- Madesubjectively false and objectively untrue opinion statements;
- Omitted material facts, including a letter from theSEC requesting removal of those very projections;
- Misled investors regarding who wasresponsible for debt obligations tied to the funds.
🧑⚖️ THE NINTH CIRCUIT’S SHARP REVERSAL
The three-judge panel, led by Judge M. Margaret McKeown, didn’t mince words.
“Cardone’s telling reaction to the SEC letter—removing the projections without any rebuttal or comment—evinces Cardone’s subjective disbelief,” wrote the court (p. 12, ¶2).
That’s right. The SEC specifically told Cardone to remove his lofty 15% return projections from formal offering materials because they lacked evidentiary backing. He complied in writing but continued promoting those same returns to investors online—without ever mentioning the SEC’s objections.
⚖️ LEGAL STANDARDS APPLIED
The court applied the Omnicare standard from the Supreme Court’s 2015 decision in Omnicare, Inc. v. Laborers District Council:
