ProText Mobility Inc (TXTM)

[Rocketstockpix]

txtm will never get a license..no experience, no money and duff under massive sec investigation

TXTM and PLPL are tied to the hips

https://www.sec.gov/litigation/complaints/2018/comp24232.pdf

John J. Bowers
Paul W. Kisslinger
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMISSION
100 F Street, N.E.
Washington, DC 20549
[phone] (Bowers)
[phone] (Kisslinger)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
________________________________________________
:
SECURITIES AND EXCHANGE COMMISSION, :
:
Plaintiff, : 18-CV-6984
:
-against- : COMPLAINT
:
ROGER DUFFIELD and : JURY TRIAL DEMANDED
PLANDAI BIOTECHNOLOGY, INC., :
:
Defendants. :
_______________________________________________ :
Plaintiff Securities and Exchange Commission (the “Commission” or “SEC”), for its
Complaint against defendants Roger Duffield (“Duffield”) and Plandai Biotechnology, Inc.
(“Plandai”) (collectively, “Defendants”), alleges as follows:
SUMMARY
1. This matter concerns violations of the federal securities laws by Plandai, a penny
stock company that purports to have developed a technology to extract live plant material for use
in the health and wellness industry, and Duffield, Plandai’s President and Chief Executive
Officer.
2. In particular, from November 2013 through August 2014, Duffield and Plandai
made unregistered offerings and sales of 548,100 shares of Plandai common stock to three
investors, two of which were unaccredited and unsophisticated investors.
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 1 of 16
2
3. In addition, although these shares were newly issued and sold directly by Plandai
to the investors at Duffield’
3
21(d), 21(e), and 27 [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
9. Defendants have, directly or indirectly, made use of the means or
instrumentalities of interstate commerce, or of the mails, or the facilities of a national securities
exchange, in connection with the transactions, acts, practices and courses of business alleged in
this Complaint.
10. Venue lies in the Southern District of New York under Securities Act Section
22(a) [15 U.S.C. § 77v(a)] and Exchange Act Section 27 [15 U.S.C. § 78aa] because certain of
the offers and sales of securities and certain of the transactions, acts, practices and courses of
conduct constituting the violations alleged in this Complaint occurred within this District. At all
relevant times, Plandai common stock traded on OTC Link, the interdealer quotation system
operated by OTC Markets Group, Inc., which is headquartered in Manhattan.
DEFENDANTS
11. Roger Duffield, age 75, is a British citizen currently residing in South Africa.
Duffield is the President and Chief Executive Officer of Plandai. He also owns and controls
CRS Technologies, a company that claims to specialize in research related to the development of
botanical extracts.
12. Plandai Biotechnology, Inc. is a Nevada corporation with its principal executive
offices currently located in London, England. Plandai claims to be in the business of producing
botanical extracts from live plant material, including from green tea leaves, tomatoes, and more
recently, marijuana, for the nutriceutical and pharmaceutical industries. Plandai purportedly
grows much of the live plant material used in its products on a 7,400 acre estate in South Africa.
At all relevant times, Plandai’s common stock was registered with the Commission pursuant to
Section 12(g) of the Exchange Act and was quoted on OTC Link under the ticker symbol
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 3 of 16
4
“PLPL.” Plandai filed periodic reports with the Commission pursuant to Section 13(a) of the
Exchange Act and related rules thereunder, including Forms 10-K and 10-Q. On January 31,
2017, Plandai filed a Form 15 with the Commission deregistering securities it had registered
pursuant to Section 12(g) of the Exchange Act. At all times relevant to this Complaint, Plandai
common stock was a “penny stock,” as defined by the Exchange Act – it traded at less than $5.00
per share, and did not meet any of the exceptions to penny stock classification pursuant to
Section 3a51-1 of the Exchange Act.
OTHER RELEVANT ENTITIES
13. CRS Technologies, Inc. is a Delaware corporation owned and controlled by
Duffield. CRS Technologies received investor payments from certain of the transactions, as
described below.
