SEC v. AUSTIN DANGER ELLISON-MEADE, No. 2:23-cv-00521-CAS, Central District of California (Sept. 5, 2025) — Complaint

COMPLAINT
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GARY Y. LEUNG (Cal. Bar No. 302928)
Email:  [email protected]
DOHOANG T. DUONG (Cal. Bar No. 219127)
Email:  [email protected]

Attorneys for Plaintiff
Securities and Exchange Commission
Michele Wein Layne, Regional Director
Alka N. Patel, Associate Regional Director
Gary Y. Leung, Regional Trial Counsel
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
Facsimile: (213) 443-1904
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,

vs.
AUSTIN DANGER ELLISON-
MEADE,
Defendant.

 Case No.

COMPLAINT

Plaintiff Securities and Exchange Commission (“SEC”) alleges:
JURISDICTION AND VENUE
1. The Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§
77t(b), 77t(d)(1) & 77v(a), Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the
Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1),
78u(d)(3)(A), 78u(e) & 78aa(a), and Sections 209(d), 209(e)(1) and 214 of the
Investment Advisers Act of 1940 (“Advisers Act”), 15 U.S.C. §§ 80b-9(d), 80b-

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9(e)(1) & 90b-14.
2. Defendant has, directly or indirectly, made use of the means or
instrumentalities of interstate commerce, of the mails, or of the facilities of a national
securities exchange in connection with the transactions, acts, practices and courses of
business alleged in this complaint.
3. Venue is proper in this district pursuant to Section 22(a) of the Securities
Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a),
because certain of the transactions, acts, practices and courses of conduct constituting
violations of the federal securities laws occurred within this district.
SUMMARY
4. This case concerns a securities offering fraud perpetrated by defendant
Austin Danger Ellison-Meade (“Ellison-Meade”), who solicited investments in
Baycap.io, an investment club that he operated and managed as a pooled investment
vehicle from at least February 2019 to May 2021.  Ellison-Meade is the 24-year old
“managing partner” of Baycap.io.  He   has never been registered with the Commission
in any capacity or associated with any Commission-registered investment adviser.
He claimed that he had developed a proprietary algorithm which accurately identified
stocks that were poised for growth.  Through these representations, Ellison-Meade
raised approximately $2.8 million from 31 individual investors, telling them that he
would use his proprietary algorithm to generate high investment returns, with very
little risk to investor capital.  Ellison-Meade’s claims of profitable algorithmic trading
were false – rather than investing their money as represented, he instead
misappropriated investor funds from Baycap.io to pay his personal expenses and to
make Ponzi payments.  To conceal his fraud, Ellison-Meade also distributed fake
account statements to investors in an effort to persuade them to maintain their
investments with him, and to contribute even more capital to Baycap.io.
5. By engaging in this conduct, defendant Ellison-Meade:  (i) violated
Section 17(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. § 77q(a); (ii)

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violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15
U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5; and (iii) violated
Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940
(“Advisers Act”), 15 U.S.C. § 80b-6(1), (2), and (4), and Rule 206(4)-8 thereunder,
17 C.F.R. § 275.206(4)-8.
6. With this complaint, plaintiff SEC seeks a permanent injunction
prohibiting future violations of the federal securities laws, a conduct-based
injunction, an order requiring defendant Ellison-Meade to disgorge his ill-gotten
gains along with prejudgment interest, and an order requiring Ellison-Meade to pay
civil penalties.
DEFENDANT
7. Defendant Austin Danger Ellison-Meade, age 24, held himself out as
the managing partner of an investment club called Baycap.io.  Ellison-Meade has
never been registered with the Commission in any capacity, nor has he ever been
associated with any Commission registrant.
THE ALLEGATIONS
A. Ellison-Meade’s Fraudulent Baycap.io Securities Offering
8. In early 2019, Ellison-Meade formed Baycap.io, a purported investment
club, began raising capital for Baycap.io, and operated Baycap.io as an unregistered
pooled investment vehicle.
9. Ellison-Meade held himself out as Baycap.io’s managing partner and
communicated in person, over the phone, and by email with potential investors.
10. Besides Ellison-Meade, no other person or entity played any role in the
management of Baycap.io.
11. From at least February 2019 to May 2021 (the “relevant period”),
Ellison-Meade raised at least $2.8 million from about 31 individual investors.
12. In doing so, Ellison-Meade used friends and family to help him identify
and recruit potential investors.

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13. Ellison-Meade sent partnership agreements to certain investors which
documented their investments in Baycap.io.
14. Ellison-Meade had ultimate authority over both the content of the
Baycap.io partnership agreements, and whether, how, and when to provide them to
Baycap.io investors for their execution.
15. The Baycap.io partnership agreement provided that Baycap.io’s purpose
was “to invest the assets of the partnership solely in publicly traded individual
corporate stocks and bonds, and mutual funds, and ETF’s (Exchange Traded Funds)
made up of those investments ... for the benefit of the partners.”
16. The Baycap.io partnership agreement stated that “[o]ne partner shall
participate in the management and conduct the affairs of the partnership.”  In practice,
Ellison-Meade exercised such authority.
17. The Baycap.io partnership agreement provided that the investment
club’s operator, Ellison-Meade, would be paid a 2% fee based on all capital
contributions.  In addition, the agreement provided that the managing partner, also
Ellison-Meade, was entitled to a separate 20% fee on all investment profits.
18. When investing in Baycap.io, investors sent Ellison-Meade money via
wire transfer or check, which he then deposited in bank accounts he controlled.
B. Ellison-Meade’s False and Misleading Representations to Investors
19. Ellison-Meade often pitched Baycap.io to potential investors in oral
presentations.
20. When raising funds from Baycap.io investors, Ellison-Meade also
provided some investors with written offering materials that described the proposed
Baycap.io investment.
21. Ellison-Meade had ultimate authority over both the content of these
written offering materials and whether and how to communicate those statements to
investors and potential investors in Baycap.io.

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1. Ellison-Meade represented that investors would receive high returns
through his proprietary algorithm
22. As part of his investment pitch, Ellison-Meade stated that he had
developed an algorithm for picking stocks, and that the algorithm could grow a
$10,000 investment into more than $100,000 in one year of trading.
23. Ellison-Meade also claimed, at times, that he had created the algorithm
for a class project.  Ellison-Meade represented that after he had tested the algorithm’s
effectiveness using a dataset of historical stock prices, the algorithm had performed
so well that his college professor then arranged for him to speak with an investment
adviser who eventually opined that Ellison-Meade could sell the algorithm for
millions.
24. Ellison-Meade told potential investors, as part of his investment pitch,
that he had decided against selling the algorithm, and instead chose to use his
algorithm to trade stocks for the benefit of a select group of investors drawn from his
family and friends.
25. In written offering materials that he provided to some investors, Ellison-
Meade further represented that when “Algo Trading,” he was able to predict the
NASDAQ through historical trends:  “By focusing on simple variables I am able to
find patterns across all of the NASDAQ regardless or [sic] type of investment, there
is [sic] observable patterns that transcend the complex variables of a stock and as a
result are impacting [sic] by all variables” and that “[B]y focusing on these simple
variables we consistently predict growth within stocks at 69% accuracy and average
almost 2% growth a day just based on the previous day’s performance.”  Thus,
according to Ellison-Meade’s written offering materials, “[U]sing deep machine
learning we can beat the market with high accuracy.”
26. The written offering materials also claimed that Ellison-Meade’s
NASDAQ “Algo Trading” strategy “[b]eats all other investments,” asserting that
“[w]ith almost 2% average interest a day trading 4 days a week last year, we had

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returns of almost 1300%” and that “[t]his year we have a projection of around
800%.”
27. Other written offering materials included a line graph purporting to show
a $10,000 investment in January 2018 growing to nearly $130,000 in value at the end
of December 2018.  Ellison-Meade claimed to one investor, based on the graph, that a
one-year investment of $100,000 could expect to earn $300,000 in profit.
2. Ellison-Meade represented that investors faced little risk
28. As part of his investment pitch, Ellison-Meade also represented that he
used various strategies to minimize the risk of investor loss.
29. For example, Ellison-Meade explained to one investor that he only
traded stocks, bonds, and mutual funds, and that he reduced those positions to cash at
the end of every trading day.
30. He also told a different investor that he traded different stocks every day.
31. Last, Ellison-Meade represented to investors that he had designed his
proprietary trading algorithm with an automatic trigger that would limit any investor
losses to 10%.  And so when one investor asked Ellison-Meade if he could lose his
entire investment, Ellison-Meade assured the investor that could not happen:  “Worst
case would be 10%.  I have it set so that I cant [sic] lose more than 10%.”
32. Finally, Ellison-Meade sought to entice investment when representing
Baycap.io membership in written offering materials as an exclusive opportunity
available to only a select few:  “Most investment opportunities such as this are
completely behind closed doors and never accept new investors,” and that “[f]or now
we are only going to be accepting 15 investors, this is due to the way we are
structuring our investment pool.”
3. Ellison-Meade represented that investments in Baycap.io were
transparent and liquid
33. As part of his investment pitch, Ellison-Meade also emphasized the
liquidity and transparency of investments in Baycap.io.

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34. Ellison-Meade stated to investors and potential investors that an
investment in Baycap.io was like a checking account, since investors would have
ready access to information about their investment through a Baycap.io online portal.
35. Ellison-Meade represented to investors and potential investors that their
investments were highly liquid, and that they could withdraw funds “in under a
week.”
C. Ellison-Meade’s Scheme to Misappropriate Funds and Make Ponzi-Like
Payments
36. Rather than investing their funds as represented, Ellison-Meade
misappropriated investor funds for his personal use and to make Ponzi-like payments
to other investors.
37. In the relevant period, Ellison-Meade raised at least $2.8 million from
Baycap.io investors and then spent most of those funds on his personal expenses.
38. As one example, at the end of September 2019, an Ellison-Meade
financial account had a balance of just $501.  In early October 2019, however, the
account received funds from two Baycap.io investors totaling $265,000.  Over the
first week of October, Ellison-Meade then spent more than $25,000 on luxury items
from Rolex, Louis Vuitton, and Yves Saint Laurent, as well as $47,000 on private jet
services.
39. In addition to misappropriating investor money for his personal use,
Ellison-Meade used incoming investor funds to make Ponzi-like payments to other
investors.
40. In the relevant period, Ellison-Meade transferred about $131,000 in
purported investment gains to Baycap.io investors.  However, most of that amount
was funded by new investor capital.
41. Because of Ellison-Meade’s misappropriation, most of Baycap.io’s
investors have not received their promised investment returns nor a return of their
invested capital.

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42. To further this fraud, Ellison-Meade engaged in a host of deceptive
conduct.  He led some investors to believe that their investments with Baycap.io were
earning high profits by flaunting his expensive lifestyle, and by providing them with
fake account statements.  He sought to explain his inability to honor investor
withdrawal requests with false excuses.  Finally, Ellison-Meade also impersonated
another individual, using a fake email account, in an effort to deflect the blame.
D. Ellison-Meade’s Representations of Algorithmic Trading, High Returns,
Low Risk, Liquidity, and Transparency Were False and Misleading
43. Ellison-Meade represented that he would use investor capital to trade
stocks, bonds, and ETFs through his proprietary trading algorithm.
44. No such securities trading occurred. Instead, Ellison-Meade
misappropriated investor funds to pay his personal expenses and/or make Ponzi-like
payments to other investors.
45. Ellison-Meade represented as well that investors would receive high
investment returns through his algorithmic trading program.
46. Ellison-Meade’s promised investment returns were an impossibility
since he did not trade in securities with investor funds as represented.
47. Ellison-Meade represented that any investor losses would be limited due
to various trading strategies and an automatic trigger he built into the algorithm.
48. Because Meade engaged in no actual securities trading and used investor
funds for his own personal expenses and for Ponzi-like payments, Baycap.io investor
losses were not limited to 10%.
49. Ellison-Meade further represented that investors could withdraw their
invested funds at any time, subject to only a brief processing delay.
50. Ellison-Meade’s claim of investment liquidity was false and Baycap.io
investors were unable to withdraw their money as represented because Ellison-Meade
had misappropriated their funds.
51. Ellison-Meade also represented that Baycap.io investors would be able

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to track the performance of their investments through an online portal.
52. Ellison-Meade’s claim of investment transparency was false because
none of Baycap.io’s investors ever received access to such a portal.
53. The false and misleading statements alleged above concerning Ellison-
Meade’s algorithm, and Ellison-Meade’s corresponding claims of high returns, little
risk of capital to investors, and investment liquidity and transparency, were all
material to investors and potential investors in Baycap.io because reasonable
investors would have considered it important when making their investment decision
to know that Baycap.io would not pay Ellison-Meade’s promised returns, to know
that their losses would not be limited to 10% of their invested capital, to know that
Ellison-Meade would not use their invested funds for securities trading but instead
misappropriate them to pay his personal expenses and/or make Ponzi-like payments,
and to know that Ellison-Meade would be consequently unable to return their
invested capital within a few days of their request.
E. Ellison-Meade Lulled Investors with Further Misrepresentations
54. To conceal his fraud, Ellison-Meade lulled investors with more false and
misleading representations.
55. Although investors in Baycap.io never received access to Ellison-
Meade’s represented online portal that would allow them to track their investments,
Ellison-Meade provided some investors with fake account statements and invoices
purportedly reflecting their promised gains.
56. For example, Ellison-Meade sent two investors statements that were
supposedly for accounts Ellison-Meade had opened at a registered broker-dealer.
57. However, that broker-dealer has no record of any securities accounts
corresponding to the names and account numbers appearing on the statements, and
the statements provided by Ellison-Meade to those investors were fake.
58. Ellison-Meade sent other investors investment statements and documents
that reflected supposed robust investment returns.  These documents were fake as

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well.
59. The false documents that Ellison-Meade provided to certain investors led
them to believe that their Baycap.io investments were generating investment returns,
and encouraged them to keep their capital invested with Ellison-Meade.
60. At other times, when Ellison-Meade was unable to honor an investor’s
request to withdraw their funds, Ellison-Meade offered various false excuses to
explain his inability to return their money.
61. Ellison-Meade told some investors that they had made their request too
late in the quarter to be processed.
62. He separately claimed that Baycap.io’s brokerage firm was at fault for
failing to release the funds.
63. In another instance, Ellison-Meade falsely claimed that he had
accidentally used the wrong number in wire transfer instructions.
F. Ellison-Meade Acted With Scienter and His Conduct Was Negligent
64. Ellison-Meade was Baycap.io’s manager and he had sole authority to
make all investment decisions on its behalf.
65. Ellison-Meade deposited the vast majority of investor capital in bank
accounts that he controlled, as their sole signatory.
66. Ellison-Meade personally raised capital from defrauded investors by
pitching them on his proprietary trading algorithm, and promises of high returns,
liquidity, transparency, and low investment risk in Baycap.io.
67. Nonetheless, Ellison-Meade engaged in no meaningful securities trading
with the investor funds he raised.
68. Moreover, Ellison-Meade took deliberate steps to conceal his fraud from
Baycap.io investors through fake documents, false excuses, and other deceptive
conduct.
69. Ellison-Meade knew, or was reckless in not knowing, that his
representations of algorithmic trading, high investment returns, liquidity,

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transparency, and low investment risk were false and misleading.
70. Ellison-Meade knew, or was reckless in not knowing, that through his
conduct, he was misappropriating investor funds for his personal use and to make
Ponzi-like payments to other investors.
71. Ellison-Meade’s false and misleading representations of algorithmic
trading, high investment returns, liquidity, transparency, and low investment risk
were negligent, and in engaging in that conduct Ellison-Meade acted unreasonably.
72. Ellison-Meade’s misappropriation of investor funds, lulling conduct, and
other deceptive acts in furtherance of his fraud – providing fake account statements
and false excuses for investor losses – were negligent, and in engaging in that
conduct Ellison-Meade acted unreasonably.
G. Ellison-Meade Acted as an Investment Adviser
73. Ellison-Meade controlled which securities were traded and when for the
Baycap.io investment club, and the Baycap.io partnership agreements that Ellison-
Meade had investors sign provided for him to receive compensation for his
investment advice through a fee that was calculated based on the Baycap.io
investment club’s trading profits.
74. During the relevant period, Ellison-Meade was therefore engaged in the
business of advising others as to the value of securities or as to the advisability of
investing in, purchasing, or selling securities, which he did in exchange for
compensation.
75. Ellison-Meade therefore acted as an investment adviser when engaging
in the conduct alleged by this complaint.
H. Baycap.io Investment Club Memberships Are Securities
76. Ellison-Meade represented to investors and potential investors that
Baycap.io members were investing money in an investment club.
77. When soliciting these investments, Ellison-Meade represented to
investors and potential investor funds would be pooled and used to trade stock in a

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brokerage account that Ellison-Meade would maintain on behalf of the investment
club.
78. The Baycap.io partnership agreements that Ellison-Meade had investors
sign also stated that investor funds would be pooled together in a financial account
selected by the Baycap.io investment club partnership, and that “[s]ecurities owned
by the partnership shall be registered in the partnership [sic] name.”  Ellison-Meade
would then use those pooled funds to trade securities and make profit distributions to
investors based on the overall net asset value of the partnership.
79. Accordingly, as represented to investors and potential investors by
Ellison-Meade, the Baycap.io investment club pooled investor funds and interests,
and the fortunes of each investor were linked to those of Ellison-Meade, the
investment club’s promoter.
80. The Baycap.io partnership agreements that Ellison-Meade had investors
sign further provided that investors had no role in the selection of securities traded by
Baycap.io, Baycap.io’s trading strategy, the management or oversight of assets, or
any profit calculations, allocations, and distributions.
81. Under the terms of the Baycap.io partnership agreements that Ellison-
Meade had investors sign, investors were passive and they provided nothing beyond
money for investment.
82. Accordingly, as represented to investors and potential investors by
Ellison-Meade, all profits from investing in the Baycap.io investment club were to be
derived solely from the efforts of Ellison-Meade, the investment club’s managing
partner.
83. The Baycap.io investment club memberships that Ellison-Meade offered
and sold to investors and potential investors were therefore securities in the form of
investment contracts.
I. Baycap.io is a Pooled-Investment Vehicle
84. According to Ellison-Meade’s representations to investors and potential

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investors and the terms of the partnership agreements that Ellison-Meade had
investors sign, the Baycap.io investment club held itself out as being primarily
engaged in the business of investing in securities.
85. Baycap.io investment club memberships were not publicly offered.
86. Ellison-Meade raised funds from approximately 31 individuals that
invested in Baycap.io investment club memberships.
87. Baycap.io was therefore a pooled investment vehicle.
FIRST CLAIM FOR RELIEF
Fraud in the Connection with the Purchase and Sale of Securities
Violations of Section 10(b) of the Exchange Act and Rule 10b-5
88. The SEC realleges and incorporates by reference paragraphs 1 through
87 above.
89. Defendant Ellison-Meade’s representations to investors and potential
investors in Baycap.io of algorithmic trading, high investment returns, liquidity,
transparency, and little investment risk were false and misleading because Ellison-
Meade never used investor funds to trade in securities as represented.  In addition,
Ellison-Meade defrauded Baycap.io investors by misappropriating their funds for his
personal use and to make Ponzi-like payments to other investors.  And last, Ellison-
Meade engaged in lulling and other deceptive conduct designed to conceal his fraud
when he provided fake account statements and false excuses to investors.
90. By engaging in the conduct described above, Defendant Ellison-Meade,
directly or indirectly, in connection with the purchase or sale of a security, by the use
of means or instrumentalities of interstate commerce, of the mails, or of the facilities
of a national securities exchange:  (a) employed devices, schemes, or artifices to
defraud; (b) made untrue statements of a material fact or omitted to state a material
fact necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; and (c) engaged in acts, practices, or
courses of business which operated or would operate as a fraud or deceit upon other

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persons.
91. Defendant Ellison-Meade, with scienter, employed devices, schemes and
artifices to defraud; made untrue statements of a material fact or omitted to state a
material fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading; and engaged in acts,
practices or courses of conduct that operated as a fraud on the investing public by the
conduct described in detail above.
92. By engaging in the conduct described above, Defendant Ellison-Meade
violated, and unless restrained and enjoined will continue to violate, Section 10(b) of
the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-5(a), 10b-5(b), and 10b-5(c)
thereunder, 17 C.F.R. §§ 240.10b-5(a), 240.10b-5(b) & 240.10b-5(c).
SECOND CLAIM FOR RELIEF
Fraud in the Offer or Sale of Securities
Violations of Section 17(a) of the Securities Act
93. The SEC realleges and incorporates by reference paragraphs 1 through
87 above.
94. Defendant Ellison-Meade’s representations to investors and potential
investors in Baycap.io of algorithmic trading, high investment returns, liquidity,
transparency, and little investment risk were false and misleading because Ellison-
Meade never used investor funds to trade in securities as represented.  In addition,
Ellison-Meade defrauded Baycap.io investors by misappropriating their funds for his
personal use and to make Ponzi-like payments to other investors.  And last, Ellison-
Meade engaged in lulling and other deceptive conduct designed to conceal his fraud
when he provided fake account statements and false excuses to investors
95. By engaging in the conduct described above, Defendant Ellison-Meade,
directly or indirectly, in the offer or sale of securities, and by the use of means or
instruments of transportation or communication in interstate commerce or by use of
the mails directly or indirectly:  (a) employed devices, schemes, or artifices to

