Dedicated Sound and Audio, Inc., et al.
Southern California-Based Home Audio Manufacturer and Telemarketer Agree to Settle Fraud Charge
Litigation Release No. 24055 / February 26, 2018
Securities and Exchange Commission v. Dedicated Sound and Audio, Inc., et al., Civil Action No. 8:18-CV-00323 (C.D. Cal. Filed Feb. 26, 2018)
The Securities and Exchange Commission today announced the filing of a settled action in federal court against the perpetrators of a multi-million dollar fraudulent offering of unregistered securities for a Southern California-based home audio manufacturer.
The SEC's complaint alleges that Dedicated Sound and Audio, Inc. ("DSA"), located in Lake Forest, California, and Steven Ventre, its founder, president, and CEO, retained the services of Choice Equity, a telemarketer controlled by recidivist Eric Lovy (formerly known as Eric Beltran), to solicit investors on DSA's behalf. The SEC alleges that investors in the unregistered offering were falsely told in a private placement memorandum drafted by Ventre and Lovy that DSA would pay no more than 15% of the amount raised in sales commissions to registered broker-dealers. In reality, over a 20-month span, DSA paid more than 33% ($1.56 million of $4.6 million) of the amount raised to Choice Equity and Lovy, neither of whom is registered with the SEC. More than half of the commissions went directly to Lovy.
The SEC's complaint, filed in U.S. District Court for the Central District of California, charges DSA and Ventre with violating Section 17(a)(2) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and, in the alternative, charges Ventre with liability as a control person under Section 20(a) of the Exchange Act for DSA's liability under Section 10(b). The complaint further charges Lovy with aiding and abetting DSA's and Ventre's violations of these antifraud provisions. In addition, the SEC charges all of the defendants with violating Sections 5(a) and 5(c) of the Securities Act and both Lovy and Choice Equity with violating Section 15(a) of the Exchange Act.
The defendants, without admitting or denying the allegations of the complaint, have consented to the entry of judgments permanently enjoining them from future violations of the federal securities laws; imposing civil penalties against each of them; and ordering Lovy and Choice Equity to pay disgorgement with prejudgment interest of the collective $1.56 million in commissions that they received from DSA, and civil penalties of $160,000 and $870,850, respectively. DSA and Ventre agreed to pay penalties of $250,000 and $80,000, respectively.
The SEC's investigation was conducted by Peter Del Greco and supervised by Marc Blau, of the Los Angeles office, with the assistance of trial attorney David Van Havermaat.
Last Reviewed or Updated: May 31, 2023