FACTS
A. Unregistered Offer and Sale of Plandai Stock
14. Pursuant to Section 5 of the Securities Act, it is unlawful for any person, directly
or indirectly, to offer or sell securities using the United States mails or interstate commerce,
unless (1) the offer or sale is registered with the SEC pursuant to a valid registration statement
that applies to that specific offering of stock; or (2) the offer or sale is exempt from the
registration requirements of Section 5.
15. Beginning on or about November 2013, via emails, telephone conversations and
in-person meetings, Duffield and Plandai directly offered to sell and sold Plandai common stock
in unregistered transactions to three investors, at least two of whom were unsophisticated and
unaccredited. The sales were made pursuant to stock purchase agreements between the investors
and Plandai.
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 4 of 16
5
16. The offers and sales to the unaccredited and unsophisticated investors were not
exempt from the registration requirements of Section 5.
17. Duffield and Plandai utilized the means of interstate commerce in connection with
these unregistered offers and sales of securities by communicating with the investors, who were
located in the United States, by email and telephone and by accepting money via wire transfers.
18. In November 2013, Duffield and Plandai offered to sell Plandai securities to
Investor A, a Wisconsin resident who was the mother of a Plandai employee. Following a series
of emails and phone calls with Duffield, Investor A agreed to purchase 20,000 shares of Plandai
stock in an unregistered private transaction, at a total cost of $10,000. At Duffield’s direction, on
December 9, 2013, Investor A wired $10,000 to a bank account owned by CRS Technologies
and controlled by Duffield. Duffield and CRS Technologies did not forward this payment to
Plandai.
19. At all relevant times, Investor A was an unaccredited and unsophisticated
investor. Her net worth, when combined with that of her spouse, was less than $1,000,000, and
her joint annual income with her spouse was less than $300,000. Duffield never asked Investor
A about her income or net worth, and he never requested or received any documents regarding
her finances. Neither Duffield nor Plandai had a reasonable basis to believe that Investor A was
an accredited investor.
20. Neither Duffield nor Plandai ever provided Investor A with any financial
information about Plandai, such as an audited balance sheet, Plandai’s most recent Form 10-K,
or a written description of the securities being offered.
21. None of the securities offered or sold to Investor A were offered or sold pursuant
to a registration statement filed with the Commission or a valid exemption, as required by the
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 5 of 16
6
securities laws.
22. Duffield and Plandai also offered to sell Plandai stock to Investors B and C,
brothers who were neighbors of a Plandai employee in the Seattle area. Pursuant to a series of
emails, telephone calls and in-person meetings between November 2013 and August 2014,
Investors B and C purchased a total of 528,100 shares of Plandai stock, at a total cost of
$115,000, pursuant to a series of stock purchase agreements with Plandai.
23. Investor B agreed to purchase 86,800 shares of Plandai stock for $40,000, and he
made the following payments at Duffield’s direction:
a. On November 27, 2013, Investor B wired $10,000 to a CRS Technologies
bank account controlled by Duffield;
b. On December 20, 2013, Investor B sent a $12,000 cashier’s check to CRS
Technologies that was deposited into a CRS Technologies bank account
controlled by Duffield;
c. On January 29, 2014, Investor B sent a $16,400 cashier’s check to CRS
Technologies that was deposited into a CRS Technologies bank account
controlled by Duffield; and
d. On January 31, 2014, Investor B paid $1,600 in cash to a third party.
After Investor B made these payments, Duffield and Plandai provided him with a written
agreement documenting the purchase, dated March 31, 2014 (“Agreement 1”).
24. Duffield subsequently solicited Investors B and C again, and they agreed to
purchase additional shares of Plandai stock. On June 9, 2014, Investor B sent a $22,000
cashier’s check to CRS Technologies that was deposited into a CRS Technologies bank account
controlled by Duffield. After Investor B made this payment, Duffield and Plandai provided
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 6 of 16
7
written agreements to Investors B and C: (1) a written agreement dated July 13, 2014,
documenting the purchase of 55,000 shares by Investor B for $11,000 (“Agreement 2”); and (2)
a written agreement, also dated July 13, 2014, documenting the purchase of 55,000 shares by
Investor C for $11,000 (“Agreement 3”).
