The Securities and Exchange Commission (SEC) has announced fraud charges against Aron Govil of Jacksonville, Florida, for defrauding investors in two companies he controlled, Cemtrex Inc. and Telidyne Inc.
Allegedly, Govil, the controlling shareholder and executive director of Cemtrex, misappropriated over $7 million of investor funds between April 2016 and January 2018 to finance his personal business ventures and to pay his personal expenses. The SEC claims that Govil engaged in secretly selling Cemtrex stock while paying stock promoters to recommend that retail investors buy the company’s stock as well as insider trading.
The SEC also alleges that while CEO of Telidyne, Govil misrepresented the company’s products to investors. The SEC claims that Govil falsely told investors that Telidyne had developed the “Teli App,” which allowed users to transact in cryptocurrencies from their mobile phones. Additionally, the SEC claims that Teledyne claims to be working on an app to detect COVID-19.
The SEC says these statements allegedly were false because the Teli App did not have the stated cryptocurrency functionality and Telidyne had not started work on the COVID-19 detection app.
“Govil allegedly flooded the market with paid-for buy recommendations for Cemtrex stock and made false claims about Telidyne’s development of mobile apps that would facilitate cryptocurrency transactions and help combat the coronavirus,” said Richard R. Best, Director of the SEC’s New York Regional Office. “Investors should be wary of online recommendations from unverified sources that appear to capitalize on the latest market trends and seem too good to be true.”
The action seeks injunctive relief, an officer and director bar, a penny stock bar, disgorgement plus prejudgment interest, and civil penalties. Without admitting or denying the complaint’s allegations, the SEC states that Govil has consented to the entry of a final judgment that enjoins him from violating the charged provisions; imposes officer and director and penny stock bars; imposes, in connection with certain violations, disgorgement in the amount of $626,782, plus prejudgment interest thereon in the amount of $76,693.95; and imposes a civil penalty in the amount of $620,000.
The judgment also provides for the court to order, upon motion of the Commission, additional disgorgement with prejudgment interest and/or penalty against Govil, if deemed appropriate. The proposed settlement is subject to court approval.
