SEC v. Ulrich Kranz; and Paul Balciunas, No. 2:23-cv-06332, Central District of California (Aug. 4, 2023) — Complaint

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CHRISTOPHER E. MARTIN (AZ Bar. No 018486)
[email protected]

SECURITIES AND EXCHANGE COMMISSION
1961 Stout Street, Suite 1700
Denver, Colorado 80294-1961
Telephone:   (303) 844-1000
Facsimile:    (303) 297-3529

Local Counsel
Charles E. Canter (Cal. Bar No. 263197)
[email protected]

SECURITIES AND EXCHANGE COMMISSION
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone:   (323) 965-3998
Facsimile:    (213) 443-1904
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,
v.
ULRICH
 KRANZ and
PAUL
 BALCIUNAS,

Defendants.
 Case No. 23-cv-06332

COMPLAINT AND JURY DEMAND

Plaintiff Securities and Exchange Commission (the “SEC”), for its Complaint
against Defendants Ulrich Kranz (“Kranz”) and Paul Balciunas (“Balciunas”)
(collectively “Defendants”), alleges as follows:
JURISDICTION AND VENUE
1. The SEC brings this action pursuant to authority conferred on it by Section
20(b) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77t(b)] and Sections
21(d) and 21(e) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C.

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§§ 78u(d) and 78u(e)].  The Court has jurisdiction over this action pursuant to Sections
20(b), 20(d), 20(e), and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), 77t(e),
and 77v(a)] and Sections 21(d), 21(e), and 27(a) of the Exchange Act [15 U.S.C.
§§ 78u(d), 78u(e), and 78aa(a)].
2. Defendants, directly or indirectly, made use of the means or instruments of
transportation or communication in interstate commerce, the means or instrumentalities
of interstate commerce, or of the mails, in connection with the acts, practices, and
courses of business set forth in this Complaint.
3. Venue lies in this Court pursuant to Section 22(a) of the Securities Act [15
U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)].
Defendants reside in the Central District of California. Certain of the acts, practices,
transactions, and courses of business alleged in this Complaint also occurred within this
judicial district, including that Defendants worked for Canoo Inc. (“Canoo” or the
“Company”), which has its principal place of business within this judicial district in
Torrance, California.
SUMMARY
4. This action involves improper conduct by defendants Ulrich Kranz, the
former Chief Executive Officer of Canoo, a company that designs and produces electric
vehicles (“EVs”), and Paul Balciunas, Canoo’s former Vice President of Corporate
Strategy and Chief Financial Officer. The Defendants’ improper conduct relates to
Canoo’s disclosure, proxy, and reporting failures concerning hundreds of millions of
dollars of unreasonable revenue projections, and with respect to Kranz specifically,
nearly $1 million of undisclosed executive compensation. These failures began while
Canoo was in the process of raising hundreds of millions of dollars from the investing
public as part of a December 2020 transaction whereby Canoo merged into another
company to become publicly traded.
5. From August 2020 until March 2021, Canoo’s financial projections, which
it   provided to investors and the SEC with both Kranz and Balciunas’s awareness,

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included projected revenue for providing engineering services to other companies of
$120 million for 2021 and $250 million for 2022. Kranz and Balciunas should have
known that these projections were unreasonable because they had information showing
that significant projects on which Canoo based its 2021 and 2022 revenue projections
were unlikely to materialize.
6. On March 29, 2021, approximately three months after successfully raising
hundreds of millions of dollars from the investing public, under the direction of
Canoo’s new Executive Chairman, Canoo announced that it would “deemphasize the
originally stated contract engineering services line,” and removed its revenue
projections from its public filings. The day after Canoo announced it would not achieve
any of the projected engineering services revenue, Canoo’s stock price dramatically
decreased by approximately 21%.
7. Additionally, in November 2019, Kranz entered into an agreement with
two individuals who were significant investors in Canoo to receive up to $1 million in
compensation related to his work at Canoo. In October 2020, Kranz received over
$900,000 from these two individuals. As CEO of Canoo, Kranz was required to disclose
compensation he received related to his work at Canoo. He failed to do so, which
caused Canoo to make inaccurate executive compensation disclosures from September
2020 until April 2021.
8. By engaging in the conduct described in this Complaint, the Defendants
are liable as follows and unless enjoined are likely to continue to violate the federal
securities laws.
a. Kranz violated Section 17(a)(3) of the Securities Act [15 U.S.C. §
77q(a)(3)] and Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)]
and Rules 14a-3 and 14a-9 thereunder [17 C.F.  R. §§ 240.14a-3 and
240.14a-9], and aided and abetted Canoo’s violations of Section 13(a)
of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1,
and 13a-11 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, and

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240.13a-11].
b. Defendant Balciunas violated Section 14(a) of the Exchange Act [15
U.S.C. § 78n(a)] and Rule 14a-3 thereunder [17 C.F.  R. § 240.14a-3]
and aided and abetted Canoo’s violations of Section 13(a) of the
Exchange Act [15 U.S.C. § 78m(a)] and Rule 13a-11 thereunder [17
C.F.  R. § 240.13a-1].
9. The SEC seeks a final judgment: (a) permanently enjoining Defendants
from violating the federal securities laws alleged in this Complaint; (b) ordering
Balciunas to disgorge any ill-gotten gains he received, with prejudgment interest
thereon, pursuant to Exchange Act Sections 21(d)(5) and (d)(7) [15 U.S.C. §§ 78u(d)(5)
and 78u(d)(7)]; (c) ordering Kranz to pay civil money penalties pursuant to Section
20(d) of the Securities Act, [15 U.S.C. § 77t(d)], and ordering both Defendants to pay
civil money penalties pursuant Section 21(d)(3) of the Exchange Act, [15 U.S.C. §
78u(d)(3)]; (d) prohibiting both Defendants pursuant to the Court’s equitable authority
from acting as officers   or directors   of any issuer that has a class of securities registered
pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file
reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]; and (e)
ordering any other and further relief the Court may deem just and proper.
DEFENDANTS
10. Ulrich Kranz resides in Manhattan Beach, California. Kranz was the CEO
of Canoo beginning in August 2019 and the “ Special Advisor to the Executive
Chairman” of Canoo beginning in October 2020.  He resigned from Canoo in April
2021.
11. Paul Balciunas resides in Los Angeles, California. Balciunas was the Vice
President of Corporate Development and CFO of Canoo from July 2020 until he
resigned in March 2021.
RELEVANT ENTITIES
12. Canoo Inc. is a Delaware corporation that designs and produces EVs. Its

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principal place of business is    Torrance, California. Canoo registered its common stock
with the SEC pursuant to Section 12(b) of the Exchange Act and the Nasdaq Global
Security Market Company lists the Company’s stock under the ticker “GOEV.”
13. Canoo’s predecessor, the “SPAC Company” was a Delaware corporation
and special purpose acquisition company (“SPAC”) that merged with Canoo on
December 21, 2020,  and thereafter ceased to exist independently. Until December 21,
2020, the SPAC Company filed the SEC filings discussed in this Complaint. After that
date, Canoo made the relevant SEC filings.
FACTS
I. Canoo Background and the SPAC Transaction
14. Kranz and others founded Canoo as a private company in November 2017
for the purpose of developing and bringing to market EVs. Initially, three individuals
(the “Initial Owners”) funded the Company. Beginning in 2019, the Initial Owners
encouraged Canoo’s management to seek other funding sources, and management
engaged in several unsuccessful attempts to raise capital. By spring 2020, Canoo’s cash
on hand was low, and the Company entered into a low cash burn mode for several
months to preserve operating capital.
15. In late June 2020, the SPAC Company and Canoo discussed a possible
deal to raise a substantial amount of capital for Canoo. The two parties signed an NDA
in early July 2020 and exchanged   data and information. On July 17, 2020, the two
parties signed an exclusive letter of intent for Canoo to merge into the SPAC Company.
Canoo and the SPAC Company publicly announced the deal on August 18, 2020,
whereby the Company expected to receive approximately $629 million of gross
proceeds,  with approximately $306 million of this amount coming from SPAC
Company investors and the remaining approximately $323 million coming from a fully
committed common stock transaction (a private investment in public equity, or “PIPE”,
transaction) from institutional investors.