25. Investor B and Investor C subsequently were solicited by Duffield and agreed to
purchase additional shares of Plandai stock. On August 11, 2014, Investor C sent a $50,000
cashier’s check to CRS Technologies that was deposited into a CRS Technologies bank account
controlled by Duffield. On August 12, 2014, Investor B sent a $3,000 cashier’s check to CRS
Technologies that was deposited into a CRS Technologies bank account controlled by Duffield.
After these payments were made, Duffield and Plandai again provided written agreements to
Investors B and C: (1) a written agreement dated August 28, 2014, documenting the purchase of
114,000 shares by Investor B for $18,236 (“Agreement 4”); and (2) a written agreement, also
dated August 28, 2014, documenting the purchase of 217,300 shares by Investor C for $34,764
(“Agreement 5”).
26. Duffield and CRS Technologies did not forward any of the payments from
Investors B and C to Plandai.
27. When Investor B questioned why Duffield had directed him to pay CRS
Technologies instead of Plandai for the stock, Duffield falsely stated that the shares were coming
from a block of Plandai stock owned by CRS Technologies. Duffield also subsequently told
Investor B that additional shares of Plandai common stock would be coming from Duffield’s
own personal allotment, which again was false, as the shares purchased by Investors B and C
were shares that had been newly issued by Plandai at Duffield’s direction.
28. At all relevant times, Investor B was an unaccredited and unsophisticated
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 7 of 16
8
investor, with a net worth of less than $1,000,000, and an annual income of less than $200,000.
Duffield never asked Investor B about his income or net worth, nor did he ever request or receive
any documents regarding Investor B’s finances. Neither Duffield nor Plandai had a reasonable
basis for believing that Investor B was an accredited investor.
29. Neither Duffield nor Plandai ever provided Investor B with any financial
information about Plandai, such as an audited balance sheet, Plandai’s most recent Form 10-K,
or a written description of the securities being offered.
30. None of the securities offered or sold to Investor B were offered or sold pursuant
to a registration statement filed with the Commission or a valid exemption, as required by the
securities laws.
B. Plandai’s Misleading Disclosure in Its Annual Report for the Fiscal Year Ending
June 30, 2014
31. On October 14, 2014, Plandai filed its annual report on Form 10-K for the fiscal
year ending June 30, 2014. Duffield signed the Form 10-K as the principal executive officer of
Plandai, certifying its accuracy and completeness.
32. The annual report contained a summary of Plandai’s unregistered securities
transactions during the fiscal year, including the following statement concerning the issuance of
86,800 Plandai shares to Investor B (described as Agreement 1 above): “86,800 shares of
restricted common stock were sold to unaffiliated third parties in exchange for cash proceeds of
$40,000.” This statement was misleading. Although Investor B had purchased 86,800 shares of
Plandai stock for $40,000 during this time period, the funds in question – $38,400 sent to a CRS
Technologies bank account controlled by Duffield, and another $1,600 paid in cash to a third
party – were not received by Plandai.
33. Plandai and Duffield failed to disclose the transaction with Investor A, described
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 8 of 16
9
in paragraph 18 above, in Plandai’s annual report on Form 10-K for the fiscal year ending June
30, 2014.
34. Plandai’s misleading statement and omission in its Form 10-K for the fiscal year
ending June 30, 2014, were material – a reasonable investor would want to know that Duffield,
Plandai’s Chief Executive Officer, diverted funds due and owing to Plandai to a private company
that he controlled and to a third party.
C. Plandai’s Improper Accounting of Money Received from Private Sales of Stock
35. As described above, at Duffield’s direction, Investors A, B and C sent a total of
$123,400 to CRS Technologies as consideration for Plandai stock, and Investor C paid an
additional $1,600 in cash to a third party. Although these investors sent the money to CRS
Technologies and a third party, rather than to Plandai, Plandai and Duffield improperly and
inaccurately recorded the transactions on Plandai’s books as though Plandai had actually
received the funds.
