# Case 8:25-cv-00492 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3A6668cc172a1df8fe ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text Case 8:25-cv-00492 1 2 3 4 5 6 7 8 9 10 11 12 13 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION 16 18 SECURITIES AND EXCHANGE COMMISSION, 19 Plaintiff, 21 22 23 24 25 26 Page 1 of 19 Page ID #:1 Local Counsel Kathryn Wanner (Cal. Bar No. 269310) Email: wannerk@sec.gov Securities and Exchange Commission 444 S. Flower St., Suite 900 Los Angeles, CA 90071 (323) 965-3998 Facsimile: (213) 443-1904 15 20 Filed 03/13/25 RUA M. KELLY (Mass. Bar No. 643351) pro hac vice pending Email: KellyRu@sec.gov JONATHAN T. MENITOVE (Mass. Bar No. 710545) pro hac vice pending Email: MenitoveJ@sec.gov Securities and Exchange Commission 33 Arch Street, 24th Floor Boston, MA 02110 (617) 573-8941 (Kelly Direct) (617) 573-4565 (Menitove Direct) Facsimile: (617) 573-4590 14 17 Document 1 Case No. 8:25-cv-00492 COMPLAINT DEMAND FOR JURY TRIAL vs. GAUNTLET HOLDINGS, LLC, DARRELL W. RIDEAUX, and ALI DERAKHSHANFAR, Defendants, and SAL N. ORTIZ, Relief Defendant. 27 28 Plaintiff Securities and Exchange Commission (“SEC”) alleges: 1 Case 8:25-cv-00492 Document 1 Page 2 of 19 Page ID #:2 JURISDICTION AND VENUE 1 2 Filed 03/13/25 1. The Court has jurisdiction over this action pursuant to Sections 20(b) 3 and 22(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§77t(b) & 4 77v(a)] and Sections 21(d), 21(e) and 27 of the Securities Exchange Act of 1934 5 (“Exchange Act”) [15 U.S.C. §§78u(d), 78u(e) & 78aa]. 6 2. Defendants Gauntlet Holdings, LLC (“Gauntlet”), Darrell W. Rideaux 7 (“Rideaux”) and Ali Derakhshanfar (“Derakhshanfar”) and Relief Defendant Sal N. 8 Ortiz (“Ortiz”) have, directly or indirectly, made use of the means or instrumentalities 9 of interstate commerce, or of the mails, in connection with the transactions, acts, 10 practices and courses of business alleged in this complaint. 11 3. Venue is proper in this district pursuant to Section 22(a) of the Securities 12 Act [15 U.S.C. §77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. §78aa(a)] 13 because certain of the transactions, acts, practices, and courses of conduct 14 constituting violations of the federal securities laws occurred within this district. 15 4. In addition, venue is proper in this district, because at all times relevant 16 to this Complaint, Defendant Gauntlet did business in this district, and Defendants 17 Rideaux and Derakhshanfar and Relief Defendant Ortiz resided in this district. SUMMARY 18 19 5. This is a securities fraud enforcement action alleging two separate 20 schemes to violate the securities laws. First, Defendants Gauntlet, Rideaux, and 21 Derakhshanfar (collectively, the “Defendants”) engaged in a scheme to defraud a 22 Company (the “Company”) by fabricating a relationship with a wealthy member of a 23 Qatari royal family (the “Sheikh”) and convincing the Company that Derakhshanfar 24 had access to billions of dollars held by the Sheikh in an account at a Qatari bank (the 25 “Qatari Bank Account”). 26 6. Through this fraudulent scheme (hereafter, the “Qatari Bank Scheme”), 27 which began in 2020 and included multiple lies by Rideaux and Derakhshanfar, the 28 Defendants persuaded the Company’s affiliate to pay the Defendants $1 million as an 2 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 3 of 19 Page ID #:3 1 “advance” on anticipated profits from transactions relying on $2 billion worth of 2 “senior secured notes” issued by Gauntlet (the “Gauntlet Notes”) that the Company 3 planned to use in future business operations. In reality, none of the Defendants had a 4 relationship with the Qatari royal family, nor did they have access to billions in a 5 Qatari bank through the Sheikh. The entire Qatari Bank Account appears to have 6 been a complete fabrication. 7 7. In addition, beginning in or about March of 2024, Rideaux and Gauntlet 8 embarked on a second scheme to defraud an investor (“Investor A”) by offering an 9 investment opportunity in which investors’ assets would be pooled to purchase asset- 10 backed securities that would purportedly generate 200% returns in 30 days (the 11 “Second Scheme”). After executing an investment agreement with Rideaux, Investor 12 A transferred $1 million to Rideaux’s attorney’s trust account, but never received the 13 promised returns, nor did he receive the return of his principal. Throughout the 14 Second Scheme, Rideaux made numerous false and misleading statements, both to 15 solicit Investor A and to lull him into a false sense that his investment would be safe 16 and lucrative, including by emailing a misleading video to show “Gauntlet’s” online 17 bank account to the investor; in reality, the account did not belong to Gauntlet. 