Vuuzle Media Corp., Vuuzle Media Corp. Limited, Ronald Shane Flynn, and Richard Marchitto
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25754 / June 26, 2023
Securities and Exchange Commission v. Vuuzle Media Corp., Vuuzle Media Corp. Limited, Ronald Shane Flynn, and Richard Marchitto, Civil Action No. 2:21-cv-01226 (D.N.J. filed January 27, 2021)
SEC Obtains Final Judgment Against Vuuzle Media Corp. and Affiliated Individuals and Entities In Connection With Over $25 Million Offering Fraud
On June 22, 2023, the U.S. District Court for the District of New Jersey entered final judgment against U.S. entity Vuuzle Media Corp. (“Vuuzle US”), UAE entity Vuuzle Media Corp Limited (“Vuuzle UAE,” and with Vuuzle US, “Vuuzle”), and U.S. citizens Ronald Shane Flynn and Richard Marchitto. Vuuzle, Flynn, and Marchitto were previously charged with fraudulently raising over $25 million from investors across the United States as part of a boiler room scheme.
The SEC’s amended complaint alleged that between 2016 and 2022, Vuuzle and Flynn raised more than $25 million from investors using a boiler room of salespeople based primarily in the Philippines and employing high-pressure tactics. According to the amended complaint, Vuuzle and Flynn promised investors that Vuuzle was a legitimate and growing company and a “pre-IPO” investment opportunity, when in fact Vuuzle had never made a profit and had never made a public offering on any stock exchange. As alleged, only a small fraction of investor funds went towards the online streaming business, with the remainder misappropriated to sustain the boiler room, to pay commissions to Flynn and others, and to pay Flynn and Marchitto’s personal and business expenses. The amended complaint alleged that Flynn and Vuuzle continued their fraud after the commencement of the SEC’s lawsuit by, among other things, offering a “VUCO security token” and falsely promising the tokens would substantially increase in value if investors exchanged their Vuuzle shares for tokens. The amended complaint alleged that Marchitto facilitated the fraudulent scheme by maintaining a U.S. bank account, corporate credit cards, and a New York office address for Vuuzle, and that he opened new accounts after the SEC’s lawsuit commenced.
The judgments, entered on the basis of default, permanently enjoin Flynn, Vuuzle US, Vuuzle UAE, and Marchitto from violating the anti-fraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgments also permanently enjoin Vuuzle US, Vuuzle UAE, and Flynn from violating the registration provisions of Section 5 of the Securities Act; Marchitto from aiding and abetting violations of these sections; and Flynn from violating the broker/dealer registration provisions of Section 15 of the Exchange Act. Flynn, Vuuzle US, and Vuuzle UAE were jointly and severally ordered to pay disgorgement of $25,807,490.73 and pre-judgment interest of $720,354.08. Marchitto was ordered to pay disgorgement of $464,819 and pre-judgment interest of $12,974.31. The Court further imposed the following civil monetary penalties: $25,807,490.73 (Flynn); $31,080 (Marchitto); and $1,035,909 each (Vuuzle US and Vuuzle UAE).
The SEC’s litigation was conducted by Devon Staren, Daniel Maher, and Drew Grossman, under the supervision of Jim Connor and Olivia Choe. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Central District of California and the Federal Bureau of Investigation.