1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DAVID J. VAN HAVERMAAT (Cal. Bar No. 175761) Email: [email protected]JENNIFER T. PURPERO (Cal. Bar No. 247976) Email: [email protected]Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka Patel, Associate Regional Director Amy J. Longo, Regional Trial Counsel 444 South Flower Street, 9th Floor Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. CANNAVEST CORP. a/k/a/ CV SCIENCES, INC. and MICHAEL J. MONA, JR., Defendants. Case No. COMPLAINT Plaintiff Securities and Exchange Commission (“SEC”) alleges as follows: JURISDICTION AND VENUE 1. This Court has jurisdiction over this action pursuant to Sections 21(d)(1), 21(d)(2), 21(d)(3)(A), 21(e), and 27 of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1), 78u(d)(2), 78u(d)(3)(A), 78u(e), and 78aa. 2. Defendants have, directly or indirectly, made use of the means or instrumentalities of interstate commerce, or of the mails, or of the facilities of a Case 2:17-cv-01681 Document 1 Filed 06/15/17 Page 1 of 19
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DAVID J. VAN HAVERMAAT (Cal. Bar No. 175761) Email: [email protected] JENNIFER T. PURPERO (Cal. Bar No. 247976) Email: [email protected] Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka Patel, Associate Regional Director Amy J. Longo, Regional Trial Counsel 444 South Flower Street, 9th Floor Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. CANNAVEST CORP. a/k/a/ CV SCIENCES, INC. and MICHAEL J. MONA, JR., Defendants.
Case No. COMPLAINT
Plaintiff Securities and Exchange Commission (“SEC”) alleges as follows:
JURISDICTION AND VENUE
1. This Court has jurisdiction over this action pursuant to Sections
21(d)(1), 21(d)(2), 21(d)(3)(A), 21(e), and 27 of the Securities Exchange Act of
79. The SEC realleges and incorporates by reference paragraphs 1
through 58 above.
80. As alleged above in paragraphs 13 through 31, 35, 36, 40, 41, and 57,
among other allegations, Mona, directly or indirectly, made or caused to be made
materially false or misleading statements or omissions to an accountant in
connection with a required audit, review, or examination of the financial
statements of an issuer, or the preparation or filing of any document or report
required to be filed with the SEC, by signing false management representation
letters to CannaVEST’s auditors that stated that there were no material transactions
that had not been properly recorded in CannaVEST’s financial information.
81. By engaging in the conduct described above, Mona violated, and
unless restrained and enjoined will continue to violate Rule 13b2-2 of the
Exchange Act, 17 C.F.R. § 240.13b2-2.
SEVENTH CLAIM FOR RELIEF
False Sarbanes-Oxley Certifications
Violations of Rule 13a-14 under the Exchange Act
(Against Defendant Mona)
Case 2:17-cv-01681 Document 1 Filed 06/15/17 Page 16 of 19
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82. The SEC realleges and incorporates by reference paragraphs 1
through 58 above.
83. As alleged above in paragraphs 13 through 31, 34, 39, and 46, among
other allegations, Mona certified that CannaVEST’s Forms 10-Q for the first
through third quarters of 2013 did not contain any untrue statement of material fact
and that the reports fairly presented, in all material respects, CannaVEST’s
financial condition.
84. By engaging in the conduct described above, Mona violated, and
unless restrained and enjoined will continue to violate Rule 13a-14 of the
Exchange Act, 17 C.F.R. § 240.13a-14.
EIGHTH CLAIM FOR RELIEF
Failure to Reimburse Bonus
Violations of Section 304(a) of the Sarbanes-Oxley Act
(Against Defendant Mona)
85. The SEC realleges and incorporates by reference paragraphs 1
through 58 above.
86. As alleged above in paragraphs 13 through 46, among other
allegations, CannaVEST, by engaging in the conduct described above, filed Forms
10-Q for the first through third quarters of 2013 that were in material
noncompliance with financial reporting requirements under the securities laws and
GAAP.
87. As alleged above in paragraphs 47 through 50, among other
allegations, due to CannaVEST’s material non-compliance with its financial
reporting requirements under the securities laws and GAAP, and as a result of its
misconduct, CannaVEST was required to prepare an accounting restatement for the
first through thirds quarters of 2013.
88. As alleged above in paragraphs 51 and 52, among other allegations,
Mona received a $10,000 cash bonus from CannaVEST in December 2013 for
Case 2:17-cv-01681 Document 1 Filed 06/15/17 Page 17 of 19
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fiscal year 2013, for which Mona has not reimbursed CannaVEST.
89. The SEC has not exempted Mona, pursuant to Section 304(b) of the
Sarbanes-Oxley Act, 15 U.S.C. § 7243(b), from the application of Section 304(a)
of the Sarbanes-Oxley Act of 2002, 15 U.S.C. § 7243(a).
90. By engaging in the conduct described above, Mona violated Section
304(a) of the Sarbanes-Oxley Act of 2002, 15 U.S.C. § 7243.
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that the Defendants committed
the alleged violations.
