United States Securities and Exchange Commission v. iFresh, Inc.

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NEW YORK

 :
UNITED STATES SECURITIES AND  :
EXCHANGE COMMISSION, :
                                                                              :
Plaintiff,            :
                                          :
- against -                                           :     Civil Action No. 1:22-cv-3200
                                                                              :
iFRESH, INC. and LONG DENG, :     COMPLAINT
                                                                              :
Defendants. :     JURY TRIAL DEMANDED
 :

COMPLAINT

Plaintiff United States Securities and Exchange Commission (“SEC” or “Commission”),
for its Complaint against defendants iFresh, Inc. (“iFresh”) and Long Deng (together,
“Defendants”), alleges as follows:
PRELIMINARY STATEMENT

1. This matter involves accounting fraud, financial reporting violations, and internal
control failures by iFresh and its founder and CEO, Long Deng.  iFresh and Deng misled the
investing public about iFresh’s finances by hiding and misstating information about related party
transactions that iFresh entered into with entities owned and controlled by Deng and his brother.
2. A related party transaction is a transaction between two parties who have a close
association, such as family members and affiliates, have common ownership, or can significantly
influence one another’s management or operating policies, as distinguished from a transaction
between third parties.  The SEC rules require public companies, like iFresh, to disclose all
related party transactions that exceed $120,000 in their public filings.   In addition, generally
accepted accounting principles require companies to disclose material related party transactions.

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3. Between August 10, 2016, when iFresh filed its initial registration statement,
through August 13, 2020, when it filed its Form 10-K for the fiscal year ending March 31, 2020
(the “Relevant Period”), iFresh engaged in numerous transactions with entities related to Deng.
However, iFresh did not properly disclose all of its related party transactions.
4. As a result, iFresh’s public filings were materially misstated in 2016, 2017, 2018,
2019, and 2020.  For example, between 2017 and 2020, from 18% to 54% of iFresh’s accounts
receivable were from undisclosed related party transactions.  Between 2016 and 2020, iFresh
failed to disclose over $12 million in payments to a company owned by Deng’s brother.
5. Deng is responsible for these misstatements.  Since its inception, Deng closely
controlled iFresh’s operations and financial information.  Deng also controlled all of iFresh’s
undisclosed related parties either through ownership or by having signature authority over bank
accounts.
6. By misrepresenting information about its related party transactions, iFresh
deprived investors of a true picture of how heavily iFresh and Deng’s business interests were
intertwined.
7. iFresh had deficiencies in its internal controls over financial reporting, which
contributed to its failure to accurately disclose its related party transactions.  During the Relevant
Period, iFresh’s internal accounting controls relating to its identification of related parties and
disclosure of related party transactions were deficient in design and application, and failed to
provide reasonable assurance that its financial statements were materially accurate.
8. By engaging in the conduct described herein, iFresh violated Section 17(a) of the
Securities Act of 1933 (”Securities Act”) [15 U.S.C. § 77q(a)], and Sections 10(b),
13(a),
13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (“Exchange Act”) [15

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U.S.C. § 78j(b), 15 U.S.C. § 78m(a), 15 U.S.C. § 78m(b)(2)(A), and 15 U.S.C. § 78m(b)(2)(B)]
and Rules 10b-5, 12b-20 and 13a-1 thereunder [17 C.F.R. § 240.10b-5, 17 C.F.R § 240.12b-20,
17 C.F.R. § 240.13a-1]; Deng violated and aided and abetted Section 17(a) of the Securities Act,
and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted
iFresh’s violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and
Rules 12b-20 and 13a-1 thereunder.
9. Defendants will continue to violate the federal securities laws unless restrained or
enjoined by this Court.
10. The SEC therefore seeks a judgment against Defendants providing permanent
injunctive relief; disgorgement of ill-gotten gains pursuant to Sections 21(d)(5) and 21(d)(7) of
the Exchange Act [15 U.S.C. §§ 78u(d)(5), (7)]; imposing civil monetary 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)]; prohibiting Deng from acting as an officer or director of a public
company, pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)]; as well as other
appropriate and necessary relief.
JURISDICTION AND VENUE

11. The Commission brings this action pursuant to the authority conferred by Section
21(d) of the Exchange Act [15 U.S.C. § 78u(d)] and Section 20(b) of the Securities Act [15
U.S.C. § 77t(b)].
12. This Court has jurisdiction over this action pursuant to Sections 21 and 27 of the
Exchange Act [15 U.S.C. §§ 78u, 78aa], and Sections 20(b), 20(d), and 22(a) of the Securities
Act [15 U.S.C. §§ 77t(b), 77t(d), 77v(a)].

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13. During the Relevant Period, iFresh was engaged in the offer and sale of securities;
it raised approximately $6.25 million through four private offerings and issued shares in
connection with compensation and acquisitions.
14. Defendants directly or indirectly made use of the means or instruments of
transportation and communication in interstate commerce, or of the mails, or of the facilities of a
national securities exchange in connection with the acts, transactions, or practices alleged in this
Complaint.
15. Venue is proper in this Court pursuant to Section 27 of the Exchange Act [15
U.S.C. § 78aa] and Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)].  Acts, practices, and
courses of business constituting violations alleged herein have occurred within the jurisdiction of
the United States District Court for the Eastern District of New York.  Moreover, Defendants
reside in this district.
DEFENDANTS

16. iFresh, Inc. is a Delaware corporation with its headquarters in Long Island City,
New York.  iFresh is an Asian grocer that operates wholesale businesses and retail supermarkets
in New York, Massachusetts, and Florida.  Until November 2021 – when it was delisted due to
its failures to timely file periodic reports and hold an annual shareholder meeting – iFresh’s
common stock was traded on the NASDAQ Capital Market.  Currently, iFresh’s common stock
is registered with the Commission pursuant to Section 12(b) of the Exchange Act and is quoted,
only on an unsolicited basis, on the OTC Expert Market under the ticker symbol “IFMK.”
17. Long Deng, age 53, is a resident of Roselyn, New York.  Deng was the Chairman
of iFresh’s board of directors from February 2017 through April 2022.  Deng was also iFresh’s
Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”) from February 2017

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through at least April 2022 (iFresh has not reported a new CEO or COO to the SEC as of the date
of this Complaint).
FACTUAL ALLEGATIONS
I. Background

18. In 1995, Deng founded NYM Holding, Inc. (“NYM”), an Asian grocery
supermarket company.  Since then, he has served as NYM’s CEO, COO, and sole director.
19. In July 2016, NYM entered into a merger agreement under which it became a
wholly owned subsidiary of iFresh.
20. iFresh is an Asian supermarket chain with stores located in the Northeastern U.S.
and in Florida.  In addition to retail supermarkets, iFresh operates two wholesale businesses that
sell to its retail supermarkets and to third parties.
21. iFresh became a public company in 2017 through a reverse merger with a special
purpose acquisition company, or “SPAC,” named E-Compass Acquisition Corp.
22. Deng was CEO and COO since iFresh’s formation in February 2017 through at
least April 2022.  Deng was also the Chairman of the Board of iFresh from February 2017 until
April 2022, when a Delaware Chancery Court affirmed a shareholder vote to remove him from
iFresh’s board of directors.
23. During the relevant period, Deng owned up to 80.79% of iFresh’s outstanding
common stock.
24. iFresh disclosed in its Form 10Ks that Deng’s total compensation was
approximately $700,000 for each fiscal year from 2017 through 2020.

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II. Governing Accounting Principles, Standards, and Procedures

25. As a U.S. public company, iFresh is required by the SEC to file financial
statements that are prepared in accordance with Generally Accepted Accounting Principles, or
“GAAP.”
26. GAAP is a series of authoritative standards (set out by policy boards, including
the Financial Accounting Standards Board, or “FASB”) that standardizes and regulates the
definitions, assumptions, and methods used in accounting across industries, and seeks to ensure
that a company’s financial statements are complete, consistent, and comparable.  This makes it
easier for investors to analyze and extract useful information from a company’s financial
statements and facilitates the comparison of financial information across different companies.
27. The federal securities laws require public companies such as iFresh to disclose
information on an ongoing basis.  Among other things, public companies like iFresh must file a
Form 10-K, which is an annual report that provides a comprehensive overview of the company’s
business and financial condition and includes audited financial statements.  This report is filed
with the SEC, posted on the SEC’s website, and thereby made available to the investing public.
Financial statements filed with the SEC which are not prepared in accordance with GAAP are
presumed to be misleading.
28. The federal securities laws and GAAP require companies to disclose certain
information about their transactions with related parties.  Accounting Standards Codification
(“ASC”) Topic 850, Related Party Disclosures (“ASC 850”) provides that related party
transactions include, among other things, transactions between an entity and its principal owners
or members of their immediate families.  ASC 850-10-05-3.  Immediate family is defined as
“Family members who might control or influence a principal owner or a member of

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management, or who might be controlled or influenced by a principal owner or a member of
management, because of the family relationship.”  ASC 850-10-20.  ASC 850 specifically
enumerates sales, purchases, borrowings, and lendings as “[e]xamples of common [related party]
transactions.”  ASC 850-10-05-4.
29. With respect to related party transactions, ASC 850 requires disclosures of the (a)
nature of the relationships, (b) descriptions of the transactions; and (c) the dollar amounts of the
transactions.  ASC 850-10-50-1.
30. Item 404(a) of Regulation S-K requires issuers to disclose any transaction
exceeding $120,000 in which the registrant was or is to be a participant and in which any related
person had or will have a direct or indirect material interest.  The instructions to Item 404(a)
define related person to include any immediate family member of a director or executive officer
of a registrant, which includes siblings.
III. iFresh Enters into Numerous Related Party Transactions.

31. After its reverse merger in February 2017, iFresh, through Deng, continued a
course of conduct that Deng began at NYM – conducting numerous transactions with related
parties.
32. iFresh engaged in transactions involving multiple related parties, including (a)
Deng himself, (b) companies owned in whole or in part by Deng, (c) companies owned in whole
or in part by Deng’s brother, and (d) companies over which Deng otherwise exercised control by
having signature authority over bank accounts.
33. iFresh disclosed some of these related party transactions in its public filings.  For
example, since July 2017, iFresh disclosed that it acquired several grocery stores from Deng.

