The Legal Framework
The complaint charges Lopez and Mehr with violating multiple provisions of federal securities law, including Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, along with Rule 10b-5 thereunder. These provisions prohibit fraudulent schemes, material misstatements, and deceptive practices in connection with securities offerings.
Burkenroad faces charges under Sections 17(a)(1) and (3) of the Securities Act and Section 10(b) and Rules 10b-5(a) and (c) of the Exchange Act. She is also charged with aiding and abetting Lopez’s and Mehr’s violations of Section 17(a)(2) of the Securities Act and Section 10(b) and Rule 10b-5(b).
The distinction in charges reflects the SEC’s theory that while Lopez and Mehr orchestrated the fraud directly, Burkenroad provided substantial assistance by managing financial operations and facilitating fund transfers between portfolio companies.
What’s Next
The defendants have not yet filed answers to the complaint. Under federal civil procedure rules, they typically have 21 days from service to respond, though extensions are common in complex securities cases.
The SEC is seeking:
