SEC v. David Pope, No. 0:22-CV-02155, District of Minnesota (Sept. 2, 2022) — Complaint

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,

v.

DAVID POPE

                                           Defendant.
Case No.:

Jury Trial Demanded

COMPLAINT
Plaintiff Securities and Exchange Commission (“SEC”)   files this Complaint
against Defendant David Pope (“Pope” or “Defendant”), and alleges as follows:
SUMMARY OF THE ACTION
1. From at least 2014 through 2018, David Pope, a Lakeville, Minnesota
resident, manipulated the quantities and values of rail freight contracts entered into by
CHS Inc. (“CHS”), an Inver Grove Heights, Minnesota-based agricultural cooperative.
As a result of Pope’s misconduct, CHS’s public financial statements for those time
periods were materially false.
2. CHS is a global agricultural cooperative owned by farmers, ranchers, and
cooperatives across the United States that provides grain, food, agronomy, and energy
resources to businesses and consumers on a global scale.  As part of its business, CHS
enters into contracts with railroads, through direct auctions or through participation in the

2

secondary market, to transport commodities throughout North America.  During the time
period relevant here, CHS reported those contracts as derivative assets on its financial
statements.
3. Pope served as CHS’s senior, rail freight trader, in charge of the rail freight
trading “desk” (“rail freight desk”).  In that role, Pope was responsible for two key
functions.  First, he was the CHS representative at auctions to acquire rail freight
contracts from railroads, and he also bought and sold such contracts for CHS in the
secondary market.  Second, he was the CHS employee responsible for properly reporting
and valuing those contracts and providing that information to CHS’s accounting
personnel for incorporation into CHS’s public financial statements.
4. Instead of properly valuing the contracts based on current market prices,
Pope  falsely manipulated the valuations.  In addition, he also reported to CHS’s
accounting personnel contracts that didn’t exist, causing them to be falsely included in
CHS’s books and records and in its public financial statements.  Pope’s fraudulent
conduct caused the rail freight desk’s profit and loss reports to appear much less volatile
than Pope’s actual performance.
5. As a result of Pope’s fraud, CHS materially misstated its net income in the
public reports that it filed with the SEC throughout the 2014 to 2018 time frame.
Ultimately the company restated its net income for its fiscal years 2014 through 2018 to
correct for Pope’s fraudulent conduct.  The adjustments required by Pope’s misconduct
were as high as approximately 43% of CHS’s previously-reported net income figures.

3

6. By his misconduct, Pope violated the antifraud, books and records, and
internal controls provisions, and aided and abetted violations by CHS of the books and
records and reporting provisions, of the federal securities laws.
7. The SEC brings this action seeking permanent injunctive relief,
disgorgement of ill-gotten gains plus prejudgment interest, a civil penalty, and all other
equitable and ancillary relief the Court deems just and proper.
JURISDICTION AND VENUE
8. This Court has jurisdiction over this action pursuant to Sections 20(b),
20(d), and 22(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t(b),
77t(d), and 77v(a)] and Sections 21(d), 21(e), and 27 of the Securities Exchange Act of
1934 (“Exchange Act”) [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
9. Defendant, directly or indirectly,  made use of the means or
instrumentalities of interstate commerce, the means or instruments of transportation or
communication in interstate commerce, and/or the mails in connection with the
transactions, acts, practices, and courses of business alleged herein.
10. Venue is proper in this district 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].  Certain
of the transactions, acts, practices, and courses of business constituting violations of the
federal securities laws occurred within this district.  Defendant also resides within this
district.

4

DEFENDANT
11. David Pope, age 55 and a resident of Lakeville, Minnesota, was a CHS
senior freight merchandiser—commonly referred to as a rail freight trader—until CHS
terminated his employment shortly after discovering his conduct as alleged herein.
During the Commission’s investigation that preceded the filing of this Complaint, Pope
asserted his Fifth Amendment privilege against self-incrimination and chose not to
testify.
FACTUAL ALLEGATIONS
A. Pope was responsible for valuing certain assets reported on CHS’s
financial statements.

12. CHS is a cooperative whose equity is 70% owned by approximately 950
local cooperatives that are, in turn, owned by half a million farmers and ranchers.  The
balance of CHS’s equity is owned by roughly 75,000 individual agricultural producers.
13. CHS operates in three reportable segments—Energy, Nitrogen Production,
and Ag.  The company’s North American grain marketing operations fall within the Ag
segment.  As part of that business, CHS enters into rail freight contracts to secure
transportation of commodities throughout North America.
14. In his position as senior rail freight trader, Pope ran the rail freight desk that
was responsible for buying and selling rail freight capacity to support CHS’s North
American grain operations.  Pope accomplished this task primarily by participating in
auctions in which CHS bid for the right and obligation to use shuttle loader trains from

5

large railroads.  If CHS won the auction, the shuttle contract typically provided for the
continuous operation, from one origin to one destination, of a 110-car train for one year.
Pope also sold, and occasionally bought, the right to use shuttles in the secondary market
on behalf of CHS.
15. During the 2014 to 2018 time period, CHS accounted for its auction and
secondary market shuttle transactions as derivatives.  Accordingly, the company carried
the net value of the derivatives as an asset on its balance sheet and valued its shuttle
capacity on a mark-to-market basis.
16. In his role as CHS’s senior rail freight trader, Pope possessed significant
responsibility.  Among other things, he was charged with accurately reporting CHS’s
shuttle contracts and their values to the company for derivative accounting purposes.
17. Pope did this by reporting (or causing others under his direction to report)
to CHS accounting personnel the rail freight contracts entered into by CHS.  He also
prepared bid sheets that, in theory, provided the current market values of CHS’s shuttles.
He provided these bid sheets every month to CHS’s grain marketing accounting group,
which used them to calculate the rail freight desk’s assets and its profit and loss statement
for that month.  In turn, those calculations were included in CHS’s public financial
statements.
18. As Pope knew or was severely reckless in not knowing, CHS relied on him
to provide accurate information because the shuttle contracts and valuations he reported
were not substantively reviewed by other CHS employees.  In particular, as an

6

accounting control, CHS required Pope to sign the monthly bid sheets that he provided to
the grain marketing accounting group to attest to the valuation of the company’s shuttle
contracts.  In falsifying those bid sheets, Pope circumvented that control.
B. Pope repeatedly and materially falsified shuttle valuations and
quantities.
19. From at least 2014 through the summer of 2018, Pope manipulated the
values of CHS’s shuttle contracts by providing “marks” (i.e. valuations of the contracts)
to the company’s accountants that he knew, or was severely reckless in not knowing, did
not properly value the company’s freight contracts.  Pope also frequently fabricated
shuttle contracts that did not exist and reported or caused others to report those fabricated
contracts into CHS’s books and records that were included into the rail freight desk’s
financial results.
20. As noted above, as part of his duties, Pope submitted bid sheets that set out
the values of the shuttle contracts he had purportedly obtained on CHS’s behalf.
Throughout the relevant time-period, these bid sheets contained materially false
information.
21. Under well-known industry practice and accounting principles, and as Pope
knew or was severely reckless or negligent in not knowing, his valuations should have
been based on actual market data.  But, when his supervisors and others generally
familiar with valuing similar contracts confronted him after discovering his false entries,
Pope was unable to produce any documents to support the valuations he provided.

7

Instead, he admitted that he ignored current market data and instead relied on what he
claimed were his subjective predictions of future market prices, a process that resulted in
improperly smoothing out the rail freight desk’s, and ultimately CHS’s, financial results.
Specifically, altering the valuation data had the effect of evening out the rail freight
desk’s profits and losses by offsetting times in which Pope had overestimated or
underestimated the amount of freight capacity that CHS should acquire and keep.  Pope
further admitted that he had reported non-existent shuttle contracts to, as he put it,
“correct the record.”
22. Pope engaged in this misconduct on a monthly basis throughout the 2014 to
2018 timeframe.
23. During August 2018, CHS’s Vice President of North American Grain
Marketing and a CHS corn trader reviewed one of Pope’s bid sheets.  Upon examining
the document, both immediately recognized that the values provided by Pope were
grossly incorrect.  For example, Pope had provided early 2019 shuttle values as high as
$4,000 per rail car.  In reality, the market price for that time frame was less than $500 per
car.
24. Through his actions, Pope fabricated hundreds of fictitious rail car
contracts, with marks up to $4,000 per car.  Because of Pope’s fraudulent conduct, those
fictitious contracts and corresponding values were added to the company’s books and

8

records and incorporated into its public financial statements and then included in reports
filed with the SEC.
25. As part of his compensation package, Pope received bonuses that were tied
to the performance of the Grain Marketing Division of CHS, which included the rail
freight desk, and of CHS.  Because of his actions described herein, Pope received
financial bonuses that were higher than he would have received, but for his misconduct.
C. Pope’s conduct was intentional or at least severely reckless.
1. Pope was an experienced trader who knew his valuation
approach was wholly inappropriate.
26. Pope knew or was severely reckless in not knowing that the monthly bid
sheets he submitted to CHS’s accounting personnel for inclusion in the company’s public
financial statements were materially false.  He also knew or was severely reckless in not
knowing that these false numbers would impact the company’s overall financial
statements.
27. Pope was an experienced rail freight trader who understood the rail markets
and the proper way to apply mark-to-market techniques to appropriately value the rail
freight contracts as derivatives.  And he knew that proper valuation must be based on
actual current market data, such as recent actual trading values, and third-party sources,
and not on his so-called subjective belief in what the contracts might be worth in the
future.  Moreover, Pope had ready access to, and received valuation information from,
objective third-party sources that provided valuation information, including “broker”

9

sheets issued by a rail freight broker.  Finally, Pope knew from his previous valuation
practices that the fabricated numbers he began using in 2014 were wholly false.
28. In early September 2018, CHS management held a series of meetings to try
to understand the reasons behind the grossly overstated valuations in Pope’s bid sheets.
During these meetings, Pope claimed that he based his reported values on his personal
opinions about how shuttle prices would move in the future—while ignoring the current,
substantially-lower market prices.  Pope’s misconduct resulted in Pope reporting
materially false contract values.
29. Pope understood the impact that his actions had on CHS’s financial
statements.  For example, he wrote in a September 6, 2018, email to his supervisors,
certain accounting personnel, and the person who first flagged the grossly inaccurate
valuations, that if he were to use shuttle market values, “People then need to be prepared
for the large swings in P&L that can happen with the large swings in values....”  In that
same email, he referred to his alleged practice of assigning his own values as “valuing for
railroad performance.”  As a result, Pope clearly understood that his misconduct was
impacting the company’s income calculations.
2. Pope’s deception of CHS’s auditor further shows Pope knew he
had to hide his conduct because it was wrong.
30. Pope’s deception of CHS’s external auditor, a major international
accounting firm (“External Auditor”), further demonstrates that he intentionally
manipulated the shuttle values.  In October 2017, an auditor working for the External

10

Auditor asked Pope what types of documentation CHS possessed to support the shuttles
that CHS’s records indicated it had won at auction.  In response to the request, Pope
forwarded two emails from a railroad with which CHS had entered into rail freight
contracts.  But before doing so, Pope doctored the emails.  Specifically, he deleted and
modified shuttle identifying information and terms, and also removed invoice hyperlinks
and contact information for the individuals at the railroad that allegedly entered into the
contracts with CHS.  In short, he took steps to keep the External Auditor from contacting
the railroad directly or from otherwise confirming the actual details of the contract.
31. A few days later, the same auditor emailed Pope, inquiring about the best
way for the External Auditor to confirm with the railroad the existence of the shuttle
contracts.  Pope dodged the question, instead offering to email a document from the
railroad website that provided an overview of the shuttle program.  The External Auditor
expressed his confusion and reminded Pope that he was simply trying to confirm that the
railroad’s record of contracts matched CHS’s record.  Ultimately, the External Auditor
selected several shuttle contracts that it sought to confirm and received documentation for
them from a CHS accounting employee.  Among the documents received from the CHS
accounting department was another email that Pope had manipulated.  In turn, the
External Auditor relied on Pope’s fraudulent, doctored email to support the existence of
fictitious shuttle contracts.
32. During the subsequent internal investigation conducted by CHS after
Pope’s conduct had been identified, Pope provided conflicting answers to questions, but

11

ultimately admitted manipulating shuttle values and adding nonexistent contracts to
CHS’s books and records.
D. Pope’s fraud materially impacted CHS’s public financial statements.
33. Because of Pope’s fraudulent conduct, CHS’s Forms 10-K and 10-Q for
fiscal years 2014 through 2017, and Forms 10-Q for fiscal year 2018, contained
materially false financial statements.  Specifically, Pope’s conduct materially impacted
the company’s net income.  For the same reason, the company’s Forms 8-K filed with the
Commission on June 14, 2017, December 8, 2017, and May 17, 2018, were also
materially false.  Further, these misstatements were incorporated by reference into CHS’s
2014, 2016, and 2017 securities offerings on Forms S-1, S-3, and S-8.
34. On December 3, 2018, CHS filed a Form 10-K in which, largely to correct
the false financial information resulting from Pope’s misconduct, it restated its audited
financial statements for fiscal years 2016 and 2017, as well as select financial information
for fiscal years 2014 and 2015.  The company also restated its unaudited financial
statements for the first three quarters of fiscal years 2017 and 2018.
35. Although CHS also addressed additional issues in its restated financial
statements, the restatement related largely to Pope’s misconduct.  Indeed, the impact of
Pope’s fraud to CHS’s previously-reported net income during the relevant period ranged
from 2.3% to 43.1%.  In aggregate, Pope’s actions inflated the company’s net income by
$123.9 million, accounting for 78.5% of CHS’s total restatement.