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16. Canoo completed the SPAC merger on December 21, 2020, and the next
day began to trade on the Nasdaq Global Select Market under the ticker GOEV. On
December 22, 2020, Canoo’s common stock price closed at $18.89 a share.
17.  Canoo’s common stock presently trades for less than a dollar a share.
II. Canoo’s Engineering Services Pipeline and Projections
18. Between June and December 2020, Canoo developed a pipeline of
potential engineering services projects for the company to pursue. The purpose of the
pipeline was to identify third parties that Canoo could provide engineering services to
and generate revenue from providing such services.
19. Beginning in July 2020, Canoo began to project engineering services
revenue of $120 million in fiscal year 2021 and $250 million in fiscal year 2022. This
projected engineering services revenue represented 100% of Canoo’s total 2021
projected revenue and 75% of its total 2022 projected revenue.
20. Certain internal Canoo documents and communications show that, by July
2020, Canoo’s revenue projections came almost exclusively from potential engineering
services partnerships with two third-party companies: a European carmaker and original
equipment manager (“European Auto OEM”),  and a technology-focused company
(“Tech Strategic”).
21. Canoo maintained an Excel spreadsheet titled “Canoo Operating Model,”
which included the Company’s financial forecasts. A version from early July 2020
included the 2021 $120 million projection—attributing $100 million to the European
Auto OEM and $20 million to Tech Strategic.  It also included 2022 revenue projections
of $250 million, $230 million of which Canoo attributed to the European Auto OEM
and Tech Strategic collectively.
22. Kranz and Balciunas were responsible for Canoo’s engineering services
“pipeline” of potential projects and associated revenue projections. Kranz was the
primary contact for several of Canoo’s potential revenue-generating business partners,

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and his expertise with those relationships (and in the auto industry in general) was key
to the development of the pipeline.
23. By mid-August 2020, discussions with the European Auto OEM and Tech
Strategic indicated that the projects were unlikely to produce revenue in 2021 and 2022.
The European Auto OEM project (which in the Canoo Operating Model constituted
$100 million of the 2021 revenue projections and $150 of the 2022 revenue projections)
hit significant hurdles by July 2020, when the European Auto OEM told Canoo—in an
email that Kranz and Balciunas received—that the work proposed was too costly and
would be “barely acceptable” even if costs could be shared with other parties. Between
July and November 2020, the European Auto OEM continued to reject Canoo’s
proposals, and in November 2020 told Canoo a project was “unworkable.” Canoo and
the European Auto OEM never finalized an agreement.
24. Kranz and Balciunas received notice of these developments in July 2020
through November 2020 either directly from the European Auto OEM, or in updates
from a junior Canoo employee.
25. Also in August 2020, Tech Strategic informed Canoo—in a phone
conversation with Kranz and email sent to Balciunas—that the potential project would
be paused because the scope of the required work had expanded, Canoo’s proposal no
longer made sense, and Tech Strategic was considering other companies to partner with
to develop EVs. By October 2020, an internal Canoo tracking document showed the
Tech Strategic project was on “hold.”
26. In early December 2020, Canoo paused or cancelled negotiations with
certain potential engineering services customers. Kranz and Balciunas were aware of
these decisions, having been included in relevant email conversations during early
December 2020.
27. Although Canoo was in discussions with other companies about potential
engineering services projects in late 2020 and early 2021, none of the talks were in

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advanced stages. Kranz and Balciunas were aware of the status of Canoo’s potential
engineering services projects during late 2020 and early 2021.
III. Canoo’s Misstatements Regarding Projected Revenue
28. During and after the time that Canoo’s discussions with possible
engineering services customers broke down, which Kranz was directly aware of, Canoo
made a number of false and misleading statements to investors projecting significant
revenue for these future periods and emphasizing the revenue-generating potential of its
engineering services model.
29. In the initial investor presentation that Canoo furnished to potential and
eventual investors and the SEC as an attachment to its Form 8-K filed on August 18,
2020 (the “August Presentation”), Canoo claimed that its engineering services model
was part of a “multi-phased approach to generate revenue” with the ability to generate
revenue “today.” Canoo stated that it had a “phased, de-risked go to market strategy
resulting in immediate revenues” and that engineering services would “generate
revenue that reduces the Company’s overall execution risk.”
30. The August Presentation also stated that Canoo had “$120 million of
projected revenue in 2021” attributable to its engineering services projects. It
specifically called out—among others—“Delivery Contract Engineering” for the
“European Auto OEM” and “Contract Engineering & Vehicle Sales” for the “Tech
Strategic.”
31. Kranz and Balciunas helped prepare and present the August Presentation.
32. On September 18, 2020, SPAC Company filed a Form S-4 with the SEC
(the “Form S-4”) that included information about projected engineering services
revenue initially calculated in the July 2020 version of Canoo’s Operating Model—
information that Kranz, Balciunas, and others at Canoo provided. The Form S-4 stated
that Canoo’s current engineering services pipeline of projects was “supportive of a
projected $120 million of revenue in 2021,”   and included a $250 million projection for
engineering services revenue in 2022.

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33. The Form S-4 registered 190,000,000 shares of common stock to be sold
“[a]s soon as practicable after this registration statement becomes effective and on
completion of the business combination.”
34. Kranz and Balciunas were involved in preparing the July 2020 Canoo
Operating Model that included information supporting the Form S-4’s statements about
Canoo’s engineering services pipeline and revenue projections, knew that the SPAC
Company was preparing, and ultimately filed, the Form S-4, and knew that the Form S-
4 included statements regarding Canoo’s engineering services pipeline and revenue
projections.
35. Similar or identical statements regarding Canoo’s 2021 and 2022
engineering services revenues appeared in numerous other filings made with the SEC
and provided to the investing public. These filings include: October 23, 2020 and
November 25, 2020 amendments to the Form S-4, a September 24, 2020 Analyst Day
Presentation (attached to a Form 8-K), a December 4, 2020 prospectus, Canoo’s
January 13, 2021 Form S-1 (the “Form S-1”), and a January 25, 2021 prospectus.
36. The Form S-1  registered 209,147,314 shares of common stock and
1,842,106 warrants to be sold “[f]rom time to time after the effective date of [the]
registration statement.”
37. Kranz and Balciunas were involved in preparing the July 2020 Canoo
Operating Model that formed the basis for these SEC filings’ statements about Canoo’s
engineering services pipeline and revenue projections. Both knew that the SPAC
Company was preparing and ultimately filed with the SEC statements regarding
Canoo’s engineering services pipeline and revenue projections.
38. Canoo did not update its projections in its SEC filings until March 2021,
when, in preparation for filing its first Form 10-K as a public company, Canoo removed
the engineering revenue projections from its public filings.  In particular, on March 29,
2021, Canoo announced that it would “deemphasize the originally stated contract
engineering services line,” and removed its revenue projections from its public filings.

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The day after Canoo announced it would not achieve any of the projected engineering
services revenue, Canoo’s stock price decreased by approximately 21%.
39. Each of these statements regarding revenue projections was false and
misleading because, during and while Canoo made these statements, discussions with
the two primary relationships driving these projections (the European Auto OEM and
the Tech Strategic) indicated that the projects were unlikely to produce revenue in 2021
and 2022.
40. Kranz and Balciunas knew or should have known that the statements were
false. Given the status of the potential partnerships with the European Auto OEM and
Tech Strategic at the time Canoo made the statements, it was unreasonable for Kranz
and Balciunas to cause Canoo to project engineering services revenue of $120 million
for 2021 and $250 million for 2022. Both Kranz and Balciunas knew or should have
known that these two potential partnerships formed the basis for Canoo’s 2021 and
2022 revenue projections, and both Kranz and Balciunas knew or should have known of
the negative developments with the two potential partnerships that made the revenue
projections unreasonable.
41. The statements regarding Canoo’s revenue projections were material to
investors who would want accurate revenue projections when making investment
decisions about Canoo.
IV. Kranz’s Undisclosed Arrangement and Compensation
42. On November 8, 2019, two of Canoo’s Initial Owners provided Kranz with
a signed agreement to pay him up to $1 million in exchange for his agreeing to remain
in his role at Canoo. One of the Initial Owners explained to Kranz, “[w]e will honor our
words to pay you” so that you “do your best in helping the company to complete the
SPAC deal.”
43. Between October 22 and 29, 2020, the two Initial Owners wired Kranz
$915,048.

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44. On September 6, 2020, Kranz signed a Directors’ and Executive Officers’
Questionnaire (“Questionnaire”) in preparation for the SPAC Company’s filing its
Form S-4. The Questionnaire represented, among other things that: (1) Kranz did not
have any contract or other arrangement (whether written or unwritten) relating to his
employment at Canoo or the SPAC Company; (2) his compensation, cash and non-cash,
earned with respect to the last fiscal year was $722,771.95; and, (3) his only other
compensation was the payment of life insurance premiums by Canoo or the SPAC
Company and $36 from the Employee Assistance Program (his “Other Compensation”).
45. Kranz did not disclose the arrangement with the Initial Owners or the
payment from the Initial Owners on the Questionnaire (or through any other means) to
Canoo or the SPAC Company.
46. Canoo’s Form S-4 and October 23 and November 25, 2020 amendments,
December 4, 2020 prospectus, Form S-1, and April 29, 2021 proxy filing listed Kranz’
compensation as $722,771.95 and also listed the Other Compensation.
47. The statements about Kranz’s compensation were false and misleading.
Those filings did not disclose Kranz’s arrangement with Canoo’s two Initial Owners,
and, after the payments were received in October 2020, also did not disclose the
payments totaling $915,048.
48. Kranz should have known that the statements about his executive
compensation in Canoo’s SEC filings were false and misleading. Kranz knew about his
arrangement with and payments from two of the Initial Owners and should have known
that Canoo would use the information about his compensation, including the
information requested in the Questionnaire, in its SEC filings. Kranz acted
unreasonably by not providing Canoo with the required information about the
arrangement and payments.
49. Item 402 of Regulation S-K requires that public companies disclose certain
compensation information for named executive officers. Section (a)(2) provides:

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All compensation covered. This Item requires clear, concise and
understandable disclosure of all plan and non-plan compensation awarded
to, earned by, or paid to the named executive officers ... by any person for
all services rendered in all capacities to the registrant and its subsidiaries,
unless otherwise specifically excluded from disclosure in this Item.

The disclosure requirements of Regulation S-K apply to registration statements under
the Securities Act and Exchange Act, annual and other reports, and “any other
documents required to be filed under the Exchange Act, to the extent provide in the
forms and rules under that Act.”
50. Canoo was required to disclose complete and accurate information
regarding Kranz’ executive compensation pursuant to Item 402 of Regulation S-K and
such information was material to investors who were making investment decisions
about Canoo. Reasonable investors would want to receive accurate information about a
CEO’s arrangements and payments related to the CEO’s employment at a public
company.
V. Kranz Engaged in a “Practice or Course of Business” that Defrauded
Investors.
51. Kranz engaged in a practice or course of business that defrauded investors
in connection with Canoo’s false and misleading statements regarding its projected
revenues and Kranz’s compensation.
52. Kranz also engaged in conduct that operated as a fraud upon investors
when he failed to inform the SPAC Company that information in the Form S-4 was no
longer accurate.
53. Pursuant to Section 7.01(d) of the merger agreement between Canoo and
the SPAC Company, Canoo was required to “promptly inform [SPAC Company]” of
any material fact included in the Form S-4 that was no longer accurate.
54. Kranz, on behalf of pre-merger Canoo, signed the merger agreement.
55. Kranz did not communicate the negative engineering services updates—
notably, the developments involving the European Auto OEM and the Tech Strategic—

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or their negative impact on Canoo’s projected 2021 and 2022 engineering services
revenue to SPAC Company.
56. Kranz’s also did not disclose the arrangement with the Initial Owners or
the payment from the Initial Owners on the Questionnaire or, through any other means.
57. Kranz was negligent in taking these actions.
VI. Kranz and Balciunas Violated Section 14(a) of the Exchange Act and
Rule 14a-3 Thereunder; Kranz Also Violated Rule 14a-9.
58. Section 14(a) of the Exchange Act and its related rules govern disclosure in
materials used to solicit shareholders’ votes in annual or special meetings held for the
election of directors and the approval of other corporate action. Exchange Act Rule 14a-
3   requires that each person solicited through a proxy solicitation must be provided with
certain statements and information. Exchange Act Rule 14a-9 prohibits the solicitation
of proxies by false or misleading statements.
59. Kranz violated Section 14(a) and each of these rules in connection with
Canoo’s false and misleading statements regarding projected revenues in 2021 and
2022, identified above, and Canoo’s false and misleading statements regarding his
compensation, also identified above.
60. As detailed above, Kranz’s actions violating these provisions include:
being involved in preparing the materials that supported false and misleading statements
in the SEC filings regarding Canoo’s engineering services pipeline and revenue
projections, preparing and presenting the August Presentation, and not disclosing, on
the Questionnaire or otherwise, the arrangement with the Initial Owners or the payment
from the Initial Owners.
61. Kranz was negligent in taking these actions.
62. As a result of his actions, Canoo made statements, identified above, in
materials used to solicit shareholders’ votes in annual or special meetings held for the
election of directors and the approval of other corporate action that failed to furnish the

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information required by Rule 14a-3 and that were false and misleading, in violation of
Rule 14a-9.
63. Balciunas violated Section 14(a) and Rules 14a-3 in connection with
Canoo’s false and misleading statements regarding projected revenues in 2021 and
2022, identified above.
64. As detailed above, Balciunas’s actions violating these provisions include:
helping prepare the materials that supported false and misleading statements in the SEC
filings regarding Canoo’s engineering services pipeline and revenue projections and
preparing and presenting the August Presentation.
65. Balciunas was negligent in taking these actions.
66. As a result of his actions, Canoo made statements, identified above,   in
materials used to solicit shareholders’ votes in annual or special meetings held for the
election of directors and the approval of other corporate action that failed to furnish the
information required by Rule 14a-3.
VII. Kranz and Balciunas Aided and Abetted Canoo’s Violations of Section
13(a) of the Exchange Act and Rule 13a-11 Thereunder; Kranz Also
Aided and Abetted Canoo’s Violations of Rules 12b-20 and 13a-1.
67. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-11 thereunder
require the periodic reporting of information by companies with publicly traded
securities, such as Canoo. Public companies must file periodic reports with the SEC,
including annual reports (pursuant to Rule 13a-1) and current reports including Forms
8-K (pursuant to Rule 13a-11). Those reports must be factually accurate and not omit
information that would otherwise make the information in the reports not misleading.
Additionally, Exchange Act Rule 12b-20 provides that, in addition to the information
expressly required to be included in a report, the company shall add such further
material information as may be necessary to make the required statements, in light of
the circumstances under which they are made, not misleading.

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68. As alleged above, Canoo made multiple statements in annual and current
reports that were false and misleading.
69. For the reasons detailed above, Kranz assisted Canoo’s false and
misleading statements in current reports regarding projected revenues in 2021 and 2022,
and Canoo’s false and misleading statements in Canoo’s 2021 annual report regarding
his compensation. Among other things, Kranz helped prepare the July 2020 Canoo
Operating Model that formed the basis for the false and misleading statements in the
SEC filings regarding Canoo’s engineering services pipeline and revenue projections
and did not disclose, on the Questionnaire or otherwise, the arrangement with the Initial
Owners or the payment from the Initial Owners on the Questionnaire.
70. For the reasons detailed above, Balciunas assisted Canoo’s false and
misleading statements in current reports   regarding projected revenues in 2021 and 2022.
Among other things, Balciunas helped prepare the July 2020 Canoo Operating Model
that formed the basis for the false and misleading statements in the SEC filings
regarding Canoo’s engineering services pipeline and revenue projections.
VIII. Balciunas Obtained Ill   -Gotten Gains.
71. Balciunas received a bonus of $7,500 in connection with the completion of
the merger between Canoo and the SPAC Company, which occurred on December 21,
2020.
CLAIMS FOR RELIEF
FIRST CLAIM
Violations of Section 17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(3)]
(Kranz)
72. The SEC re-alleges and incorporates by reference paragraphs 1 through 71
as though fully set forth herein.
73. Kranz has, by engaging in the conduct set forth above, directly or
indirectly, in the offer or sale of securities, by use of means or instrumentalities of
interstate commerce or of the mails, engaged in transactions, practices, or courses of

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business which operated or would operate as a fraud or deceit upon purchasers of
securities.
74. By reason of the foregoing, Kranz violated, and, unless restrained and
enjoined, will continue to violate, Section 17(a)(3) of the Securities Act.
SECOND CLAIM
Violations of Section 14(a) of the Exchange Act and Rules   14a-3 and 14a-9
Thereunder [15 U.S.C. § 78n(a) and 17 C.F.R. §§   240.14a-3, 240.14a-9]
(Kranz)
75. The SEC re-alleges and incorporates by reference paragraphs 1 through 71
as though fully set forth herein.
76. As a result of the conduct alleged herein, Kranz directly or indirectly, by
use of mails, or the means or instrumentalities of interstate commerce or any facility of
a national securities exchange, solicited proxies without furnishing each person solicited
a proxy statement containing the information specified by the proxy rules, and used
proxy statements containing statements which, at the time and in light of the
circumstances under which they are made, were false or misleading with respect to a
material fact, or omitted to state material facts necessary to make the statement therein
not misleading or necessary to correct any statement in any earlier communication with
respect to the solicitation of a proxy for the same meeting or subject matter which has
become false or misleading.
77. By reason of the foregoing, Kranz violated and, unless restrained and
enjoined, will again violate Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)] and
Rules   14a-3 and 14a-9 thereunder [17 C.F.R. §§   240.14a-3 , 240.14a-9].
THIRD CLAIM
Violations of Section 14(a) of the Exchange Act and Rule 14a-3 Thereunder
[15 U.S.C. § 78n(a) and 17 C.F.R. §§ 240.14a-3]
(Balciunas)
78. The SEC realleges and incorporates by reference paragraphs 1 through 71
as through fully set forth herein.

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79. As a result of the conduct alleged herein, Balciunas, directly or indirectly,
by use of mails, or the means or instrumentalities of interstate commerce or any facility
of a national securities exchange, solicited proxies without furnishing each person
solicited a proxy statement containing the information specified by the proxy rules.
80. By reason of the foregoing, Balciunas violated and, unless restrained and
enjoined, will again violate Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)] and
Rule 14a-3 thereunder [17 C.F.R. § 240.14a-3].
FOURTH CLAIM
Aiding and Abetting Canoo’s Violations of Section 13(a) of the Exchange Act and
Rules   12b-20, 13a-1, and 13a-11 Thereunder [15 U.S.C. § 78m(a) and 17 C.F.R. §§
240.12b-20, 240.13a-1, and 240.13a-11]
(Kranz)
81. The SEC realleges and incorporates by reference paragraphs 1 through 71
as though fully set forth herein.
82. Canoo, which is an issuer of securities registered pursuant to Section 12 of
the Exchange Act, filed materially false and misleading annual and current reports with
the SEC in violation of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and
13a-11 thereunder.
83. As a result of the conduct alleged herein, Kranz aided and abetted Canoo’s
violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11
thereunder by knowingly or recklessly providing substantial assistance to Canoo.
84. By reason of the foregoing, Kranz, directly or indirectly, aided and abetted
and, unless restrained and enjoined, will again aid and abet violations of Section 13(a)
of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1, and 13a-11
thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-11].

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FIFTH CLAIM
Aiding and Abetting Canoo’s Violations of Section 13(a) of the Exchange Act and
Rule 13a-11 Thereunder [15 U.S.C. § 78m(a) and 17 C.F.R. § 240.13a-11]
(Balciunas)
85. The SEC realleges and incorporates by reference paragraphs 1 through 71
as though fully set forth herein.
86. Canoo, which is an issuer of securities registered pursuant to Section 12 of
the Exchange Act, filed materially false and misleading annual and current reports with
the SEC in in violation of Section 13(a) of the Exchange Act and Rule and 13a-11
thereunder.
87. As a result of the conduct alleged herein, Balciunas aided and abetted
Canoo’s violations of Section 13(a) of the Exchange Act and Rule 13a-11 thereunder by
knowingly or recklessly providing substantial assistance to Canoo.
88. By reason of the foregoing, Balciunas, directly or indirectly, aided and
abetted and, unless restrained and enjoined, will again aid and abet violations of Section
13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rule 13a-11 thereunder [17 C.F.R.
§ 240.13a-11].
RELIEF SOUGHT
WHEREFORE, the SEC respectfully requests that this Court:
I.
Find that the Defendants committed the violations alleged in this Complaint;
II.
Enter an injunction, in a form consistent with Rule 65 of the Federal Rules of
Civil Procedure, permanently restraining and enjoining each of the Defendants from
violating, directly or indirectly, the laws and rules they are alleged to have violated in
this Complaint;
III.
Pursuant to Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C.

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§§ 78u(d)(5) and 78u(d)(7)], order Defendant Balciunas to disgorge all ill-gotten gains,
together with pre-judgment interest, derived from the activities set forth in this
Complaint;
IV.
Order Kranz to pay civil money penalties pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and both Defendants to pay civil money penalties
pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and
V.
Issue an order, pursuant to the Court’s equitable powers, barring Defendants from
acting as officers   or directors   of any issuer that has a class of securities registered
pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file
reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)].
VI.
Grant such other and further relief as this Court may deem just and proper.
JURY DEMAND
 The SEC demands a trial by jury on all claims so triable.

Respectfully submitted, August 4, 2023.

_s/ Charles E. Canter
Charles Canter
Local Counsel

Christopher E. Martin

Attorneys   for Plaintiff
Securities and Exchange Commission

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CHRISTOPHER E. MARTIN (AZ Bar. No 018486) 
[email protected] 
SECURITIES AND EXCHANGE COMMISSION 
1961 Stout Street, Suite 1700 
Denver, Colorado 80294-1961 
Telephone: (303) 844-1000 
Facsimile: (303) 297-3529 
 
Local Counsel 
Charles E. Canter (Cal. Bar No. 263197) 
[email protected] 
SECURITIES AND EXCHANGE COMMISSION 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 
Facsimile: (213) 443-1904 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

 

SECURITIES AND EXCHANGE 
COMMISSION, 
 

Plaintiff, 

v. 

ULRICH KRANZ and 
PAUL BALCIUNAS, 
 

Defendants. 

 Case No. 23-cv-06332 

 
COMPLAINT AND JURY DEMAND 

 

Plaintiff Securities and Exchange Commission (the “SEC”), for its Complaint 

against Defendants Ulrich Kranz (“Kranz”) and Paul Balciunas (“Balciunas”) 

(collectively “Defendants”), alleges as follows: 

JURISDICTION AND VENUE 

1. The SEC brings this action pursuant to authority conferred on it by Section 

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

21(d) and 21(e) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. 

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mailto:[email protected]
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§§ 78u(d) and 78u(e)]. The Court has jurisdiction over this action pursuant to Sections 

20(b), 20(d), 20(e), and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), 77t(e), 

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

§§ 78u(d), 78u(e), and 78aa(a)].   

2. Defendants, directly or indirectly, made use of the means or instruments of 

transportation or communication in interstate commerce, the means or instrumentalities 

of interstate commerce, or of the mails, in connection with the acts, practices, and 

courses of business set forth in this Complaint. 

3. Venue lies in this Court pursuant to Section 22(a) of the Securities Act [15 

U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)]. 

Defendants reside in the Central District of California. Certain of the acts, practices, 

transactions, and courses of business alleged in this Complaint also occurred within this 

judicial district, including that Defendants worked for Canoo Inc. (“Canoo” or the 

“Company”), which has its principal place of business within this judicial district in 

Torrance, California. 

SUMMARY 

4. This action involves improper conduct by defendants Ulrich Kranz, the 

former Chief Executive Officer of Canoo, a company that designs and produces electric 

vehicles (“EVs”), and Paul Balciunas, Canoo’s former Vice President of Corporate 

Strategy and Chief Financial Officer. The Defendants’ improper conduct relates to 

Canoo’s disclosure, proxy, and reporting failures concerning hundreds of millions of 

dollars of unreasonable revenue projections, and with respect to Kranz specifically, 

nearly $1 million of undisclosed executive compensation. These failures began while 

Canoo was in the process of raising hundreds of millions of dollars from the investing 

public as part of a December 2020 transaction whereby Canoo merged into another 

company to become publicly traded.  

5. From August 2020 until March 2021, Canoo’s financial projections, which  

it provided to investors and the SEC with both Kranz and Balciunas’s awareness, 

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included projected revenue for providing engineering services to other companies of 

$120 million for 2021 and $250 million for 2022. Kranz and Balciunas should have 

known that these projections were unreasonable because they had information showing 

that significant projects on which Canoo based its 2021 and 2022 revenue projections 

were unlikely to materialize.  

6. On March 29, 2021, approximately three months after successfully raising 

hundreds of millions of dollars from the investing public, under the direction of 

Canoo’s new Executive Chairman, Canoo announced that it would “deemphasize the 

originally stated contract engineering services line,” and removed its revenue 

projections from its public filings. The day after Canoo announced it would not achieve 

any of the projected engineering services revenue, Canoo’s stock price dramatically 

decreased by approximately 21%. 

7. Additionally, in November 2019, Kranz entered into an agreement with 

two individuals who were significant investors in Canoo to receive up to $1 million in 

compensation related to his work at Canoo. In October 2020, Kranz received over 

$900,000 from these two individuals. As CEO of Canoo, Kranz was required to disclose 

compensation he received related to his work at Canoo. He failed to do so, which 

caused Canoo to make inaccurate executive compensation disclosures from September 

2020 until April 2021. 

8. By engaging in the conduct described in this Complaint, the Defendants 

are liable as follows and unless enjoined are likely to continue to violate the federal 

securities laws. 

a. Kranz violated Section 17(a)(3) of the Securities Act [15 U.S.C. § 

77q(a)(3)] and Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)] 

and Rules 14a-3 and 14a-9 thereunder [17 C.F.R. §§ 240.14a-3 and 

240.14a-9], and aided and abetted Canoo’s violations of Section 13(a) 

of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1, 

and 13a-11 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 

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240.13a-11]. 

b. Defendant Balciunas violated Section 14(a) of the Exchange Act [15 

U.S.C. § 78n(a)] and Rule 14a-3 thereunder [17 C.F.R. § 240.14a-3] 

and aided and abetted Canoo’s violations of Section 13(a) of the 

Exchange Act [15 U.S.C. § 78m(a)] and Rule 13a-11 thereunder [17 

C.F.R. § 240.13a-1].    

9. The SEC seeks a final judgment: (a) permanently enjoining Defendants 

from violating the federal securities laws alleged in this Complaint; (b) ordering 

Balciunas to disgorge any ill-gotten gains he received, with prejudgment interest 

thereon, pursuant to Exchange Act Sections 21(d)(5) and (d)(7) [15 U.S.C. §§ 78u(d)(5) 

and 78u(d)(7)]; (c) ordering Kranz to pay civil money penalties pursuant to Section 

20(d) of the Securities Act, [15 U.S.C. § 77t(d)], and ordering both Defendants to pay 

civil money penalties pursuant Section 21(d)(3) of the Exchange Act, [15 U.S.C. § 

78u(d)(3)]; (d) prohibiting both Defendants pursuant to the Court’s equitable authority 

from acting as officers or directors of any issuer that has a class of securities registered 

pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file 

reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]; and (e) 

ordering any other and further relief the Court may deem just and proper. 

DEFENDANTS 

10. Ulrich Kranz resides in Manhattan Beach, California. Kranz was the CEO 

of Canoo beginning in August 2019 and the “Special Advisor to the Executive 

Chairman” of Canoo beginning in October 2020.  He resigned from Canoo in April 

2021. 

11. Paul Balciunas resides in Los Angeles, California. Balciunas was the Vice 

President of Corporate Development and CFO of Canoo from July 2020 until he 

resigned in March 2021.   

RELEVANT ENTITIES 

12. Canoo Inc. is a Delaware corporation that designs and produces EVs. Its 

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principal place of business is Torrance, California. Canoo registered its common stock 

with the SEC pursuant to Section 12(b) of the Exchange Act and the Nasdaq Global 

Security Market Company lists the Company’s stock under the ticker “GOEV.” 

13. Canoo’s predecessor, the “SPAC Company” was a Delaware corporation 

and special purpose acquisition company (“SPAC”) that merged with Canoo on 

December 21, 2020, and thereafter ceased to exist independently. Until December 21, 

2020, the SPAC Company filed the SEC filings discussed in this Complaint. After that 

date, Canoo made the relevant SEC filings.  

FACTS 

I. Canoo Background and the SPAC Transaction 

14. Kranz and others founded Canoo as a private company in November 2017 

for the purpose of developing and bringing to market EVs. Initially, three individuals 

(the “Initial Owners”) funded the Company. Beginning in 2019, the Initial Owners 

encouraged Canoo’s management to seek other funding sources, and management 

engaged in several unsuccessful attempts to raise capital. By spring 2020, Canoo’s cash 

on hand was low, and the Company entered into a low cash burn mode for several 

months to preserve operating capital. 

15. In late June 2020, the SPAC Company and Canoo discussed a possible 

deal to raise a substantial amount of capital for Canoo. The two parties signed an NDA 

in early July 2020 and exchanged data and information. On July 17, 2020, the two 

parties signed an exclusive letter of intent for Canoo to merge into the SPAC Company. 

Canoo and the SPAC Company publicly announced the deal on August 18, 2020, 

whereby the Company expected to receive approximately $629 million of gross 

proceeds, with approximately $306 million of this amount coming from SPAC 

Company investors and the remaining approximately $323 million coming from a fully 

committed common stock transaction (a private investment in public equity, or “PIPE”, 

transaction) from institutional investors.  

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16. Canoo completed the SPAC merger on December 21, 2020, and the next 

day began to trade on the Nasdaq Global Select Market under the ticker GOEV. On 

December 22, 2020, Canoo’s common stock price closed at $18.89 a share. 

17.  Canoo’s common stock presently trades for less than a dollar a share. 

II. Canoo’s Engineering Services Pipeline and Projections 

18. Between June and December 2020, Canoo developed a pipeline of 

potential engineering services projects for the company to pursue. The purpose of the 

pipeline was to identify third parties that Canoo could provide engineering services to 

and generate revenue from providing such services.  

19. Beginning in July 2020, Canoo began to project engineering services 

revenue of $120 million in fiscal year 2021 and $250 million in fiscal year 2022. This 

projected engineering services revenue represented 100% of Canoo’s total 2021 

projected revenue and 75% of its total 2022 projected revenue.  

20. Certain internal Canoo documents and communications show that, by July 

2020, Canoo’s revenue projections came almost exclusively from potential engineering 

services partnerships with two third-party companies: a European carmaker and original 

equipment manager (“European Auto OEM”), and a technology-focused company 

(“Tech Strategic”).  

21. Canoo maintained an Excel spreadsheet titled “Canoo Operating Model,” 

which included the Company’s financial forecasts. A version from early July 2020 

included the 2021 $120 million projection—attributing $100 million to the European 

Auto OEM and $20 million to Tech Strategic. It also included 2022 revenue projections 

of $250 million, $230 million of which Canoo attributed to the European Auto OEM 

and Tech Strategic collectively. 

22. Kranz and Balciunas were responsible for Canoo’s engineering services 

“pipeline” of potential projects and associated revenue projections. Kranz was the 

primary contact for several of Canoo’s potential revenue-generating business partners, 

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and his expertise with those relationships (and in the auto industry in general) was key 

to the development of the pipeline. 

23. By mid-August 2020, discussions with the European Auto OEM and Tech 

Strategic indicated that the projects were unlikely to produce revenue in 2021 and 2022. 

The European Auto OEM project (which in the Canoo Operating Model constituted 

$100 million of the 2021 revenue projections and $150 of the 2022 revenue projections) 

hit significant hurdles by July 2020, when the European Auto OEM told Canoo—in an 

email that Kranz and Balciunas received—that the work proposed was too costly and 

would be “barely acceptable” even if costs could be shared with other parties. Between 

July and November 2020, the European Auto OEM continued to reject Canoo’s 

proposals, and in November 2020 told Canoo a project was “unworkable.” Canoo and 

the European Auto OEM never finalized an agreement. 

24. Kranz and Balciunas received notice of these developments in July 2020 

through November 2020 either directly from the European Auto OEM, or in updates 

from a junior Canoo employee.  

25. Also in August 2020, Tech Strategic informed Canoo—in a phone 

conversation with Kranz and email sent to Balciunas—that the potential project would 

be paused because the scope of the required work had expanded, Canoo’s proposal no 

longer made sense, and Tech Strategic was considering other companies to partner with 

to develop EVs. By October 2020, an internal Canoo tracking document showed the 

Tech Strategic project was on “hold.” 

26. In early December 2020, Canoo paused or cancelled negotiations with 

certain potential engineering services customers. Kranz and Balciunas were aware of 

these decisions, having been included in relevant email conversations during early 

December 2020.  

27. Although Canoo was in discussions with other companies about potential 

engineering services projects in late 2020 and early 2021, none of the talks were in 

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advanced stages. Kranz and Balciunas were aware of the status of Canoo’s potential 

engineering services projects during late 2020 and early 2021. 

III. Canoo’s Misstatements Regarding Projected Revenue 

28. During and after the time that Canoo’s discussions with possible 

engineering services customers broke down, which Kranz was directly aware of, Canoo 

made a number of false and misleading statements to investors projecting significant 

revenue for these future periods and emphasizing the revenue-generating potential of its 

engineering services model.  

29. In the initial investor presentation that Canoo furnished to potential and 

eventual investors and the SEC as an attachment to its Form 8-K filed on August 18, 

2020 (the “August Presentation”), Canoo claimed that its engineering services model 

was part of a “multi-phased approach to generate revenue” with the ability to generate 

revenue “today.” Canoo stated that it had a “phased, de-risked go to market strategy 

resulting in immediate revenues” and that engineering services would “generate 

revenue that reduces the Company’s overall execution risk.” 

30. The August Presentation also stated that Canoo had “$120 million of 

projected revenue in 2021” attributable to its engineering services projects. It 

specifically called out—among others—“Delivery Contract Engineering” for the 

“European Auto OEM” and “Contract Engineering & Vehicle Sales” for the “Tech 

Strategic.”  

31. Kranz and Balciunas helped prepare and present the August Presentation.  

32. On September 18, 2020, SPAC Company filed a Form S-4 with the SEC 

(the “Form S-4”) that included information about projected engineering services 

revenue initially calculated in the July 2020 version of Canoo’s Operating Model—

information that Kranz, Balciunas, and others at Canoo provided. The Form S-4 stated 

that Canoo’s current engineering services pipeline of projects was “supportive of a 

projected $120 million of revenue in 2021,” and included a $250 million projection for 

engineering services revenue in 2022.  

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33. The Form S-4 registered 190,000,000 shares of common stock to be sold 

“[a]s soon as practicable after this registration statement becomes effective and on 

completion of the business combination.” 

34. Kranz and Balciunas were involved in preparing the July 2020 Canoo 

Operating Model that included information supporting the Form S-4’s statements about 

Canoo’s engineering services pipeline and revenue projections, knew that the SPAC 

Company was preparing, and ultimately filed, the Form S-4, and knew that the Form S-

4 included statements regarding Canoo’s engineering services pipeline and revenue 

projections.  

35. Similar or identical statements regarding Canoo’s 2021 and 2022 

engineering services revenues appeared in numerous other filings made with the SEC 

and provided to the investing public. These filings include: October 23, 2020 and 

November 25, 2020 amendments to the Form S-4, a September 24, 2020 Analyst Day 

Presentation (attached to a Form 8-K), a December 4, 2020 prospectus, Canoo’s 

January 13, 2021 Form S-1 (the “Form S-1”), and a January 25, 2021 prospectus.   

36. The Form S-1 registered 209,147,314 shares of common stock and 

1,842,106 warrants to be sold “[f]rom time to time after the effective date of [the] 

registration statement.”  

37. Kranz and Balciunas were involved in preparing the July 2020 Canoo 

Operating Model that formed the basis for these SEC filings’ statements about Canoo’s 

engineering services pipeline and revenue projections. Both knew that the SPAC 

Company was preparing and ultimately filed with the SEC statements regarding 

Canoo’s engineering services pipeline and revenue projections.   

38. Canoo did not update its projections in its SEC filings until March 2021, 

when, in preparation for filing its first Form 10-K as a public company, Canoo removed 

the engineering revenue projections from its public filings.  In particular, on March 29, 

2021, Canoo announced that it would “deemphasize the originally stated contract 

engineering services line,” and removed its revenue projections from its public filings. 

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The day after Canoo announced it would not achieve any of the projected engineering 

services revenue, Canoo’s stock price decreased by approximately 21%. 

39. Each of these statements regarding revenue projections was false and 

misleading because, during and while Canoo made these statements, discussions with 

the two primary relationships driving these projections (the European Auto OEM and 

the Tech Strategic) indicated that the projects were unlikely to produce revenue in 2021 

and 2022. 

40. Kranz and Balciunas knew or should have known that the statements were 

false. Given the status of the potential partnerships with the European Auto OEM and 

Tech Strategic at the time Canoo made the statements, it was unreasonable for Kranz 

and Balciunas to cause Canoo to project engineering services revenue of $120 million 

for 2021 and $250 million for 2022. Both Kranz and Balciunas knew or should have 

known that these two potential partnerships formed the basis for Canoo’s 2021 and 

2022 revenue projections, and both Kranz and Balciunas knew or should have known of 

the negative developments with the two potential partnerships that made the revenue 

projections unreasonable.  

41. The statements regarding Canoo’s revenue projections were material to 

investors who would want accurate revenue projections when making investment 

decisions about Canoo.  

IV. Kranz’s Undisclosed Arrangement and Compensation  

42. On November 8, 2019, two of Canoo’s Initial Owners provided Kranz with 

a signed agreement to pay him up to $1 million in exchange for his agreeing to remain 

in his role at Canoo. One of the Initial Owners explained to Kranz, “[w]e will honor our 

words to pay you” so that you “do your best in helping the company to complete the 

SPAC deal.” 

43. Between October 22 and 29, 2020, the two Initial Owners wired Kranz 

$915,048.  

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44. On September 6, 2020, Kranz signed a Directors’ and Executive Officers’ 

Questionnaire (“Questionnaire”) in preparation for the SPAC Company’s filing its 

Form S-4. The Questionnaire represented, among other things that: (1) Kranz did not 

have any contract or other arrangement (whether written or unwritten) relating to his 

employment at Canoo or the SPAC Company; (2) his compensation, cash and non-cash, 

earned with respect to the last fiscal year was $722,771.95; and, (3) his only other 

compensation was the payment of life insurance premiums by Canoo or the SPAC 

Company and $36 from the Employee Assistance Program (his “Other Compensation”). 

45. Kranz did not disclose the arrangement with the Initial Owners or the 

payment from the Initial Owners on the Questionnaire (or through any other means) to 

Canoo or the SPAC Company.  

46. Canoo’s Form S-4 and October 23 and November 25, 2020 amendments, 

December 4, 2020 prospectus, Form S-1, and April 29, 2021 proxy filing listed Kranz’ 

compensation as $722,771.95 and also listed the Other Compensation. 

47. The statements about Kranz’s compensation were false and misleading. 

Those filings did not disclose Kranz’s arrangement with Canoo’s two Initial Owners, 

and, after the payments were received in October 2020, also did not disclose the 

payments totaling $915,048. 

48. Kranz should have known that the statements about his executive 

compensation in Canoo’s SEC filings were false and misleading. Kranz knew about his 

arrangement with and payments from two of the Initial Owners and should have known 

that Canoo would use the information about his compensation, including the 

information requested in the Questionnaire, in its SEC filings. Kranz acted 

unreasonably by not providing Canoo with the required information about the 

arrangement and payments.   

49. Item 402 of Regulation S-K requires that public companies disclose certain 

compensation information for named executive officers. Section (a)(2) provides:  

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All compensation covered. This Item requires clear, concise and 
understandable disclosure of all plan and non-plan compensation awarded 
to, earned by, or paid to the named executive officers … by any person for 
all services rendered in all capacities to the registrant and its subsidiaries, 
unless otherwise specifically excluded from disclosure in this Item. 
 

The disclosure requirements of Regulation S-K apply to registration statements under 

the Securities Act and Exchange Act, annual and other reports, and “any other 

documents required to be filed under the Exchange Act, to the extent provide in the 

forms and rules under that Act.” 

50. Canoo was required to disclose complete and accurate information 

regarding Kranz’ executive compensation pursuant to Item 402 of Regulation S-K and 

such information was material to investors who were making investment decisions 

about Canoo. Reasonable investors would want to receive accurate information about a 

CEO’s arrangements and payments related to the CEO’s employment at a public 

company.  

V. Kranz Engaged in a “Practice or Course of Business” that Defrauded 
Investors. 

51. Kranz engaged in a practice or course of business that defrauded investors 

in connection with Canoo’s false and misleading statements regarding its projected 

revenues and Kranz’s compensation. 

52. Kranz also engaged in conduct that operated as a fraud upon investors 

when he failed to inform the SPAC Company that information in the Form S-4 was no 

longer accurate. 

53. Pursuant to Section 7.01(d) of the merger agreement between Canoo and 

the SPAC Company, Canoo was required to “promptly inform [SPAC Company]” of 

any material fact included in the Form S-4 that was no longer accurate. 

54. Kranz, on behalf of pre-merger Canoo, signed the merger agreement. 

55. Kranz did not communicate the negative engineering services updates—

notably, the developments involving the European Auto OEM and the Tech Strategic—

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or their negative impact on Canoo’s projected 2021 and 2022 engineering services 

revenue to SPAC Company. 

56. Kranz’s also did not disclose the arrangement with the Initial Owners or 

the payment from the Initial Owners on the Questionnaire or, through any other means. 

57. Kranz was negligent in taking these actions. 

VI. Kranz and Balciunas Violated Section 14(a) of the Exchange Act and 
Rule 14a-3 Thereunder; Kranz Also Violated Rule 14a-9. 

58. Section 14(a) of the Exchange Act and its related rules govern disclosure in 

materials used to solicit shareholders’ votes in annual or special meetings held for the 

election of directors and the approval of other corporate action. Exchange Act Rule 14a-

3 requires that each person solicited through a proxy solicitation must be provided with 

certain statements and information. Exchange Act Rule 14a-9 prohibits the solicitation 

of proxies by false or misleading statements. 

59. Kranz violated Section 14(a) and each of these rules in connection with 

Canoo’s false and misleading statements regarding projected revenues in 2021 and 

2022, identified above, and Canoo’s false and misleading statements regarding his 

compensation, also identified above.   

60. As detailed above, Kranz’s actions violating these provisions include: 

being involved in preparing the materials that supported false and misleading statements 

in the SEC filings regarding Canoo’s engineering services pipeline and revenue 

projections, preparing and presenting the August Presentation, and not disclosing, on 

the Questionnaire or otherwise, the arrangement with the Initial Owners or the payment 

from the Initial Owners. 

61. Kranz was negligent in taking these actions. 

62. As a result of his actions, Canoo made statements, identified above, in 

materials used to solicit shareholders’ votes in annual or special meetings held for the 

election of directors and the approval of other corporate action that failed to furnish the 

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information required by Rule 14a-3 and that were false and misleading, in violation of 

Rule 14a-9. 

63. Balciunas violated Section 14(a) and Rules 14a-3 in connection with 

Canoo’s false and misleading statements regarding projected revenues in 2021 and 

2022, identified above.   

64. As detailed above, Balciunas’s actions violating these provisions include: 

helping prepare the materials that supported false and misleading statements in the SEC 

filings regarding Canoo’s engineering services pipeline and revenue projections and 

preparing and presenting the August Presentation. 

65. Balciunas was negligent in taking these actions. 

66. As a result of his actions, Canoo made statements, identified above, in 

materials used to solicit shareholders’ votes in annual or special meetings held for the 

election of directors and the approval of other corporate action that failed to furnish the 

information required by Rule 14a-3. 

VII. Kranz and Balciunas Aided and Abetted Canoo’s Violations of Section 
13(a) of the Exchange Act and Rule 13a-11 Thereunder; Kranz Also 
Aided and Abetted Canoo’s Violations of Rules 12b-20 and 13a-1. 

67. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-11 thereunder 

require the periodic reporting of information by companies with publicly traded 

securities, such as Canoo. Public companies must file periodic reports with the SEC, 

including annual reports (pursuant to Rule 13a-1) and current reports including Forms 

8-K (pursuant to Rule 13a-11). Those reports must be factually accurate and not omit 

information that would otherwise make the information in the reports not misleading. 

