2013-08-05 sec-litreleases pdf 209 KB 22,801 chars

SEC v. John G. Rizzo

raw: Securities and Exchange Commission vs John G Rizzo Complaint For Violations Of Federal Securities Laws

Securities and Exchange Commission vs John G Rizzo Complaint For Violations Of Federal Securities Laws, No. 3:13-cv-01801 (Aug. 5, 2013)

Caption: SEC v. John G. Rizzo

Exhibit of John G. Rizzo

Source PDF JSON

summary

John G. Rizzo defrauded approximately $2.5 million from UK investors in 2009 by using offshore boiler rooms to sell unregistered shares of iTrackr Systems, concealing that up to 80% of investments went to undisclosed commissions and personal funds funneled through a Belize account, leading to SEC charges under Sections 17(a)(1), 17(a)(3), 10(b), and Rule 10b-5.

paragraph

In 2009, John G. Rizzo orchestrated a securities fraud scheme by hiring offshore boiler rooms to solicit $2.5 million from UK investors in iTrackr Systems, Inc., a penny stock company he controlled. He concealed that up to 80% of each investment was paid as commissions to the boiler rooms, routing funds through U.S.-based escrow accounts to create a false appearance of legitimacy before transferring them to a Belize account he controlled for personal use and commission payments. The SEC charged Rizzo with violations of Sections 17(a)(1) and (a)(3) of the Securities Act and Section 10(b) and Rule 10b-5(a) and (c) of the Exchange Act, seeking injunctive relief, disgorgement, civil penalties, and a permanent bar from participating in penny stock offerings or serving as a public company officer.

narrative

In 2009, John G. Rizzo, CEO of iTrackr Systems, Inc., orchestrated a fraudulent scheme using offshore boiler rooms in Europe to solicit approximately $2.5 million from UK investors in iTrackr, a Florida-based penny stock company he controlled. He deliberately concealed that up to 80% of each investor’s funds were paid as undisclosed commissions to the boiler rooms, violating material disclosure requirements under federal securities laws. To evade U.S. registration obligations, Rizzo used his British Virgin Islands shell company to facilitate the sales and routed investor funds through U.S.-based escrow agents and bank accounts—including one in San Diego—to create a false impression of legitimacy. Once funds arrived in the U.S., he transferred them to a Belize bank account under the名义 of his BVI entity, which he used to pay commissions and siphon money into his personal accounts, while falsely naming his father-in-law as the beneficial owner to obscure his control. The SEC filed a civil complaint on August 2, 2013, in the Southern District of California, charging Rizzo with violations of Sections 17(a)(1) and (a)(3) of the Securities Act and Section 10(b) and Rule 10b-5(a) and (c) of the Exchange Act. The SEC seeks a permanent injunction, disgorgement of all ill-gotten gains with prejudgment interest, civil penalties, and a permanent bar prohibiting Rizzo from participating in penny stock offerings or serving as an officer or director of any public company. Rizzo’s use of offshore entities, U.S. intermediaries, and false ownership structures demonstrates a deliberate effort to evade regulatory oversight and deceive investors.

Enriched metadata

Scheme: boiler-room (95%)
Court: Southern District of California
Case No.: 3:13-cv-01801
Victim loss: $2,500,000
Entity: John G. Rizzo
Ticker: FW

Classified boiler-room(confidence 95%). EDGAR detection: forms Form D· recall 50% / precision 4%. detection rule →

Extracted insights

Dollar amounts 4

$2.50M $2.5 million $1M–$10M
$77K $77251 $10K–$100K
$3K $02817 <$10K
$785 $785 <$10K

Entities 8

person John G. Rizzo ×2
organization ITrackr Systems, Inc.
person John W. Berry
person lorraine b. echavarria
person marc j. blau
person Michele Wein Layne
person Sara D. Kalin
organization Securities and Exchange Commission

