SEC v. Biogenic, Inc.; Diagnostic Link Ltd, LLC; Vital Systems Ltd LLC; BioTek Holdings LLC; Tek Wellness Inc.; Capital Care Management LLC, et al., No. 5:21-cv-12236-MFL, Eastern District of Michigan (Sept. 23, 2021) — Complaint

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

Securities and Exchange Commission,
Plaintiff,
vs.
Biogenic, Inc., Diagnostic Link Ltd, LLC,
Vital Systems Ltd LLC, BioTek Holdings
LLC, Tek Wellness Inc., Capital Care
Management LLC, Susann Ashley Cargnino
a/k/a Susann Ashley Walker a/k/a Ashley
Walker, Zachari Alan Cargnino a/k/a Zach
Alan, Julie Ann Youssef a/k/a Julie Ann a/k/a
Julie Joseph, and Gary Youssef a/k/a Gary
Joseph,
 Defendants,

Case No. 5:21-cv-12236

COMPLAINT
 Plaintiff Securities and Exchange Commission alleges as follows against Defendants
Biogenic, Inc., Diagnostic Link Ltd, LLC, BioTek Holdings LLC, Vital Systems Ltd LLC, Tek
Wellness Inc., (collectively, “the Biogenic Entities”), Capital Care Management LLC (“Capital
Care”), Susann   Ashley Cargnino a/k/a Susann Ashley Walker a/k/a Ashley Walker (“Susann
Cargnino”), Zachari Alan Cargnino a/k/a Zach Alan (“Zach Cargnino”), Julie Ann Youssef a/k/a
Julie Ann a/k/a Julie Joseph (“Julie Youssef”), and Gary Youssef a/k/a Gary Joseph (“Gary
Youssef”),  (collectively, “Defendants”):
I. SUMMARY
1. This is an illegal investment contracts case.  Beginning no later than June 2017, and
continuing through at least March 2021, Defendants defrauded more than 55 investors out of nearly
$7 million through sales of bogus investment contracts for a supposed “World-Class” and “Life
Saving” medical device that “performs comprehensive neuropathic cardiovascular diagnostics.”

2

2. Working under the name of Vital Systems, Biogenic, or one of the other Biogenic
Entities, Julie Youssef, Gary Youssef, Susan Cargnino, and Zach Cargnino directly or indirectly
offered and sold to investors an investment contract involving a medical testing device that
purportedly had been manufactured by one of the Biogenic Entities, which these individuals and the
Biogenic Entities claimed would provide investors with $250 of “passive income” every time the
device was used in a doctor’s office.  Defendants routinely communicated to prospective investors
in writing and in conversations that the Biogenic Entity they were pitching at the time had more
than 1,400 devices earning money for existing investors, with the devices being used on average
more than five times each weekday and generating more than $10,000 per month in passive income
for existing investors.  These claims were false.
3. Contrary to Defendants’ claims, the devices behind the investment contract
offerings were not manufactured by any of the Biogenic Entities but instead were purchased
from a third party at a small fraction of the roughly $150,000 paid by defrauded investors.  Also,
contrary to Defendants’ claims, fewer than 70 devices were ever purchased by Defendants, and
doctors seldom used the devices before putting them in storage or asking Defendants to take
them back.  And to the extent any investor was informed that their device was being used by a
doctor, the investor was provided phony usage reports and billing invoices fabricated by Julie
Yousef or Zach Cargnino or others operating at their direction.  These phony usage reports and
billing invoices gave investors the misleading impression that the machines were regularly being
used and the investors would make money on their investments from such use.
4. Likewise, no investors appear to have ever received any money from the actual use
of one of Defendants’ devices much less anywhere close to the $10,000 per month described by
Defendants in their offering communications.  Rather, the purported “passive income” that
investors received from their investment contracts came not from a doctor’s use of a device but

3

rather from Ponzi payments that Zach Cargnino or Susan Cargnino sent using money received by
one of the Biogenic Entities from new investors’ purchases of investment contracts.  Indeed, at
least one investor received purported “usage” revenue payments from Zach Cargnino out of money
that the investor had himself paid to purchase additional investment contracts from Defendants.
5. While all Defendants benefited from the fraud on investors, with each of the
individuals receiving hundreds of thousands of dollars of illicit proceeds, Susann Cargnino and
Zach Cargnino profited most from Defendants’ scam.    Indeed, they used millions of dollars of
defrauded investors’ money to buy jewelry, jet skis and a trailer, pay for multiple vacation rentals
and expensive home improvements, buy three residential properties in Manitou Beach, Michigan,
and extinguish nearly $100,000 of pre-existing bankruptcy debt.
6. Defendants’ offers and sales of unregistered investment contract securities
violated Sections 5(a) and 5(c) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§
77e(a) and 77e(c)].
7. By directly or indirectly making materially false statements to investors to offer
and sell investment contracts to investors, and/or engaging in deceptive acts in connection with
the offer, purchase, and sale of these investment contracts, the Biogenic Entities, Capital Care,
Julie Youssef, Gary Youssef and Zach Cargnino violated Section 17(a) of the Securities Act [15
U.S.C. §77q(a)], Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15
U.S.C. § 78j(b)], and Rule 10b-5(a)-(c) thereunder [17 C.F.R. § 240.10b-5].
8. As the principal or sole member and owner of the Biogenic Entities and, for a
period of time, Capital Care, Susann Cargnino was at a minimum negligent with respect to the
fraud committed by and through these companies, and is liable for violating Section 17(a)(3) of
the Securities Act [15 U.S.C. §77q(a)(3)].  She also is jointly and severally liable as a control

4

person for the securities violations committed by and through these companies, pursuant to
Section 20(a) of the Exchange Act [15 U.S.C. § 78t].
9. As the principal or sole member and owner of Capital Care after acquiring
ownership from his mother, and as the principal operational employee and Chief Financial
Officer of each of the Biogenic Entities, Zach Cargnino is likewise jointly and severally liable as
a control person for the securities violations committed by and through the Biogenic Entities and
Capital Care, pursuant to Section 20(a) of the Exchange Act [15 U.S.C. § 78t].
II. JURISDICTION AND VENUE
10. This Court has jurisdiction pursuant to Section 22(a) of the Securities Act [15
U.S.C. § 77v(a)] and Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d),
78(e) and 78aa].
11. Defendants directly or indirectly made use of the means or instrumentalities of
interstate commerce, of the mails, or of the means or instruments of transportation or
communication in interstate commerce, in connection with the acts, practices, and courses of
business set forth in this Complaint.
12. Venue lies in this Court pursuant to 15 U.S.C. §§ 77v(a) and 78aa, and 28 U.S.C. §
1391(b)(2).  Susann Cargnino and Zach Cagnino are both residents of Manitou Beach, Lenawee
County, Michigan, which is within this judicial district.  Many illegal acts were perpetrated by
these defendants within this judicial district and three Manitou Beach properties were purchased
by Susann Cargnino and/or Zach Cagnino using illegally-obtained investor money.  Each of the
Biogenic Entities are or were organized and/or registered in Michigan by Susann Cargnino and
Zach Cagnino and ostensibly maintained offices within this judicial district.

5

III. DEFENDANTS
13. Biogenic Inc. (“Biogenic”) was incorporated in Michigan in February 2018, with
Susann Cargnino as its sole member and owner and Zach Cargnino as its primary officer.  Its
principal office was 8000 Yankee Rd., Ottawa Lake, Michigan.  Biogenic, through its agents and
employees, solicited investors during the relevant period and received at least $5.4 million from
36 different investors.
14. Diagnostic Link LTD LLC (“Diagnostic”), was incorporated in Michigan in
August 2016 with Susann Cargnino as member and owner.  Zach Cargnino was Chief Financial
Officer (CFO)/Treasurer and designated recipient of ten percent (10%) of the company’s profits.
Diagnostic’s principal office was listed as 8000 Yankee Rd., Ottawa Lake, Michigan.
Diagnostic was the predecessor to co-Defendant Vital Systems, which Susann Cargnino
incorporated in November 2017.   Diagnostic received about $176,000 from four investors.
15. Vital Systems LTD LLC (“Vital Systems”), was incorporated in Michigan in
November 2017, with Susann Cargnino as its sole member and owner and Zach Cargnino as its
primary officer.  Its principal office was 8000 Yankee Rd., Ottawa Lake, Michigan.  Vital
Systems, the precursor business to Biogenic, Inc., through its agents and employees, solicited
investors during the relevant period and received at least $1.5 million from seven investors.
16. Biotek Holdings LLC (“Biotek”) was incorporated in Michigan in October 2018,
listing Susann Cargnino’s pseudonym “Ashley Walker” – which are Susann Cargnino’s middle
name and maiden name – as its registered agent, President, Treasurer, Secretary, and Director.
Zach Cargnino was Biotek’s primary officer.  The operating address for Biotek is shown as 9194
Cherry Point Road, Manitou Beach, Michigan, an address otherwise used by Mrs. Cargnino, and
Susan Cargnino was identified as Biotek’s sole member and owner in communications with the
IRS.  Biotek purported to offer the same diagnostic equipment, services, and investment

6

opportunity as Vital Systems and Biogenic and, along with co-Defendant Tek Wellness, received
at least $759,000 from seven investors.
17. Tek Wellness, Inc. (“Tek Wellness”) was incorporated in Michigan in March
2019, listing Susann Cargnino’s pseudonym “Ashley Walker” as its registered agent, President,
Treasurer, Secretary, and Director.  Zach Cargnino was the primary officer for Tek Wellness.
The operating address for Tek Wellness w as 13854 Lakeside Circle, 22nd Floor #311, Sterling
Heights, Michigan.  Tek Wellness purported to offer the same diagnostic equipment, services,
and investment opportunity as Vital Systems and Biogenic and, along with co-Defendant Biotek,
received at least $759,000 from seven investors.
18. Capital Care Management LLC (“Capital Care”) was created in August 2016
with Susann Cargnino as its sole member and owner, and a principal office at 8000 Yankee Rd.,
Ottawa Lake, Michigan.   Capital Care was registered in Florida in 2016 with a Capital Care
employee listed as its agent, and remains an active business entity in that state.  The company was
registered in Michigan in October 2017 listing “Zach Alan,” the pseudonymous first and middle
name of Defendant Zach Cargnino, as its authorized agent and CFO/Treasurer.
19. Susann Ashley Cargnino a/k/a Susann Ashley Walker a/k/a Ashley Walker
(“Susan Cargnino”), age 57, is a Michigan resident of Manitou Beach, Lenawee County,
Michigan.  Susann Cargnino was the principal if not exclusive owner of all of the Biogenic
Entities, and at one point the owner of Capital Care, and used defrauded investors’ money to
purchase three properties for herself and Zach Cargnino.  At various points in time, she used the
names Susan Ashley Walker or Ashley Walker on documents related to the fraud to disguise her
connection to her husband, Philip Cargnino, who was previously sentenced to 18 months in
prison for an unrelated fraud.

7

20. Zachari Alan Cargnino a/k/a Zach Alan (“Zach Cargnino”), age 32, is a
resident of Manitou Beach, Michigan.  He was the CFO of all or most of the Biogenic Entities
and he operated and controlled Capital Care.   Zach Cargnino admitted that he routinely used the
pseudonym “Zach Alan” and intentionally omitted Cargnino, to avoid disclosure of Cargnino
family involvement given prior public allegations against Zach Cargnino as well as his father’s
unrelated fraud conviction.  Among other activities, Zach Cargnino used Susann Cargnino’s
credit cards to register and set up websites for Capital Care and the Biogenic Entities with
GoDaddy and/or other internet service providers, as well as email addresses for the companies
and/or their employees through those providers, and at times changed the names associated with
company and employee email accounts when public allegations of misconduct were made
against one or more of the Defendants.
21. Gary Youssef a/k/a Gary Joseph (“Gary Youssef”), age 71, is a resident of
California and is married to Defendant Julie Youssef.  Gary Youssef purported to be the
President of the Biogenic Entities.  Gary Youssef and his wife Defendant Julie Youssef are long-
time friends and business associates of Susann and her husband, Phil Cargnino.  The Youssefs
wrote a letter in support of Phil Cargnino at his 2012 sentencing for fraud.  Mr. Youssef
personally made investment pitches to prospective investors over the telephone, by email, and in
person, and routinely communicated false information about the company to investors as well as
to medical sales representatives involved in the process.  Mr. Youssef and his wife collectively
received at least $500,000 as part of the fraud.  Mr. Youssef asserted his right under the Fifth
Amendment to the U.S. Constitution not to incriminate himself in response to most substantive
questions from SEC staff during the SEC’s investigation in this matter.
22. Julie Ann Youssef a/k/a Julie Ann a/k/a Julie Joseph (“Julie Youssef”), age 53,
is a  resident of California and is married to Defendant Gary Youssef.  Julie Youssef purported to

8

be the Director of Business for the Biogenic Entities.  Mrs. Youssef personally made investment
pitches to prospective investors over the telephone, by email, and in person, and routinely
communicated false information about the company in the process.  In addition, Mrs. Youssef
provided investors by email the Biogenic business plans and other investment contract offering
documents that communicated false information about the company to investors.  Mrs. Youssef
also communicated false information about the company over the phone and in electronic
communications to medical sales representatives and doctors.  Mrs. Youssef and her husband
collectively received at least $500,000 as part of the fraud.  Mrs. Youssef asserted her right under
the Fifth Amendment to the U.S. Constitution not to incriminate herself in response to all
substantive questions from SEC staff during the SEC’s investigation in this matter.
IV. FACTS
A. DEFENDANTS PROVIDED MATERIALLY FALSE INFORMATION TO
SCORES OF PROSPECTIVE INVESTORS AROUND THE UNITED STATES
23. Beginning no later than June 2017, Vital Systems and/or Biogenic (and, in fewer
instances, one of the other Biogenic Entities) offered investment contract opportunities to hundreds
of investors around the United States.
24. No registration statement was ever filed with the Commission or in effect for any of
these investment contract offerings and no exemption from registration applied.
25. Gary Youssef, Julie Youssef, or one of the sales representatives they hired and
had working at their direction, typically were the first and oftentimes the only contacts for
prospective investors interested in the investment contract opportunity being offered by one of
the Biogenic Entities.
26. The Youssefs,  and/or one of several sales representatives working in conjunction
with them and at their direction, provided prospective investors with offering documents, by

9

email and in person, about the company and the diagnostic medical device at issue in the
investment contract offering.  The Youssefs and their sales team also communicated with
investors by text message and over the phone and repeated offering document information.
27. Among other materials that the Youssefs and their sales team provided to
prospective investors were business plans for one of the Biogenic Entities that were written by a
combination of the Youssefs, Zach Cargnino, and other employees of Capital Care or one of the
Biogenic Entities acting with their knowledge and at their direction.
28. These business plans described the respective Biogenic entity as “a World-Class
Medical Device Manufacturer” that “sells a patented, Life Saving Medical Device in the $3.4
Trillion Health Care Industry,” with the device described as “a fully integrated, non-invasive
medical testing system which performs comprehensive neuropathic cardiovascular diagnostics.”
29. The representations about the Biogenic Entities manufacturing the devices was
important to investors as it caused them to believe they were dealing with a successful,
sophisticated U.S. company capable of managing their investments and providing returns.
30. The representations about the Biogenic Entities manufacturing the devices was
materially false because none of the defendant entities manufactured any device much less the
device described in the business plan.  Instead, Zach Cargnino, Capital Care, and/or one of the
Biogenic Entities purchased the devices from the real manufacturer at a fraction of the price
investors paid when they purchased their investment contract.  The Youssefs knew or were
reckless in not knowing as much because at times they received devices directly from the true
manufacturer when arranging installation at doctors’ offices.
31. The business plans for whichever of the Biogenic Entities was in effect at the time
claimed the company “has a long history of success and currently we have 1,404 Diagnostic
Partners’ systems operating nationwide.”  These statements were materially false because none of

10

the Biogenic Entities existed prior to August 2016 and the Biogenic Entities, collectively, never
purchased more than 70 devices much less had anywhere close to 1,404 Diagnostic Partners.
32. The business plans offered investors the opportunity to become a “Diagnostic
Partner” with Vital Systems or Biogenic (or another Biogenic Entity) once they wired to the
company a “$150,000 Investment,”
 1
 and ostensibly committed to a $225 monthly service fee.
33. The business plans told investors they would not have to do anything as
Diagnostic Partners in order to profit from their investment:
Biogenic does everything for you. We procure the clinic site and negotiate a Fee-
for-Service (FFS) Agreement with the physicians on your behalf.  Biogenic
programs your system with our proprietary software, delivers and installs
computerized testing equipment and thoroughly trains the medical staff in the
proper way to administer the tests. . . .  The test takes under 15 minutes and
identifies the risk of sudden death, silent heart attack and much, much more.
(Emphasis added).

34. The business plans further explained the financial returns investors could expect
by becoming a Diagnostic Partner with Vital Systems, Biogenic, or another Biogenic Entity:
The Biogenic system is FDA Approved and each time a test is performed, you will
be paid a Fee of $250 (per the F-F-S) by the clinic.  The clinic is reimbursed an
average of $500 per test by Medicare, Medicaid and on average about 11% more
per test from Private Insurers. . . .  The Biogenic testing systems can be utilized
up to ten or more times per day in some locations, and even at a substandard
utilization rate of three tests per day, breakeven on a system purchase price of
$150,000 is under 12 months.  Nationally, our Partners are [sic] average 5.1 tests
per day in the summer and test 5.5 tests per day in the winter testing five days per
week. (Emphasis in Original)

1
 In some instances, particularly when investors were purchasing more than one investment
contract, the purchase price went as low as $110,000.  In many instances, investors were offered
the opportunity to finance up to 50% of the purchase price through Capital Care after paying at
least $75,000 when purchasing the investment contract.  In fact, no financing was ever arranged
and this financing offer was merely a false inducement to receive partial payment from investors
who had less money to invest.

