A USA Herald Investigation

For roughly twenty years, Milton Charles "Todd" Ault III has been a fixture in the small-cap corner of American capital markets — and a recurring subject of regulator findings, civil lawsuits, FINRA discipline, SEC enforcement, and a steady drumbeat of complaints from retail shareholders who say they have been wiped out by his companies. He has rebranded his flagship public vehicle at least four times. He has filed for personal bankruptcy. He has been suspended by FINRA and sanctioned by the SEC. And he has cultivated an unusually devoted online critic class that follows his every Form 8‑K.

This article walks the public record sequentially, from the earliest documented dispute through the most recent 2025 court filings. Where the source is a regulator or a court, the facts are stated as such. Where the source is an investor forum, an opposing party in litigation, or a social-media account, the language is kept to allegations — claims made, not claims proven. Ault has, throughout, denied wrongdoing in most of these matters and has settled the regulatory cases without admitting or denying findings. He continues to operate publicly traded companies today.

2005–2007: Ault Glazer Bodnar & Co. and the "Old Switcheroo"

The first time Ault's name surfaces in widely available litigation records is in the mid‑2000s, around an investment-banking boutique called Ault Glazer Bodnar & Co. According to a complaint chronicled by Courthouse News Serviceunder the headline "The Old Switcheroo," an investor sank roughly $700,000 in equity and $480,000 in debt into what was pitched as a Los Angeles "privately held financial company, modeled after Goldman Sachs." The plaintiff, Bodnar Capital Management, alleged the company's strategy was then quietly redirected toward an adult-entertainment business — a pivot the investor said it never agreed to and which it argued amounted to fraud.

That dispute foreshadowed an entire arc. Around the same window, Ault's affiliates — operating through entities including Ault Glazer Capital Partners (AGCP) and later Zealous Holdings — extended roughly $2.4 million in loans, between 2005 and 2006, to a public company called Patient Safety Technologies (PSTX). When PSTX defaulted, Ault's side blamed the borrower. PSTX and its principals, the Glazers, blamed Ault. The competing narratives spawned years of litigation in California state court (including the Glazer v. Ault appellate decision later published on Leagle.com) and a separate 2010 lawsuit by Zealous Asset Management against Patient Safety Technologies. Bodnar Capital ultimately obtained a $350,000 judgment, plus interest, against Ault Glazer Capital Partners, Zealous Asset Management, and Ault personally.

2008–2011: Zealous Capital Markets and Personal Bankruptcy

By 2008, Ault was running his own broker-dealer, Zealous Capital Markets, LLC, out of Tustin, California. According to FINRA's later disciplinary findings, this is the period in which the unauthorized-trading conduct at the heart of his 2012 suspension occurred — 43 trades across four customer accounts, executed without the clients' prior authorization, knowledge, or consent.

Zealous Holdings, the parent, did not survive. The company filed for Chapter 7 bankruptcy. Ault personally filed for bankruptcy protection under Chapter 11, which was later converted to Chapter 7 — a fact subsequently disclosed in SEC filings of the public companies he would go on to lead.

2012: FINRA Suspension and Restitution

In May 2012, FINRA — without Ault admitting or denying the findings — suspended him from association with any FINRA member firm for two years, fined him $75,000, and ordered him to pay $312,916.06 plus interest in restitution to the four customers whose accounts he had traded in without authorization. The full disciplinary action remains visible today on FINRA's BrokerCheck record for CRD #2157788.

For most professionals, a two-year industry bar tied to unauthorized customer trading would mark the end of a public-markets career. For Ault, it was an intermission.

2016–2017: The Pivot Into Public-Company Stewardship — Digital Power Corp

In September 2016, Ault acquired a controlling interest in a small Nasdaq-listed company called Digital Power Corp., later restructured as DPW Holdings, Inc. From this base, he assembled a sprawl of subsidiaries spanning power-electronics, defense, lending, real estate, hospitality, and — eventually — Bitcoin mining and AI data centers.

The market reaction over the following two to three years was unkind. A widely circulated 2019 Seeking Alpha article carried the title "DPW Holdings: A Death Spiral Masquerading As A Bitcoin Stock," capturing what retail investors were saying out loud on Yahoo Finance, InvestorsHub, and StockTwits: that the company's lifeblood appeared to be the issuance of new shares at deeply discounted prices to convertible-note holders, who would then sell those shares into the open market, pressuring the price down and forcing more issuance. Critics called this "toxic financing." Ault, his executives, and their lenders disputed the characterization.

2018–2020: Derivative Lawsuit and Settlement

The pressure crystallized into formal litigation. On July 31, 2018, a consolidated shareholder derivative action was filed in the U.S. District Court for the Central District of California (Case No. 2:18‑cv‑06578) against DPW Holdings as nominal defendant and against its directors and officers. The complaint alleged breach of fiduciary duty and unjust enrichment.