Triples 8

John G. Rizzo engaged in a fraudulent scheme that used offshore boiler rooms to solicit approximately $2.5 million in investments in iTrackr Systems, Inc.
John G. Rizzo failed to disclose that up to 80% of each investment would be paid back to the boiler rooms as commission
John G. Rizzo used offshore boiler rooms to solicit foreign investors to evade U.S. securities registration requirements
John G. Rizzo used U.S.-based escrow agents and bank accounts to make investments appear more legitimate
John G. Rizzo arranged for funds to be transferred to an account he controlled in Belize
John G. Rizzo used the Belize account to pay boiler room operators and funnel money to his own accounts
John G. Rizzo violated Sections 17(a)(1) and (a)(3) of the Securities Act of 1933, Section 10(b) of the Exchange Act, and Rules 10b-5(a) and (c)
John G. Rizzo founded iTrackr in 2006

PDF

Securities and Exchange Commission vs John G Rizzo Complaint For Violations Of Federal Securities Laws · Source

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Extracted body text (22,801c)

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MARC J. BLAU, Cal. Bar No. 198162
Email:  [email protected]
SARA D. KALIN, Cal. Bar No. 212156
Email:  [email protected]

Attorneys for Plaintiff
Securities and Exchange Commission
Michele Wein Layne, Regional Director
Lorraine B. Echavarria, Associate Regional Director
John W. Berry, Regional Trial Counsel
5670 Wilshire Boulevard, 11th Floor
Los Angeles, California 90036
Telephone:   (323)   965-3998
Facsimile:    (323)    965-3908

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
SECURITIES AND EXCHANGE
COMMISSION,

                    Plaintiff,

          vs.

JOHN G. RIZZO,

                    Defendant.

Case No.

COMPLAINT
 FOR VIOLATIONS
OF THE FEDERAL SECURITIES
LAWS
COMPLAINT
 Plaintiff Securities and Exchange Commission (“SEC”) alleges as follows:
SUMMARY
1. In 2009, Defendant John G. Rizzo engaged in a fraudulent scheme that
used offshore boiler rooms to solicit approximately $2.5 million in investments in
iTrackr Systems, Inc. (“iTrackr”), a Florida corporation.  The boiler rooms failed to
disclose that up to 80% of each investment would be paid back to the boiler rooms
as commission, and a portion of the remaining amount would go to Rizzo, who
controlled the scheme.
2. Rizzo purposely used offshore boiler rooms to solicit foreign investors
in an attempt to evade the U.S. securities registration requirements.  He also used
'13CV1801BLMMMA

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U.S.-based escrow agents and bank accounts to make the investments appear more
legitimate to investors.
3. After an investor’s wire of funds arrived in one of the U.S. bank
accounts, Rizzo arranged for the funds to be subsequently transferred to an account
he controlled in Belize.  Rizzo used the Belize account to pay the boiler room
operators and funnel money to his own accounts, in an attempt to conceal his
scheme.
4. As a result of the conduct described in this Complaint, Rizzo violated
Sections 17(a)(1) and (a)(3) of the Securities Act of 1933 (“Securities Act”), 15
U.S.C. § 77q(a)(1) and (3); Section 10(b) of the Securities Exchange Act of 1934
(“Exchange Act”), 15 U.S.C. § 78j(b); and Exchange Act Rules 10b-5(a) and (c), 17
C.F.R. § 240.10b-5(a) and (c).  Unless restrained and enjoined, Rizzo is reasonably
likely to continue to violate the federal securities laws.
JURISDICTION AND VENUE
5. 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) and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d) and 78aa.
6. Venue is proper in this district pursuant to Section 22(a) of the Securities
Act and Section 27 of the Exchange Act, because certain of the transactions, acts,
practices, and courses of conduct constituting violations of the federal securities laws
occurred within this district.  For example, one of the escrow agents Rizzo used was an
attorney in San Diego with an escrow account at a San Diego bank.
7. Rizzo, 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.
///
///

