SEC v. Phoenix Outsourced Development, LLC; Edger Solutions Management, LLC; Michael P. McLaughlin; Derek A. McLaughlin; Louis Peter Goff; Brian Hubbard, et al., No. 2:23-cv-00663, District of Utah (Sept. 25, 2023) — Complaint

Tracy S. Combs (California Bar No. 298664)
[email protected]

Casey R. Fronk (Illinois Bar No. 6296535)
[email protected]
Michael E. Welsh (Massachusetts Bar No. 693537)
[email protected]
Paul Feindt (Utah Bar No. 8769)
[email protected]
Securities and Exchange Commission
351 South West Temple, Suite 6.100
Salt Lake City, Utah 84101
Tel.  801-524-5796
Fax: 801-524-3558
Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

SECURITIES AND EXCHANGE
COMMISSION,

PLAINTIFF,

v.
PHOENIX OUTSOURCED
DEVELOPMENT, LLC, a Utah Limited
Liability Company, EDGER SOLUTIONS
MANAGEMENT, LLC, a Utah Limited
Liability Company, MICHAEL P.
MCLAUGHLIN, DEREK A.
MCLAUGHLIN, LOUIS PETER GOFF,
BRIAN HUBBARD, ERIC J. FAIRBOURN,
and NICHOLAS F. DELUCA, individuals,

DEFENDANTS.

COMPLAINT

Case No.:

Judge:

Plaintiff, Securities and Exchange Commission (the “Commission”), brings this civil law
enforcement action against Defendants Phoenix Outsourced Development, LLC (“Phoenix”),
Edger Solutions Management, LLC (“Edger Management”), Michael P. McLaughlin (“Michael
McLaughlin”), Derek A. McLaughlin (“Derek McLaughlin”), Louis Peter Goff (“Goff”), Brian

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Hubbard (“Hubbard”), Eric J. Fairbourn (“Fairbourn”), and Nicholas F. Deluca (“Deluca”)
(collectively, “Defendants”), and hereby alleges as follows:
INTRODUCTION
1. This matter involves a fraudulent securities offering run by six individuals, Michael
McLaughlin, Derek McLaughlin, Goff, Hubbard, Fairbourn, and Deluca through two entities
associated and controlled by them, Phoenix and Edger Management.
2. From approximately June 2019 through April 2020, the Defendants raised more than
$2.1 million from at least 49 investors in connection with a fraudulent offering of subscription
agreements in two pooled investment funds.
3. The Defendants falsely told investors that their investments in two funds, POD
Solutions, LLC (“PODS”) and Edger Solutions, LLC (“Edger,”) would generate guaranteed
profits from a high-yield foreign currency (“Forex”) trading program.
4. The Defendants made numerous material misrepresentations to investors in each fund
concerning the existence and structure of the fees charged to each fund, the method by which
profits and losses were calculated in the funds, and the present and past performance of each
fund.
5. Defendants engaged in a scheme to deceive investors and furthered this scheme by
fabricating monthly account statements to show false and inflated values in investor accounts.
6. The McLaughlins also misappropriated investor funds by paying themselves
management fees for which they were not entitled.
7. Most notably, the Defendants failed to disclose to investors that the individual who
would purportedly execute the Forex trading program was a convicted felon and a securities
fraud recidivist.

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8. As a result of the foregoing conduct, Defendants violated the antifraud provisions of
the federal securities laws.
JURISDICTION AND VENUE
9. This Court has subject matter jurisdiction under Sections 20 and 22 of the
Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t and 77v] and Sections 21 and
Section 27 of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u and
78aa].
10. Defendants, directly and indirectly, singly and in concert, made use of the means
and instrumentalities of interstate commerce and the mails in connection with the transactions,
acts and courses of business alleged herein, certain of which have occurred within the District of
Utah.
11. Venue for this action is proper in the District of Utah under Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)] and under Section 27 of the Exchange Act [15 U.S.C. §
78aa] because certain of the transactions, acts, practices, and courses of business alleged in this
Complaint took place in this district and because each of the Defendants resides in and transacts
business in this district.
12. Defendants, unless restrained and enjoined by this Court, will continue to engage
in the transactions, acts, practices, and courses of business alleged herein and in transactions,
acts, practices, and courses of business of similar purport and object.
13. Defendants’ conduct took place in connection with the offer, purchase and/or sale
of securities issued by Defendants.

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DEFENDANTS
14. Phoenix Outsourced Development, LLC (“Phoenix”), is a Utah limited liability
company formed in 2009 and located in Bluffdale, Utah.  Michael McLaughlin is Phoenix’s
registered agent, managing member, and Executive Director.  Since 2019, Derek McLaughlin
has been its President.  Phoenix is the manager of PODS.
15. Edger Solutions Management, LLC (“Edger Management”), is a Utah limited
liability company formed in August 2019 and located in Saratoga Springs, Utah.  Goff, Hubbard,
Fairbourn, and Deluca are its members, founders, and principals.  Edger Management is the
manager of Edger.
16. Michael P. McLaughlin (“Michael McLaughlin” or “Michael”), age 68, is a
resident of Draper, Utah.  He is the cofounder, managing member, and Executive Director of
Phoenix.  Michael McLaughlin is also the cofounder, CEO, and director of PODS.
17. Derek A. McLaughlin (“Derek McLaughlin” or “Derek”), age 40, is a resident of
Bluffdale, Utah.  He is the cofounder and President of Phoenix, and the cofounder and an officer
and director of PODS.
18. Louis Peter Goff (“Goff”), age 46, is a resident of Layton, Utah.  Goff is the
Administrator and Compliance Officer of Edger and a manager and board member of Edger
Management.  Goff is a current registered representative holding Series 7 and 63 licenses.
19. Brian Hubbard (“Hubbard”), age 33, is a resident of Saratoga Springs, Utah.
Hubbard is a manager of Edger and a manager and board member of Edger Management.
20. Eric J. Fairbourn (“Fairbourn”), age 37, is a resident of Draper, Utah.  Fairbourn
is a manager of Edger and a manager and board member of Edger Management.

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21. Nicholas F. Deluca (“Deluca”), age 51, is a resident of Sandy, Utah.  Deluca is a
manager of Edger and a manager and board member of Edger Management.
RELATED PARTIES
22. POD Solutions, LLC (“PODS”), is a Utah limited liability company formed in
May 2019 and located in Bluffdale, Utah.  PODS is a private investment fund managed by Edger
Management.
23. Edger Solutions, LLC (“Edger”), is a Utah limited liability company formed in
August 2019 and located in Saratoga Springs, Utah.  Edger is a private investment fund managed
by Edger Management.
24. Thomas J. Robbins (“Robbins”), age 68, is   the undisclosed Forex trader for the
Edger and PODS investments.  Robbins is a convicted felon and securities fraud recidivist.
STATEMENT OF FACTS
Background
25. Beginning in or around the summer of 2018, Derek met Robbins through a mutual
acquaintance.  Robbins told Derek that he was a highly experienced and successful financial
industry professional, and Derek scheduled a meeting for Robbins to meet with him and his
father, Michael, to discuss potential business opportunities.  In that meeting, Robbins made a
number of misrepresentations to the Michael and Derek McLaughlin (collectively
“McLaughlins”), including that he had 30-40 years of experience in the financial industry, that
he previously ran a trade desk in Europe for a number of large banking clients that included
Deutsche Bank, UBS, and HSBC, and that he invented a proprietary algorithmic trading program
to trade foreign currency.  Robbins falsely told them that his trading program generated

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extremely high monthly rates of returns and that, at his current stage of life, he only traded $10-
12 million for a select group of friends and family.
26. After discussing their shared faith and a purported mutual interest in philanthropic
and charitable causes, Robbins expressed his willingness to generate investment returns for funds
raised by the McLaughlins using his trading program.
27. Robbins told the McLaughlins that he could not trade securities due to his prior
disciplinary history.  The McLaughlins, who were concerned by Robbins’s admission, asked
their friend, an attorney, to conduct due diligence on Robbins.  The attorney gave the
McLaughlins numerous documents detailing prior criminal and regulatory actions against
Robbins.  Those documents included a 2006 criminal indictment for securities fraud; a 2005 SEC
complaint alleging securities fraud; and Robbins’s April 5, 2011 statement to the U.S. District
Court for the District of Utah in advance of his guilty plea to conspiracy to commit securities
fraud in which he admitted, inter alia, that he operated a fraudulent day trading scheme, failed to
disclose to investors an earlier criminal conviction for wire fraud, lied to investors about the
profitability of the day trading investment program, and misappropriated investor funds for his
personal benefit.
28. Despite knowing about Robbins’s prior criminal convictions and civil charges for
securities fraud, Michael decided to promote Robbins’s Forex trading program to investors
anyway.  Derek, who was also aware of Robbins’s background, deferred to his father’s judgment
and experience in the securities industry in agreeing to promote Robbins’s purported program.
29. To prevent Robbins from stealing investor funds, the McLaughlins did not give
Robbins access to the bank account where they deposited investor funds.  Rather, they
transferred that money into a Phoenix Forex trading account and gave Robbins limited access to

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that account so he could apply his trading program and execute the trades.  In return, Robbins
promised to provide the McLaughlins with virtual “real time monitoring” so they could
ostensibly protect the Forex trading account and confirm how Robbins traded investor funds.
Both Michael and Derek fully depended on Robbins to make all the decisions about the trading
program.
30. The McLaughlins paid Robbins 30% of all gross profits generated by the
investment.  Robbins also agreed to train Derek, so that after Derek obtained an anticipated
securities license, he could eventually take over the trading program and generate the profits for
investor returns.  Michael and Derek knew that Robbins did not have a securities license due to
his prior regulatory and criminal history.
31. In approximately May 2019, the McLaughlins incorporated PODS for the sole
purpose of soliciting money from investors for Robbins to trade through his Forex trading
program.  They named a pre-existing entity they controlled, Phoenix, the manager of the PODS
fund, with the goal of issuing numerous additional securities offerings, in addition to PODS,
which would also be managed by Phoenix.  Shorty thereafter, Michael drafted a private
placement memorandum (“PPM”) to sell subscription agreements in PODS.  After Derek
reviewed, edited, and approved the PPM, the McLaughlins, through Phoenix began to solicit
investors.  Between July 11, 2019, and April 17, 2020, the McLaughlins, through their entity
Phoenix, raised approximately $1.5 million from at least 39 investors through the offer and sale
of investment contracts in PODS.
The Edger Offering
32. In mid-2019, the McLaughlins met with four prospective investors, Goff,
Hubbard, Fairbourn, and Deluca (collectively “the Edger principals”) to discuss the PODS

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investment opportunity.  All four expressed interest in the PODS investment, invested their own
funds in PODS, and told the McLaughlins that they knew other individuals who might also be
interested in investing.  During these discussions, the McLaughlins told the Edger principals that
Robbins ran the PODS trading program that would purportedly generate the PODS investment
returns.  Although the McLaughlins did not tell the Edger principals about Robbins’s prior SEC
or criminal history, the Edger principals discovered on their own that Robbins had been
convicted of securities fraud.  While this prior history concerned them, they decided that the
Forex trading program’s potential profits outweighed the risks posed by Robbins.
33. The Edger principals created an investment fund, Edger, for the sole purpose of
soliciting investment funds for Robbins to trade.  In order to personally profit from investors,
they solicited for the trading program, the Edger principal created Edger Management, named
themselves as managers, and arranged for Edger to pay Edger Management a fee of 50% of the
monthly profits earned in the Edger investment.  Edger entered into an agreement with PODS in
which it would transfer the Edger investor funds into the Phoenix bank account, in which the
McLaughlins pooled PODS investor money, which would then be transferred to the Phoenix
Forex trading account.  The McLaughlins and the Edger principals agreed that Robbins would
trade the combines Edger and PODS investor funds to generate returns for all investors.  The
Edger principals agreed that Edger would pay Phoenix 50% of the profits generated by
Robbins’s trading program as a management fee to Phoenix and that Phoenix, in turn, would pay
30% of their fee to Robbins
.
34. The McLaughlins provided the Edger principals with limited access to the
Phoenix Forex trading account via a password so they could also review the daily trading
activity, profits and losses, margin trades, and account balance in real time.  In addition, the

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McLaughlins and all Edger principals received daily emails from a third-party service that
detailed the daily trading activity, account balance, profit and loss, and use of margin for the
account containing the PODS and Edger investor money.   The McLaughlins would report
investment performance to PODS investors, and the Edger principals would report investment
performance to Edger investors.  Michael recommended that the Edger principals draft a PPM
for Edger and suggested they hire the attorney who had previously conducted due diligence on
Robbins.  Michael gave the attorney the PODS PPM Michael had drafted to assist the attorney in
drafting the Edger PPM.  Prior to distributing it to investors, all four Edger principals personally
reviewed, approved, and authorized the distribution of the Edger PPM to investors.  Between
October 4, 2019, and March 3, 2020, the Edger principals, through their entity Edger
Management, raised approximately $655,000 from at least 10 investors through the offer and
sale of investment contracts in Edger.
The Defendants Made Material Misrepresentations and Omissions to Investors in
Connection with the PODS and Eger Offerings and Engaged in Deceptive Acts in
Furtherance of a Fraudulent Scheme

35. Each of the McLaughlins and Edger principals helped draft, review, edit, and
distribute the PODS and/or Edger PPMs and other materials to investors.  The McLaughlins and
Edger principals also personally met with investors.
Omissions Regarding the Principals’ Regulatory and Criminal History
36. The McLaughins and Edger principals knew but deliberately failed to disclose to
investors (in the PODS or Edger PPMs or otherwise) that the PODS and Edger funds were
wholly dependent on a Forex trading program created and operated by a securities fraud
recidivist and convicted felon, Robbins.  The McLaughlins and the four Edger principals told

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their respective investors that their trader was an extremely successful financial expert but did
not tell these same investors about Robbins’s prior criminal and regulatory history.
37. The McLaughlins also failed to disclose that Michael, who raised funds for PODS
and was the signatory on the Phoenix bank account containing the commingled PODS and Edger
investor funds, had previously been named in two prior actions by state securities regulators.
False Profit and Loss Calculations and False Monthly Account Statements
38. Both the PODS and Edger PPMs misrepresented the method by which investor
profits and losses would be calculated, falsely stating that the method was compliant with U.S.
GAAP.  Specifically, both PPMs represented that in “calculating profits and losses, securities
will be valued on a marked-to-market” basis and foreign currency exchange contracts will be
valued at the “current cost of covering or offsetting such contracts.”  In fact, instead of
calculating the current fair market value of the investment in accordance with U.S. GAAP, the
McLaughlins, through Phoenix, and the Edger principals, through Edger Management,
specifically excluded the cost of covering or offsetting currency contracts to conceal that the
actual value of the assets held by the respective funds decreased over time.

39. The McLaughlins and Edger principals issued monthly account statements to
investors that did not accurately reflect the investment’s true “marked-to-market” return, which
should include both “realized” and “unrealized” gains and losses.  A “realized” gain or loss is the
gain or loss that is earned when a trade is closed.  An “unrealized” gain or loss is the gain or loss
that the investor would earn if the open trade were closed today.  According to the PODS and
Edger PPMs, the monthly account statements should reflect both the investors’ realized and
unrealized trading positions.  Instead, the defendants, to conceal large unrealized losses, deceived
investors by only disclosing the realized trading positions; investors did not know that the

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investment’s unrealized losses exceeded the realized gains until the Forex broker issued a margin
call in June 2020.  By excluding the unrealized losses, the McLaughlins and Edger principals
provided investors with statements that greatly inflated their account values and falsely
represented the investment was earning profits.  However, the McLaughlins and Edger principals
knew that Robbins executed high-risk trades on margin and knew that the account held foreign
currency contracts that, is sold, would generate significant trading losses rather than profits.
False and Misleading Statements Regarding Management Fees
40. Per the PODS and Edger PPMs, Phoenix and Edger Management, as the
“managers” of each investment fund, are entitled to charge PODS or Edger, respectively, a
monthly management fee of 50% of revenue generated by the trading program.  However, the
PODS PPM did not disclose to investors that it paid a portion of its purported management fee to
Robbins, and the Edger PPM did not disclose to investors that Edger paid a purported
management fee to Phoenix and that Phoenix paid a portion of that fee to Robbins.  The Edger
investor monthly statements show two separate fees of 50% each; an “investment fee” of 50%
based on “account growth,” and a 50% “Management Fee” based on the remainder after
deducting the investment fee.  This left Edger investors to receive only 25% of the alleged
monthly profits even though the Edger PPM only disclosed a one-time 50% management fee
payable to Edger Management.
41. In calculating management fees, the McLaughlins and Edger principals calculated
fees in a way that deliberately excluded unrealized losses even though the PPMs state that funds
will be valued based on their current market value, thus accounting for unrealized losses.  The
investors’ statements show that fee calculations are based on “account growth” which,
conveniently for Phoenix and Edger Management, excluded the unrealized loss portion of the

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fund’s return.  The monthly account statements issued to investors were misleading and
deceptive.  Phoenix and Edger Management showed investors growth, when the trading program
had actually returned a loss, and took management fees based on that fictitious growth.  Had the
investor statements included both realized and unrealized trading positions (i.e., the totality of
the trading program and consistent with the “marked-to-market” method promised to investors in
each PPM), Phoenix and Edger Management would not have had sufficient “account growth”
from which to extract fees.
False and Misleading Statements Regarding Fund Performance
42. The McLaughlins made numerous false and misleading statements to investors
about the trading program’s performance and historic returns.  They told investors they could
expect investment returns ranging from 5% to 25% each month depending on the level of risk the
investor selected.  Michael told one investor that he had reviewed 20-40 years of historic returns,
and the average return for high-risk tolerant investors was 117% per month.  Derek told investors
that he personally reviewed numerous years of trading records and that those records
demonstrated a lengthy history of positive returns.  In reality, neither Michael nor Derek
reviewed historic returns ranging from 5% to 25% per month going back many years because
such returns did not exist.  The only historic returns Derek reviewed were 12-18 months of
hypothetical returns that did not involve actual trading or real money.
43. All four Edger principals participated in meetings with potential investors and
made false and misleading statements concerning the trading program.  All four Edger principals
told investors that the trading program earned historical returns ranging from 5% to 25% each
month depending on the level of risk the investor selected.

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44. In furtherance of their deceptive scheme, the McLaughlins and Edger principals
created, reviewed, approved and/or distributed monthly account statements to their PODS or
Edger investors that showed fictitious account balances and monthly profits.  The false monthly
account statements enabled the McLaughlins and the Edger principals to continue to obtain
additional investor funds.
45. In February 2020, the four Edger principals discussed the size of the unrealized
loss compared to the overall value of the investment and expressed their concerns to the
McLaughlins in text messages.  Although the Edger principals knew the unrealized loss was
continuing to grow and were concerned about its size compared to the total value of the
investment, they did not disclose this information to investors.  Hubbard contacted one investor
on February 28, 2020, saying “good stuff happening” that will generate even larger returns for
Edger’s investors and scheduled a phone call with the investors to seek additional investment
funds.  The following day, on February 29, 2020, each of the Edger principals either drafted,
reviewed, or authorized the issuance of Edger monthly account statements to their investors
falsely representing that Edger investors earned 14.23% that month.  In reality, on February 29,
2020, the Edger investment had unrealized losses of -$1,13,325.  Based on these false
representations, the investor made an additional $100,000 investment in Edger on March 3,
2020.  On March 31, 2020, the unrealized loss increased to -$1,752,854 while PODS and Edger
investors were told they earned 16$% that month.
46. The large unrealized loss continued to increase each month until it triggered a
margin call that, as of June 30, 2020, reduced the total value of the Phoenix Forex investment
account (containing both PODS and Edger assets) to only $43,906.  At this point, all trading

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stopped.  Over the next few months, the McLaughlins misappropriated the remaining $43,906 for
their personal use, justifying their withdrawals as compensation from fictitious trading profits.
Material Omissions Regarding Pooling of Funds
47. In addition, the Edger PPM and all four Edger principals failed to disclose that
investments in the Edger fund would be and were pooled with the PODS fund, and that Edger
Management, Edger’s ostensible fund manager, could not access or review any information
about the Edger fund absent approval by Phoenix, PODS’s fund manager.  They failed to
disclose that Edger Management could not calculate Edger’s performance or value unless
Phoenix agreed to provide that data to Edger Management.
48. The McLaughlins also falsely told investors that they could customize the PODS
investment to reflect each investor’s personal risk tolerance.  Although they claimed to allow
each investor to individually select a level of risk for their investment into PODS, the level the
investor selected was meaningless because Phoenix commingled all investor money into one
aggregate account for Robbins, and his trading program, to collectively trade.  All investors were
exposed to the same level of risk and earned the same profits and losses distributed on a pro rata
basis.
Other Material Misrepresentations, Omissions and Deceptive Acts
49. The PPMs also misrepresented the identity and qualifications of certain of the
PODS and Edger principals.  In the PODS PPM, the McLaughlins named a long-time family
friend as PODS’ Chief Operating Officer, Business Administrator and Compliance Officer, and
falsely represented that he had been both a CEO and CFO for “public and private companies.”
This statement was false; he was not affiliated with PODS and had never been a CEO or CFO of
a public company.

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50. The Edger PPM also misrepresented the qualifications of Goff, a registered
representative holding Series 7 and 63 licenses and the Edger Compliance Officer and Fund
Administrator.  While the Edger PPM states that Goff managed more than $750 million of
“client” money, that amount was the total amount of all customer funds being serviced by his
broker-dealer’s call center at which Goff worked, not just that of Goff’s customers.
51. Michael met with all PODS investors before they invested and falsely told many
of them that the Roshschild and Kennedy families were clients and falsely represented to at least
one investor that the Chinese government had contacted him to express interest in funding
PODS.  Derek falsely told investors that he was a registered investment adviser.  Michael and
Derek made additional misrepresentations to investors including that the LDS Church was a
client and the main beneficiary of the trading program’s profits and that Phoenix was responsible
for several special projects for the LDS Church.
52. Both Michael and Derek told investors that Phoenix would use the profits it
earned from managing PODS to support humanitarian and philanthropic projects.  They did not
use the management fees for such purposes.  The Edger principals also told investors that they
would donate a portion of Edger’s profits to charity, when in fact they did not use any of the
purported “profits” for charitable purposes.
FIRST CAUSE OF ACTION
FRAUD IN CONNECTION WITH THE PURCHASE AND SALE OF
SECURITIES
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5(a), (b)
and (c) thereunder [17 C.F.R. § 240.10b-5(a), (b) and (c)]
(All Defendants)

53. The Commission realleges and incorporates by reference the allegations contained
in Paragraphs 1 through 52, above.

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54. Defendants, by engaging in the conduct described above, directly or indirectly, by
the use of means or instrumentalities of interstate commerce or use of the mails, in connection
with the purchase or sale of securities, with scienter, (1) employed devices, schemes, or artifices
to defraud; (2) made untrue statements of material fact or omitted to state a material fact
necessary in order to make statements made, in light of the circumstances under which they were
made not misleading; or (3) engaged in acts, practices, or courses of business that operated or
would operate as a fraud and deceit upon other persons.
55. By reason of the foregoing, Defendants violated, and unless restrained and
enjoined will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and
Rule 10b-5(a), (b) and (c) thereunder [17 C.F.R. § 240.10b-5(a), (b) and (c)].
SECOND CAUSE OF ACTION
FRAUD IN THE OFFER AND SALE OF SECURITIES
Violations of Sections 17(a)(1), (2) and (3) of the Securities Act [15 U.S.C. § 77q(a)(1), (2)
and (3)]
(All Defendants)

56. The Commission realleges and incorporates by reference the allegations contained
in Paragraphs 1 through 52, above.
57. Defendants, by engaging in conduct described above, directly or indirectly, in the
offer or sale of securities, by the use of the means or instruments of transportation or
communication in interstate commerce or by use of the mails, with scienter, (1) employed
devices, schemes, or artifices to defraud (2) obtained money or property by means of untrue
statements of material fact or by omitting to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not misleading, and
(3) engaged in transactions, practices, or courses of business which operate or would operate as a
fraud or deceit upon the purchaser.

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58. By reason of the foregoing, Defendants directly or indirectly, violated, and unless
restrained and enjoined by this Court, will continue to violate, Section 17(a)(1), (a)(2) and (a)(3)
of the Securities Act [15 U.S.C. § 77q(a)(1), (a)(2) and (a)(3)].
RELIEF REQUESTED
 WHEREFORE, the Commission respectfully requests that this Court enter a final
judgment:
I.
Permanently restraining and enjoining Defendants from, directly or indirectly, engaging
in conduct in violation of Securities Act Section 17(a) [15 U.S.C. § 77q(a)], and Exchange Act
Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];
II.
Pursuant to Section 20(b) of the Securities Act and Sections 21(d)(1) and (d)(5) of
Exchange Act [15 U.S.C. §§ 77t(b), 78u(d)(5)], permanently restraining and enjoining
Defendants Michael McLaughlin, Derek McLaughlin, Goff, Hubbard, Fairbourn and Deluca
from directly or indirectly, including, but, not limited to, through any entity owned or controlled
by them, participating in the issuance, purchase, offer, or sale of any security, provided,
however, that such injunction shall not prevent him from purchasing or selling securities for his
own personal account;
III.
Ordering Defendants Michael McLaughlin and Derek McLaughlin to disgorge all ill-
gotten gains or unjust enrichment derived from the activities set forth in this Complaint, together
with prejudgment interest thereon;

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 IV.
Ordering Defendants Michael McLaughlin, Derek McLaughlin, Goff, Hubbard,
Fairbourn and Deluca 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)];
V.
Retaining jurisdiction of this action in accordance with the principles of equity and the
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and
decrees that may be entered, or to entertain any suitable application or motion for additional
relief within the jurisdiction of this Court; and,
VI.
Granting such other and further relief as this Court may deem just, equitable, or necessary
in connection with the enforcement of the federal securities laws and for the protection of
investors.
Dated this 25
th
 day of September, 2023.

Respectfully submitted,

_/s/ Tracy S. Combs___________
Tracy S. Combs
Casey R. Fronk
Michael E. Welsh
Paul Feindt
Attorneys for Plaintiff

Tracy S. Combs (California Bar No. 298664) 
[email protected] 
Casey R. Fronk (Illinois Bar No. 6296535) 
[email protected] 
Michael E. Welsh (Massachusetts Bar No. 693537) 
[email protected] 
Paul Feindt (Utah Bar No. 8769) 
[email protected] 
Securities and Exchange Commission 
351 South West Temple, Suite 6.100 
Salt Lake City, Utah 84101 
Tel.  801-524-5796 
Fax: 801-524-3558 
Attorneys for Plaintiff 

 
IN THE UNITED STATES DISTRICT COURT 
DISTRICT OF UTAH, CENTRAL DIVISION 

 
 
SECURITIES AND EXCHANGE 
COMMISSION, 
 

PLAINTIFF, 
 

v. 

PHOENIX OUTSOURCED 
DEVELOPMENT, LLC, a Utah Limited 
Liability Company, EDGER SOLUTIONS 
MANAGEMENT, LLC, a Utah Limited 
Liability Company, MICHAEL P. 
MCLAUGHLIN, DEREK A. 
MCLAUGHLIN, LOUIS PETER GOFF, 
BRIAN HUBBARD, ERIC J. FAIRBOURN, 
and NICHOLAS F. DELUCA, individuals, 
 

DEFENDANTS. 
 

 
 
 
COMPLAINT 

 
Case No.:   
 
Judge: 
 
 

 
Plaintiff, Securities and Exchange Commission (the “Commission”), brings this civil law 

enforcement action against Defendants Phoenix Outsourced Development, LLC (“Phoenix”), 

Edger Solutions Management, LLC (“Edger Management”), Michael P. McLaughlin (“Michael 

McLaughlin”), Derek A. McLaughlin (“Derek McLaughlin”), Louis Peter Goff (“Goff”), Brian 

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mailto:[email protected]
mailto:[email protected]
mailto:[email protected]


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Hubbard (“Hubbard”), Eric J. Fairbourn (“Fairbourn”), and Nicholas F. Deluca (“Deluca”) 

(collectively, “Defendants”), and hereby alleges as follows: 

INTRODUCTION 

1. This matter involves a fraudulent securities offering run by six individuals, Michael 

McLaughlin, Derek McLaughlin, Goff, Hubbard, Fairbourn, and Deluca through two entities 

associated and controlled by them, Phoenix and Edger Management. 

2. From approximately June 2019 through April 2020, the Defendants raised more than 

$2.1 million from at least 49 investors in connection with a fraudulent offering of subscription 

agreements in two pooled investment funds.     

3. The Defendants falsely told investors that their investments in two funds, POD 

Solutions, LLC (“PODS”) and Edger Solutions, LLC (“Edger,”) would generate guaranteed 

profits from a high-yield foreign currency (“Forex”) trading program.   

4. The Defendants made numerous material misrepresentations to investors in each fund 

concerning the existence and structure of the fees charged to each fund, the method by which 

profits and losses were calculated in the funds, and the present and past performance of each 

fund.     

5. Defendants engaged in a scheme to deceive investors and furthered this scheme by 

fabricating monthly account statements to show false and inflated values in investor accounts.  

6. The McLaughlins also misappropriated investor funds by paying themselves 

management fees for which they were not entitled.   

7. Most notably, the Defendants failed to disclose to investors that the individual who 

would purportedly execute the Forex trading program was a convicted felon and a securities 

fraud recidivist.   

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8. As a result of the foregoing conduct, Defendants violated the antifraud provisions of 

the federal securities laws. 

JURISDICTION AND VENUE 

9. This Court has subject matter jurisdiction under Sections 20 and 22 of the 

Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t and 77v] and Sections 21 and 

Section 27 of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u and 

78aa]. 

10. Defendants, directly and indirectly, singly and in concert, made use of the means 

and instrumentalities of interstate commerce and the mails in connection with the transactions, 

acts and courses of business alleged herein, certain of which have occurred within the District of 

Utah. 

11. Venue for this action is proper in the District of Utah under Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)] and under Section 27 of the Exchange Act [15 U.S.C. § 

78aa] because certain of the transactions, acts, practices, and courses of business alleged in this 

Complaint took place in this district and because each of the Defendants resides in and transacts 

business in this district. 

12. Defendants, unless restrained and enjoined by this Court, will continue to engage 

in the transactions, acts, practices, and courses of business alleged herein and in transactions, 

acts, practices, and courses of business of similar purport and object. 

13. Defendants’ conduct took place in connection with the offer, purchase and/or sale 

of securities issued by Defendants.  

 

 

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DEFENDANTS 

14. Phoenix Outsourced Development, LLC (“Phoenix”), is a Utah limited liability 

company formed in 2009 and located in Bluffdale, Utah.  Michael McLaughlin is Phoenix’s 

registered agent, managing member, and Executive Director.  Since 2019, Derek McLaughlin 

has been its President.  Phoenix is the manager of PODS.     

15. Edger Solutions Management, LLC (“Edger Management”), is a Utah limited 

liability company formed in August 2019 and located in Saratoga Springs, Utah.  Goff, Hubbard, 

Fairbourn, and Deluca are its members, founders, and principals.  Edger Management is the 

manager of Edger.   

16. Michael P. McLaughlin (“Michael McLaughlin” or “Michael”), age 68, is a 

resident of Draper, Utah.  He is the cofounder, managing member, and Executive Director of 

Phoenix.  Michael McLaughlin is also the cofounder, CEO, and director of PODS.   

17. Derek A. McLaughlin (“Derek McLaughlin” or “Derek”), age 40, is a resident of 

Bluffdale, Utah.  He is the cofounder and President of Phoenix, and the cofounder and an officer 

and director of PODS. 

18. Louis Peter Goff (“Goff”), age 46, is a resident of Layton, Utah.  Goff is the 

Administrator and Compliance Officer of Edger and a manager and board member of Edger 

Management.  Goff is a current registered representative holding Series 7 and 63 licenses. 

19. Brian Hubbard (“Hubbard”), age 33, is a resident of Saratoga Springs, Utah.  

Hubbard is a manager of Edger and a manager and board member of Edger Management.   

20. Eric J. Fairbourn (“Fairbourn”), age 37, is a resident of Draper, Utah.  Fairbourn 

is a manager of Edger and a manager and board member of Edger Management. 

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21. Nicholas F. Deluca (“Deluca”), age 51, is a resident of Sandy, Utah.  Deluca is a 

manager of Edger and a manager and board member of Edger Management.   

RELATED PARTIES 

22. POD Solutions, LLC (“PODS”), is a Utah limited liability company formed in 

May 2019 and located in Bluffdale, Utah.  PODS is a private investment fund managed by Edger 

Management. 

23. Edger Solutions, LLC (“Edger”), is a Utah limited liability company formed in 

August 2019 and located in Saratoga Springs, Utah.  Edger is a private investment fund managed 

by Edger Management. 

24. Thomas J. Robbins (“Robbins”), age 68, is the undisclosed Forex trader for the 

Edger and PODS investments.  Robbins is a convicted felon and securities fraud recidivist. 

STATEMENT OF FACTS 

Background 

25. Beginning in or around the summer of 2018, Derek met Robbins through a mutual 

acquaintance.  Robbins told Derek that he was a highly experienced and successful financial 

industry professional, and Derek scheduled a meeting for Robbins to meet with him and his 

father, Michael, to discuss potential business opportunities.  In that meeting, Robbins made a 

number of misrepresentations to the Michael and Derek McLaughlin (collectively 

“McLaughlins”), including that he had 30-40 years of experience in the financial industry, that 

he previously ran a trade desk in Europe for a number of large banking clients that included 

Deutsche Bank, UBS, and HSBC, and that he invented a proprietary algorithmic trading program 

to trade foreign currency.  Robbins falsely told them that his trading program generated 

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extremely high monthly rates of returns and that, at his current stage of life, he only traded $10-

12 million for a select group of friends and family.     

26. After discussing their shared faith and a purported mutual interest in philanthropic 

and charitable causes, Robbins expressed his willingness to generate investment returns for funds 

raised by the McLaughlins using his trading program. 

27. Robbins told the McLaughlins that he could not trade securities due to his prior 

disciplinary history.  The McLaughlins, who were concerned by Robbins’s admission, asked 

their friend, an attorney, to conduct due diligence on Robbins.  The attorney gave the 

McLaughlins numerous documents detailing prior criminal and regulatory actions against 

Robbins.  Those documents included a 2006 criminal indictment for securities fraud; a 2005 SEC 

complaint alleging securities fraud; and Robbins’s April 5, 2011 statement to the U.S. District 

Court for the District of Utah in advance of his guilty plea to conspiracy to commit securities 

fraud in which he admitted, inter alia, that he operated a fraudulent day trading scheme, failed to 

disclose to investors an earlier criminal conviction for wire fraud, lied to investors about the 

profitability of the day trading investment program, and misappropriated investor funds for his 

personal benefit. 

28. Despite knowing about Robbins’s prior criminal convictions and civil charges for 

securities fraud, Michael decided to promote Robbins’s Forex trading program to investors 

anyway.  Derek, who was also aware of Robbins’s background, deferred to his father’s judgment 

and experience in the securities industry in agreeing to promote Robbins’s purported program. 

29. To prevent Robbins from stealing investor funds, the McLaughlins did not give 

Robbins access to the bank account where they deposited investor funds.  Rather, they 

transferred that money into a Phoenix Forex trading account and gave Robbins limited access to 

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that account so he could apply his trading program and execute the trades.  In return, Robbins 

promised to provide the McLaughlins with virtual “real time monitoring” so they could 

ostensibly protect the Forex trading account and confirm how Robbins traded investor funds.  

Both Michael and Derek fully depended on Robbins to make all the decisions about the trading 

program. 

30. The McLaughlins paid Robbins 30% of all gross profits generated by the 

investment.  Robbins also agreed to train Derek, so that after Derek obtained an anticipated 

securities license, he could eventually take over the trading program and generate the profits for 

investor returns.  Michael and Derek knew that Robbins did not have a securities license due to 

his prior regulatory and criminal history.   

31. In approximately May 2019, the McLaughlins incorporated PODS for the sole 

purpose of soliciting money from investors for Robbins to trade through his Forex trading 

program.  They named a pre-existing entity they controlled, Phoenix, the manager of the PODS 

fund, with the goal of issuing numerous additional securities offerings, in addition to PODS, 

which would also be managed by Phoenix.  Shorty thereafter, Michael drafted a private 

placement memorandum (“PPM”) to sell subscription agreements in PODS.  After Derek 

reviewed, edited, and approved the PPM, the McLaughlins, through Phoenix began to solicit 

investors.  Between July 11, 2019, and April 17, 2020, the McLaughlins, through their entity 

Phoenix, raised approximately $1.5 million from at least 39 investors through the offer and sale 

of investment contracts in PODS. 

The Edger Offering 

32. In mid-2019, the McLaughlins met with four prospective investors, Goff, 

Hubbard, Fairbourn, and Deluca (collectively “the Edger principals”) to discuss the PODS 

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investment opportunity.  All four expressed interest in the PODS investment, invested their own 

funds in PODS, and told the McLaughlins that they knew other individuals who might also be 

interested in investing.  During these discussions, the McLaughlins told the Edger principals that 

Robbins ran the PODS trading program that would purportedly generate the PODS investment 

returns.  Although the McLaughlins did not tell the Edger principals about Robbins’s prior SEC 

or criminal history, the Edger principals discovered on their own that Robbins had been 

convicted of securities fraud.  While this prior history concerned them, they decided that the 

Forex trading program’s potential profits outweighed the risks posed by Robbins.   

33. The Edger principals created an investment fund, Edger, for the sole purpose of 

soliciting investment funds for Robbins to trade.  In order to personally profit from investors, 

they solicited for the trading program, the Edger principal created Edger Management, named 

themselves as managers, and arranged for Edger to pay Edger Management a fee of 50% of the 

monthly profits earned in the Edger investment.  Edger entered into an agreement with PODS in 

which it would transfer the Edger investor funds into the Phoenix bank account, in which the 

McLaughlins pooled PODS investor money, which would then be transferred to the Phoenix 

Forex trading account.  The McLaughlins and the Edger principals agreed that Robbins would 

trade the combines Edger and PODS investor funds to generate returns for all investors.  The 

Edger principals agreed that Edger would pay Phoenix 50% of the profits generated by 

Robbins’s trading program as a management fee to Phoenix and that Phoenix, in turn, would pay 

30% of their fee to Robbins.   

34. The McLaughlins provided the Edger principals with limited access to the 

Phoenix Forex trading account via a password so they could also review the daily trading 

activity, profits and losses, margin trades, and account balance in real time.  In addition, the 

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McLaughlins and all Edger principals received daily emails from a third-party service that 

detailed the daily trading activity, account balance, profit and loss, and use of margin for the 

account containing the PODS and Edger investor money.   The McLaughlins would report 

investment performance to PODS investors, and the Edger principals would report investment 

performance to Edger investors.  Michael recommended that the Edger principals draft a PPM 

for Edger and suggested they hire the attorney who had previously conducted due diligence on 

Robbins.  Michael gave the attorney the PODS PPM Michael had drafted to assist the attorney in 

drafting the Edger PPM.  Prior to distributing it to investors, all four Edger principals personally 

reviewed, approved, and authorized the distribution of the Edger PPM to investors.  Between 

October 4, 2019, and March 3, 2020, the Edger principals, through their entity Edger 

Management, raised approximately $655,000 from at least 10 investors through the offer and 

sale of investment contracts in Edger. 

The Defendants Made Material Misrepresentations and Omissions to Investors in 
Connection with the PODS and Eger Offerings and Engaged in Deceptive Acts in 
Furtherance of a Fraudulent Scheme 
 

35. Each of the McLaughlins and Edger principals helped draft, review, edit, and 

distribute the PODS and/or Edger PPMs and other materials to investors.  The McLaughlins and 

Edger principals also personally met with investors. 