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defraud; (b) obtained money or property by means of untrue statements of a material
fact or by omitting to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading; and
(c) engaged in transactions, practices, or courses of business which operated or would
operate as a fraud or deceit upon the purchaser.
96. Defendant Ellison-Meade, with scienter, employed devices, schemes and
artifices to defraud; with scienter and/or negligence, obtained money or property by
means of untrue statements of a material fact or by omitting to state a material fact
necessary in order to make the statements made, in light of the circumstances under
which they were made, not misleading; and, with scienter and/or negligence, engaged
in transactions, practices, or courses of business which operated or would operate as a
fraud or deceit upon the purchaser.
97. By engaging in the conduct described above, Defendant Ellison-Meade
violated, and unless restrained and enjoined will continue to violate, Sections
17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77q(a)(1),
77q(a)(2), & 77q(a)(3).
THIRD CLAIM FOR RELIEF
Fraud by an Investment Adviser
Violations of Sections 206(1) and 206(2) of the Advisers Act
98. The SEC realleges and incorporates by reference paragraphs 1 through
88 above.
99. During the relevant period, Defendant Ellison-Meade was engaged in the
business of advising others as to the value of securities or as to the advisability of
investing in, purchasing, or selling securities, which he did in exchange for
compensation.  Ellison-Meade was therefore an investment adviser to Baycap.io and
certain investors.  Ellison-Meade’s representations to investors and potential investors
in Baycap.io of algorithmic trading, high investment returns, liquidity, transparency,
and little investment risk were false and misleading because Ellison-Meade never

COMPLAINT
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used investor funds to trade in securities as represented.  In addition, Ellison-Meade
defrauded Baycap.io investors by misappropriating their funds for his personal use
and to make Ponzi-like payments to other investors.  And last, Ellison-Meade
engaged in lulling and other deceptive conduct designed to conceal his fraud when he
provided fake account statements and false excuses to investors.
100. By engaging in the conduct described above, Defendant Ellison-Meade,
directly or indirectly, by use of the mails or means and instrumentalities of interstate
commerce: (a) employed or is employing devices, schemes or artifices to defraud
clients or prospective clients; and engaged in or is  engaging in transactions, practices,
or courses of business which operated as a fraud or deceit upon clients or prospective
clients.
101. By engaging in the conduct described above, Defendant Ellison-Meade
has violated, and unless restrained and enjoined, is reasonably likely to continue to
violate, Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-6(1) & 80b-
6(2).
FOURTH CLAIM FOR RELIEF
Fraud Involving a Pooled Investment Vehicle
Violations of Section 206(4) of the Advisers Act and Rule 206(4)-8
102. The SEC realleges and incorporates by reference paragraphs 1 through
88 above.
103. During the relevant period, Baycap.io was a pooled investment vehicle
and Defendant Ellison-Meade acted as that pooled investment vehicle’s investment
adviser.  Ellison-Meade’s representations to investors and potential investors in
Baycap.io of algorithmic trading, high investment returns, liquidity, transparency, and
little investment risk were false and misleading because Ellison-Meade never used
investor funds to trade in securities as represented.  In addition, Ellison-Meade
defrauded Baycap.io investors by misappropriating their funds for his personal use
and to make Ponzi-like payments to other investors.  And last, Ellison-Meade

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engaged in lulling and other deceptive conduct designed to conceal his fraud when he
provided fake account statements and false excuses to investors.
104. By engaging in the conduct described above, Defendant Ellison-Meade,
directly or indirectly, by engaging in the conduct described above, while acting as an
investment adviser to a pooled investment vehicle, directly or indirectly, by use of the
mails or means or instrumentalities of interstate commerce:  (a) made untrue
statements of a material fact or omitted to state a material fact necessary in order to
make the statements made, in the light of the circumstances under which there were
made, not misleading, to any investor or prospective investor in the pooled
investment vehicle; or (b) engaged in acts, practices, or courses of business that were
fraudulent, deceptive, or manipulative with respect to any investor or prospective
investor in the pooled investment vehicle.
105. By engaging in the conduct described above, Defendant Ellison-Meade
has violated, and unless restrained and enjoined, is reasonably likely to continue to
violate, Section 206(4) of the Advisers Act, 15 U.S.C. § 80b-6(4),  and Rule 206(4)-8
thereunder, 17 C.F.R. § 275.206(4)-8.
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that Defendant committed the
alleged violations.
II.
Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining defendant Ellison-Meade, and his officers,
agents, servants, employees and attorneys, and those persons in active concert or
participation with any of them, who receive actual notice of the judgment by personal
service or otherwise, and each of them, from violating Section 17(a) of the Securities
Act [15 U.S.C. §77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. §§ 78j(b)]

COMPLAINT
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and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Section 206 of the Advisers
Act [15 U.S.C. § 80b-6] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
III.
Issue a   judgment, in a form consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining defendant Ellison-Meade 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 in an
unregistered offering by an issuer, provided, however, that such injunction shall not
prevent him from purchasing or selling securities for his own personal account.
IV.
Order Defendant to disgorge all funds received from his illegal conduct,
together with prejudgment interest thereon, pursuant to Sections 21(d)(3), 21(d)(5)
and 21(d)(7) of the Exchange Act [15 U.S.C. § 78u(d)(3), § 78u(d)(5), & 78u(d)(7)].
V.
Order Defendant to pay civil penalties under Section 20(d) of the Securities
Act [15 U.S.C. § 77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. §
78u(d)(3)], and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)].
VI.
Retain 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.
VII.
Grant such other and further relief as this Court may determine to be just and
necessary.
///
///
///

COMPLAINT
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Dated:  January 24, 2023

/s/ Gary Y. Leung
GARY Y. LEUNG
Attorney for Plaintiff
Securities and Exchange Commission



			

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COMPLAINT 1  
 

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GARY Y. LEUNG (Cal. Bar No. 302928) 
Email:  [email protected] 
DOHOANG T. DUONG (Cal. Bar No. 219127) 
Email:  [email protected] 
 
Attorneys for Plaintiff 
Securities and Exchange Commission 
Michele Wein Layne, Regional Director 
Alka N. Patel, Associate Regional Director 
Gary Y. Leung, Regional Trial Counsel 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 
Facsimile: (213) 443-1904 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 
 

vs. 

AUSTIN DANGER ELLISON-
MEADE, 

Defendant. 
 

 Case No. 
 
 
COMPLAINT 
 

 
 
 

Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 

77t(b), 77t(d)(1) & 77v(a), Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the 

Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1), 

78u(d)(3)(A), 78u(e) & 78aa(a), and Sections 209(d), 209(e)(1) and 214 of the 

Investment Advisers Act of 1940 (“Advisers Act”), 15 U.S.C. §§ 80b-9(d), 80b-

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 1 of 19   Page ID #:1



 

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9(e)(1) & 90b-14. 

2. Defendant has, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, of the mails, or of the facilities of a national 

securities exchange in connection with the transactions, acts, practices and courses of 

business alleged in this complaint.  

3. Venue is proper in this district pursuant to Section 22(a) of the Securities 

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

because certain of the transactions, acts, practices and courses of conduct constituting 

violations of the federal securities laws occurred within this district.   

SUMMARY 

4. This case concerns a securities offering fraud perpetrated by defendant 

Austin Danger Ellison-Meade (“Ellison-Meade”), who solicited investments in 

Baycap.io, an investment club that he operated and managed as a pooled investment 

vehicle from at least February 2019 to May 2021.  Ellison-Meade is the 24-year old 

“managing partner” of Baycap.io.  He has never been registered with the Commission 

in any capacity or associated with any Commission-registered investment adviser.  

He claimed that he had developed a proprietary algorithm which accurately identified 

stocks that were poised for growth.  Through these representations, Ellison-Meade 

raised approximately $2.8 million from 31 individual investors, telling them that he 

would use his proprietary algorithm to generate high investment returns, with very 

little risk to investor capital.  Ellison-Meade’s claims of profitable algorithmic trading 

were false – rather than investing their money as represented, he instead 

misappropriated investor funds from Baycap.io to pay his personal expenses and to 

make Ponzi payments.  To conceal his fraud, Ellison-Meade also distributed fake 

account statements to investors in an effort to persuade them to maintain their 

investments with him, and to contribute even more capital to Baycap.io.       

5. By engaging in this conduct, defendant Ellison-Meade:  (i) violated 

Section 17(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. § 77q(a); (ii) 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 2 of 19   Page ID #:2



 

COMPLAINT 3  
 

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violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 

U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5; and (iii) violated 

Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 

(“Advisers Act”), 15 U.S.C. § 80b-6(1), (2), and (4), and Rule 206(4)-8 thereunder, 

17 C.F.R. § 275.206(4)-8.  

6. With this complaint, plaintiff SEC seeks a permanent injunction 

prohibiting future violations of the federal securities laws, a conduct-based 

injunction, an order requiring defendant Ellison-Meade to disgorge his ill-gotten 

gains along with prejudgment interest, and an order requiring Ellison-Meade to pay 

civil penalties.   

DEFENDANT 

7. Defendant Austin Danger Ellison-Meade, age 24, held himself out as 

the managing partner of an investment club called Baycap.io.  Ellison-Meade has 

never been registered with the Commission in any capacity, nor has he ever been 

associated with any Commission registrant. 

THE ALLEGATIONS 

A. Ellison-Meade’s Fraudulent Baycap.io Securities Offering 

8. In early 2019, Ellison-Meade formed Baycap.io, a purported investment 

club, began raising capital for Baycap.io, and operated Baycap.io as an unregistered 

pooled investment vehicle.   

9. Ellison-Meade held himself out as Baycap.io’s managing partner and 

communicated in person, over the phone, and by email with potential investors.   

10. Besides Ellison-Meade, no other person or entity played any role in the 

management of Baycap.io. 

11. From at least February 2019 to May 2021 (the “relevant period”), 

Ellison-Meade raised at least $2.8 million from about 31 individual investors.   

12. In doing so, Ellison-Meade used friends and family to help him identify 

and recruit potential investors.   

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 3 of 19   Page ID #:3



 

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13. Ellison-Meade sent partnership agreements to certain investors which 

documented their investments in Baycap.io.  

14. Ellison-Meade had ultimate authority over both the content of the 

Baycap.io partnership agreements, and whether, how, and when to provide them to 

Baycap.io investors for their execution.    

15. The Baycap.io partnership agreement provided that Baycap.io’s purpose 

was “to invest the assets of the partnership solely in publicly traded individual 

corporate stocks and bonds, and mutual funds, and ETF’s (Exchange Traded Funds) 

made up of those investments … for the benefit of the partners.”   

16. The Baycap.io partnership agreement stated that “[o]ne partner shall 

participate in the management and conduct the affairs of the partnership.”  In practice, 

Ellison-Meade exercised such authority.  

17. The Baycap.io partnership agreement provided that the investment 

club’s operator, Ellison-Meade, would be paid a 2% fee based on all capital 

contributions.  In addition, the agreement provided that the managing partner, also 

Ellison-Meade, was entitled to a separate 20% fee on all investment profits.   

18. When investing in Baycap.io, investors sent Ellison-Meade money via 

wire transfer or check, which he then deposited in bank accounts he controlled.   

B. Ellison-Meade’s False and Misleading Representations to Investors 

19. Ellison-Meade often pitched Baycap.io to potential investors in oral 

presentations.   

20. When raising funds from Baycap.io investors, Ellison-Meade also 

provided some investors with written offering materials that described the proposed 

Baycap.io investment.   

21. Ellison-Meade had ultimate authority over both the content of these 

written offering materials and whether and how to communicate those statements to 

investors and potential investors in Baycap.io.   

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 4 of 19   Page ID #:4



 

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1. Ellison-Meade represented that investors would receive high returns 

through his proprietary algorithm 

22. As part of his investment pitch, Ellison-Meade stated that he had 

developed an algorithm for picking stocks, and that the algorithm could grow a 

$10,000 investment into more than $100,000 in one year of trading.   

23. Ellison-Meade also claimed, at times, that he had created the algorithm 

for a class project.  Ellison-Meade represented that after he had tested the algorithm’s 

effectiveness using a dataset of historical stock prices, the algorithm had performed 

so well that his college professor then arranged for him to speak with an investment 

adviser who eventually opined that Ellison-Meade could sell the algorithm for 

millions. 

24. Ellison-Meade told potential investors, as part of his investment pitch, 

that he had decided against selling the algorithm, and instead chose to use his 

algorithm to trade stocks for the benefit of a select group of investors drawn from his 

family and friends.   

25. In written offering materials that he provided to some investors, Ellison-

Meade further represented that when “Algo Trading,” he was able to predict the 

NASDAQ through historical trends:  “By focusing on simple variables I am able to 

find patterns across all of the NASDAQ regardless or [sic] type of investment, there 

is [sic] observable patterns that transcend the complex variables of a stock and as a 

result are impacting [sic] by all variables” and that “[B]y focusing on these simple 

variables we consistently predict growth within stocks at 69% accuracy and average 

almost 2% growth a day just based on the previous day’s performance.”  Thus, 

according to Ellison-Meade’s written offering materials, “[U]sing deep machine 

learning we can beat the market with high accuracy.”     

26. The written offering materials also claimed that Ellison-Meade’s 

NASDAQ “Algo Trading” strategy “[b]eats all other investments,” asserting that 

“[w]ith almost 2% average interest a day trading 4 days a week last year, we had 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 5 of 19   Page ID #:5



 

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returns of almost 1300%” and that “[t]his year we have a projection of around 

800%.” 

27. Other written offering materials included a line graph purporting to show 

a $10,000 investment in January 2018 growing to nearly $130,000 in value at the end 

of December 2018.  Ellison-Meade claimed to one investor, based on the graph, that a 

one-year investment of $100,000 could expect to earn $300,000 in profit.  

2. Ellison-Meade represented that investors faced little risk  

28. As part of his investment pitch, Ellison-Meade also represented that he 

used various strategies to minimize the risk of investor loss.   