11

These statements were materially false because doctors were hardly if ever using the devices
much less at a rate of five t imes per day or five days per week, and were not being reimbursed for
the handful of times the devices were used much less at $500 or more per test.  The Youssefs,
Zach Cargnino, and Capital Care were involved in placing devices in doctors’ offices and
communicated with doctors or their staff about actual usage and actual insurance reimbursement
rates, and thus knew or were reckless in not knowing that actual usage and actual insurance
reimbursement was materially lower than claimed in the business plans.
35. While investors were offered the possibility of managing their own system and
billing doctors directly, Defendants’ business plans explained how investors could receive
“‘totally and purely passive’ income” as a Diagnostic Partner if they signed on to have Biogenic
provide “additional accounting services and support for the modest monthly fee of $225.”
2
  The
business plans explained the services and support the company would provide if investors signed
on as Diagnostic Partners:
i. Establishing a separate checking account into which the system(s) revenues
shall be deposited each month, copies of which shall be provided to the
Diagnostic Partner
ii.   Tracking the number of tests performed each month
iii.  Billing the medical facility for the appropriate number of tests
iv. Collecting the amount payable by the medical facility under the FFS Agreement
v. Disabling the unit for failure to pay in a timely [manner], subject to agreed-
upon cure periods
vi. If necessary, and on a best efforts basis, identifying new system locations
vii. Preparing a monthly Servicer Report setting forth data points such as:
a. Billings
b. Number of tests

2
 Zach Cargnino admitted in testimony during the SEC’s investigation that at no point in time did
Capital Care or any of the Biogenic Entities ever bill investors for the $225 service fee but
nevertheless purported to offer and provide the accounting services and support.

12

c.
Collections
d. Account reconciliations
All of the above activities (excepting v. above) can be performed by the Diagnostic
Partner at their discretion, or Biogenic will perform these services for those who
want “totally and purely passive” income.

36. Virtually all of the investors who entered into investment contracts with
Defendants agreed to be Diagnostic Partners and accept the proffered “accounting services and
support,” yet the offered services and support were entirely illusory.  Defendants never
established separate checking accounts to collect revenues for any of the investors who signed on
as Diagnostic Partners.  While investors were told that they would receive reports showing tests
conducted by their machines, Julie Youssef, Zach Cargnino, and/or an employee working at her
or his direction manufactured fake usage reports and doctor billing invoices.  Further, Zach
Cargnino, or Susann Cargnino operating at his direction, made “revenue” payments to investors,
if at all, out of a Capital Care bank account or one of the Biogenic Entities’ bank accounts using
money obtained from investors who were duped into purchasing investment contracts.
37. Defendants’ business plans repeated that the investment contract offered investors
“a potentially large passive income for you”:  “Some Diagnostic Partners initially have a
preference to have their systems close to their place of residence.  As you will learn, that is
certainly not necessary, as this business is totally passive and requires no hands-on whatsoever
as we remotely poll all systems.” (Emphasis added)
38. The Youssefs, Zach Cargnino, and others working under their direction sent emails
and text messages to prospective investors that routinely repeated many of the false claims
reflected in the business plans and other offering documents, including that Biogenic entity
manufactured the devices, had been in business for as much as 14 years, and had placed more
than 1,400 diagnostic testing machines in doctors’ offices.

13

39. The Youssefs,  Zach Cargnino, and/or others working under their direction also
provided prospective investors with information about the company and the investment contract
opportunity verbally over the telephone and in face-to-face meetings.  These communications
typically regurgitated the false information contained in Defendants’ business plans about the
Biogenic Entities manufacturing the devices, how many devices had been put into use for
investors, how often those devices were being used by doctors, and how much passive revenue
those investors were receiving from such use.
40. The Youssefs and Zach Cargnino knew or were reckless in not knowing that none
of the entities had any history much less “a long history of success” because Zach Cargnino
created new email addresses for the Youssefs and others working at his and their direction
whenever a defendant entity was created, starting in 2016, and in many instances had their last
names on the email changed to shield their true identity from investors in light of public
allegations of misconduct and fraud.
41. The Youssefs and Zach Cargnino also knew or were reckless in not knowing that
the Biogenic entities did not even collectively have 1,404 Diagnostic Partners because they were
involved in nearly all of the investment contract purchases related to the fewer than 70 devices
that were ever actually purchased by Zach Cargnino, Capital Care, or one of the Biogenic
Entities from the third-party manufacturer.
42. The Youssefs and their sales team advertised the investment contract opportunity
nationwide in the major print and electronic news media, on franchise recruitment websites, as well
as on the find-businesses-for-sale website, BizBuySell.com.  These advertisements often described
the investment contract as “a wonderful, Passive/Absentee offering for someone who wants to keep
their current job or for a retired individual that desires to put their hard-earned retirement funds to

14

work.”  The advertisements mimicked the materially false statements in the business plans,
including that “ Our 1,404 diagnostic partners are ALL Netting $10,000/mo or More!”
43. The Youssefs and their team routinely put prospective investors in contact with at
least three individuals who purported to be reaping the financial rewards of their relationship with
the Biogenic Entities.  In fact, none of these individuals had ever paid for one of the devices, to
the extent they even owned one at all, and none were receiving any revenue from the use of such
devices.  Instead, at least one was a personal friend of the Youssefs and all were paid to lie to
prospective investors and fabricate successful experiences with one of the Biogenic Entities.
44. At several points during the relevant period, public allegations of misconduct
and/or fraud were made against the Youssefs, Zach Cargnino, Capital Care, or one of the
Biogenic Entities, including lawsuits filed in state court in Texas and California and public
condemnations on the Ripoff Report website for reporting scams (www.ripoffreport.com).
45. After such publicity, Zach Cargnino worked with an employee of Capital Care or
one of the Biogenic Entities to change the name of the operative Biogenic entity and all associated
email addresses, including changing offering documents and other company materials and email
addresses to falsely identify Gary Youssef as “Gary Joseph,” Julie Youssef as either “Julie Joseph”
or “Julie Ann,” Zach Cargnino as “Zach Alan,” and also to use Susan Cargnino’s “Susan Walker”
or “Ashley Walker” pseudonyms on company filings and other public documents.
46. In investigative testimony with the SEC, Susann Cargnino admitted that she was
aware the Biogenic Entities that were offering the medical devices were changing names several
times, all while using her aliases when she incorporated the later businesses.  Despite knowing this
information, she neither sought nor received any explanation from Zach Cargnino as to why the
changes were taking place.  Susann Cargnino also was the agent for service of process for at least

15

one investor lawsuit against one of the Biogenic Entities, but disclaimed in testimony any
knowledge of the lawsuit.
47. As a result of Defendants’ false communications and deceptive practices, at least
55 investors collectively paid roughly $6.8 million to purchase investment contracts from and
engage as Diagnostic Partners with one or more of the Biogenic Entities.
48. Investor funds were initially deposited into the bank accounts of one of the
Biogenic Entities that were controlled by Susann Cargnino.  Zach Cargnino had direct online
access to the accounts, including using Susann Cargnino’s login information, and he made
numerous electronic transfers and ACH payments out of the accounts.  Susann Cargnino
generally made deposits into and withdrawals from the accounts, including by obtaining
cashiers’ checks or directing wire transfers from the accounts.  Zach Cargnino layered investor
funds between multiple Biogenic Entity and CCM bank accounts to avoid detection.
49. From these company bank accounts Susann Cargnino or Zach Cargnino also
made bank-to-bank transfer payments to the Youssefs, paying the Youssefs and their team
collectively more than $2 million of illicit proceeds for their work in defrauding investors.
B. ZACH CARGNINO, CAPITAL CARE, AND JULIE YOUSSEF PROVIDED
INVESTORS WITH PHONY USAGE REPORTS ALONG WITH “USAGE
REVENUE” THAT WAS IN FACT MONEY FROM INVESTORS
50. After investors purchased their investment contracts from one of the Biogenic
Entities, Zach Cargnino and Capital Care arranged to purchase devices from the third-party
manufacturer and directed a Capital Care employee to travel to doctors’ offices around the United
States to install the devices.  Rarely if ever did these installations occur at locations near to the
investor who had purchased the device,  and investors often were instructed by the Youssefs and
their sales team not to contact the doctors or their staff about the installation and use of the devices.

16

51. Defendants typically did not tell doctors about the investors.  Instead, documents
provided to doctors indicated they were engaging with a “ CONTRACTOR,” which they
typically believed to be Capital Care or the relevant Biogenic entity.  Doctors only learned about
investors when they received calls from investors complaining that they were not receiving any
payments.  Doctors have stated to the SEC during its investigation that if they had been told that
investors were involved they would not have engaged with Capital Care or the Biogenic entity.
52. Doctors and their staff typically were provided little to no meaningful training by
Capital Care and its employees on how to use the device or arrange for billing to Medicare,
Medicaid, or private insurance when the device was used.  As result, doctors generally stopped
trying to use the devices fairly quickly after receiving them and either asked to have them picked
up by Capital Care or put the devices in storage or otherwise disposed of them.
53. To deceive investors about how often the devices were being used, Zach Cargnino
created fake device usage reports and doctor billing invoices that reflected fictitious usage of
investors’ machines and fictitious collection of fees from doctors.   Zach Cargnino and Capital
Care then emailed these phony documents directly to investors, or emailed the documents to
Julie Youssef who then emailed them to investors herself or through one of her employees.
54. After directly or indirectly sending phony usage reports and doctor invoices to
investors, Zach Cargnino and Capital Care used online banking systems to arrange payments to
investors through bank-to-bank money transfers from defendant entity bank accounts that only
he or Susann Cargnino could access or control.
55. Zach Cargnino and/or Julie Youssef, or others working at their direction, falsely
communicated to investors by email, text, or in phone calls that these payments to investors were
derived from device usage and payments from doctors, when they knew or were reckless in not

17

knowing that the money actually came from the proceeds of new investors’ purchases of
investment contracts.
56. In total, Zach Cargnino sent about $537,000 of Ponzi payments to investors
through ACH transfers from bank accounts belonging to Capital Care or one of the Biogenic
Entities, making it appear as though the investors were receiving income from actual usage of the
medical devices.  In addition, Zach Cargnino requested Susann Cargnino withdraw at least
$124,000 in cashier’s checks from bank accounts of one of the Biogenic Entities to pay four
complaining investors as contractual “buyouts” which were funded out of money received from
more recent investment contract investors.
57. In investigative testimony with the SEC, Susann Cargnino testified that she knew
about the medical device offerings to investors and acknowledged that she received and handled
investor funds in bank accounts for the Biogenic Entities that she controlled.  She disclaimed
understanding of the bank transactions she made, stating that she performed them at Zach
Cargnino’s request and direction despite being the person with responsibility for and authority
over the company bank accounts.  As to the cashier check “buyouts” and other refunds, she
admitted knowing they were being paid to investors.  She also testified that she neither sought
nor received any explanation as to why the investors were complaining or demanding refunds.
58. In order to induce the purchase of additional investment contracts, at least one
investor, D.K., received what Zach Cargnino communicated to him was device usage revenue
related to D.K.’s first few investment contracts.  In reality, in Ponzi-like fashion, Mr. Cargnino
made payments to D.K. using money that D.K. previously had sent to purchase additional
investment contracts from Defendants.  Zach Cargnino admitted in testimony during the SEC’s
investigation that no money had been received from any doctor in connection with these