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THE DEFENDANT
8. John G. Rizzo (“Rizzo”), age 51, resides in Boca Raton, Florida.
Rizzo founded iTrackr in 2006 and was its CEO at all relevant times.
AFFILIATED ENTITY
9. iTrackr Systems, Inc. is a Florida corporation with its principal place
of business in Boca Raton, Florida.  The company developed software capable of
tracking electronics inventory at local stores.  iTrackr’s stock is quoted on the OTC
Link under the symbol “IRYS.”  Its common stock was registered with the SEC
pursuant to Section 12(g) of the Exchange Act until July 24, 2013, when its
registration was revoked.  At all relevant times, iTrackr qualified as a penny stock
as defined by Rule 3a51-1 of the Exchange Act, and did not meet any exceptions to
that rule.
STATEMENT OF FACTS
A. Background
10. In early 2006, Rizzo organized iTrackr and began raising money for
the company.
11. In or about 2006, Rizzo also purchased a shell company in the British
Virgin Islands (“BVI”).  Rizzo’s BVI entity was unrelated to iTrackr and was used
by Rizzo to evade U.S. income tax.
12. To conceal his ownership of the funds held by the BVI entity, Rizzo
opened a bank account in Belize and a brokerage account in Canada, both in the
name of the BVI entity, and named his father-in-law, a Bulgarian citizen, as the
beneficial owner of the company and its accounts.
B. The Boiler Room Scheme
13. In or about late 2008/early 2009, Rizzo hired “boiler rooms” in Europe
to solicit investments in iTrackr from investors in the United Kingdom (“UK”).
14. Rizzo agreed to pay the boiler room operators a commission of up to
80% of the amount they raised from investors.  At the time of this agreement,

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Rizzo knew that the amount of commissions would not be disclosed to investors,
and knew that the commission amount was a material fact.
15. In order to avoid the U.S. securities registration requirements, Rizzo
used his BVI entity to sell iTrackr shares to UK investors.  In order to make the
investment in iTrackr appear more legitimate, investors were instructed to send
their money to U.S. escrow companies and bank accounts.
1. The Investment Paperwork
16. Rizzo directed his Florida-based administrative assistant to stay in
contact with the boiler room operators and send investment paperwork to the UK
investors who had expressed an interest in purchasing iTrackr shares.  The
paperwork included wiring instructions that directed investors to wire funds to
various entities and individuals, including an escrow agent in San Diego, using a
San Diego-based bank account.
17. The investment paperwork also included a Stock Purchase
Agreement.  The agreement required that the investor sign the document and return
it to Rizzo’s administrative assistant.  However, it also included a provision
indicating that the seller could reject the terms of the agreement for any reason,
including not receiving investor funds within 31 days.  The agreement further
stated that the escrow agent, who in some cases was a San Diego lawyer, would
coordinate the release of stock certificates from the U.S.-based stock transfer agent
on behalf of the seller.
2. The Cover-Up
18. Once the UK investors wired their funds to one of the U.S. bank
accounts, Rizzo directed the transfer of funds to his bank account in Belize, from
which he paid the boiler room commissions.
19. Rizzo instructed his administrative assistant to keep track of each
investment, the bank accounts through which they were transferred, and the
amounts owed to the various boiler rooms.

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20. In 2009, the boiler rooms raised approximately $2.5 million from
approximately 120 UK investors.  The vast majority of the money was funneled
through accounts in the United States and transferred to Rizzo’s bank account in
Belize.  After paying commissions to the boiler room operators, Rizzo used the
remainder of the money to pay his own personal expenses and to pay the expenses
of iTrackr.
FIRST CLAIM FOR RELIEF
Violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act
21. The SEC realleges and incorporates by reference paragraphs 1
through 20 above.
22. Rizzo knowingly or recklessly, directly or indirectly, in the offer and
sale of securities, by the use of any means or instruments of transportation or
communication in interstate commerce, or by the use of the mails:
a. employed devices, schemes or artifices to defraud; and/or
b. engaged in acts, practices, or courses of business which
operated or would operate as a fraud or deceit upon the
purchaser.
23. By engaging in the foregoing conduct, Rizzo violated, and unless
restrained and enjoined will continue to violate, Section 17(a) of the Securities Act,
15 U.S.C. § 77q(a).
SECOND CLAIM FOR RELIEF
Violations of Section 10(b) and Rules 10b-5(a) and (c) of the Exchange Act
24. The SEC realleges and incorporates by reference paragraphs 1
through 20 above.
25. Rizzo knowingly or recklessly, in connection with the purchase or
sale of securities, directly or indirectly, by the use of any means or instrumentality
of interstate commerce, or of the mails, or of any facility of a national securities
exchange:

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a. employed devices, schemes, or artifices to defraud; and/or
b. engaged in acts, practices, or courses of business which
operated or would operate as a fraud or deceit upon any person.
26. By engaging in the foregoing conduct, Rizzo violated, and unless
restrained and enjoined will continue to violate, Section 10(b) of the Exchange
Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.
PRAYER FOR RELIEF
 WHEREFORE, the SEC respectfully requests that the Court:
I.
 Issue findings of fact and conclusions of law that Rizzo committed the
alleged violations.
II.
 Issue a permanent injunction restraining and enjoining Rizzo and his
officers, agents, servants, employees, attorneys, and all persons in active concert of
participation with them, and each of them, from violating Sections 17(a)(1) and
17(a)(3) of the Securities Act, and Section 10(b) and Rule 10b-5(a) and (c) of the
Exchange Act, as indicated above.
III.
 Issue an Order directing Rizzo to disgorge all ill-gotten gains, including
prejudgment interest, resulting from the acts or courses of conduct alleged in this
Complaint.
IV.
 Issue an Order directing Rizzo 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, 15 U.S.C. § 78(d)(3).
V.
 Issue an order barring Rizzo from participating in any offering of penny
stock, pursuant to Section 20(g) of the Securities Act, 15 U.S.C. § 77t(g), and

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Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d), for the violations alleged
in this Complaint.
VI.
 Issue an Order pursuant to Section 20(e) of the Securities Act and Section
21(d)(2) of the Exchange Act, 15 U.S.C. § 77t(e) and 15 U.S.C. § 78u(d)(2),
barring Rizzo from acting as an officer or director of any issuer that has a class of
securities registered pursuant to Section 12 of the Exchange Act or that is required
to file reports pursuant to Section 15(d) of the Exchange Act.
VII.
 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.
VIII.
 Grant such other and further relief as this Court may determine to be just and
necessary.

DATED:  August 2, 2013   /s/ Sara D. Kalin
                                                                                                                                                                                 SARA                                                           D.                                                           KALIN
     Attorney for Plaintiff
     Securities and Exchange Commission
     Email:  [email protected]

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SECURITIES AND EXCHANGE COMMISSION
Sara D. Kalin(323) 965-3998
Securities and Exchange Commission
5670 Wilshire Blvd., 11th Floor, Los Angeles, CA 90036
JOHN G. RIZZO
Palm Beach County
Steven M. Goldsobel(310) 552-4848
Law Offices of Steven M. Goldsobel
1900 Avenue of the Stars, Suite 1800, Los Angeles, CA 90067
15 U.S.C. §§ 77q(a)(1) & 77q(a)(3); 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5 thereunder.
The Complaint alleges violations of the federal securities laws.
August 2, 2013
/s/ Sara D. Kalin
'13CV1801BLMMMA

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Date and Attorney Signature.'DWHDQGVLJQWKHFLYLOFRYHUVKHHW

OCR text (14,957c · tika · 95% conf)

MARC J. BLAU, Cal. Bar No. 198162
Email: [email protected]
SARA D. KALIN, Cal. Bar No. 212156
Email: [email protected]

Attorneys for Plaintiff
Securities and Exchange Commission
Michele Wein Layne, Regional Director
Lorraine B. Echavarria, Associate Regional Director
John W. Berry, Regional Trial Counsel
5670 Wilshire Boulevard, 11th Floor
Los Angeles, California 90036
Telephone: (323) 965-3998
Facsimile: (323) 965-3908

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,

vs.

