South Florida, including Fort Lauderdale, Boynton Beach, West Palm Beach, Boca Raton and Deerfield Beach Ponzi Scheme and Securities Fraud FINRA Arbitration and Litigation Attorney:
Securities and Exchange Commission v. Robert Hurd, Your Best Memories International Inc. and Kenneth Gross, Civil Action No. 13-CV-04464-RGK (JCGx) (C.D. Cal. June 20, 2013)
Court Orders California Company and Its President to Pay Over $1.9 Million in Investment Scheme Involving Purported Alzheimer’s Treatment
The Securities and Exchange Commission recently announced that on June 10, 2014, a California federal court entered final judgments against Your Best Memories International Inc., a promoter of a purported Alzheimer’s treatment, its president, Robert Hurd, and Smokey Canyon Financial Inc., another company controlled by Hurd. Your Best Memories and Hurd, both of Los Angeles, California, were charged as defendants in a fraud action filed by the Commission in June 2013. The Commission alleged that they claimed to be in the business of raising money from investors on behalf of a Massachusetts-based company that was in the business of developing products intended to improve memory function in individuals suffering from Alzheimer’s disease and other conditions. The Commission charged Your Best Memories and Hurd with misleading investors about how their funds would be used and making misleading statements that one of the products touted to investors had received approval from the U.S. Food and Drug Administration as a treatment for Alzheimer’s disease. Smokey Canyon Financial, based in Reno, Nevada, was charged by the Commission as a relief defendant because it received investor funds.
According to the Commission’s complaint, filed on June 20, 2013, Your Best Memories and Hurd falsely told investors that their funds would largely be used to finance the development and marketing of products intended to improve memory function in individuals suffering from Alzheimer’s disease, dementia or memory loss. The Commission alleged that, unbeknownst to investors, a mere 17% of the funds raised were used for their intended purpose, while 37% of investor funds were funneled to Hurd or his company, Smokey Canyon Financial. The Commission also alleged that Your Best Memories and Hurd made Ponzi payments to investors (using investors’ principal to make payments purporting to be investment returns to other investors) and falsely stated that they had secured FDA approval to sell coconut oil as a treatment for Alzheimer’s disease, when, in fact, the FDA had never approved such a claim. The complaint alleged that, in total, Your Best Memories raised approximately $1.2 million from more than 50 investors in an unregistered securities offering.
The final judgments, entered by default by the United States District Court for the Central District of California, imposed permanent injunctions prohibiting Your Best Memories and Hurd from future violations of Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. Your Best Memories, Hurd, and Smokey Canyon Financial also were ordered to pay disgorgement of $963,000 and prejudgment interest of $34,170. In addition, Your Best Memories and Hurd were ordered jointly and severally to pay a civil penalty of $963,000.
On March 14, 2014, the Court entered a partial final judgment, by consent, against the other Defendant in the action, Kenneth Gross, of Porter Ranch, California, who was charged with selling Your Best Memories stock without being registered as a broker-dealer as required by the federal securities laws. The judgment permanently enjoined Gross from future violations of Sections 5(a) and (c) of the Securities Act and Section 15(a) of the Exchange Act, with disgorgement, prejudgment interest and civil penalties to be decided by the Court at a later date. The Commission also instituted a settled follow-on administrative proceeding against Gross on March 6, 2014, permanently barring him from the securities industry.
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