12

36. The impact of Pope’s misconduct broken down by time period is illustrated
below:
Time Period Impact of Pope’s Fraud
on CHS’s Net Income

12 months ending 8/31/2014

Net Income Understated by 7.3%

12 months ending 8/31/2015

Net Income Overstated by 16.9%

12 months ending 8/31/2016

Net Income Understated by 2.3%

12 months ending 8/31/2017

Net Income Overstated by 43.1%

9   months ending 5/31/2018

Net Income Overstated by 4.5%

FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange
Act and Exchange Act Rule 10b-5(a) and (c)

37. The SEC alleges and incorporates by reference each and every allegation
in the paragraphs above as though fully set forth herein.
38. By engaging in the conduct described above, Defendant Pope, in
connection with the purchase or sale of securities, by the use of means or
instrumentalities of interstate commerce or of the mails, or of any facility of a national
securities exchange, directly or indirectly employed devices, schemes, or artifices to

13

defraud, and engaged in acts, practices, or courses of business which operated or would
operate as   a   fraud or deceit upon any person.

39. Defendant Pope acted with scienter in that he knowingly or recklessly
engaged in the fraudulent conduct described above.
40. By reason of the foregoing, Defendant Pope has violated, and unless
enjoined will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j
(b)] and Exchange Act Rules 10b-5(a) and (c) [17 C.F.R. 240.10b-5(a) and (c)].
SECOND CLAIM FOR RELIEF

Violations of Section 17(a) of the Securities Act

41. The SEC alleges and incorporates by reference each and every allegation in
the paragraphs above as though fully set forth herein.
42. By engaging in the conduct described above, Defendant Pope, directly or
indirectly, in the offer or sale of a security, by the use of any means or instruments of
transportation or communication in interstate commerce or by use of the mails has: (a)
employed a device, scheme, or artifice to defraud; and/or (b) obtained money or property
by means of an untrue statement of a material fact or an 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; and/or (c) engaged in a transaction, practice, or
course of business which operated or would operate as a fraud or deceit upon the
purchaser.

14

43. With regard to the violations of Section 17(a)(1) of the Securities Act, Pope
engaged in the conduct intentionally or with severe recklessness.  With regard to the
violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act, he acted at least
negligently.
44. By reason of the foregoing, the Pope has violated, and unless enjoined will
continue to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q].
THIRD CLAIM FOR RELIEF
Violations of Section 13(b)(5) of the Exchange Act

45. The SEC alleges and incorporates by reference each and every allegation
in the paragraphs above as though fully set forth therein.
46. By   engaging in the   conduct described above, Pope knowingly
circumvented a   system  of  internal accounting  controls and  knowingly falsified CHS’s
books, records, and accounts.
47. By  reason of  the foregoing, Pope  violated,  and  unless  enjoined  will
continue to violate, Section 13(b) (5) of the Exchange Act [15 U.S.C. § 78m (b) (5)].
FOURTH CLAIM FOR RELIEF
Violations of Exchange Act Rule 13b2-1
48. The SEC alleges and incorporates by reference each and every allegation
in the paragraphs above as though fully set forth herein.
49. By engaging in the conduct described above, Pope directly or indirectly,
falsified and caused to be falsified CHS’s books, records, and accounts.

15

50. By reason of the foregoing, Pope violated, and unless enjoined
will continue to violate, Exchange Act Rule 13b2-1 [17 C.F.R. 240.13b2-1].
FIFTH CLAIM FOR RELIEF
Aiding and Abetting CHS’s
Violations of Section 13(a) of the Exchange Act
and Exchange Act Rules 12b-20, 13a-1, 13a-11,
13a-13

51. The SEC alleges and incorporates by reference each and every allegation
in the paragraphs above as though fully set forth herein.
52. As described above, CHS’s filings with the SEC, including its reports
filed on Form 8-K, Form 10-Q, and Form 10-K, incorporated inaccurate and
misleading financial information concerning CHS’s business operations, revenue, and
net and gross profit.
53. By engaging in the conduct described above,  CHS violated Section
13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-
13, which obligates issuers of securities registered pursuant to Section 12 of the
Exchange Act [15 U.S.C. §   78l] to file with the SEC periodic reports that are accurate
and not misleading.
54. By engaging in the conduct described above, Pope knowingly or
recklessly provided substantial assistance to CHS’s filing of false and misleading
reports with the SEC.
55. By reason of the foregoing, Pope aided and abetted, and unless

16

enjoined will continue to aid and abet, CHS’s violations of Section 13(a) of the
Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13, and
pursuant to Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)], Pope is liable
to the same extent as CHS for its violations of Section 13(a) of the Exchange Act
and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13.
SIXTH CLAIM FOR RELIEF

Aiding and Abetting CHS’s
Violations of Section 13(b)(2)(A) of the Exchange Act

56. The SEC alleges and incorporates by reference each and every allegation
in the paragraphs above as though fully set forth herein.
57. As described above, CHS failed to make and keep books, records,
and accounts, which, in reasonable detail, accurately and fairly reflected the
transactions and dispositions of the assets of CHS.
58. By engaging in the conduct described, CHS violated Section 13(b)(2)(A)
of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)].
59. Pope knowingly or recklessly provided substantial assistance to CHS’s
failure to make and keep books, records, and accounts, which, in reasonable detail,
accurately and fairly reflected the transactions and dispositions of the assets of CHS.
60. By reason of the foregoing, Pope aided and abetted, and unless
enjoined will continue to violate, CHS’s violations of Section 13(b)(2)(A) of the
Exchange Act, and pursuant to Section 20(e) of the Exchange Act

17

[15 U.S.C. § 78t(e)], Pope is liable to the same extent as CHS for its violations of
Section 13(b)(2)(A) of the Exchange Act.
RELIEF REQUESTED
Therefore, the SEC respectfully requests that this Court:
(a) Permanently enjoin Pope from violating Section 17(a) of the
Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C.
§78j(b)], Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m(b)(5)], and
Exchange Act Rules 10b-5 [17 C.F.R. 240.10b-5],13b2-1 [17 C.F.R. 240.13b2-1];
and from aiding and abetting violations of Section 13(a) of the Exchange Act [15
U.S.C. § 78m(a)], Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. §
78m(b)(2)(a)], and Exchange Act Rules 12b-20 [17 C.F.R. 240.12b-20], 13a-1 [17
C.F.R. 240.13a-1], 13a-11[17 C.F.R. 240.13a-11], and 13a-13 [17 C.F.R. 240.13a-
13].
(b) Order Pope to disgorge ill-gotten gains and benefits obtained as a result of
the violations alleged herein, plus prejudgment interest;
(c) Order Pope to pay a civil penalty pursuant to Section 20(d) of the Securities
Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §
78u(d)(3)]; and

18
(d)Grant such further relief as this Court may deem just and proper.
DATED: S
eptember 2, 2022 Respectfully submitted,
s/David B. Reece__________
DAVID B. REECE
Texas Bar No. 24002810
Securities and Exchange Commission
Fort Worth Regional Office
801 Cherry Street, 19th Floor
Fort Worth, Texas 76102-6882
Phone: (817) 978-6476
Fax: (817) 978-4927
[email protected]
ATTORN
EY FOR PLAINTIFF
SECURITIES AND EXCHANGE
COMMISSION
ANDRE
W M. LUGER
United States Attorney
BY:  CRAIG R. BAUNE
Assistant U.S. Attorney
Attorney ID No. 331727
600 United States
Courthouse
300 South Fourth Street
Minneapolis, MN 55415
Phone:  612-664-5600
[email protected]
Local Counsel
s/ Craig R. Baune

JS 44   (Rev. 04/21)
CIVIL COVER SHEET
The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as
provided by local rules of court.  This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the
purpose of initiating the civil docket sheet.    (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)
I.
(a)   PLAINTIFFSDEFENDANTS
(b)
County of Residence of First Listed Plaintiff
County of Residence of First Listed Defendant
(EXCEPT IN U.S. PLAINTIFF CASES)(IN U.S. PLAINTIFF CASES ONLY)
NOTE:IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.
(c)
Attorneys
(Firm Name, Address, and Telephone Number)
Attorneys
(If Known)
II.  BASIS OF JURISDICTION
(Place an “X” in One Box Only)
III. CITIZENSHIP OF PRINCIPAL PARTIES
(Place an “X” in One Box for Plaintiff
and One Box for Defendant)
(For Diversity Cases Only)
1U.S. Government3Federal Question
PTFDEFPTFDEF
Plaintiff
(U.S. Government Not a Party)
Citizen of This State1
1Incorporated
or
Principal Place44
of Business In This State
2U.S. Government4DiversityCitizen of Another State22Incorporated
and
Principal Place55
Defendant
(Indicate Citizenship of Parties in Item III)
of Business In Another State
Citizen or Subject of a33Foreign Nation66
Foreign Country
IV.  NATURE OF SUIT
(Place an “X” in One Box Only)
Click here for: Nature of Suit Code Descriptions.
CONTRACTTORTSFORFEITURE/PENALTYBANKRUPTCYOTHER STATUTES
110 Insurance
PERSONAL INJURYPERSONAL INJURY
625 Drug Related Seizure422 Appeal 28 USC 158375 False Claims Act
120 Marine310 Airplane365 Personal Injury  -of Property 21 USC 881423 Withdrawal376 Qui Tam (31 USC
130 Miller Act315 Airplane ProductProduct Liability690 Other28 USC 1573729(a))
140 Negotiable InstrumentLiability367 Health Care/400 State Reapportionment
150 Recovery of Overpayment320 Assault, Libel &Pharmaceutical
PROPERTY RIGHTS
410 Antitrust
& Enforcement of JudgmentSlanderPersonal Injury
820 Copyrights
430 Banks and Banking
151 Medicare Act330 Federal Employers’Product Liability
830 Patent
450 Commerce
152 Recovery of DefaultedLiability368 Asbestos Personal
835 Patent - Abbreviated
460 Deportation
Student Loans340 MarineInjury Product
New Drug Application
470 Racketeer Influenced and
(Excludes Veterans)345 Marine ProductLiability
840 Trademark
Corrupt Organizations
153 Recovery of OverpaymentLiability
PERSONAL PROPERTYLABOR
880 Defend Trade Secrets
480 Consumer Credit
of Veteran’s Benefits350 Motor Vehicle370 Other Fraud710 Fair Labor Standards
Act of 2016
(15 USC 1681 or 1692)
160 Stockholders’ Suits355 Motor Vehicle371 Truth in LendingAct485 Telephone Consumer
190 Other ContractProduct Liability380 Other Personal720 Labor/Management
SOCIAL SECURITY
Protection Act
195 Contract Product Liability360 Other PersonalProperty DamageRelations861 HIA (1395ff)490 Cable/Sat TV
196 FranchiseInjury385 Property Damage740 Railway Labor Act862 Black Lung (923)850 Securities/Commodities/
362 Personal Injury -
Product Liability751 Family and Medical863 DIWC/DIWW (405(g))Exchange
Medical MalpracticeLeave Act
864 SSID Title XVI890 Other Statutory Actions
REAL PROPERTYCIVIL RIGHTSPRISONER PETITIONS
790 Other Labor Litigation
865 RSI (405(g))891 Agricultural Acts
210 Land Condemnation440 Other Civil Rights
Habeas Corpus:
791 Employee Retirement893 Environmental Matters
220 Foreclosure441 Voting463 Alien DetaineeIncome Security Act
FEDERAL TAX SUITS
895 Freedom of Information
230 Rent Lease & Ejectment442 Employment510 Motions to Vacate870 Taxes (U.S. PlaintiffAct
240 Torts to Land443 Housing/Sentenceor Defendant)896 Arbitration
245 Tort Product LiabilityAccommodations530 General871 IRS—Third Party899 Administrative Procedure
290 All Other Real Property445 Amer. w/Disabilities -535 Death Penalty
IMMIGRATION
Act/Review or Appeal of
Employment
Other:
462 Naturalization Application
Agency Decision
446 Amer. w/Disabilities -540 Mandamus & Other465 Other Immigration950 Constitutionality of
Other550 Civil RightsActionsState Statutes
448 Education555 Prison Condition
560 Civil Detainee -
Conditions of
Confinement
V.  ORIGIN
(Place an “X” in One Box Only)
1   Original
Proceeding
2   Removed from
State Court
3Remanded from
Appellate Court
4  Reinstated or
Reopened
5  Transferred from
Another District
(specify)
6   Multidistrict
Litigation -
Transfer
8  Multidistrict
Litigation -
Direct File
VI.  CAUSE OF ACTION
Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):
Brief description of cause:
VII.  REQUESTED IN
COMPLAINT:
CHECK IF THIS IS A
CLASS ACTION
UNDER RULE 23, F.R.Cv.P.
DEMAND $
CHECK YES only if demanded in complaint:
JURY DEMAND:
YesNo
VIII.  RELATED CASE(S)
          IF ANY
(See instructions):
JUDGEDOCKET NUMBER
DATESIGNATURE OF ATTORNEY OF RECORD
FOR OFFICE USE ONLY
RECEIPT #AMOUNTAPPLYING IFPJUDGEMAG. JUDGE
26 USC 7609
INTELLECTUAL
Dakota
U.S. Securities and Exchange Commission
David B. Reece, U.S. Securities and Exchange
Commission, 801 Cherry St., Suite 1900, Fort Worth, TX
76102 (817) 978-6476
David Pope
William J. Mauzy, Mauzy Law Office, P.A., 650 Third Ave.
South, Suite 260, Minneapolis, MN 55402 (612) 340-9108
✖
✖
Securities Act of 1933, 15 U.S.C. § 77q(a); Securities Exchange Act of 1934, 15 U.S.C 78j(b), 78m(b)(5), 78t(e) and 17 C.F.R § 240.10b-5(a) & (c),
Violations of Federal Securities Laws
✖
✖
9/2/2022s/ David B. Reece

UNITED STATES DISTRICT COURT 
DISTRICT OF MINNESOTA  

 
  
SECURITIES AND EXCHANGE 
COMMISSION, 

 

  
Plaintiff,  

  
v.  
  
