The U.S. Securities and Exchange Commission (SEC) announced a $3 million settlement to resolve claims in a California home audio securities fraud case a regarding a company accused of a fraudulent, multimillion-dollar unregistered securities scheme.
Home Audio Securities Fraud Bilked Millions from Investors
The home audio securities fraud case involves the Lake Forest, California-based company Dedicated Sound and Audio Inc. (DSA) and its founder Steven Ventre, and Wyoming-based telemarketer Choice Equity and its principal Eric Lovy.
In 2013, DSA launched a $5 million offering of preferred stock and contracted Choice Equity to solicit potential investors through its Southern California call centers.
According to the complaint, the founders of each company collaborated on a private placement memorandum for the offering that stated that DSA committed to pay no more than 15 percent of the offering’s proceeds as a sales commission to registered broker-dealers.
The SEC alleges that DSA actually paid Choice Equity $1.56 million, amounting to a commission of more than 33 percent of the offering proceeds. In addition, neither Choice Equity nor its principal, Eric Lovy, were registered broker-dealers.
The SEC also alleges that DSA founder Steven Ventre profited from the fraud scheme, as the company’s accounts showed more than $700,000 in personal purchases and a number of large checks written to Ventre himself or made out to cash.
The Settlement includes Civil Penalties and Disgorgement
The SEC alleges that Steven Ventre and Eric Lovy, through their respective companies, violated various provisions of the Securities Act and Exchange Act.
DSA and Ventre will be required to pay $300,000 in civil penalties, while Choice Equity and Lovy have consented to $1.73 million in disgorgement and interest, as well as $1.03 million in civil penalties.
Both Ventre and Lovy, along with their companies, have agreed to be permanently barred from issuing further securities or participate in acts in violation of these federal securities laws.
Are You a Victim of Securities Fraud?
If you believe you are a victim of securities fraud or have lost money as a result of securities fraud, contact a qualified securities fraud attorney today.
Contact a Securities Fraud Attorney Today
If you are looking for a securities fraud attorney to review your rights and options, the securities fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.
With offices in Los Angeles, New York, West Palm Beach, Miami, and Detroit, our securities fraud attorneys represent clients nationwide and can help you recover your investment losses.