SEC v. Drew Morgan Ciccarelli, No. 1:20-cv-11789, District of Massachusetts (Aug. 30, 2024) — Complaint

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

SECURITIES AND EXCHANGE
COMMISSION,
    Plaintiff,
 v.

DREW MORGAN CICCARELLI,
    Defendant.

   Civil Action No. 20-CV-____ (___)

   JURY TRIAL DEMANDED

COMPLAINT
 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges the
following against defendant Drew Morgan Ciccarelli:
SUMMARY
1. This is a securities fraud enforcement action.  From approximately May 2012 to
July 2012 (the “relevant period”), Ciccarelli aided and abetted a scheme to defraud investors by
arranging for stock promotional campaigns to boost demand for the stock of a company, Rarus
Technologies,  Inc. (“Rarus”).  Rarus was secretly controlled by a group that sought to illegally
dump shares into the market while concealing their control of the company.  Rarus, an issuer of
securities whose stock was publicly traded, was based in New York and, during the relevant
period, it was purportedly developing a social media platform.  It is a type of company that is
often referred to as a “microcap” company and whose stock is often referred to as “microcap
stock” because the company has low market capitalization (a measure of a company’s value).
2. Ciccarelli was hired by a party (referred to in this complaint as “Individual A”) to
assist this party and his cohorts with a fraudulent scheme involving the sale of Rarus stock.
Individual A and his cohorts (the “Rarus Control Group”) controlled a large position in the

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shares of Rarus and were thus “affiliates” of Rarus under the federal securities laws.  An
“affiliate” of an issuer is a person or entity that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, such issuer (i.e. a
control person).  “Control” means the power to direct management and policies of the company
in question.  Typically, affiliates include officers, directors, and controlling shareholders but any
person who is “under common control” with an issuer may also be an affiliate.
  Absent
registration, affiliates may sell a small percentage of their stock pursuant to limitations
established by the registration safe-harbor in SEC Rule 144 [17 C.F.R. 230.144].   Before selling
stock, affiliates are required to: (a) register the stock sales with the Commission pursuant to
Section 5 of the Securities Act [15 U.S.C. §77e]; (b) sell the stock pursuant to an applicable
exemption from registration; or (c) sell the stock pursuant to conditions set forth in SEC Rule
144, including limitations on the amount of stock an affiliate can legally sell.
3. The Rarus Control Group sought to evade these requirements and restrictions and
illegally dump their shares by concealing their control and ownership of Rarus, including by
transferring their shares to offshore entities in amounts under 5% of the outstanding shares and
concealing their connection with stock promotions designed to enhance demand for Rarus’ stock
among the investing public.  The registration requirements and sale restrictions are designed to
protect unsuspecting investors from, among other things, buying stock from company insiders
who seek to dump their stock directly into the market instead of selling it in a registered offering
of securities.  A securities registration statement filed with the Commission contains important
information about an issuer’s business operations, financial condition, results of operation, risk
factors, management, and certain large shareholders.

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4. During the relevant period, Ciccarelli knowingly or recklessly assisted the Rarus
Control Group in their illegal sales of Rarus stock by arranging for a stock promotional
campaign on behalf of the Rarus Control Group.  The campaign was designed to create demand
for sales and to disguise the Rarus Control Group’s ultimate sponsorship of that campaign.
5. Individual A and Ciccarelli agreed to share half of the proceeds from the Rarus
Control Group’s sales of the securities of Rarus during a promotion arranged by Ciccarelli.
Ciccarelli, in turn, agreed to share sixty percent of his proceeds with certain persons engaged by
Ciccarelli who published Rarus-related promotional materials on their sites.  Following the Rarus
campaign, Ciccarelli received his compensation from Individual A and shared it with the
publishers.
6. Through the activities alleged in this Complaint, Ciccarelli has aided and abetted
(a) fraudulent or deceptive conduct in connection with the purchase or sale of securities, in
violation of Section 10(b) of the Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5(a)
and (c) thereunder; (b) fraud in the offer or sale of securities, in violation of Sections 17(a)(1)
and (3) of the Securities Act of 1933 (“Securities Act”); and (c) unregistered sales of securities in
violation of Sections 5(a) and (c) of the Securities Act.
7. The Commission seeks a permanent injunction against Ciccarelli, enjoining him
from engaging in the transactions, acts, practices, and courses of business alleged in this
Complaint, an order barring Ciccarelli from participating in any offering of a penny stock,
pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and/or 21(d) of the Exchange
Act [15 U.S.C. § 78u(d)], disgorgement with prejudgment interest, and a civil penalty.
JURISDICTION AND VENUE
8. The Court has jurisdiction over this case pursuant to Sections 20(d) and 22(a) of

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the Securities Act [15 U.S.C. §§77t(d), 77v(a)] and Sections 21(d), 21(e) and 27 of the Exchange
Act [15 U.S.C. §§78u(d), 78u(e), 78aa].  Venue is proper in this district because certain of the
acts, practices, transactions and courses of business alleged in this Complaint occurred within the
District of Massachusetts, and were e ffected, directly or indirectly, by making use of means or
instrumentalities of transportation or communication in interstate commerce, or the mails.  For
example, during the Rarus promotional campaign several individuals residing in Massachusetts
purchased shares of Rarus.
9. In connection with the conduct described in this Complaint, Ciccarelli directly or
indirectly made use of the mails or the means or instruments of transportation or communication
in interstate commerce.
10. Ciccarelli’s conduct involved fraud, deceit, or deliberate or reckless disregard of
regulatory requirements, and resulted in substantial loss, or significant risk of substantial loss, to
other persons.
DEFENDANT
11. Drew Morgan Ciccarelli (“Ciccarelli”), age 38, is a resident of Johns Island,
South Carolina.  In 2012, during the time of the conduct alleged in this complaint, Ciccarelli
controlled several businesses including Flip Ventures, LLC, that either directly promoted
microcap stocks or paid others to promote microcap stocks at Ciccarelli’s direction.
RELATED ENTITY
12. Rarus is a Nevada corporation with last known headquarters located in Oceanside,
New York.  On January 4, 2011, Rarus’ initial public offering became effective.  During the
relevant period, Rarus was quoted under the symbol RARS on OTC Link (previously, the “Pink
Sheets”) operated by OTC Markets Group, Inc.  During the relevant period, Rarus was

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purportedly in the business of developing a social media platform.
FACTS
13. From approximately 2010 to July 2012, Ciccarelli earned compensation for
assisting persons who were undisclosed affiliates of various microcap issuers by concealing their
association with related stock promotional campaigns, which allowed them to sell large blocks of
shares without disclosing the affiliates’ roles in those sales.  Ciccarelli used intermediaries he
controlled to pass funds from the affiliates to the promoters of their stock.  In some instances
Ciccarelli was compensated from proceeds of the stock sales; in other instances Ciccarelli was
compensated directly from the promotional budget for a campaign.  Ciccarelli understood that
while stock promoters c ommonly disclose the identities of persons who pay for promotional
campaigns, the promoters generally would not know about and would not identify the corporate
affiliates who were ultimately the ones financing (and expecting to benefit from) the promotions.
Through his intermediary companies, Ciccarelli assisted the affiliates by concealing their roles in
funding various stock promotional campaigns.
Consolidation of Rarus Stock by Rarus Control Group
14. On January 4, 2011, Rarus’ securities registration statement filed with the
Commission became effective and approximately nineteen persons purchased shares in that
registered offering of securities.
15. On or about June 23, 2011, fifteen of the initial nineteen shareholders who had
acquired shares in Rarus’ initial registered offering transferred 75,000,000 shares (which
exceeded 5% of Rarus’ outstanding shares) to six offshore entities, all of which were controlled
by the Rarus Control Group.  Commission rules require issuers of securities like Rarus to list all
persons holding greater than 5% of its outstanding stock in certain reports filed with the

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Commission.  Moreover, broker-dealers rely on accurate shareholder ownership and issuer
control information in order to avoid unknowingly participating in illegal unregistered offerings
of securities.  By dividing these shares among six separately-named accounts, the Rarus Control
Group concealed its control over all of the transferred shares and created a misleading façade
that none of the offshore entities held amounts exceeding 5% of the outstanding shares of Rarus.
Four of the six offshore entities, accounting for 54,000,000 shares, had “in care of” addresses as
Legacy Global Markets S.A. in Belize.  Collectively, these four entities, controlled by the Rarus
Control Group, accounted for 54% of the purportedly unrestricted stock of Rarus and over 12%
of the total outstanding stock.
16. Between August and September 2011, all 54,000,000 shares held “in care of”
Legacy Global Markets were deposited with the Depository Trust & Clearing Corporation
(“DTCC”) (a clearing and settlements service for member brokers), which makes shares
available for quick electronic transfer by broker-dealers transacting trades in the over-the-counter
market.  These 54,000,000 shares were the only shares deposited at DTCC as of September 5,
2011.
Sale of Unregistered Securities at Inflated Prices
17. On May 8, 2012, Rarus announced in a press release that it had implemented a
new business plan and had acquired certain intellectual property related to a social media
platform named Zngle.  Rarus’ stock significantly increased in price and trading volume
following this press release.
18. On or before June 6, 2012, Ciccarelli, through Flip Ventures, retained a promoter
(“Promoter A”) to publish and distribute a stock promotional campaign concerning Rarus and its
Zngle social media website to run for one week.  Individual A ( a member of the undisclosed

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Rarus Control Group) agreed to pay Ciccarelli fifty percent of the net proceeds of the Rarus
Control Group’s sale of Rarus stock during the promotion.  In turn, Ciccarelli agreed to distribute
sixty percent of his portion of the proceeds to Promoter A and retain the balance for himself.
Ciccarelli knew or was reckless in not knowing that his services were retained by Individual A
for the purpose of concealing Individual A’s funding of, and involvement with, the promotion of
Rarus.  Specifically, Ciccarelli understood that stock promoters would only disclose the identity
of whoever directly paid them for a promotion.
19. Beginning on June 6, 2012 and running through at least June 11, 2012, Promoter
A distributed promotions touting the merits of investing in Rarus.  In the “disclaimer” at the end
of the promotions, Promoter A stated that it expected to be compensated $200,000 to $300,000
from Flip V entures.
20. The promotions were effective.  Trading volume for Rarus stock increased to
approximately 11.3 million shares on the first day of the promotion, up 645% from the average
trading volume over the prior six days of trading of 1.5 million shares.  The intraday high price
for Rarus stock on June 6th was $0.14 per share, representing a sixty-five percent increase over
the prior day’s closing price.  On June 7, 2012, the trading volume was over 9.7 million shares
and remained higher than the pre-promotion average for the remainder of the weeklong
promotion.
21. Between June 6 and 7, 2012, Legacy Global Markets sold approximately
3,339,150 shares of Rarus during the Flip Ventures-sponsored promotion, for gross proceeds of
$378,110.  No registration statement for these transactions was effective nor was an exemption
applicable.
22. On July 6, 2012, Legacy Global Markets received a deposit of $4,670,000 in its

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Cayman Islands bank account that, on information and belief, included the proceeds derived
from sales of Rarus securities and other microcap issuers.  On the same day, Legacy Global
Markets transferred this entire balance to the Cayman Islands bank account of an affiliated
entity, Law Firm A.    Immediately thereafter, Law Firm A (controlled by the Rarus Control
Group) transferred $150,055 to a Cayman Islands’ bank account of another affiliated entity, Law
Firm B.  Law Firm B in turn transferred $150,000 to Flip Ventures.  These funds represented
Ciccarelli’s compensation for his efforts in the Rarus stock promotional campaign in early June
2012.
23. On July 10, 2012, Ciccarelli caused Flip Ventures to wire $115,000 from the Flip
Ventures bank account to Promoter A’s bank account.  This wire included Promoter A’s portion
of the compensation for the Rarus promotional campaign, as well as payments related to other
business arrangements between them.
CLAIMS FOR RELIEF

FIRST CLAIM FOR RELIEF
Aiding and Abetting Violations of Sections 5(a) and 5(c) of the Securities Act
24. Paragraphs 1 through 23 above are re-alleged and incorporated by reference as if
fully set forth herein.
25. By engaging in the conduct described above, Ciccarelli knowingly or recklessly
provided substantial assistance to the Rarus Control Group’s violations of Sections 5(a) and 5(c)
of the Securities Act whereby they directly or indirectly:  (a) made use of the means or
instruments of transportation or communication in interstate commerce or of the mails to sell,
through the use or medium of a prospectus or otherwise, securities as to which no registration
statement has been in effect and for which no exemption from registration has been available;
and/or (b) made use of the means or instruments of transportation or communication in interstate

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commerce or of the mails to offer to sell, through the use or medium of a prospectus or
otherwise, securities as to which no registration statement has been filed and for which no
exemption from registration has been available.
26. As a result, the Defendant aided and abetted violations of Sections 5(a) and (c) of
the Securities Act and unless enjoined, will continue to aid and abet violations of Sections 5(a)
and 5(c) [15 U.S.C. §§ 77e(a), (c)].
SECOND CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 10(b) of the Exchange Act and
Rules 10b-5(a) and (c) Thereunder
27. Paragraphs 1 through 23 above are re-alleged and incorporated by reference as if
fully set forth herein.
28. By reason of the foregoing, the Rarus Control Group, directly or indirectly, acting
knowing or recklessly, in connection with the purchase or sale of securities, by the use of means
and instrumentalities of interstate commerce, or of the mails, or a facility of a national securities
exchange: (a) employed or are employing devices, schemes or artifices to defraud; or (b)
engaged or are engaging in acts, practices or courses of business which operate as a fraud or
deceit upon certain persons.
29. Ciccarelli knew or recklessly disregarded that Individual A’s and his cohorts’
conduct was unlawful and knowingly or recklessly rendered substantial assistance in this
conduct.
30. The conduct of Ciccarelli involved fraud, deceit, manipulation, or deliberate or
reckless disregard of regulatory requirements and directly or indirectly resulted in substantial
losses to other persons.

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31. As a result, Ciccarelli aided and abetted, and, unless enjoined, will continue to aid
and abet, violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-
5(a) and (c) [  17 C.F.R. § 240.10b-5(a) and (c)] thereunder.
THIRD CLAIM FOR RELIEF
Aiding and Abetting Violations of Sections 17(a)(1) and (3) of the Securities Act
32. Paragraphs 1 through 23 above are re-alleged and incorporated by reference as if
fully set forth herein.
33. By reason of the conduct described above, the Rarus Control Group, in
connection with the offer or sale of securities, by the use of the means or instrumentalities of
interstate commerce or of the mails, directly or indirectly, acting knowingly, recklessly and/or
negligently (a) employed devices, schemes, or artifices to defraud; and (b) engaged in
transactions, practices, or courses of business which operated or would operate as a fraud or
deceit upon any persons, including purchasers or sellers of the securities.
34. Ciccarelli knew or recklessly disregarded that the Rarus Control Group’s conduct
was unlawful and knowingly or recklessly rendered substantial assistance in this conduct.
35. By reason of the conduct described above, Ciccarelli aided and abetted, and,
unless enjoined will continue to aid and abet violations of Sections 17(a)(1) and (3) of the
Securities Act [15 U.S.C. § 77q(a)(1) and (3)].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court:
A. Enter a permanent injunction restraining Ciccarelli, his officers, agents, servants,
employees and attorneys, and those persons in active concert or participation with him who
receive actual notice of the injunction by personal service or otherwise, and each of them, from
violations of Sections 5(a) and (c) of the Securities Act [15 U.S.C. § 77e(a) and (c)], Section

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17(a) of the Securities Act [15 U.S.C. § 77q(a)], and Section 10(b) of the Exchange Act [15
U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5];
B. Order Ciccarelli to pay an appropriate civil penalty pursuant to Section 20(d) of
the Securities Act [15 U.S.C. §77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C.
§78u(d)(3)];
C. Require Ciccarelli to disgorge his ill-gotten gains, plus prejudgment interest;
D Enter an order barring Ciccarelli from participating in any offering of a penny
stock, pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and/or 21(d) of the
Exchange Act [15 U.S.C. § 78u(d)];
E. Retain jurisdiction over this action to implement and carry out the terms of all
orders and decrees that may be entered; and
F. Grant such other and further relief as this Court may deem just and proper.
JURY DEMAND
The Commission demands a jury in this matter for all claims so triable.
     Respectfully submitted,
     /s/ Deena R. Bernstein
Deena Bernstein (Mass Bar No. 558721)
 Senior Trial Counsel
Amy Gwiazda (Mass Bar No. 663494)
 Assistant Regional Director
J. Lauchlan Wash (Mass Bar No. 629092)
 Enforcement Counsel
U.S. Securities and Exchange Commission
Boston Regional Office
33 Arch St., 24
th
 Floor
Boston, MA 02110
[email protected]

September 30, 2020

UNITED STATES DISTRICT COURT 
DISTRICT OF MASSACHUSETTS 

 
 

 
SECURITIES AND EXCHANGE 
COMMISSION, 
    Plaintiff, 
 v. 
 
DREW MORGAN CICCARELLI, 
    Defendant. 
 

 
 
   Civil Action No. 20-CV-____ (___) 
 
   JURY TRIAL DEMANDED 
 
 

 
COMPLAINT 

 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges the 

following against defendant Drew Morgan Ciccarelli: 

SUMMARY 

1. This is a securities fraud enforcement action.  From approximately May 2012 to 

July 2012 (the “relevant period”), Ciccarelli aided and abetted a scheme to defraud investors by 

arranging for stock promotional campaigns to boost demand for the stock of a company, Rarus 

Technologies, Inc. (“Rarus”).  Rarus was secretly controlled by a group that sought to illegally 

dump shares into the market while concealing their control of the company.  Rarus, an issuer of 

securities whose stock was publicly traded, was based in New York and, during the relevant 

period, it was purportedly developing a social media platform.  It is a type of company that is 

often referred to as a “microcap” company and whose stock is often referred to as “microcap 

stock” because the company has low market capitalization (a measure of a company’s value).   

2. Ciccarelli was hired by a party (referred to in this complaint as “Individual A”) to 

assist this party and his cohorts with a fraudulent scheme involving the sale of Rarus stock.  

Individual A and his cohorts (the “Rarus Control Group”) controlled a large position in the 

Case 1:20-cv-11789   Document 1   Filed 09/30/20   Page 1 of 11



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shares of Rarus and were thus “affiliates” of Rarus under the federal securities laws.  An 

“affiliate” of an issuer is a person or entity that, directly or indirectly through one or more 

intermediaries, controls, is controlled by, or is under common control with, such issuer (i.e. a 

control person).  “Control” means the power to direct management and policies of the company 

in question.  Typically, affiliates include officers, directors, and controlling shareholders but any 

person who is “under common control” with an issuer may also be an affiliate.  Absent 

registration, affiliates may sell a small percentage of their stock pursuant to limitations 

established by the registration safe-harbor in SEC Rule 144 [17 C.F.R. 230.144].   Before selling 

stock, affiliates are required to: (a) register the stock sales with the Commission pursuant to 

Section 5 of the Securities Act [15 U.S.C. §77e]; (b) sell the stock pursuant to an applicable 

exemption from registration; or (c) sell the stock pursuant to conditions set forth in SEC Rule 

144, including limitations on the amount of stock an affiliate can legally sell.  

3. The Rarus Control Group sought to evade these requirements and restrictions and 

illegally dump their shares by concealing their control and ownership of Rarus, including by 

transferring their shares to offshore entities in amounts under 5% of the outstanding shares and 

concealing their connection with stock promotions designed to enhance demand for Rarus’ stock 

among the investing public.  The registration requirements and sale restrictions are designed to 

protect unsuspecting investors from, among other things, buying stock from company insiders 

who seek to dump their stock directly into the market instead of selling it in a registered offering 

of securities.  A securities registration statement filed with the Commission contains important 

information about an issuer’s business operations, financial condition, results of operation, risk 

factors, management, and certain large shareholders.   

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4. During the relevant period, Ciccarelli knowingly or recklessly assisted the Rarus 

Control Group in their illegal sales of Rarus stock by arranging for a stock promotional 

campaign on behalf of the Rarus Control Group.  The campaign was designed to create demand 

for sales and to disguise the Rarus Control Group’s ultimate sponsorship of that campaign.    

5. Individual A and Ciccarelli agreed to share half of the proceeds from the Rarus 

Control Group’s sales of the securities of Rarus during a promotion arranged by Ciccarelli.  

Ciccarelli, in turn, agreed to share sixty percent of his proceeds with certain persons engaged by 

Ciccarelli who published Rarus-related promotional materials on their sites.  Following the Rarus 

campaign, Ciccarelli received his compensation from Individual A and shared it with the 

publishers. 

6. Through the activities alleged in this Complaint, Ciccarelli has aided and abetted  

(a) fraudulent or deceptive conduct in connection with the purchase or sale of securities, in 

violation of Section 10(b) of the Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5(a) 

and (c) thereunder; (b) fraud in the offer or sale of securities, in violation of Sections 17(a)(1) 

and (3) of the Securities Act of 1933 (“Securities Act”); and (c) unregistered sales of securities in 

violation of Sections 5(a) and (c) of the Securities Act.    

7. The Commission seeks a permanent injunction against Ciccarelli, enjoining him 

from engaging in the transactions, acts, practices, and courses of business alleged in this 

Complaint, an order barring Ciccarelli from participating in any offering of a penny stock, 

pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and/or 21(d) of the Exchange 

Act [15 U.S.C. § 78u(d)], disgorgement with prejudgment interest, and a civil penalty.    

JURISDICTION AND VENUE 

8. The Court has jurisdiction over this case pursuant to Sections 20(d) and 22(a) of 

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the Securities Act [15 U.S.C. §§77t(d), 77v(a)] and Sections 21(d), 21(e) and 27 of the Exchange 

Act [15 U.S.C. §§78u(d), 78u(e), 78aa].  Venue is proper in this district because certain of the 

acts, practices, transactions and courses of business alleged in this Complaint occurred within the 

District of Massachusetts, and were effected, directly or indirectly, by making use of means or 

instrumentalities of transportation or communication in interstate commerce, or the mails.  For 

example, during the Rarus promotional campaign several individuals residing in Massachusetts 

purchased shares of Rarus.  

9. In connection with the conduct described in this Complaint, Ciccarelli directly or 

indirectly made use of the mails or the means or instruments of transportation or communication 

in interstate commerce. 

10. Ciccarelli’s conduct involved fraud, deceit, or deliberate or reckless disregard of 

regulatory requirements, and resulted in substantial loss, or significant risk of substantial loss, to 

other persons. 

DEFENDANT 

11. Drew Morgan Ciccarelli (“Ciccarelli”), age 38, is a resident of Johns Island, 

South Carolina.  In 2012, during the time of the conduct alleged in this complaint, Ciccarelli 

controlled several businesses including Flip Ventures, LLC, that either directly promoted 

microcap stocks or paid others to promote microcap stocks at Ciccarelli’s direction.  

RELATED ENTITY 

12. Rarus is a Nevada corporation with last known headquarters located in Oceanside, 

New York.  On January 4, 2011, Rarus’ initial public offering became effective.  During the 

relevant period, Rarus was quoted under the symbol RARS on OTC Link (previously, the “Pink 

Sheets”) operated by OTC Markets Group, Inc.  During the relevant period, Rarus was 

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purportedly in the business of developing a social media platform.    

FACTS 

13. From approximately 2010 to July 2012, Ciccarelli earned compensation for 

assisting persons who were undisclosed affiliates of various microcap issuers by concealing their 

association with related stock promotional campaigns, which allowed them to sell large blocks of 

shares without disclosing the affiliates’ roles in those sales.  Ciccarelli used intermediaries he 

controlled to pass funds from the affiliates to the promoters of their stock.  In some instances 

Ciccarelli was compensated from proceeds of the stock sales; in other instances Ciccarelli was 

compensated directly from the promotional budget for a campaign.  Ciccarelli understood that 

while stock promoters commonly disclose the identities of persons who pay for promotional 

campaigns, the promoters generally would not know about and would not identify the corporate 

affiliates who were ultimately the ones financing (and expecting to benefit from) the promotions.  

Through his intermediary companies, Ciccarelli assisted the affiliates by concealing their roles in 

funding various stock promotional campaigns.  

Consolidation of Rarus Stock by Rarus Control Group 

14. On January 4, 2011, Rarus’ securities registration statement filed with the 

Commission became effective and approximately nineteen persons purchased shares in that 

registered offering of securities.   

15. On or about June 23, 2011, fifteen of the initial nineteen shareholders who had 

acquired shares in Rarus’ initial registered offering transferred 75,000,000 shares (which 

exceeded 5% of Rarus’ outstanding shares) to six offshore entities, all of which were controlled 

by the Rarus Control Group.  Commission rules require issuers of securities like Rarus to list all 

persons holding greater than 5% of its outstanding stock in certain reports filed with the 

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Commission.  Moreover, broker-dealers rely on accurate shareholder ownership and issuer 

control information in order to avoid unknowingly participating in illegal unregistered offerings 

of securities.  By dividing these shares among six separately-named accounts, the Rarus Control 

Group concealed its control over all of the transferred shares and created a misleading façade 

that none of the offshore entities held amounts exceeding 5% of the outstanding shares of Rarus.  

Four of the six offshore entities, accounting for 54,000,000 shares, had “in care of” addresses as 

Legacy Global Markets S.A. in Belize.  Collectively, these four entities, controlled by the Rarus 

Control Group, accounted for 54% of the purportedly unrestricted stock of Rarus and over 12% 

of the total outstanding stock.   

