SEC v. Brian H. Casutto; Matthew J. Zucco; and Kevin R. Harris, No. 2:23-cv-05104, Central District of California (June 28, 2023) — Complaint

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ZACHARY T. CARLYLE (pro hac vice forthcoming)
[email protected]
SHARAN E. LIEBERMAN (pro hac vice forthcoming)
[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:
DANIEL BLAU (Cal. Bar No. 305008)
[email protected]
SECURITIES AND EXCHANGE COMMISSION
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone:   (323) 965-3306
Facsimile:    (213) 443-1904
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
B
RIAN H. CASUTTO, MATTHEW J.
ZUCCO, AND KEVIN R. HARRIS,
CPA,
Defendants.
Case No. 2:23-cv-05104
COMPLAINT AND JURY DEMAND
P
laintiff United States Securities and Exchange Commission (the “SEC”), for
its Complaint against Defendants Brian H. Casutto, Matthew J. Zucco, and Kevin R.

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Harris, CPA (collectively, the “Defendants”), alleges as follows:
JURISDICTION AND VENUE
1. The Court has jurisdiction over this action pursuant to Sections 20(b),
20(d), 20(e), and 22(a) of the Securities Act of 1933 (“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
Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u(d), 78u(e), and
78aa(a)].
2. Defendants, directly or indirectly, made use of the means or
instrumentalities of interstate commerce, or of the mails, or of the facilities of a
national securities exchange in connection with the acts, practices, transactions, 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 of the Exchange Act [15 U.S.C. §78aa]. During
the majority of the time period relevant to this Complaint, MusclePharm, Corp.
(“MusclePharm”) was headquartered in Burbank, California, and certain of the acts,
practices, transactions, and courses of business alleged in the Complaint occurred
within this District. Additionally, Harris is a resident of Los Angeles, California,  and
Zucco is a resident of Sherman Oaks, California. Although Casutto is a resident of Ft.
Lauderdale, Florida, he regularly traveled to and did business in Burbank, California
while employed by MusclePharm.
SUMMARY
4. Beginning in 2017, the Defendants engaged in a variety of improper
conduct that materially inflated the reported quarterly revenues and gross profits of
MusclePharm, a publicly-traded nutritional supplement company, by as much as 25
percent and 49 percent, respectively. As a result, in March 2019, MusclePharm
announced that its previously reported financial statements should no longer be relied
upon and in August 2020, MusclePharm restated its financial statements for 2017 and
the first three quarters of 2018 (the “Restatement Period”).

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5. First, MusclePharm prematurely recognized $9.2 million in revenue
during the Restatement Period by booking sales at quarter end even though it did not
ship the “sold” product to customers but instead placed the product in storage trailers
and third-party warehouses at the company’s expense. Casutto, MusclePharm’s
Executive Vice President for Sales and Operations, directed and condoned this
practice, and Zucco, MusclePharm’s Vice President for Sales, implemented the
logistics necessary to carry out Casutto’s directives. Harris, MusclePharm’s contract
CFO, on several occasions failed to correct the accounting for these transactions
when he received information that should have suggested that revenue had been
recognized prematurely for certain orders.
6. Second, MusclePharm prematurely recognized $12.8 million in revenue
during the Restatement Period by recognizing revenue at the time of shipment and
before delivery despite MusclePharm’s most significant customer contracts requiring
delivery before revenue could be recognized, as Harris should have known.
7. Third, MusclePharm overstated revenues during the Restatement Period
by $15.5 million by classifying credits that MusclePharm granted to certain
customers, which allowed the customers to pay a reduced price for MusclePharm
products based on the customers’ marketing of the products, as expenses rather than
reductions to revenue. As Harris should have known, generally accepted accounting
principles (“GAAP”) require such credits to be accounted for as reductions to
revenue.
8. MusclePharm’s improper revenue recognition resulted in material
misstatements to its financial statements, which Harris participated in preparing and
were publically disclosed in the company’s 2017 Form 10-K and 2018 Forms 10-Q,
as well as in the related earnings releases filed on Form 8-K and earnings calls for
those periods.
9. Harris also participated in preparing SEC filings and participated in
earnings calls that included false or misleading information regarding MusclePharm’s

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revenue recognition practices and promotional expense trends.
10. Additionally, Harris and Casutto failed to ensure that all 2017 executive
perquisites were properly disclosed in the company’s 2017 Form 10-K and proxy
statement filed October 26, 2018.
11. By engaging in this conduct, the Defendants are liable as follows, and
unless enjoined, are likely to continue to violate the federal securities laws:
a.   Casutto violated Sections 17(a)(1) and 17(a)(3) of the Securities
Act [15 U.S.C. §§ 77q(a)(1) and 77q(a)(3)], Sections 10(b),
13(b)(5), and 14(a) of the Exchange Act [15 U.S.C. §§ 78j(b),
78m(b)(5), and 78n(a)], and Rules 10b-5(a), 10b-5(c), 13b2-1,
14a-3, and 14a-9 thereunder [17 C.F.R. §§ 240.10b-5(a), 240.10b-
5(c), 240.13b2-1, 240.14a-3, and 240.14a-9], and aided and
abetted MusclePharm’s violations of Section 17(a)(2) of the
Securities Act [15 U.S.C. §§ 77q(a)(2)], Sections 10(b), 13(a) and
13(b)(2)(A) of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(a) and
78m(b)(2)(A)], and Rules 10b-5(b), 12b-20, 13a-1,   13a-11, and
13a-13 thereunder [17 C.F.R. §§ 240.10b-5(b), 240.12b-20,
240.13a-1, 240.13a-11, and 240.13a-13];
b. Zucco violated Section 13(b)(5) of the Exchange Act [15 U.S.C. §
78m(b)(5)] and Rule 13b2-1 thereunder [17 C.F.R. § 240.13b2-1],
and aided and abetted MusclePharm’s violations of Section 17(a)
of the Securities Act [15 U.S.C. §§ 77q(a)], Sections 10(b), 13(a),
and 13(b)(2)(A) of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(a)
and 78m(b)(2)(A)], and Rules 10b-5, 12b-20, 13a-1, 13a-11, and
13a-13 thereunder [17 C.F.R. §§ 240.10b-5(a)-(c), 240.12b-20,
240.13a-1, 240.13a-11, and 240.13a-13]; and
c.   Harris violated Sections 17(a)(2) and 17(a)(3) of the Securities
Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)], Section 14(a) of the

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Exchange Act [15 U.S.C. § 78n(a)], and Rules 13b2-1, 14a-3, and
14a-9 thereunder [17 C.F.R. §§ 240.13b2-1, 240.14a-3, and
240.14a-9], and aided and abetted MusclePharm’s violations of
Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act
[15 U.S.C. §§ 78m(a), 78m(b)(2)(A), and 78m(b)(2)(B)],  and
Rules 12b-20, 13a-1, 13a-11, 13a-13, and 13a-15(a) thereunder
[17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11, 240.13a-13,
and 240.13a-15(a)].
DEFENDANTS
12. Brian H. Casutto, 52, resides in Ft. Lauderdale, Florida. Casutto joined
MusclePharm in June 2014 and was promoted to Executive Vice President of Sales
and Operations in July 2015. He was also appointed to MusclePharm’s board of
directors in July 2017. In May 2020, Casutto resigned from the company.
13. Matthew J. Zucco, 32, resides in Sherman Oaks, California. Zucco
joined MusclePharm in August 2013 and served in various sales and business analyst
positions before being promoted to Vice President of Sales in October 2017. In June
2019, Zucco left the company.
14. Kevin R. Harris, CPA, 54, resides in Los Angeles, California. Harris
joined MusclePharm as its contract CFO in November 2017 and continued in that
capacity through March 2020. Harris previously worked in finance at various
companies, including public companies in the entertainment and technology sectors.
Harris is a CPA licensed in California since 1995. His license has been inactive since
approximately 1997.
OTHER RELEVANT ENTITY
15. MusclePharm Corp., is a Nevada corporation that develops, markets,
and distributes branded nutritional supplements. Its current principal place of
business is in Las Vegas, Nevada, but it was headquartered in Burbank, California
throughout the Restatement Period. MusclePharm’s securities are registered pursuant

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to Section 12(g) of the Exchange Act and trade on OTC Link, operated by OTC
Markets Group Inc., under the symbol “MSLP” or “MSLPQ.” In 2015, MusclePharm
settled claims by the SEC for violations of Sections 5(a), 5(c), 17(a)(2), and 17(a)(3)
of the Securities Act;  Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the
Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13, and 14a-9 thereunder;  and
Rule 302 of Regulation S-T of the Exchange Act (the “2015 SEC Order”).
MusclePharm filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy
Court for the District of Nevada on December 15, 2022.
FACTS
I. BACKGROUND AND FINANCIAL RESTATEMENT.
16. In August 2015, MusclePharm announced a restructuring plan focused
on reducing costs and reallocating the company’s resources for profitable growth. In
its Form 10-K filed on April 2, 2018, MusclePharm announced that this restructuring
plan was substantially complete.
17. During the earnings call for the fourth quarter of 2017, MusclePharm’s
Chief Executive Officer (“CEO”) highlighted the completion of the restructuring
program and proclaimed that the company was now on a path to consistent profitable
growth.
18. In order to achieve consistent growth, the CEO pushed MusclePharm’s
sales team, including Casutto and Zucco, to meet unrealistic quarterly sales targets,
and threatened to, and did, fire employees who challenged him or failed to achieve
the targets.
19. In this environment, MusclePharm reported quarter over quarter revenue
growth from the fourth quarter of 2017 through the third quarter of 2018. The CEO
highlighted this achievement in each of the Company’s press releases and earnings
calls during that period.
20. During its 2018 audit work, the company’s external auditor detected that
MusclePharm had recognized revenue at the end of the fourth quarter of 2018 that it

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should have recorded in later periods because certain inventory had been temporarily
stored off-site in trailers rather than being shipped to MusclePharm’s customers prior
to year-end.
21. The company opened an internal investigation to identify the scope and
cause of the errors. The internal investigation uncovered similar errors with
unshipped orders impacting the third quarter of 2018, and the company filed a Form
8-K on March 14, 2019, announcing that its previously reported financial statements
for the three and nine months ended September 30, 2018, should no longer be relied
upon. In April 2019, the company announced on Form NT 10-K that it would be
unable to timely file its 2018 annual report, and in May 2019, the company’s external
auditor resigned without completing the 2018 audit work.
22. More than a year later, on August 25, 2020, MusclePharm filed a Form
10-K that restated its financial statements for year-end 2017 and the first three
quarters of 2018 and included the overdue financial statements for 2018 and 2019.
23. The restatement disclosed that, during the Restatement Period,
MusclePharm inflated its previously reported quarterly revenues by 9 to 25 percent,
overstated its gross margins by 22 to 49 percent, understated its customer credits by
23 to 38 percent, understated its inventory by 23 to 34 percent, and overstated its
advertising and promotional expenses by 284 to 594 percent.
24. MusclePharm’s financial misstatements were primarily caused by three
areas of misconduct by the Defendants: (i) Casutto, with Zucco’s assistance, caused
MusclePharm to prematurely recognize revenue for orders prior to shipment and
Harris failed to correct the accounting; (ii) Harris should have known that the
company was prematurely recognizing revenue for shipped orders that had not yet
been delivered to and accepted by the customer, as required by the customer
agreements; and (iii) Harris should have known that the company was misclassifying
customer credits as expenses rather than as reductions to revenue.

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II. MUSCLEPHARM, THROUGH CONDUCT OF THE DEFENDANTS,
IMPROPERLY RECOGNIZED REVENUE.
25. The date MusclePharm shipped an order to a MusclePharm customer,
and the specific shipping terms of the contract with that customer, had a significant
impact on when MusclePharm could properly recognize revenue from an order.
Under the relevant GAAP, revenue may be recognized when risk of loss or control
has transferred from a seller to a buyer. Depending on the terms of the sale, risk of
loss and control may transfer upon shipment from the seller to the buyer (“FOB
shipping point”) or upon delivery and acceptance by the buyer (“FOB destination”).
26. During the Restatement Period, MusclePharm’s automated accounting
system recognized revenue when an order was marked as shipped in the inventory
system. MusclePharm’s accounting system assumed that all orders had FOB shipping
point terms and that when an order was marked as shipped in the system, the order
had in fact been shipped from MusclePharm to the customer.
27. Defendants were all aware and understood that marking an order as
shipped in the inventory system would trigger the system to recognize the sale. For
example, if an order was marked as shipped on December 31, 2017, MusclePharm’s
accounting system would recognize revenue in the fourth quarter of 2017. If the order
was marked as shipped on the following day, January 1, 2018, the MusclePharm
accounting system would recognize the revenue in the first quarter of 2018.
28. In order to achieve the CEO’s quarterly sales targets and report
consistent sales growth, Casutto directed and condoned the practice of marking orders
as shipped in the inventory system at the end of a quarter when he knew that those
orders had not been shipped from MusclePharm to customers. The orders were, in
fact, held in storage trailers and warehouses at the company’s expense and would not
be shipped to customers until a future quarter.
29. Zucco implemented the logistics necessary to carry out Casutto’s
directive to achieve the CEO’s quarterly revenue targets.

