On July 23, 2024, a federal judge in Minnesota gave permission for Mark R. Basile, an attorney representingDarkPulse, Inc., to intervene in an enforcement action against Carebourn Capital, L.P.
To allow a third party to play a role in litigation brought by the SEC is unusual, perhaps unprecedented.
On July 23, 2024, a federal judge in Minnesota gave permission for Mark R. Basile, an attorney representingDarkPulse, Inc., to intervene in an enforcement action against Carebourn Capital, L.P.
To allow a third party to play a role in litigation brought by the SEC is unusual, perhaps unprecedented.
On September 27, 2021, the SECchargedCarebourn Capital, L.P. and its managing partner Chip Alvin Rice of Maple Grove, Minnesota, with acting as unregistered dealers in “connection with their buying and selling of billions of newly-issued shares of microcap securities, or “penny stocks,” which generated millions of dollars for Carebourn Capital and Rice. Another Rice-controlled entity, Carebourn Partners, LLC, was also named as a relief defendant.
The complaint was issued in the U.S. District Court for the District of Minnesota, where Carebourn is located and where Rice lives.
While it isn’t clear how long Carebourn has been in the toxic funding business, between January 2017 and July 2021, it purchased more than 100 convertible promissory notes from about 40 different microcap issuers located all over the country.
During that time, Carebourn and Rice converted and sold more than 17.5 billion shares of stock, generated more than $25.8 million in gross sales, and netted over $13.9 million in profits. Many deals remained outstanding at the time the SEC brought its action.
Carebourne and DarkPulse
Examples of several of Carebourn’s transactions with issuers are offered to help explain precisely how the scheme worked.
DarkPulse, Inc., the company represented by Mark Basile, is not one of them.
The company, originally formed decades ago, has a subsidiary called DarkPulse Technologies Inc. which was a spinoff from the University of New Brunswick in New Brunswick, Canada.
It still has connections with the university. Its business is developing security and monitoring systems that will initially be delivered in applications for border security, pipelines, the oil and gas industry and mine safety.
The effects of DarkPulse’s adventures with toxic funders can be seen in its 20 billion shares of authorized capital for its commons, with 8,100,117,720 shares issued and outstanding. Unsurprisingly, it is not yet profitable.
On June 29, 2021, Carebourn and Rice sued DarkPulse for breach of contract, as did Wruck and More Capital.
On February 9, 2024, the SEC filed a motion for remedies. In it, the agency requested that the Court impose the following remedies against Carebourn Capital and Chip Rice:
(1) permanent injunctions as to both Defendants prohibiting them from further violating the federal securities laws as alleged in the Complaint;
(2) permanent penny stock bars as to both Defendants;
(3) order Defendants to pay, on a joint and several basis, disgorgement of net profits of $10,135,738.71, and prejudgment interest of $950,173.40, totaling $11,085,912.11; and
(4) a civil penalty of $642,500 against each Defendant. The Court should also order Relief Defendant Carebourn Partners, LLC to pay disgorgement of $1,109,306.50, and prejudgment interest of $103,924.66, totaling $1,213,231.16, based on its receipt of ill-gotten gains from Defendants’ misconduct.
Finally, the SEC requests that the Court order Defendants to surrender for cancellation shares of stock from, and conversion rights under, convertible notes that issuers sold to them.
The SEC motion was followed by a flurry of responses.
A hearing on the motion was scheduled for July 22, 2024.
At the beginning of the month, Mark Basile entered his appearance as an interested party on behalf of DarkPulse.
Judge Menendez has left a teaser:
Counsel for Darkpulse, Inc. may file a letter brief of no more than 10 pages on or before 8/5/24.
If Darkpulse files a letter brief, the SEC and Defendants may file any responsive letter brief, not exceeding 10 pages, on or before 8/19/24. Written order to be issued.
Basile’s brief is due in exactly a week. It will be brief in both senses of the word, but perhaps it will be punchier as a result. We’ll be ready to report on it when it appears.
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