36. Plandai’s accounting failures described above stemmed from Plandai’s failure to
devise and maintain a reasonable system of internal accounting controls. In particular, Plandai
failed to establish sufficient internal accounting controls to provide reasonable assurance that
transactions were recorded as necessary to permit preparation of financial statements in
accordance with GAAP and to maintain accountability of assets.
D. Duffield Aided and Abetted Plandai’s Disclosure, Accounting and Internal Control
Violations
37. As described in detail above, Duffield and Plandai made unregistered offerings
and sales of Plandai common stock to at least two unaccredited and unsophisticated investors.
38. Duffield knowingly or recklessly made the unregistered offerings described above
and facilitated and participated in transactions with Investors A, B and C in which they
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 9 of 16
10
purchased shares of Plandai stock based on unregistered offerings.
39. Duffield also knowingly or recklessly directed Investors A, B and C to send
payment for the above-described purchases of Plandai shares to CRS Technologies rather than
Plandai, and directed Investor B to pay $1,600 in cash to a third party in connection with one of
these purchases.
40. As discussed above, Plandai’s Form 10-K for the fiscal year ending June 30,
2014, filed on October 14, 2014, contained a materially misleading statement concerning the
issuance of Plandai shares to Investor B: “86,800 shares of restricted common stock were sold to
unaffiliated third parties in exchange for cash proceeds of $40,000.” Duffield signed the Form
10-K in his capacity as the principal executive officer of Plandai, certifying its accuracy and
completeness, despite his knowledge that the funds in question – $38,400 sent to a CRS
Technologies bank account controlled by Duffield, and another $1,600 paid in cash to a third
party – were not received by Plandai.
41. Despite his personal knowledge of, and involvement in, the above-described
unregistered offerings and sales of Plandai shares, Duffield knowingly or recklessly failed to
ensure that these transactions received the proper accounting treatment.
42. In addition, Duffield was the individual responsible for devising and maintaining
Plandai’s system of internal accounting controls. Duffield was therefore responsible for
Plandai’s failure to devise and maintain a reasonable system of internal accounting controls.
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 10 of 16
11
FIRST CLAIM FOR RELIEF
Violations of Sections 5(a) and (c) of the Securities Act
(Against Plandai and Duffield)
43. Paragraphs 1-2, 6-30 and 37-42 are re-alleged and incorporated by reference as if
fully set forth herein.
44. By engaging in the conduct described above, Defendants singly or in concert,
directly or indirectly: (a) made use of means or instruments of transportation or communication
in interstate commerce or of the mails to sell shares of Plandai common stock through the use or
medium of a prospectus or otherwise; (b) carried or caused to be carried through the mails or in
interstate commerce, by any means or instruments of transportation, shares of Plandai common
stock for the purpose of sale or delivery after sale; and/or (c) made use of a means or instrument
of transportation or communication in interstate commerce or of the mails to offer to sell or offer
to buy shares of Plandai common stock through the use or medium of a prospectus or otherwise.
No valid registration statement was filed or in effect with the Commission pursuant to the
Securities Act respect to the transactions that resulted in the issuance of such shares of Plandai
common stock and no exemption from registration was available.
45. By reason of the foregoing, Defendants violated, and unless enjoined will again
violate, Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 78e(a) and 78e(c)].
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 11 of 16
12
SECOND CLAIM FOR RELIEF
Violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder
(Against Plandai)
46. Paragraphs 1-36, 39-41 are re-alleged and incorporated by reference as if fully set
forth herein.
47. Defendant Plandai, by engaging in the conduct described above, failed to file
factually accurate and complete periodic reports with the Commission concerning the payments
it received for the issuance and sale of Plandai stock to Investors A, B, and C.