II.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendant CannaVEST and its officers,
agents, servants, employees, and attorneys, and those persons in active concert or
participation with any of them, who receive actual notice of the judgment by
personal service or otherwise, and each of them, from violating Sections 10(b),
13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78j(b),
78m(a), 78m(b)(2)(A), and 78m(b)(2)(B)] and Rules 10b-5(b), 12b-20, and 13a-13
thereunder [17 C.F.R. §§ 240.10b-5(b), 240.12b-20, and 240.13a-13].
III.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendant Mona and his officers, agents,
servants, employees, and attorneys, and those persons in active concert or
participation with any of them, who receive actual notice of the judgment by
personal service or otherwise, and each of them, from violating Sections 10(b),
13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act [15 U.S.C. §§
78j(b), 78m(a), 78m(b)(2)(A), 78m(b)(2)(B), and 78m(b)(5)] and Rules 10b-5(b),
Case 2:17-cv-01681 Document 1 Filed 06/15/17 Page 18 of 19
Case 2:17-cv-01681 Document 1 Filed 06/15/17 Page 19 of 19
CON TRACT
FOR OFFICE USE ONLY
I V 1.1../ICILIV.II I VI LI IG I GUVICII SJL, I.AI ILIGO 1-411,
TOMS VORF EITURE/PENALTY I BANKRUPTCY OTHER srATIJTFs
l'PL! N., 1"C,
Case 2:17-cv-01681 Document 1-1 Filed 06/15/17 Page 1 of 1
JS 44 (Rev. 06/17) CIVIL COVER SHEETThe JS 44 civil cover sheet and the information comained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except asprovided by local rules of court. This form, approved by the Judicial Conf erence of the United States in September 1974, is required for the use of the Clerk ofCourt for thepurpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF)MS FLOW)
I. (a) PLAINTIFFS DEFENDANTS
Securities and Exchange Commission Cannavest Corp. a/k/a CV Sciences, Inc. and Michael J. Mona, Jr.
(b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant Clark(EX('EPT IN QS. PLAINTIFF CASES) (IN US. PLAINTIFF CASES ONLY)
NOTE: IN LAND CONDEMNATION CASES. USE THE LOCATION OFTHE TRACT OF LAND INVOLVED.
(C) Attorneys (Firm Name. Address, and Telephone Number) Attorneys (IfKnown)David J. Van Havermaat Jennifer T. Purpero Thomas A. Zaccaro and Nick Morgan, Paul Hastings LLP, 515 SouthSecurities and Exchange Commission, 444 South Flower Street, Flower Street, 25th Floor, Los Angeles, CA 90071, (213) 683-6000Suite 900, Los Angeles, CA 90071, (323) 965-3998
II. BASIS OF JURISDICTION (Place an "X" inane liax Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an 'X" in One Boxfim Plaintiff(For Diversity I'oses Only) and One Boxfor Depndanr)
X 1 U.& Government 0 3 Federal Question NT DEE PTE DEFPlaintiff (US Gon:rnmeni Vol ()Pony.) Citizen of This State 0 1 0 1 lneorporated or Principal Place 0 4 0 4
of Business In This Slate
2 U.S. Government 0 4 Diversity Citizen of Another State 0 2 0 2 Incorporated and Principal Place 0 5 0 5Defendant (indicate Cai:eirehip ofPanics in hem 111.1 of Business In Another State
Citizen or Subject of a 0 3 0 3 Foreign Nation 0 6 ET 6
IV. NATURE OF SUIT (Place on "X- in One Box Olds) Click here for: Nature aSuit Code Descriptions.
O 110 Insurance PERSONAL INJURY PERSONAL INJURY 0 625 Druu Related Seizure 0 422 Appeal 28 USC 158 0 375 False Claims ActO 120 Marine 0 310 Airplane 0 365 Personal Injury of Property 2 l USC 881 0 423 Withdrawal 0 376 Qui Tam (3 i USCO 130 Miller Act 0 315 Airplane Product Product Liability 0 690 Other 28 USC 157 3729(0)O 140 Negotiable Instrument Liability 0 367 Health Carel 0 400 State ReapportionmentO 150 Recovery of Overpayment 0 320 Assault. Libel & Pharmaceutical PROPERTY RIGFITS 0 410 Antitrust
& Enforcement of Judgment Slander Personal Injury 0 820 Copyrights 0 430 Banks and BankingO 151 Medicare Act 0 330 Federal Employers' Product Liability 0 810 Patent 0 450 CommerceO 152 Recovery of Defaulted Liability 0 368 Asbestos Personal 0 835 Patent Abbreviated D 460 Deportation
O 153 Recovety of Overpayment Liability PERSONAL PROPERTY LABOR, SOCIAL SEAT IRVIN 0 480 Consumer Creditof Veteran's Benefits 0 350 Motor Vehicle 0 370 Other Fraud 0 710 Fair Labor Standards 0 801 IBA (1395t1) 0 490 CableiSat TV
