SEC Obtains Court Order to Enforce Investigative Subpoenas for Production of Documents by GP Capital and Its President

(HedeCo.Net) The Hon. Ronnie Abrams, United States District Judge for the Southern District of New York, granted the Securities and Exchange Commission’s application to enforce subpoenas for production of documents issued to GP Capital Group, Inc., a Wyoming corporation headquartered in Corona, California, and its President, Shannon W. Illingworth.

If a person or entity refuses to comply with a subpoena issued by SEC enforcement staff pursuant to a formal order of investigation, the Commission may file a subpoena enforcement action in federal district court seeking an order compelling compliance.

According to the SEC’s filing, the SEC is investigating whether GP Capital Group and Illingworth violated the antifraud and registration provisions of the federal securities laws. The filing alleges that, among other things, since at least May 2020, Illingworth and GP Capital Group have solicited investors to enter into sale-leaseback agreements for shipping containers used for cannabis cultivation, promising investors a 20% or 12% annual return. The SEC’s filing also states that GP Capital Group and associated persons may have acted as unregistered broker-dealers in the solicitation and sale of securities.

As stated in the SEC’s filing, SEC staff served both GP Capital Group and Illingworth in July 2021 with investigative subpoenas requiring the production of certain documents. According to the filing, however, GP Capital Group and Illingworth failed to comply with the subpoenas despite numerous extensions by the SEC staff.

The SEC’s application sought a court order directing GP Capital Group and Illingworth to comply fully with the subpoenas. Following a hearing, the court ordered the respondents to produce non-privileged responsive documents to the Commission’s subpoena no later than August 31, 2022. The court order also states that in the event GP Capital Group and Illingworth do not produce the documents by that date, the Court will promptly hold a civil contempt hearing and entertain any application for sanctions filed by the Commission. The SEC is continuing its fact-finding investigation and, to date, has not concluded that any individual or entity has violated the federal securities laws.

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