Neil S. Chandran, et al.

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26046 / July 8, 2024

Securities and Exchange Commission v. Neil S. Chandran, et al., No. 4:23-cv-10017 (E.D. Mich. filed Jan. 4, 2023)

SEC Obtains Default Judgments Against Two Perpetrators of $45 Million CoinDeal Scheme

On June 3, 2024, the United States District Court for the Eastern District of Michigan entered final judgments on all claims against Garry Davidson of Henderson, Nevada and Linda Knott of Oklahoma City, Oklahoma for their involvement in an unregistered offering scheme that defrauded tens of thousands of investors.

The SEC's complaint alleged that Davidson and Knott falsely claimed that investors could generate extravagant returns by investing in a blockchain technology called CoinDeal that would be sold for trillions of dollars to a group of prominent and wealthy buyers. From at least January 2019 to mid-2022, Davidson and Knott allegedly disseminated false and misleading statements to investors regarding the purported value of CoinDeal, the parties involved in the supposed sale of CoinDeal, and the use of investment proceeds. According to the complaint, no sale of CoinDeal ever occurred and no distributions were made to CoinDeal investors. The complaint further alleged that Davidson, Knott, and their co-defendants collectively misappropriated millions of dollars of investor funds for personal use.

Davidson and Knott did not answer or otherwise respond to the SEC's complaint. In an order entering default judgments, the Court found that Davidson and Knott violated the registration and antifraud provisions of Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and aided and abetted violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by the alleged orchestrator of the scheme, Neil Chandran. In addition, the Court: (i) permanently enjoined Davidson and Knott from future violations of these provisions; (ii) entered officer-and-director bars against Davidson and Knott; (iii) ordered Davidson to pay disgorgement of $3,911,302 plus prejudgment interest of $915,113 and a $3,911,302 civil penalty; and (iv) ordered Knott to pay disgorgement of $108,171 plus prejudgment interest of $12,714 and a $108,171 civil penalty.

The SEC's litigation was handled by Michael D. Foster, Dante A. Roldan, and Caryn Trombino, with assistance from Steven Tremaglio and Lynette Nichols-Newman, all of the Chicago Regional Office. The SEC's litigation against the remaining defendants continues.