48. By reason of the foregoing, Defendant Plandai violated, and unless enjoined will
again violate, Section 13(a) of the Exchange Act
13
devise and maintain a system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary (I) to permit preparation of
financial statements in conformity with generally accepted accounting principles or any other
criteria applicable to such statements, and (II) to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
52. By reason of the foregoing, Defendant Plandai violated, and unless enjoined will
again violate, Exchange Act Sections 13(b)(2)(A) and (B) [15 U.S.C. §§ 78m(b)(2)(A) and (B)].
FOURTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 13(a) of the Exchange Act and Exchange Act
Rules 12b-20 and 13a-1 thereunder
(Against Duffield)
53. Paragraphs 1-42 are re-alleged and incorporated by reference as if fully set forth
herein.
54. Defendant Duffield, by engaging in the conduct described above, knowingly and
substantially assisted Plandai’s failure to file factually accurate and complete periodic reports
with the Commission in connection with the payments Plandai received for the issuance and sale
of Plandai stock to Investors A, B, and C.
55. By reason of the foregoing, Defendant Duffield violated, and unless enjoined will
again violate, Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)] by aiding and abetting
violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rules
12b-20 and 13a-1 [17 C.F.R. §§ 240.12b-20 and 240.13a-1].
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 13 of 16
14
FIFTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Sections 13(b)(2)(A) and (B) of the Exchange Act
(Against Duffield)
56. Paragraphs 1-42 are re-alleged and incorporated by reference as if fully set forth
herein.
57. Defendant Duffield, by engaging in the conduct described above, knowingly and
substantially assisted Plandai’s failure to make and keep books, records, and accounts, which in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the issuer.
58. Defendant Duffield, by engaging in the conduct described above, knowingly and
substantially assisted Plandai’s failure to devise and maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific authorization; (ii) transactions are recorded as
necessary (I) to permit preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements, and (II) to maintain
accountability for assets; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
59. By reason of the foregoing, Defendant Duffield violated, and unless enjoined will
again violate, Section 20(e) of the Exchange Act by aiding and abetting violations of Sections
13(b)(2)(A) and (B) of the Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and (B)].
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 14 of 16
15
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
Finding that Defendants violated the provisions of the federal securities laws as alleged
herein;
II.
Permanently enjoining Plandai and its agents, servants, employees, and attorneys, and all
persons in active concert or participation with any of them who receive actual notice of the final
judgment by personal service or otherwise from future violations of Sections 5(a) and 5(c) of the
Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)] and Sections 13(a) [15 U.S.C. § 78m(a)],
13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)] and 13(b)(2)(B) [15 U.S.C. § 78m(b)(2)(B)] of the
Exchange Act and Exchange Act Rules 12b-20 [17 C.F.R. § 240.12b-20] and 13a-1 [17 C.F.R. §
240.13a-1];
Permanently enjoining Duffield and his agents, servants, employees, and attorneys, and
all persons in active concert or participation with any of them who receive actual notice of the
final judgment by personal service or otherwise from future violations of Sections 5(a) and 5(c)
of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)] and from aiding and abetting violations
Sections 13(a) [15 U.S.C. § 78m(a)], 13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)] and 13(b)(2)(B)
[15 U.S.C. § 78m(b)(2)(B)] of the Exchange Act and Exchange Act Rules 12b-20 [17 C.F.R. §
240.12b-20] and 13a-1 [17 C.F.R. § 240.13a-1];
Case 1:18-cv-06984-KPF Document 1 Filed 08/02/18 Page 15 of 16
16
III.
Ordering Defendants to pay civil 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. § 78u(d)]; and
IV.
Granting any other and further relief this Court deems appropriate.
Dated: August 2, 2018
/s/ John J. Bowers
John J. Bowers
Paul W. Kisslinger
100 F Street, N.E.
Washington, DC 20549-4473
Telephone: [phone] (Bowers)
202-551-4427 (Kisslinger)
email: [e-mail]
[e-mail]
COUNSEL FOR PLAINTIFF SECURITIES
AND EXCHANGE COMMISSION