18

payments to D.K. and, tellingly, could not provide a single explanation as to why he was making
any payments to this investor.
C. SUSANN CARGNINO AND ZACH CARGNINO USED INVESTOR PROCEEDS
TO PURCHASE RESIDENTIAL PROPERTIES AND LIVE LAVISHLY

59. In J une 2018, Susann Cargnino used $675,000 of investor proceeds to purchase a
residential property located at 9182 Cherry Point Road in Manitou Beach, Michigan.  She made
the purchase in the name of 9182 Cherry Point Road LLC, a Michigan company that she or Zach
Cargnino organized using her “Ashley Walker” pseudonym.  In June 2020, ownership of this
property was re-titled into Zach Cargnino’s name using a quitclaim deed, with Zach Cargnino
signing on behalf of 9182 Cherry Point Road LLC in the paperwork process.  The property has a
current estimated value of roughly $850,000.
60. In August 2018, Susann Cargnino used $325,000 of investor proceeds to purchase
a residential property located at 9194 Cherry Point Road in Manitou Beach, Michigan.  She
made the purchase in the name of 9194 Cherry Point Road LLC, a Michigan company that she or
Zach Cargnino organized using her “Ashley Walker” pseudonym.  On March 26, 2021, shortly
after the SEC served investigative subpoenas on Defendants, the Cargninos listed the property
for sale, and it sold on May 26, 2021, for $500,000.
61. In March 2019, Susann Cargnino used $800,000 of investor proceeds to purchase
a residential property located at 8962 Cherry Point Road in Manitou Beach, Michigan, which she
titled in her name.  The property has a current estimated value of roughly $950,000.
62. Susan Cargnino and/or Zach Cargnino used at least $175,000 of investor proceeds
to buy two jet skis and a jet ski trailer, nearly $10,000 of jewelry, more than $8,000 of VRBO
vacation rentals, more than $15,000 of home improvements, and spent nearly $100,000 to
extinguish creditor claims from a prior bankruptcy.

19

VI.  CLAIMS FOR RELIEF
CLAIM ONE
Violation of Section 5(a) and (c) of the Securities Act
[15 U.S.C. § 77(a) and (c)]
(Against All Defendants)

63. Paragraphs 1 through 62 are re-alleged and incorporated by reference
64. Section 5(a) of the Securities Act provides that unless a registration statement is
in effect as to a security, it shall be unlawful any person, directly or directly, (1) to make use of
any means or instruments of transportation or communication in interstate commerce or of the
mails to sell such security through the use or medium of any prospectus or otherwise; or (2) to
carry or cause to be carried through the mails or in interstate commerce, by any means or
instruments of transportation, any such security for the purpose of sale or for delivery after sale.
65. Section 5(c) of the Securities Act provides that it shall be unlawful for any person,
directly or indirectly, to make use of any means or instruments of transportation or
communication in interstate commerce or of the mails to offer to sell or offer to buy through the
use or medium of any prospectus or otherwise any security, unless a registration statement has
been filed as to such security, or while the registration statement is the subject of a refusal order
or stop order or (prior to the effective date of the registration statement) any public proceeding or
examination under section 77h of this title.
66. No registration statement had been filed or was in effect for any of the investment
contract securities offered and sold by Defendants and no exemption applied.
67. Defendants, by engaging in the conduct described above, directly or indirectly,
made use of means or instruments of transportation or communication in interstate commerce or
of the mails to offer to sell or to sell such investment contract securities.

20

68. By reason of the foregoing, Defendants violated, and unless enjoined will again
violate, Section 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)].
CLAIM TWO
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5]
(Against the Biogenic Entities, Capital Care, Julie Youssef, Gary Youssef, Zach Cargnino)

69. Paragraphs 1 through 62 are re-alleged and incorporated by reference.
70. Section 10(b) of the Exchange Act provides that it shall be unlawful for any person,
directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the
mails, or of any facility of any national securities exchange t o use or employ, in connection with
the purchase or sale of any security registered on a national securities exchange or any security not
so registered, or any securities-based swap agreement, any manipulative or deceptive device or
contrivance in contravention of such rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the protection of investors.
71. Rule 10b-5 provide that it shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate commerce, or of the mails or of any
facility of any national securities exchange, (a) to employ any device, scheme, or artifice to
defraud, (b) to make any untrue statement of a material fact or to omit to state a material fact
necessary in order to make the statements made, in the light of the circumstances under which
they were made, not misleading, or (c) to engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person, in connection with the purchase
or sale of any security.
72. By reason of the foregoing, the Biogenic Entities, Capital Care, Julie Youssef,
Gary Youssef, and Zach Cargnino violated,  and unless enjoined will again violate, 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].

21

CLAIM THREE
Violations of Section 17(a) of the Securities Act
[15 U.S.C. § 77q(a)]
(Against the Biogenic Entities, Capital Care, Julie Youssef, Gary Youssef, Zach Cargnino)

73. Paragraphs 1 through 62 are re-alleged and incorporated by reference.
74. Section 17(a) of the Securities Act provides that it shall be unlawful for any
person in the offer in the offer and sale of securities, by use of the means or instruments of
transportation or communication in interstate commerce, or of the mails, directly or indirectly (1)
to employ any device, scheme or artifice to defraud, (2) to obtain money or property by means of
untrue statements of material fact or by omitting to state material facts necessary to make the
statements made, in light of the circumstances under which they were made, not misleading, or
(3) to engage in transactions, practices, or courses of business that operated or would operate as a
fraud or deceit upon the purchasers of such securities.
75. By reason of the foregoing, the Biogenic Entities, Capital Care, Julie Youssef,
Gary Youssef, and Zach Cargnino violated,  and unless enjoined will again violate, Section 17(a)
of the Securities Act [15 U.S.C. § 77q(a)].
CLAIM FOUR
Violations of Section 17(a)  (3) of the Securities Act
[15 U.S.C. § 77q(a)]
(Against Susann Cargnino)
76. Paragraphs 1 through 62 are re-alleged and incorporated by reference.
77. Section 17(a)(3) of the Securities Act provides that it shall be unlawful for any
person in the offer in the offer and sale of securities, by use of the means or instruments of
transportation or communication in interstate commerce, or of the mails, directly or indirectly, to
engage in transactions, practices, or courses of business that operated or would operate as a fraud
or deceit upon the purchasers of such securities.

