SEC v. Stephen Durland, No. 4:11-cr-00009, Northern District of Texas (Aug. 13, 2024) — Complaint

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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

        §
SECURITIES AND EXCHANGE COMMISSION, §
        §
Plaintiff,     §
        §
v.        § Case No.: 3:24-cv-02062
        §
STEPHEN DURLAND     §
        §
  Defendant.         §
        §

COMPLAINT

Plaintiff  Securities  and  Exchange  Commission  (the  “Commission”)  files  this  Complaint
against Defendant Stephen Durland (“Durland”) and alleges as follows:
I.
SUMMARY
1. From approximately August 2017 through September 2022, Durland participated
in a scheme to artificially inflate stock prices and trading volume in three penny-stock companies
so that scheme participants could sell their shares for a substantial profit.  Specifically, Durland,
a securities-fraud recidivist who was previously suspended from appearing or practicing before
the Commission as an accountant, prepared financial statements for the issuers: Alternet
Systems, Inc. (“Alternet”), Priority Aviation, Inc. (“Priority”), and Vaycaychella, Inc.
(“Vaycaychella”) (collectively, the “Issuers”).
2. The Issuers’ financial statements, along with related disclosure statements, were
false and misleading in numerous respects.  For example, although Durland prepared the
financial statements, the public filings omitted Durland’s role, thereby concealing his 2011
felony securities-fraud conviction, a previous judgment obtained against him by the

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Commission, and his suspension from appearing or practicing before the Commission as an
accountant.  Similarly, the Issuers’ disclosure statements falsely reported that the Issuers’
respective CEOs prepared the financial statements.  In addition, the financial statements for at
least one of the Issuers contained materially misleading statements and omissions concerning the
conversion terms of a convertible promissory note, concealing that the conversion terms would
allow a scheme participant who obtained the promissory note to amass significant amounts of the
Issuer’s stock at extreme discounts, and then sell those discounted shares to market participants.
3. By committing the acts alleged in this Complaint, Durland directly or indirectly
engaged in, and unless restrained and enjoined by the Court will continue to engage in, acts,
transactions, practices, and/or courses of business that violate the antifraud provisions of the
federal securities laws, specifically Sections 17(a)(1) and (3) of the Securities Act of 1933
(“Securities Act”) [15 U.S.C. §§ 77q(a)(1), (3)] and Section 10(b) of the Securities Exchange Act
of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R.
§§ 240.10b-5(a), (c)].
4. In the interest of protecting the public from any further fraudulent activity and
harm, the Commission brings this action against Durland seeking: (a) permanent injunctive
relief; (b) disgorgement of ill-gotten gains, plus prejudgment interest thereon; (c) civil penalties;
and (d) all other equitable and ancillary relief to which the Court determines that the
Commission is entitled.
II.
JURISDICTION AND VENUE
5. The Commission brings this action under Section 20(b) of the Securities Act [15
U.S.C. § 77t(b)] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)], seeking to
permanently restrain and enjoin Durland from violating the antifraud provisions of the federal

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securities laws.
6. The Court has jurisdiction of this action under Sections 20(d) and 22(a) of the
Securities Act [15 U.S.C. §§ 77t(d) and 77v(a)] and Sections 21(d), 21(e), and 27 of the
Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
7. Venue is proper because the Dallas Division of the Northern District of Texas is
where a substantial part of the acts, omissions, transactions, practices, and/or courses of business
giving rise to the claims occurred.  Alternet and Priority are based, respectively, in Addison and
Dallas, Texas.  Furthermore, the Dallas Division of the Northern District of Texas is the venue of
a related civil action, SEC v. Verges, et al., No. 3:23-cv-02146-D (N.D. Tex. filed Sept. 26,
2023).
8. Durland, directly and indirectly, made use of the mails or of the means and
instrumentalities of interstate commerce in connection with the acts, omissions, transactions,
practices, and/or courses of business described in this complaint.
9. Durland engaged in the acts, omissions, transactions, practices, and/or courses of
business described in this complaint in connection with the offer, purchase, and/or sale of
securities.
III.
DEFENDANT AND RELEVANT PERSONS
A. Defendant
10. Durland resides in Greensboro, North Carolina.  Durland was formerly a Certified
Public Accountant (“CPA”), licensed in New York.  In 2009, the Commission filed a civil
injunctive action against Durland in connection with an alleged stock-dumping scheme; in 2010,
the court entered a final judgment, enjoining him from violating or aiding and abetting violations
of the antifraud, reporting, books-and-records, securities registration, and stock-ownership-

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reporting provisions of the federal securities laws and imposing an officer-and-director bar
against him.  See SEC v. Pegasus Wireless Corp., et al., No. 4:09-cv-2302 (N.D. Cal. filed May
26, 2009).  Thereafter, the Commission issued an order in 2010, suspending him from appearing
or practicing before the Commission as an accountant.  See Securities Exchange Act of 1934 Rel.
No. 63013 (issued on Sept. 29, 2010).  In a related criminal case, Durland pled guilty to felony
counts of securities fraud, conspiracy to commit securities fraud, and falsifying books, records,
and accounts, and in 2011 he was sentenced to serve a 33-month term of imprisonment.  United
States v. Durland, No. 4:11-cr-00009 JSW (N.D. Cal. filed Jan. 10, 2011).
B. Other Relevant Persons
11. Phillip Verges, a/k/a Tom Faye, a/k/a Mike Murphy (“Verges”), resides in Dallas,
Texas.  Verges maintained undisclosed control over the Issuers and directed their actions.
12. Alternet is a non-SEC-reporting microcap company based in Addison, Texas and
incorporated in Wyoming.  Alternet purports to be in the business of building an electric mobility
ecosystem designed to support its anticipated product launch of an electric motorcycle to be
marketed and sold in Africa.  Alternet’s common stock is quoted under the symbol “ALYI” on
OTC Link (previously “Pink Sheets”) operated by OTC Markets Group, Inc. (“OTC Link”).
Since January 1, 2017, Alternet’s common stock has generally traded for less than $0.88 per
share.
13. Priority is a non-SEC-reporting microcap company based in Dallas, Texas and
incorporated in Wyoming.  Priority purports to be a technology company that develops
applications designed to enhance student life.  Priority’s common stock is quoted under the
symbol “PJET” on OTC Link.  Since January 1, 2017, Priority’s common stock has generally
traded for less than $0.03 per share.
14. Vaycaychella is a non-SEC-reporting microcap company based in Las Vegas,

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Nevada and incorporated in Wyoming.  Vaycaychella claims its mission is to serve short-term
vacation rental owners and investors with a peer-to-peer lending application, which is under
development.  Vaycaychella’s common stock is quoted under the symbol “VAYK” on the OTC
Link.  Since January 1, 2017, Vaycaychella’s common stock has generally traded for less $0.093
per share.
IV.
STATEMENT OF FACTS
A. Overview of the Fraudulent Scheme.
15. On September 26, 2023, the Commission filed a civil injunctive action against
Verges and others in an action styled, SEC v. Phillip Verges, et al., Case No. 3:23-cv-02146-D
(N.D. Tex. filed Sept. 26, 2023) ( the “Verges Action”).  As detailed in the Complaint [Dkt. No.
1] (the “Verges Complaint”), Verges and other persons participated in a scheme to pump and
dump the stock of the Issuers and other publicly traded companies.
16. As alleged in the Verges Complaint, Verges gained control of the Issuers and
other related companies and installed figurehead CEOs.  From at least June 2017 to June 2022,
the Issuers and other related companies, at Verges’s direction, issued approximately 5.2 billion
shares of unrestricted stock to scheme participants in exchange for previously issued convertible
promissory notes and other debt obligations (together “debt instruments”).  The debt
instruments’ aggregate conversion price was approximately $15 million—a discount of
approximately 86.64% from the shares’ aggregate market price, which exceeded $112 million.
Once the scheme participants received their shares, they either sold them or transferred them to
third parties for sale into the market.  The scheme participants received proceeds from these sales
and then kicked back a portion to companies owned or controlled by Verges.
17. As further alleged in the Verges Complaint, Verges artificially inflated the trading

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volume in the Issuers’ stocks to ensure that his nominees and other scheme participants could
sell their shares.  Using an alias, Verges authored and posted more than 1,400 press releases
promoting the Issuers and other related companies to increase the stocks’ trading volumes.  He
also directed the Issuers and other related companies to publish false and misleading disclosures
and financial statements through a publicly available website maintained by OTC Markets
Group, Inc.  The press releases, OTC disclosures, and financial statements were all designed to
make the stocks of the Issuers and other related companies appear more attractive to the
investing public, to increase their trading volume,  and to create market conditions in which
scheme participants could more readily dump their shares.
B. Durland’s Participation in the Scheme
1. Durland Prepared Financial Statements
18. In or around August 2017, Verges hired Durland to prepare quarterly and annual
financial statements for the Issuers.   In preparing these financial statements, Durland never
received financial information directly from the Issuers or their CEOs.  Instead, Verges, as the
undisclosed control person of these entities, directly provided Durland with financial information
for the Issuers.  Bank records from June 2019 to September 2022 show that Verges paid Durland
at least $83,000 for his services.
19. At Verges’s direction, each of the three Issuers included Durland-prepared
financial statements in a “Financial Report” published to OTC Markets for each quarterly and
annual period.  Along with the Financial Report, each entity also published to OTC Markets a
separate “Disclosure Statement” for each period, again at Verges’s direction, to disclose relevant
company information.  Each Disclosure Statement either included the financial statements in the
Financial Report for the relevant period or incorporated the financial statements by reference.
As discussed below, the Financial Reports and Disclosure Statements contained false and

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misleading statements, which Durland knew or was severely reckless in not knowing.
2. The Disclosure Statements Concealed Durland’s Involvement
20. From December 2018 to August 2022, Verges directed the submission of at least
35 Disclosure Statements that falsely stated that the Issuers’ CEOs prepared their financial
statements and omitted any mention of Durland’s role in their preparation.  These false
statements prevented investors from assessing investment risks, because the Issuers’ financial
statements had been secretly prepared by Durland, a convicted securities-fraud recidivist who
served a 33-month prison term and who was subject to antifraud injunctions and a prohibition
from appearing or practicing before the Commission as an accountant.
21. Durland continued to prepare financial statements for the Issuers despite red flags
alerting him that the Issuers’ Disclosure Statements concealed his role.  For example, in August
2019 and November 2019, Durland received copies of an Alternet Disclosure Statement falsely
stating that the Issuers’ CEOs prepared Alternet’s financial statements and, thereby, concealing
Durland’s involvement.  Yet Durland continued to prepare the Issuers’ financial statements
through at least August 2022, making no effort to: (a) ensure that the Issuers’ Disclosure
Statements accurately disclosed his role, or (b) cease his activities to be in conformance with the
Disclosure Statements.   Thus, Durland knew, or was severely reckless in not knowing, that the
Disclosure Statements were false and misleading.
3. Durland Prepared Misleading Financial Statements for Alternet
22. In April 2021, Alternet issued a $1,111,111 convertible promissory note (the
“Promissory Note”) to a scheme participant.  As Durland knew or was severely reckless in not
knowing, the Promissory Note had a 12-month maturity, a 12% annual interest rate, and a
provision allowing the scheme participant to convert the note to Alternet stock six months after
issuance.

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23. At Verges’s direction, Alternet published quarterly and annual Financial Reports
to OTC Markets containing the financial statements that Durland prepared.  For the quarterly
periods ended June 30, 2021 and September 30, 2021, the notes to each of the financial
statements described the Promissory N ote as follows:
In April 2021, the Company entered into a convertible note with a
third  party  for  $1,111,111,  which  includes  $111,111  of  [original
issue discount]. This note has a maturity in one year and carries a
12% interest rate. This note is convertible beginning 6 months after
issuance. It is convertible at a discount of 50% to the lowest trade
price  during  the  20  consecutive  trading  days  immediately  prior  to
conversion date.
For the annual period ended December 31, 2021, the notes to the financial statements contained
the same description above, except it stated “issued” as opposed to “entered into.”
24. As Durland knew, or was severely reckless in not knowing, this statement was
misleading.  The actual terms of the note stated: “[t]he conversion price . . . shall equal the lesser
of fifty percent (50%) of the lowest trade price . . . during the twenty (20) consecutive Trading
Days immediately preceding the (i) Issue Date; or, (ii) Conversion Date” (emphasis added).  The
exclusion of the actual Promissory Note terms was significant because the note allowed the
scheme participant to convert at a rate significantly lower than that disclosed in the financial
statements that Durland prepared.  This fact was not included in any Alternet financial
statements or other public disclosures.  On at least two occasions, the scheme participant
converted at the lower, undisclosed conversion rate and extracted a profit from these
conversions.
25. The financial statements that Durland prepared for the quarters ended March 31,
2022, and June 30, 2022, also contained misleading statements concerning the Promissory Note.
Unlike the earlier financial statements, the notes to these financial statements omitted the
statement block-quoted in paragraph 23 above, which described the Promissory Note.  As