The case settled on terms set out in a Stipulation and Agreement of Settlement dated February 24, 2020. The court found the agreement "fundamentally fair, adequate, and reasonable" and DPW agreed to adopt a package of corporate-governance reforms. As is typical of derivative settlements, no individual director admitted wrongdoing. Plaintiffs' counsel collected fees; the company received governance commitments; the underlying shareholder dilution complaints continued unabated.

In a separate matter from the same period, plaintiffs Ding Gu and Xiaodan Wang filed a complaint in early 2020 against Ault personally and DPW Holdings, alleging losses tied to the company's securities — one of several individual-investor suits that surfaced during this stretch.

2018–2021: The Avalanche International Transactions

The conduct that would ultimately produce a federal enforcement action was already underway. According to the SEC's 2023 administrative order (Release No. 33‑11222), from 2016 through 2021 Ault Alliance loaned approximately $17.8 million to Avalanche International, Inc., a related party that Ault controlled. The SEC alleged that during this period Avalanche "had little to no revenues, insufficient funds to pay its expenses, and relied on AAI's loans for its operating cash flows."

Two specific disclosure failures sit at the center of the SEC's case. First, in 2018 and 2019, the agency alleged that Ault Alliance and Ault personally made materially false and misleading statements about a $50 million purchase order that Ault Alliance said it had received from Avalanche — a related party whose ability to ever pay was, on the SEC's account, fundamentally dependent on Ault Alliance's own loans back to it. Second, the SEC alleged that in 2019, Ault and CFO William Horne caused Ault Alliance to record a $75,000 payment to an individual as "consulting services" when, according to the order, it was actually used to extinguish a personal debt owed by Ault.

The SEC also cited long-running internal-control weaknesses dating back to June 2017, missed related-person disclosures across 2016–2021, and improper accounting on Avalanche warrant investments in fiscal years 2018–2021.

2023: SEC Settlement — Roughly $956,000 Across the Defendants

On August 9, 2023, the Commission announced settled administrative charges. Without admitting or denying the findings, Ault Alliance agreed to a $700,000 civil penalty; Ault personally agreed to a $150,000 civil penalty plus $75,000 disgorgement and $10,504 in prejudgment interest; current CEO Horne agreed to a $20,720 penalty for record-keeping and internal-control violations. Bloomberg Law tabulated the combined recovery at $956,000.

For context, that is a comparatively modest financial sanction. But the SEC's order is now part of the permanent public record, and it is one of the few documents in this story that contains formal regulator findings — not allegations — even though Ault did not admit them.

2023–2025: Bankruptcy of Subsidiaries, Lawsuits From Lenders, Reverse Splits, and Another Rebrand

The corporate vehicle has continued its evolution. The public parent has cycled through names — Digital Power Corporation, DPW Holdings, Ault Global Holdings, BitNile Holdings, Ault Alliance — and on September 10, 2024, rebranded again, this time to Hyperscale Data, Inc., trading under the ticker GPUS. Subsidiaries pursued Bitcoin mining, then AI/GPU data-center hosting, with operations announced in Michigan and elsewhere.

The litigation kept arriving. Briebug Software, Inc. v. Ault Alliance, Inc. (S.D.N.Y., 1:23‑cv‑04369) was filed in 2023. Arena Investors, LP v. Ault Alliance, Inc. (2025 NY Slip Op 30248(U)) reached the New York courts in 2025. Public records show a string of supplier and counterparty disputes — the kind that pile up around a company perpetually short of cash.

Cash was indeed perpetually short. Hyperscale Data executed a 1‑for‑35 reverse stock split effective November 22, 2024, collapsing roughly 38.8 million shares into about 1.1 million. By 2025 the company was again seeking shareholder authority for another reverse split, an authorization to issue up to 2.5 billion shares, and the ability to sell up to $100 million in a new Series H preferred stock. Macroaxis at one point pegged the company's "Probability of Bankruptcy" metric — a model output, not a filing — at 96%.

What Investors Are Saying — In Their Own Words

This is where the published record gives way to public complaint. On InvestorsHub, retail shareholders have repeatedly accused the company of operating as a "stock printer" with "no real businesses," writing things like "the company has no other revenues except the dilution" and predicting it will "push their survival until bankruptcy." Similar language recurs across Reddit's small‑cap and penny-stock subreddits, on StockTwits, and on the Investing.com forums for DPW/AULT/GPUS.

A self-published critic operating an X account under the handle "@FatToddOUT" — branded "Fraud Ault" — chronicles each new dilution event in real time. None of those forum claims have been adjudicated, and Ault has supporters online as well, including a personal site at toddault.com and an active X presence (@ToddAultIII) where he highlights the company's data-center pivot. But the volume and persistence of the negative sentiment — across multiple platforms, across a decade, across at least four ticker symbols — is itself part of the story.