22

78. By reason of the foregoing, Susann Cargnino violated, and unless enjoined will
again violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
CLAIM FIVE
Control Person Liability Under Section 20(a) of the Exchange Act
[15 U.S.C. § 78t(a)]
 ( Against Susann Cargnino and Zach Cargnino)
79. Paragraphs 1 through 62 are re-alleged and incorporated by reference.
80. Section 20(a) of the Exchange Act provides that every person who, directly or
indirectly, controls any person liable under any provision of this chapter or of any rule or
regulation thereunder shall also be liable jointly and severally with and to the same extent as
such controlled person to any person to whom such controlled person is liable, unless the
controlling person acted in good faith and did not directly or indirectly induce the act or acts
constituting the violation or cause of action.
81. As alleged above, Susan Cargnino and Zach Cargnino were the only principals,
owners, and officers of each of the Biogenic Entities and Capital Care and at no point in time
acted in good faith.
82. As alleged above, the Biogenic Entities and Capital Care violated Sections 5(a), (c),
and 17(a) of the Securities Act [15 U.S.C. § 77(a) and (c), 15 U.S.C. § 77q(a)], and 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]  .
83. Accordingly, Susann Cargnino and Zach Cargnino are liable as a controlling
person for the securities violations committed by the Biogenic Entities and Capital Care pursuant
to Section 20(a) of the Exchange Act [15 U.S.C. § 78t(a)].

23

VII. PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court enter a Final Judgment:
1. Finding that Defendants committed the securities law violations alleged in this
Complaint;
2. Permanently enjoining Defendants f rom violating, directly or indirectly, Sections
5 (a), (c), and 17 of the Securities Act [15 U.S.C. §§ 77(a) and (c), 77q(a)], and 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]  ;
3. Permanently enjoining Defendants from directly or indirectly, including, but not
limited to, through any entity owned or controlled by Defendants, participating in the issuance,
purchase, offer, or sale of any security in an unregistered transaction, including but not limited to
investment contracts or other securities related to medical testing devices or medical equipment;
provided, however, that such injunction shall not prevent Defendants from purchasing or selling
securities listed on a national securities exchange for his/her/its own personal account;
4. Ordering that each of the Defendants disgorge any and all i ll-  gotten gains,
together with pre-judgment and post-judgment interest, derived from the securities law violations
set forth in this Complaint;
5. Imposing civil monetary penalties against Defendants for each of their securities
law violations, 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)];
6. Retain jurisdiction over this action in order to implement and carry out the terms
of all orders and decrees that it may enter, or to entertain any suitable application or motion for
additional relief within the jurisdiction of this Court; and
7. Granting such other relief as this Court may deem just or appropriate.

24

VIII.   JURY DEMAND
 The SEC demands a jury in this matter.
 Dated:  September 23, 2021
Respectfully submitted,
s/ Christian D. H. Schultz
Christian D. H. Schultz
Assistant Chief Litigation Counsel
Timothy England
Assistant Director
Stephen Kaiser
Senior Counsel
Matthew Reisig
Senior Counsel
U.S. Securities and Exchange Commission
100 F Street NE
Washington, DC 20549
(202) 551-4740 (Schultz)
[email protected]

IN THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 
 

Securities and Exchange Commission, 

Plaintiff, 
vs. 

Biogenic, Inc., Diagnostic Link Ltd, LLC, 
Vital Systems Ltd LLC, BioTek Holdings 
LLC, Tek Wellness Inc., Capital Care 
Management LLC, Susann Ashley Cargnino 
a/k/a Susann Ashley Walker a/k/a Ashley 
Walker, Zachari Alan Cargnino a/k/a Zach 
Alan, Julie Ann Youssef a/k/a Julie Ann a/k/a 
Julie Joseph, and Gary Youssef a/k/a Gary 
Joseph, 

 Defendants, 
 

  
 
 
 
 
Case No. 5:21-cv-12236 
 
 

  

COMPLAINT 

 Plaintiff Securities and Exchange Commission alleges as follows against Defendants 

Biogenic, Inc., Diagnostic Link Ltd, LLC, BioTek Holdings LLC, Vital Systems Ltd LLC, Tek 

Wellness Inc., (collectively, “the Biogenic Entities”), Capital Care Management LLC (“Capital 

Care”), Susann Ashley Cargnino a/k/a Susann Ashley Walker a/k/a Ashley Walker (“Susann 

Cargnino”), Zachari Alan Cargnino a/k/a Zach Alan (“Zach Cargnino”), Julie Ann Youssef a/k/a 

Julie Ann a/k/a Julie Joseph (“Julie Youssef”), and Gary Youssef a/k/a Gary Joseph (“Gary 

Youssef”), (collectively, “Defendants”): 

I. SUMMARY 

1. This is an illegal investment contracts case.  Beginning no later than June 2017, and 

continuing through at least March 2021, Defendants defrauded more than 55 investors out of nearly 

$7 million through sales of bogus investment contracts for a supposed “World-Class” and “Life 

Saving” medical device that “performs comprehensive neuropathic cardiovascular diagnostics.”   

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.1   Filed 09/23/21   Page 1 of 24



2 
 

2. Working under the name of Vital Systems, Biogenic, or one of the other Biogenic 

Entities, Julie Youssef, Gary Youssef, Susan Cargnino, and Zach Cargnino directly or indirectly 

offered and sold to investors an investment contract involving a medical testing device that 

purportedly had been manufactured by one of the Biogenic Entities, which these individuals and the 

Biogenic Entities claimed would provide investors with $250 of “passive income” every time the 

device was used in a doctor’s office.  Defendants routinely communicated to prospective investors 

in writing and in conversations that the Biogenic Entity they were pitching at the time had more 

than 1,400 devices earning money for existing investors, with the devices being used on average 

more than five times each weekday and generating more than $10,000 per month in passive income 

for existing investors.  These claims were false.   