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30. On multiple occasions specified below, Harris failed to ensure that
MusclePharm accounted for certain transactions in accordance with GAAP despite
receiving information that should have suggested that revenue had been recognized
prematurely.
31. The practice of marking orders as shipped prior to shipment to a
customer resulted in MusclePharm prematurely recognizing revenue totaling $9.2
million during the Restatement Period for orders that were (i) held in storage trailers,
(ii) moved to third-party warehouses, and (iii) left in MusclePharm’s own warehouse.
The practice also resulted in an additional $2.5 million in prematurely recognized
revenue recorded in MusclePharm’s books and records in the fourth quarter of 2018,
although this revenue was not publicly reported because MusclePharm’s financial
statements for this quarter were delayed by the auditors’ discovery of the errors with
unshipped orders described above.
A. Unshipped Orders Held in Storage Trailers.
32. On December 30, 2017, Casutto directed Zucco to ship orders before
certain customers wanted the product in order to meet the CEO’s revenue target, even
though “shipping” meant placing the orders in trailers. Specifically, Casutto texted
Zucco: “[G]et those orders in a trailer [and] park it in the lot for all I care. Every
$100k helps [MusclePharm’s CEO] to get a funding deal done. Go time.”
33. Zucco carried out Casutto’s directive. On the last day of 2017, Zucco
instructed warehouse personnel to load orders representing approximately $210,000
in sales onto storage trailers, and to mark those orders as shipped in the inventory
system, which triggered revenue recognition in the fourth quarter of 2017. The orders
were left in the storage trailers in the warehouse parking lot at the end of the quarter.
In early 2018, the orders were reloaded onto shipping trucks and sent to customers.
34. This conduct resulted in MusclePharm prematurely recognizing revenue
of approximately $210,000 in the fourth quarter of 2017.
35. Based on Casutto’s direction to engage in this practice in the fourth

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quarter of 2017, Zucco, with Casutto’s approval, continued to apply this practice to
other transactions.
36. For example, in the second and third quarters of 2018, Zucco directed
warehouse personnel to put orders for a major online retailer (“Customer A”) in
storage trailers parked in the warehouse parking lot at quarter end that he knew, based
on emails from Customer A’s shipping carrier, would not be picked up until after the
end of the quarters. MusclePharm marked the orders as shipped and recognized
revenue at the time orders were placed in storage trailers, rather than when the orders
were shipped to the customer.
37. Casutto was aware of and condoned the practice of marking Customer
A’s orders as shipped as soon as they were placed in storage trailers. Text messages
between Zucco and Casutto confirm that they had spoken about similar conduct with
the same customer in a prior quarter, with Zucco writing on March 31, 2018:
“confirming we have drop trail[er]s ready just in case the 4 trucks show up late” and
“as long as i[t] gets out the warehouse door and the truck leaves before the auditors
get there lol.” Ultimately the trailers were not needed in the first quarter of 2018
because Customer A’s carriers arrived before quarter-end.
38. This conduct resulted in MusclePharm prematurely recognizing revenue
of approximately $1 million in the second quarter of 2018 and $110,000 in the third
quarter of 2018.
39. Additionally, in the fourth quarter of 2018, Zucco told warehouse
personnel to rent, at MusclePharm’s expense, eleven 53-foot storage trailers and load
them in the final days of 2018 with orders from multiple customers totaling
approximately $2.5 million that customers did not want shipped until 2019.
40. Casutto directed Zucco to place orders on trailers to prematurely
recognize revenue in the fourth quarter of 2018 and was aware of and condoned the
continuation of this practice in order to achieve the CEO’s revenue target.

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41. After the products were loaded onto storage trailers, the orders were
marked as shipped in the inventory system to trigger revenue recognition in the fourth
quarter of 2018, and the warehouse manager moved the trailers to an off-site parking
lot. MusclePharm’s external auditor then conducted its annual inventory observation
and testing, but the auditor was not told about the off-site inventory.
42. After the auditor’s inventory testing, the products were returned to the
MusclePharm warehouse, reloaded onto shipping trucks, and shipped to customers in
January 2019.
43. Initially, warehouse personnel uploaded bills of lading (“BOLs”)
showing the accurate January 2019 shipment dates into MusclePharm’s accounting
system.
44. At the direction of Casutto and Harris, Zucco instructed the warehouse
and IT personnel to alter the BOLs in the accounting system by deleting BOLs with
January 2019 shipment dates and replacing them with BOLs showing December 2018
shipment dates.
45. The December 2018 BOLs, on their face, contain red flags indicating
that they were falsified.
46. In a February 2019 email, Harris stated that there was “some confusion
with providing accurate shipping/supporting documents” but that he was “assured by
Ops [Casutto and Zucco] that everything shipped on or before 12/31[/2018].”
47. Any reliance by Harris on assurances from Zucco and Casutto that the
product shipped in 2018, without any further investigation, was unreasonable. Had
Harris contacted any of the customers, he would have discovered the accurate
January 2019 shipment dates.
48. This conduct resulted in MusclePharm prematurely recognizing revenue
of approximately $2.5 million in its books and records for the fourth quarter 2018.
49. MusclePharm’s external auditors identified these errors with unshipped
orders for the fourth quarter of 2018 during their audit work for 2018, prior to

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MusclePharm reporting its 2018 financial results to the public. MusclePharm delayed
its release of its fourth quarter of 2018 financial statements and, in August 2020,
restated financial statements of earlier periods and reported its 2018 financial results,
which did not include this $2.5 million in revenue.
50. In light of the facts above, Casutto knew or was reckless in not knowing,
and should have known, that his conduct in marking orders held in storage trailers as
shipped during the Restatement Period and in the fourth quarter of 2018 was
improper, fraudulent, and deceptive.
51. In light of the facts above, Zucco knew or was reckless in not knowing,
and should have known, that MusclePharm was engaged in the improper, fraudulent,
or deceitful practice of recognizing revenue for orders held in storage trailers during
the Restatement Period and in the fourth quarter of 2018, and he provided substantial
assistance to that conduct.
52. In light of the facts above and his education, experience, and job
responsibilities, Harris should have known that revenue for the fourth quarter of 2018
transactions was not recorded in accordance with GAAP after becoming aware of
BOLs that indicated that shipping did not occur until 2019.
B. Unshipped Orders Moved to Third Party Warehouses.
53. MusclePharm had a practice of recognizing revenue on sales to a
customer in Mexico (“Customer B”) as soon as the products were shipped to a
holding warehouse paid for by MusclePharm, despite the fact that the products
remained in that holding warehouse for weeks or months before Customer B
requested the product be shipped.
54. In March 2017, the then-CFO correctly instructed Casutto that, because
MusclePharm retained title to the products in the warehouse, MusclePharm should
not recognize the revenue, and he directed Casutto via email to cease the practice.
55.  That CFO left the company shortly thereafter and, through at least the
third quarter of 2018, Casutto continued the practice of MusclePharm recognizing

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revenue for orders for Customer B that were sitting in a holding warehouse.
56. This practice resulted in MusclePharm prematurely recognizing revenue
for Customer B orders totaling approximately $188,000 in the fourth quarter of 2017,
$213,000 in the first quarter of 2018, $429,000 in the second quarter of 2018, and
$425,000 in the third quarter of 2018.
57. Harris received emails that should have alerted him to this practice no
later than August 2018 (before the second quarter 2018 Form 10-Q was filed). The
improper practice continued and Harris took no steps to correct the accounting until
April 2019, after the internal investigation and restatement process began.
58. In the second of quarter of 2018, MusclePharm prematurely recognized
revenue totaling approximately $472,000 for orders that Zucco instructed the
warehouse in an email to ship to a holding warehouse paid for by MusclePharm in
June 2018 for delivery to another customer (“Customer C”)   in August 2018.
59. And in the third quarter of 2018, MusclePharm prematurely recognized
revenue totaling approximately $4.7 million for orders stored in third-party
warehouses paid for by MusclePharm in September 2018 for delivery to another
customer (“Customer D”)   in October 2018. Casutto was responsible for managing
Customer D’s account. At Casutto’s direction, Zucco sent an email directing
warehouse personnel to store the orders for Customer D in a holding warehouse.
60. In light of the facts above, Casutto knew or was reckless in not knowing,
and should have known, that his conduct in marking orders moved to third party
warehouses as shipped during the Restatement Period was improper, fraudulent, and
deceptive.
61. In light of the facts above, Zucco knew or was reckless in not knowing,
and should have known, that MusclePharm was engaged in the improper, fraudulent,
and deceitful practice of recognizing revenue for orders held in third party
warehouses paid for by MusclePharm during the Restatement Period, and he provided
substantial assistance to that conduct.

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62. In light of the facts above and his education, experience, and job
responsibilities, Harris should have known that MusclePharm’s revenue recognition
for Customer B transactions did not comply with GAAP, after he received
information that should have suggested that MusclePharm prematurely recognized
revenue for Customer B’s orders.
C. Unshipped Orders Left in MusclePharm’s Warehouse.
63. At Casutto’s insistence and with Harris’s approval, MusclePharm
improperly recognized $632,000 of revenue in the fourth quarter of 2017 for a sale to
MusclePharm’s Canadian distributor (“Customer E”).
64. Recognizing the revenue in that quarter was improper because, as
Casutto knew or was reckless in not knowing, and should have known, there was no
formal purchase order; the sale was contingent on certain future events; and all the
products remained in a Canadian warehouse, which was paid for by MusclePharm, at
the end of 2017 (where much of it remained for more than six months). Harris was
aware that the products remained in the warehouse at the end of 2017 and approved
the revenue recognition for the sale to Customer E in the fourth quarter of 2017
without proper support.
65. This conduct resulted in MusclePharm prematurely recognizing revenue
of approximately $632,000 in the fourth quarter of 2017.
66. In light of the facts above, Casutto knew or was reckless in not knowing,
and should have known, that his conduct that caused MusclePharm to recognize
revenue for Customer E’s order in the fourth quarter of 2017 was improper,
fraudulent, and deceptive.
67. In light of the facts above and his education, experience, and job
responsibilities, Harris should have known that his conduct in approving revenue
recognition for Customer E’s order in the fourth quarter of 2017 caused MusclePharm
to improperly recognize revenue.

COMPLAINT
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D. Revenue Recognition Contrary to Customer Shipping Terms.
68. During the Restatement Period, MusclePharm’s practice was to
recognize revenue for all orders when an order was marked as shipped in the
inventory system (i.e., FOB shipping point). Harris should have known that
MusclePharm’s most significant customers had contracts with MusclePharm that
included shipping terms that required delivery and acceptance before title and risk of
loss passed (i.e., FOB destination), meaning that revenue could not be recognized
until delivery and acceptance by the customer. Yet Harris continued to allow
MusclePharm to recognize all revenue at FOB shipping point, meaning at the
moment the product was shipped to the customer.
69. As a result, MusclePharm prematurely recognized revenue at the end of
each quarter, totaling approximately $3.3 million in the fourth quarter of 2017, $3
million in the first quarter of 2018, $3.5 million in the second quarter of 2018, and $3
million in the third quarter of 2018.
70. In light of the facts above and his education, experience, and job
responsibilities, Harris should have known that his failure to ensure that
MusclePharm’s revenue recognition practices aligned with the terms of its customer
contracts caused MusclePharm to improperly recognize revenue.
E. Customer Credit Classification.
71. GAAP requires that payments or discounts given to a customer,
including a reduction in the amount the customer pays for a product based on
advertising or marketing for the product provided by the customer (“customer
credits”), be accounted for as a reduction in revenue, unless certain conditions are
satisfied. If an issuer improperly accounts for customer credits as expenses, rather
than as reductions to revenue as required by GAAP, it overstates its revenue.
72. In 2012, MusclePharm filed a restatement, in part, to correct its
accounting for customer credits that had been misclassified as advertising expenses,

COMPLAINT
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instead of reductions to revenue. This misclassification was one of the bases for the
2015 SEC Order.
73. MusclePharm correctly accounted for customer credits for a short time
thereafter by reducing revenue by the amount of customer credits.
74. Beginning in 2016, however, MusclePharm again misclassified customer
credits as expenses rather than reductions to revenue in conformity with GAAP.
75. Upon taking over as contract CFO in November 2017, Harris failed to
correct MusclePharm’s accounting for customer credits. Rather, during Harris’s
tenure the scope and magnitude of the error expanded, resulting in MusclePharm
overstating its reported revenue by approximately $6.2 million in 2017, $2.6 million
in the first quarter of 2018, $3.8 million in the second quarter of 2018, and $2.9
million in the third quarter of 2018.
76. In light of the facts above and his education, experience, and job
responsibilities, Harris should have known that his failure to ensure that
MusclePharm recorded customer credits in compliance with GAAP caused
MusclePharm to improperly recognize revenue.
III. MUSCLEPHARM MADE MATERIALLY FALSE AND MISLEADING
STATEMENTS.
A. MusclePharm Made Material Misstatements in its Financial
Statements Filed with the SEC.
77. MusclePharm was required to file annual, quarterly, and current reports
with the SEC that presented its financial results in conformity with GAAP.
78. During the Restatement Period, MusclePharm filed reports with the SEC
that, as a result of the conduct by Defendants described above, contained materially
false and misleading financial results. According to MusclePharm’s filings with the
SEC, MusclePharm materially misstated critical financial results, such as its revenues
and gross profit margin. For example, MusclePharm overstated its revenues by
approximately 9.2 percent for the end of the year 2017 in its Form 10-K filed on

COMPLAINT
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April 2, 2018, 9.8 percent for the first quarter of 2018 in its Form 10-Q filed on May
15, 2018, 24.2 percent for the second quarter of 2018 in its Form 10-Q filed on
August 14, 2018, and 24.9 percent for the third quarter of 2018 in its Form 10-Q filed
on November 14, 2018. In these same filings, MusclePharm also overstated its gross
profit margin by approximately 21.6 percent for the end of the year 2017, 49.1
percent for the first quarter of 2018, 39.4 percent for the second quarter of 2018, and
26.9 percent for the third quarter of 2018.
79. MusclePharm also reported these materially false and misleading
financial results in its related earnings press releases filed on Form 8-K and on
earnings calls. Harris participated in preparing these false and misleading press
releases and participated in the earnings calls relaying false and misleading
information.
80. MusclePharm’s misstatement of its financial results, including its
revenues and gross profit margins, would be important to a reasonable investor
because those metrics are fundamental to understanding a company’s financial health
and are important to an investor’s decision to invest. Additionally, the amount of the
misstatements of those metrics were material to a reasonable investor.
B. MusclePharm Made Material Misstatements Regarding Its Revenue
Recognition Practices and Expense Trends.
81. MusclePharm’s 2017 Form 10-K and 2018 Forms 10-Q each state that
revenue was recognized in compliance with the relevant GAAP, at the time title and
risk of loss transferred or at the time control of the promised goods transferred.
Statements regarding a company’s revenue recognition policies are material to
investors. These statements regarding the company’s revenue recognition policies
were false and misleading because MusclePharm recognized all revenue upon
shipment without regard to when risk of loss or control transferred.
82. MusclePharm’s 2017 Form 10-K also stated that “advertising related
credits” are recorded as a “reduction to revenue as no identifiable benefit is received

COMPLAINT
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in exchange for credits claimed by the customer.” Statements regarding a company’s
revenue recognition policies are material to investors. These statements were false
and misleading because MusclePharm recorded many promotional credits as
ex  penses, not as reductions to revenue.
83. Finally, throughout 2018, in earnings releases and earnings calls,
MusclePharm claimed that year-over-year increases to advertising and promotion
expenses were a result of higher costs. Statements regarding trends in a company’s
expenses are material to investors. These statements were false and misleading
because the reported increases resulted from reclassification of credits from a
discount to revenue to an expense, not from a trend towards higher promotional costs.
IV. CASUTTO AND ZUCCO AIDED AND ABETTED MUSCLEPHARM’S
FALSE AND MISLEADING STATEMENTS.
84. Casutto’s and Zucco’s conduct, described above, led to prematurely
reporting revenue in MusclePharm’s financial statements as filed in its 2017 Form
10-K and 2018 Forms 10-Q as well as in the related earnings press releases filed on
Form 8-K and on earnings calls. As such, Casutto and Zucco knowingly or recklessly
provided substantial assistance to MusclePharm’s false and misleading financial
statements.
V. HARRIS WAS NEGLIGENT WITH RESPECT TO, AND OBTAINED
MONEY FOR MUSCLEPHARM BY MEANS OF, MUSCLEPHARM’S
FALSE AND MISLEADING STATEMENTS.
85. Throughout the Restatement Period, Harris oversaw the preparation of
MusclePharm’s financial statements and SEC filings; read, reviewed, commented on,
and gathered information for SEC filings; presented the draft SEC filings to
MusclePharm’s audit committee; drafted earnings press releases; and presented
MusclePharm’s financial results to investors on quarterly earnings calls. In light of all
of the above-alleged facts, including his own role in the accounting misconduct, as
well as his education, experience, and job description, Harris should have known that

COMPLAINT
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MusclePharm’s financial statements in its 2017 Form 10-K and 2018 Forms 10-Q, as
well as in the related earnings press releases filed on Form 8-K and in earnings calls,
were materially misstated and did not comply with GAAP.
86. When Harris oversaw the preparation of these filings, he should have
known that statements in the filings regarding the company’s revenue recognition
policies were false and misleading because MusclePharm recognized all revenue
upon shipment without regard to when risk of loss or control transferred.
87. Harris should have known that disclosures in MusclePharm’s 2017 Form
10-K regarding its accounting for “advertising related credits” as a “reduction to
revenue” were false and misleading because MusclePharm recorded many
promotional credits as expenses, not as reductions to revenue.
88. Harris should have known that statements in MusclePharm’s earnings
releases and earnings calls throughout 2018 claiming that year-over-year increases to
advertising and promotion expenses were a result of higher costs were false and
misleading because the reported increases resulted, in part, from Harris’s role in
reclassifying certain credits from a discount to revenue to an expense, not from a
trend towards higher promotional costs. In fact, after that decision was reversed in the
restatement, the year-over-year advertising and promotional expenses decreased in
each quarter of 2018 compared to 2017.
89. By preparing the false and misleading financial statements and SEC
filings and making misleading statements on earnings calls, Harris obtained money
for MusclePharm when the company sold stock in private placements at inflated
prices.
90. Harris obtained money for MusclePharm by means of the misstatements
described above because, from at least June 2018 to May 2019, through private
placements, MusclePharm sold (i) restricted stock to board members to pay for board
fees, (ii) common stock to plaintiffs engaged in civil litigation with the company to
pay for litigation settlements, and (iii) common stock to vendors to pay for invoices.

COMPLAINT
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91. Harris was involved in implementing the private placements by, for
example, writing letters to the stock transfer services company directing them to issue
the shares and send stock certificates to the applicable parties.
92. In addition to the statements described above, Harris obtained money for
MusclePharm by means of untrue statements of material fact relating to
MusclePharm’s executive perquisite compensation described below.
VI. HARRIS AND CASUTTO FAILED TO PROPERLY DISCLOSE ALL
EXECUTIVE PERQUISITES IN MUSCLEPHARM’S PUBLIC
FILINGS.
 93. Accurate disclosure of executive perquisites was the primary focus of
the 2015 SEC Order. Pursuant to the 2015 SEC Order, MusclePharm engaged an
independent compliance consultant (“ICC”) to, among other things, strengthen the
disclosure controls and procedures relevant to accurate disclosure of perquisite
compensation.
94. In February 2017, the company certified to the SEC that it had complied
with the undertakings in the 2015 SEC Order, in part, by implementing a disclosure
control recommended by the ICC to use an “[a]nnual questionnaire[] ... provided to
the members of the Board of Directors and executives to identify any perquisites.”
(“D&O questionnaire”).
95. MusclePharm used a D&O questionnaire in early 2017 to identify 2016
perquisites. But the very next year, after Harris took over as contract CFO, neither he,
nor the CEO, nor anyone else at the company used a D&O questionnaire, or any other
controls, to identify 2017 perquisites for its named executive officers: the CEO and
Casutto.
96. MusclePharm’s Travel and Expense Policy outlined the procedures for
obtaining reimbursement for business expenses, including specifically identifying the
business purpose of the expense and submitting original receipts.
97. Casutto disregarded these procedures by seeking reimbursement for

COMPLAINT
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expenses that were not supported by any business purpose or appropriate
documentation.
98. Casutto obtained reimbursement for significant commuting expenses and
other expenses not integrally and directly related to his job that should have been
reported as perquisites.
99. Additionally, Harris, Casutto and the CEO failed to ensure that
perquisites, which they had personal knowledge of, were properly included in the
company’s executive compensation disclosures.
100.   This conduct resulted in MusclePharm materially underreporting
executive perquisites in the 2017 Form 10-K and October 26, 2018 proxy statement
by approximately $231,000 (88 percent) for the CEO and approximately $107,900
(54 percent) for Casutto. The unreported perquisites included: (i) personal legal fees,
(ii) tax gross-ups on restricted stock, (iii) automobile expenses, and (iv) commuting
and living costs.
101.   Accurate and transparent executive compensation disclosures are
material to investors. Additionally, the amount by which MusclePharm underreported
its 2017 executive perquisites was material.
VII.   THE DEFENDANTS ENGAGED IN DECEPTIVE CONDUCT AND
AIDED AND ABETTED DECEPTIVE CONDUCT.
102.   As detailed above, the Defendants engaged in and/or substantially
assisted deceptive conduct in furtherance of a scheme to artificially inflate
MusclePharm’s revenue and other financial information.
103.   For example, Cassuto committed numerous fraudulent and deceptive
acts. Among other things, Casutto:
a.   instructed Zucco to store orders totaling approximately $210,000
in trailers at the end of fourth quarter of 2017 when he knew they
would not be shipped to customers until 2018;
b. worked with Harris to approve revenue recognition for a sale to

COMPLAINT
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Customer E totaling approximately $632,000 in the fourth quarter
of 2017 when he knew that there was no formal purchase order,
the sale was contingent on certain future events, and all the
products remained in MusclePharm’s Canadian warehouse at the
end of 2017;
c.   directed Zucco to store Customer D orders totaling approximately
$4.7 million in a third-party warehouse paid for by MusclePharm
in third quarter of 2018 when he knew Customer D did not want
the orders shipped until the following quarter;
d. directed Zucco to store invoiced but unshipped orders totaling
approximately $2.5 million in trailers at the end of fourth quarter
of 2018 when he knew they would not be shipped to customers
until 2019;
e.   disregarded MusclePharm’s Travel and Expense Policy by failing
to provide receipts or business justifications for expenditures
and/or seeking reimbursement for expenses outside the policy
limits and failed to ensure that perquisites, which he had personal
knowledge of, were properly included in the company’s executive
compensation disclosures for 2017.
104.   In light of all of the above-alleged facts, Casutto knew or was reckless in
not knowing, and should have known, that his conduct was deceptive and that it
resulted in material misstatements by MusclePharm.
105.   Additionally, as detailed above, Zucco knowingly or recklessly provided
substantial assistance to MusclePharm’s fraudulent and deceptive conduct. Among
other things, Zucco:
a. at Casutto’s direction, instructed the warehouse to store orders
totaling approximately $210,000 in trailers at the end of fourth

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quarter of 2017 when he knew they would not be shipped to
customers until 2018;
b. at Casutto’s direction, instructed warehouse personnel to store
Customer D orders totaling approximately $4.7 million in a third
party warehouse paid for by MusclePharm in third quarter of 2018
when he knew Customer D did not want the orders shipped until
the following quarter;
c. at Casutto’s direction, instructed warehouse personnel to store
invoiced but unshipped orders totaling approximately $2.5 million
in trailers at the end of fourth quarter of 2018 when he knew they
would not be shipped to customers until 2019; and
d. At the direction of Casutto and Harris, instructed warehouse and
IT personnel to replace BOLs in the accounting system showing
January 2019 ship dates with BOLs showing December 2018 ship
dates.
106.   In light of all of the above-alleged facts, Zucco knew or was reckless in
not knowing, and should have known, that his conduct substantially assisted
MusclePharm in its violations of the federal securities laws.
107.   As detailed above, Harris engaged in transactions, practices, and a
course of business that operated or would operate as a fraud or deceit. Among other
things, Harris:
a.   approved revenue recognition for a sale to Customer E totaling
approximately $632,000 in the fourth quarter of 2017 without
proper support and failed to timely correct the accounting for
Customer B’s orders after receiving emails that should have
alerted him to the fact the revenue was prematurely recognized
upon shipment to a holding warehouse instead of the customer;
b. participated in replacing BOLs showing December 2018 ship

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dates with BOLs showing January 2019 ship dates without taking
reasonable steps to confirm which ship date was accurate;
c.   failed to ensure that MusclePharm recognized revenue in
accordance with its customer contract terms and classified
customer credits in compliance with GAAP;
d. failed to ensure that MusclePharm used a D&O questionnaire, or
any other disclosure controls and procedure, to identify perquisite
compensation for disclosure, and failed to ensure that certain
perquisites, which he had personal knowledge of, were properly
included in the company’s executive compensation disclosures.
108.   In light of all of the above-alleged facts, as well as his background,
education, and job responsibilities, Harris negligently engaged in transactions,
practices, and a course of business that operated or would operate as a fraud or deceit
that resulted in misstatements by MusclePharm.
VIII.  THE DEFENDANTS AIDED AND ABETTED MUSCLEPHARM’S
VIOLATION OF REPORTING PROVISIONS OF THE FEDERAL
SECURITIES LAWS.
109.   Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11 and 13a-13
thereunder require issuers like MusclePharm to file reports with the SEC containing
such information as the SEC’s rules prescribe. Further, Rule 12b-20 requires that an
issuer’s statement or report contain such further material information as may be
necessary to make the required statements, in light of the circumstances under which
they were made, not misleading.
110.   As detailed above, MusclePharm violated these reporting provisions by
filing annual, current, and quarterly reports with the SEC throughout the Restatement
Period that, among other things, materially inflated reported revenue.
111.   Also as detailed above, Casutto, Zucco, and Harris aided and abetted
these violations by knowingly or recklessly providing substantial assistance to those

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violations. Among other things, Harris oversaw the preparation of the filings and
participated in the underlying accounting misconduct, as described above. And
Casutto and Zucco engaged in a practice of marking orders as shipped prior to
shipment for the purpose of prematurely closing sales, which inflated the revenue
reported in MusclePharm’s financial statements as filed on its 2017 Form 10-K and
2018 Forms 10-Q.
IX. THE DEFENDANTS VIOLATED AND/OR AIDED AND ABETTED
MUSCLEPHARM’S VIOLATION OF BOOKS AND RECORDS AND
INTERNAL CONTROLS PROVISIONS OF THE FEDERAL
SECURITIES LAWS.
  112.   Section 13(b)(2)(A) of the Exchange Act requires issuers like
MusclePharm to make and keep books, records, and accounts which, in reasonable
detail, accurately and fairly reflect the company’s transactions and dispositions of the
assets. Section 13(b)(2)(B) of the Exchange Act requires issuers like MusclePharm to
devise and maintain a system of sufficient internal accounting controls. Section
13(b)(5) of the Exchange Act prohibits any person from knowingly circumventing or
failing to implement a system of internal accounting controls or knowingly falsifying
books, records, or accounts. Similarly, Rule 13b2-1 prohibits any person from
directly or indirectly falsifying or causing to be falsified books, records, or accounts.
113.    In violation of Section 13(b)(2)(A), MusclePharm failed to make and
keep accurate books, records, and accounts. Casutto, Zucco, and Harris aided and
abetted MusclePharm’s violations of the books and records provision based on their
respective roles in MusclePharm’s improper revenue recognition during the
Restatement Period. Through those same actions, the Defendants also violated Rule
13b2-1 of the Exchange Act.
114.   In violation of Section 13(b)(2)(B), MusclePharm failed to maintain a
system of internal accounting controls sufficient to provide reasonable assurance that
revenue, customer credits, gross profit margin, advertising and promotional expenses,

COMPLAINT
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and inventory complied with GAAP. In his role as contract CFO, Harris was one of
the persons responsible for devising and maintaining MusclePharm’s system of
internal accounting controls, and his failure to do so aided and abetted
MusclePharm’s violation of Section 13(b)(2)(B) of the Exchange Act.
115.   Casutto and Zucco additionally circumvented MusclePharm’s internal
accounting control requiring shipment prior to revenue recognition in violation of
Section 13(b)(5) of the Exchange Act by engaging in the practice of storing
unshipped inventory off-site in trailers and third-party warehouses and marking it as
shipped in the inventory system.
X. HARRIS AIDED AND ABETTED MUSCLEPHARM’S VIOLATIONS
OF THE REPORTING CONTROLS PROVISION OF THE FEDERAL
SECURITIES LAWS.
116.   Rule 13a-15(a) of the Exchange Act requires issuers like MusclePharm
to maintain disclosure controls and procedures (“DCP”) and internal control over
financial reporting (“ICFR”). DCP are defined in Rule 13a-15(e), in part, as controls
and other procedures “designed to ensure that information required to be disclosed ...
is recorded, processed, summarized, and reported.” ICFR is defined in Rule 13a-
15(f), in part, as “a process ... to provide reasonable assurance regarding the
reliability of financial reporting ....”
117.   MusclePharm violated Rule 13a-15(a) by failing to maintain DCP or
ICFR as required. Specifically, MusclePharm failed to implement DCP concerning
the identification and reporting of executive perquisites, and failed to maintain
appropriate ICFR to prevent and detect the revenue recognition misconduct described
above. Harris aided and abetted MusclePharm’s violation of Rule 13a-15(a).
Although the company certified to the staff in February 2017 that it implemented a
D&O questionnaire disclosure control, Harris did not use D&O questionnaires, or any
other controls, to identify 2017 perquisites for the 2017 Form 10-K and October 2018
proxy statement. Additionally, Harris did nothing to establish and maintain

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MusclePharm’s ICFR.
XI. CASUTTO AND HARRIS VIOLATED PROXY SOLICITATION
PROVISIONS OF THE FEDERAL SECURITIES LAWS.
118.   Section 14(a) of the Exchange Act makes it unlawful to solicit any proxy
with respect to any security (other than an exempted security) registered pursuant to
Section 12 of the Exchange Act in contravention of such rules and regulations as the
SEC may prescribe. Rule 14a-3 provides that no solicitation of a proxy may occur
unless each person solicited is concurrently furnished or has previously been
furnished with a proxy statement containing the information specified by Schedule
14A, including executive compensation. Rule 14a-9 prohibits the use of proxy
statements containing statements that are materially false or misleading by omission.
119.   On October 26, 2018, MusclePharm filed a definitive proxy statement
that it used to solicit proxies in connection with, among other things, the re-election
of Casutto to the board of directors and an advisory vote on the executive
compensation packages for the CEO and Casutto.
120.   Harris participated in preparing the proxy statement, and Casutto, as a
director of the company, participated in the solicitation.
121.   In violation of Rule 14a-3, the proxy failed to disclose all compensation
received by the CEO and Casutto as required by Item 8 of Schedule 14A.
Additionally, in violation of Rule 14a-9, the 2017 “other compensation” was
materially misleading because it underreported perquisites for the CEO and Casutto
by 88 percent and 54 percent, respectively.
XII.   CASUTTO AND ZUCCO RECEIVED ILL-GOTTEN GAINS FROM
THEIR CONDUCT.
122.   Casutto received cash performance bonuses for year-end 2017, first
quarter of 2018, and second quarter of 2018 totaling $65,531 that he would not have
received but for his participation in the misconduct described above.
123.   Zucco received cash performance bonuses for the second quarter of 2018

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totaling $12,500 that he would not have received but for his participation in the
misconduct described above.
FIRST CLAIM FOR RELIEF
Fraud: Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c)
(Casutto)
124. The SEC realleges and incorporates by reference paragraphs 1 through
123   as though fully set forth herein.
125. Casutto, directly or indirectly, acting with scienter, by use of the means
or instrumentalities or interstate commerce, or of the mails, or of a facility of a
national securities exchange, in connection with the purchase or sale of a security (i)
employed devices, schemes, or artifices to defraud and (ii) engaged in acts, practices,
or courses of business which operated or would operate as a fraud or deceit upon
another person.
126. By virtue of the foregoing, Casutto, directly or indirectly, violated and,
unless restrained and enjoined, will again violate Section 10(b) of the Exchange Act
[15 U.S.C. § 78j(b)] and Rule 10b-5(a) and (c) [17 C.F.C. § 240.10b-5(a) and (c)]
thereunder.
SECOND CLAIM FOR RELIEF
Fraud: Aiding and Abetting MusclePharm’s Violations of
Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c)
(Zucco)
127. The SEC realleges and incorporates by reference paragraphs 1 through
123   as though fully set forth herein.
128. MusclePharm, directly or indirectly, acting with scienter, by use of the
means or instrumentalities of interstate commerce, or of the mails, or of a facility of a
national securities exchange, in connection with the purchase or sale of a security (i)
employed devices, schemes, or artifices to defraud and (ii) engaged in acts, practices,
or courses of business which operated or would operate as a fraud or deceit upon

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an  other person in violation of Section 10(b) of the Exchange Act and Rules 10b-5(a)
and 10b-5(c).
129. As a result of the conduct alleged herein, Zucco aided and abetted
MusclePharm’s violations of Section 10(b) of the Exchange Act and Rules 10b-5(a)
and (c) by knowingly or recklessly providing substantial assistance to MusclePharm.
130. By reason of the foregoing, Zucco, directly or indirectly, aided and
abetted and, unless restrained and enjoined, will again aid and abet violations of
Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5(a) and (c) [17
C.F.C. § 240.10b-5(a) and (c)] thereunder.
THIRD CLAIM FOR RELIEF
Fraud: Section 17(a)(1) of the Securities Act
(Casutto)
131. The SEC realleges and incorporates by reference paragraphs 1 through
123   as though fully set forth herein.
132. Casutto, directly or indirectly, in the offer or sale of securities, by use of
the means or instruments of transportation or communication in interstate commerce
or by use of the mails, acting with scienter, employed a device, scheme, or artifice to
defraud.
133. By virtue of the foregoing, Casutto, directly or indirectly, violated and,
unless restrained and enjoined, will again violate Section 17(a)(1) of the Securities
Act [15 U.S.C. § 77q(a)(1)].
FOURTH CLAIM FOR RELIEF
Fraud: Sections 17(a)(3) of the Securities Act
(Casutto and Harris)
134. The SEC realleges and incorporates by reference paragraphs 1 through
123 as though fully set forth herein.
135. Casutto and Harris, directly or indirectly, in the offer or sale of
securities, by use of the means or instruments of transportation or communication in

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interstate commerce or by use of the mails, acting with negligence, engaged in a
transaction, practice, or course of business which operated or would operate as a
fraud or deceit upon the purchasers.
136. By virtue of the foregoing, Casutto and Harris, directly or indirectly,
violated and, unless restrained and enjoined, will again violate Section 17(a)(3) of the
Securities Act [15 U.S.C. § 77q(a)(3)].
FIFTH CLAIM FOR RELIEF
Fraud: Aiding and Abetting MusclePharm’s Violation of
Sections 17(a)(1) and (3) of the Securities Act
(Zucco)
137. The SEC realleges and incorporates by reference paragraphs 1 through
123 as through fully set forth herein.
138. MusclePharm, directly or indirectly, in the offer or sale of securities, by
use of the means or instruments of transportation or communication in interstate
commerce or by use of the mails, acting with the requisite state of mind (i) employed
a device, scheme, or artifice to defraud and (ii) engaged in transactions, practices, or a
course of business which operated or would operate as a fraud or deceit upon
purchasers in violation of Section 17(a)(1) and 17(a)(3) of the Securities Act.
139. As a result of the conduct alleged herein, Zucco aided and abetted
MusclePharm’s violations of Section 17(a)(1) and 17(a)(3) of the Securities Act by
knowingly or recklessly providing substantial assistance to MusclePharm.
140. By reason of the foregoing, Zucco, directly or indirectly, aided and
abetted and, unless restrained and enjoined, will again aid and abet violations of
Section 17(a)(1) and (3) of the Securities Act [15 U.S.C. § 77q(a)(1) and (3)].
SIXTH CLAIM FOR RELIEF
Fraud: Section 17(a)(2) of the Securities Act
(Harris)
141. The SEC realleges and incorporates by reference paragraphs 1 through

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123 as though fully set forth herein.
142. Harris, directly or indirectly, in the offer or sale of securities, by use of
the means or instruments of transportation or communication in interstate commerce
or by use of the mails, acting with the requisite state of mind, obtained money or
property by means of an untrue statement of material fact or omission 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.
143. By virtue of the foregoing, Harris, directly or indirectly, violated and,
unless restrained and enjoined, will again violate Section 17(a)(2) of the Securities
Act [15 U.S.C. § 77q(a)(2)].
SEVENTH CLAIM FOR RELIEF
Fraud: Aiding and Abetting MusclePharm’s Violation of Section 17(a)(2) of the
Securities Act
(Casutto and Zucco)
144. The SEC realleges and incorporates by reference paragraphs 1 through
123 as though fully set forth herein.
145. MusclePharm, directly or indirectly, in the offer or sale of securities, by
use of the means or instruments of transportation or communication in interstate
commerce or by use of the mails, acting with the requisite state of mind, obtained
money or property by means of an untrue statement of material fact or omission 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 in violation of Section
17(a)(2) of the Securities Act.
146. As a result of the conduct alleged herein, Casutto and Zucco aided and
abetted MusclePharm’s violations of Section 17(a)(2) of the Securities Act by
knowingly or recklessly providing substantial assistance to MusclePharm.
147. By virtue of the foregoing, Casutto and Zucco, directly or indirectly,
aided and abetted and, unless restrained and enjoined, will again aid and abet

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violations of Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)].
EIGHTH CLAIM FOR RELIEF
Fraud: Aiding and Abetting MusclePharm’s Violation of Section 10(b) of the
Exchange Act and Rule 10b-5(b)
(Casutto and Zucco)
148. The SEC realleges and incorporates by reference paragraphs 1 through
123 as though fully set forth herein.
149. MusclePharm, directly or indirectly, acting with scienter, by use of the
means or instrumentalities of interstate commerce, or of the mails, or of a facility of a
national securities exchange, in connection with the purchase or sale of a security
made an untrue statement of a material fact or omitted a material fact necessary in
order to make the statements made, in the light of the circumstances under which they
were made, not misleading in violation of Section 10(b) of the Exchange Act and
Rule 10b-5(b) thereunder.
150. As a result of the conduct alleged herein, Casutto and Zucco aided and
abetted MusclePharm’s violations of Section 10(b) of the Exchange Act and Rule
10b-5(b) thereunder by knowingly or recklessly providing substantial assistance to
MusclePharm.
151. By virtue of the foregoing, Casutto and Zucco, directly or indirectly,
aided and abetted and, unless restrained and enjoined, will again aid and abet
violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-
5(b) [17 C.F.C. § 240.10b-5(b)].
NINTH CLAIM FOR RELIEF
False SEC Filings: Aiding and Abetting MusclePharm’s Violation of Section
13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13
(All Defendants)
152. The SEC realleges and incorporates by reference paragraphs 1 through
123 as though fully set forth herein.

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153. MusclePharm, which is an issuer of securities registered pursuant to
Section 12 of the Exchange Act, filed materially false and misleading annual,
quarterly, and current reports with the SEC that made untrue statements of material
fact or omitted to state material facts necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading in violation
of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13
thereunder.
154. As a result of the conduct alleged herein, Casutto, Zucco, and Harris
aided and abetted MusclePharm’s violations of Section 13(a) of the Exchange Act
and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder by knowingly or recklessly
providing substantial assistance to MusclePharm.
155. By reason of the foregoing, Casutto, Zucco, and Harris, 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, 13a-11, and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1,
240.13a-11, and 240.13a-13].
TENTH CLAIM FOR RELIEF
Reporting Controls: Aiding and Abetting MusclePharm’s Violations of
Rule 13a-15(a) of the Exchange Act
(Harris)
156. The SEC realleges and incorporates by reference paragraphs 1 through
123 as though fully set forth herein.
157. MusclePharm, which is an issuer of securities pursuant to Section 12 of
the Exchange Act and which files annual reports with the SEC pursuant to Section
13(a) of the Exchange Act, failed to maintain required disclosure controls and
procedures and internal control over financial reporting in violation of Rule 13a-15(a)
of the Exchange Act.
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MusclePharm’s violations of Rule 13a-15(a) of the Exchange Act by knowingly or
recklessly providing substantial assistance to MusclePharm.
159.    By reason of the foregoing, Harris, directly or indirectly, aided and
abetted and, unless restrained and enjoined, will again aid and abet violations of
Exchange Act Rule 13a-15(a) [17 C.F.R. § 240.13a-15(a)].
ELEVENTH CLAIM FOR RELIEF
False Books and Records: Aiding and Abetting MusclePharm’s Violations of
Section 13(b)(2)(A) of the Exchange Act
(All Defendants)
160. The SEC realleges and incorporates by reference paragraphs 1 through
123 as though fully set forth herein.
161. MusclePharm failed to make and keep books, records, and accounts,
which, in reasonable detail, accurately and fairly reflected its transactions and
dispositions of assets in violation of Section 13(b)(2)(A) of the Exchange Act.
162. As a result of the conduct alleged herein, Casutto, Zucco, and Harris,
aided and abetted MusclePharm’s violations of Section 13(b)(2)(A) of the Exchange
Act by knowingly or recklessly providing substantial assistance to MusclePharm.
163.    By reason of the foregoing, Casutto, Zucco, and Harris, directly or
indirectly, aided and abetted and, unless restrained and enjoined, will again aid and
abet violations of Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. §
78m(b)(2)(A)].
TWELFTH CLAIM FOR RELIEF
Internal Accounting Controls: Aiding and Abetting MusclePharm’s Violation of
Section 13(b)(2)(B) of the Exchange Act
(Harris)
164.    The SEC realleges and incorporates by reference paragraphs 1 through
123 as though fully set forth herein.
165. MusclePharm failed to devise and maintain a system of internal

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accounting controls sufficient to provide reasonable assurances that transactions were
recorded as necessary to permit preparation of financial statements in conformity
with GAAP and any other criteria applicable to such statements in violation of
Section 13(b)(2)(B) of the Exchange Act.
166. As a result of the conduct alleged herein, Harris aided and abetted
MusclePharm’s violations of Section 13(b)(2)(B) of the Exchange Act by knowingly
or recklessly providing substantial assistance to MusclePharm.
167. By reason of the foregoing, Harris, directly or indirectly, aided and
abetted and, unless restrained and enjoined, will again aid and abet violations of
Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)].
THIRTEENTH CLAIM FOR RELIEF
Falsified Books, Records, or Accounts: Section 13(b)(5) of the Exchange Act
(Casutto and Zucco)
168. The SEC realleges and incorporates by reference paragraphs 1 through
123 as though fully set forth herein.
169. As a result of the conduct alleged herein, Casutto and Zucco, knowingly
circumvented a system of internal accounting controls or knowingly falsified or
caused to be falsified books, records or accounts of MusclePharm.
170. By reason of the foregoing, Casutto and Zucco violated and, unless
restrained and enjoined, will again violate Section 13(b)(5) of the Exchange Act [15
U.S.C. § 78m(b)(5)].
FOURTEENTH CLAIM FOR RELIEF
Falsified Books, Records, or Accounts: Rule 13b2-1 of the Exchange Act
(All Defendants)
171. The SEC realleges and incorporates by reference paragraphs 1 through
123 as though fully set forth herein.
172. As a result of the conduct alleged herein, Casutto, Zucco, and Harris,
directly or indirectly, falsified or caused to be falsified books, records or accounts of

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173. By reason of the foregoing, Casutto, Zucco, and Harris violated and,
unless restrained and enjoined, will again violate Rule 13b2-1 of the Exchange Act
[17 C.F.R. § 240.13b2-1].
FIFTEENTH CLAIM FOR RELIEF
Proxy Disclosures: Violation of Section 14(a) of the Exchange Act
and Rules 14a-3 and 14a-9
(Casutto and Harris)
174. The SEC realleges and incorporates by reference paragraphs 1 through
123 as through fully set forth herein.
175. As a result of the conduct alleged herein, Casutto and Harris, directly or
indirectly, by use of mails, or the means or instrumentalities or 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.
176. By reason of the foregoing, Casutto and Harris 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 and
240.14a.9].
RELIEF SOUGHT
WHEREFORE, the SEC respectfully requests that this Court:
I.
Find that the Defendants committed the violations alleged in this Complaint;

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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. §§
78u(d)(5) and 78u(d)(7)], order Casutto and Zucco to disgorge all ill-gotten gains,
together with pre-judgment interest, derived from the activities set forth in this
Complaint;
IV.
Order Casutto, Zucco, and Harris to pay civil money penalties pursuant to
Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the
Exchange Act [15 U.S.C. § 78u(d)(3)]; and
V.
Issue an order, pursuant to the Court’s equitable powers, Section 20(e) of the
Securities Act [15 U.S.C. § 77t(e)], and Section 21(d)(2) of the Exchange Act [15
U.S.C. § 78u(d)(2)], barring Casutto from acting as an officer or director 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.

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

Respectfully submitted, June 27, 2023.

/s/ Daniel Blau
Daniel Blau
Zachary T. Carlyle
Sharan E. Lieberman
Attorneys for Plaintiff
Securities and Exchange Commission

COMPLAINT 1 

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ZACHARY T. CARLYLE (pro hac vice forthcoming) 
[email protected] 
SHARAN E. LIEBERMAN (pro hac vice forthcoming) 
[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: 
DANIEL BLAU (Cal. Bar No. 305008) 
[email protected] 
SECURITIES AND EXCHANGE COMMISSION 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3306 
Facsimile: (213) 443-1904 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

vs. 

BRIAN H. CASUTTO, MATTHEW J. 
ZUCCO, AND KEVIN R. HARRIS, 
CPA, 

Defendants. 