18 8. As a result of the conduct alleged herein, the Defendants violated, and 19 unless restrained and enjoined will continue to violate, Sections 17(a)(1), (a)(2), and 20 (a)(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(1), (2), 21 and (3)] and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) 22 [15 U.S.C. §§ 78j(b)] and Rule 10b-5(a), (b), and (c) thereunder [17 C.F.R. § 23 240.10b-5(a), (b), and (c)]. 24 9. The Commission seeks a permanent injunction against the Defendants, 25 enjoining them from engaging in the transactions, acts, practices, and courses of 26 business alleged in this Complaint, or in conduct of similar purpose or effect; 27 disgorgement by the Defendants and the Relief Defendant of all ill-gotten gains from 28 the conduct alleged herein, with prejudgment interest, pursuant to Section 21(d)(5) of 3 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 4 of 19 Page ID #:4 1 the Exchange Act [15 U.S.C. §78u(d)(5)]; civil penalties against the Defendants 2 pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 3 21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)]; and such other relief as the 4 Court may deem appropriate. DEFENDANTS AND RELIEF DEFENDANT 5 6 10. Gauntlet is a Delaware limited liability company with its principal place 7 of business in Brea, California. On its website, Gauntlet describes itself as a “family 8 office” that is not registered with FINRA and is exempt from SEC registration. 9 11. Rideaux, age 45, is a U.S. citizen who resides in Placentia, California. 10 Rideaux is the managing member of Gauntlet, through which he conducts business. 11 He holds Series 7, Series 63, and Series 66 securities licenses and has previously been 12 associated with several U.S.-based financial institutions. 13 14 15 12. Derakhshanfar, age 74, is a U.S. citizen who resides in Arcadia, California. Derakhshanfar runs an insurance business in Los Angeles. 13. Ortiz, age 59, is a U.S. citizen who resides in Chino, California. Ortiz is 16 an accountant who serves as President and CEO of a tax preparation firm. Ortiz is 17 also the CEO of a liquor company, and the founder of an entertainment company as 18 well as a beverage distributor licensed in California. RELATED ENTITIES AND INDIVIDUALS 19 20 14. The Company is a privately-held company incorporated in Wyoming. It 21 is affiliated with a group of companies held under common ownership. Among the 22 companies affiliated with the Company are a formerly publicly-traded company 23 incorporated in Delaware with its principal place of business in Beverly Hills, 24 California and a privately-held corporation headquartered in the United Kingdom. 25 15. 26 Company. 27 16. 28 The Company CEO is the U.K.-based Chief Executive Officer of the Investor A is an individual who invested $1 million with Rideaux and Gauntlet in March of 2024. To date, Investor A’s money has not been returned. 4 Case 8:25-cv-00492 Filed 03/13/25 Page 5 of 19 Page ID #:5 THE ALLEGATIONS 1 2 Document 1 A. Overview of the Qatari Bank Scheme 17. 3 The Defendants’ fraudulent scheme began in 2020, when Rideaux was 4 introduced to the Company, and when Ortiz introduced Rideaux and Derakhshanfar 5 to each other. Ortiz was a long-time friend of Rideaux and had more recently met 6 Derakhshanfar at a business function and had become friendly with him. 18. 7 At that time, the Company’s business objective was to acquire minority 8 stakes in insurance companies and financial firms. The Company planned to acquire 9 such minority stakes through the issuance of “credit-linked notes” 1 that could then be 10 held by businesses as reserve capital – meaning that insurance companies and 11 financial firms would have the Company’s credit-linked notes available to draw upon 12 if they needed access to capital, thereby meeting capital reserve regulatory 13 requirements. 14 19. In order to put this business plan into action, the Company first needed a 15 source of money, which could serve as the collateral for credit-linked notes. 16 B. The Defendants Schemed to Convince the Company That They Had 17 Access to Billions in a Qatari Bank Account Through Derakhshanfar. 18 20. Beginning in mid-2020, the Defendants deployed an extensive scheme to 19 convince the Company CEO that the Qatari Bank Account was real, that it held $7.98 20 billion, that Derakhshanfar had access to it through his connection to the Sheikh, and 21 that this money could be used as collateral securing promissory notes issued by 22 Gauntlet that the Company purchased to execute its business plan. 21. 