DAVID POPE   
 

                                           Defendant. 

Case No.:  
 

Jury Trial Demanded 
  

 
COMPLAINT 

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

against Defendant David Pope (“Pope” or “Defendant”), and alleges as follows:  

SUMMARY OF THE ACTION 

1. From at least 2014 through 2018, David Pope, a Lakeville, Minnesota 

resident, manipulated the quantities and values of rail freight contracts entered into by 

CHS Inc. (“CHS”), an Inver Grove Heights, Minnesota-based agricultural cooperative.  

As a result of Pope’s misconduct, CHS’s public financial statements for those time 

periods were materially false.     

2. CHS is a global agricultural cooperative owned by farmers, ranchers, and 

cooperatives across the United States that provides grain, food, agronomy, and energy 

resources to businesses and consumers on a global scale.  As part of its business, CHS 

enters into contracts with railroads, through direct auctions or through participation in the 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 1 of 18



2 
 

secondary market, to transport commodities throughout North America.  During the time 

period relevant here, CHS reported those contracts as derivative assets on its financial 

statements.   

3. Pope served as CHS’s senior, rail freight trader, in charge of the rail freight 

trading “desk” (“rail freight desk”).  In that role, Pope was responsible for two key 

functions.  First, he was the CHS representative at auctions to acquire rail freight 

contracts from railroads, and he also bought and sold such contracts for CHS in the 

secondary market.  Second, he was the CHS employee responsible for properly reporting 

and valuing those contracts and providing that information to CHS’s accounting 

personnel for incorporation into CHS’s public financial statements.   

4. Instead of properly valuing the contracts based on current market prices, 

Pope  falsely manipulated the valuations.  In addition, he also reported to CHS’s 

accounting personnel contracts that didn’t exist, causing them to be falsely included in 

CHS’s books and records and in its public financial statements.  Pope’s fraudulent 

conduct caused the rail freight desk’s profit and loss reports to appear much less volatile 

than Pope’s actual performance.         

5. As a result of Pope’s fraud, CHS materially misstated its net income in the 

public reports that it filed with the SEC throughout the 2014 to 2018 time frame.  

Ultimately the company restated its net income for its fiscal years 2014 through 2018 to 

correct for Pope’s fraudulent conduct.  The adjustments required by Pope’s misconduct 

were as high as approximately 43% of CHS’s previously-reported net income figures. 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 2 of 18



3 
 

6. By his misconduct, Pope violated the antifraud, books and records, and 

internal controls provisions, and aided and abetted violations by CHS of the books and 

records and reporting provisions, of the federal securities laws.   

7. The SEC brings this action seeking permanent injunctive relief, 

disgorgement of ill-gotten gains plus prejudgment interest, a civil penalty, and all other 

equitable and ancillary relief the Court deems just and proper. 

JURISDICTION AND VENUE 

8. This Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d), and 22(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77t(b), 

77t(d), and 77v(a)] and Sections 21(d), 21(e), and 27 of the Securities Exchange Act of 

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

9. Defendant, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, the means or instruments of transportation or 

communication in interstate commerce, and/or the mails in connection with the 

transactions, acts, practices, and courses of business alleged herein.   

10. Venue is proper in this district 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].  Certain 

of the transactions, acts, practices, and courses of business constituting violations of the 

federal securities laws occurred within this district.  Defendant also resides within this 

district.  

 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 3 of 18



4 
 

DEFENDANT 

11. David Pope, age 55 and a resident of Lakeville, Minnesota, was a CHS 

senior freight merchandiser—commonly referred to as a rail freight trader—until CHS 

terminated his employment shortly after discovering his conduct as alleged herein.  

During the Commission’s investigation that preceded the filing of this Complaint, Pope 

asserted his Fifth Amendment privilege against self-incrimination and chose not to 

testify.   

FACTUAL ALLEGATIONS 

A. Pope was responsible for valuing certain assets reported on CHS’s 
financial statements. 
 

12. CHS is a cooperative whose equity is 70% owned by approximately 950 

local cooperatives that are, in turn, owned by half a million farmers and ranchers.  The 

balance of CHS’s equity is owned by roughly 75,000 individual agricultural producers.  

13. CHS operates in three reportable segments—Energy, Nitrogen Production, 

and Ag.  The company’s North American grain marketing operations fall within the Ag 

segment.  As part of that business, CHS enters into rail freight contracts to secure 

transportation of commodities throughout North America.   

14. In his position as senior rail freight trader, Pope ran the rail freight desk that 

was responsible for buying and selling rail freight capacity to support CHS’s North 

American grain operations.  Pope accomplished this task primarily by participating in 

auctions in which CHS bid for the right and obligation to use shuttle loader trains from 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 4 of 18



5 
 

large railroads.  If CHS won the auction, the shuttle contract typically provided for the 

continuous operation, from one origin to one destination, of a 110-car train for one year.  

Pope also sold, and occasionally bought, the right to use shuttles in the secondary market 

on behalf of CHS. 

15. During the 2014 to 2018 time period, CHS accounted for its auction and 

secondary market shuttle transactions as derivatives.  Accordingly, the company carried 

the net value of the derivatives as an asset on its balance sheet and valued its shuttle 

capacity on a mark-to-market basis.   

16. In his role as CHS’s senior rail freight trader, Pope possessed significant 

responsibility.  Among other things, he was charged with accurately reporting CHS’s 

shuttle contracts and their values to the company for derivative accounting purposes.   

17. Pope did this by reporting (or causing others under his direction to report) 

to CHS accounting personnel the rail freight contracts entered into by CHS.  He also 

prepared bid sheets that, in theory, provided the current market values of CHS’s shuttles.  

He provided these bid sheets every month to CHS’s grain marketing accounting group, 

which used them to calculate the rail freight desk’s assets and its profit and loss statement 

for that month.  In turn, those calculations were included in CHS’s public financial 

statements.     

18. As Pope knew or was severely reckless in not knowing, CHS relied on him 

to provide accurate information because the shuttle contracts and valuations he reported 

were not substantively reviewed by other CHS employees.  In particular, as an 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 5 of 18



6 
 

accounting control, CHS required Pope to sign the monthly bid sheets that he provided to 

the grain marketing accounting group to attest to the valuation of the company’s shuttle 

contracts.  In falsifying those bid sheets, Pope circumvented that control.   

B. Pope repeatedly and materially falsified shuttle valuations and 
quantities. 

19. From at least 2014 through the summer of 2018, Pope manipulated the 

values of CHS’s shuttle contracts by providing “marks” (i.e. valuations of the contracts) 

to the company’s accountants that he knew, or was severely reckless in not knowing, did 

not properly value the company’s freight contracts.  Pope also frequently fabricated 

shuttle contracts that did not exist and reported or caused others to report those fabricated 

contracts into CHS’s books and records that were included into the rail freight desk’s 

financial results. 

20. As noted above, as part of his duties, Pope submitted bid sheets that set out 

the values of the shuttle contracts he had purportedly obtained on CHS’s behalf.  

