Native American Energy Group, Inc.; Joseph D'Arrigo; David Hudzik
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25748 / June 16, 2023
Securities and Exchange Commission v. Native American Energy Group, Inc., et al., No. 23-civ-4455 (E.D.N.Y. filed June 16, 2023)
SEC Charges Microcap Company, Its CEO, and Former Consultant with Fraud and Registration Violations
The Securities and Exchange Commission today charged Native American Energy Group, Inc., its CEO, Joseph D'Arrigo, and one of its former consultants, David Hudzik, with violating antifraud and registration provisions of the federal securities laws in connection with a multi-million dollar offering fraud.
The SEC's complaint alleges that defendants deceived investors regarding the use of investor proceeds. According to the complaint, defendants solicited investors with a misleading subscription agreement that described the subscription as an "investment in the Company." In reality, as alleged in the complaint, D'Arrigo and the company's stock salespersons, including Hudzik, pocketed approximately 70 percent of the $3.43 million raised from investors between October 2014 and August 2020. The complaint further alleges that Hudzik falsely told investors that he would only receive a commission on any profits earned after an investor sold their Native American Energy shares when, in fact, Hudzik received commissions of 20 to 30 percent within days of the investments he sold. In addition, the complaint alleges that D'Arrigo misappropriated approximately $958,500 in investor proceeds for his personal benefit, using the proceeds to withdraw cash for himself, to wire money to himself and his wife, to pay personal credit card bills, and to make numerous purchases at restaurants, gas stations, grocery stores, drug stores, and other retailers.
The SEC's complaint, filed in the U.S. District Court for the Eastern District of New York, charges Native American Energy Group, D'Arrigo, and Hudzik with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder. The complaint further charges Hudzik with violating Section 15(a) of the Exchange Act. The SEC seeks permanent injunctive relief, disgorgement of allegedly ill-gotten gains plus prejudgment interest, and civil money penalties against each defendant. The SEC also seeks officer and director bars and penny stock bars against D'Arrigo and Hudzik.
The SEC's investigation was conducted by Christine Ely, Benjamin Mishkin, Diego Brucculeri, and Gerald Gross of the New York Regional Office. The matter was supervised by Sheldon Pollock. The litigation will be handled by Preethi Krishnamurthy and Mr. Mishkin.