23 The Defendants played different roles in the scheme. Rideaux served as 24 the primary liaison with the Company, provided reassurances that the Qatari Bank 25 Account existed, assured the Company CEO as to the legitimacy of a Gmail address 26 27 28 1 A credit-linked note is a security that is similar to a traditional bond, but that contains an embedded credit default swap. Credit-linked notes typically earn a higher rate of return than traditional bonds because they often include higher exposure to credit risk than bonds. 5 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 6 of 19 Page ID #:6 1 that was purportedly the Sheikh’s personal email address, and manipulated the 2 Company CEO and the Company’s counsel to avoid the Company or its 3 representatives directly reaching out to the Qatari bank. Derakhshanfar pretended to 4 have a connection with the Sheikh, operated the Sheikh’s Gmail address, and fulfilled 5 requests for documents that Rideaux passed along when the Company performed its 6 due diligence of the transaction. 7 22. At the inception of the scheme, in early 2020, Rideaux informed the 8 Company CEO that he represented an individual named Ali Derakhshanfar, claiming 9 that Derakhshanfar had access to a large amount of cash deposited at a bank in Qatar, 10 because Derakhshanfar had won the trust of a Qatari sheikh. While Rideaux used 11 Derakhshanfar’s real name, he did not tell the Company CEO that Derakhshanfar was 12 actually an insurance salesman who resided in California and had no connection to 13 the Qatari royal family. 14 23. The Defendants – led by Rideaux – effected the scheme by offering the 15 Company $2 billion worth of “senior secured notes” to be issued by Gauntlet (the 16 “Gauntlet Notes”). As consideration for the Gauntlet Notes, Gauntlet was to receive 17 convertible redeemable preferred shares in the Company, which provided the holders 18 of those securities with dividends linked to transactions executed under the 19 anticipated credit-linked note program. 20 24. In a memorandum of understanding (“MOU”) dated June 16, 2020, 21 Gauntlet and the Company agreed that the Company would obtain $1 billion of 22 Gauntlet Notes in exchange for providing Gauntlet with convertible redeemable 23 preferred stock. The convertible redeemable preferred stock would pay a dividend 24 linked to profits obtained from transactions under the anticipated credit-linked note 25 program, with Gauntlet and the Company splitting the profits equally. The June 16, 26 2020 MOU expressly stated that the Gauntlet Notes were “fully backed by a pledged 27 cash account” at the Qatari bank. In a second MOU dated June 21, 2020, Rideaux 28 (signing on behalf of Gauntlet), Derakhshanfar, and Ortiz agreed to split the profits 6 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 7 of 19 Page ID #:7 1 paid to Gauntlet, with 40% to Gauntlet and Rideaux, 40% to Derakhshanfar, and 20% 2 to Ortiz (purportedly for Ortiz’s role in introducing and facilitating the exchange of 3 information between certain of the parties to the agreement). The June 16, 2020 4 MOU was subsequently amended in an agreement dated July 30, 2020 to provide that 5 Gauntlet would sell $2 billion worth of Gauntlet Notes in exchange for additional 6 convertible redeemable preferred shares. Similar to the June 16, 2020 MOU, the July 7 30, 2020 agreement stated that the “Senior Secured Notes for an aggregate amount of 8 Two Billion Dollars ($2,000,000,000.00) with the funds for such Notes to be 9 deposited as collateral at the [Qatari bank].” 10 25. The Gauntlet Notes each had a face value of $50 million, and each 11 promised to pay its face value upon maturity in July 2030. The Gauntlet Notes were 12 purportedly backed by a “Security Interest,” defined as a “first priority security 13 interest in the [USD] equivalent to the face value” of the note held at the Qatari bank, 14 with a specific account number identified. Each Gauntlet Note contained a paragraph 15 titled “Investment Intent,” in which the holder of the note “warrants and represents 16 that . . . any security issuable hereof will be acquired for investment only.” In 17 addition, each Gauntlet Note contained a heading that described the note as a security 18 and stated that it had not been registered with the SEC or any state securities 19 authority. The Gauntlet Notes also each contained a paragraph titled “Transfer of this 20 Note,” which provided as follows: 21 Neither this note nor any of the rights, interests or obligations hereunder, shall 22 be assigned, sold, pledged, transferred or otherwise disposed of except with the 23 prior written consent of the Issuer and in compliance with the Securities Act of 24 1933, as amended …, applicable state securities laws, and the Note Issuance 25 Agreement. 26 26. In February and March of 2021, the Company’s affiliate based in the 27 United Kingdom transferred a total of $1 million USD by wire to its counsel in the 28 United States. The money was transferred to pay the Defendants and Ortiz an 7 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 8 of 19 Page ID #:8 1 “advance” on profits from the Company’s credit-linked note program to be backed by 2 the Gauntlet Notes. Excepting $15,000 that counsel retained, counsel distributed the 3 $1 million to the Defendants and Ortiz. 27. 4 In truth, there were no funds backing the Gauntlet Notes, and the Qatari 5 bank documents provided to the Company during the due diligence process appear to 6 have been fabricated. While the Gauntlet Notes listed an account number for the 7 Qatari Bank Account, that account number did not exist and in any event, it did not 8 match the format of account numbers used at the Qatari bank. Moreover, financial 9 records for the Qatari bank show that the total amount of money held at the bank that 10 individual, non-entity account holders had deposited was less than the $7.98 billion 11 that the Defendants claimed that Derakhshanfar could access in a single Qatari Bank 12 Account purportedly belonging to the Sheikh. 28. 13 In addition, records reflecting IP address 2 login information show that, 14 on at least certain occasions, the Sheikh’s alleged Gmail address used to provide 15 documentation supporting the existence of funds at the Qatari Bank Account was 16 accessed at the exact same time and location where Derakhshanfar accessed his own 17 Gmail account, indicating that the Gmail account for the “Sheikh” was, in fact, 18 controlled by Derakhshanfar. 19 C. Rideaux and Derakhshanfar Misled and Lied to the Company about the 20 Alleged $7.98 Billion Bank Account in Qatar 21 29. The Defendants were able to effect this scheme by manipulating through 22 lies and omissions the Company CEO to believe that the Qatari Bank Account was 23 real and that Derakhshanfar had access to it. For example, Rideaux – recognizing 24 that it might seem suspicious that a sheikh relied on a commonly used application 25 such as Gmail – sought to preempt any concerns by explaining its use to the 26 Company CEO: “While I was somewhat apprehensive of the gmail [sic] being used it 27 28 2 An IP address is a unique string of characters that identifies a device on the internet or a local network. 8 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 9 of 19 Page ID #:9 1 is apparently understood and accepted by the Royal Family. Please acknowledge 2 receipt of this email and the understanding that Ali [Derakhshanfar] reports to [the] 3 Shiek [sic] …” 4 30. Rideaux also provided the Company and its counsel with a “bank 5 confirmation letter” from an administrator at the Qatari bank, purportedly evidencing 6 the account and confirming a $7.98 billion balance in the Qatari Bank Account. 7 Rideaux further shared with the Company CEO and the counsel he retained 8 screenshots of a bank statement reflecting a $7.98 billion balance in the Qatari Bank 9 Account; the screenshots were attached to what appeared to be an email from the 10 Qatari bank that the Sheikh’s Gmail address had purportedly forwarded to 11 Derakhshanfar. 12 31. To ensure the scheme’s success, the Defendants sought to quash any 13 efforts to reach out directly to the Qatari bank to confirm the existence of these funds. 14 On one occasion, when counsel the Company CEO retained attempted to reach out to 15 a publicly-listed email for the Qatari bank, Rideaux expressed concern and upset, 16 cautioning the Company that sending the email was a “breach in procedures” that 17 “caused tremendous damage and may have consequences beyond repair.” Before 18 allowing further due diligence, Rideaux ordered the Company CEO to send an 19 apology to the Sheikh’s Gmail address, which he did, and his counsel sent an 20 additional apologetic email to that email account. 21 32. In fact, even as these apologies were made, the Defendants were 22 fabricating documents in furtherance of the scheme. On July 21, 2020, the Sheikh’s 23 Gmail address sent an email to counsel the Company CEO had retained attaching two 24 letters, one on “State of Qatar” stationery and the other on stationery from the Qatari 25 bank. Both letters attested to the validity of a bank comfort letter, bank statements, 26 and screenshots showing an account balance and confirmed that Derakhshanfar was 27 the owner of an account identified by a specific account number. Further, on August 28 3, 2020, the Sheikh’s Gmail address sent an email to the Company CEO and his 9 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 10 of 19 Page ID #:10 1 counsel. The Gmail message attached a letter printed on “State of Qatar” stationery 2 and the letter vouched for Derakhshanfar as a “fiduciary” for the Sheikh. However, 3 email traffic between the Defendants shows that Rideaux drafted the language of the 4 “Sheikh’s” Gmail message and provided it to Derakhshanfar. 5 33. Rideaux’s manipulation of the Company CEO is further evidenced in 6 communications concerning a press release the Company CEO had hoped to issue. In 7 August 2020, the Company CEO sent Rideaux a draft press release, noting that the 8 Sheikh, on behalf of the Qatari royal family, had invested $2 billion in the Company. 9 Rideaux responded, rewriting the draft press release to remove any mention of the 10 Qatari royal family, telling the Company CEO that any mention of the royal family 11 would be in violation of a non-disclosure agreement. In truth, Rideaux sought to 12 avoid any mention of the royal household because there was no actual investment of 13 $2 billion from the Qatari royal family. 14 34. Rideaux further projected a false air of legitimacy by touting his 15 purported ties to Qatari royalty. In a January 2021 email to the Company CEO, 16 Rideaux forwarded a Los Angeles Times article entitled “The true story of the 17 heartthrob prince of Qatar and his time at USC.” The article described the conduct of 18 a member of the Qatari royal family (not the “Sheikh” who purportedly entrusted 19 money to Derakhshanfar) while he was a student at the University of Southern 20 California. Rideaux – a former football player at USC who played with the team in 21 the 2003 Orange Bowl – told the Company CEO that “[t]his is how I came to meet 22 [Derakhshanfar] and the [royal family of Qatar].” In fact, Rideaux graduated from 23 USC several years before the Qatari prince arrived on the campus. 24 35. In addition to touting his own purported ties to the Qatari royal family, 25 Rideaux continued to tout Derakhshanfar’s ties to Qatari royalty. In a February 22, 26 2021 letter to the Company CEO, Rideaux said, in relevant part: “Mr. Derakhshanfar, 27 who has had an account at [the Qatari bank] since 2013; is a sovereign fund manager 28 who has a close relationship to members of the … Royal Family of Qatar.” 10 Case 8:25-cv-00492 1 D. Filed 03/13/25 Page 11 of 19 Page ID #:11 The Defendants Obtained $1 Million Through the Qatari Bank Scheme 36. 2 Document 1 In February 2021, the Company’s affiliate in the United Kingdom made 3 an initial $250,000 payment that was divided among the Defendants. Derakhshanfar 4 received $175,000, Rideaux received $30,000, and Ortiz received $30,000, with the 5 remaining $15,000 going to the Company’s attorney. In mid-March 2021, the 6 Company’s affiliate in the United Kingdom paid the remaining $750,000 to the 7 Defendants. This time, Rideaux received $212,500, Derakhshanfar received 8 $325,000, and Ortiz received $112,500, with the remaining $100,000 going to 9 Derakhshanfar’s attorney. 10 E. 11 Overview of the Second Scheme by Rideaux and Gauntlet 37. In early 2024, Rideaux connected with Investor A through the 12 WhatsApp communications application, where Rideaux pitched Investor A on a 13 potential investment opportunity in which Investor A’s money would be pooled with 14 other investors to purchase asset-backed securities. Through messages exchanged 15 with Rideaux, Investor A received a one-page document describing a “Special 30- 16 Day Small Cap Program,” stating that the program was “[b]y invitation only. 200% 17 return after 30 Days. 1M Minimum/ 5M maximum.” 18 38. In March 2024, Rideaux met with Investor A on Zoom, along with a 19 mutual acquaintance who had introduced the two. Rideaux told Investor A during the 20 meeting that he had worked for a prominent broker-dealer in the U.S., that he was a 21 financial adviser for wealthy clients, and that he had made millions for those clients. 22 In describing his professional background, Rideaux omitted the fact that since 2018 23 he had been barred from associating with any FINRA member (including any broker- 24 dealer) after an investigation into potential securities law violations at his prior firm. 25 39. During the March 2024 meeting with Investor A, Rideaux displayed a 26 flow chart that purported to show how investor funds would be used by Gauntlet to 27 “[p]urchase security and receive monthly pass-through of principal and interest from 28 borrowers.” The chart showed that funds from investors would flow to Gauntlet, 11 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 12 of 19 Page ID #:12 1 which would then use the funds to purchase loans from issuers. Rideaux reiterated 2 that Investor A could invest with Gauntlet and receive 200% returns within 30 days. 40. 