Additionally, Exchange Act Rule 12b-20 provides that, in addition to the information 

expressly required to be included in a report, the company shall add such further 

material information as may be necessary to make the required statements, in light of 

the circumstances under which they are made, not misleading. 

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68. As alleged above, Canoo made multiple statements in annual and current 

reports that were false and misleading. 

69. For the reasons detailed above, Kranz assisted Canoo’s false and 

misleading statements in current reports regarding projected revenues in 2021 and 2022, 

and Canoo’s false and misleading statements in Canoo’s 2021 annual report regarding 

his compensation. Among other things, Kranz helped prepare the July 2020 Canoo 

Operating Model that formed the basis for the false and misleading statements in the 

SEC filings regarding Canoo’s engineering services pipeline and revenue projections 

and did not disclose, on the Questionnaire or otherwise, the arrangement with the Initial 

Owners or the payment from the Initial Owners on the Questionnaire. 

70. For the reasons detailed above, Balciunas assisted Canoo’s false and 

misleading statements in current reports regarding projected revenues in 2021 and 2022. 

Among other things, Balciunas helped prepare the July 2020 Canoo Operating Model 

that formed the basis for the false and misleading statements in the SEC filings 

regarding Canoo’s engineering services pipeline and revenue projections. 

VIII. Balciunas Obtained Ill-Gotten Gains.  

71. Balciunas received a bonus of $7,500 in connection with the completion of 

the merger between Canoo and the SPAC Company, which occurred on December 21, 

2020.  

CLAIMS FOR RELIEF 

FIRST CLAIM 

Violations of Section 17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(3)] 

(Kranz) 

72. The SEC re-alleges and incorporates by reference paragraphs 1 through 71 

as though fully set forth herein. 

73. Kranz has, by engaging in the conduct set forth above, directly or 

indirectly, in the offer or sale of securities, by use of means or instrumentalities of 

interstate commerce or of the mails, engaged in transactions, practices, or courses of 

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business which operated or would operate as a fraud or deceit upon purchasers of 

securities. 

74. By reason of the foregoing, Kranz violated, and, unless restrained and 

enjoined, will continue to violate, Section 17(a)(3) of the Securities Act. 

SECOND CLAIM 

Violations of Section 14(a) of the Exchange Act and Rules 14a-3 and 14a-9 
Thereunder [15 U.S.C. § 78n(a) and 17 C.F.R. §§ 240.14a-3, 240.14a-9] 

(Kranz) 

75. The SEC re-alleges and incorporates by reference paragraphs 1 through 71 

as though fully set forth herein. 

76. As a result of the conduct alleged herein, Kranz directly or indirectly, by 

use of mails, or the means or instrumentalities of interstate commerce or any facility of 

a national securities exchange, solicited proxies without furnishing each person solicited 

a proxy statement containing the information specified by the proxy rules, and used 

proxy statements containing statements which, at the time and in light of the 

circumstances under which they are made, were false or misleading with respect to a 

material fact, or omitted to state material facts necessary to make the statement therein 

not misleading or necessary to correct any statement in any earlier communication with 

respect to the solicitation of a proxy for the same meeting or subject matter which has 

become false or misleading. 

77. By reason of the foregoing, Kranz violated and, unless restrained and 

enjoined, will again violate Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)] and 

Rules 14a-3 and 14a-9 thereunder [17 C.F.R. §§ 240.14a-3, 240.14a-9]. 

THIRD CLAIM 

Violations of Section 14(a) of the Exchange Act and Rule 14a-3 Thereunder 
[15 U.S.C. § 78n(a) and 17 C.F.R. §§ 240.14a-3]  

(Balciunas) 

78. The SEC realleges and incorporates by reference paragraphs 1 through 71 

as through fully set forth herein. 

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79. As a result of the conduct alleged herein, Balciunas, directly or indirectly, 

by use of mails, or the means or instrumentalities of interstate commerce or any facility 

of a national securities exchange, solicited proxies without furnishing each person 

solicited a proxy statement containing the information specified by the proxy rules.  

80. By reason of the foregoing, Balciunas violated and, unless restrained and 

enjoined, will again violate Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)] and 

Rule 14a-3 thereunder [17 C.F.R. § 240.14a-3]. 

FOURTH CLAIM 

Aiding and Abetting Canoo’s Violations of Section 13(a) of the Exchange Act and 
Rules 12b-20, 13a-1, and 13a-11 Thereunder [15 U.S.C. § 78m(a) and 17 C.F.R. §§ 

240.12b-20, 240.13a-1, and 240.13a-11] 
(Kranz) 

81. The SEC realleges and incorporates by reference paragraphs 1 through 71 

as though fully set forth herein. 

82. Canoo, which is an issuer of securities registered pursuant to Section 12 of 

the Exchange Act, filed materially false and misleading annual and current reports with 

the SEC in violation of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 

13a-11 thereunder.  

83. As a result of the conduct alleged herein, Kranz aided and abetted Canoo’s 

violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11 

thereunder by knowingly or recklessly providing substantial assistance to Canoo.  

84. By reason of the foregoing, Kranz, directly or indirectly, aided and abetted 

and, unless restrained and enjoined, will again aid and abet violations of Section 13(a) 

of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1, and 13a-11 

thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-11].  

 

 

 

 

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FIFTH CLAIM 

Aiding and Abetting Canoo’s Violations of Section 13(a) of the Exchange Act and 
Rule 13a-11 Thereunder [15 U.S.C. § 78m(a) and 17 C.F.R. § 240.13a-11] 

(Balciunas) 

85. The SEC realleges and incorporates by reference paragraphs 1 through 71 

as though fully set forth herein. 

86. Canoo, which is an issuer of securities registered pursuant to Section 12 of 

the Exchange Act, filed materially false and misleading annual and current reports with 

the SEC in in violation of Section 13(a) of the Exchange Act and Rule and 13a-11 

thereunder.  

87. As a result of the conduct alleged herein, Balciunas aided and abetted 

Canoo’s violations of Section 13(a) of the Exchange Act and Rule 13a-11 thereunder by 

knowingly or recklessly providing substantial assistance to Canoo.  

88. By reason of the foregoing, Balciunas, directly or indirectly, aided and 

abetted and, unless restrained and enjoined, will again aid and abet violations of Section 

13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rule 13a-11 thereunder [17 C.F.R. 

§ 240.13a-11].  

RELIEF SOUGHT 

WHEREFORE, the SEC respectfully requests that this Court: 

I. 

Find that the Defendants committed the violations alleged in this Complaint; 

II. 

Enter an injunction, in a form consistent with Rule 65 of the Federal Rules of 

Civil Procedure, permanently restraining and enjoining each of the Defendants from 

violating, directly or indirectly, the laws and rules they are alleged to have violated in 

this Complaint;  

III. 

Pursuant to Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. 

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§§ 78u(d)(5) and 78u(d)(7)], order Defendant Balciunas to disgorge all ill-gotten gains, 

together with pre-judgment interest, derived from the activities set forth in this 

Complaint; 

IV. 

Order Kranz to pay civil money penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and both Defendants to pay civil money penalties 

pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and 

V. 

Issue an order, pursuant to the Court’s equitable powers, barring Defendants from 

acting as officers or directors of any issuer that has a class of securities registered 

pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file 

reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)].  

VI. 

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

JURY DEMAND 

 The SEC demands a trial by jury on all claims so triable.  

 

Respectfully submitted, August 4, 2023.   
 

 
_s/ Charles E. Canter    
Charles Canter 
Local Counsel 
 
 
Christopher E. Martin 

 
 

Attorneys for Plaintiff  
Securities and Exchange Commission 

        
 
 

 

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