29. For example, Ellison-Meade explained to one investor that he only 

traded stocks, bonds, and mutual funds, and that he reduced those positions to cash at 

the end of every trading day.   

30. He also told a different investor that he traded different stocks every day.   

31. Last, Ellison-Meade represented to investors that he had designed his 

proprietary trading algorithm with an automatic trigger that would limit any investor 

losses to 10%.  And so when one investor asked Ellison-Meade if he could lose his 

entire investment, Ellison-Meade assured the investor that could not happen:  “Worst 

case would be 10%.  I have it set so that I cant [sic] lose more than 10%.”   

32. Finally, Ellison-Meade sought to entice investment when representing 

Baycap.io membership in written offering materials as an exclusive opportunity 

available to only a select few:  “Most investment opportunities such as this are 

completely behind closed doors and never accept new investors,” and that “[f]or now 

we are only going to be accepting 15 investors, this is due to the way we are 

structuring our investment pool.”   

3. Ellison-Meade represented that investments in Baycap.io were 

transparent and liquid 

33. As part of his investment pitch, Ellison-Meade also emphasized the 

liquidity and transparency of investments in Baycap.io.   

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 6 of 19   Page ID #:6



 

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34. Ellison-Meade stated to investors and potential investors that an 

investment in Baycap.io was like a checking account, since investors would have 

ready access to information about their investment through a Baycap.io online portal.   

35. Ellison-Meade represented to investors and potential investors that their 

investments were highly liquid, and that they could withdraw funds “in under a 

week.”   

C. Ellison-Meade’s Scheme to Misappropriate Funds and Make Ponzi-Like 

Payments 

36. Rather than investing their funds as represented, Ellison-Meade 

misappropriated investor funds for his personal use and to make Ponzi-like payments 

to other investors.   

37. In the relevant period, Ellison-Meade raised at least $2.8 million from 

Baycap.io investors and then spent most of those funds on his personal expenses.   

38. As one example, at the end of September 2019, an Ellison-Meade 

financial account had a balance of just $501.  In early October 2019, however, the 

account received funds from two Baycap.io investors totaling $265,000.  Over the 

first week of October, Ellison-Meade then spent more than $25,000 on luxury items 

from Rolex, Louis Vuitton, and Yves Saint Laurent, as well as $47,000 on private jet 

services.   

39. In addition to misappropriating investor money for his personal use, 

Ellison-Meade used incoming investor funds to make Ponzi-like payments to other 

investors.   

40. In the relevant period, Ellison-Meade transferred about $131,000 in 

purported investment gains to Baycap.io investors.  However, most of that amount 

was funded by new investor capital. 

41. Because of Ellison-Meade’s misappropriation, most of Baycap.io’s 

investors have not received their promised investment returns nor a return of their 

invested capital. 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 7 of 19   Page ID #:7



 

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42. To further this fraud, Ellison-Meade engaged in a host of deceptive 

conduct.  He led some investors to believe that their investments with Baycap.io were 

earning high profits by flaunting his expensive lifestyle, and by providing them with 

fake account statements.  He sought to explain his inability to honor investor 

withdrawal requests with false excuses.  Finally, Ellison-Meade also impersonated 

another individual, using a fake email account, in an effort to deflect the blame.   

D. Ellison-Meade’s Representations of Algorithmic Trading, High Returns, 

Low Risk, Liquidity, and Transparency Were False and Misleading 

43. Ellison-Meade represented that he would use investor capital to trade 

stocks, bonds, and ETFs through his proprietary trading algorithm. 

44. No such securities trading occurred. Instead, Ellison-Meade 

misappropriated investor funds to pay his personal expenses and/or make Ponzi-like 

payments to other investors. 

45. Ellison-Meade represented as well that investors would receive high 

investment returns through his algorithmic trading program.   

46. Ellison-Meade’s promised investment returns were an impossibility 

since he did not trade in securities with investor funds as represented.   

47. Ellison-Meade represented that any investor losses would be limited due 

to various trading strategies and an automatic trigger he built into the algorithm.  

48. Because Meade engaged in no actual securities trading and used investor 

funds for his own personal expenses and for Ponzi-like payments, Baycap.io investor 

losses were not limited to 10%. 

49. Ellison-Meade further represented that investors could withdraw their 

invested funds at any time, subject to only a brief processing delay. 

50. Ellison-Meade’s claim of investment liquidity was false and Baycap.io 

investors were unable to withdraw their money as represented because Ellison-Meade 

had misappropriated their funds.   

51. Ellison-Meade also represented that Baycap.io investors would be able 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 8 of 19   Page ID #:8



 

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to track the performance of their investments through an online portal. 

52. Ellison-Meade’s claim of investment transparency was false because 

none of Baycap.io’s investors ever received access to such a portal.  

53. The false and misleading statements alleged above concerning Ellison-

Meade’s algorithm, and Ellison-Meade’s corresponding claims of high returns, little 

risk of capital to investors, and investment liquidity and transparency, were all 

material to investors and potential investors in Baycap.io because reasonable 

investors would have considered it important when making their investment decision 

to know that Baycap.io would not pay Ellison-Meade’s promised returns, to know 

that their losses would not be limited to 10% of their invested capital, to know that 

Ellison-Meade would not use their invested funds for securities trading but instead 

misappropriate them to pay his personal expenses and/or make Ponzi-like payments, 

and to know that Ellison-Meade would be consequently unable to return their 

invested capital within a few days of their request.   

E. Ellison-Meade Lulled Investors with Further Misrepresentations 

54. To conceal his fraud, Ellison-Meade lulled investors with more false and 

misleading representations. 

55. Although investors in Baycap.io never received access to Ellison-

Meade’s represented online portal that would allow them to track their investments, 

Ellison-Meade provided some investors with fake account statements and invoices 

purportedly reflecting their promised gains.   

56. For example, Ellison-Meade sent two investors statements that were 

supposedly for accounts Ellison-Meade had opened at a registered broker-dealer. 

57. However, that broker-dealer has no record of any securities accounts 

corresponding to the names and account numbers appearing on the statements, and 

the statements provided by Ellison-Meade to those investors were fake.   

58. Ellison-Meade sent other investors investment statements and documents 

that reflected supposed robust investment returns.  These documents were fake as 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 9 of 19   Page ID #:9



 

COMPLAINT 10  
 

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well.   

59. The false documents that Ellison-Meade provided to certain investors led 

them to believe that their Baycap.io investments were generating investment returns, 

and encouraged them to keep their capital invested with Ellison-Meade. 

60. At other times, when Ellison-Meade was unable to honor an investor’s 

request to withdraw their funds, Ellison-Meade offered various false excuses to 

explain his inability to return their money.   

61. Ellison-Meade told some investors that they had made their request too 

late in the quarter to be processed.   

62. He separately claimed that Baycap.io’s brokerage firm was at fault for 

failing to release the funds.   

63. In another instance, Ellison-Meade falsely claimed that he had 

accidentally used the wrong number in wire transfer instructions.   

F. Ellison-Meade Acted With Scienter and His Conduct Was Negligent 

64. Ellison-Meade was Baycap.io’s manager and he had sole authority to 

make all investment decisions on its behalf.   

65. Ellison-Meade deposited the vast majority of investor capital in bank 

accounts that he controlled, as their sole signatory. 

66. Ellison-Meade personally raised capital from defrauded investors by 

pitching them on his proprietary trading algorithm, and promises of high returns, 

liquidity, transparency, and low investment risk in Baycap.io.   

67. Nonetheless, Ellison-Meade engaged in no meaningful securities trading 

with the investor funds he raised.   

68. Moreover, Ellison-Meade took deliberate steps to conceal his fraud from 

Baycap.io investors through fake documents, false excuses, and other deceptive 

conduct.   

69. Ellison-Meade knew, or was reckless in not knowing, that his 

representations of algorithmic trading, high investment returns, liquidity, 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 10 of 19   Page ID #:10



 

COMPLAINT 11  
 

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transparency, and low investment risk were false and misleading.   

70. Ellison-Meade knew, or was reckless in not knowing, that through his 

conduct, he was misappropriating investor funds for his personal use and to make 

Ponzi-like payments to other investors. 

71. Ellison-Meade’s false and misleading representations of algorithmic 

trading, high investment returns, liquidity, transparency, and low investment risk 

were negligent, and in engaging in that conduct Ellison-Meade acted unreasonably.   

72. Ellison-Meade’s misappropriation of investor funds, lulling conduct, and 

other deceptive acts in furtherance of his fraud – providing fake account statements 

and false excuses for investor losses – were negligent, and in engaging in that 

conduct Ellison-Meade acted unreasonably.  

G. Ellison-Meade Acted as an Investment Adviser  

73. Ellison-Meade controlled which securities were traded and when for the 

Baycap.io investment club, and the Baycap.io partnership agreements that Ellison-

Meade had investors sign provided for him to receive compensation for his 

investment advice through a fee that was calculated based on the Baycap.io 

investment club’s trading profits.   

74. During the relevant period, Ellison-Meade was therefore engaged in the 

business of advising others as to the value of securities or as to the advisability of 

investing in, purchasing, or selling securities, which he did in exchange for 

compensation.   

75. Ellison-Meade therefore acted as an investment adviser when engaging 

in the conduct alleged by this complaint.    

H. Baycap.io Investment Club Memberships Are Securities 

76. Ellison-Meade represented to investors and potential investors that 

Baycap.io members were investing money in an investment club. 

77. When soliciting these investments, Ellison-Meade represented to 

investors and potential investor funds would be pooled and used to trade stock in a 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 11 of 19   Page ID #:11



 

COMPLAINT 12  
 

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brokerage account that Ellison-Meade would maintain on behalf of the investment 

club. 

78. The Baycap.io partnership agreements that Ellison-Meade had investors 

sign also stated that investor funds would be pooled together in a financial account 

selected by the Baycap.io investment club partnership, and that “[s]ecurities owned 

by the partnership shall be registered in the partnership [sic] name.”  Ellison-Meade 

would then use those pooled funds to trade securities and make profit distributions to 

investors based on the overall net asset value of the partnership. 

79. Accordingly, as represented to investors and potential investors by 

Ellison-Meade, the Baycap.io investment club pooled investor funds and interests, 

and the fortunes of each investor were linked to those of Ellison-Meade, the 

investment club’s promoter.   

80. The Baycap.io partnership agreements that Ellison-Meade had investors 

sign further provided that investors had no role in the selection of securities traded by 

Baycap.io, Baycap.io’s trading strategy, the management or oversight of assets, or 

any profit calculations, allocations, and distributions.   

81. Under the terms of the Baycap.io partnership agreements that Ellison-

Meade had investors sign, investors were passive and they provided nothing beyond 

money for investment.   

82. Accordingly, as represented to investors and potential investors by 

Ellison-Meade, all profits from investing in the Baycap.io investment club were to be 

derived solely from the efforts of Ellison-Meade, the investment club’s managing 

partner.   

83. The Baycap.io investment club memberships that Ellison-Meade offered 

and sold to investors and potential investors were therefore securities in the form of 

investment contracts.   

I. Baycap.io is a Pooled-Investment Vehicle 

84. According to Ellison-Meade’s representations to investors and potential 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 12 of 19   Page ID #:12



 

COMPLAINT 13  
 

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investors and the terms of the partnership agreements that Ellison-Meade had 

investors sign, the Baycap.io investment club held itself out as being primarily 

engaged in the business of investing in securities. 

85. Baycap.io investment club memberships were not publicly offered.   

86. Ellison-Meade raised funds from approximately 31 individuals that 

invested in Baycap.io investment club memberships.   

87. Baycap.io was therefore a pooled investment vehicle.   

FIRST CLAIM FOR RELIEF 

Fraud in the Connection with the Purchase and Sale of Securities 

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

88. The SEC realleges and incorporates by reference paragraphs 1 through 

87 above. 

89. Defendant Ellison-Meade’s representations to investors and potential 

investors in Baycap.io of algorithmic trading, high investment returns, liquidity, 

transparency, and little investment risk were false and misleading because Ellison-

Meade never used investor funds to trade in securities as represented.  In addition, 

Ellison-Meade defrauded Baycap.io investors by misappropriating their funds for his 

personal use and to make Ponzi-like payments to other investors.  And last, Ellison-

Meade engaged in lulling and other deceptive conduct designed to conceal his fraud 

when he provided fake account statements and false excuses to investors.  

90. By engaging in the conduct described above, Defendant Ellison-Meade, 

directly or indirectly, in connection with the purchase or sale of a security, by the use 

of means or instrumentalities of interstate commerce, of the mails, or of the facilities 

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

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

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

under which they were made, not misleading; and (c) engaged in acts, practices, or 

courses of business which operated or would operate as a fraud or deceit upon other 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 13 of 19   Page ID #:13



 

COMPLAINT 14  
 

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persons. 

91. Defendant Ellison-Meade, with scienter, employed devices, schemes and 

artifices to defraud; made untrue statements of a material fact or omitted to state a 

material fact necessary in order to make the statements made, in the light of the 

circumstances under which they were made, not misleading; and engaged in acts, 

practices or courses of conduct that operated as a fraud on the investing public by the 

conduct described in detail above. 

92. By engaging in the conduct described above, Defendant Ellison-Meade 

violated, and unless restrained and enjoined will continue to violate, Section 10(b) of 

the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-5(a), 10b-5(b), and 10b-5(c) 

thereunder, 17 C.F.R. §§ 240.10b-5(a), 240.10b-5(b) & 240.10b-5(c). 

SECOND CLAIM FOR RELIEF 

Fraud in the Offer or Sale of Securities 

Violations of Section 17(a) of the Securities Act 

93. The SEC realleges and incorporates by reference paragraphs 1 through 

87 above. 