JOHN G. RIZZO,

Defendant.

Case No.

COMPLAINT FOR VIOLATIONS
OF THE FEDERAL SECURITIES
LAWS

COMPLAINT

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

SUMMARY

1. In 2009, Defendant John G. Rizzo engaged in a fraudulent scheme that

used offshore boiler rooms to solicit approximately $2.5 million in investments in

iTrackr Systems, Inc. (“iTrackr”), a Florida corporation. The boiler rooms failed to

disclose that up to 80% of each investment would be paid back to the boiler rooms

as commission, and a portion of the remaining amount would go to Rizzo, who

controlled the scheme.

2. Rizzo purposely used offshore boiler rooms to solicit foreign investors

in an attempt to evade the U.S. securities registration requirements. He also used

'13CV1801 BLMMMA

Case 3:13-cv-01801-MMA-BLM Document 1 Filed 08/02/13 Page 1 of 9

U.S.-based escrow agents and bank accounts to make the investments appear more

legitimate to investors.

3. After an investor’s wire of funds arrived in one of the U.S. bank

accounts, Rizzo arranged for the funds to be subsequently transferred to an account

he controlled in Belize. Rizzo used the Belize account to pay the boiler room

operators and funnel money to his own accounts, in an attempt to conceal his

scheme.

4. As a result of the conduct described in this Complaint, Rizzo violated

Sections 17(a)(1) and (a)(3) of the Securities Act of 1933 (“Securities Act”), 15

U.S.C. § 77q(a)(1) and (3); Section 10(b) of the Securities Exchange Act of 1934

(“Exchange Act”), 15 U.S.C. § 78j(b); and Exchange Act Rules 10b-5(a) and (c), 17

C.F.R. § 240.10b-5(a) and (c). Unless restrained and enjoined, Rizzo is reasonably

likely to continue to violate the federal securities laws.

JURISDICTION AND VENUE

5. 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) and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d) and 78aa.

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

Act and Section 27 of the Exchange Act, because certain of the transactions, acts,

practices, and courses of conduct constituting violations of the federal securities laws

occurred within this district. For example, one of the escrow agents Rizzo used was an

attorney in San Diego with an escrow account at a San Diego bank.

7. Rizzo, 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.

///

Case 3:13-cv-01801-MMA-BLM Document 1 Filed 08/02/13 Page 2 of 9

THE DEFENDANT

8. John G. Rizzo (“Rizzo”), age 51, resides in Boca Raton, Florida.

Rizzo founded iTrackr in 2006 and was its CEO at all relevant times.

AFFILIATED ENTITY

9. iTrackr Systems, Inc. is a Florida corporation with its principal place

of business in Boca Raton, Florida. The company developed software capable of

tracking electronics inventory at local stores. iTrackr’s stock is quoted on the OTC

Link under the symbol “IRYS.” Its common stock was registered with the SEC

pursuant to Section 12(g) of the Exchange Act until July 24, 2013, when its

registration was revoked. At all relevant times, iTrackr qualified as a penny stock

as defined by Rule 3a51-1 of the Exchange Act, and did not meet any exceptions to

that rule.

STATEMENT OF FACTS

A. Background

10. In early 2006, Rizzo organized iTrackr and began raising money for

the company.

11. In or about 2006, Rizzo also purchased a shell company in the British

Virgin Islands (“BVI”). Rizzo’s BVI entity was unrelated to iTrackr and was used

by Rizzo to evade U.S. income tax.

12. To conceal his ownership of the funds held by the BVI entity, Rizzo

opened a bank account in Belize and a brokerage account in Canada, both in the

name of the BVI entity, and named his father-in-law, a Bulgarian citizen, as the

beneficial owner of the company and its accounts.

B. The Boiler Room Scheme

13. In or about late 2008/early 2009, Rizzo hired “boiler rooms” in Europe

to solicit investments in iTrackr from investors in the United Kingdom (“UK”).