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34. However, as explained below, iFresh failed to fully disclose all its related party
transactions, as required by the federal securities laws and GAAP.
35. Since its inception, Deng closely controlled iFresh’s operations and financial
information.  Deng controlled iFresh’s bank accounts.  He also controlled all of iFresh’s
undisclosed related parties either through ownership or by having signature authority over bank
accounts.
36. Deng sometimes transferred money between iFresh and related parties in an
informal way, without documentation.  For example, Deng caused iFresh to borrow funds
multiple times from an entity which had a bank account that Deng controlled, without
documenting the loans in written agreements.
IV. iFresh Failed to Properly Disclose Related Party Transactions in its Public Filings.

37. During the Relevant Period, at least five of iFresh’s public filings were materially
misstated, because iFresh failed to properly disclose related party transactions.  These materially
misstated public filings include iFresh’s (a) Form S-4 filed on December 16, 2016, (b) Form 10-
K for the fiscal year ended March 31, 2017, filed on June 29, 2017; (c) Form 10-K for the fiscal
year ended March 31, 2018, filed on June 29, 2018; (d) Form 10-K for the fiscal year ended
March 31, 2019, filed on June 28, 2019; and (e) Form 10-K for the fiscal year ended March 31,
2020, filed on August 13, 2020.
38. These misstatements were material.  Reasonable investors would consider
transactions between iFresh and related parties important to a decision to invest.  The
misstatements deprived investors of information about the amounts iFresh received from and
paid to related parties, amounts due to and from related parties, and how heavily intertwined
iFresh was with Deng.

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A. iFresh Mischaracterized Related Party Transactions as Transactions with
Third Parties.

39. iFresh failed to disclose numerous related party transactions.  Thereby, iFresh
mischaracterized many of its related party transactions as transactions with third parties in its
financial statements.
40. There were approximately $6.5 million of related party transactions affecting
iFresh’s net assets over the Relevant Period that were not disclosed (Table 1).

Table 1: iFresh’s Undisclosed Related Party Transactions During Relevant Period

March 31,
2020
March 31,
2019
March 31,
2018
March 31,
2017
March 31,
2016
Accounts receivables
(1)
$1,470,338 $1,883,250 $2,626,757 $400,392 -
Prepaid expenses and
other current assets (2)
$619,477 $867,192 $613,349 $221,897 $220,442
Other payables, current
(3)
$712,998 $856,137 $706,585 $98,299 $4,509
Net Assets Related to
Undisclosed Related
Party Transactions
(=1+2-3)
$1,376,817 $1,894,305 $2,533,521 $523,990 $215,933
Net Assets Reported by
iFresh
($2,550,147) ($1,031,979) $5,465,476 $5,904,189 $5,111,626

41. iFresh’s failures to properly disclose transactions with related parties fell into two
categories.  First, in some cases, iFresh had properly identified an entity as a related party in its
public filings and/or in its internal records, but it failed to disclose all of its transactions with that
related party as related party transactions in its public filings.  Second, iFresh failed to identify
some entities as related parties in the first place.
42. As an example of the first category of failure, iFresh failed to disclose
transactions with a related party named New York Supermarket, Inc.  New York Supermarket,
Inc. was a related party because it was 100% owned by Deng.  iFresh identified New York

10
Supermarket, Inc. in its internal records as a related party.  From fiscal years 2016 through 2020,
iFresh made loans to New York Supermarket, Inc.  However, iFresh did not disclose these loans
as related party transactions in its public filings.
43. As another example, for the fiscal year ended March 31, 2020, iFresh failed to
disclose approximately $200,000 in accounts receivable due from five related parties that had
been either categorized as related parties in iFresh’s internal records and/or identified as related
parties in iFresh’s public filings.  These five related parties are Spicy Bubbles, Inc., Sunray
Venus LLC, Spring Farm WPB Inc., NYM Tampa Seafood Inc. (“NYM Tampa”), and New
York Mart El Monte Inc. (“NYM El Monte”).
44. iFresh presented on the face of its consolidated balance sheets a line item for
advances and receivables due from related parties.  This line item should have captured all
relevant amounts due from related parties, including the transactions described above in
paragraphs 42 and 43.
45. The following table summarizes the parties which iFresh identified as related in
its public filings and/or internal records with whom iFresh engaged in undisclosed related party
transactions:

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Table 2.
Related Party

Relationship to iFresh Fiscal Year(s)
Impacted by
Undisclosed Related
Party Transactions

New York Supermarket Inc. 100% owned by Deng 2017-2020
United States of America-China
Chamber of Commerce (“USCC”)
Controlled by Deng –
President
2018, 2020
Dragon 6
th
 Ave LLC 99% owned by Deng 2020
Spicy Bubbles Inc. 100% owned by Deng 2017-2020
Sunray Venus LLC 100% owned by Deng 2019-2020
Spring Farm WPB Inc. 100% owned by Deng 2020
NYM Tampa  70% owned by Deng 2020
NYM El Monte  100% owned by Deng 2020

46. Next, as an example of the second type of failure – iFresh’s failure to disclose
related party transactions with entities that it failed to identify as related parties in the first place
– iFresh failed to properly disclose transactions with a related party named Li Ba HVAC &
Construction Inc. (“Li Ba”).  Li Ba was a related party to iFresh for two reasons.  First, because
Deng was signatory on Li Ba’s bank accounts, he controlled the company.  In addition, Deng’s
brother owned Li Ba.  However, iFresh did not identify Li Ba as a related party in its publicly
filed financial statements.
47. Between fiscal years 2016 and 2020, in each fiscal year, iFresh made the
following material payments to Li Ba for property and equipment:
            Table            3.
March 31, 2020 March 31, 2019 March 31, 2018 March 31, 2017 March 31, 2016
$ 1,288,264 $ 2,266,563 $ 5,570,905 $ 1,836,488 $ 1,373,950

In addition, there were amounts due to and from Li Ba for the fiscal years 2016 through 2020,
and iFresh recognized sales to Li Ba from fiscal years 2017 through 2019.  iFresh was required
to disclose all of these transactions as related party transactions, but it failed to do so.  Also,

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iFresh should have reported all amounts due from Li Ba on the consolidated balance sheet in the
line item for advances and receivables due from related parties, but failed to do so.
48. In addition, in fiscal year 2020, Deng made payments totaling $500,000 to repay
amounts owed by another related party, New York Mart White Plains Inc. (“NYM White
Plains”).  Like Li Ba, NYM White Plains was a related party because (a) Deng had signatory
authority over its bank account, and (b) it was owned and controlled by Deng’s brother.  iFresh
was required but failed to disclose these payments as related party transactions.
49. Also in fiscal year 2020, another undisclosed related party, Jiutian Music Club
Inc. (“Jiutian”), made capital contributions to iFresh on behalf of Deng totaling over $500,000.
Like Li Ba and NYM White Plains, Jiutian was a related party because (a) Deng had signatory
authority over its bank account, and (b) it was owned and controlled by Deng’s brother.  Again,
iFresh was required to but failed to disclose those capital contributions as related party
transactions.
50. In summary, the following table summarizes the related parties that iFresh failed
to identify as related parties and the fiscal years wherein iFresh’s public filings contained
undisclosed related party transactions:

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            Table            4.
Related Party

Relationship to iFresh Fiscal Year(s)
Impacted by
Undisclosed
Related Party
Transactions
Li Ba  Controlled by Deng (signature authority over
a bank account) & owned and controlled by
Deng’s brother
2016-2020
New York Mart River
Edge Inc.
Controlled by Deng (signature authority over
a bank account)
2017-2020
NYM White Plains  Controlled by Deng (signature authority over
a bank account) & owned and controlled by
Deng’s brother
2017-2020
Jiutian  Controlled by Deng (signature authority over
a bank account) & owned and controlled by
Deng’s brother
2020
900 Northlake LLC Controlled by Deng (signature authority over
a bank account and was a manager and
member)
2017, 2018
Silong Management
Inc.
Controlled by Deng (signature authority over
a bank account)
2020
551 Management Inc.

Controlled by Deng (signature authority over
a bank account)
2020
E. Colonial
Management Inc.
Controlled by Deng (signature authority over
a bank account)
2020
Sunrise Management
Inc.
Controlled by Deng (signature authority over
a bank account)
2020

51. Taken together, iFresh’s undisclosed related party transactions were material to
iFresh’s consolidated balance sheets.  For example, from fiscal year 2017 through fiscal year
2020, between 18% and 54% of iFresh’s net accounts receivable were from undisclosed related
party transactions.   See Table 5 below.
Table 5.  Balance Sheet – as of the Years Ended March 31
1

March 31,
2020
March 31,
2019
March 31,
2018
March
31, 2017
March
31, 2016
Accounts receivable, net 43% 47% 54% 18% 0%

1
      Errors are calculated as undisclosed related party transaction/originally reported amount.  For example,
accounts receivable due from undisclosed related parties for the year ended 3/31/2020 was approximately $1.47
million and the accounts receivable, net reported by iFresh was approximately $3.41 million, or 43% ($1.47/$3.41).

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Prepaid expenses and
other current assets
17%               23%               32%               23%               47%
Other payables, current 20% 29% 60% 20% 1%

52. In addition, iFresh’s undisclosed related party transactions materially impacted
iFresh’s income statements.  For example, iFresh presented on the face of its consolidated
statements of income a line item for net sales to related parties.  This line item should have
captured all sales to related parties.  During fiscal years 2018 and 2019 iFresh had approximately
$9.8 million and $4.2 million, respectively, in sales to undisclosed related parties.  iFresh failed
to report these sales on the consolidated statements of income as sales to related parties and
failed to disclose the sales as related party transactions.  As a result, sales to related parties was
understated by 33% for the fiscal year 2018 and 17% for the fiscal year 2019.
B. iFresh Misrepresented a Legal Settlement Involving a Related Party.

53. In its Form 10-K for fiscal year ending March 31, 2018, iFresh erroneously
described a legal settlement that occurred in May 2018.  iFresh disclosed as a subsequent event
that it had entered into a settlement with Jendo Ermi LP (“Jendo”) in connection with lawsuits
the parties had filed against one another.  iFresh disclosed in the notes to its financial statements,
“New York Mart El Monte, Inc., a third party, timely paid the full settlement amount [of
$652,038.73] on behalf of iFresh.”
54. This disclosure was wrong in two respects.  First, NYM El Monte, which was
owned by Deng, was a related party, not a third party.  Second, NYM El Monte did not make this
payment; Li Ba did.
55. In addition, iFresh recorded the settlement in fiscal year 2019 in its general ledger
as a payable due to shareholder (Deng), as if Deng himself made the settlement payment, instead
of as a payable due to Li Ba or, for that matter, to NYM El Monte.

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V. Deng Signed the Misstated Financial Statements.

56. For each of the four Form 10-Ks that iFresh filed for the fiscal years ending
March 31, 2017 through March 31, 2020, Deng signed the report on behalf of iFresh in his
capacities as iFresh’s CEO, COO, and Principal Operating Officer.
57. As part of each of those four filings, Deng signed a certification affirming that,
based on his knowledge, the Form 10-K did not “contain any untrue statement of material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading....”  Deng further
certified that “the financial statements, and other financial information included in this report
fairly represent in all material respects the financial condition ... of [iFresh]....”
58. Deng signed these filings and certifications without reading them.  Instead, Deng
relied on iFresh employees to brief him on the contents of the public filings he signed.
59. Deng was at least reckless in signing the filings and certifications.  He knew that
iFresh engaged in many transactions with related parties, because he made those transactions,
caused others to make the transactions, and/or controlled the related parties through ownership
or signature authority.  As described below, also Deng knew or was reckless in not knowing that
iFresh had insufficient controls and procedures to identify all of the related parties and related
party transactions.  Therefore, the danger of misstatement was obvious to Deng.
VI. Deng’s Misrepresentations and Omissions to iFresh’s Auditor.

60. Each year during the Relevant Period, iFresh’s auditor (the “Auditor”) audited
iFresh’s financial statements.
61. Deng never disclosed to the Auditor that he had signatory authority over some of
the parties with which iFresh was transacting.  For example, he never disclosed (or caused others

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to disclose) to the Auditor that he had signatory authority over the bank accounts of the entities
listed above in Table 4.
62. In connection with each audit, iFresh sent a management representation letter to
the Auditor.  Among other things, these letters contained representations that:
(a) iFresh’s consolidated financial statements were presented in conformity with U.S.
GAAP;
(b) iFresh had made available to the Auditor the names of all related parties and
relationships and transactions with related parties;
(c) All material transactions had been properly recorded in iFresh’s accounting
records underlying its consolidated financial statements;
(d) Related party relationships or transactions – including sales, purchases, loans,
transfers, leasing arrangements, guarantees, and amounts receivable from or
payable to related parties – had been properly accounted for and adequately
disclosed in the consolidated financial statements.
63. Deng signed management representation letters containing the above
representations in 2016, 2017, 2018, 2019, 2020.  Specifically, he signed letters dated:
(a) July 15, 2016, referencing NYM’s financial statements for the fiscal years ending
March 31, 2015 and March 31, 2016;
(b) June 29, 2017, referencing iFresh’s financial statements for the fiscal years ending
March 31, 2016 and March 31, 2017;
(c) June 29, 2018, referencing iFresh’s financial statements for the fiscal years ending
March 31, 2017 and March 31, 2018;

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(d) June 28, 2019, referencing iFresh’s financial statements for the fiscal years ending
March 31, 2018 and March 31, 2019; and
(e) August 13, 2020, referencing iFresh’s financial statements for the fiscal years
ending 2019 and 2020.
64. These representations to the Auditor were false.  In fact, the lists of related parties
provided to the Auditor were incomplete.  iFresh omitted related parties such as Li Ba, NYM
White Plains, Jiutian Music Club, Inc., and others shown in Table 4.
65. In these management representation letters, Deng also acknowledged his
responsibility for the “design and implementation of programs and controls to prevent and detect
fraud.”
66. Deng was at least reckless in signing the management representation letters
containing these false representations.  As described below, Deng knew or was reckless in not
knowing that iFresh had insufficient controls and procedures to identify related parties, and he
did not take sufficient steps to ensure that iFresh properly accounted for and disclosed all related
party transactions in its public filings.
VII. iFresh’s Inadequate Internal Controls Failed to Identify All of its Related Party
Transactions.

67. As a public company, iFresh was required to make and keep books, records, and
accounts, which accurately reflected its transactions and dispositions of its assets.
68. iFresh was also required to devise and maintain a system of internal accounting
controls sufficient to provide reasonable assurances that, among other things, transactions were
recorded as necessary to permit preparation of financial statements in conformity with GAAP.
To that end, iFresh was required to establish procedures designed to prevent errors and
irregularities.

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69.  In its Form 10Ks for fiscal years 2018, 2019, and 2020, iFresh disclosed that it
had concluded its internal controls over financial reporting were not effective.  For the fiscal
years 2019 and 2020, iFresh disclosed it had identified material weakness and control
deficiencies in its internal control over financial reporting related to (a) the deficiencies in the
ability of its in-house accounting professionals to generate financial statements in accordance
with GAAP and (b) lack of accounting and internal control staff experienced in GAAP.
70. On November 23, 2021, iFresh’s common stock was de-listed from the NASDAQ
Capital Market.  According to iFresh’s public disclosure regarding its de-listing, NASDAQ’s
decision was based in part on its failure to address in a timely manner material weaknesses in
internal controls over financial reporting.
71. In particular, iFresh’s internal accounting controls and recordkeeping systems
were not properly designed to provide reasonable assurance that iFresh would identify related
parties and properly disclose all of its related party transactions as necessary to permit
preparation of financial statements in conformity with GAAP.
72. Since its inception, Deng closely controlled iFresh’s operations and financial
information.  Deng served as both CEO and COO of iFresh during the entire Relevant Period.
iFresh disclosed in its public filings that Deng was also the company’s Chief Operating Decision
Maker or “CODM”.  This meant, according to iFresh’s filings, that Deng “bears ultimate
responsibility for, and is actively engaged in, the allocation of resources and the evaluation of the
Company’s operating and financial results.”
73. Between February 2017 and June 2021, iFresh employed succession of six short
term Chief Financial Officers, or “CFOs.”  Deng did not ensure that iFresh’s CFOs had access to
information regarding related party transactions.

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74. iFresh employed an accounting manager (the “Accounting Manager”), who
assisted Deng with, among other things, identifying related parties.  The Accounting Manager
had limited knowledge of GAAP and no prior SEC reporting experience.
75. Even though Deng controlled all the related parties at issue through signature
authority and/or ownership, he did not take an active role in verifying the accuracy of iFresh’s
records.
76. Deng knew that iFresh conducted many related party transactions.  He also knew
related party transactions was a significant audit area identified by the Auditor during iFresh’s
audits.  Nevertheless, Deng failed to ensure that iFresh’s accounting staff properly identified
related parties and the transactions with related parties were properly accounted for and
adequately disclosed in the consolidated financial statements.
77. The principal procedure that iFresh used to identify related parties was for Deng
and the Accounting Manager annually to review a list of iFresh’s related parties (the “Related
Party Lists”).  The Related Party Lists were provided to the Auditor.  iFresh had no procedures
regarding how the Related Party Lists should be created, who should create them, what
information they should contain, or what the review process should entail.  Deng – who
controlled the information about the related parties – did not know how the Related Party Lists
were compiled.  Together with the Accounting Manager, Deng reviewed these Related Party
Lists, but he did not consider whether the lists were missing any entities.  Rather, his review
focused on whether any entities should be removed from the Related Party Lists.
78. Other than the annual review of the Related Party Lists, Deng did not do anything
to ensure that the Accounting Manager knew all of iFresh’s related parties.

20
79. Although iFresh relied on Deng and the Accounting Manager to identify related
parties, neither Deng nor the Accounting Manager adequately understood the disclosure rules
regarding related party transactions.  Neither performed any independent research to understand
the SEC and GAAP definitions of a related party.
80. Deng never asked the Accounting Manager or any of the iFresh CFOs what steps
were taken to ensure all related parties were identified and related party transactions had been
properly accounted for and disclosed by iFresh.
VIII. iFresh and Deng Acquired Money.

81. During the Relevant Period, according to Form 4s filed by Deng, Deng sold at
least $19 million worth of iFresh stock.
82. During the Relevant Period, iFresh raised over $6 million through four private
offerings.  It also issued shares in connection with various acquisitions and compensation.
83. If purchasers of iFresh stock had known about iFresh’s undisclosed related party
transactions, they would likely have assigned a lower value to iFresh and its stock.  Therefore,
when Deng and iFresh sold stock during the Relevant Period, iFresh stock prices were artificially
inflated, and Defendants benefitted from the undisclosed related party transactions.
IX. This Action Is Timely Filed.
84. This misconduct at issue in this Complaint occurred between August 2016 and
August 2020.
85. Each of the Defendants has entered into agreements with the SEC in which they
agreed to toll, for various periods and lengths of time, any statute of limitations applicable to the
conduct and claims alleged herein.  iFresh’s tolling agreements cover the period between August

21
6, 2021 through June 1, 2022 and Deng’s tolling agreements cover the period between July 1,
2021 through July 1, 2022.
CLAIMS FOR RELIEF
COUNT I
Against Defendants iFresh and Deng,
for Violations of Section 10(b) of the Exchange Act
and Rule 10b-5 Thereunder
86. The Commission realleges and incorporates by reference paragraphs 1 through 85
as if fully set forth herein.
87. Defendants, in connection with the purchase and sale of securities, by the use of
the means and instrumentalities of interstate commerce or the mails, directly and indirectly: (a)
used and employed devices, schemes, or artifices to defraud; (b) made untrue statements of
material facts and 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; and (c)
engaged in acts, practices, or courses of business which operated or would operate as a fraud
and deceit upon other persons, including current and prospective investors.
88. Defendants knowingly or recklessly engaged in the fraudulent conduct described
above.
89. By engaging in the conduct described above, Defendants violated Section 10(b) of
the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

22
COUNT II

(In the alternative)
Against Defendant Deng,
for Aiding and Abetting iFresh’s Violations of
Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder

90. The Commission realleges and incorporates by reference paragraphs 1 through 85
as if fully set forth herein.
91. iFresh, in connection with the purchase and sale of securities, by the use of the
means and instrumentalities of interstate commerce or the mails, directly and indirectly: (a) used
and employed devices, schemes, or artifices to defraud; (b) made untrue statements of material
facts and 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; and (c) engaged in acts,
practices, or courses of business which operated or would operate as a fraud and deceit upon
other persons, including current and prospective investors.
92. By engaging in the conduct described above, iFresh violated Section 10(b) of the
Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.
93. Defendant Deng knowingly or recklessly provided substantial assistance to iFresh
in its violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
94. By engaging in the conduct described above, and pursuant to Section 20(e) of the
Exchange Act [15 U.S.C. § 78t(e)], Deng aided and abetted iFresh’s violations and, unless
restrained and enjoined, will in the future aid and abet violations of Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

23
COUNT III

Against Defendants iFresh and Deng,
for Violations of Section 17(a) of the Securities Act

95. The Commission realleges and incorporates by reference paragraphs 1 through 85
as if fully set forth herein.
96. Defendants, in the offer or sale of securities, by the use of the means and
instruments of transportation or communication in interstate commerce or by use of the mails,
directly and indirectly: (a) knowingly or recklessly employed devices, schemes, or artifices to
defraud; (b) obtained money or property by means of 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; and (c) engaged in transactions,
practices, or courses of business which operated or would operate as a fraud or deceit upon
purchasers of securities.
97. Defendants knowingly, recklessly, or negligently engaged in the fraudulent
conduct described above.
98. By engaging in the conduct described above, Defendants violated and unless
restrained and enjoined will continue to violate Section 17(a) of the Securities Act [15 U.S.C. §
77q(a)].

24
COUNT IV
(In the alternative)
Against Defendant and Deng,
for Aiding and Abetting iFresh’s Violations of Section 17(a) of the Securities Act

99. The Commission realleges and incorporates by reference paragraphs 1 through 85
as if fully set forth herein.
100. iFresh, in the offer or sale of securities, by the use of the means and instruments
of transportation or communication in interstate commerce or by use of the mails, directly and
indirectly: (a) knowingly or recklessly employed devices, schemes, or artifices to defraud; (b)
obtained money or property by means of 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; and (c) engaged in transactions, practices, or
courses of business which operated or would operate as a fraud or deceit upon purchasers of
securities.
101. By engaging in the conduct described above, iFresh violated and unless restrained
and enjoined will continue to violate Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
102. Defendant Deng knowingly or recklessly provided substantial assistance to iFresh
in its violations of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
103. By engaging in the conduct described above, and pursuant to Section 20(e) of the
Exchange Act [15 U.S.C. § 78t(e)], Deng aided and abetted iFresh’s violations and, unless
restrained and enjoined, will in the future aid and abet violations of Section 17(a) of the
Securities Act [15 U.S.C. § 77q(a)].

25
COUNT V
Against Defendant iFresh
for Violations of Section 13(a) of the Exchange Act and
Rules 12b-20 and 13a-1 thereunder

104. The Commission realleges and incorporates by reference paragraphs 1 through 85
as if fully set forth herein.
105. Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rule
13a-1 [17 C.F.R. § 240.13a-1] require issuers of registered securities to file with the Commission
factually accurate annual reports.  Exchange Act Rule 12b-20 [17 C.F. R. § 240.12b-20] further
provides that, in addition to the information expressly required to be included in a statement or
report, there shall be added such further material information, if any, as may be necessary to
make the required statements, in the light of the circumstances under which they were made, not
misleading.
106. By engaging in the conduct described above, iFresh filed with the Commission
and disseminated to investors false and misleading annual reports, each containing untrue
statements of material fact or omitting to state material facts necessary in order to make the
statements made, in light of the circumstances under which they were made, not misleading.
107. By reason of the foregoing, iFresh, directly or indirectly, violated and, unless
restrained and enjoined, will continue to violate Section 13(a) of the Exchange Act and Rules
12b-20 and 13a-1 thereunder [15 U.S.C. § 78m(a); 17 C.F.R. §§ 240.12b-20, 240.13a-1].

26
COUNT VI
Against Defendant Deng,
for Aiding And Abetting Violations of Section 13(a) of the Exchange Act
and Rules 12b-20 and 13a-1 thereunder

108. The Commission realleges and incorporates by reference paragraphs 1 through 85
as if fully set forth herein.
109. Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rule
13a-1 [17 C.F.R. § 240.13a-1] require issuers of registered securities to file with the Commission
factually accurate annual reports.  Exchange Act Rule 12b-20 [17 C.F. R. § 240.12b-20] further
provides that, in addition to the information expressly required to be included in a statement or
report, there shall be added such further material information, if any, as may be necessary to
make the required statements, in the light of the circumstances under which they were made, not
misleading.
110. iFresh filed with the Commission and disseminated to investors false and
misleading annual reports in violation of Section 13(a) of the Exchange Act and Rules 12b-20
and 13a-1 thereunder [15 U.S.C. § 78m(a); 17 C.F.R. §§ 240.12b-20, 240.13a-1].
111. Defendant Deng knowingly or recklessly provided substantial assistance to iFresh
in its violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder [15
U.S.C. § 78m(a); 17 C.F.R. §§ 240.12b-20, 240.13a-1].
112. By engaging in the conduct described above, and pursuant to Section 20(e) of the
Exchange Act [15 U.S.C. § 78t(e)], Deng aided and abetted iFresh’s violations and, unless
restrained and enjoined, will in the future aid and abet violations of Section 13(a) of the
Exchange Act and Rules 12b-20 and 13a-1 thereunder [15 U.S.C. § 78m(a); 17 C.F.R. §§
240.12b-20, 240.13a-1].

27
COUNT VII
Against Defendant iFresh
for Violations of Section 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act

113.  The Commission realleges and incorporates by reference paragraphs 1 through
85 as if fully set forth herein.
114. Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)] requires
issuers to make and keep books, records, and accounts which, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of its assets.  Section 13(b)(2)(B) of the
Exchange Act [15 U.S.C. § 78m(b)(2)(B)] requires issuers to devise and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that transactions were
recorded as necessary to permit preparation of financial statements in conformity with GAAP
and to maintain the accountability of assets.
115. By engaging in the conduct described above, iFresh violated and, unless retrained
and enjoined, will continue to violate Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act
[15 U.S.C. § 78m(b)(2)(A) and 78(m)(b)(2)(B)].
COUNT VIII
Against Defendant Deng
for Aiding and Abetting iFresh’s Violation of Sections
13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act

116.  The Commission realleges and incorporates by reference paragraphs 1 through
85 as if fully set forth herein.
117. By engaging in the conduct described above, iFresh violated Sections 13(b)(2)(A)
and 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A) and 78(m)(b)(2)(B)].
118. By engaging in the conduct described above, Deng knowingly or recklessly
provided substantial assistance to iFresh in its failures to (1) make and keep accurate books,

28
records, and accounts; and (2) to devise and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that transactions were recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain the accountability
of assets.
119. By engaging in the conduct described above, and pursuant to Section 20(e) of the
Exchange Act [15 U.S.C. § 78t(e)], Deng aided and abetted iFresh’s violations and, unless
retrained and enjoined, will in the future aid and abet violations of Sections 13(b)(2)(A) and
13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A) and 78(m)(b)(2)(B)].

PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that the Court:
I.
 Enter an Order of Permanent Injunction, in a form consistent with Rule 65(d) of the
Federal Rules of Civil Procedure, restraining and enjoining iFresh, its officers, agents, servants,
employees, attorneys, and those persons in active concert or participation with iFresh who
receive actual notice of the Order, by personal service or otherwise, and each of them from,
directly or indirectly, engaging in the acts, practices or courses of business alleged above, or in
conduct of similar purport and object, in violation of Sections 10(b), 13(a), 13(b)(2)(A) and
13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(b)(2)(A), and 78(m)(b)(2)(B)] and

29
Rules 10b-5, 12b-20 and 13a-1 thereunder [17 C.F.R. §§ 240.10b-5, 240.12b-20, 240.13a-1], and
Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];
II.
 Enter an Order of Permanent Injunction, in a form consistent with Rule 65(d) of the
Federal Rules of Civil Procedure, restraining and enjoining Deng from, directly or indirectly,
engaging in the acts, practices or courses of business alleged above, or in conduct of similar
purport and object, in violation of Sections 10(b) of the Exchange Act [15 U.S.C. §§ 78j(b)] and
Rule 10b-5 thereunder [17 C.F.R. §§ 240.10b-5], and Section 17(a) of the Securities Act [15
U.S.C. § 77q(a)], and from aiding and abetting violations of 13(a), 13(b)(2)(A), and 13(b)(2)(B)
of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(b)(2)(A), and 78m(b)(2)(B)] and Rules 12b-20
and 13a-1 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1];
III.
 Enter an Order requiring Defendants to disgorge the ill-gotten gains that they received,
directly or indirectly, from the violations alleged herein, including prejudgment interest pursuant
to Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(5), (7)];
IV.
 Enter an Order requiring Defendants to pay civil penalties pursuant to Section 20(d) of
the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d)(3) of the Exchange Act [15 U.S.C. §
78u(d)(3)];
V.
 Enter an Order, pursuant to 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)], permanently prohibiting Deng
from serving as an officer or director of any issuer that has a class of securities registered

30
pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section
15(d) of the Exchange Act;
VI.
Retain jurisdiction over this action in accordance with the principles of equity and the
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and
decrees that may be entered, or to entertain any suitable application or motion for additional
relief within the jurisdiction of this Court; and
VII.
 Grant such other relief as the Court deems appropriate.
JURY DEMAND
Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff demands that
this case be tried to a jury on all issues so triable.

May 31, 2022 Respectfully submitted,

UNITED STATES SECURITIES AND
EXCHANGE COMMISSION

  /s/ Alyssa A. Qualls
Alyssa A. Qualls (AQ-4247)
Ariella O. Guardi, Illinois Bar No. 6297336
Ruta G. Dudenas, Illinois Bar No. 6274848
175 West Jackson Boulevard, Suite 1450
Chicago, Illinois 60604
(312) 353-7390
(312) 353-7398 (FAX)
[email protected]
[email protected]
[email protected]

Attorneys for Plaintiff
U.S. Securities and Exchange Commission

UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF NEW YORK 

                                                                               
 : 
UNITED STATES SECURITIES AND  : 
EXCHANGE COMMISSION, :   
 : 

Plaintiff, :        
 : 

- against -                                           : Civil Action No. 1:22-cv-3200 
 :  
iFRESH, INC. and LONG DENG, : COMPLAINT 
 :  

Defendants. :   JURY TRIAL DEMANDED 
 :   

  
COMPLAINT 

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

for its Complaint against defendants iFresh, Inc. (“iFresh”) and Long Deng (together, 

“Defendants”), alleges as follows: 

PRELIMINARY STATEMENT 
 

1. This matter involves accounting fraud, financial reporting violations, and internal 

control failures by iFresh and its founder and CEO, Long Deng.  iFresh and Deng misled the 

investing public about iFresh’s finances by hiding and misstating information about related party 

transactions that iFresh entered into with entities owned and controlled by Deng and his brother.  