Pattern, Or Pattern of Allegations?

Stitched together, the documented record describes a long arc: an early boutique that allegedly switched strategies on its own investor; a broker-dealer whose principal was sanctioned by FINRA for unauthorized customer trading; a personal bankruptcy and a corporate Chapter 7; a public-company platform that drew shareholder derivative litigation, an SEC enforcement action over related-party disclosures, repeated reverse splits, repeated rebrands, and a near-permanent state of capital-raising distress.

What the record does not contain — and this matters — is a criminal conviction, an SEC fraud finding admitted by Ault, or any formal determination that the businesses themselves were sham operations. The 2023 SEC order is a settled administrative proceeding; Ault neither admitted nor denied its findings. The various civil suits have largely settled or remained at the pleading stage. Online accusations of "scam" are characterizations, not adjudications.

That distinction is the line a careful publication has to walk. The allegations against Milton "Todd" Ault III are extensive, sequential, and unusually well documented across regulators, courts, and retail-investor communities. Whether they amount to a "scam" in the colloquial sense is a judgment each reader — and, if it ever comes to it, a future regulator or jury — gets to make on their own.

USA Herald has reached out to Hyperscale Data, Inc. for comment. This story will be updated if a response is received.

Sources

• SEC, "SEC Charges Ault Alliance, Inc. and former CEO Milton Charles ('Todd') Ault III…" — Administrative Proceeding 33‑11222 (Aug. 9, 2023): https://www.sec.gov/enforcement-litigation/administrative-proceedings/33-11222-s
• SEC, Order Instituting Cease‑and‑Desist Proceedings (Release 33‑11222, full PDF): https://www.sec.gov/files/litigation/admin/2023/33-11222.pdf
• Bloomberg Law, "Ault Alliance, Execs Pay $956,000 to Settle SEC Disclosure Case": https://news.bloomberglaw.com/securities-law/ault-alliance-execs-pay-956-000-to-settle-sec-disclosure-case
• Courthouse News Service, "The Old Switcheroo": https://www.courthousenews.com/the-old-switcheroo-2/
• FINRA BrokerCheck, Milton Charles Ault III (CRD 2157788): https://brokercheck.finra.org/individual/summary/2157788
• Glazer v. Ault, B246821 (Cal. Ct. App. 2014): https://www.leagle.com/decision/incaco20140812014
• "Zealous Asset Management LLC Sues Patient Safety Technologies and Former Partners," GlobeNewswire (Nov. 16, 2010): https://www.globenewswire.com/news-release/2010/11/16/967785/0/en/Zealous-Asset-Management-LLC-Sues-Patient-Safety-Technologies-and-Former-Partners.html
• "DPW Holdings Announces Final Order Approving Settlement in Derivative Action," GlobeNewswire (July 17, 2020): https://www.globenewswire.com/en/news-release/2020/07/17/2063845/23689/en/DPW-Holdings-Announces-that-a-Court-has-Issued-a-Final-Order-and-Judgment-Approving-a-Motion-for-Approval-of-Settlement-in-the-Derivative-Action-Filed-Against-It-as-a-Nominal-Defen.html
• Seeking Alpha, "DPW Holdings: A Death Spiral Masquerading As A Bitcoin Stock": https://seekingalpha.com/article/4283959-dpw-holdings-death-spiral-masquerading-bitcoin-stock
• Pomerantz LLP shareholder investigation alert (DPW Holdings): https://www.prnewswire.com/news-releases/shareholder-alert-pomerantz-law-firm-investigates-claims-on-behalf-of-investors-of-dpw-holdings-inc---dpw-301203217.html
• Arena Investors, LP v. Ault Alliance, Inc., 2025 NY Slip Op 30248(U): https://law.justia.com/cases/new-york/other-courts/2025/2025-ny-slip-op-30248-u.html
• Briebug Software, Inc. v. Ault Alliance, Inc., 1:23‑cv‑04369 (S.D.N.Y.): https://dockets.justia.com/docket/new-york/nysdce/1:2023cv04369/599374
• "Hyperscale Data Announces 1‑for‑35 Reverse Stock Split," StockTitan: https://www.stocktitan.net/news/GPUS/hyperscale-data-announces-date-and-ratio-of-reverse-stock-76bkqkis8fr1.html
• Hyperscale Data PRE 14A (reverse split, 2.5B share authorization, $100M Series H): https://www.stocktitan.net/sec-filings/GPUS/pre-14a-hyperscale-data-inc-preliminary-proxy-statement-55dd9e447151.html
• InvestorsHub, Ault Alliance message board (representative investor commentary): https://investorshub.advfn.com/Ault-Alliance-Inc-7899
• InvestorsHub, "Update: SEC charges AGEL and FINRA Charged Milton Ault": https://investorshub.advfn.com/boards/read_msg.aspx?message_id=77740515