16. Between August and September 2011, all 54,000,000 shares held “in care of” 

Legacy Global Markets were deposited with the Depository Trust & Clearing Corporation 

(“DTCC”) (a clearing and settlements service for member brokers), which makes shares 

available for quick electronic transfer by broker-dealers transacting trades in the over-the-counter 

market.  These 54,000,000 shares were the only shares deposited at DTCC as of September 5, 

2011. 

Sale of Unregistered Securities at Inflated Prices 

17. On May 8, 2012, Rarus announced in a press release that it had implemented a 

new business plan and had acquired certain intellectual property related to a social media 

platform named Zngle.  Rarus’ stock significantly increased in price and trading volume 

following this press release.  

18. On or before June 6, 2012, Ciccarelli, through Flip Ventures, retained a promoter 

(“Promoter A”) to publish and distribute a stock promotional campaign concerning Rarus and its 

Zngle social media website to run for one week.  Individual A (a member of the undisclosed 

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Rarus Control Group) agreed to pay Ciccarelli fifty percent of the net proceeds of the Rarus 

Control Group’s sale of Rarus stock during the promotion.  In turn, Ciccarelli agreed to distribute 

sixty percent of his portion of the proceeds to Promoter A and retain the balance for himself.  

Ciccarelli knew or was reckless in not knowing that his services were retained by Individual A 

for the purpose of concealing Individual A’s funding of, and involvement with, the promotion of 

Rarus.  Specifically, Ciccarelli understood that stock promoters would only disclose the identity 

of whoever directly paid them for a promotion.     

19. Beginning on June 6, 2012 and running through at least June 11, 2012, Promoter 

A distributed promotions touting the merits of investing in Rarus.  In the “disclaimer” at the end 

of the promotions, Promoter A stated that it expected to be compensated $200,000 to $300,000 

from Flip Ventures.   

20. The promotions were effective.  Trading volume for Rarus stock increased to 

approximately 11.3 million shares on the first day of the promotion, up 645% from the average 

trading volume over the prior six days of trading of 1.5 million shares.  The intraday high price 

for Rarus stock on June 6th was $0.14 per share, representing a sixty-five percent increase over 

the prior day’s closing price.  On June 7, 2012, the trading volume was over 9.7 million shares 

and remained higher than the pre-promotion average for the remainder of the weeklong 

promotion. 

21. Between June 6 and 7, 2012, Legacy Global Markets sold approximately 

3,339,150 shares of Rarus during the Flip Ventures-sponsored promotion, for gross proceeds of 

$378,110.  No registration statement for these transactions was effective nor was an exemption 

applicable.   

22. On July 6, 2012, Legacy Global Markets received a deposit of $4,670,000 in its 

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Cayman Islands bank account that, on information and belief, included the proceeds derived 

from sales of Rarus securities and other microcap issuers.  On the same day, Legacy Global 

Markets transferred this entire balance to the Cayman Islands bank account of an affiliated 

entity, Law Firm A.  Immediately thereafter, Law Firm A (controlled by the Rarus Control 

Group) transferred $150,055 to a Cayman Islands’ bank account of another affiliated entity, Law 

Firm B.  Law Firm B in turn transferred $150,000 to Flip Ventures.  These funds represented 

Ciccarelli’s compensation for his efforts in the Rarus stock promotional campaign in early June 

2012.    

23. On July 10, 2012, Ciccarelli caused Flip Ventures to wire $115,000 from the Flip 

Ventures bank account to Promoter A’s bank account.  This wire included Promoter A’s portion 

of the compensation for the Rarus promotional campaign, as well as payments related to other 

business arrangements between them.  

CLAIMS FOR RELIEF 
 

FIRST CLAIM FOR RELIEF 
Aiding and Abetting Violations of Sections 5(a) and 5(c) of the Securities Act 

24. Paragraphs 1 through 23 above are re-alleged and incorporated by reference as if 

fully set forth herein.  

25. By engaging in the conduct described above, Ciccarelli knowingly or recklessly 

provided substantial assistance to the Rarus Control Group’s violations of Sections 5(a) and 5(c) 

of the Securities Act whereby they directly or indirectly:  (a) made use of the means or 

instruments of transportation or communication in interstate commerce or of the mails to sell, 

through the use or medium of a prospectus or otherwise, securities as to which no registration 

statement has been in effect and for which no exemption from registration has been available; 

and/or (b) made use of the means or instruments of transportation or communication in interstate 

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commerce or of the mails to offer to sell, through the use or medium of a prospectus or 

otherwise, securities as to which no registration statement has been filed and for which no 

exemption from registration has been available. 