Case No. 2:23-cv-05104

COMPLAINT AND JURY DEMAND 

Plaintiff United States Securities and Exchange Commission (the “SEC”), for 

its Complaint against Defendants Brian H. Casutto, Matthew J. Zucco, and Kevin R. 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 1 of 38   Page ID #:1

mailto:[email protected]


 

COMPLAINT 2  
 

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Harris, CPA (collectively, the “Defendants”), alleges as follows:  

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d), 20(e), and 22(a) of the Securities Act of 1933 (“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 

Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u(d), 78u(e), and 

78aa(a)].   

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

instrumentalities of interstate commerce, or of the mails, or of the facilities of a 

national securities exchange in connection with the acts, practices, transactions, 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 of the Exchange Act [15 U.S.C. §78aa]. During 

the majority of the time period relevant to this Complaint, MusclePharm, Corp. 

(“MusclePharm”) was headquartered in Burbank, California, and certain of the acts, 

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

within this District. Additionally, Harris is a resident of Los Angeles, California, and 

Zucco is a resident of Sherman Oaks, California. Although Casutto is a resident of Ft. 

Lauderdale, Florida, he regularly traveled to and did business in Burbank, California 

while employed by MusclePharm.  

SUMMARY 

4. Beginning in 2017, the Defendants engaged in a variety of improper 

conduct that materially inflated the reported quarterly revenues and gross profits of 

MusclePharm, a publicly-traded nutritional supplement company, by as much as 25 

percent and 49 percent, respectively. As a result, in March 2019, MusclePharm 

announced that its previously reported financial statements should no longer be relied 

upon and in August 2020, MusclePharm restated its financial statements for 2017 and 

the first three quarters of 2018 (the “Restatement Period”).  

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5. First, MusclePharm prematurely recognized $9.2 million in revenue 

during the Restatement Period by booking sales at quarter end even though it did not 

ship the “sold” product to customers but instead placed the product in storage trailers 

and third-party warehouses at the company’s expense. Casutto, MusclePharm’s 

Executive Vice President for Sales and Operations, directed and condoned this 

practice, and Zucco, MusclePharm’s Vice President for Sales, implemented the 

logistics necessary to carry out Casutto’s directives. Harris, MusclePharm’s contract 

CFO, on several occasions failed to correct the accounting for these transactions 

when he received information that should have suggested that revenue had been 

recognized prematurely for certain orders.  

6. Second, MusclePharm prematurely recognized $12.8 million in revenue 

during the Restatement Period by recognizing revenue at the time of shipment and 

before delivery despite MusclePharm’s most significant customer contracts requiring 

delivery before revenue could be recognized, as Harris should have known.  

7. Third, MusclePharm overstated revenues during the Restatement Period 

by $15.5 million by classifying credits that MusclePharm granted to certain 

customers, which allowed the customers to pay a reduced price for MusclePharm 

products based on the customers’ marketing of the products, as expenses rather than 

reductions to revenue. As Harris should have known, generally accepted accounting 

principles (“GAAP”) require such credits to be accounted for as reductions to 

revenue.  

8. MusclePharm’s improper revenue recognition resulted in material 

misstatements to its financial statements, which Harris participated in preparing and 

were publically disclosed in the company’s 2017 Form 10-K and 2018 Forms 10-Q, 

as well as in the related earnings releases filed on Form 8-K and earnings calls for 

those periods.    

9. Harris also participated in preparing SEC filings and participated in 

earnings calls that included false or misleading information regarding MusclePharm’s 

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revenue recognition practices and promotional expense trends.  

10. Additionally, Harris and Casutto failed to ensure that all 2017 executive 

perquisites were properly disclosed in the company’s 2017 Form 10-K and proxy 

statement filed October 26, 2018.    

11. By engaging in this conduct, the Defendants are liable as follows, and 

unless enjoined, are likely to continue to violate the federal securities laws: 

a. Casutto violated Sections 17(a)(1) and 17(a)(3) of the Securities 

Act [15 U.S.C. §§ 77q(a)(1) and 77q(a)(3)], Sections 10(b), 

13(b)(5), and 14(a) of the Exchange Act [15 U.S.C. §§ 78j(b), 

78m(b)(5), and 78n(a)], and Rules 10b-5(a), 10b-5(c), 13b2-1, 

14a-3, and 14a-9 thereunder [17 C.F.R. §§ 240.10b-5(a), 240.10b-

5(c), 240.13b2-1, 240.14a-3, and 240.14a-9], and aided and 

abetted MusclePharm’s violations of Section 17(a)(2) of the 

Securities Act [15 U.S.C. §§ 77q(a)(2)], Sections 10(b), 13(a) and 

13(b)(2)(A) of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(a) and 

78m(b)(2)(A)], and Rules 10b-5(b), 12b-20, 13a-1, 13a-11, and 

13a-13 thereunder [17 C.F.R. §§ 240.10b-5(b), 240.12b-20, 

240.13a-1, 240.13a-11, and 240.13a-13];  

b. Zucco violated Section 13(b)(5) of the Exchange Act [15 U.S.C. § 

78m(b)(5)] and Rule 13b2-1 thereunder [17 C.F.R. § 240.13b2-1], 

and aided and abetted MusclePharm’s violations of Section 17(a) 

of the Securities Act [15 U.S.C. §§ 77q(a)], Sections 10(b), 13(a), 

and 13(b)(2)(A) of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(a) 

and 78m(b)(2)(A)], and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 

13a-13 thereunder [17 C.F.R. §§ 240.10b-5(a)-(c), 240.12b-20, 

240.13a-1, 240.13a-11, and 240.13a-13]; and  

c. Harris violated Sections 17(a)(2) and 17(a)(3) of the Securities 

Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)], Section 14(a) of the 

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Exchange Act [15 U.S.C. § 78n(a)], and Rules 13b2-1, 14a-3, and 

14a-9 thereunder [17 C.F.R. §§ 240.13b2-1, 240.14a-3, and 

240.14a-9], and aided and abetted MusclePharm’s violations of 

Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act 

[15 U.S.C. §§ 78m(a), 78m(b)(2)(A), and 78m(b)(2)(B)], and 

Rules 12b-20, 13a-1, 13a-11, 13a-13, and 13a-15(a) thereunder 

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

and 240.13a-15(a)]. 

DEFENDANTS 

12. Brian H. Casutto, 52, resides in Ft. Lauderdale, Florida. Casutto joined 

MusclePharm in June 2014 and was promoted to Executive Vice President of Sales 

and Operations in July 2015. He was also appointed to MusclePharm’s board of 

directors in July 2017. In May 2020, Casutto resigned from the company.  

13. Matthew J. Zucco, 32, resides in Sherman Oaks, California. Zucco 

joined MusclePharm in August 2013 and served in various sales and business analyst 

positions before being promoted to Vice President of Sales in October 2017. In June 

2019, Zucco left the company.    

14. Kevin R. Harris, CPA, 54, resides in Los Angeles, California. Harris 

joined MusclePharm as its contract CFO in November 2017 and continued in that 

capacity through March 2020. Harris previously worked in finance at various 

companies, including public companies in the entertainment and technology sectors. 

Harris is a CPA licensed in California since 1995. His license has been inactive since 

approximately 1997.   

OTHER RELEVANT ENTITY 

15. MusclePharm Corp., is a Nevada corporation that develops, markets, 

and distributes branded nutritional supplements. Its current principal place of 

business is in Las Vegas, Nevada, but it was headquartered in Burbank, California 

throughout the Restatement Period. MusclePharm’s securities are registered pursuant 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 5 of 38   Page ID #:5



 

COMPLAINT 6  
 

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to Section 12(g) of the Exchange Act and trade on OTC Link, operated by OTC 

Markets Group Inc., under the symbol “MSLP” or “MSLPQ.” In 2015, MusclePharm 

settled claims by the SEC for violations of Sections 5(a), 5(c), 17(a)(2), and 17(a)(3) 

of the Securities Act; Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the 

Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13, and 14a-9 thereunder; and 

Rule 302 of Regulation S-T of the Exchange Act (the “2015 SEC Order”). 

MusclePharm filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy 

Court for the District of Nevada on December 15, 2022. 

FACTS  

I. BACKGROUND AND FINANCIAL RESTATEMENT. 

16. In August 2015, MusclePharm announced a restructuring plan focused 

on reducing costs and reallocating the company’s resources for profitable growth. In 

its Form 10-K filed on April 2, 2018, MusclePharm announced that this restructuring 

plan was substantially complete.  

17. During the earnings call for the fourth quarter of 2017, MusclePharm’s 

Chief Executive Officer (“CEO”) highlighted the completion of the restructuring 

program and proclaimed that the company was now on a path to consistent profitable 

growth. 

18. In order to achieve consistent growth, the CEO pushed MusclePharm’s 

sales team, including Casutto and Zucco, to meet unrealistic quarterly sales targets, 

and threatened to, and did, fire employees who challenged him or failed to achieve 

the targets.   

19. In this environment, MusclePharm reported quarter over quarter revenue 

growth from the fourth quarter of 2017 through the third quarter of 2018. The CEO 

highlighted this achievement in each of the Company’s press releases and earnings 

calls during that period.     

20. During its 2018 audit work, the company’s external auditor detected that 

MusclePharm had recognized revenue at the end of the fourth quarter of 2018 that it 

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COMPLAINT 7  
 

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should have recorded in later periods because certain inventory had been temporarily 

stored off-site in trailers rather than being shipped to MusclePharm’s customers prior 

to year-end.  

21. The company opened an internal investigation to identify the scope and 

cause of the errors. The internal investigation uncovered similar errors with 

unshipped orders impacting the third quarter of 2018, and the company filed a Form 

8-K on March 14, 2019, announcing that its previously reported financial statements 

for the three and nine months ended September 30, 2018, should no longer be relied 

upon. In April 2019, the company announced on Form NT 10-K that it would be 

unable to timely file its 2018 annual report, and in May 2019, the company’s external 

auditor resigned without completing the 2018 audit work.  

22. More than a year later, on August 25, 2020, MusclePharm filed a Form 

10-K that restated its financial statements for year-end 2017 and the first three 

quarters of 2018 and included the overdue financial statements for 2018 and 2019.  

23. The restatement disclosed that, during the Restatement Period, 

MusclePharm inflated its previously reported quarterly revenues by 9 to 25 percent, 

overstated its gross margins by 22 to 49 percent, understated its customer credits by 

23 to 38 percent, understated its inventory by 23 to 34 percent, and overstated its 

advertising and promotional expenses by 284 to 594 percent.   

24. MusclePharm’s financial misstatements were primarily caused by three 

areas of misconduct by the Defendants: (i) Casutto, with Zucco’s assistance, caused 

MusclePharm to prematurely recognize revenue for orders prior to shipment and 

Harris failed to correct the accounting; (ii) Harris should have known that the 

company was prematurely recognizing revenue for shipped orders that had not yet 

been delivered to and accepted by the customer, as required by the customer 

agreements; and (iii) Harris should have known that the company was misclassifying 

customer credits as expenses rather than as reductions to revenue.   

      

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COMPLAINT 8  
 

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II. MUSCLEPHARM, THROUGH CONDUCT OF THE DEFENDANTS, 

IMPROPERLY RECOGNIZED REVENUE. 

25. The date MusclePharm shipped an order to a MusclePharm customer, 

and the specific shipping terms of the contract with that customer, had a significant 

impact on when MusclePharm could properly recognize revenue from an order. 

Under the relevant GAAP, revenue may be recognized when risk of loss or control 

has transferred from a seller to a buyer. Depending on the terms of the sale, risk of 

loss and control may transfer upon shipment from the seller to the buyer (“FOB 

shipping point”) or upon delivery and acceptance by the buyer (“FOB destination”).  

26. During the Restatement Period, MusclePharm’s automated accounting 

system recognized revenue when an order was marked as shipped in the inventory 

system. MusclePharm’s accounting system assumed that all orders had FOB shipping 

point terms and that when an order was marked as shipped in the system, the order 

had in fact been shipped from MusclePharm to the customer.  

27. Defendants were all aware and understood that marking an order as 

shipped in the inventory system would trigger the system to recognize the sale. For 

example, if an order was marked as shipped on December 31, 2017, MusclePharm’s 

accounting system would recognize revenue in the fourth quarter of 2017. If the order 

was marked as shipped on the following day, January 1, 2018, the MusclePharm 

accounting system would recognize the revenue in the first quarter of 2018. 

28. In order to achieve the CEO’s quarterly sales targets and report 

consistent sales growth, Casutto directed and condoned the practice of marking orders 

as shipped in the inventory system at the end of a quarter when he knew that those 

orders had not been shipped from MusclePharm to customers. The orders were, in 

fact, held in storage trailers and warehouses at the company’s expense and would not 

be shipped to customers until a future quarter.  

29. Zucco implemented the logistics necessary to carry out Casutto’s 

directive to achieve the CEO’s quarterly revenue targets. 

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COMPLAINT 9  
 

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30. On multiple occasions specified below, Harris failed to ensure that 

MusclePharm accounted for certain transactions in accordance with GAAP despite 

receiving information that should have suggested that revenue had been recognized 

prematurely.     

31. The practice of marking orders as shipped prior to shipment to a 

customer resulted in MusclePharm prematurely recognizing revenue totaling $9.2 

million during the Restatement Period for orders that were (i) held in storage trailers, 

(ii) moved to third-party warehouses, and (iii) left in MusclePharm’s own warehouse. 

The practice also resulted in an additional $2.5 million in prematurely recognized 

revenue recorded in MusclePharm’s books and records in the fourth quarter of 2018, 

although this revenue was not publicly reported because MusclePharm’s financial 

statements for this quarter were delayed by the auditors’ discovery of the errors with 

unshipped orders described above. 

A. Unshipped Orders Held in Storage Trailers. 

32. On December 30, 2017, Casutto directed Zucco to ship orders before 

certain customers wanted the product in order to meet the CEO’s revenue target, even 

though “shipping” meant placing the orders in trailers. Specifically, Casutto texted 

Zucco: “[G]et those orders in a trailer [and] park it in the lot for all I care. Every 

$100k helps [MusclePharm’s CEO] to get a funding deal done. Go time.” 

33. Zucco carried out Casutto’s directive. On the last day of 2017, Zucco 

instructed warehouse personnel to load orders representing approximately $210,000 

in sales onto storage trailers, and to mark those orders as shipped in the inventory 

system, which triggered revenue recognition in the fourth quarter of 2017. The orders 

were left in the storage trailers in the warehouse parking lot at the end of the quarter. 

In early 2018, the orders were reloaded onto shipping trucks and sent to customers. 

34. This conduct resulted in MusclePharm prematurely recognizing revenue 

of approximately $210,000 in the fourth quarter of 2017.  

35. Based on Casutto’s direction to engage in this practice in the fourth 

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COMPLAINT 10  
 

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quarter of 2017, Zucco, with Casutto’s approval, continued to apply this practice to 

other transactions.        