2. A related party transaction is a transaction between two parties who have a close 

association, such as family members and affiliates, have common ownership, or can significantly 

influence one another’s management or operating policies, as distinguished from a transaction 

between third parties.  The SEC rules require public companies, like iFresh, to disclose all 

related party transactions that exceed $120,000 in their public filings.   In addition, generally 

accepted accounting principles require companies to disclose material related party transactions. 

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3. Between August 10, 2016, when iFresh filed its initial registration statement, 

through August 13, 2020, when it filed its Form 10-K for the fiscal year ending March 31, 2020 

(the “Relevant Period”), iFresh engaged in numerous transactions with entities related to Deng.  

However, iFresh did not properly disclose all of its related party transactions.   

4. As a result, iFresh’s public filings were materially misstated in 2016, 2017, 2018, 

2019, and 2020.  For example, between 2017 and 2020, from 18% to 54% of iFresh’s accounts 

receivable were from undisclosed related party transactions.  Between 2016 and 2020, iFresh 

failed to disclose over $12 million in payments to a company owned by Deng’s brother.   

5. Deng is responsible for these misstatements.  Since its inception, Deng closely 

controlled iFresh’s operations and financial information.  Deng also controlled all of iFresh’s 

undisclosed related parties either through ownership or by having signature authority over bank 

accounts.   

6. By misrepresenting information about its related party transactions, iFresh 

deprived investors of a true picture of how heavily iFresh and Deng’s business interests were 

intertwined.   

7. iFresh had deficiencies in its internal controls over financial reporting, which 

contributed to its failure to accurately disclose its related party transactions.  During the Relevant 

Period, iFresh’s internal accounting controls relating to its identification of related parties and 

disclosure of related party transactions were deficient in design and application, and failed to 

provide reasonable assurance that its financial statements were materially accurate.   

8. By engaging in the conduct described herein, iFresh violated Section 17(a) of the 

Securities Act of 1933 (”Securities Act”) [15 U.S.C. § 77q(a)], and Sections 10(b), 13(a), 

13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 

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

and Rules 10b-5, 12b-20 and 13a-1 thereunder [17 C.F.R. § 240.10b-5, 17 C.F.R § 240.12b-20, 

17 C.F.R. § 240.13a-1]; Deng violated and aided and abetted Section 17(a) of the Securities Act, 

and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted 

iFresh’s violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and 

Rules 12b-20 and 13a-1 thereunder. 

9. Defendants will continue to violate the federal securities laws unless restrained or 

enjoined by this Court. 

10. The SEC therefore seeks a judgment against Defendants providing permanent 

injunctive relief; disgorgement of ill-gotten gains pursuant to Sections 21(d)(5) and 21(d)(7) of 

the Exchange Act [15 U.S.C. §§ 78u(d)(5), (7)]; imposing civil monetary 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)]; prohibiting Deng from acting as an officer or director of a public 

company, pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)]; as well as other 

appropriate and necessary relief. 

JURISDICTION AND VENUE 
 

11. The Commission brings this action pursuant to the authority conferred by Section 

21(d) of the Exchange Act [15 U.S.C. § 78u(d)] and Section 20(b) of the Securities Act [15 

U.S.C. § 77t(b)]. 

12. This Court has jurisdiction over this action pursuant to Sections 21 and 27 of the 

Exchange Act [15 U.S.C. §§ 78u, 78aa], and Sections 20(b), 20(d), and 22(a) of the Securities 

Act [15 U.S.C. §§ 77t(b), 77t(d), 77v(a)]. 

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13. During the Relevant Period, iFresh was engaged in the offer and sale of securities; 

it raised approximately $6.25 million through four private offerings and issued shares in 

connection with compensation and acquisitions. 

14. Defendants directly or indirectly made use of the means or instruments of 

transportation and communication in interstate commerce, or of the mails, or of the facilities of a 

national securities exchange in connection with the acts, transactions, or practices alleged in this 

Complaint.   

15. Venue is proper in this Court pursuant to Section 27 of the Exchange Act [15 

U.S.C. § 78aa] and Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)].  Acts, practices, and 

courses of business constituting violations alleged herein have occurred within the jurisdiction of 

the United States District Court for the Eastern District of New York.  Moreover, Defendants 

reside in this district. 

DEFENDANTS 
 

16. iFresh, Inc. is a Delaware corporation with its headquarters in Long Island City, 

New York.  iFresh is an Asian grocer that operates wholesale businesses and retail supermarkets 

in New York, Massachusetts, and Florida.  Until November 2021 – when it was delisted due to 

its failures to timely file periodic reports and hold an annual shareholder meeting – iFresh’s 

common stock was traded on the NASDAQ Capital Market.  Currently, iFresh’s common stock 

is registered with the Commission pursuant to Section 12(b) of the Exchange Act and is quoted, 

only on an unsolicited basis, on the OTC Expert Market under the ticker symbol “IFMK.”  

17. Long Deng, age 53, is a resident of Roselyn, New York.  Deng was the Chairman 

of iFresh’s board of directors from February 2017 through April 2022.  Deng was also iFresh’s 

Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”) from February 2017 

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through at least April 2022 (iFresh has not reported a new CEO or COO to the SEC as of the date 

of this Complaint).   

FACTUAL ALLEGATIONS 
I. Background 

 
18. In 1995, Deng founded NYM Holding, Inc. (“NYM”), an Asian grocery 

supermarket company.  Since then, he has served as NYM’s CEO, COO, and sole director.  

19. In July 2016, NYM entered into a merger agreement under which it became a 

wholly owned subsidiary of iFresh.   

20. iFresh is an Asian supermarket chain with stores located in the Northeastern U.S. 

and in Florida.  In addition to retail supermarkets, iFresh operates two wholesale businesses that 

sell to its retail supermarkets and to third parties.   

21. iFresh became a public company in 2017 through a reverse merger with a special 

purpose acquisition company, or “SPAC,” named E-Compass Acquisition Corp.   

22. Deng was CEO and COO since iFresh’s formation in February 2017 through at 

least April 2022.  Deng was also the Chairman of the Board of iFresh from February 2017 until 

April 2022, when a Delaware Chancery Court affirmed a shareholder vote to remove him from 

iFresh’s board of directors.   

23. During the relevant period, Deng owned up to 80.79% of iFresh’s outstanding 

common stock. 

24. iFresh disclosed in its Form 10Ks that Deng’s total compensation was 

approximately $700,000 for each fiscal year from 2017 through 2020. 

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II. Governing Accounting Principles, Standards, and Procedures 
 

25. As a U.S. public company, iFresh is required by the SEC to file financial 

statements that are prepared in accordance with Generally Accepted Accounting Principles, or 

“GAAP.” 

26. GAAP is a series of authoritative standards (set out by policy boards, including 

the Financial Accounting Standards Board, or “FASB”) that standardizes and regulates the 

definitions, assumptions, and methods used in accounting across industries, and seeks to ensure 

that a company’s financial statements are complete, consistent, and comparable.  This makes it 

easier for investors to analyze and extract useful information from a company’s financial 

statements and facilitates the comparison of financial information across different companies. 

27. The federal securities laws require public companies such as iFresh to disclose 

information on an ongoing basis.  Among other things, public companies like iFresh must file a 

Form 10-K, which is an annual report that provides a comprehensive overview of the company’s 

business and financial condition and includes audited financial statements.  This report is filed 

with the SEC, posted on the SEC’s website, and thereby made available to the investing public.  

Financial statements filed with the SEC which are not prepared in accordance with GAAP are 

presumed to be misleading. 

28. The federal securities laws and GAAP require companies to disclose certain 

information about their transactions with related parties.  Accounting Standards Codification 

(“ASC”) Topic 850, Related Party Disclosures (“ASC 850”) provides that related party 

transactions include, among other things, transactions between an entity and its principal owners 

or members of their immediate families.  ASC 850-10-05-3.  Immediate family is defined as 

“Family members who might control or influence a principal owner or a member of 

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management, or who might be controlled or influenced by a principal owner or a member of 

management, because of the family relationship.”  ASC 850-10-20.  ASC 850 specifically 

enumerates sales, purchases, borrowings, and lendings as “[e]xamples of common [related party] 

transactions.”  ASC 850-10-05-4.   

29. With respect to related party transactions, ASC 850 requires disclosures of the (a) 

nature of the relationships, (b) descriptions of the transactions; and (c) the dollar amounts of the 

transactions.  ASC 850-10-50-1.   

30. Item 404(a) of Regulation S-K requires issuers to disclose any transaction 

exceeding $120,000 in which the registrant was or is to be a participant and in which any related 

person had or will have a direct or indirect material interest.  The instructions to Item 404(a) 

define related person to include any immediate family member of a director or executive officer 

of a registrant, which includes siblings. 

III. iFresh Enters into Numerous Related Party Transactions. 
 
31. After its reverse merger in February 2017, iFresh, through Deng, continued a 

course of conduct that Deng began at NYM – conducting numerous transactions with related 

parties.   

32. iFresh engaged in transactions involving multiple related parties, including (a) 

Deng himself, (b) companies owned in whole or in part by Deng, (c) companies owned in whole 

or in part by Deng’s brother, and (d) companies over which Deng otherwise exercised control by 

having signature authority over bank accounts.  

33. iFresh disclosed some of these related party transactions in its public filings.  For 

example, since July 2017, iFresh disclosed that it acquired several grocery stores from Deng.   

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34. However, as explained below, iFresh failed to fully disclose all its related party 

transactions, as required by the federal securities laws and GAAP. 

35. Since its inception, Deng closely controlled iFresh’s operations and financial 

information.  Deng controlled iFresh’s bank accounts.  He also controlled all of iFresh’s 

undisclosed related parties either through ownership or by having signature authority over bank 

accounts.   

36. Deng sometimes transferred money between iFresh and related parties in an 

informal way, without documentation.  For example, Deng caused iFresh to borrow funds 

multiple times from an entity which had a bank account that Deng controlled, without 

documenting the loans in written agreements.   