26. As a result, the Defendant aided and abetted violations of Sections 5(a) and (c) of 

the Securities Act and unless enjoined, will continue to aid and abet violations of Sections 5(a) 

and 5(c) [15 U.S.C. §§ 77e(a), (c)].  

SECOND CLAIM FOR RELIEF 
Aiding and Abetting Violations of Section 10(b) of the Exchange Act and  

Rules 10b-5(a) and (c) Thereunder 
27. Paragraphs 1 through 23 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

28. By reason of the foregoing, the Rarus Control Group, directly or indirectly, acting 

knowing or recklessly, in connection with the purchase or sale of securities, by the use of means 

and instrumentalities of interstate commerce, or of the mails, or a facility of a national securities 

exchange: (a) employed or are employing devices, schemes or artifices to defraud; or (b) 

engaged or are engaging in acts, practices or courses of business which operate as a fraud or 

deceit upon certain persons. 

29. Ciccarelli knew or recklessly disregarded that Individual A’s and his cohorts’ 

conduct was unlawful and knowingly or recklessly rendered substantial assistance in this 

conduct. 

30. The conduct of Ciccarelli involved fraud, deceit, manipulation, or deliberate or 

reckless disregard of regulatory requirements and directly or indirectly resulted in substantial 

losses to other persons.   

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31. As a result, Ciccarelli aided and abetted, and, unless enjoined, will continue to aid 

and abet, violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-

5(a) and (c) [17 C.F.R. § 240.10b-5(a) and (c)] thereunder. 

THIRD CLAIM FOR RELIEF 
Aiding and Abetting Violations of Sections 17(a)(1) and (3) of the Securities Act 
32. Paragraphs 1 through 23 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

33. By reason of the conduct described above, the Rarus Control Group, in 

connection with the offer or sale of securities, by the use of the means or instrumentalities of 

interstate commerce or of the mails, directly or indirectly, acting knowingly, recklessly and/or 

negligently (a) employed devices, schemes, or artifices to defraud; and (b) engaged in 

transactions, practices, or courses of business which operated or would operate as a fraud or 

deceit upon any persons, including purchasers or sellers of the securities.  

34. Ciccarelli knew or recklessly disregarded that the Rarus Control Group’s conduct 

was unlawful and knowingly or recklessly rendered substantial assistance in this conduct. 

35. By reason of the conduct described above, Ciccarelli aided and abetted, and, 

unless enjoined will continue to aid and abet violations of Sections 17(a)(1) and (3) of the 

Securities Act [15 U.S.C. § 77q(a)(1) and (3)]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court: 

A. Enter a permanent injunction restraining Ciccarelli, his officers, agents, servants, 

employees and attorneys, and those persons in active concert or participation with him who 

receive actual notice of the injunction by personal service or otherwise, and each of them, from 

violations of Sections 5(a) and (c) of the Securities Act [15 U.S.C. § 77e(a) and (c)], Section 

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17(a) of the Securities Act [15 U.S.C. § 77q(a)], and Section 10(b) of the Exchange Act [15 

U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]; 

B. Order Ciccarelli to pay an appropriate civil penalty pursuant to Section 20(d) of 

the Securities Act [15 U.S.C. §77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 

§78u(d)(3)]; 

C. Require Ciccarelli to disgorge his ill-gotten gains, plus prejudgment interest;  

D Enter an order barring Ciccarelli from participating in any offering of a penny 

stock, pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and/or 21(d) of the 

Exchange Act [15 U.S.C. § 78u(d)]; 

E. Retain jurisdiction over this action to implement and carry out the terms of all 

orders and decrees that may be entered; and  

F. Grant such other and further relief as this Court may deem just and proper. 

JURY DEMAND 

The Commission demands a jury in this matter for all claims so triable. 

     Respectfully submitted, 

     /s/ Deena R. Bernstein   
Deena Bernstein (Mass Bar No. 558721) 
 Senior Trial Counsel  
Amy Gwiazda (Mass Bar No. 663494) 
 Assistant Regional Director 
J. Lauchlan Wash (Mass Bar No. 629092) 
 Enforcement Counsel 
U.S. Securities and Exchange Commission 
Boston Regional Office 
33 Arch St., 24th Floor 
Boston, MA 02110 
[email protected] 

September 30, 2020 
 

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