aliases to 

conceal their identities and past criminal histories while soliciting investors 

The solicitations of investors contained baseless and false 

value and future profitability while concealing that NIT was 

paying them approximately 30%-50% in commissions from investor proceeds. I were also 

told that NIT was preparing to engage in an initial public offering and soon would become 

a publicly traded company, which created an expectation that investors would double or triple their 

investment in a short amount of time 

By engaging in this conduct the Defendants each violated Sections 5(a), 5(c), and 

17(a) 

and Sections lO(b) and 15(a) 

[15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)] 

[15 u.s.c. 

§§ 78j(b), 78o(a)] and Rule l0b-5 thereunder [17 C.F.R. § 240.l0b-5] Unless enjoined the 

Defendants are reasonably likely to continue to engage in violations of the federal securities laws. 

THE DEFENDANTS 

Baquerizo age 39, resides in Boca Raton, Florida. Baquerizo worked for NIT as 

an umegistered broker and was paid approximately in commissions. Baquerizo has 

never been associated with any entity registered with the Commission and has no prior disciplinary 



3

aliases, among them “Teddy Stone,”

.

7. ,

.

es, among them “Jacob Rosenthal,”

. 

8.

May 2014, 

, incorporated in Florida in June 2016.  NIT’s principal place of business 

vant period, NIT’s securities qualified as a “penny stock” because 

they did not meet any of the exceptions from the definition of a “penny stock,” as defined by 

ities were equity securities: (1) that were not an “NMS stock,” as defined in 17 CFR 

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 3 of 14 

history with the Commission. In May 2000, Baquerizo was convicted of state felony charges of 

aggravated assault and was sentenced to probation. When he solicited investors on behalf of NIT, 

Baquerizo at times used 

history 

in part to help conceal his criminal 

Cardenas age 33, resides in Fort Lauderdale, Florida. Cardenas worked for NIT 

as an unregistered broker and was paid approximately $121,690 in commissions. Cardenas has 

never been associated with any entity registered with the Commission and has no prior disciplinary 

history with the Commission. In March 2015, Cardenas was convicted of state felony charges of 

burglary of an unoccupied dwelling and grand theft and was sentenced to probation When he 

solicited investors on behalf of NIT, Cardenas used alias 

part to help conceal his criminal history 

Ill 

Inc. 

RELATED ENTITY 

NIT consisted of three entities: NIT Enterprises, Inc., incorporated in Delaware in 

NIT Enterprises, Inc., incorporated in Florida in May 2014, and NIT Enterprises FL, 

was in Palm Beach 

Gardens, Florida. NIT and its investment offerings were not registered with the Commission in 

any capacity. During the rele 

Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder. Among other things, the 

secur 

242.600(b )( 47); (2) traded below five dollars per share during the relevant period; (3) whose issuer 

had net tangible assets and average revenue below the thresholds of Rule 3a51-1 (g)(l ); and ( 4) did 



4

not meet any of the other exceptions from the definition of “penny stock” contained in Rule 3a51

9.

.

10.

’

.  

11.

12. 2015, , ,

4.9

.

,

. ., 19 24822 .

13. “genetic material solutions” in order to, among other 

, .  

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 4 of 14 

1 under the Exchange Act. 

JURISDICTION AND VENUE 

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

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

27(a) of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa(a)] 

This Court has personal jurisdiction over the Defendants and venue is proper in the 

Southern District of Florida because many of the Defendants acts and transactions constituting 

the violations of the Securities Act and Exchange Act occurred in the Southern District of Florida 

Moreover, the Defendants reside in the Southern District of Florida. 

In connection with the conduct alleged in this Complaint, the Defendants, directly 

or indirectly, singly or in concert with others, made use of the means or instruments of 

transportation and communication in interstate commerce, and the mails. 

FACTUAL ALLEGATIONS 

A. NIT Fraudulent Scheme 

Beginning at least as early as March NIT the Defendants and others 

executed a fraudulent scheme through which they obtained at least $ million from investors in 

the Southern District of Florida and nationwide The NIT fraud scheme did not cease until 

November 2019 when the Commission filed a complaint charging NIT, its CEO and two other 

unregistered brokers, with securities fraud on an emergency basis in order to stop the ongoing 

fraud. SEC v NIT Enterprises, et.al -CV- -CMA (S.D. Fla). 

NIT claimed to be developing 

things, produce lightweight protection garments that would protect against exposure to damaging 

radiation with medical and military applications NIT claimed to have several agreements or 



5

, 

capital for design production efforts and materials, “until profits break even with 

costs as production grows.”

14. by 

NIT’s website.  

company, its directors and management, NIT’s technology and various business relationships to 

15. NIT’s website and Executive Sum

regarding NIT’s timing for going public.  For example, a June 2016 investor update stated that 

NIT “plans to enter the public market, filing Form S 2, 2016.”  

2019, NIT’s website stated the company “has prepared an S

company.”

16. NIT’s subscription agreement d

.  

.

Defendants’ Solicitation of Investors

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 5 of 14 

partnerships with other entities that were assisting with the testing and production of its protection 

garments. In offering materials intended to lure prospective investors into investing NIT made it 

appear that funds raised from investors would be directed to research and development efforts. 

For example, in 2018 and 2019, NIT sent investors several updates that referenced the need to 

raise additional 

NIT followed up on investor solicitations providing prospective investors with 

an NIT Executive Summary, a stock subscription agreement and a link to further information on 

The Executive Summary purported to provide general information about the 

further its research and development, and ultimate production, of its protection garments and 

materials. 

mary made inconsistent representations 

-1 (IPO) in Q- As late as November 

-1 registration for the SEC. With this 

filing expected in 2018, NIT would become an independent full reporting, audited, public 

state that the investor had a substantive and pre­

existing relationship with NIT before investing, however, this was far from the truth In fact, most 

investors solicited had never heard of NIT before the initial cold-call solicitation they received 

from the Defendants or another NIT unregistered broker 

B. The -=--------------------



6

17. NIT’s CEO n

“cold call” scripts as well as sales materials to 

,

.

18. u

NIT’s value and business prospects, .

no .

19.

by 

, 

.  ,

no 1 

.

20. NIT’s website and 

tations regarding NIT’s timing for going public.  For example, 

2019, NIT’s website (which was not updated), stated the company “has prepared an S 1 

2018

l reporting, audited, public company.” (emphasis added).  The NIT 2017 Executive Summary 

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 6 of 14 

The Defendants were hired by to solicit potential i vestors on behalf 

of NIT. The CEO provided the Defendants with 

use when soliciting investors. The Defendants acted as unregistered brokers by soliciting 

investors participating in the sale of NIT stock, and receiving undisclosed commissions. 

C Material Misrepresentations and Omissions to Investors and Other Deceptive 
Conduct 

The Defendants sold NIT stock to investors sing high-pressure sales tactics that 

misrepresented such as claims that an NIT IPO was imminent 

The Defendants made baseless claims that the NIT shares were discounted for varying reasons and 

that the true value of the shares were much higher, when in fact, they were t 

In their solicitations of investors, the Defendants misrepresented that an NIT IPO 

would occur in the near future. This misrepresentation was made NIT, its CEO, and 

unregistered brokers like the Defendants orally and through the use of written offering materials 

which the Defendants had NIT send to investors after the Defendants had solicited them In fact 

NIT made effort to take the company public and never filed an S- registration statement with 

the Commission 

inconsistent represen 

the Executive Summary provided to investors also contained 

in October 

registration for the SEC. With this filing expected in , NIT would become an independent 

ful 

sent to investors contained the same statement with a 2017 expected filing date. Ultimately, NIT 

never filed a registration statement with the Commission for a public offering of securities, much 

less had such a registration statement declared effective. 



7

21.

misrepresentations about the timing of NIT’s purported IPO.

that NIT would be “going public” in six months a

.

22.

5

23. 22

24.

no 

25.

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 7 of 14 

The Defendants also made baseless price projections in conjunction with their 

Numerous investors were falsely 

told that they needed to purchase shares immediately because NIT was about to go public and the 

price would go up to between $2.00 and $3 .00 per share. Baquerizo informed at least one investor 

t which time the current $1.00 per share price 

would increase to between $3.00 and $5.00. For his part, Cardenas told at least one investor that 

he stood to make a lot of money when NIT went public in the near future 

NIT and its CEO paid the Defendants transaction-based compensation in the form 

of commissions of approximately 30% (to Cardenas) and approximately 50% (to Baquerizo) of 

the investor funds they raised. Defendants did not disclose to investors that they would be 

receiving such large commissions. Furthermore, the Defendants used aliases to conceal their prior 

criminal convictions when soliciting investors. 

CLAIMS FOR RELIEF 

COUNTI 
Violations of Sections (a) and S(c) of the Securities Act 

The Commission repeats and realleges Paragraphs 1 through of this Complaint 

as if fully set forth herein. 

No registration statement was filed or in effect with the Commission pursuant to 

the Securities Act with respect to the securities and transactions described in this Complaint and 

exemption from registration existed with respect to these securities and transactions. 

Beginning in or about February 2017 and continuing through September 2018, for 

Cardenas, and in or about April 2019 through August 2019, for Baquerizo, the Defendants, directly 

and indirectly: 



8

26.

§§

1

27. 22

. 