Throughout the relevant time-period, these bid sheets contained materially false 

information.  

21. Under well-known industry practice and accounting principles, and as Pope 

knew or was severely reckless or negligent in not knowing, his valuations should have 

been based on actual market data.  But, when his supervisors and others generally 

familiar with valuing similar contracts confronted him after discovering his false entries, 

Pope was unable to produce any documents to support the valuations he provided.  

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 6 of 18



7 
 

Instead, he admitted that he ignored current market data and instead relied on what he 

claimed were his subjective predictions of future market prices, a process that resulted in 

improperly smoothing out the rail freight desk’s, and ultimately CHS’s, financial results.  

Specifically, altering the valuation data had the effect of evening out the rail freight 

desk’s profits and losses by offsetting times in which Pope had overestimated or 

underestimated the amount of freight capacity that CHS should acquire and keep.  Pope 

further admitted that he had reported non-existent shuttle contracts to, as he put it, 

“correct the record.”     

22. Pope engaged in this misconduct on a monthly basis throughout the 2014 to 

2018 timeframe. 

23. During August 2018, CHS’s Vice President of North American Grain 

Marketing and a CHS corn trader reviewed one of Pope’s bid sheets.  Upon examining 

the document, both immediately recognized that the values provided by Pope were 

grossly incorrect.  For example, Pope had provided early 2019 shuttle values as high as 

$4,000 per rail car.  In reality, the market price for that time frame was less than $500 per 

car.  

24. Through his actions, Pope fabricated hundreds of fictitious rail car 

contracts, with marks up to $4,000 per car.  Because of Pope’s fraudulent conduct, those 

fictitious contracts and corresponding values were added to the company’s books and 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 7 of 18



8 
 

records and incorporated into its public financial statements and then included in reports 

filed with the SEC. 

25. As part of his compensation package, Pope received bonuses that were tied 

to the performance of the Grain Marketing Division of CHS, which included the rail 

freight desk, and of CHS.  Because of his actions described herein, Pope received 

financial bonuses that were higher than he would have received, but for his misconduct.  

C. Pope’s conduct was intentional or at least severely reckless. 

1. Pope was an experienced trader who knew his valuation 
approach was wholly inappropriate. 

26. Pope knew or was severely reckless in not knowing that the monthly bid 

sheets he submitted to CHS’s accounting personnel for inclusion in the company’s public 

financial statements were materially false.  He also knew or was severely reckless in not 

knowing that these false numbers would impact the company’s overall financial 

statements.   

27. Pope was an experienced rail freight trader who understood the rail markets 

and the proper way to apply mark-to-market techniques to appropriately value the rail 

freight contracts as derivatives.  And he knew that proper valuation must be based on 

actual current market data, such as recent actual trading values, and third-party sources, 

and not on his so-called subjective belief in what the contracts might be worth in the 

future.  Moreover, Pope had ready access to, and received valuation information from, 

objective third-party sources that provided valuation information, including “broker” 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 8 of 18



9 
 

sheets issued by a rail freight broker.  Finally, Pope knew from his previous valuation 

practices that the fabricated numbers he began using in 2014 were wholly false.     

28. In early September 2018, CHS management held a series of meetings to try 

to understand the reasons behind the grossly overstated valuations in Pope’s bid sheets.  

During these meetings, Pope claimed that he based his reported values on his personal 

opinions about how shuttle prices would move in the future—while ignoring the current, 

substantially-lower market prices.  Pope’s misconduct resulted in Pope reporting 

materially false contract values. 

29. Pope understood the impact that his actions had on CHS’s financial 

statements.  For example, he wrote in a September 6, 2018, email to his supervisors, 

certain accounting personnel, and the person who first flagged the grossly inaccurate 

valuations, that if he were to use shuttle market values, “People then need to be prepared 

for the large swings in P&L that can happen with the large swings in values….”  In that 

same email, he referred to his alleged practice of assigning his own values as “valuing for 

railroad performance.”  As a result, Pope clearly understood that his misconduct was 

impacting the company’s income calculations.  

2. Pope’s deception of CHS’s auditor further shows Pope knew he 
had to hide his conduct because it was wrong.  

30. Pope’s deception of CHS’s external auditor, a major international 

accounting firm (“External Auditor”), further demonstrates that he intentionally 

manipulated the shuttle values.  In October 2017, an auditor working for the External 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 9 of 18



10 
 

Auditor asked Pope what types of documentation CHS possessed to support the shuttles 

that CHS’s records indicated it had won at auction.  In response to the request, Pope 

forwarded two emails from a railroad with which CHS had entered into rail freight 

contracts.  But before doing so, Pope doctored the emails.  Specifically, he deleted and 

modified shuttle identifying information and terms, and also removed invoice hyperlinks 

and contact information for the individuals at the railroad that allegedly entered into the 

contracts with CHS.  In short, he took steps to keep the External Auditor from contacting 

the railroad directly or from otherwise confirming the actual details of the contract.  

31. A few days later, the same auditor emailed Pope, inquiring about the best 

way for the External Auditor to confirm with the railroad the existence of the shuttle 

contracts.  Pope dodged the question, instead offering to email a document from the 

railroad website that provided an overview of the shuttle program.  The External Auditor 

expressed his confusion and reminded Pope that he was simply trying to confirm that the 

railroad’s record of contracts matched CHS’s record.  Ultimately, the External Auditor 

selected several shuttle contracts that it sought to confirm and received documentation for 

them from a CHS accounting employee.  Among the documents received from the CHS 

accounting department was another email that Pope had manipulated.  In turn, the 

External Auditor relied on Pope’s fraudulent, doctored email to support the existence of 

fictitious shuttle contracts.  

32. During the subsequent internal investigation conducted by CHS after 

Pope’s conduct had been identified, Pope provided conflicting answers to questions, but 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 10 of 18



11 
 

ultimately admitted manipulating shuttle values and adding nonexistent contracts to 

CHS’s books and records.  

D. Pope’s fraud materially impacted CHS’s public financial statements.   

33. Because of Pope’s fraudulent conduct, CHS’s Forms 10-K and 10-Q for 

fiscal years 2014 through 2017, and Forms 10-Q for fiscal year 2018, contained 

materially false financial statements.  Specifically, Pope’s conduct materially impacted 

the company’s net income.  For the same reason, the company’s Forms 8-K filed with the 

Commission on June 14, 2017, December 8, 2017, and May 17, 2018, were also 

materially false.  Further, these misstatements were incorporated by reference into CHS’s 

2014, 2016, and 2017 securities offerings on Forms S-1, S-3, and S-8. 

34. On December 3, 2018, CHS filed a Form 10-K in which, largely to correct 

the false financial information resulting from Pope’s misconduct, it restated its audited 

financial statements for fiscal years 2016 and 2017, as well as select financial information 

for fiscal years 2014 and 2015.  The company also restated its unaudited financial 

statements for the first three quarters of fiscal years 2017 and 2018.  