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Durland knew, or was severely reckless in not knowing, by failing to include this or similar
language, the financial statements conveyed the misleading impression that the Promissory Note
was no longer outstanding.  But as Durland knew, or was severely reckless in not knowing, the
Promissory Note’s initial principal balance of $1,111,111 was still outstanding as of March 31,
2022, and as much as $695,111 was outstanding as of June 30, 2022.
V.
CLAIMS FOR RELIEF

FIRST CLAIM FOR RELIEF

Violations of the Antifraud Provisions of the Exchange Act
Section 10(b) [15 U.S.C. § 78j(b)] and Rules  10b-5 (a), (c) [17 C.F.R. §§ 240.10b-5(a), (c)]

26. Plaintiff re-alleges and incorporates paragraphs 1 through 25 of this Complaint by
reference as if set forth verbatim in this Claim.
27. By engaging in the acts and conduct alleged herein, Durland, directly or
indirectly, in connection with the purchase or sale of securities, by the use of any means or
instrumentality of interstate commerce, or of the mails or of any facility of any national securities
exchange:
a. employed a device, scheme, or artifice to defraud; and/or
b. engaged  in  an act,  practice,  or  course  of  business  which  operated  or  would
operate as a fraud or deceit upon any person.
28. With regard to the violations of Section 10(b) and Rules 10b-5(a) and (c), Durland
acted with scienter and engaged in the referenced conduct knowingly and/or with severe
recklessness.
29. By reason of the foregoing, Durland violated, and unless restrained and enjoined
will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-

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5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a), (c)].
SECOND CLAIM FOR RELIEF

Violations of the Antifraud Provisions of the Securities Act
Sections 17(a)(1) and (3) [15 U.S.C. §§ 77q(a)(1) and (3)]

30. Plaintiff re-alleges and incorporates paragraphs 1 through 25 of this Complaint by
reference as if set forth verbatim in this Claim.
31. By engaging in the acts and conduct alleged herein, Durland, directly or
indirectly, in the offer or sale of a security, by the use of any means or instruments of
transportation or communication in interstate commerce or by use of the mails, have:
a. employed a device, scheme, or artifice to defraud; and/or
b. engaged in a transaction, practice, or course of business which operated or
would operate as a fraud or deceit upon the purchaser.
32. With regard to violations of Section 17(a)(1), Durland acted with scienter and
engaged in the conduct knowingly and/or with severe recklessness.  With regard to the violations
of Section 17(a)(3), Durland acted at least negligently.
33. By reason of the foregoing, Durland violated, and unless enjoined will continue to
violate, Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(1), (3)].
PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court enter a final
judgment:
1. Permanently enjoining Durland from violating, directly or indirectly, Sections
17(a)(1) and (3) of the Securities Act [15 U.S.C. §§ 77e(1), (3)] and Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-
5(a), (c)];

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2. Barring Durland from participating in any offering of penny stock, including
engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing
or attempting to induce the purchase or sale of any penny stock.  A penny stock is any equity
security that has a price of less than five dollars, except as provided in Rule 3a51-1 under the
Exchange Act [17 C.F.R. § 240.3a51-1];
3. Ordering Durland to disgorge all ill-gotten gains he received as a result of the
conduct alleged herein, together with pre-judgment interest on those amounts, pursuant to the
Court’s equitable powers and Sections 21(d)(3), 21(d)(5), and 21(d)(7) of the Exchange Act [15
U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)];
4. Ordering Durland to pay civil penalties 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)]; and
5. Granting such other and further relief as this Court may determine to be just,
equitable, and necessary.

Dated:   August 12, 2024    Respectfully submitted,

/s/ Jason P. Reinsch
Jason P. Reinsch
Texas Bar No. 24040120
United States Securities and Exchange Commission
Fort Worth Regional Office
801 Cherry Street, Suite 1900
Fort Worth, Texas 76102
(817) 900-2601 (phone)
(817) 978-4927 (facsimile)
[email protected]

ATTORNEY FOR PLAINTIFF SECURITIES
AND EXCHANGE COMMISSION

1 

IN THE UNITED STATES DISTRICT COURT 
FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 
 
         
        § 
SECURITIES AND EXCHANGE COMMISSION, § 
        § 

Plaintiff,     § 
        § 
v.        § Case No.: 3:24-cv-02062 
        § 
STEPHEN DURLAND     § 
        § 
  Defendant.      § 
        § 
 

COMPLAINT 

 
Plaintiff Securities and Exchange Commission (the “Commission”) files this Complaint 

against Defendant Stephen Durland (“Durland”) and alleges as follows: 

I. 
SUMMARY 

1. From approximately August 2017 through September 2022, Durland participated 

in a scheme to artificially inflate stock prices and trading volume in three penny-stock companies 

so that scheme participants could sell their shares for a substantial profit.  Specifically, Durland, 

a securities-fraud recidivist who was previously suspended from appearing or practicing before 

the Commission as an accountant, prepared financial statements for the issuers: Alternet 

Systems, Inc. (“Alternet”), Priority Aviation, Inc. (“Priority”), and Vaycaychella, Inc. 

(“Vaycaychella”) (collectively, the “Issuers”).   

2. The Issuers’ financial statements, along with related disclosure statements, were 

false and misleading in numerous respects.  For example, although Durland prepared the 

financial statements, the public filings omitted Durland’s role, thereby concealing his 2011 

felony securities-fraud conviction, a previous judgment obtained against him by the 

Case 3:24-cv-02062-N   Document 1   Filed 08/13/24    Page 1 of 11   PageID 1



 

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Commission, and his suspension from appearing or practicing before the Commission as an 

accountant.  Similarly, the Issuers’ disclosure statements falsely reported that the Issuers’ 

respective CEOs prepared the financial statements.  In addition, the financial statements for at 

least one of the Issuers contained materially misleading statements and omissions concerning the 

conversion terms of a convertible promissory note, concealing that the conversion terms would 

allow a scheme participant who obtained the promissory note to amass significant amounts of the 

Issuer’s stock at extreme discounts, and then sell those discounted shares to market participants. 

3. By committing the acts alleged in this Complaint, Durland directly or indirectly 

engaged in, and unless restrained and enjoined by the Court will continue to engage in, acts, 

transactions, practices, and/or courses of business that violate the antifraud provisions of the 

federal securities laws, specifically Sections 17(a)(1) and (3) of the Securities Act of 1933 

(“Securities Act”) [15 U.S.C. §§ 77q(a)(1), (3)] and Section 10(b) of the Securities Exchange Act 

of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. 

§§ 240.10b-5(a), (c)]. 

4. In the interest of protecting the public from any further fraudulent activity and 

harm, the Commission brings this action against Durland seeking: (a) permanent injunctive 

relief; (b) disgorgement of ill-gotten gains, plus prejudgment interest thereon; (c) civil penalties; 

and (d) all other equitable and ancillary relief to which the Court determines that the 

Commission is entitled. 

II. 
JURISDICTION AND VENUE 

5. The Commission brings this action under Section 20(b) of the Securities Act [15 

U.S.C. § 77t(b)] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)], seeking to 

permanently restrain and enjoin Durland from violating the antifraud provisions of the federal 

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securities laws. 

6. The Court has jurisdiction of this action under Sections 20(d) and 22(a) of the 

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

Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].     

7. Venue is proper because the Dallas Division of the Northern District of Texas is 

where a substantial part of the acts, omissions, transactions, practices, and/or courses of business 

giving rise to the claims occurred.  Alternet and Priority are based, respectively, in Addison and 

Dallas, Texas.  Furthermore, the Dallas Division of the Northern District of Texas is the venue of 

a related civil action, SEC v. Verges, et al., No. 3:23-cv-02146-D (N.D. Tex. filed Sept. 26, 

2023). 

8. Durland, directly and indirectly, made use of the mails or of the means and 

instrumentalities of interstate commerce in connection with the acts, omissions, transactions, 

practices, and/or courses of business described in this complaint.  

9. Durland engaged in the acts, omissions, transactions, practices, and/or courses of 

business described in this complaint in connection with the offer, purchase, and/or sale of 

securities.        

III. 
DEFENDANT AND RELEVANT PERSONS 

A. Defendant 

10. Durland resides in Greensboro, North Carolina.  Durland was formerly a Certified 

Public Accountant (“CPA”), licensed in New York.  In 2009, the Commission filed a civil 

injunctive action against Durland in connection with an alleged stock-dumping scheme; in 2010, 

the court entered a final judgment, enjoining him from violating or aiding and abetting violations 

of the antifraud, reporting, books-and-records, securities registration, and stock-ownership-

Case 3:24-cv-02062-N   Document 1   Filed 08/13/24    Page 3 of 11   PageID 3



 

4 

reporting provisions of the federal securities laws and imposing an officer-and-director bar 

against him.  See SEC v. Pegasus Wireless Corp., et al., No. 4:09-cv-2302 (N.D. Cal. filed May 

26, 2009).  Thereafter, the Commission issued an order in 2010, suspending him from appearing 

or practicing before the Commission as an accountant.  See Securities Exchange Act of 1934 Rel. 

