Commission Files Another Offering Fraud Action

We are close to the fiscal year end for the government. As usual, the Commission is filing more cases than typical just as in earlier years, although the typical flood of new actions is not happing as in earlier years. Nevertheless, by next Tuesday a significant number of new actions will have been filed. The categories and types of cases are the traditional ones such as offering frauds. Indeed, one of the cases filed this week centers on two offering frauds, SEC v. Blanchard, Civil Action No. 2:24:cv-02437 (D. Ka. Filed Sept/ 23, 20-24.

Named as defendants are: Anthem Hayek Blanchard and Anthem Holdings Co. Mr. Blanchard founded the company named as defendant in 2019. He serves as its CEO. The company was in the software development business and based in Oklahoma.

Defendants conducted two offerings of securities to raise funds for the company. The first was known as the “Series A” offering. It was conducted in 2020 and 2021. To solicit investors Defendants used significantly inflated revenue projections for the firm. Investors were told that the projections were based on financial models. They were supposedly tied to company contracts that had been developed over time. This process resulted in $5 million of investments for the software company from 200 investors. The representations made to investors about the firm were false.

The second offering was called “Pre-Series B.” It was a convertible note offering conducted in 2021 and 2022. To solicit investors Defendants some were told about supposedly existing clients. Other investors were told that the company was close to securing another group of investors. Again the claims were false. The complaint alleges violations of Exchange Act Section 10(b) and Securities Act Section 17(a). See Lit. Rel. No. 26121 (Sept. 23, 2024).