Dharma Teja Nukarapu, et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25825 / September 12, 2023
Securities and Exchange Commission v. Dharma Teja Nukarapu, et al., No. 5:23-cv-00503-M (E.D.N.C. filed Sept. 11, 2023)
SEC Charges North Carolina Man and Entities He Controlled with Fraud
The Securities and Exchange Commission yesterday charged Dharma Teja Nukarapu, a resident of Apex, North Carolina and India, and the purported healthcare software development firm that he controlled, SharkDreams, Inc., with fraudulently raising approximately $2.7 million from more than 20 investors through securities offerings from at least January 2018 to November 2019. The SEC also charged D Dollar Inc. for its role in soliciting investor funds in 2019 and 2020 that were later misappropriated by Nukarapu.
According to the SEC's complaint, SharkDreams and Nukarapu made multiple false and misleading statements to current and prospective investors in connection with the offer and sale of SharkDreams securities, including that prior investors had doubled their money in a year, that SharkDreams was valued at as much as $7 million to $30 million, that SharkDreams had customer orders for its LIVIT products, and that it had a large investor who would buy out all of the remaining SharkDreams shares to infuse capital. Allegedly, none of this was true. The SEC's complaint further alleges that SharkDreams never received any revenue from any LIVIT product sales, there was no factual basis for a valuation in the range Nukarapu touted, and there was never a bona fide offer to buy out SharkDreams shares. The SEC's complaint also alleges that, in 2019 and 2020, D Dollar raised at least $650,000 from investors. According to the SEC's complaint, investors were told that the funds would be used for a purported D Dollar subsidiary; but Nukarapu misappropriated approximately $595,000 of investor proceeds to fund SharkDreams operations and for his personal uses.
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of North Carolina, charges Nukarapu and SharkDreams with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and, in the alternative, charges that Nukarapu was liable as a control person for violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by SharkDreams and D Dollar, pursuant to Section 20(a) of the Exchange Act. The SEC’s complaint also charges D Dollar with violations of Sections 17(a)(1) and (3) of the Securities Act, Section 10(b) of the Exchange Act, and Rules 10b-5(a) and (c) thereunder. The SEC’s complaint seeks from all defendants permanent injunctive relief, conduct-based injunctions, disgorgement with prejudgment interest, and civil penalties; the complaint also seeks an officer and director bar as to Nukarapu.
The SEC's investigation was conducted by Delane Olson and Dan Furlano, under the supervision of Kevin Guerrero, Peter Rosario, and Stacy Bogert. The litigation will be handled by Peter Lallas under the supervision of James Connor.