28. 2017

, , d

,

,

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 8 of 14 

(a) made use of means or instruments of transportation or communication in 

interstate commerce or of the mails to sell securities as described herein, through the use or 

medium of a prospectus or otherwise; 

(b) carried securities or caused such securities, as described herein, to be carried 

through the mails or in interstate commerce, by any means or instruments of transportation, for the 

purpose of sale or delivery after sale; or 

( c) made use of means or instruments of transportation or communication in 

interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of a 

prospectus or otherwise, as described herein, without a registration statement having been filed or 

being in effect with the Commission as to such securities. 

By reason of the foregoing, the Defendants violated and, unless enjoined, are 

reasonably likely to continue to violate, Sections 5(a) and 5(c) of the Securities Act [15 U.S.C 

77e(a) and 77e(c)]. 

COUNT II 
Fraud in the Offer or Sale of Securities in Violation of 

Section 17(a)( ) of the Securities Act 

The Commission repeats and realleges Paragraphs 1 through of this Complaint 

as if fully set forth herein 

Beginning in or about February and continuing through September 2018, for 

Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants irectly 

and indirectly, in the offer or sale of securities by use of the means or instruments of transportation 

or communication in interstate commerce or of the mails knowingly or recklessly employed 

devices, schemes or artifices to defraud. 



9

29. v

§

2

30. 22

31. 2017

, 

,

32.

2

15 77 2 .

33. 22

34. 2017

, 

,

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 9 of 14 

By reason of the foregoing, the Defendants iolated, and, unless enjoined are 

reasonably likely to continue to violate, Section 17(a)(l) of the Securities Act [15 U.S.C. 

77q(a)(l)]. 

COUNT III 
Fraud in the Offer or Sale of Securities in 

Violation of Section 17(a)( ) of the Securities Act 

The Commission repeats and realleges Paragraphs 1 through of this Complaint 

as if fully set forth herein. 

Beginning in or about February and continuing through September 2018, for 

Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants, directly 

and indirectly, in the offer or sale of securities by use of the means or instruments of transportation 

or communication in interstate commerce or of the mails, negligently obtained money or property 

by means of untrue statements of material facts and omissions to state material facts necessary in 

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

not misleading. 

By reason of the foregoing, the Defendants directly and indirectly violated, and 

unless enjoined, are reasonably likely to continue to violate, Section 17(a)( ) of the Securities Act 

[ U.S.C. § q(a)( )] 

COUNT IV 
Fraud in the Offer or Sale of Securities in 

Violation of Section 17(a)(3) of the Securities Act 

The Commission repeats and realleges Paragraphs 1 through of this Complaint 

as if fully set forth herein. 

Beginning in or about February and continuing through September 2018, for 

Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants, directly 

and indirectly, in the offer or sale of securities by use of any means or instruments of transportation 



10

35.

15

.

5

36. 22

37. 2017

, 

,

,

38. v

5 b 5 .

Section 10(b) 

39. 22

40. 2017

, 

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 10 of 14 

or communication m interstate commerce or by use of the mails, negligently engaged in 

transactions, practices, or courses of business which have operated, are now operating or will 

operate as a fraud or deceit upon the purchasers. 

By reason of the foregoing the Defendants violated and, unless enjoined, are 

reasonably likely to continue to violate Section l 7(a)(3) of the Securities Act [ U.S.C. § 

77q(a)(3)] 

COUNTV 
Fraud in Connection with the Purchase or Sale of Securities in 

Violation of Section 1 O{b) and Rule 1 Ob- {a) of the Exchange Act 

The Commission repeats and realleges Paragraphs 1 through of this Complaint 

as if fully set forth herein. 

Beginning in or about February and continuing through September 2018, for 

Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants, directly 

and indirectly, in connection with the purchase or sale of securities by use of any means and 

instrumentalities of interstate commerce or by use of the mails knowingly or recklessly employed 

devices, schemes or artifices to defraud in connection with the purchase or sale of securities. 

By reason of the foregoing, the Defendants iolated, and unless enjoined, are 

reasonably likely to continue to violate, Section lO(b) of the Exchange Act [15 U.S.C. § 78j(b)] 

and Exchange Act Rule lOb- (a) [17 C.F.R. § 240.10 - (a)] 

COUNT VI 
Fraud in Connection with the Purchase or Sale of Securities in Violation of 

and Rule 1 Ob-S(b) of the Exchange Act 

The Commission realleges and incorporates paragraphs 1 through 

Complaint as if fully set forth herein. 

of this 

Beginning in or about February and continuing through September 2018, for 

Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants directly 



11

, 

41.

b b .

Section 10(b) 
5

42. 22

43. 2017

, 

44. v

, 1

0b . § 240.10b .

45. 22

.