36. For example, in the second and third quarters of 2018, Zucco directed 

warehouse personnel to put orders for a major online retailer (“Customer A”) in 

storage trailers parked in the warehouse parking lot at quarter end that he knew, based 

on emails from Customer A’s shipping carrier, would not be picked up until after the 

end of the quarters. MusclePharm marked the orders as shipped and recognized 

revenue at the time orders were placed in storage trailers, rather than when the orders 

were shipped to the customer.  

37. Casutto was aware of and condoned the practice of marking Customer 

A’s orders as shipped as soon as they were placed in storage trailers. Text messages 

between Zucco and Casutto confirm that they had spoken about similar conduct with 

the same customer in a prior quarter, with Zucco writing on March 31, 2018: 

“confirming we have drop trail[er]s ready just in case the 4 trucks show up late” and 

“as long as i[t] gets out the warehouse door and the truck leaves before the auditors 

get there lol.” Ultimately the trailers were not needed in the first quarter of 2018 

because Customer A’s carriers arrived before quarter-end.  

38. This conduct resulted in MusclePharm prematurely recognizing revenue 

of approximately $1 million in the second quarter of 2018 and $110,000 in the third 

quarter of 2018. 

39. Additionally, in the fourth quarter of 2018, Zucco told warehouse 

personnel to rent, at MusclePharm’s expense, eleven 53-foot storage trailers and load 

them in the final days of 2018 with orders from multiple customers totaling 

approximately $2.5 million that customers did not want shipped until 2019.  

40. Casutto directed Zucco to place orders on trailers to prematurely 

recognize revenue in the fourth quarter of 2018 and was aware of and condoned the 

continuation of this practice in order to achieve the CEO’s revenue target.  

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COMPLAINT 11  
 

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41. After the products were loaded onto storage trailers, the orders were 

marked as shipped in the inventory system to trigger revenue recognition in the fourth 

quarter of 2018, and the warehouse manager moved the trailers to an off-site parking 

lot. MusclePharm’s external auditor then conducted its annual inventory observation 

and testing, but the auditor was not told about the off-site inventory.  

42. After the auditor’s inventory testing, the products were returned to the 

MusclePharm warehouse, reloaded onto shipping trucks, and shipped to customers in 

January 2019.  

43. Initially, warehouse personnel uploaded bills of lading (“BOLs”) 

showing the accurate January 2019 shipment dates into MusclePharm’s accounting 

system.  

44. At the direction of Casutto and Harris, Zucco instructed the warehouse 

and IT personnel to alter the BOLs in the accounting system by deleting BOLs with 

January 2019 shipment dates and replacing them with BOLs showing December 2018 

shipment dates. 

45. The December 2018 BOLs, on their face, contain red flags indicating 

that they were falsified.  

46. In a February 2019 email, Harris stated that there was “some confusion 

with providing accurate shipping/supporting documents” but that he was “assured by 

Ops [Casutto and Zucco] that everything shipped on or before 12/31[/2018].”  

47. Any reliance by Harris on assurances from Zucco and Casutto that the 

product shipped in 2018, without any further investigation, was unreasonable. Had 

Harris contacted any of the customers, he would have discovered the accurate 

January 2019 shipment dates.  

48. This conduct resulted in MusclePharm prematurely recognizing revenue 

of approximately $2.5 million in its books and records for the fourth quarter 2018.   

49. MusclePharm’s external auditors identified these errors with unshipped 

orders for the fourth quarter of 2018 during their audit work for 2018, prior to 

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COMPLAINT 12  
 

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MusclePharm reporting its 2018 financial results to the public. MusclePharm delayed 

its release of its fourth quarter of 2018 financial statements and, in August 2020, 

restated financial statements of earlier periods and reported its 2018 financial results, 

which did not include this $2.5 million in revenue.  

50. In light of the facts above, Casutto knew or was reckless in not knowing, 

and should have known, that his conduct in marking orders held in storage trailers as 

shipped during the Restatement Period and in the fourth quarter of 2018 was 

improper, fraudulent, and deceptive.  

51. In light of the facts above, Zucco knew or was reckless in not knowing, 

and should have known, that MusclePharm was engaged in the improper, fraudulent, 

or deceitful practice of recognizing revenue for orders held in storage trailers during 

the Restatement Period and in the fourth quarter of 2018, and he provided substantial 

assistance to that conduct. 

52. In light of the facts above and his education, experience, and job 

responsibilities, Harris should have known that revenue for the fourth quarter of 2018 

transactions was not recorded in accordance with GAAP after becoming aware of 

BOLs that indicated that shipping did not occur until 2019.   

B. Unshipped Orders Moved to Third Party Warehouses. 

53. MusclePharm had a practice of recognizing revenue on sales to a 

customer in Mexico (“Customer B”) as soon as the products were shipped to a 

holding warehouse paid for by MusclePharm, despite the fact that the products 

remained in that holding warehouse for weeks or months before Customer B 

requested the product be shipped.  

54. In March 2017, the then-CFO correctly instructed Casutto that, because 

MusclePharm retained title to the products in the warehouse, MusclePharm should 

not recognize the revenue, and he directed Casutto via email to cease the practice.  

55.  That CFO left the company shortly thereafter and, through at least the 

third quarter of 2018, Casutto continued the practice of MusclePharm recognizing 

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COMPLAINT 13  
 

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revenue for orders for Customer B that were sitting in a holding warehouse.  

56. This practice resulted in MusclePharm prematurely recognizing revenue 

for Customer B orders totaling approximately $188,000 in the fourth quarter of 2017, 

$213,000 in the first quarter of 2018, $429,000 in the second quarter of 2018, and 

$425,000 in the third quarter of 2018.  

57. Harris received emails that should have alerted him to this practice no 

later than August 2018 (before the second quarter 2018 Form 10-Q was filed). The 

improper practice continued and Harris took no steps to correct the accounting until 

April 2019, after the internal investigation and restatement process began.  

58. In the second of quarter of 2018, MusclePharm prematurely recognized 

revenue totaling approximately $472,000 for orders that Zucco instructed the 

warehouse in an email to ship to a holding warehouse paid for by MusclePharm in 

June 2018 for delivery to another customer (“Customer C”) in August 2018.  

59. And in the third quarter of 2018, MusclePharm prematurely recognized 

revenue totaling approximately $4.7 million for orders stored in third-party 

warehouses paid for by MusclePharm in September 2018 for delivery to another 

customer (“Customer D”) in October 2018. Casutto was responsible for managing 

Customer D’s account. At Casutto’s direction, Zucco sent an email directing 

warehouse personnel to store the orders for Customer D in a holding warehouse.  

60. In light of the facts above, Casutto knew or was reckless in not knowing, 

and should have known, that his conduct in marking orders moved to third party 

warehouses as shipped during the Restatement Period was improper, fraudulent, and 

deceptive.  

61. In light of the facts above, Zucco knew or was reckless in not knowing, 

and should have known, that MusclePharm was engaged in the improper, fraudulent, 

and deceitful practice of recognizing revenue for orders held in third party 

warehouses paid for by MusclePharm during the Restatement Period, and he provided 

substantial assistance to that conduct.  

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COMPLAINT 14  
 

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62. In light of the facts above and his education, experience, and job 

responsibilities, Harris should have known that MusclePharm’s revenue recognition 

for Customer B transactions did not comply with GAAP, after he received 

information that should have suggested that MusclePharm prematurely recognized 

revenue for Customer B’s orders.    

C. Unshipped Orders Left in MusclePharm’s Warehouse. 

63. At Casutto’s insistence and with Harris’s approval, MusclePharm 

improperly recognized $632,000 of revenue in the fourth quarter of 2017 for a sale to 

MusclePharm’s Canadian distributor (“Customer E”).  

64. Recognizing the revenue in that quarter was improper because, as 

Casutto knew or was reckless in not knowing, and should have known, there was no 

formal purchase order; the sale was contingent on certain future events; and all the 

products remained in a Canadian warehouse, which was paid for by MusclePharm, at 

the end of 2017 (where much of it remained for more than six months). Harris was 

aware that the products remained in the warehouse at the end of 2017 and approved 

the revenue recognition for the sale to Customer E in the fourth quarter of 2017 

without proper support.   

65. This conduct resulted in MusclePharm prematurely recognizing revenue 

of approximately $632,000 in the fourth quarter of 2017. 

66. In light of the facts above, Casutto knew or was reckless in not knowing, 

and should have known, that his conduct that caused MusclePharm to recognize 

revenue for Customer E’s order in the fourth quarter of 2017 was improper, 

fraudulent, and deceptive.  

67. In light of the facts above and his education, experience, and job 

responsibilities, Harris should have known that his conduct in approving revenue 

recognition for Customer E’s order in the fourth quarter of 2017 caused MusclePharm 

to improperly recognize revenue.     
 

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COMPLAINT 15  
 

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D. Revenue Recognition Contrary to Customer Shipping Terms. 

68. During the Restatement Period, MusclePharm’s practice was to 

recognize revenue for all orders when an order was marked as shipped in the 

inventory system (i.e., FOB shipping point). Harris should have known that 

MusclePharm’s most significant customers had contracts with MusclePharm that 

included shipping terms that required delivery and acceptance before title and risk of 

loss passed (i.e., FOB destination), meaning that revenue could not be recognized 

until delivery and acceptance by the customer. Yet Harris continued to allow 

MusclePharm to recognize all revenue at FOB shipping point, meaning at the 

moment the product was shipped to the customer.  

69. As a result, MusclePharm prematurely recognized revenue at the end of 

each quarter, totaling approximately $3.3 million in the fourth quarter of 2017, $3 

million in the first quarter of 2018, $3.5 million in the second quarter of 2018, and $3 

million in the third quarter of 2018.  

70. In light of the facts above and his education, experience, and job 

responsibilities, Harris should have known that his failure to ensure that 

MusclePharm’s revenue recognition practices aligned with the terms of its customer 

contracts caused MusclePharm to improperly recognize revenue.     

E. Customer Credit Classification. 

71. GAAP requires that payments or discounts given to a customer, 

including a reduction in the amount the customer pays for a product based on 

advertising or marketing for the product provided by the customer (“customer 

credits”), be accounted for as a reduction in revenue, unless certain conditions are 

satisfied. If an issuer improperly accounts for customer credits as expenses, rather 

than as reductions to revenue as required by GAAP, it overstates its revenue.    

72. In 2012, MusclePharm filed a restatement, in part, to correct its 

accounting for customer credits that had been misclassified as advertising expenses, 

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COMPLAINT 16  
 

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instead of reductions to revenue. This misclassification was one of the bases for the 

2015 SEC Order.  

73. MusclePharm correctly accounted for customer credits for a short time 

thereafter by reducing revenue by the amount of customer credits.  

74. Beginning in 2016, however, MusclePharm again misclassified customer 

credits as expenses rather than reductions to revenue in conformity with GAAP.   

75. Upon taking over as contract CFO in November 2017, Harris failed to 

correct MusclePharm’s accounting for customer credits. Rather, during Harris’s 

tenure the scope and magnitude of the error expanded, resulting in MusclePharm 

overstating its reported revenue by approximately $6.2 million in 2017, $2.6 million 

in the first quarter of 2018, $3.8 million in the second quarter of 2018, and $2.9 

million in the third quarter of 2018.  

76. In light of the facts above and his education, experience, and job 

responsibilities, Harris should have known that his failure to ensure that 

MusclePharm recorded customer credits in compliance with GAAP caused 

MusclePharm to improperly recognize revenue.   

III. MUSCLEPHARM MADE MATERIALLY FALSE AND MISLEADING 

STATEMENTS. 

A. MusclePharm Made Material Misstatements in its Financial 

Statements Filed with the SEC. 

77. MusclePharm was required to file annual, quarterly, and current reports 

with the SEC that presented its financial results in conformity with GAAP. 

78. During the Restatement Period, MusclePharm filed reports with the SEC 

that, as a result of the conduct by Defendants described above, contained materially 

false and misleading financial results. According to MusclePharm’s filings with the 

SEC, MusclePharm materially misstated critical financial results, such as its revenues 

and gross profit margin. For example, MusclePharm overstated its revenues by 

approximately 9.2 percent for the end of the year 2017 in its Form 10-K filed on 

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COMPLAINT 17  
 

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April 2, 2018, 9.8 percent for the first quarter of 2018 in its Form 10-Q filed on May 

15, 2018, 24.2 percent for the second quarter of 2018 in its Form 10-Q filed on 

August 14, 2018, and 24.9 percent for the third quarter of 2018 in its Form 10-Q filed 

on November 14, 2018. In these same filings, MusclePharm also overstated its gross 

profit margin by approximately 21.6 percent for the end of the year 2017, 49.1 

percent for the first quarter of 2018, 39.4 percent for the second quarter of 2018, and 

26.9 percent for the third quarter of 2018. 

79. MusclePharm also reported these materially false and misleading 

financial results in its related earnings press releases filed on Form 8-K and on 

earnings calls. Harris participated in preparing these false and misleading press 

releases and participated in the earnings calls relaying false and misleading 

information. 

80. MusclePharm’s misstatement of its financial results, including its 

revenues and gross profit margins, would be important to a reasonable investor 

because those metrics are fundamental to understanding a company’s financial health 

and are important to an investor’s decision to invest. Additionally, the amount of the 

misstatements of those metrics were material to a reasonable investor. 

B. MusclePharm Made Material Misstatements Regarding Its Revenue 

Recognition Practices and Expense Trends. 

81. MusclePharm’s 2017 Form 10-K and 2018 Forms 10-Q each state that 

revenue was recognized in compliance with the relevant GAAP, at the time title and 

risk of loss transferred or at the time control of the promised goods transferred. 

Statements regarding a company’s revenue recognition policies are material to 

investors. These statements regarding the company’s revenue recognition policies 

were false and misleading because MusclePharm recognized all revenue upon 

shipment without regard to when risk of loss or control transferred.  

82. MusclePharm’s 2017 Form 10-K also stated that “advertising related 

credits” are recorded as a “reduction to revenue as no identifiable benefit is received 

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COMPLAINT 18  
 

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in exchange for credits claimed by the customer.” Statements regarding a company’s 

revenue recognition policies are material to investors. These statements were false 

and misleading because MusclePharm recorded many promotional credits as 

expenses, not as reductions to revenue.   

83. Finally, throughout 2018, in earnings releases and earnings calls, 

MusclePharm claimed that year-over-year increases to advertising and promotion 

expenses were a result of higher costs. Statements regarding trends in a company’s 

expenses are material to investors. These statements were false and misleading 

because the reported increases resulted from reclassification of credits from a 

discount to revenue to an expense, not from a trend towards higher promotional costs. 

IV. CASUTTO AND ZUCCO AIDED AND ABETTED MUSCLEPHARM’S 

FALSE AND MISLEADING STATEMENTS. 

