The Securities and Exchange Commission today announced that ProSky, Inc., a Utah-based purported provider of human resources software and services, and its Chief Executive Officer, Crystal A. Huang, of Lehi, Utah, have agreed to pay more than $4.7 million to settle charges that they defrauded investors by providing investors with falsified bank statements and balance sheets, inaccurate customer lists, and other information that materially misrepresented ProSky's financial condition over a multi-year period.

According to the SEC's complaint, filed in the United States District Court for the Southern District of New York, Huang and ProSky, under Huang's direction, materially misrepresented ProSky's financial health to prospective and existing investors during the period April 2015 through February 2020. As alleged in the complaint, Huang and ProSky provided falsified bank statements and balance sheets that overstated ProSky's cash balances by as much as 2,029% and falsified customer lists that included entities that were never ProSky customers. According to the complaint, thirteen investors ultimately invested a total of $5.025 million, purchasing ProSky securities in the form of preferred shares and convertible promissory notes based on the materially false information. As also alleged in the complaint, Huang directed ProSky's transfer of $410,000 to family members and to an entity, T and C Partnership LLC, for no legitimate business purpose.

ProSky and Huang, without admitting or denying the allegations in the SEC's complaint, consented to the entry of a final judgment, subject to court approval, which would permanently enjoin each of them from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and hold them jointly and severally liable for payment of $3,196,949.82 in disgorgement plus $809,799.07 in prejudgment interest. The final judgment, if approved by the court, also would order Huang to pay a $700,000 civil penalty, prohibit her from trading in securities (with the exception of trading in securities on a national market for her own account), and impose an officer and director bar. Additionally, relief defendant T and C Partnership, without admitting or denying the SEC's allegations, consented to entry of a final judgment, subject to court approval, that would order it, jointly and severally with Huang and ProSky, to pay $136,030 in disgorgement plus $2,031.21 in prejudgment interest.

The SEC's investigation was conducted by Ryan Farney and John J. Dempsey under the supervision of Carolyn M. Welshhans and Nina B. Finston, with the assistance of trial counsel David Misler under the supervision of Jan M. Folena.