35. Although CHS also addressed additional issues in its restated financial 

statements, the restatement related largely to Pope’s misconduct.  Indeed, the impact of 

Pope’s fraud to CHS’s previously-reported net income during the relevant period ranged 

from 2.3% to 43.1%.  In aggregate, Pope’s actions inflated the company’s net income by 

$123.9 million, accounting for 78.5% of CHS’s total restatement. 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 11 of 18



12 
 

36. The impact of Pope’s misconduct broken down by time period is illustrated 

below: 

Time Period Impact of Pope’s Fraud  
on CHS’s Net Income 

 
12 months ending 8/31/2014 

 
Net Income Understated by 7.3% 

 
 

12 months ending 8/31/2015 
 

Net Income Overstated by 16.9% 
 

 
12 months ending 8/31/2016 

 
Net Income Understated by 2.3% 

 
 

12 months ending 8/31/2017 
 

Net Income Overstated by 43.1% 
 

 
9 months ending 5/31/2018 

 
Net Income Overstated by 4.5% 

 
 

FIRST CLAIM FOR RELIEF 

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

 
37. The SEC alleges and incorporates by reference each and every allegation 

in the paragraphs above as though fully set forth herein. 

38. By engaging in the conduct described above, Defendant Pope, in 

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

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

securities exchange, directly or indirectly employed devices, schemes, or artifices to 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 12 of 18



13 
 

defraud, and engaged in acts, practices, or courses of business which operated or would 

operate as a fraud or deceit upon any person. 
 

39. Defendant Pope acted with scienter in that he knowingly or recklessly 

engaged in the fraudulent conduct described above. 

40. By reason of the foregoing, Defendant Pope has violated, and unless 

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

(b)] and Exchange Act Rules 10b-5(a) and (c) [17 C.F.R. 240.10b-5(a) and (c)]. 

SECOND CLAIM FOR RELIEF 
 

Violations of Section 17(a) of the Securities Act 
 

41. The SEC alleges and incorporates by reference each and every allegation in 

the paragraphs above as though fully set forth herein. 

42. By engaging in the conduct described above, Defendant Pope, directly or 

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

transportation or communication in interstate commerce or by use of the mails has: (a) 

employed a device, scheme, or artifice to defraud; and/or (b) obtained money or property 

by means of an untrue statement of a material fact or an 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; and/or (c) engaged in a transaction, practice, or 

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

purchaser.  

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 13 of 18



14 
 

43. With regard to the violations of Section 17(a)(1) of the Securities Act, Pope 

engaged in the conduct intentionally or with severe recklessness.  With regard to the 

violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act, he acted at least 

negligently.    

44. By reason of the foregoing, the Pope has violated, and unless enjoined will 

continue to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q]. 

THIRD CLAIM FOR RELIEF 

Violations of Section 13(b)(5) of the Exchange Act 
 

45. The SEC alleges and incorporates by reference each and every allegation 

in the paragraphs above as though fully set forth therein. 

46. By engaging in the conduct described above, Pope knowingly 

circumvented a system of internal accounting controls and knowingly falsified CHS’s 

books, records, and accounts. 

47. By reason of the foregoing, Pope violated, and unless enjoined will 

continue to violate, Section 13(b) (5) of the Exchange Act [15 U.S.C. § 78m (b) (5)]. 

FOURTH CLAIM FOR RELIEF 

Violations of Exchange Act Rule 13b2-1 

48. The SEC alleges and incorporates by reference each and every allegation 

in the paragraphs above as though fully set forth herein. 

49. By engaging in the conduct described above, Pope directly or indirectly, 

falsified and caused to be falsified CHS’s books, records, and accounts. 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 14 of 18



15 
 

50. By reason of the foregoing, Pope violated, and unless enjoined 

will continue to violate, Exchange Act Rule 13b2-1 [17 C.F.R. 240.13b2-1]. 

FIFTH CLAIM FOR RELIEF 

Aiding and Abetting CHS’s 
Violations of Section 13(a) of the Exchange Act 
and Exchange Act Rules 12b-20, 13a-1, 13a-11, 

13a-13  
 

51. The SEC alleges and incorporates by reference each and every allegation 

in the paragraphs above as though fully set forth herein. 

52. As described above, CHS’s filings with the SEC, including its reports 

filed on Form 8-K, Form 10-Q, and Form 10-K, incorporated inaccurate and 

misleading financial information concerning CHS’s business operations, revenue, and 

net and gross profit.   

53. By engaging in the conduct described above, CHS violated Section 

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

13, which obligates issuers of securities registered pursuant to Section 12 of the 

Exchange Act [15 U.S.C. § 78l] to file with the SEC periodic reports that are accurate 

and not misleading. 

54. By engaging in the conduct described above, Pope knowingly or 

recklessly provided substantial assistance to CHS’s filing of false and misleading 

reports with the SEC. 

55. By reason of the foregoing, Pope aided and abetted, and unless 

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 15 of 18



16 
 

enjoined will continue to aid and abet, CHS’s violations of Section 13(a) of the 

Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13, and 

pursuant to Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)], Pope is liable 

to the same extent as CHS for its violations of Section 13(a) of the Exchange Act 

and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13. 

SIXTH CLAIM FOR RELIEF 
 

Aiding and Abetting CHS’s 
Violations of Section 13(b)(2)(A) of the Exchange Act  

 
56. The SEC alleges and incorporates by reference each and every allegation 

in the paragraphs above as though fully set forth herein. 

57. As described above, CHS failed to make and keep books, records, 

and accounts, which, in reasonable detail, accurately and fairly reflected the 

transactions and dispositions of the assets of CHS. 

58. By engaging in the conduct described, CHS violated Section 13(b)(2)(A) 

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

59. Pope knowingly or recklessly provided substantial assistance to CHS’s 

failure to make and keep books, records, and accounts, which, in reasonable detail, 

accurately and fairly reflected the transactions and dispositions of the assets of CHS. 

60. By reason of the foregoing, Pope aided and abetted, and unless 

enjoined will continue to violate, CHS’s violations of Section 13(b)(2)(A) of the 

Exchange Act, and pursuant to Section 20(e) of the Exchange Act  

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 16 of 18



17 
 

[15 U.S.C. § 78t(e)], Pope is liable to the same extent as CHS for its violations of 

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

RELIEF REQUESTED 

Therefore, the SEC respectfully requests that this Court: 

(a) Permanently enjoin Pope from violating Section 17(a) of the 

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

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

Exchange Act Rules 10b-5 [17 C.F.R. 240.10b-5],13b2-1 [17 C.F.R. 240.13b2-1]; 

and from aiding and abetting violations of Section 13(a) of the Exchange Act [15 

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

78m(b)(2)(a)], and Exchange Act Rules 12b-20 [17 C.F.R. 240.12b-20], 13a-1 [17 

C.F.R. 240.13a-1], 13a-11[17 C.F.R. 240.13a-11], and 13a-13 [17 C.F.R. 240.13a-

13]. 

