(Hedgeco.Net) The Securities and Exchange Commission has announced the final judgments against Nicole Birch, former CEO of crowdfunding issuer, Transatlantic Real Estate, LLC, SEC-registered crowdfunding portal, TruCrowd, Inc., and its CEO, Vincent Petrescu.
The SEC’s complaint, filed on September 20, 2021 in the United States District Court for the Eastern District of Michigan, alleged that Shumake, alongside Birch, conducted a fraudulent and unregistered crowdfunding offering through Transatlantic Real Estate, a cannabis company. The complaint also alleged that Shumake and Birch raised $1,020,100 from retail investors through Transatlantic Real Estate. According to the complaint, Shumake, with assistance from Birch, hid his involvement in the offering from the public out of concern that his prior criminal conviction could deter prospective investors. Shumake and Birch allegedly diverted investor funds for personal use rather than using the funds for the purposes disclosed to investors. TruCrowd, and its CEO, Petrescu, allegedly hosted the Transatlantic Real Estate offering on TruCrowd’s platform and hosted a crowdfunding offering for 420 Real Estate, LLC, a hemp company affiliated with Shumake and Willard Jackson. The complaint further alleged that Petrescu failed to address red flags including Shumake’s criminal history and involvement in the crowdfunding offerings, and otherwise failed to reduce the risk of fraud to investors.
Without admitting or denying the allegations of the complaint, Birch consented to the entry of the judgment permanently enjoining her from violating the registration provisions of Section 5 of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act and Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Petrescu and TruCrowd, without admitting or denying the allegations in the complaint, consented to the entry of the judgments permanently enjoining them from violating the crowdfunding rules of Section 4A(a)(5) of the Securities Act and Rule 301(c)(2) thereunder. The judgments order: (i) civil penalties of $200,000, $9,700, and $97,500 against Birch, Petrescu, and TruCrowd, respectively; (2) disgorgement including prejudgment interest of $600,712 against Birch and $129,380 against TruCrowd; and (3) an officer and director bar against Birch.
In separate proceedings, based on the entry of their consent judgments, Birch and Petrescu also agreed to SEC orders entered on December 30, 2021. Birch was permanently suspended from appearing and practicing before the SEC as an attorney. The order prohibits Birch from representing clients in SEC matters, including investigations, litigation, or examinations, and from advising clients about SEC filing obligations or content. Petrescu was suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. The order permits Petrescu to apply for reinstatement after three years