3 160 Stockholders' Suits 0 355 Motor Vehicle 0 371 Truth in Lending Act 0 362 Black Lung (923) 3k 850 Securities:Commodities/O 190 Other Contract Product Liability 0 380 Other Personal 0 720 Labor/Management 3 863 DIWCIDIWW (405(g)) Exchange3 195 Contract Product Liability 0 360 Oilier l'ersonal Progeny Damage Relations 0 804 SSD Title XVI 0 890 Other Statutory Actions3 196 Franchise In Mry D 385 Property Damage 0 740 Railway Labor Act 0 865 RS( (405(g)) 0 891 Agricultural Acts
3 362 Personal Injury. Product Liability 0 751 Family arid Medical 0 893 Environmental MattersMedical NlaIpractice Leave Act 0 895 Freedom of Information
1 REAL PROPERTY CIVIL RIGHTS PRISONER wrynoNs 0 790 Other Labor Litigation FEDERAL TAX SUITS Act
7 210 Land Condemnation 0 440 Other Civil Rights Habeas Corpus: 0 791 Employee Retirement 0 870 Taxes (U.S. Plaintiff 0 896 Arbitration0 220 Foreclosure 0 441 Vonne 0 463 Alien Detainee Income Security Act or Defendant) 0 899 Administrative Procedure
0 230 Rent Lease & Ejectment 0 442 Employment CI 5 l0 Motions to Vacate 0 871 IRS—Third Parry Act/Review or Appeal of0 240 Torts to Land 0 443 Housinei Sentence 26 USC 7609 Agency Decision0 245 Tort Product Liability Accommodations 0 530 General 0 950 Constitutionality of0 290 All Other Real Property 0 4-45 Amer. wiDisabilnics 0 535 Death Penalty. IMMIGRATION State Statutes
Employment Other: 0 462 Naturalization Application0 446 Amer. wiDisabilities 0 540 Mandamus & Other 0 465 Other Immigration
Other D 550 Civil Rights Actions0 448 Education 0 555 Prison Condition
0 560 Civil DetaineeConditions ofConfinement
V. ORIGIN (Place an Orw Box (Jnly)X I Original 0 2 Removed from El 3 Remanded from 0 4 Reinstated or 0 5 Transferred from 0 6 Multidistrict 0 8 Multidistriet
Proceeding State Court Appellate Court Reopened Another District Litigation LitigationTrnncfor
VI. CAUSE OF ACTION I Brief description of cause:/i, l, firsrto esf than ...3.-lear,-31 irifimc n.re
DATE S1GNATUR OF FR -Y lou RECORD
6 6RECEIPT Ii AMOUNT APPLYING !FP JUDGE MAG. JUDGE
V II. li.P.J14 U L.J I L11 IIN I--P LI-ILI.-1\. It• I HIS IS A L.L.AJJ AC I WIN 1.01...1l1...1., 0 I-, !Lk-V. 1 L., VIII, IL Ul1S1.111l1,1-1 11, -UliF1,1111l.
COMPLAINT: UNDER RULE 23, F.R.Cv.P. JURY DEMAND: 0 Yes X No
VIII. RELATED CASE(S)IF ANY (Sec alsawciancc):
JUDGE DOCKET NUMBER
•^•I 11•••ir. I I,.
Cite the U.S. Civil Statute under which you are filing (Do noicitc jurisdictional Nhaales ti Was divers/A):1 I ;sr. ga 721(h) Thrnia) 7Rm(h)(2)(A)VB), 78m(b)(5), 78t(a). and 7243.
AO 440 (Rev. 06/12) Summons in a Civil Action
UNITED STATES DISTRICT COURTfor the
__________ District of __________
))))))))))))
Plaintiff(s)
v. Civil Action No.
Defendant(s)
SUMMONS IN A CIVIL ACTION
To: (Defendant’s name and address)
A lawsuit has been filed against you.
Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if youare the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ.P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 ofthe Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney,whose name and address are:
If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court.
CLERK OF COURT
Date:Signature of Clerk or Deputy Clerk
District of Nevada
Securities and Exchange Commission
Cannavest Corp. a/k/a CV Sciences, Inc. andMichael J. Mona, Jr.
David J. Van HavermaatJennifer T. PurperoSecurities and Exchange Commission444 South Flower Street, Suite 900Los Angeles, CA 90071
Case 2:17-cv-01681 Document 1-2 Filed 06/15/17 Page 1 of 2
AO 440 (Rev. 06/12) Summons in a Civil Action (Page 2)
Civil Action No.
PROOF OF SERVICE(This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l))
This summons for (name of individual and title, if any)
was received by me on (date) .
I personally served the summons on the individual at (place)
on (date) ; or
I left the summons at the individual’s residence or usual place of abode with (name)
, a person of suitable age and discretion who resides there,
on (date) , and mailed a copy to the individual’s last known address; or
I served the summons on (name of individual) , who is
designated by law to accept service of process on behalf of (name of organization)
on (date) ; or
I returned the summons unexecuted because ; or
Other (specify):
.
My fees are $ for travel and $ for services, for a total of $ .
I declare under penalty of perjury that this information is true.
Date:Server’s signature
Printed name and title
Server’s address
Additional information regarding attempted service, etc:
0.00
Case 2:17-cv-01681 Document 1-2 Filed 06/15/17 Page 2 of 2