3 Investor A, Rideaux, and others executed a written “Joint Venture / 4 Partnership Management Agreement” that described an “Investment Offer” involving 5 a $1 million investment to be sent to an escrow account. The agreement 6 contemplates an investment that lasts 10 banking days promising a return of 50% 7 derived from an investment strategy executed by a firm Rideaux’s brother-in-law 8 purportedly managed. Investor A’s obligation was limited to sending $1 million to 9 the escrow account, and Investor A was assured that, with respect to the way the 10 investment works, “the principal remains in the non-depletion account.” The 11 agreement specified that information about the investment opportunity would be 12 presented to other investors, “especially private accredited investors seeking high- 13 yield returns uncorrelated to the stock market.” The contract terms gave Investor A 14 the ability to terminate the contract via writing or electronic mail and further provided 15 that Gauntlet and others “shall earn profits net of distributions” to Investor A. 41. 16 Between March 22 and March 25, 2024, Investor A transferred $1 17 million to Rideaux’s attorney’s trust account to be invested with Gauntlet. 18 F. 19 Rideaux Makes Numerous Misstatements to Investor A 42. Notwithstanding the provision in the “Joint Venture / Partnership 20 Management Agreement” specifying that funds would not be transferred, Investor 21 A’s money was quickly wired out of the escrow account. Further, notwithstanding 22 the provision in the agreement specifying that Gauntlet would earn profits net of 23 distributions to Investor A, Rideaux and other Gauntlet employee received Investor 24 A’s money without Investor A receiving any distributions. 25 43. In April 2024, after 30 days elapsed, Investor A began what would 26 ultimately be a months-long and failed quest to get his money back. Investor A 27 called, emailed, and sent WhatsApp messages to Rideaux, who responded with 28 misrepresentations and omissions to lull Investor A into a false sense of security. 12 Case 8:25-cv-00492 1 44. Document 1 Filed 03/13/25 Page 13 of 19 Page ID #:13 For example, on June 20, 2024, Rideaux sent Investor A an email titled: 2 “Video from Gauntlet Family Office.” The email assured Investor A that his funds 3 were safe and claimed that Investor A’s principal would be returned shortly. Rideaux 4 attached to the email the video referenced in the subject line, which showed an online 5 bank account with a balance of $1.75 million. However, that account did not belong 6 to Gauntlet, but to an Arizona-based entity. Rideaux appears to have obtained online 7 access to the Arizona-based entity’s bank account through an agreement nearly 8 identical to the “Joint Venture / Partnership Management Agreement” Gauntlet 9 executed with Investor A. In the agreement, Rideaux promised the Arizona-based 10 entity a return on its capital if the Arizona-based entity kept money in its account and 11 gave Rideaux online access. Rideaux used this access to take a video of the account 12 to send to Investor A in an effort to assure Investor A that his funds were safe. In 13 fact, the funds in the account were completely unrelated to Gauntlet or Investor A’s 14 investment. 15 45. Investor A continued to communicate with Rideaux through various 16 means over the following weeks, including WhatsApp, texts, emails, and calls to 17 Gauntlet’s office and Rideaux’s cell phone. Rideaux responded with a variety of 18 misleading statements about the safety and expected return of Investor A’s $1 million 19 investment with Gauntlet. Among other things, Rideaux periodically sent Investor A 20 photographs of what purported to be stacks of cash in wrappers from the bank as 21 evidence that he was in possession of substantial funds. At other times, Rideaux sent 22 visual evidence of his excuses for delays, such as a GPS image of his whereabouts, or 23 a photo of him on a plane in order to justify to Investor A why Rideaux was 24 unavailable to discuss the status of the $1 million investment. 25 46. On July 19, 2024 – almost three months after Gauntlet was required to 26 return his principal with interest – Investor A emailed Rideaux pleading for an update 27 on the status of his investment: “I’ve tried to call you and text you… but without any 28 answer or feedback. You promised me that you [would] transfer USD 1.435 million 13 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 14 of 19 Page ID #:14 1 from your [bank] to [your lawyer’s] account on Wednesday morning as the payback 2 of my investment. … Could you get back to me [with] the update ASAP?” 3 4 47. As of today’s date, Investor A has not received any principal or interest from Rideaux and/or anyone associated with Gauntlet. 5 FIRST CLAIM FOR RELIEF 6 Fraud in the Connection with the Purchase and Sale of Securities 7 Violations of Section 10(b) of the Exchange Act and Rule 10b-5 8 (against Defendants Gauntlet, Rideaux, and Derakhshanfar) 9 48. 