14. Rizzo agreed to pay the boiler room operators a commission of up to

80% of the amount they raised from investors. At the time of this agreement,

Case 3:13-cv-01801-MMA-BLM Document 1 Filed 08/02/13 Page 3 of 9

Rizzo knew that the amount of commissions would not be disclosed to investors,

and knew that the commission amount was a material fact.

15. In order to avoid the U.S. securities registration requirements, Rizzo

used his BVI entity to sell iTrackr shares to UK investors. In order to make the

investment in iTrackr appear more legitimate, investors were instructed to send

their money to U.S. escrow companies and bank accounts.

1. The Investment Paperwork

16. Rizzo directed his Florida-based administrative assistant to stay in

contact with the boiler room operators and send investment paperwork to the UK

investors who had expressed an interest in purchasing iTrackr shares. The

paperwork included wiring instructions that directed investors to wire funds to

various entities and individuals, including an escrow agent in San Diego, using a

San Diego-based bank account.

17. The investment paperwork also included a Stock Purchase

Agreement. The agreement required that the investor sign the document and return

it to Rizzo’s administrative assistant. However, it also included a provision

indicating that the seller could reject the terms of the agreement for any reason,

including not receiving investor funds within 31 days. The agreement further

stated that the escrow agent, who in some cases was a San Diego lawyer, would

coordinate the release of stock certificates from the U.S.-based stock transfer agent

on behalf of the seller.

2. The Cover-Up

18. Once the UK investors wired their funds to one of the U.S. bank

accounts, Rizzo directed the transfer of funds to his bank account in Belize, from

which he paid the boiler room commissions.

19. Rizzo instructed his administrative assistant to keep track of each

investment, the bank accounts through which they were transferred, and the

amounts owed to the various boiler rooms.

Case 3:13-cv-01801-MMA-BLM Document 1 Filed 08/02/13 Page 4 of 9

20. In 2009, the boiler rooms raised approximately $2.5 million from

approximately 120 UK investors. The vast majority of the money was funneled

through accounts in the United States and transferred to Rizzo’s bank account in

Belize. After paying commissions to the boiler room operators, Rizzo used the

remainder of the money to pay his own personal expenses and to pay the expenses

of iTrackr.

FIRST CLAIM FOR RELIEF

Violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act

21. The SEC realleges and incorporates by reference paragraphs 1

through 20 above.

22. Rizzo knowingly or recklessly, directly or indirectly, in the offer and

sale of securities, by the use of any means or instruments of transportation or

communication in interstate commerce, or by the use of the mails:

a. employed devices, schemes or artifices to defraud; and/or

b. engaged in acts, practices, or courses of business which

operated or would operate as a fraud or deceit upon the

purchaser.

23. By engaging in the foregoing conduct, Rizzo violated, and unless

restrained and enjoined will continue to violate, Section 17(a) of the Securities Act,

15 U.S.C. § 77q(a).

SECOND CLAIM FOR RELIEF

Violations of Section 10(b) and Rules 10b-5(a) and (c) of the Exchange Act

24. The SEC realleges and incorporates by reference paragraphs 1

through 20 above.

25. Rizzo knowingly or recklessly, in connection with the purchase or

sale of securities, directly or indirectly, by the use of any means or instrumentality

of interstate commerce, or of the mails, or of any facility of a national securities

exchange:

Case 3:13-cv-01801-MMA-BLM Document 1 Filed 08/02/13 Page 5 of 9

a. employed devices, schemes, or artifices to defraud; and/or

b. engaged in acts, practices, or courses of business which

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

26. By engaging in the foregoing conduct, Rizzo violated, and unless

restrained and enjoined will continue to violate, Section 10(b) of the Exchange

Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.

PRAYER FOR RELIEF

WHEREFORE, the SEC respectfully requests that the Court:

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

alleged violations.

II.