Omissions Regarding the Principals’ Regulatory and Criminal History 

36. The McLaughins and Edger principals knew but deliberately failed to disclose to 

investors (in the PODS or Edger PPMs or otherwise) that the PODS and Edger funds were 

wholly dependent on a Forex trading program created and operated by a securities fraud 

recidivist and convicted felon, Robbins.  The McLaughlins and the four Edger principals told 

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their respective investors that their trader was an extremely successful financial expert but did 

not tell these same investors about Robbins’s prior criminal and regulatory history. 

37. The McLaughlins also failed to disclose that Michael, who raised funds for PODS 

and was the signatory on the Phoenix bank account containing the commingled PODS and Edger 

investor funds, had previously been named in two prior actions by state securities regulators. 

False Profit and Loss Calculations and False Monthly Account Statements 

38. Both the PODS and Edger PPMs misrepresented the method by which investor 

profits and losses would be calculated, falsely stating that the method was compliant with U.S. 

GAAP.  Specifically, both PPMs represented that in “calculating profits and losses, securities 

will be valued on a marked-to-market” basis and foreign currency exchange contracts will be 

valued at the “current cost of covering or offsetting such contracts.”  In fact, instead of 

calculating the current fair market value of the investment in accordance with U.S. GAAP, the 

McLaughlins, through Phoenix, and the Edger principals, through Edger Management, 

specifically excluded the cost of covering or offsetting currency contracts to conceal that the 

actual value of the assets held by the respective funds decreased over time.     

39. The McLaughlins and Edger principals issued monthly account statements to 

investors that did not accurately reflect the investment’s true “marked-to-market” return, which 

should include both “realized” and “unrealized” gains and losses.  A “realized” gain or loss is the 

gain or loss that is earned when a trade is closed.  An “unrealized” gain or loss is the gain or loss 

that the investor would earn if the open trade were closed today.  According to the PODS and 

Edger PPMs, the monthly account statements should reflect both the investors’ realized and 

unrealized trading positions.  Instead, the defendants, to conceal large unrealized losses, deceived 

investors by only disclosing the realized trading positions; investors did not know that the 

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investment’s unrealized losses exceeded the realized gains until the Forex broker issued a margin 

call in June 2020.  By excluding the unrealized losses, the McLaughlins and Edger principals 

provided investors with statements that greatly inflated their account values and falsely 

represented the investment was earning profits.  However, the McLaughlins and Edger principals 

knew that Robbins executed high-risk trades on margin and knew that the account held foreign 

currency contracts that, is sold, would generate significant trading losses rather than profits.   

False and Misleading Statements Regarding Management Fees 

40. Per the PODS and Edger PPMs, Phoenix and Edger Management, as the 

“managers” of each investment fund, are entitled to charge PODS or Edger, respectively, a 

monthly management fee of 50% of revenue generated by the trading program.  However, the 

PODS PPM did not disclose to investors that it paid a portion of its purported management fee to 

Robbins, and the Edger PPM did not disclose to investors that Edger paid a purported 

management fee to Phoenix and that Phoenix paid a portion of that fee to Robbins.  The Edger 

investor monthly statements show two separate fees of 50% each; an “investment fee” of 50% 

based on “account growth,” and a 50% “Management Fee” based on the remainder after 

deducting the investment fee.  This left Edger investors to receive only 25% of the alleged 

monthly profits even though the Edger PPM only disclosed a one-time 50% management fee 

payable to Edger Management. 

41. In calculating management fees, the McLaughlins and Edger principals calculated 

fees in a way that deliberately excluded unrealized losses even though the PPMs state that funds 

will be valued based on their current market value, thus accounting for unrealized losses.  The 

investors’ statements show that fee calculations are based on “account growth” which, 

conveniently for Phoenix and Edger Management, excluded the unrealized loss portion of the 

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fund’s return.  The monthly account statements issued to investors were misleading and 

deceptive.  Phoenix and Edger Management showed investors growth, when the trading program 

had actually returned a loss, and took management fees based on that fictitious growth.  Had the 

investor statements included both realized and unrealized trading positions (i.e., the totality of 

the trading program and consistent with the “marked-to-market” method promised to investors in 

each PPM), Phoenix and Edger Management would not have had sufficient “account growth” 

from which to extract fees. 

False and Misleading Statements Regarding Fund Performance 

42. The McLaughlins made numerous false and misleading statements to investors 

about the trading program’s performance and historic returns.  They told investors they could 

expect investment returns ranging from 5% to 25% each month depending on the level of risk the 

investor selected.  Michael told one investor that he had reviewed 20-40 years of historic returns, 

and the average return for high-risk tolerant investors was 117% per month.  Derek told investors 

that he personally reviewed numerous years of trading records and that those records 

demonstrated a lengthy history of positive returns.  In reality, neither Michael nor Derek 

reviewed historic returns ranging from 5% to 25% per month going back many years because 

such returns did not exist.  The only historic returns Derek reviewed were 12-18 months of 

hypothetical returns that did not involve actual trading or real money.   

43. All four Edger principals participated in meetings with potential investors and 

made false and misleading statements concerning the trading program.  All four Edger principals 

told investors that the trading program earned historical returns ranging from 5% to 25% each 

month depending on the level of risk the investor selected.     

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44. In furtherance of their deceptive scheme, the McLaughlins and Edger principals 

created, reviewed, approved and/or distributed monthly account statements to their PODS or 

Edger investors that showed fictitious account balances and monthly profits.  The false monthly 

account statements enabled the McLaughlins and the Edger principals to continue to obtain 

additional investor funds.    

45. In February 2020, the four Edger principals discussed the size of the unrealized 

loss compared to the overall value of the investment and expressed their concerns to the 

McLaughlins in text messages.  Although the Edger principals knew the unrealized loss was 

continuing to grow and were concerned about its size compared to the total value of the 

investment, they did not disclose this information to investors.  Hubbard contacted one investor 

on February 28, 2020, saying “good stuff happening” that will generate even larger returns for 

Edger’s investors and scheduled a phone call with the investors to seek additional investment 

funds.  The following day, on February 29, 2020, each of the Edger principals either drafted, 

reviewed, or authorized the issuance of Edger monthly account statements to their investors 

falsely representing that Edger investors earned 14.23% that month.  In reality, on February 29, 

2020, the Edger investment had unrealized losses of -$1,13,325.  Based on these false 

representations, the investor made an additional $100,000 investment in Edger on March 3, 

2020.  On March 31, 2020, the unrealized loss increased to -$1,752,854 while PODS and Edger 

investors were told they earned 16$% that month. 

46. The large unrealized loss continued to increase each month until it triggered a 

margin call that, as of June 30, 2020, reduced the total value of the Phoenix Forex investment 

account (containing both PODS and Edger assets) to only $43,906.  At this point, all trading 

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stopped.  Over the next few months, the McLaughlins misappropriated the remaining $43,906 for 

their personal use, justifying their withdrawals as compensation from fictitious trading profits.   

Material Omissions Regarding Pooling of Funds 

47. In addition, the Edger PPM and all four Edger principals failed to disclose that 

investments in the Edger fund would be and were pooled with the PODS fund, and that Edger 

Management, Edger’s ostensible fund manager, could not access or review any information 

about the Edger fund absent approval by Phoenix, PODS’s fund manager.  They failed to 

disclose that Edger Management could not calculate Edger’s performance or value unless 

Phoenix agreed to provide that data to Edger Management.   

48. The McLaughlins also falsely told investors that they could customize the PODS 

investment to reflect each investor’s personal risk tolerance.  Although they claimed to allow 

each investor to individually select a level of risk for their investment into PODS, the level the 

investor selected was meaningless because Phoenix commingled all investor money into one 

aggregate account for Robbins, and his trading program, to collectively trade.  All investors were 

exposed to the same level of risk and earned the same profits and losses distributed on a pro rata 

basis. 

Other Material Misrepresentations, Omissions and Deceptive Acts 

49. The PPMs also misrepresented the identity and qualifications of certain of the 

PODS and Edger principals.  In the PODS PPM, the McLaughlins named a long-time family 

friend as PODS’ Chief Operating Officer, Business Administrator and Compliance Officer, and 

falsely represented that he had been both a CEO and CFO for “public and private companies.”  

This statement was false; he was not affiliated with PODS and had never been a CEO or CFO of 

a public company.   

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50. The Edger PPM also misrepresented the qualifications of Goff, a registered 

representative holding Series 7 and 63 licenses and the Edger Compliance Officer and Fund 

Administrator.  While the Edger PPM states that Goff managed more than $750 million of 

“client” money, that amount was the total amount of all customer funds being serviced by his 

broker-dealer’s call center at which Goff worked, not just that of Goff’s customers.   

51. Michael met with all PODS investors before they invested and falsely told many 

of them that the Roshschild and Kennedy families were clients and falsely represented to at least 

one investor that the Chinese government had contacted him to express interest in funding 

PODS.  Derek falsely told investors that he was a registered investment adviser.  Michael and 

Derek made additional misrepresentations to investors including that the LDS Church was a 

client and the main beneficiary of the trading program’s profits and that Phoenix was responsible 

for several special projects for the LDS Church. 

52. Both Michael and Derek told investors that Phoenix would use the profits it 

earned from managing PODS to support humanitarian and philanthropic projects.  They did not 

use the management fees for such purposes.  The Edger principals also told investors that they 

would donate a portion of Edger’s profits to charity, when in fact they did not use any of the 

purported “profits” for charitable purposes. 

FIRST CAUSE OF ACTION 
FRAUD IN CONNECTION WITH THE PURCHASE AND SALE OF  

SECURITIES 
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5(a), (b) 

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

 
53. The Commission realleges and incorporates by reference the allegations contained 

in Paragraphs 1 through 52, above. 

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54. Defendants, by engaging in the conduct described above, directly or indirectly, by 

the use of means or instrumentalities of interstate commerce or use of the mails, in connection 

with the purchase or sale of securities, with scienter, (1) employed devices, schemes, or artifices 

to defraud; (2) made untrue statements of material fact or omitted to state a material fact 

necessary in order to make statements made, in light of the circumstances under which they were 

made not misleading; or (3) engaged in acts, practices, or courses of business that operated or 

would operate as a fraud and deceit upon other persons. 

55. By reason of the foregoing, Defendants violated, and unless restrained and 

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

Rule 10b-5(a), (b) and (c) thereunder [17 C.F.R. § 240.10b-5(a), (b) and (c)]. 

SECOND CAUSE OF ACTION 
FRAUD IN THE OFFER AND SALE OF SECURITIES 

Violations of Sections 17(a)(1), (2) and (3) of the Securities Act [15 U.S.C. § 77q(a)(1), (2) 
and (3)] 

(All Defendants) 
 

56. The Commission realleges and incorporates by reference the allegations contained 

in Paragraphs 1 through 52, above. 

57. Defendants, by engaging in conduct described above, directly or indirectly, in the 

offer or sale of securities, by the use of the means or instruments of transportation or 

communication in interstate commerce or by use of the mails, with scienter, (1) employed 

devices, schemes, or artifices to defraud (2) obtained money or property by means of untrue 

statements of material fact or by omitting to state a material fact necessary in order to make the 

statements made, in light of the circumstances under which they were made, not misleading, and 

(3) engaged in transactions, practices, or courses of business which operate or would operate as a 

fraud or deceit upon the purchaser.  

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58. By reason of the foregoing, Defendants directly or indirectly, violated, and unless 

restrained and enjoined by this Court, will continue to violate, Section 17(a)(1), (a)(2) and (a)(3) 

of the Securities Act [15 U.S.C. § 77q(a)(1), (a)(2) and (a)(3)]. 

RELIEF REQUESTED 

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

judgment: 

I. 

Permanently restraining and enjoining Defendants from, directly or indirectly, engaging 

in conduct in violation of Securities Act Section 17(a) [15 U.S.C. § 77q(a)], and Exchange Act 

Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; 

II. 

Pursuant to Section 20(b) of the Securities Act and Sections 21(d)(1) and (d)(5) of 

Exchange Act [15 U.S.C. §§ 77t(b), 78u(d)(5)], permanently restraining and enjoining 

Defendants Michael McLaughlin, Derek McLaughlin, Goff, Hubbard, Fairbourn and Deluca 

from directly or indirectly, including, but, not limited to, through any entity owned or controlled 

by them, participating in the issuance, purchase, offer, or sale of any security, provided, 

however, that such injunction shall not prevent him from purchasing or selling securities for his 

own personal account; 

III. 

Ordering Defendants Michael McLaughlin and Derek McLaughlin to disgorge all ill-

gotten gains or unjust enrichment derived from the activities set forth in this Complaint, together 

with prejudgment interest thereon; 

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 IV.  

Ordering Defendants Michael McLaughlin, Derek McLaughlin, Goff, Hubbard, 

Fairbourn and Deluca 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)]; 

V. 

Retaining jurisdiction of this action in accordance with the principles of equity and the 

Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and 

decrees that may be entered, or to entertain any suitable application or motion for additional 

relief within the jurisdiction of this Court; and, 

VI. 

Granting such other and further relief as this Court may deem just, equitable, or necessary 

in connection with the enforcement of the federal securities laws and for the protection of 

investors. 

Dated this 25th day of September, 2023.  
 

Respectfully submitted,  
 

_/s/ Tracy S. Combs___________ 
Tracy S. Combs 
Casey R. Fronk 
Michael E. Welsh 
Paul Feindt 
Attorneys for Plaintiff 

 

Case 2:23-cv-00663   Document 1   Filed 09/25/23   PageID.18   Page 18 of 18


	Material Omissions Regarding Pooling of Funds