10 47 above. 11 49. 12 13 The SEC realleges and incorporates by reference paragraphs 1 through During the Relevant Period, the Gauntlet Notes were securities under Section 3(a)(10) of the Exchange Act, 15 U.S.C. §78c(a)(10). 50. By engaging in the conduct described above, Defendants Gauntlet, 14 Rideaux, and Derakhshanfar, directly or indirectly, in connection with the purchase or 15 sale of a security, by the use of means or instrumentalities of interstate commerce, of 16 the mails, or of the facilities of a national securities exchange: (a) employed devices, 17 schemes, or artifices to defraud; (b) made untrue statements of a material fact or 18 omitted to state a material fact necessary in order to make the statements made, in the 19 light of the circumstances under which they were made, not misleading; and (c) 20 engaged in acts, practices, or courses of business which operated or would operate as 21 a fraud or deceit upon other persons. 22 51. By engaging in the conduct described above, Defendants Gauntlet, 23 Rideaux, and Derakhshanfar violated, and unless restrained and enjoined will 24 continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. §78j(b), and Rules 25 10b-5(a), 10b-5(b), and 10b-5(c) thereunder, 17 C.F.R. §§240.10b-5(a), 240.10b-5(b) 26 & 240.10b-5(c). 27 28 14 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 15 of 19 Page ID #:15 1 SECOND CLAIM FOR RELIEF 2 Fraud in the Offer or Sale of Securities 3 Violations of Section 17(a) of the Securities Act 4 (against Defendants Gauntlet, Rideaux, and Derakhshanfar) 5 52. 6 47 above. 7 53. 8 9 The SEC realleges and incorporates by reference paragraphs 1 through During the Relevant Period, the Gauntlet Notes were securities under Section 2(a)(1) of the Securities Act, 15 U.S.C. §77b(a)(1). 54. By engaging in the conduct described above, the Defendants, directly or 10 indirectly, in the offer or sale of securities, and by the use of means or instruments of 11 transportation or communication in interstate commerce or by use of the mails 12 directly or indirectly: (a) employed devices, schemes, or artifices to defraud; (b) have 13 obtained money or property by making untrue statements of material fact or omitting 14 material facts necessary to make the statements not misleading; and/or (c) engaged in 15 transactions, practices, or courses of business which operated or would operate as a 16 fraud or deceit upon the purchaser. 17 55. Defendants, with scienter, employed devices, schemes and artifices to 18 defraud; and with scienter or negligence, engaged in transactions, practices, or 19 courses of business which operated or would operate as a fraud or deceit upon the 20 purchaser. 21 56. By engaging in the conduct described above, Defendants violated, and 22 unless restrained and enjoined will continue to violate, Sections 17(a)(1), 17(a)(2), 23 and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77q(a)(1), (2) and (3). 24 THIRD CLAIM FOR RELIEF 25 Other Equitable Relief, Including Unjust Enrichment 26 and Constructive Trust 27 (against Relief Defendant Ortiz) 28 57. The Commission realleges and incorporates by references paragraphs 1 15 Case 8:25-cv-00492 1 2 Document 1 Filed 03/13/25 Page 16 of 19 Page ID #:16 through 47 as if fully set forth herein. 58. Section 21(d)(5) of the Exchange Act states, “In any action or 3 proceeding brought or instituted by the Commission under any provision of the 4 securities laws, the Commission may seek, and any Federal court may grant, any 5 equitable relief that may be appropriate or necessary for the benefit of investors.” 6 59. Relief Defendant Ortiz received ill-gotten funds provided by the 7 Company for purposes of investment with the Defendants. Relief Defendant has no 8 legitimate claim to this property. In equity and good conscience, Relief Defendant 9 should not be allowed to retain such funds. 10 60. As a result, Relief Defendant is liable for unjust enrichment and should 11 be required to return the ill-gotten gains, in an amount to be determined by the Court. 12 The Court should also impose a constructive trust on the ill-gotten gains in the 13 possession of the Relief Defendant. 14 FOURTH CLAIM FOR RELIEF 15 Fraud in the Connection with the Purchase and Sale of Securities 16 Violations of Section 10(b) of the Exchange Act and Rule 10b-5 17 (against Defendants Gauntlet and Rideaux) 18 61. 19 47 above. 20 62. 21 22 The SEC realleges and incorporates by reference paragraphs 1 through During the Relevant Period, the securities offered to Investor A were securities under Section 3(a)(10) of the Exchange Act, 15 U.S.C. §78c(a)(10). 