IV. iFresh Failed to Properly Disclose Related Party Transactions in its Public Filings.  
 

37. During the Relevant Period, at least five of iFresh’s public filings were materially 

misstated, because iFresh failed to properly disclose related party transactions.  These materially 

misstated public filings include iFresh’s (a) Form S-4 filed on December 16, 2016, (b) Form 10-

K for the fiscal year ended March 31, 2017, filed on June 29, 2017; (c) Form 10-K for the fiscal 

year ended March 31, 2018, filed on June 29, 2018; (d) Form 10-K for the fiscal year ended 

March 31, 2019, filed on June 28, 2019; and (e) Form 10-K for the fiscal year ended March 31, 

2020, filed on August 13, 2020.   

38. These misstatements were material.  Reasonable investors would consider 

transactions between iFresh and related parties important to a decision to invest.  The 

misstatements deprived investors of information about the amounts iFresh received from and 

paid to related parties, amounts due to and from related parties, and how heavily intertwined 

iFresh was with Deng.    

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A. iFresh Mischaracterized Related Party Transactions as Transactions with 
Third Parties. 

 
39. iFresh failed to disclose numerous related party transactions.  Thereby, iFresh 

mischaracterized many of its related party transactions as transactions with third parties in its 

financial statements.  

40. There were approximately $6.5 million of related party transactions affecting 

iFresh’s net assets over the Relevant Period that were not disclosed (Table 1). 

 
Table 1: iFresh’s Undisclosed Related Party Transactions During Relevant Period 

  
March 31, 

2020 
March 31, 

2019 
March 31, 

2018 
March 31, 

2017 
March 31, 

2016 
Accounts receivables 
(1) 

$1,470,338 $1,883,250 $2,626,757 $400,392 - 

Prepaid expenses and 
other current assets (2) 

$619,477 $867,192 $613,349 $221,897 $220,442 

Other payables, current 
(3) 

$712,998 $856,137 $706,585 $98,299 $4,509 

Net Assets Related to 
Undisclosed Related 
Party Transactions  
(=1+2-3) 

$1,376,817 $1,894,305 $2,533,521 $523,990 $215,933 

Net Assets Reported by 
iFresh  

($2,550,147) ($1,031,979) $5,465,476 $5,904,189 $5,111,626 

 

41. iFresh’s failures to properly disclose transactions with related parties fell into two 

categories.  First, in some cases, iFresh had properly identified an entity as a related party in its 

public filings and/or in its internal records, but it failed to disclose all of its transactions with that 

related party as related party transactions in its public filings.  Second, iFresh failed to identify 

some entities as related parties in the first place. 

42. As an example of the first category of failure, iFresh failed to disclose 

transactions with a related party named New York Supermarket, Inc.  New York Supermarket, 

Inc. was a related party because it was 100% owned by Deng.  iFresh identified New York 

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Supermarket, Inc. in its internal records as a related party.  From fiscal years 2016 through 2020, 

iFresh made loans to New York Supermarket, Inc.  However, iFresh did not disclose these loans 

as related party transactions in its public filings. 

43. As another example, for the fiscal year ended March 31, 2020, iFresh failed to 

disclose approximately $200,000 in accounts receivable due from five related parties that had 

been either categorized as related parties in iFresh’s internal records and/or identified as related 

parties in iFresh’s public filings.  These five related parties are Spicy Bubbles, Inc., Sunray 

Venus LLC, Spring Farm WPB Inc., NYM Tampa Seafood Inc. (“NYM Tampa”), and New 

York Mart El Monte Inc. (“NYM El Monte”).   

44. iFresh presented on the face of its consolidated balance sheets a line item for 

advances and receivables due from related parties.  This line item should have captured all 

relevant amounts due from related parties, including the transactions described above in 

paragraphs 42 and 43.   

45. The following table summarizes the parties which iFresh identified as related in 

its public filings and/or internal records with whom iFresh engaged in undisclosed related party 

transactions: 

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Table 2. 
Related Party  

 
Relationship to iFresh Fiscal Year(s) 

Impacted by 
Undisclosed Related 
Party Transactions 

 
New York Supermarket Inc. 100% owned by Deng 2017-2020 
United States of America-China 
Chamber of Commerce (“USCC”)  

Controlled by Deng –
President 

2018, 2020 

Dragon 6th Ave LLC 99% owned by Deng 2020 
Spicy Bubbles Inc. 100% owned by Deng 2017-2020 
Sunray Venus LLC 100% owned by Deng 2019-2020 
Spring Farm WPB Inc. 100% owned by Deng 2020 
NYM Tampa  70% owned by Deng 2020 
NYM El Monte  100% owned by Deng 2020 

 

46. Next, as an example of the second type of failure – iFresh’s failure to disclose 

related party transactions with entities that it failed to identify as related parties in the first place 

– iFresh failed to properly disclose transactions with a related party named Li Ba HVAC & 

Construction Inc. (“Li Ba”).  Li Ba was a related party to iFresh for two reasons.  First, because 

Deng was signatory on Li Ba’s bank accounts, he controlled the company.  In addition, Deng’s 

brother owned Li Ba.  However, iFresh did not identify Li Ba as a related party in its publicly 

filed financial statements. 

47. Between fiscal years 2016 and 2020, in each fiscal year, iFresh made the 

following material payments to Li Ba for property and equipment: 

 Table 3. 
March 31, 2020 March 31, 2019 March 31, 2018 March 31, 2017 March 31, 2016 

$ 1,288,264 $ 2,266,563 $ 5,570,905 $ 1,836,488 $ 1,373,950 
 

In addition, there were amounts due to and from Li Ba for the fiscal years 2016 through 2020, 

and iFresh recognized sales to Li Ba from fiscal years 2017 through 2019.  iFresh was required 

to disclose all of these transactions as related party transactions, but it failed to do so.  Also, 

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iFresh should have reported all amounts due from Li Ba on the consolidated balance sheet in the 

line item for advances and receivables due from related parties, but failed to do so. 

48. In addition, in fiscal year 2020, Deng made payments totaling $500,000 to repay 

amounts owed by another related party, New York Mart White Plains Inc. (“NYM White 

Plains”).  Like Li Ba, NYM White Plains was a related party because (a) Deng had signatory 

authority over its bank account, and (b) it was owned and controlled by Deng’s brother.  iFresh 

was required but failed to disclose these payments as related party transactions. 

49. Also in fiscal year 2020, another undisclosed related party, Jiutian Music Club 

Inc. (“Jiutian”), made capital contributions to iFresh on behalf of Deng totaling over $500,000.  

Like Li Ba and NYM White Plains, Jiutian was a related party because (a) Deng had signatory 

authority over its bank account, and (b) it was owned and controlled by Deng’s brother.  Again, 

iFresh was required to but failed to disclose those capital contributions as related party 

transactions. 

50. In summary, the following table summarizes the related parties that iFresh failed 

to identify as related parties and the fiscal years wherein iFresh’s public filings contained 

undisclosed related party transactions: 

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 Table 4. 
Related Party  

 
Relationship to iFresh Fiscal Year(s) 

Impacted by 
Undisclosed 

Related Party 
Transactions 

Li Ba  Controlled by Deng (signature authority over 
a bank account) & owned and controlled by 
Deng’s brother 

2016-2020 

New York Mart River 
Edge Inc. 

Controlled by Deng (signature authority over 
a bank account) 

2017-2020 

NYM White Plains  Controlled by Deng (signature authority over 
a bank account) & owned and controlled by 
Deng’s brother 

2017-2020 

Jiutian  Controlled by Deng (signature authority over 
a bank account) & owned and controlled by 
Deng’s brother 

2020 

900 Northlake LLC Controlled by Deng (signature authority over 
a bank account and was a manager and 
member) 

2017, 2018 

Silong Management 
Inc. 

Controlled by Deng (signature authority over 
a bank account) 

2020 

551 Management Inc. 
 

Controlled by Deng (signature authority over 
a bank account) 

2020 

E. Colonial 
Management Inc. 

Controlled by Deng (signature authority over 
a bank account) 

2020 

Sunrise Management 
Inc. 

Controlled by Deng (signature authority over 
a bank account) 

2020 

 

51. Taken together, iFresh’s undisclosed related party transactions were material to 

iFresh’s consolidated balance sheets.  For example, from fiscal year 2017 through fiscal year 

2020, between 18% and 54% of iFresh’s net accounts receivable were from undisclosed related 

party transactions.   See Table 5 below.   

Table 5.  Balance Sheet – as of the Years Ended March 311 

 March 31, 
2020 

March 31, 
2019 

March 31, 
2018 

March 
31, 2017 

March 
31, 2016 

Accounts receivable, net 43% 47% 54% 18% 0% 

                                                 
1  Errors are calculated as undisclosed related party transaction/originally reported amount.  For example, 
accounts receivable due from undisclosed related parties for the year ended 3/31/2020 was approximately $1.47 
million and the accounts receivable, net reported by iFresh was approximately $3.41 million, or 43% ($1.47/$3.41). 

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Prepaid expenses and 
other current assets 

17% 23% 32% 23% 47% 

Other payables, current 20% 29% 60% 20% 1% 
 

52. In addition, iFresh’s undisclosed related party transactions materially impacted 

iFresh’s income statements.  For example, iFresh presented on the face of its consolidated 

statements of income a line item for net sales to related parties.  This line item should have 

captured all sales to related parties.  During fiscal years 2018 and 2019 iFresh had approximately 

$9.8 million and $4.2 million, respectively, in sales to undisclosed related parties.  iFresh failed 

to report these sales on the consolidated statements of income as sales to related parties and 

failed to disclose the sales as related party transactions.  As a result, sales to related parties was 

understated by 33% for the fiscal year 2018 and 17% for the fiscal year 2019. 

B. iFresh Misrepresented a Legal Settlement Involving a Related Party. 
 

53. In its Form 10-K for fiscal year ending March 31, 2018, iFresh erroneously 

described a legal settlement that occurred in May 2018.  iFresh disclosed as a subsequent event 

that it had entered into a settlement with Jendo Ermi LP (“Jendo”) in connection with lawsuits 

the parties had filed against one another.  iFresh disclosed in the notes to its financial statements, 

“New York Mart El Monte, Inc., a third party, timely paid the full settlement amount [of 

$652,038.73] on behalf of iFresh.”   

