Can I Recover Losses from Former Torch Securities, LLC Broker Jeremy Johnson?
Posted on Monday, June 7th, 2021 at 6:26 pm
Erez Law is currently investigating former Torch Securities, LLC broker Jeremy Johnson (CRD# 7074043) regarding his participation in the offering of a penny stock. Johnson was registered with Torch Securities, LLC in Murrieta, California from May 2019 to April 2020.
In March 2021, FINRA barred Johnson after he, “consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony in connection with FINRA’s investigation into the suitability and potential misrepresentations and omissions related to Johnson’s offer and sale of securities offerings while associated with his member firm.”
In January 2021, the Securities and Exchange Commission (SEC) barred Johnson for his participation in the offering of a penny stock. According to his CRD report, “The Commission finds that Jeremy Johnson resides in Murrieta, California. At all relevant times he was a managing member and the chief operating officer of Smart Initiatives, LLC “Smart Initiatives”), Valley View Enterprises LLC (“Valley View), Target Equity LLC (“Target Equity”), Zabala Farms Group LLC (“ZFG”), GPA Enterprises LLC (“GPA”) (the “Issuers), Green Bud Initiatives LLC (“GBI Marketing”) (collectively, the “Entities”), and C-Quadrant LLC (“CQuadrant”), each of which were California limited liability companies with their principal place of business in Temecula, California. Neither Jeremy Johnson, the Entities, GBI Marketing, nor CQuadrant, has ever been registered with the Commission in any capacity. On January 28, 2021, a judgment was entered by consent against Jeremy Johnson permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (“Securities Act”), Sections 10(b) and 15(a) of the Exchange Act, and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Smart Initiatives, LLC, et al., Civil Action Number 20-cv-01493-MCS-SHK, in the United States District Court for the Central District of California. The Commission’s complaint alleged that between September 2017 and February 2019, Jeremy Johnson, together with his brother Anthony Todd Johnson (collectively, “the Johnsons”), created, managed and controlled the Issuers, and both individually and through GBI Marketing, acted an unregistered broker-dealers in soliciting prospective investors to invest in the Issuers’s and C-Quadrant’s unregistered securities offerings. Those securities were offered in the form of membership units, for the stated purpose of investing in and developing a newly established and licenced marijuana farm located in Salinas, Calfornia and/or C-Quadrant’s startup cannibidiol (“CBD”) extraction facility, also located in Salinas, California. The complaint alleged that the Johnsons and GBI Marketing raised approximately $20 million from over 300 investors in connection with the Issuers’s and C-Quadrant’s securities offerings. In doing so, the complaint alleges the Johnsons misled and deceived investors regarding their compensation and misappropriated at least $2.7 million of investor funds, contrary to representations regarding the use of proceeds in the Issuers’s private placement memoranda. In all their offerings – Smart Initiatives, Valley View, Target Equity, ZFG, C-Quadrant and GPA – the Johnsons also deceived investors and made material misrepresentations and omissions to investors regarding expected returns on investment, promising guaranteed annual returns of 100, 150 or 200 percent, depending on the offering. The complaint further alleged, among other things, that the Johnsons, together with Gregory, falsely described the use of proceeds of a $2.9 million business loan, that was secured by C-Quadrant’s real property, that would purportedly be used to develop C-Quadant’s business, but was in fact used to pay off investors in an unrelated entity.”
In July 2020, the SEC sanctioned Johnson to pay $2,776,726 in disgorgement regarding a complaint against Johnson that “alleges that this action involves securities offering fraud by nine issuer entities (the “issuers”) and their respective principals and control persons that raised over $25 million from more than 400 investors located in multiple states between September 2017 and February 2019 to ostensibly finance two marijuana related businesses. Five of the issuer defendants – Smart Initiatives, LLC, Valley View Enterprises LLC, Target Equity LLC, Zabala Farms Group, LLC, and Green Growth Ventures, LLC – raised approximately $12.3 million from approximately 226 investors for the stated purpose of investing in a newly established and licensed marijuana farm located in Salinas, California. The other four issuer defendants – C Quadrant LLC, GPA Enterprises LLC, RJ Holdings Group, LLC, and Extraction Capital Tier 1, LLC – raised approximately $13.2 million from approximately 211 investors for the stated purpose of developing C-Quadrant, a startup cannabidiol (“CBD”) extraction facility, also located Salinas, California. In soliciting investor funds to invest in the marijuana farm and the CBD extraction facility, defendants Todd and Jeremy Johnson, who were the principals and control persons of six of the issuers, and defendants Richard Portillo, Charles Lloyd, and Mark Heckele, who were the principals and control persons of the other three issuers, misled and deceived actual and prospective investors about the profits they could expect to realize on their investments, claiming that the investments would generate annual returns of 100% or more. In addition, the Johnsons deceived investors as to how their monies would be used, misrepresented their compensation, and misappropriated at least $2.7 million of investor money. The Johnsons and defendant Michael Gregory, an additional principal and control person of C-Quadrant, also misled and deceived investors about a purported “business loan,” secured by C-Quadrant’s real property, that would be used to develop C-Quadrant’s CBD extraction facility. Rather than using that business loan for the benefit of C-Quadrant, Gregory used the loan proceeds to pay off different investors in an entirely unrelated entity. To further generate investor interest in their various offerings, the Johnsons, Gregory, and Portillo also made material misrepresentations to investors and prospective investors about their financial and business backgrounds. Gregory and Portillo also misled and deceived investors by claiming they had made large personal capital contributions to their respective issuers, when in fact they had not. The Johnsons and Gregory also misled and deceived investors by falsely claiming that C-Quadrant had a business and research relationship with a prominent California university. The Johnsons, Portillo, Lloyd, Heckele, and the defendant marketing entities – Green Bud Initiatives LLC, CIS Marketing, LLC, and Lloyd Marketing, LLC – acted as unregistered broker-dealers in connection with the offerings, none of which were registered with the Commission, and used general solicitation to attract prospective investors, including via cold calls, Craigslist, Facebook, and other websites and social media. None of the securities offerings were registered with the Commission as required by the Securities Act. Hence, investors were not provided with the information that a registration statement is required to provide for the protection of investors. In addition, many of the investors in each offering were unaccredited and unsophisticated. The defendants did not take reasonable steps to verify the investors’ accreditation status.”
In February 2019, the State of California Business, Consumer Services and Housing Agency Department of Business Oversight sanctioned a cease and desist against Johnson following allegations that “beginning on or about September 2017, Green Bud Initiatives and Jeremy Johnson (“Business”) offered and sold securities in the State of California to members of the public in the form of limited liability company membership units in Smart Initiatives, Valley View Enterprises, Target Equity, and GPA Enterprises without qualification (under Corporate Securities Law of 1968, Corp Code Section 25000 et seq) or exemption from qualification (under Regulation D, Rule 506).”
In February 2018, the SEC opened an investigation into Johnson regarding, “Non-public, fact-finding inquiry to determine whether there have been any violations of the federal securities laws.”
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Torch Securities, LLC may be liable for investment or other losses suffered by Johnson’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.