63. By engaging in the conduct described above, Defendants Gauntlet and 23 Rideaux, directly or indirectly, in connection with the purchase or sale of a security, 24 by the use of means or instrumentalities of interstate commerce, of the mails, or of 25 the facilities of a national securities exchange: (a) employed devices, schemes, or 26 artifices to defraud; (b) made untrue statements of a material fact or omitted to state a 27 material fact necessary in order to make the statements made, in the light of the 28 circumstances under which they were made, not misleading; and (c) engaged in acts, 16 Case 8:25-cv-00492 Document 1 Filed 03/13/25 Page 17 of 19 Page ID #:17 1 practices, or courses of business which operated or would operate as a fraud or deceit 2 upon other persons. 3 64. By engaging in the conduct described above, Defendants Gauntlet and 4 Rideaux violated, and unless restrained and enjoined will continue to violate, Section 5 10(b) of the Exchange Act, 15 U.S.C. §78j(b), and Rules 10b-5(a), 10b-5(b), and 10b- 6 5(c) thereunder, 17 C.F.R. §§240.10b-5(a), 240.10b-5(b) & 240.10b-5(c). 7 FIFTH CLAIM FOR RELIEF 8 Fraud in the Offer or Sale of Securities 9 Violations of Section 17(a) of the Securities Act 10 (against Defendants Gauntlet and Rideaux) 11 65. 12 47 above. 13 66. 14 15 The SEC realleges and incorporates by reference paragraphs 1 through During the Relevant Period, the securities offered to Investor A were securities under Section 2(a)(1) of the Securities Act, 15 U.S.C. §77b(a)(1). 67. By engaging in the conduct described above, the Defendants, directly or 16 indirectly, in the offer or sale of securities, and by the use of means or instruments of 17 transportation or communication in interstate commerce or by use of the mails 18 directly or indirectly: (a) employed devices, schemes, or artifices to defraud; (b) have 19 obtained money or property by making untrue statements of material fact or omitting 20 material facts necessary to make the statements not misleading; and/or (c) engaged in 21 transactions, practices, or courses of business which operated or would operate as a 22 fraud or deceit upon the purchaser. 23 68. Defendants, with scienter, employed devices, schemes and artifices to 24 defraud; and with scienter or negligence, engaged in transactions, practices, or 25 courses of business which operated or would operate as a fraud or deceit upon the 26 purchaser. 27 69. 28 By engaging in the conduct described above, Defendants violated, and unless restrained and enjoined will continue to violate, Sections 17(a)(1), 17(a)(2), 17 Case 8:25-cv-00492 1 Document 1 Page 18 of 19 Page ID #:18 and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77q(a)(1), (2), and (3). PRAYER FOR RELIEF 2 3 Filed 03/13/25 WHEREFORE, the SEC respectfully requests that the Court: 4 I. 5 Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 6 Civil Procedure, permanently enjoining Defendants and their agents, servants, 7 employees and attorneys, and those persons in active concert or participation with 8 any of them, from directly or indirectly engaging in the conduct described above, or 9 in conduct of similar purpose or effect, in violation of Section 17(a) of the Securities 10 Act [15 U.S.C. §77q(a)], and Section 10(b) of the Exchange Act [15 U.S.C. §§78j(b)] 11 and Rule 10b-5 thereunder [17 C.F.R. §240.10b-5]. 12 II. 13 Order Defendants to disgorge all ill-gotten gains from the conduct alleged 14 herein, with prejudgment interest, pursuant to Section 21(d)(5) of the Exchange Act 15 [15 U.S.C. §78u(d)(5)]. 16 III. 17 Order Defendants to pay civil penalties under Section 20(d) of the Securities 18 Act [15 U.S.C. §77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 19 §78u(d)(3)]. IV. 20 21 Order the Relief Defendant to disgorge all ill-gotten gains or unjust 22 enrichment, with prejudgment interest thereon, to effect the remedial purposes of the 23 federal securities laws. 24 V. 25 Retain jurisdiction of this action in accordance with the principles of equity and 26 the Federal Rules of Civil Procedure in order to implement and carry out the terms of 27 all orders and decrees that may be entered, or to entertain any suitable application or 28 motion for additional relief within the jurisdiction of this Court. 18 Case 8:25-cv-00492 Document 1 3 4 5 6 7 8 9 Page 19 of 19 Page ID #:19 VI. 1 2 Filed 03/13/25 Grant such other and further relief as this Court may determine to be just and necessary. Dated: March 13, 2025 /s/ Kathryn Wanner KATHRYN WANNER RUA M. KELLY (pro hac vice pending) JONATHAN T. MENITOVE (pro hac vice pending) Attorneys for Plaintiff Securities and Exchange Commission 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3A6668cc172a1df8fe. Public record. Not legal advice.