94. Defendant Ellison-Meade’s representations to investors and potential 

investors in Baycap.io of algorithmic trading, high investment returns, liquidity, 

transparency, and little investment risk were false and misleading because Ellison-

Meade never used investor funds to trade in securities as represented.  In addition, 

Ellison-Meade defrauded Baycap.io investors by misappropriating their funds for his 

personal use and to make Ponzi-like payments to other investors.  And last, Ellison-

Meade engaged in lulling and other deceptive conduct designed to conceal his fraud 

when he provided fake account statements and false excuses to investors 

95. By engaging in the conduct described above, Defendant Ellison-Meade, 

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

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

the mails directly or indirectly:  (a) employed devices, schemes, or artifices to 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 14 of 19   Page ID #:14



 

COMPLAINT 15  
 

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defraud; (b) obtained money or property by means of untrue statements of a material 

fact or by omitting to state a material fact necessary in order to make the statements 

made, in light of the circumstances under which they were made, not misleading; and 

(c) engaged in transactions, practices, or courses of business which operated or would 

operate as a fraud or deceit upon the purchaser. 

96. Defendant Ellison-Meade, with scienter, employed devices, schemes and 

artifices to defraud; with scienter and/or negligence, obtained money or property by 

means of untrue statements of a material fact or by omitting to state a material fact 

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

which they were made, not misleading; and, with scienter and/or negligence, engaged 

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

fraud or deceit upon the purchaser. 

97. By engaging in the conduct described above, Defendant Ellison-Meade 

violated, and unless restrained and enjoined will continue to violate, Sections 

17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77q(a)(1), 

77q(a)(2), & 77q(a)(3). 

THIRD CLAIM FOR RELIEF 

Fraud by an Investment Adviser 

Violations of Sections 206(1) and 206(2) of the Advisers Act 

98. The SEC realleges and incorporates by reference paragraphs 1 through 

88 above. 

99. During the relevant period, Defendant Ellison-Meade was engaged in the 

business of advising others as to the value of securities or as to the advisability of 

investing in, purchasing, or selling securities, which he did in exchange for 

compensation.  Ellison-Meade was therefore an investment adviser to Baycap.io and 

certain investors.  Ellison-Meade’s representations to investors and potential investors 

in Baycap.io of algorithmic trading, high investment returns, liquidity, transparency, 

and little investment risk were false and misleading because Ellison-Meade never 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 15 of 19   Page ID #:15



 

COMPLAINT 16  
 

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used investor funds to trade in securities as represented.  In addition, Ellison-Meade 

defrauded Baycap.io investors by misappropriating their funds for his personal use 

and to make Ponzi-like payments to other investors.  And last, Ellison-Meade 

engaged in lulling and other deceptive conduct designed to conceal his fraud when he 

provided fake account statements and false excuses to investors.   

100. By engaging in the conduct described above, Defendant Ellison-Meade, 

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

commerce: (a) employed or is employing devices, schemes or artifices to defraud 

clients or prospective clients; and engaged in or is engaging in transactions, practices, 

or courses of business which operated as a fraud or deceit upon clients or prospective 

clients. 

101. By engaging in the conduct described above, Defendant Ellison-Meade 

has violated, and unless restrained and enjoined, is reasonably likely to continue to 

violate, Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-6(1) & 80b-

6(2). 

FOURTH CLAIM FOR RELIEF 

Fraud Involving a Pooled Investment Vehicle 

Violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 

102. The SEC realleges and incorporates by reference paragraphs 1 through 

88 above. 

103. During the relevant period, Baycap.io was a pooled investment vehicle 

and Defendant Ellison-Meade acted as that pooled investment vehicle’s investment 

adviser.  Ellison-Meade’s representations to investors and potential investors in 

Baycap.io of algorithmic trading, high investment returns, liquidity, transparency, and 

little investment risk were false and misleading because Ellison-Meade never used 

investor funds to trade in securities as represented.  In addition, Ellison-Meade 

defrauded Baycap.io investors by misappropriating their funds for his personal use 

and to make Ponzi-like payments to other investors.  And last, Ellison-Meade 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 16 of 19   Page ID #:16



 

COMPLAINT 17  
 

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engaged in lulling and other deceptive conduct designed to conceal his fraud when he 

provided fake account statements and false excuses to investors.     

104. By engaging in the conduct described above, Defendant Ellison-Meade, 

directly or indirectly, by engaging in the conduct described above, while acting as an 

investment adviser to a pooled investment vehicle, directly or indirectly, by use of the 

mails or means or instrumentalities of interstate commerce:  (a) made untrue 

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

make the statements made, in the light of the circumstances under which there were 

made, not misleading, to any investor or prospective investor in the pooled 

investment vehicle; or (b) engaged in acts, practices, or courses of business that were 

fraudulent, deceptive, or manipulative with respect to any investor or prospective 

investor in the pooled investment vehicle. 

105. By engaging in the conduct described above, Defendant Ellison-Meade 

has violated, and unless restrained and enjoined, is reasonably likely to continue to 

violate, Section 206(4) of the Advisers Act, 15 U.S.C. § 80b-6(4), and Rule 206(4)-8 

thereunder, 17 C.F.R. § 275.206(4)-8. 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that Defendant committed the 

alleged violations. 

II. 

Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining defendant Ellison-Meade, and his officers, 

agents, servants, employees and attorneys, and those persons in active concert or 

participation with any of them, who receive actual notice of the judgment by personal 

service or otherwise, and each of them, from violating Section 17(a) of the Securities 

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

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 17 of 19   Page ID #:17



 

COMPLAINT 18  
 

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and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Section 206 of the Advisers 

Act [15 U.S.C. § 80b-6] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

III. 

Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining defendant Ellison-Meade 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 in an 

unregistered offering by an issuer, provided, however, that such injunction shall not 

prevent him from purchasing or selling securities for his own personal account. 

IV. 

Order Defendant to disgorge all funds received from his illegal conduct, 

together with prejudgment interest thereon, pursuant to Sections 21(d)(3), 21(d)(5) 

and 21(d)(7) of the Exchange Act [15 U.S.C. § 78u(d)(3), § 78u(d)(5), & 78u(d)(7)]. 

V. 

Order Defendant to pay civil penalties under Section 20(d) of the Securities 

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

78u(d)(3)], and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)]. 

VI. 

Retain 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. 

VII. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

/// 

/// 

///  

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 18 of 19   Page ID #:18



 

COMPLAINT 19  
 

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Dated:  January 24, 2023  
 /s/ Gary Y. Leung 

GARY Y. LEUNG 
Attorney for Plaintiff 
Securities and Exchange Commission 
 

 
 

Case 2:23-cv-00521   Document 1   Filed 01/24/23   Page 19 of 19   Page ID #:19



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	A. Ellison-Meade’s Fraudulent Baycap.io Securities Offering
	B. Ellison-Meade’s False and Misleading Representations to Investors
	1. Ellison-Meade represented that investors would receive high returns through his proprietary algorithm
	2. Ellison-Meade represented that investors faced little risk
	3. Ellison-Meade represented that investments in Baycap.io were transparent and liquid

	C. Ellison-Meade’s Scheme to Misappropriate Funds and Make Ponzi-Like Payments
	D. Ellison-Meade’s Representations of Algorithmic Trading, High Returns, Low Risk, Liquidity, and Transparency Were False and Misleading
	E. Ellison-Meade Lulled Investors with Further Misrepresentations
	F. Ellison-Meade Acted With Scienter and His Conduct Was Negligent
	G. Ellison-Meade Acted as an Investment Adviser
	H. Baycap.io Investment Club Memberships Are Securities
	I. Baycap.io is a Pooled-Investment Vehicle