Issue a permanent injunction restraining and enjoining Rizzo and his

officers, agents, servants, employees, attorneys, and all persons in active concert of

participation with them, and each of them, from violating Sections 17(a)(1) and

17(a)(3) of the Securities Act, and Section 10(b) and Rule 10b-5(a) and (c) of the

Exchange Act, as indicated above.

III.

Issue an Order directing Rizzo to disgorge all ill-gotten gains, including

prejudgment interest, resulting from the acts or courses of conduct alleged in this

Complaint.

IV.

Issue an Order directing Rizzo 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, 15 U.S.C. § 78(d)(3).

Issue an order barring Rizzo from participating in any offering of penny

stock, pursuant to Section 20(g) of the Securities Act, 15 U.S.C. § 77t(g), and

Case 3:13-cv-01801-MMA-BLM Document 1 Filed 08/02/13 Page 6 of 9

Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d), for the violations alleged

in this Complaint.

VI.

Issue an Order pursuant to Section 20(e) of the Securities Act and Section

21(d)(2) of the Exchange Act, 15 U.S.C. § 77t(e) and 15 U.S.C. § 78u(d)(2),

barring Rizzo from acting as an officer or director of any issuer that has a class of

securities registered pursuant to Section 12 of the Exchange Act or that is required

to file reports pursuant to Section 15(d) of the Exchange Act.

VII.

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.

VIII.

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

necessary.

DATED: August 2, 2013 /s/ Sara D. Kalin
SARA D. KALIN
Attorney for Plaintiff
Securities and Exchange Commission
Email: [email protected]

Case 3:13-cv-01801-MMA-BLM Document 1 Filed 08/02/13 Page 7 of 9

CIVIL COVER SHEET

(SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)

I. (a) PLAINTIFFS DEFENDANTS

(b)
(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)

II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff
(For Diversity Cases Only) and One Box for Defendant)

PTF DEF PTF DEF
(U.S. Government Not a Party) or

and
(Indicate Citizenship of Parties in Item III)

IV. NATURE OF SUIT (Place an “X” in One Box Only)
CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES

PERSONAL INJURY PERSONAL INJURY

PROPERTY RIGHTS

LABOR SOCIAL SECURITY
PERSONAL PROPERTY

REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS FEDERAL TAX SUITS
Habeas Corpus:

IMMIGRATION
Other:

V. ORIGIN (Place an “X” in One Box Only)

(specify)

VI. CAUSE OF ACTION

(Do not cite jurisdictional statutes unless diversity)

VII. REQUESTED IN
COMPLAINT:

CLASS ACTION DEMAND $

JURY DEMAND:

VIII. RELATED CASE(S)
IF ANY (See instructions):

FOR OFFICE USE ONLY

SECURITIES AND EXCHANGE COMMISSION

Sara D. Kalin (323) 965-3998
Securities and Exchange Commission
5670 Wilshire Blvd., 11th Floor, Los Angeles, CA 90036

JOHN G. RIZZO

Palm Beach County

Steven M. Goldsobel (310) 552-4848
Law Offices of Steven M. Goldsobel
1900 Avenue of the Stars, Suite 1800, Los Angeles, CA 90067

15 U.S.C. §§ 77q(a)(1) & 77q(a)(3); 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5 thereunder.

The Complaint alleges violations of the federal securities laws.

August 2, 2013 /s/ Sara D. Kalin

'13CV1801 BLMMMA

Case 3:13-cv-01801-MMA-BLM Document 1 Filed 08/02/13 Page 8 of 9

INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44

I.(a) Plaintiffs-Defendants.

(b) County of Residence.

II. Jurisdiction.

. ; NOTE: federal question actions take precedence over diversity
cases.

III. Residence (citizenship) of Principal Parties.

IV. Nature of Suit.

V. Origin.

VI. Cause of Action. Do not cite jurisdictional
statutes unless diversity.

VII. Requested in Complaint.

VIII. Related Cases.

Date and Attorney Signature.

Case 3:13-cv-01801-MMA-BLM Document 1 Filed 08/02/13 Page 9 of 9