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 11 of 14 

and indirectly, in connection with the purchase or sale of securities by use of any means and 

instrumentalities of interstate commerce or of the mails knowingly or recklessly made untrue 

statements of material facts or omitted to state material facts in order to make the statements made, 

in light of the circumstance in which they were made, not misleading. 

By reason of the foregoing, the Defendants violated, and unless enjoined, are 

reasonably likely to continue to violate, Section lO(b) of the Exchange Act [15 U.S.C. § 78j(b)] 

and Exchange Act Rule lOb-5( ) [17 C.F.R. § 240.lOb-5( )] 

COUNT VII 
Fraud in Connection with the Purchase or Sale of Securities in Violation of 

and Rule lOb- (c) of the Exchange Act 

The Commission repeats and realleges paragraphs 1 through of this Complaint 

as if fully set forth herein. 

Beginning in or about February and continuing through September 2018, for 

Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants directly 

or indirectly, in connection with the purchase or sale of securities by the use of the means or 

instrumentalities of interstate commerce, or of the mails, knowingly or recklessly engaged in acts, 

practices, and course of business which have operated, are now operating, and will operate as a 

fraud upon the purchasers of such securities. 

By reason of the foregoing, the Defendants iolated, and unless enjoined, are 

reasonably likely to continue to violate Section 0(b) of the Exchange Act [15 U.S.C. § 78j(b) 

and Exchange Act Rule 1 -5(c) [17 C.F R. -5(c)] 

COUNT VIII 
Unregistered Broker-Dealer Conduct in Violation of 

Section 15(a)(l) of the Exchange Act 

The Commission repeats and realleges paragraphs 1 through of this Complaint 

as if fully set forth herein 



12

46. 2017

, , d

.

47.

,

,

5

15 

.

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 12 of 14 

Beginning in or about February and continuing through September 2018, for 

Cardenas, and in or about April 2019 through August 2019, for Baquerizo the Defendants irectly 

and indirectly, by the use of the mails or the means and instrumentalities of interstate commerce, 

effected transactions in, or induced or attempted to induce the purchase and sale of securities, while 

they were not registered with the Commission as a broker or dealer or when they were not 

associated with an entity registered with the Commission as a broker or dealer in accordance with 

Section 15(b) of the Exchange Act [15 U.S.C. § 78o(b)] 

By reason of the foregoing, the Defendants violated and, unless enjoined, are 

reasonably likely to continue to violate Section 15(a)(l) of the Exchange Act [15 U.S.C. 

§78o(a)(l)]. 

RELIEF REQUESTED 

WHEREFORE, the Commission respectfully requests the Court find the Defendants 

committed the violations alleged, and: 

I. 
Permanent Injunction 

Issue a Permanent Injunction restraining and enjoining the Defendants, their officers, 

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

and each of them, from violating Sections 5(a), 5(c), and 17(a) of the Securities Act [15 U.S.C. §§ 

77e(a), 77e(c), and 77q(a)] and Sections l0(b) and 15(a)(l) of the Exchange Act [15 U.S.C. §§ 

78j(b), 78o(a)] and Rule lOb- thereunder [17 C.F.R. § 240.lOb-5] . 

II. 
Civil Money Penalties 

Issue an Order directing each of the Defendants to pay civil money penalties pursuant to 

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

U.S.C. § 78(d)] 



13

.

.

.

29, 2020

0142859
6376

982 6318

6300

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 13 of 14 

III 
Disgorgement and Prejudgment Interest 

Issue an Order directing the Defendants to disgorge all ill-gotten gams, including 

prejudgment interest, resulting from the acts and/or courses of conduct complained of herein. 

IV 
Further Relief 

Grant such other and further relief as may be necessary and appropriate. 

V 
Retention of Jurisdiction 

Further, the Commission respectfully requests that the Court retain jurisdiction over this 

action in order to implement and carry out the terms of all orders and decrees that may hereby be 

entered, or to entertain any suitable application or motion by the Commission for additional relief 

within the jurisdiction of this Court. 

Dated: September Respectfully submitted, 

By: s/Wilfredo Fernandez 
Wilfredo Fernandez 
Senior Trial Counsel 
Florida Bar No. 
Telephone: (305) 982-
Email: [email protected] 

Michael J. Gonzalez 
Senior Counsel 
Florida Bar No. 110598 
Telephone: (305) 
Email: [email protected] 

Attorneys for Plaintiff 
SECURITIES AND EXCHANGE 
COMMISSION 
801 Brickell A venue, Suite 1950 
Miami, Florida 33131 
Telephone: (305) 982-



14

Case 9:20-cv-81763-XXXX Document 1 Entered on FLSD Docket 09/29/2020 Page 14 of 14 

Of Counsel: 
Eric E. Morales, Senior Counsel 
Securities and Exchange Commission 
801 Brickell Avenue, Suite 1950 
Miami, Florida 33131