No. 63013 (issued on Sept. 29, 2010).  In a related criminal case, Durland pled guilty to felony 

counts of securities fraud, conspiracy to commit securities fraud, and falsifying books, records, 

and accounts, and in 2011 he was sentenced to serve a 33-month term of imprisonment.  United 

States v. Durland, No. 4:11-cr-00009 JSW (N.D. Cal. filed Jan. 10, 2011). 

B. Other Relevant Persons 

11. Phillip Verges, a/k/a Tom Faye, a/k/a Mike Murphy (“Verges”), resides in Dallas, 

Texas.  Verges maintained undisclosed control over the Issuers and directed their actions. 

12. Alternet is a non-SEC-reporting microcap company based in Addison, Texas and 

incorporated in Wyoming.  Alternet purports to be in the business of building an electric mobility 

ecosystem designed to support its anticipated product launch of an electric motorcycle to be 

marketed and sold in Africa.  Alternet’s common stock is quoted under the symbol “ALYI” on 

OTC Link (previously “Pink Sheets”) operated by OTC Markets Group, Inc. (“OTC Link”).  

Since January 1, 2017, Alternet’s common stock has generally traded for less than $0.88 per 

share. 

13. Priority is a non-SEC-reporting microcap company based in Dallas, Texas and 

incorporated in Wyoming.  Priority purports to be a technology company that develops 

applications designed to enhance student life.  Priority’s common stock is quoted under the 

symbol “PJET” on OTC Link.  Since January 1, 2017, Priority’s common stock has generally 

traded for less than $0.03 per share. 

14. Vaycaychella is a non-SEC-reporting microcap company based in Las Vegas, 

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5 

Nevada and incorporated in Wyoming.  Vaycaychella claims its mission is to serve short-term 

vacation rental owners and investors with a peer-to-peer lending application, which is under 

development.  Vaycaychella’s common stock is quoted under the symbol “VAYK” on the OTC 

Link.  Since January 1, 2017, Vaycaychella’s common stock has generally traded for less $0.093 

per share.   

IV. 
STATEMENT OF FACTS 

A. Overview of the Fraudulent Scheme. 

15. On September 26, 2023, the Commission filed a civil injunctive action against 

Verges and others in an action styled, SEC v. Phillip Verges, et al., Case No. 3:23-cv-02146-D 

(N.D. Tex. filed Sept. 26, 2023) (the “Verges Action”).  As detailed in the Complaint [Dkt. No. 

1] (the “Verges Complaint”), Verges and other persons participated in a scheme to pump and 

dump the stock of the Issuers and other publicly traded companies.   

16. As alleged in the Verges Complaint, Verges gained control of the Issuers and 

other related companies and installed figurehead CEOs.  From at least June 2017 to June 2022, 

the Issuers and other related companies, at Verges’s direction, issued approximately 5.2 billion 

shares of unrestricted stock to scheme participants in exchange for previously issued convertible 

promissory notes and other debt obligations (together “debt instruments”).  The debt 

instruments’ aggregate conversion price was approximately $15 million—a discount of 

approximately 86.64% from the shares’ aggregate market price, which exceeded $112 million.  

Once the scheme participants received their shares, they either sold them or transferred them to 

third parties for sale into the market.  The scheme participants received proceeds from these sales 

and then kicked back a portion to companies owned or controlled by Verges. 

17. As further alleged in the Verges Complaint, Verges artificially inflated the trading 

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6 

volume in the Issuers’ stocks to ensure that his nominees and other scheme participants could 

sell their shares.  Using an alias, Verges authored and posted more than 1,400 press releases 

promoting the Issuers and other related companies to increase the stocks’ trading volumes.  He 

also directed the Issuers and other related companies to publish false and misleading disclosures 

and financial statements through a publicly available website maintained by OTC Markets 

Group, Inc.  The press releases, OTC disclosures, and financial statements were all designed to 

make the stocks of the Issuers and other related companies appear more attractive to the 

investing public, to increase their trading volume, and to create market conditions in which 

scheme participants could more readily dump their shares. 

B. Durland’s Participation in the Scheme 

1. Durland Prepared Financial Statements 

18. In or around August 2017, Verges hired Durland to prepare quarterly and annual 

financial statements for the Issuers.  In preparing these financial statements, Durland never 

received financial information directly from the Issuers or their CEOs.  Instead, Verges, as the 

undisclosed control person of these entities, directly provided Durland with financial information 

for the Issuers.  Bank records from June 2019 to September 2022 show that Verges paid Durland 

at least $83,000 for his services. 

19. At Verges’s direction, each of the three Issuers included Durland-prepared 

financial statements in a “Financial Report” published to OTC Markets for each quarterly and 

annual period.  Along with the Financial Report, each entity also published to OTC Markets a 

separate “Disclosure Statement” for each period, again at Verges’s direction, to disclose relevant 

company information.  Each Disclosure Statement either included the financial statements in the 

Financial Report for the relevant period or incorporated the financial statements by reference.  

As discussed below, the Financial Reports and Disclosure Statements contained false and 

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misleading statements, which Durland knew or was severely reckless in not knowing. 

2. The Disclosure Statements Concealed Durland’s Involvement 

20. From December 2018 to August 2022, Verges directed the submission of at least 

35 Disclosure Statements that falsely stated that the Issuers’ CEOs prepared their financial 

statements and omitted any mention of Durland’s role in their preparation.  These false 

statements prevented investors from assessing investment risks, because the Issuers’ financial 

statements had been secretly prepared by Durland, a convicted securities-fraud recidivist who 

served a 33-month prison term and who was subject to antifraud injunctions and a prohibition 

from appearing or practicing before the Commission as an accountant. 

21. Durland continued to prepare financial statements for the Issuers despite red flags 

alerting him that the Issuers’ Disclosure Statements concealed his role.  For example, in August 

2019 and November 2019, Durland received copies of an Alternet Disclosure Statement falsely 

stating that the Issuers’ CEOs prepared Alternet’s financial statements and, thereby, concealing 

Durland’s involvement.  Yet Durland continued to prepare the Issuers’ financial statements 

through at least August 2022, making no effort to: (a) ensure that the Issuers’ Disclosure 

Statements accurately disclosed his role, or (b) cease his activities to be in conformance with the 

Disclosure Statements.  Thus, Durland knew, or was severely reckless in not knowing, that the 

Disclosure Statements were false and misleading. 

3. Durland Prepared Misleading Financial Statements for Alternet 

22. In April 2021, Alternet issued a $1,111,111 convertible promissory note (the 

“Promissory Note”) to a scheme participant.  As Durland knew or was severely reckless in not 

knowing, the Promissory Note had a 12-month maturity, a 12% annual interest rate, and a 

provision allowing the scheme participant to convert the note to Alternet stock six months after 

issuance.   

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23. At Verges’s direction, Alternet published quarterly and annual Financial Reports 

to OTC Markets containing the financial statements that Durland prepared.  For the quarterly 

periods ended June 30, 2021 and September 30, 2021, the notes to each of the financial 

statements described the Promissory Note as follows: 

In April 2021, the Company entered into a convertible note with a 
third party for $1,111,111, which includes $111,111 of [original 
issue discount]. This note has a maturity in one year and carries a 
12% interest rate. This note is convertible beginning 6 months after 
issuance. It is convertible at a discount of 50% to the lowest trade 
price during the 20 consecutive trading days immediately prior to 
conversion date. 

For the annual period ended December 31, 2021, the notes to the financial statements contained 

the same description above, except it stated “issued” as opposed to “entered into.” 

24. As Durland knew, or was severely reckless in not knowing, this statement was 

misleading.  The actual terms of the note stated: “[t]he conversion price . . . shall equal the lesser 

of fifty percent (50%) of the lowest trade price . . . during the twenty (20) consecutive Trading 

Days immediately preceding the (i) Issue Date; or, (ii) Conversion Date” (emphasis added).  The 

exclusion of the actual Promissory Note terms was significant because the note allowed the 

scheme participant to convert at a rate significantly lower than that disclosed in the financial 

statements that Durland prepared.  This fact was not included in any Alternet financial 

statements or other public disclosures.  On at least two occasions, the scheme participant 

converted at the lower, undisclosed conversion rate and extracted a profit from these 

conversions. 

25. The financial statements that Durland prepared for the quarters ended March 31, 

2022, and June 30, 2022, also contained misleading statements concerning the Promissory Note.  