(b) Order Pope to disgorge ill-gotten gains and benefits obtained as a result of 

the violations alleged herein, plus prejudgment interest; 

(c) Order Pope to pay a civil penalty pursuant to Section 20(d) of the Securities 

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

78u(d)(3)]; and 

  

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 17 of 18



18 

(d) Grant such further relief as this Court may deem just and proper.

DATED: September 2, 2022 Respectfully submitted, 

s/David B. Reece__________ 
DAVID B. REECE 
Texas Bar No. 24002810  
Securities and Exchange Commission 
Fort Worth Regional Office  
801 Cherry Street, 19th Floor  
Fort Worth, Texas 76102-6882  
Phone: (817) 978-6476  
Fax: (817) 978-4927 
[email protected]  

ATTORNEY FOR PLAINTIFF 
SECURITIES AND EXCHANGE 
COMMISSION 

ANDREW M. LUGER 
United States Attorney 

BY: CRAIG R. BAUNE 
Assistant U.S. Attorney 
Attorney ID No. 331727 
600 United States 
Courthouse  
300 South Fourth Street 
Minneapolis, MN 55415 
Phone: 612-664-5600 
[email protected] 

Local Counsel 

s/ Craig R. Baune    

CASE 0:22-cv-02155   Doc. 1   Filed 09/02/22   Page 18 of 18

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


JS 44   (Rev. 04/21) CIVIL COVER SHEET
The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as 
provided by local rules of court.  This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the 
purpose of initiating the civil docket sheet.    (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)

I. (a) PLAINTIFFS DEFENDANTS

(b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant
(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF 
THE TRACT OF LAND INVOLVED.

(c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known)

II.  BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff 
and One Box for Defendant) (For Diversity Cases Only)

1 U.S. Government 3 Federal Question PTF DEF PTF DEF
Plaintiff (U.S. Government Not a Party) Citizen of This State 1 1 Incorporated or Principal Place 4 4

of Business In This State

2 U.S. Government 4 Diversity Citizen of Another State 2 2 Incorporated and Principal Place 5 5
Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State

Citizen or Subject of a 3 3 Foreign Nation 6 6
Foreign Country

IV.  NATURE OF SUIT (Place an “X” in One Box Only) Click here for: Nature of Suit Code Descriptions.
CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES

110 Insurance PERSONAL INJURY PERSONAL INJURY 625 Drug Related Seizure 422 Appeal 28 USC 158 375 False Claims Act
120 Marine 310 Airplane 365 Personal Injury  - of Property 21 USC 881 423 Withdrawal 376 Qui Tam (31 USC 
130 Miller Act 315 Airplane Product Product Liability 690 Other 28 USC 157 3729(a))
140 Negotiable Instrument Liability 367 Health Care/ 400 State Reapportionment
150 Recovery of Overpayment 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS 410 Antitrust

& Enforcement of Judgment Slander Personal Injury 820 Copyrights 430 Banks and Banking
151 Medicare Act 330 Federal Employers’ Product Liability 830 Patent 450 Commerce
152 Recovery of Defaulted Liability 368 Asbestos Personal 835 Patent - Abbreviated 460 Deportation

Student Loans 340 Marine Injury Product New Drug Application 470 Racketeer Influenced and
(Excludes Veterans) 345 Marine Product Liability 840 Trademark Corrupt Organizations

153 Recovery of Overpayment Liability PERSONAL PROPERTY LABOR 880 Defend Trade Secrets 480 Consumer Credit
of Veteran’s Benefits 350 Motor Vehicle 370 Other Fraud 710 Fair Labor Standards Act of 2016 (15 USC 1681 or 1692)

160 Stockholders’ Suits 355 Motor Vehicle 371 Truth in Lending Act 485 Telephone Consumer
190 Other Contract Product Liability 380 Other Personal 720 Labor/Management SOCIAL SECURITY Protection Act
195 Contract Product Liability 360 Other Personal Property Damage Relations 861 HIA (1395ff) 490 Cable/Sat TV
196 Franchise Injury 385 Property Damage 740 Railway Labor Act 862 Black Lung (923) 850 Securities/Commodities/

362 Personal Injury - Product Liability 751 Family and Medical 863 DIWC/DIWW (405(g)) Exchange
Medical Malpractice Leave Act 864 SSID Title XVI 890 Other Statutory Actions

REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS 790 Other Labor Litigation 865 RSI (405(g)) 891 Agricultural Acts
210 Land Condemnation 440 Other Civil Rights Habeas Corpus: 791 Employee Retirement 893 Environmental Matters
220 Foreclosure 441 Voting 463 Alien Detainee Income Security Act FEDERAL TAX SUITS 895 Freedom of Information
230 Rent Lease & Ejectment 442 Employment 510 Motions to Vacate 870 Taxes (U.S. Plaintiff Act
240 Torts to Land 443 Housing/ Sentence or Defendant) 896 Arbitration
245 Tort Product Liability Accommodations 530 General 871 IRS—Third Party 899 Administrative Procedure
290 All Other Real Property 445 Amer. w/Disabilities - 535 Death Penalty IMMIGRATION Act/Review or Appeal of

Employment Other: 462 Naturalization Application Agency Decision
446 Amer. w/Disabilities - 540 Mandamus & Other 465 Other Immigration 950 Constitutionality of

Other 550 Civil Rights Actions State Statutes
448 Education 555 Prison Condition

560 Civil Detainee -
Conditions of 
Confinement

V.  ORIGIN (Place an “X” in One Box Only)
1 Original

Proceeding 
2 Removed from

State Court
3 Remanded from

Appellate Court 
4 Reinstated or

Reopened
5 Transferred from

Another District
(specify)

6 Multidistrict
Litigation - 
Transfer

8  Multidistrict
Litigation -
Direct File

VI.  CAUSE OF ACTION
Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):

Brief description of cause:

VII.  REQUESTED IN
COMPLAINT:

CHECK IF THIS IS A CLASS ACTION
UNDER RULE 23, F.R.Cv.P. 

DEMAND $ CHECK YES only if demanded in complaint:
JURY DEMAND: Yes No

VIII.  RELATED CASE(S) 
          IF ANY (See instructions):

JUDGE DOCKET NUMBER

DATE SIGNATURE OF ATTORNEY OF RECORD

FOR OFFICE USE ONLY

RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE

26 USC 7609

INTELLECTUAL

Dakota 

U.S. Securities and Exchange Commission

David B. Reece, U.S. Securities and Exchange 
Commission, 801 Cherry St., Suite 1900, Fort Worth, TX 
76102 (817) 978-6476

David Pope

William J. Mauzy, Mauzy Law Office, P.A., 650 Third Ave. 
South, Suite 260, Minneapolis, MN 55402 (612) 340-9108 

✖

✖

Securities Act of 1933, 15 U.S.C. § 77q(a); Securities Exchange Act of 1934, 15 U.S.C 78j(b), 78m(b)(5), 78t(e) and 17 C.F.R § 240.10b-5(a) & (c),  

Violations of Federal Securities Laws

✖

✖

9/2/2022 s/ David B. Reece

CASE 0:22-cv-02155   Doc. 1-1   Filed 09/02/22   Page 1 of 1