84. Casutto’s and Zucco’s conduct, described above, led to prematurely 

reporting revenue in MusclePharm’s financial statements as filed in its 2017 Form 

10-K and 2018 Forms 10-Q as well as in the related earnings press releases filed on 

Form 8-K and on earnings calls. As such, Casutto and Zucco knowingly or recklessly 

provided substantial assistance to MusclePharm’s false and misleading financial 

statements. 

V. HARRIS WAS NEGLIGENT WITH RESPECT TO, AND OBTAINED 

MONEY FOR MUSCLEPHARM BY MEANS OF, MUSCLEPHARM’S 

FALSE AND MISLEADING STATEMENTS. 

85. Throughout the Restatement Period, Harris oversaw the preparation of 

MusclePharm’s financial statements and SEC filings; read, reviewed, commented on, 

and gathered information for SEC filings; presented the draft SEC filings to 

MusclePharm’s audit committee; drafted earnings press releases; and presented 

MusclePharm’s financial results to investors on quarterly earnings calls. In light of all 

of the above-alleged facts, including his own role in the accounting misconduct, as 

well as his education, experience, and job description, Harris should have known that 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 18 of 38   Page ID #:18



 

COMPLAINT 19  
 

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MusclePharm’s financial statements in its 2017 Form 10-K and 2018 Forms 10-Q, as 

well as in the related earnings press releases filed on Form 8-K and in earnings calls, 

were materially misstated and did not comply with GAAP. 

86. When Harris oversaw the preparation of these filings, he should have 

known that statements in the filings regarding the company’s revenue recognition 

policies were false and misleading because MusclePharm recognized all revenue 

upon shipment without regard to when risk of loss or control transferred.  

87. Harris should have known that disclosures in MusclePharm’s 2017 Form 

10-K regarding its accounting for “advertising related credits” as a “reduction to 

revenue” were false and misleading because MusclePharm recorded many 

promotional credits as expenses, not as reductions to revenue.   

88. Harris should have known that statements in MusclePharm’s earnings 

releases and earnings calls throughout 2018 claiming that year-over-year increases to 

advertising and promotion expenses were a result of higher costs were false and 

misleading because the reported increases resulted, in part, from Harris’s role in 

reclassifying certain credits from a discount to revenue to an expense, not from a 

trend towards higher promotional costs. In fact, after that decision was reversed in the 

restatement, the year-over-year advertising and promotional expenses decreased in 

each quarter of 2018 compared to 2017.  

89. By preparing the false and misleading financial statements and SEC 

filings and making misleading statements on earnings calls, Harris obtained money 

for MusclePharm when the company sold stock in private placements at inflated 

prices.  

90. Harris obtained money for MusclePharm by means of the misstatements 

described above because, from at least June 2018 to May 2019, through private 

placements, MusclePharm sold (i) restricted stock to board members to pay for board 

fees, (ii) common stock to plaintiffs engaged in civil litigation with the company to 

pay for litigation settlements, and (iii) common stock to vendors to pay for invoices.   

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 19 of 38   Page ID #:19



 

COMPLAINT 20  
 

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91. Harris was involved in implementing the private placements by, for 

example, writing letters to the stock transfer services company directing them to issue 

the shares and send stock certificates to the applicable parties. 

92. In addition to the statements described above, Harris obtained money for 

MusclePharm by means of untrue statements of material fact relating to 

MusclePharm’s executive perquisite compensation described below. 

VI. HARRIS AND CASUTTO FAILED TO PROPERLY DISCLOSE ALL 

EXECUTIVE PERQUISITES IN MUSCLEPHARM’S PUBLIC 

FILINGS. 

 93. Accurate disclosure of executive perquisites was the primary focus of 

the 2015 SEC Order. Pursuant to the 2015 SEC Order, MusclePharm engaged an 

independent compliance consultant (“ICC”) to, among other things, strengthen the 

disclosure controls and procedures relevant to accurate disclosure of perquisite 

compensation.  

94. In February 2017, the company certified to the SEC that it had complied 

with the undertakings in the 2015 SEC Order, in part, by implementing a disclosure 

control recommended by the ICC to use an “[a]nnual questionnaire[] ... provided to 

the members of the Board of Directors and executives to identify any perquisites.” 

(“D&O questionnaire”).  

95. MusclePharm used a D&O questionnaire in early 2017 to identify 2016 

perquisites. But the very next year, after Harris took over as contract CFO, neither he, 

nor the CEO, nor anyone else at the company used a D&O questionnaire, or any other 

controls, to identify 2017 perquisites for its named executive officers: the CEO and 

Casutto. 

96. MusclePharm’s Travel and Expense Policy outlined the procedures for 

obtaining reimbursement for business expenses, including specifically identifying the 

business purpose of the expense and submitting original receipts.    

97. Casutto disregarded these procedures by seeking reimbursement for 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 20 of 38   Page ID #:20



 

COMPLAINT 21  
 

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expenses that were not supported by any business purpose or appropriate 

documentation.  

98. Casutto obtained reimbursement for significant commuting expenses and 

other expenses not integrally and directly related to his job that should have been 

reported as perquisites.   

99. Additionally, Harris, Casutto and the CEO failed to ensure that 

perquisites, which they had personal knowledge of, were properly included in the 

company’s executive compensation disclosures.    

100. This conduct resulted in MusclePharm materially underreporting 

executive perquisites in the 2017 Form 10-K and October 26, 2018 proxy statement 

by approximately $231,000 (88 percent) for the CEO and approximately $107,900 

(54 percent) for Casutto. The unreported perquisites included: (i) personal legal fees, 

(ii) tax gross-ups on restricted stock, (iii) automobile expenses, and (iv) commuting 

and living costs.  

101. Accurate and transparent executive compensation disclosures are 

material to investors. Additionally, the amount by which MusclePharm underreported 

its 2017 executive perquisites was material.   

VII. THE DEFENDANTS ENGAGED IN DECEPTIVE CONDUCT AND 

AIDED AND ABETTED DECEPTIVE CONDUCT. 

102. As detailed above, the Defendants engaged in and/or substantially 

assisted deceptive conduct in furtherance of a scheme to artificially inflate 

MusclePharm’s revenue and other financial information.   

103. For example, Cassuto committed numerous fraudulent and deceptive 

acts. Among other things, Casutto: 

a. instructed Zucco to store orders totaling approximately $210,000 

in trailers at the end of fourth quarter of 2017 when he knew they 

would not be shipped to customers until 2018;  

b. worked with Harris to approve revenue recognition for a sale to 

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COMPLAINT 22  
 

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Customer E totaling approximately $632,000 in the fourth quarter 

of 2017 when he knew that there was no formal purchase order, 

the sale was contingent on certain future events, and all the 

products remained in MusclePharm’s Canadian warehouse at the 

end of 2017;  

c. directed Zucco to store Customer D orders totaling approximately 

$4.7 million in a third-party warehouse paid for by MusclePharm 

in third quarter of 2018 when he knew Customer D did not want 

the orders shipped until the following quarter;   

d. directed Zucco to store invoiced but unshipped orders totaling 

approximately $2.5 million in trailers at the end of fourth quarter 

of 2018 when he knew they would not be shipped to customers 

until 2019; 

e. disregarded MusclePharm’s Travel and Expense Policy by failing 

to provide receipts or business justifications for expenditures 

and/or seeking reimbursement for expenses outside the policy 

limits and failed to ensure that perquisites, which he had personal 

knowledge of, were properly included in the company’s executive 

compensation disclosures for 2017.    

104. In light of all of the above-alleged facts, Casutto knew or was reckless in 

not knowing, and should have known, that his conduct was deceptive and that it 

resulted in material misstatements by MusclePharm.  

105. Additionally, as detailed above, Zucco knowingly or recklessly provided 

substantial assistance to MusclePharm’s fraudulent and deceptive conduct. Among 

other things, Zucco:  

a. at Casutto’s direction, instructed the warehouse to store orders 

totaling approximately $210,000 in trailers at the end of fourth 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 22 of 38   Page ID #:22



 

COMPLAINT 23  
 

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quarter of 2017 when he knew they would not be shipped to 

customers until 2018;  

b. at Casutto’s direction, instructed warehouse personnel to store 

Customer D orders totaling approximately $4.7 million in a third 

party warehouse paid for by MusclePharm in third quarter of 2018 

when he knew Customer D did not want the orders shipped until 

the following quarter;   

c. at Casutto’s direction, instructed warehouse personnel to store 

invoiced but unshipped orders totaling approximately $2.5 million 

in trailers at the end of fourth quarter of 2018 when he knew they 

would not be shipped to customers until 2019; and 

d. At the direction of Casutto and Harris, instructed warehouse and 

IT personnel to replace BOLs in the accounting system showing 

January 2019 ship dates with BOLs showing December 2018 ship 

dates.  

106. In light of all of the above-alleged facts, Zucco knew or was reckless in 

not knowing, and should have known, that his conduct substantially assisted 

MusclePharm in its violations of the federal securities laws. 

107. As detailed above, Harris engaged in transactions, practices, and a 

course of business that operated or would operate as a fraud or deceit. Among other 

things, Harris: 

a. approved revenue recognition for a sale to Customer E totaling 

approximately $632,000 in the fourth quarter of 2017 without 

proper support and failed to timely correct the accounting for 

Customer B’s orders after receiving emails that should have 

alerted him to the fact the revenue was prematurely recognized 

upon shipment to a holding warehouse instead of the customer; 

b. participated in replacing BOLs showing December 2018 ship 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 23 of 38   Page ID #:23



 

COMPLAINT 24  
 

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dates with BOLs showing January 2019 ship dates without taking 

reasonable steps to confirm which ship date was accurate;  

c. failed to ensure that MusclePharm recognized revenue in 

accordance with its customer contract terms and classified 

customer credits in compliance with GAAP; 

d. failed to ensure that MusclePharm used a D&O questionnaire, or 

any other disclosure controls and procedure, to identify perquisite 

compensation for disclosure, and failed to ensure that certain 

perquisites, which he had personal knowledge of, were properly 

included in the company’s executive compensation disclosures.    

108. In light of all of the above-alleged facts, as well as his background, 

education, and job responsibilities, Harris negligently engaged in transactions, 

practices, and a course of business that operated or would operate as a fraud or deceit 

that resulted in misstatements by MusclePharm. 

VIII. THE DEFENDANTS AIDED AND ABETTED MUSCLEPHARM’S 

VIOLATION OF REPORTING PROVISIONS OF THE FEDERAL 

SECURITIES LAWS. 

109. Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11 and 13a-13 

thereunder require issuers like MusclePharm to file reports with the SEC containing 

such information as the SEC’s rules prescribe. Further, Rule 12b-20 requires that an 

issuer’s statement or report contain such further material information as may be 

necessary to make the required statements, in light of the circumstances under which 

they were made, not misleading. 

110. As detailed above, MusclePharm violated these reporting provisions by 

filing annual, current, and quarterly reports with the SEC throughout the Restatement 

Period that, among other things, materially inflated reported revenue.   

111. Also as detailed above, Casutto, Zucco, and Harris aided and abetted 

these violations by knowingly or recklessly providing substantial assistance to those 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 24 of 38   Page ID #:24



 

COMPLAINT 25  
 

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violations. Among other things, Harris oversaw the preparation of the filings and 

participated in the underlying accounting misconduct, as described above. And 

Casutto and Zucco engaged in a practice of marking orders as shipped prior to 

shipment for the purpose of prematurely closing sales, which inflated the revenue 

reported in MusclePharm’s financial statements as filed on its 2017 Form 10-K and 

2018 Forms 10-Q.  

IX. THE DEFENDANTS VIOLATED AND/OR AIDED AND ABETTED 

MUSCLEPHARM’S VIOLATION OF BOOKS AND RECORDS AND 

INTERNAL CONTROLS PROVISIONS OF THE FEDERAL 

SECURITIES LAWS. 

  112. Section 13(b)(2)(A) of the Exchange Act requires issuers like 

MusclePharm to make and keep books, records, and accounts which, in reasonable 

detail, accurately and fairly reflect the company’s transactions and dispositions of the 

assets. Section 13(b)(2)(B) of the Exchange Act requires issuers like MusclePharm to 

devise and maintain a system of sufficient internal accounting controls. Section 

13(b)(5) of the Exchange Act prohibits any person from knowingly circumventing or 

failing to implement a system of internal accounting controls or knowingly falsifying 

books, records, or accounts. Similarly, Rule 13b2-1 prohibits any person from 

directly or indirectly falsifying or causing to be falsified books, records, or accounts. 

113.  In violation of Section 13(b)(2)(A), MusclePharm failed to make and 

keep accurate books, records, and accounts. Casutto, Zucco, and Harris aided and 

abetted MusclePharm’s violations of the books and records provision based on their 

respective roles in MusclePharm’s improper revenue recognition during the 

Restatement Period. Through those same actions, the Defendants also violated Rule 

13b2-1 of the Exchange Act. 

114. In violation of Section 13(b)(2)(B), MusclePharm failed to maintain a 

system of internal accounting controls sufficient to provide reasonable assurance that 

revenue, customer credits, gross profit margin, advertising and promotional expenses, 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 25 of 38   Page ID #:25



 

COMPLAINT 26  
 

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and inventory complied with GAAP. In his role as contract CFO, Harris was one of 

the persons responsible for devising and maintaining MusclePharm’s system of 

internal accounting controls, and his failure to do so aided and abetted 

MusclePharm’s violation of Section 13(b)(2)(B) of the Exchange Act.   

115. Casutto and Zucco additionally circumvented MusclePharm’s internal 

accounting control requiring shipment prior to revenue recognition in violation of 

Section 13(b)(5) of the Exchange Act by engaging in the practice of storing 

unshipped inventory off-site in trailers and third-party warehouses and marking it as 

shipped in the inventory system.  

X. HARRIS AIDED AND ABETTED MUSCLEPHARM’S VIOLATIONS 

OF THE REPORTING CONTROLS PROVISION OF THE FEDERAL 

SECURITIES LAWS. 

116. Rule 13a-15(a) of the Exchange Act requires issuers like MusclePharm 

to maintain disclosure controls and procedures (“DCP”) and internal control over 

financial reporting (“ICFR”). DCP are defined in Rule 13a-15(e), in part, as controls 

and other procedures “designed to ensure that information required to be disclosed ... 

is recorded, processed, summarized, and reported.” ICFR is defined in Rule 13a-

15(f), in part, as “a process ... to provide reasonable assurance regarding the 

reliability of financial reporting ....”  

117. MusclePharm violated Rule 13a-15(a) by failing to maintain DCP or 

ICFR as required. Specifically, MusclePharm failed to implement DCP concerning 

the identification and reporting of executive perquisites, and failed to maintain 

appropriate ICFR to prevent and detect the revenue recognition misconduct described 

above. Harris aided and abetted MusclePharm’s violation of Rule 13a-15(a). 