Unlike the earlier financial statements, the notes to these financial statements omitted the 

statement block-quoted in paragraph 23 above, which described the Promissory Note.  As 

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Durland knew, or was severely reckless in not knowing, by failing to include this or similar 

language, the financial statements conveyed the misleading impression that the Promissory Note 

was no longer outstanding.  But as Durland knew, or was severely reckless in not knowing, the 

Promissory Note’s initial principal balance of $1,111,111 was still outstanding as of March 31, 

2022, and as much as $695,111 was outstanding as of June 30, 2022. 

V. 
CLAIMS FOR RELIEF 

 
FIRST CLAIM FOR RELIEF 

 
Violations of the Antifraud Provisions of the Exchange Act  

Section 10(b) [15 U.S.C. § 78j(b)] and Rules 10b-5(a), (c) [17 C.F.R. §§ 240.10b-5(a), (c)]  
 

26. Plaintiff re-alleges and incorporates paragraphs 1 through 25 of this Complaint by 

reference as if set forth verbatim in this Claim. 

27. By engaging in the acts and conduct alleged herein, Durland, directly or 

indirectly, in connection with the purchase or sale of securities, by the use of any means or 

instrumentality of interstate commerce, or of the mails or of any facility of any national securities 

exchange: 

a. employed a device, scheme, or artifice to defraud; and/or 

b. engaged in an act, practice, or course of business which operated or would 

operate as a fraud or deceit upon any person. 

28. With regard to the violations of Section 10(b) and Rules 10b-5(a) and (c), Durland 

acted with scienter and engaged in the referenced conduct knowingly and/or with severe 

recklessness. 

29. By reason of the foregoing, Durland violated, and unless restrained and enjoined 

will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-

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

SECOND CLAIM FOR RELIEF 
 

Violations of the Antifraud Provisions of the Securities Act 
Sections 17(a)(1) and (3) [15 U.S.C. §§ 77q(a)(1) and (3)] 

 
30. Plaintiff re-alleges and incorporates paragraphs 1 through 25 of this Complaint by 

reference as if set forth verbatim in this Claim. 

31. By engaging in the acts and conduct alleged herein, Durland, directly or 

indirectly, in the offer or sale of a security, by the use of any means or instruments of 

transportation or communication in interstate commerce or by use of the mails, have: 

a. employed a device, scheme, or artifice to defraud; and/or 

b. engaged in a transaction, practice, or course of business which operated or 

would operate as a fraud or deceit upon the purchaser. 

32. With regard to violations of Section 17(a)(1), Durland acted with scienter and 

engaged in the conduct knowingly and/or with severe recklessness.  With regard to the violations 

of Section 17(a)(3), Durland acted at least negligently. 

33. By reason of the foregoing, Durland violated, and unless enjoined will continue to 

violate, Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(1), (3)]. 

PRAYER FOR RELIEF  
 

WHEREFORE, the Commission respectfully requests that the Court enter a final 

judgment:  

1. Permanently enjoining Durland from violating, directly or indirectly, Sections 

17(a)(1) and (3) of the Securities Act [15 U.S.C. §§ 77e(1), (3)] and Section 10(b) of the 

Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-

5(a), (c)]; 

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2. Barring Durland from participating in any offering of penny stock, including 

engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing 

or attempting to induce the purchase or sale of any penny stock.  A penny stock is any equity 

security that has a price of less than five dollars, except as provided in Rule 3a51-1 under the 

Exchange Act [17 C.F.R. § 240.3a51-1]; 

3. Ordering Durland to disgorge all ill-gotten gains he received as a result of the 

conduct alleged herein, together with pre-judgment interest on those amounts, pursuant to the 

Court’s equitable powers and Sections 21(d)(3), 21(d)(5), and 21(d)(7) of the Exchange Act [15 

U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)];  

4. Ordering Durland to pay civil penalties 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)]; and 

5. Granting such other and further relief as this Court may determine to be just, 

equitable, and necessary. 

 

Dated:  August 12, 2024    Respectfully submitted, 
        

/s/ Jason P. Reinsch    
Jason P. Reinsch 
Texas Bar No. 24040120 
United States Securities and Exchange Commission 
Fort Worth Regional Office 
801 Cherry Street, Suite 1900 
Fort Worth, Texas 76102 
(817) 900-2601 (phone) 
(817) 978-4927 (facsimile) 
[email protected] 
 
ATTORNEY FOR PLAINTIFF SECURITIES 
AND EXCHANGE COMMISSION 

 

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