54. This disclosure was wrong in two respects.  First, NYM El Monte, which was 

owned by Deng, was a related party, not a third party.  Second, NYM El Monte did not make this 

payment; Li Ba did.   

55. In addition, iFresh recorded the settlement in fiscal year 2019 in its general ledger 

as a payable due to shareholder (Deng), as if Deng himself made the settlement payment, instead 

of as a payable due to Li Ba or, for that matter, to NYM El Monte. 

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V. Deng Signed the Misstated Financial Statements. 
 

56. For each of the four Form 10-Ks that iFresh filed for the fiscal years ending 

March 31, 2017 through March 31, 2020, Deng signed the report on behalf of iFresh in his 

capacities as iFresh’s CEO, COO, and Principal Operating Officer.     

57. As part of each of those four filings, Deng signed a certification affirming that, 

based on his knowledge, the Form 10-K did not “contain any untrue statement of material fact 

or omit to state a material fact necessary to make the statements made, in light of the 

circumstances under which such statements were made, not misleading….”  Deng further 

certified that “the financial statements, and other financial information included in this report 

fairly represent in all material respects the financial condition … of [iFresh]….” 

58. Deng signed these filings and certifications without reading them.  Instead, Deng 

relied on iFresh employees to brief him on the contents of the public filings he signed.   

59. Deng was at least reckless in signing the filings and certifications.  He knew that 

iFresh engaged in many transactions with related parties, because he made those transactions, 

caused others to make the transactions, and/or controlled the related parties through ownership 

or signature authority.  As described below, also Deng knew or was reckless in not knowing that 

iFresh had insufficient controls and procedures to identify all of the related parties and related 

party transactions.  Therefore, the danger of misstatement was obvious to Deng.   

VI. Deng’s Misrepresentations and Omissions to iFresh’s Auditor. 
 
60. Each year during the Relevant Period, iFresh’s auditor (the “Auditor”) audited 

iFresh’s financial statements.   

61. Deng never disclosed to the Auditor that he had signatory authority over some of 

the parties with which iFresh was transacting.  For example, he never disclosed (or caused others 

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to disclose) to the Auditor that he had signatory authority over the bank accounts of the entities 

listed above in Table 4.  

62. In connection with each audit, iFresh sent a management representation letter to 

the Auditor.  Among other things, these letters contained representations that: 

(a) iFresh’s consolidated financial statements were presented in conformity with U.S. 

GAAP; 

(b) iFresh had made available to the Auditor the names of all related parties and 

relationships and transactions with related parties; 

(c) All material transactions had been properly recorded in iFresh’s accounting 

records underlying its consolidated financial statements;  

(d) Related party relationships or transactions – including sales, purchases, loans, 

transfers, leasing arrangements, guarantees, and amounts receivable from or 

payable to related parties – had been properly accounted for and adequately 

disclosed in the consolidated financial statements. 

63. Deng signed management representation letters containing the above 

representations in 2016, 2017, 2018, 2019, 2020.  Specifically, he signed letters dated:  

(a) July 15, 2016, referencing NYM’s financial statements for the fiscal years ending 

March 31, 2015 and March 31, 2016; 

(b) June 29, 2017, referencing iFresh’s financial statements for the fiscal years ending 

March 31, 2016 and March 31, 2017; 

(c) June 29, 2018, referencing iFresh’s financial statements for the fiscal years ending 

March 31, 2017 and March 31, 2018; 

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(d) June 28, 2019, referencing iFresh’s financial statements for the fiscal years ending 

March 31, 2018 and March 31, 2019; and  

(e) August 13, 2020, referencing iFresh’s financial statements for the fiscal years 

ending 2019 and 2020. 

64. These representations to the Auditor were false.  In fact, the lists of related parties 

provided to the Auditor were incomplete.  iFresh omitted related parties such as Li Ba, NYM 

White Plains, Jiutian Music Club, Inc., and others shown in Table 4. 

65. In these management representation letters, Deng also acknowledged his 

responsibility for the “design and implementation of programs and controls to prevent and detect 

fraud.” 

66. Deng was at least reckless in signing the management representation letters 

containing these false representations.  As described below, Deng knew or was reckless in not 

knowing that iFresh had insufficient controls and procedures to identify related parties, and he 

did not take sufficient steps to ensure that iFresh properly accounted for and disclosed all related 

party transactions in its public filings.  

VII. iFresh’s Inadequate Internal Controls Failed to Identify All of its Related Party 
Transactions. 

 
67. As a public company, iFresh was required to make and keep books, records, and 

accounts, which accurately reflected its transactions and dispositions of its assets.   

68. iFresh was also required to devise and maintain a system of internal accounting 

controls sufficient to provide reasonable assurances that, among other things, transactions were 

recorded as necessary to permit preparation of financial statements in conformity with GAAP.  

To that end, iFresh was required to establish procedures designed to prevent errors and 

irregularities. 

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69.  In its Form 10Ks for fiscal years 2018, 2019, and 2020, iFresh disclosed that it 

had concluded its internal controls over financial reporting were not effective.  For the fiscal 

years 2019 and 2020, iFresh disclosed it had identified material weakness and control 

deficiencies in its internal control over financial reporting related to (a) the deficiencies in the 

ability of its in-house accounting professionals to generate financial statements in accordance 

with GAAP and (b) lack of accounting and internal control staff experienced in GAAP. 

70. On November 23, 2021, iFresh’s common stock was de-listed from the NASDAQ 

Capital Market.  According to iFresh’s public disclosure regarding its de-listing, NASDAQ’s 

decision was based in part on its failure to address in a timely manner material weaknesses in 

internal controls over financial reporting. 

71. In particular, iFresh’s internal accounting controls and recordkeeping systems 

were not properly designed to provide reasonable assurance that iFresh would identify related 

parties and properly disclose all of its related party transactions as necessary to permit 

preparation of financial statements in conformity with GAAP.   

72. Since its inception, Deng closely controlled iFresh’s operations and financial 

information.  Deng served as both CEO and COO of iFresh during the entire Relevant Period.  

iFresh disclosed in its public filings that Deng was also the company’s Chief Operating Decision 

Maker or “CODM”.  This meant, according to iFresh’s filings, that Deng “bears ultimate 

responsibility for, and is actively engaged in, the allocation of resources and the evaluation of the 

Company’s operating and financial results.” 

73. Between February 2017 and June 2021, iFresh employed succession of six short 

term Chief Financial Officers, or “CFOs.”  Deng did not ensure that iFresh’s CFOs had access to 

information regarding related party transactions.   

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74. iFresh employed an accounting manager (the “Accounting Manager”), who 

assisted Deng with, among other things, identifying related parties.  The Accounting Manager 

had limited knowledge of GAAP and no prior SEC reporting experience.   

75. Even though Deng controlled all the related parties at issue through signature 

authority and/or ownership, he did not take an active role in verifying the accuracy of iFresh’s 

records.   

76. Deng knew that iFresh conducted many related party transactions.  He also knew 

related party transactions was a significant audit area identified by the Auditor during iFresh’s 

audits.  Nevertheless, Deng failed to ensure that iFresh’s accounting staff properly identified 

related parties and the transactions with related parties were properly accounted for and 

adequately disclosed in the consolidated financial statements. 

77. The principal procedure that iFresh used to identify related parties was for Deng 

and the Accounting Manager annually to review a list of iFresh’s related parties (the “Related 

Party Lists”).  The Related Party Lists were provided to the Auditor.  iFresh had no procedures 

regarding how the Related Party Lists should be created, who should create them, what 

information they should contain, or what the review process should entail.  Deng – who 

controlled the information about the related parties – did not know how the Related Party Lists 

were compiled.  Together with the Accounting Manager, Deng reviewed these Related Party 

Lists, but he did not consider whether the lists were missing any entities.  Rather, his review 

focused on whether any entities should be removed from the Related Party Lists.     

78. Other than the annual review of the Related Party Lists, Deng did not do anything 

to ensure that the Accounting Manager knew all of iFresh’s related parties. 

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79. Although iFresh relied on Deng and the Accounting Manager to identify related 

parties, neither Deng nor the Accounting Manager adequately understood the disclosure rules 

regarding related party transactions.  Neither performed any independent research to understand 

the SEC and GAAP definitions of a related party. 

80. Deng never asked the Accounting Manager or any of the iFresh CFOs what steps 

were taken to ensure all related parties were identified and related party transactions had been 

properly accounted for and disclosed by iFresh.   

VIII. iFresh and Deng Acquired Money. 
 
81. During the Relevant Period, according to Form 4s filed by Deng, Deng sold at 

least $19 million worth of iFresh stock.   

82. During the Relevant Period, iFresh raised over $6 million through four private 

offerings.  It also issued shares in connection with various acquisitions and compensation. 

83. If purchasers of iFresh stock had known about iFresh’s undisclosed related party 

transactions, they would likely have assigned a lower value to iFresh and its stock.  Therefore, 

when Deng and iFresh sold stock during the Relevant Period, iFresh stock prices were artificially 

inflated, and Defendants benefitted from the undisclosed related party transactions. 

IX. This Action Is Timely Filed.  

84. This misconduct at issue in this Complaint occurred between August 2016 and 

August 2020. 

85. Each of the Defendants has entered into agreements with the SEC in which they 

agreed to toll, for various periods and lengths of time, any statute of limitations applicable to the 

conduct and claims alleged herein.  iFresh’s tolling agreements cover the period between August 

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6, 2021 through June 1, 2022 and Deng’s tolling agreements cover the period between July 1, 

2021 through July 1, 2022.   

CLAIMS FOR RELIEF 

COUNT I 

Against Defendants iFresh and Deng,  
for Violations of Section 10(b) of the Exchange Act  

and Rule 10b-5 Thereunder  

86. The Commission realleges and incorporates by reference paragraphs 1 through 85 

as if fully set forth herein. 

87. Defendants, in connection with the purchase and sale of securities, by the use of 

the means and instrumentalities of interstate commerce or the mails, directly and indirectly: (a) 

used and employed devices, schemes, or artifices to defraud; (b) made untrue statements of 

material facts and 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; and (c) 

engaged in acts, practices, or courses of business which operated or would operate as a fraud 

and deceit upon other persons, including current and prospective investors. 

88. Defendants knowingly or recklessly engaged in the fraudulent conduct described 

above. 

