Securities and Exchange Commission has filed a lawsuit against Clyde Cameron Cravey and Kenneth Wiedrich, claiming that their companies, Quantum Filtration, Inc. and Reliable One Resources, Inc., participated in a fraudulent, non-registered offering. Over 500 investors allegedly contributed $34 million to the offering. On January 9, 20,23, the court issued an order to temporarily stop the defendants from continuing their offering, to freeze their assets, to appoint a receiver temporary, and for other emergency relief.
In its complaint, the SEC claims that Cravey’s and Wiedrich’s false claims regarding Quantum Filtration N-95 facemasks were made to capitalize on the COVID-19 outbreak by making false claims. These masks were allegedly produced with cutting-edge technologies. The mask, however, did not possess the necessary certification. The complaint alleges also that the defendants falsely claimed that Reliable One expected approval from the U.S. Food and Drug Administration for the sale of the facemask even though they had never submitted the required application. The defendants also allegedly promoted nonexistent business deals, lied to investors about how funds were used, and failed disclose negative information regarding Cravey’s previous involvement in fraudulent security offerings.
The SEC’s complaint charges Cravey, Wiedrich, Reliable One Resources, and Quantum Filtration with violating antifraud and securities-registration provisions. The SEC’s complaint asks for injunctions and civil penalties against each defendant as well as disgorgement and disgorgement ill-gotten gain against Wiedrich, Cravey, and Reliable One Resources.
After the SEC filed a complaint and the court issued orders, Wiedrich & Cravey agreed to settle part of the SEC claims without admitting nor denying them. The court issued a judgment on February 8, 2023 reflecting the settlements. The judgment permanently prohibits Wiedrich from committing any further violations. It also imposes penny stock and officer-and director bars and a conduct-based order against them. The court will then address the SEC’s claims for disgorgement of funds, prejudgment intérêt, and civil penalties. The court also froze the assets of defendants and appointed a Receiver until further orders. A preliminary injunction was also issued without opposition against Reliable One Resources, Quantum Filtration and Quantum Filtration.
Catherine Floyd, Jody Z. Moor and Timothy S. McCole of the SEC Fort Worth Regional Office conducted the SEC’s investigation under the supervision Timothy S. McCole. David Reece, under the supervision of B. David Fraser, is in charge of the litigation.
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SEC: What You Need to Know
Securities Exchange Commission is the regulatory agency for the United States. It oversees all aspects of the securities industry including exchanges, brokers-dealers and investment advisors. Its primary function is to safeguard investors, maintain fair, efficient markets, as well as facilitate capital formation. The SEC enforces the securities laws, establishes rules for market players, and informs investors about companies and investments products. The SEC aims to promote stability and integrity in the financial markets, as well as ensure transparency and prevent fraud and manipulation.
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