A trio of men failed to register as broker/dealers with the SEC while soliciting investors to buy common stock equity securities in an LED lighting manufacturer, the commission claimed in a complaint filed this past weekend.
The SEC argued that during their unregistered actions, Hughe Duwayne Graham, Donald Lee Howard and Larry Louis Matyas received as much as 40% of the investors’ proceeds as commissions, with Graham receiving commissions totaling at least $443,127, while Howard received at least $118,800 and Matyas received at least $367,916.
The complaint, which was filed in the U.S. District Court for the Northern District of Ohio, stated that all three defendants had been subpoenaed to testify; Graham and Matyas both invoked their Fifth Amendment privilege against self-incrimination in response to several questions, and servers intending to deliver subpoenas to Howard were unable to locate him. The three individuals could not be reached for comment as of press time.
While technically a Florida corporation, U.S. Lighting Group (USLG) is primarily located in Eastlake, Ohio. Starting in 2017, USLG sought individuals to solicit potential investors in order to sell its offering of microcap securities, and found the three defendants, among others. The solicitors found prospective clients through lead lists and customer leads USLG prepared, reaching out to potential investors to tout the company’s securities by phone or email.
Graham and Howard both started working for USLG near the end of 2017, with Matyas joining later in the following year, according to the complaint. Graham and Matyas both used the pseudonyms “John Morgan” and “Gary Bennett,” respectively, according to the complaint. The unregistered activity continued until at least May 2019, according to the commission.
All three of the defendants are charged with violating provisions in the 1934 Securities Exchange Act, but Matyas consented “on a neither-admit-nor-deny basis” to be subject to a permanent injunction, as well as conduct-based injunctions concerning soliciting securities sales, as well as a civil penalty totaling $367,916.