89. By engaging in the conduct described above, Defendants violated Section 10(b) of 

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

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COUNT II  
 

(In the alternative)  
Against Defendant Deng,  

for Aiding and Abetting iFresh’s Violations of  
Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 

 
90. The Commission realleges and incorporates by reference paragraphs 1 through 85 

as if fully set forth herein. 

91. iFresh, in connection with the purchase and sale of securities, by the use of the 

means and instrumentalities of interstate commerce or the mails, directly and indirectly: (a) used 

and employed devices, schemes, or artifices to defraud; (b) made untrue statements of material 

facts and 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; and (c) engaged in acts, 

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

other persons, including current and prospective investors. 

92. By engaging in the conduct described above, iFresh violated Section 10(b) of the 

Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5. 

93. Defendant Deng knowingly or recklessly provided substantial assistance to iFresh 

in its violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5]. 

94. By engaging in the conduct described above, and pursuant to Section 20(e) of the 

Exchange Act [15 U.S.C. § 78t(e)], Deng aided and abetted iFresh’s violations and, unless 

restrained and enjoined, will in the future aid and abet violations of Section 10(b) of the 

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

 

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COUNT III 
 

Against Defendants iFresh and Deng,  
for Violations of Section 17(a) of the Securities Act  

 
95. The Commission realleges and incorporates by reference paragraphs 1 through 85 

as if fully set forth herein. 

96. Defendants, in the offer or sale of securities, by the use of the means and 

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

directly and indirectly: (a) knowingly or recklessly employed devices, schemes, or artifices to 

defraud; (b) obtained money or property by means of 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; and (c) engaged in transactions, 

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

purchasers of securities. 

97. Defendants knowingly, recklessly, or negligently engaged in the fraudulent 

conduct described above. 

98. By engaging in the conduct described above, Defendants violated and unless 

restrained and enjoined will continue to violate Section 17(a) of the Securities Act [15 U.S.C. § 

77q(a)]. 

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COUNT IV 

(In the alternative) 
Against Defendant and Deng,  

for Aiding and Abetting iFresh’s Violations of Section 17(a) of the Securities Act  
 

99. The Commission realleges and incorporates by reference paragraphs 1 through 85 

as if fully set forth herein. 

100. iFresh, in the offer or sale of securities, by the use of the means and instruments 

of transportation or communication in interstate commerce or by use of the mails, directly and 

indirectly: (a) knowingly or recklessly employed devices, schemes, or artifices to defraud; (b) 

obtained money or property by means of 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; and (c) engaged in transactions, practices, or 

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

securities. 

101. By engaging in the conduct described above, iFresh violated and unless restrained 

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

102. Defendant Deng knowingly or recklessly provided substantial assistance to iFresh 

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

103. By engaging in the conduct described above, and pursuant to Section 20(e) of the 

Exchange Act [15 U.S.C. § 78t(e)], Deng aided and abetted iFresh’s violations and, unless 

restrained and enjoined, will in the future aid and abet violations of Section 17(a) of the 

Securities Act [15 U.S.C. § 77q(a)]. 

 

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COUNT V 

Against Defendant iFresh 
for Violations of Section 13(a) of the Exchange Act and  

Rules 12b-20 and 13a-1 thereunder  
 

104. The Commission realleges and incorporates by reference paragraphs 1 through 85 

as if fully set forth herein. 

105. Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rule 

13a-1 [17 C.F.R. § 240.13a-1] require issuers of registered securities to file with the Commission 

factually accurate annual reports.  Exchange Act Rule 12b-20 [17 C.F. R. § 240.12b-20] further 

provides that, in addition to the information expressly required to be included in a statement or 

report, there shall be added such further material information, if any, as may be necessary to 

make the required statements, in the light of the circumstances under which they were made, not 

misleading. 

106. By engaging in the conduct described above, iFresh filed with the Commission 

and disseminated to investors false and misleading annual reports, each containing untrue 

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

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

107. By reason of the foregoing, iFresh, directly or indirectly, violated and, unless 

restrained and enjoined, will continue to violate Section 13(a) of the Exchange Act and Rules 

12b-20 and 13a-1 thereunder [15 U.S.C. § 78m(a); 17 C.F.R. §§ 240.12b-20, 240.13a-1]. 

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COUNT VI 

Against Defendant Deng,  
for Aiding And Abetting Violations of Section 13(a) of the Exchange Act  

and Rules 12b-20 and 13a-1 thereunder 
 

108. The Commission realleges and incorporates by reference paragraphs 1 through 85 

as if fully set forth herein. 

109. Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rule 

13a-1 [17 C.F.R. § 240.13a-1] require issuers of registered securities to file with the Commission 

factually accurate annual reports.  Exchange Act Rule 12b-20 [17 C.F. R. § 240.12b-20] further 

provides that, in addition to the information expressly required to be included in a statement or 

report, there shall be added such further material information, if any, as may be necessary to 

make the required statements, in the light of the circumstances under which they were made, not 

misleading. 

110. iFresh filed with the Commission and disseminated to investors false and 

misleading annual reports in violation of Section 13(a) of the Exchange Act and Rules 12b-20 

and 13a-1 thereunder [15 U.S.C. § 78m(a); 17 C.F.R. §§ 240.12b-20, 240.13a-1]. 

111. Defendant Deng knowingly or recklessly provided substantial assistance to iFresh 

in its violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder [15 

U.S.C. § 78m(a); 17 C.F.R. §§ 240.12b-20, 240.13a-1]. 

112. By engaging in the conduct described above, and pursuant to Section 20(e) of the 

Exchange Act [15 U.S.C. § 78t(e)], Deng aided and abetted iFresh’s violations and, unless 

restrained and enjoined, will in the future aid and abet violations of Section 13(a) of the 

Exchange Act and Rules 12b-20 and 13a-1 thereunder [15 U.S.C. § 78m(a); 17 C.F.R. §§ 

240.12b-20, 240.13a-1]. 

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COUNT VII 

Against Defendant iFresh 
for Violations of Section 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act 

 
113.  The Commission realleges and incorporates by reference paragraphs 1 through 

85 as if fully set forth herein. 

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

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

and fairly reflect the transactions and dispositions of its assets.  Section 13(b)(2)(B) of the 

Exchange Act [15 U.S.C. § 78m(b)(2)(B)] requires issuers to devise and maintain a system of 

internal accounting controls sufficient to provide reasonable assurances that transactions were 

recorded as necessary to permit preparation of financial statements in conformity with GAAP 

and to maintain the accountability of assets. 

115. By engaging in the conduct described above, iFresh violated and, unless retrained 

and enjoined, will continue to violate Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act 

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

COUNT VIII 

Against Defendant Deng 
for Aiding and Abetting iFresh’s Violation of Sections  

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

116.  The Commission realleges and incorporates by reference paragraphs 1 through 

85 as if fully set forth herein. 

117. By engaging in the conduct described above, iFresh violated Sections 13(b)(2)(A) 

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

118. By engaging in the conduct described above, Deng knowingly or recklessly 

provided substantial assistance to iFresh in its failures to (1) make and keep accurate books, 

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records, and accounts; and (2) to devise and maintain a system of internal accounting controls 

sufficient to provide reasonable assurances that transactions were recorded as necessary to permit 

preparation of financial statements in conformity with GAAP and to maintain the accountability 

of assets. 

119. By engaging in the conduct described above, and pursuant to Section 20(e) of the 

Exchange Act [15 U.S.C. § 78t(e)], Deng aided and abetted iFresh’s violations and, unless 

retrained and enjoined, will in the future aid and abet violations of Sections 13(b)(2)(A) and 

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

 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that the Court: 

I. 

 Enter an Order of Permanent Injunction, in a form consistent with Rule 65(d) of the 

Federal Rules of Civil Procedure, restraining and enjoining iFresh, its officers, agents, servants, 

employees, attorneys, and those persons in active concert or participation with iFresh who 

receive actual notice of the Order, by personal service or otherwise, and each of them from, 

directly or indirectly, engaging in the acts, practices or courses of business alleged above, or in 

conduct of similar purport and object, in violation of Sections 10(b), 13(a), 13(b)(2)(A) and 

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

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Rules 10b-5, 12b-20 and 13a-1 thereunder [17 C.F.R. §§ 240.10b-5, 240.12b-20, 240.13a-1], and 

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

II. 

 Enter an Order of Permanent Injunction, in a form consistent with Rule 65(d) of the 

Federal Rules of Civil Procedure, restraining and enjoining Deng from, directly or indirectly, 

engaging in the acts, practices or courses of business alleged above, or in conduct of similar 

purport and object, in violation of Sections 10(b) of the Exchange Act [15 U.S.C. §§ 78j(b)] and 

Rule 10b-5 thereunder [17 C.F.R. §§ 240.10b-5], and Section 17(a) of the Securities Act [15 

U.S.C. § 77q(a)], and from aiding and abetting violations of 13(a), 13(b)(2)(A), and 13(b)(2)(B) 

of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(b)(2)(A), and 78m(b)(2)(B)] and Rules 12b-20 

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

III. 

 Enter an Order requiring Defendants to disgorge the ill-gotten gains that they received, 

directly or indirectly, from the violations alleged herein, including prejudgment interest pursuant 

to Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(5), (7)];  

IV. 

 Enter an Order requiring Defendants to pay civil penalties pursuant to Section 20(d) of 

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

78u(d)(3)]; 

V. 

 Enter an Order, pursuant to 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)], permanently prohibiting Deng 

from serving as an officer or director of any issuer that has a class of securities registered 

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pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 

15(d) of the Exchange Act;  

VI. 

Retain jurisdiction over this action in accordance with the principles of equity and the 

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

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

relief within the jurisdiction of this Court; and 

VII. 

 Grant such other relief as the Court deems appropriate. 

JURY DEMAND 

Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff demands that 

this case be tried to a jury on all issues so triable. 

 

May 31, 2022 Respectfully submitted, 
 
UNITED STATES SECURITIES AND 
EXCHANGE COMMISSION 
 
  /s/ Alyssa A. Qualls                               
Alyssa A. Qualls (AQ-4247) 
Ariella O. Guardi, Illinois Bar No. 6297336 
Ruta G. Dudenas, Illinois Bar No. 6274848 
175 West Jackson Boulevard, Suite 1450 
Chicago, Illinois 60604 
(312) 353-7390 
(312) 353-7398 (FAX) 
[email protected] 
[email protected] 
[email protected] 
 
Attorneys for Plaintiff  
U.S. Securities and Exchange Commission 

 

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