Although the company certified to the staff in February 2017 that it implemented a 

D&O questionnaire disclosure control, Harris did not use D&O questionnaires, or any 

other controls, to identify 2017 perquisites for the 2017 Form 10-K and October 2018 

proxy statement. Additionally, Harris did nothing to establish and maintain 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 26 of 38   Page ID #:26



 

COMPLAINT 27  
 

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MusclePharm’s ICFR.    

XI. CASUTTO AND HARRIS VIOLATED PROXY SOLICITATION 

PROVISIONS OF THE FEDERAL SECURITIES LAWS.    

118. Section 14(a) of the Exchange Act makes it unlawful to solicit any proxy 

with respect to any security (other than an exempted security) registered pursuant to 

Section 12 of the Exchange Act in contravention of such rules and regulations as the 

SEC may prescribe. Rule 14a-3 provides that no solicitation of a proxy may occur 

unless each person solicited is concurrently furnished or has previously been 

furnished with a proxy statement containing the information specified by Schedule 

14A, including executive compensation. Rule 14a-9 prohibits the use of proxy 

statements containing statements that are materially false or misleading by omission.    

119. On October 26, 2018, MusclePharm filed a definitive proxy statement 

that it used to solicit proxies in connection with, among other things, the re-election 

of Casutto to the board of directors and an advisory vote on the executive 

compensation packages for the CEO and Casutto.  

120. Harris participated in preparing the proxy statement, and Casutto, as a 

director of the company, participated in the solicitation.  

121. In violation of Rule 14a-3, the proxy failed to disclose all compensation 

received by the CEO and Casutto as required by Item 8 of Schedule 14A. 

Additionally, in violation of Rule 14a-9, the 2017 “other compensation” was 

materially misleading because it underreported perquisites for the CEO and Casutto 

by 88 percent and 54 percent, respectively.   

XII. CASUTTO AND ZUCCO RECEIVED ILL-GOTTEN GAINS FROM 

THEIR CONDUCT. 

122. Casutto received cash performance bonuses for year-end 2017, first 

quarter of 2018, and second quarter of 2018 totaling $65,531 that he would not have 

received but for his participation in the misconduct described above. 

123. Zucco received cash performance bonuses for the second quarter of 2018 

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 27 of 38   Page ID #:27



 

COMPLAINT 28  
 

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totaling $12,500 that he would not have received but for his participation in the 

misconduct described above.     

FIRST CLAIM FOR RELIEF 

Fraud: Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) 

(Casutto) 

124. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

125. Casutto, directly or indirectly, acting with scienter, by use of the means 

or instrumentalities or interstate commerce, or of the mails, or of a facility of a 

national securities exchange, in connection with the purchase or sale of a security (i) 

employed devices, schemes, or artifices to defraud and (ii) engaged in acts, practices, 

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

another person. 

126. By virtue of the foregoing, Casutto, directly or indirectly, violated and, 

unless restrained and enjoined, will again violate Section 10(b) of the Exchange Act 

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

thereunder. 

SECOND CLAIM FOR RELIEF 

Fraud: Aiding and Abetting MusclePharm’s Violations of 

Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) 

(Zucco) 

127. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

128. MusclePharm, directly or indirectly, acting with scienter, by use of the 

means or instrumentalities of interstate commerce, or of the mails, or of a facility of a 

national securities exchange, in connection with the purchase or sale of a security (i) 

employed devices, schemes, or artifices to defraud and (ii) engaged in acts, practices, 

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

Case 2:23-cv-05104   Document 1   Filed 06/27/23   Page 28 of 38   Page ID #:28



 

COMPLAINT 29  
 

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another person in violation of Section 10(b) of the Exchange Act and Rules 10b-5(a) 

and 10b-5(c).  

129. As a result of the conduct alleged herein, Zucco aided and abetted 

MusclePharm’s violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) 

and (c) by knowingly or recklessly providing substantial assistance to MusclePharm. 

130. By reason of the foregoing, Zucco, directly or indirectly, aided and 

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

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5(a) and (c) [17 

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

THIRD CLAIM FOR RELIEF 

Fraud: Section 17(a)(1) of the Securities Act 

(Casutto) 

131. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

132. Casutto, directly or indirectly, in the offer or sale of securities, by use of 

the means or instruments of transportation or communication in interstate commerce 

or by use of the mails, acting with scienter, employed a device, scheme, or artifice to 

defraud.  

133. By virtue of the foregoing, Casutto, directly or indirectly, violated and, 

unless restrained and enjoined, will again violate Section 17(a)(1) of the Securities 

Act [15 U.S.C. § 77q(a)(1)]. 

FOURTH CLAIM FOR RELIEF 

Fraud: Sections 17(a)(3) of the Securities Act 

(Casutto and Harris) 

134. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

135. Casutto and Harris, directly or indirectly, in the offer or sale of 

securities, by use of the means or instruments of transportation or communication in 

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COMPLAINT 30  
 

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interstate commerce or by use of the mails, acting with negligence, engaged in a 

transaction, practice, or course of business which operated or would operate as a 

fraud or deceit upon the purchasers.  

136. By virtue of the foregoing, Casutto and Harris, directly or indirectly, 

violated and, unless restrained and enjoined, will again violate Section 17(a)(3) of the 

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

FIFTH CLAIM FOR RELIEF 

Fraud: Aiding and Abetting MusclePharm’s Violation of 

Sections 17(a)(1) and (3) of the Securities Act 

(Zucco) 

137. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as through fully set forth herein. 

138. MusclePharm, directly or indirectly, in the offer or sale of securities, by 

use of the means or instruments of transportation or communication in interstate 

commerce or by use of the mails, acting with the requisite state of mind (i) employed 

a device, scheme, or artifice to defraud and (ii) engaged in transactions, practices, or a 

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

purchasers in violation of Section 17(a)(1) and 17(a)(3) of the Securities Act.  

139. As a result of the conduct alleged herein, Zucco aided and abetted 

MusclePharm’s violations of Section 17(a)(1) and 17(a)(3) of the Securities Act by 

knowingly or recklessly providing substantial assistance to MusclePharm. 

140. By reason of the foregoing, Zucco, directly or indirectly, aided and 

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

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

SIXTH CLAIM FOR RELIEF 

Fraud: Section 17(a)(2) of the Securities Act 

(Harris) 

141. The SEC realleges and incorporates by reference paragraphs 1 through 

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COMPLAINT 31  
 

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123 as though fully set forth herein. 

142. Harris, directly or indirectly, in the offer or sale of securities, by use of 

the means or instruments of transportation or communication in interstate commerce 

or by use of the mails, acting with the requisite state of mind, obtained money or 

property by means of an untrue statement of material fact or omission 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. 

143. By virtue of the foregoing, Harris, directly or indirectly, violated and, 

unless restrained and enjoined, will again violate Section 17(a)(2) of the Securities 

Act [15 U.S.C. § 77q(a)(2)]. 

SEVENTH CLAIM FOR RELIEF 

Fraud: Aiding and Abetting MusclePharm’s Violation of Section 17(a)(2) of the 

Securities Act 

(Casutto and Zucco) 

144. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

145. MusclePharm, directly or indirectly, in the offer or sale of securities, by 

use of the means or instruments of transportation or communication in interstate 

commerce or by use of the mails, acting with the requisite state of mind, obtained 

money or property by means of an untrue statement of material fact or omission 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 in violation of Section 

17(a)(2) of the Securities Act. 

146. As a result of the conduct alleged herein, Casutto and Zucco aided and 

abetted MusclePharm’s violations of Section 17(a)(2) of the Securities Act by 

knowingly or recklessly providing substantial assistance to MusclePharm. 

147. By virtue of the foregoing, Casutto and Zucco, directly or indirectly, 

aided and abetted and, unless restrained and enjoined, will again aid and abet 

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violations of Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)].  

EIGHTH CLAIM FOR RELIEF 

Fraud: Aiding and Abetting MusclePharm’s Violation of Section 10(b) of the 

Exchange Act and Rule 10b-5(b) 

(Casutto and Zucco) 

148. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

149. MusclePharm, directly or indirectly, acting with scienter, by use of the 

means or instrumentalities of interstate commerce, or of the mails, or of a facility of a 

national securities exchange, in connection with the purchase or sale of a security 

made an untrue statement of a material fact or omitted a material fact necessary in 

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

were made, not misleading in violation of Section 10(b) of the Exchange Act and 

Rule 10b-5(b) thereunder. 

150. As a result of the conduct alleged herein, Casutto and Zucco aided and 

abetted MusclePharm’s violations of Section 10(b) of the Exchange Act and Rule 

10b-5(b) thereunder by knowingly or recklessly providing substantial assistance to 

MusclePharm. 

151. By virtue of the foregoing, Casutto and Zucco, directly or indirectly, 

aided and abetted and, unless restrained and enjoined, will again aid and abet 

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

5(b) [17 C.F.C. § 240.10b-5(b)].  

NINTH CLAIM FOR RELIEF 

False SEC Filings: Aiding and Abetting MusclePharm’s Violation of Section 

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

(All Defendants) 

152. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

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153. MusclePharm, which is an issuer of securities registered pursuant to 

Section 12 of the Exchange Act, filed materially false and misleading annual, 

quarterly, and current reports with the SEC that made untrue statements of material 

fact or omitted to state material facts necessary in order to make the statements made, 

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

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

thereunder.  

154. As a result of the conduct alleged herein, Casutto, Zucco, and Harris 

aided and abetted MusclePharm’s violations of Section 13(a) of the Exchange Act 

and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder by knowingly or recklessly 

providing substantial assistance to MusclePharm.  

155. By reason of the foregoing, Casutto, Zucco, and Harris, 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, 13a-11, and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, 

240.13a-11, and 240.13a-13].  

TENTH CLAIM FOR RELIEF 

Reporting Controls: Aiding and Abetting MusclePharm’s Violations of 

Rule 13a-15(a) of the Exchange Act 

(Harris) 

156. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

157. MusclePharm, which is an issuer of securities pursuant to Section 12 of 

the Exchange Act and which files annual reports with the SEC pursuant to Section 

13(a) of the Exchange Act, failed to maintain required disclosure controls and 

procedures and internal control over financial reporting in violation of Rule 13a-15(a) 

of the Exchange Act. 

158. As a result of the conduct alleged herein, Harris aided and abetted 

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MusclePharm’s violations of Rule 13a-15(a) of the Exchange Act by knowingly or 

recklessly providing substantial assistance to MusclePharm. 

159.  By reason of the foregoing, Harris, directly or indirectly, aided and 

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

Exchange Act Rule 13a-15(a) [17 C.F.R. § 240.13a-15(a)]. 

ELEVENTH CLAIM FOR RELIEF 

False Books and Records: Aiding and Abetting MusclePharm’s Violations of 

Section 13(b)(2)(A) of the Exchange Act 

(All Defendants) 

160. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

161. MusclePharm failed to make and keep books, records, and accounts, 

which, in reasonable detail, accurately and fairly reflected its transactions and 

dispositions of assets in violation of Section 13(b)(2)(A) of the Exchange Act. 

162. As a result of the conduct alleged herein, Casutto, Zucco, and Harris, 

aided and abetted MusclePharm’s violations of Section 13(b)(2)(A) of the Exchange 

Act by knowingly or recklessly providing substantial assistance to MusclePharm.  

163.  By reason of the foregoing, Casutto, Zucco, and Harris, directly or 

indirectly, aided and abetted and, unless restrained and enjoined, will again aid and 

abet violations of Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 

78m(b)(2)(A)]. 

TWELFTH CLAIM FOR RELIEF 

Internal Accounting Controls: Aiding and Abetting MusclePharm’s Violation of 

Section 13(b)(2)(B) of the Exchange Act 

(Harris) 

164.  The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

165. MusclePharm failed to devise and maintain a system of internal 

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accounting controls sufficient to provide reasonable assurances that transactions were 

recorded as necessary to permit preparation of financial statements in conformity 

with GAAP and any other criteria applicable to such statements in violation of 

Section 13(b)(2)(B) of the Exchange Act. 

166. As a result of the conduct alleged herein, Harris aided and abetted 

MusclePharm’s violations of Section 13(b)(2)(B) of the Exchange Act by knowingly 

or recklessly providing substantial assistance to MusclePharm.  

167. By reason of the foregoing, Harris, directly or indirectly, aided and 

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

Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)]. 

THIRTEENTH CLAIM FOR RELIEF 

Falsified Books, Records, or Accounts: Section 13(b)(5) of the Exchange Act 

(Casutto and Zucco) 

168. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

169. As a result of the conduct alleged herein, Casutto and Zucco, knowingly 

circumvented a system of internal accounting controls or knowingly falsified or 

caused to be falsified books, records or accounts of MusclePharm.   

170. By reason of the foregoing, Casutto and Zucco violated and, unless 

restrained and enjoined, will again violate Section 13(b)(5) of the Exchange Act [15 

U.S.C. § 78m(b)(5)].  

FOURTEENTH CLAIM FOR RELIEF 

Falsified Books, Records, or Accounts: Rule 13b2-1 of the Exchange Act 

(All Defendants) 

171. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as though fully set forth herein. 

172. As a result of the conduct alleged herein, Casutto, Zucco, and Harris, 

directly or indirectly, falsified or caused to be falsified books, records or accounts of 

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MusclePharm.   

173. By reason of the foregoing, Casutto, Zucco, and Harris violated and, 

unless restrained and enjoined, will again violate Rule 13b2-1 of the Exchange Act 

[17 C.F.R. § 240.13b2-1]. 

FIFTEENTH CLAIM FOR RELIEF 

Proxy Disclosures: Violation of Section 14(a) of the Exchange Act 

and Rules 14a-3 and 14a-9 

(Casutto and Harris) 

174. The SEC realleges and incorporates by reference paragraphs 1 through 

123 as through fully set forth herein. 

175. As a result of the conduct alleged herein, Casutto and Harris, directly or 

indirectly, by use of mails, or the means or instrumentalities or 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.  

176. By reason of the foregoing, Casutto and Harris 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 and 

240.14a.9]. 

RELIEF SOUGHT 

WHEREFORE, the SEC respectfully requests that this Court: 

I. 

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

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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. §§ 

78u(d)(5) and 78u(d)(7)], order Casutto and Zucco to disgorge all ill-gotten gains, 

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

Complaint; 

IV. 

Order Casutto, Zucco, and Harris to pay civil money penalties pursuant to 

Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the 

Exchange Act [15 U.S.C. § 78u(d)(3)]; and 

V. 

Issue an order, pursuant to the Court’s equitable powers, Section 20(e) of the 

Securities Act [15 U.S.C. § 77t(e)], and Section 21(d)(2) of the Exchange Act [15 

U.S.C. § 78u(d)(2)], barring Casutto from acting as an officer or director 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. 

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JURY DEMAND 

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

 

Respectfully submitted, June 27, 2023. 

 
/s/ Daniel Blau 
Daniel Blau 
Zachary T. Carlyle 
Sharan E. Lieberman 
Attorneys for Plaintiff 
Securities and Exchange Commission  

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