3. Contrary to Defendants’ claims, the devices behind the investment contract 

offerings were not manufactured by any of the Biogenic Entities but instead were purchased 

from a third party at a small fraction of the roughly $150,000 paid by defrauded investors.  Also, 

contrary to Defendants’ claims, fewer than 70 devices were ever purchased by Defendants, and 

doctors seldom used the devices before putting them in storage or asking Defendants to take 

them back.  And to the extent any investor was informed that their device was being used by a 

doctor, the investor was provided phony usage reports and billing invoices fabricated by Julie 

Yousef or Zach Cargnino or others operating at their direction.  These phony usage reports and 

billing invoices gave investors the misleading impression that the machines were regularly being 

used and the investors would make money on their investments from such use.   

4. Likewise, no investors appear to have ever received any money from the actual use 

of one of Defendants’ devices much less anywhere close to the $10,000 per month described by 

Defendants in their offering communications.  Rather, the purported “passive income” that 

investors received from their investment contracts came not from a doctor’s use of a device but 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.2   Filed 09/23/21   Page 2 of 24



3 
 

rather from Ponzi payments that Zach Cargnino or Susan Cargnino sent using money received by 

one of the Biogenic Entities from new investors’ purchases of investment contracts.  Indeed, at 

least one investor received purported “usage” revenue payments from Zach Cargnino out of money 

that the investor had himself paid to purchase additional investment contracts from Defendants.   

5. While all Defendants benefited from the fraud on investors, with each of the 

individuals receiving hundreds of thousands of dollars of illicit proceeds, Susann Cargnino and 

Zach Cargnino profited most from Defendants’ scam.  Indeed, they used millions of dollars of 

defrauded investors’ money to buy jewelry, jet skis and a trailer, pay for multiple vacation rentals 

and expensive home improvements, buy three residential properties in Manitou Beach, Michigan, 

and extinguish nearly $100,000 of pre-existing bankruptcy debt. 

6. Defendants’ offers and sales of unregistered investment contract securities 

violated Sections 5(a) and 5(c) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 

77e(a) and 77e(c)].   

7. By directly or indirectly making materially false statements to investors to offer 

and sell investment contracts to investors, and/or engaging in deceptive acts in connection with 

the offer, purchase, and sale of these investment contracts, the Biogenic Entities, Capital Care, 

Julie Youssef, Gary Youssef and Zach Cargnino violated Section 17(a) of the Securities Act [15 

U.S.C. §77q(a)], Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 

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

8. As the principal or sole member and owner of the Biogenic Entities and, for a 

period of time, Capital Care, Susann Cargnino was at a minimum negligent with respect to the 

fraud committed by and through these companies, and is liable for violating Section 17(a)(3) of 

the Securities Act [15 U.S.C. §77q(a)(3)].  She also is jointly and severally liable as a control 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.3   Filed 09/23/21   Page 3 of 24



4 
 

person for the securities violations committed by and through these companies, pursuant to 

Section 20(a) of the Exchange Act [15 U.S.C. § 78t].   

9. As the principal or sole member and owner of Capital Care after acquiring 

ownership from his mother, and as the principal operational employee and Chief Financial 

Officer of each of the Biogenic Entities, Zach Cargnino is likewise jointly and severally liable as 

a control person for the securities violations committed by and through the Biogenic Entities and 

Capital Care, pursuant to Section 20(a) of the Exchange Act [15 U.S.C. § 78t]. 

II. JURISDICTION AND VENUE 

10. This Court has jurisdiction pursuant to Section 22(a) of the Securities Act [15 

U.S.C. § 77v(a)] and Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 

78(e) and 78aa]. 

11. Defendants directly or indirectly made use of the means or instrumentalities of 

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

communication in interstate commerce, in connection with the acts, practices, and courses of 

business set forth in this Complaint. 

12. Venue lies in this Court pursuant to 15 U.S.C. §§ 77v(a) and 78aa, and 28 U.S.C. § 

1391(b)(2).  Susann Cargnino and Zach Cagnino are both residents of Manitou Beach, Lenawee 

County, Michigan, which is within this judicial district.  Many illegal acts were perpetrated by 

these defendants within this judicial district and three Manitou Beach properties were purchased 

by Susann Cargnino and/or Zach Cagnino using illegally-obtained investor money.  Each of the 

Biogenic Entities are or were organized and/or registered in Michigan by Susann Cargnino and 

Zach Cagnino and ostensibly maintained offices within this judicial district.   

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.4   Filed 09/23/21   Page 4 of 24



5 
 

III. DEFENDANTS 

13. Biogenic Inc. (“Biogenic”) was incorporated in Michigan in February 2018, with 

Susann Cargnino as its sole member and owner and Zach Cargnino as its primary officer.  Its 

principal office was 8000 Yankee Rd., Ottawa Lake, Michigan.  Biogenic, through its agents and 

employees, solicited investors during the relevant period and received at least $5.4 million from 

36 different investors. 

14. Diagnostic Link LTD LLC (“Diagnostic”), was incorporated in Michigan in 

August 2016 with Susann Cargnino as member and owner.  Zach Cargnino was Chief Financial 

Officer (CFO)/Treasurer and designated recipient of ten percent (10%) of the company’s profits.  

Diagnostic’s principal office was listed as 8000 Yankee Rd., Ottawa Lake, Michigan.  

Diagnostic was the predecessor to co-Defendant Vital Systems, which Susann Cargnino 

incorporated in November 2017.   Diagnostic received about $176,000 from four investors. 

15. Vital Systems LTD LLC (“Vital Systems”), was incorporated in Michigan in 

November 2017, with Susann Cargnino as its sole member and owner and Zach Cargnino as its 

primary officer.  Its principal office was 8000 Yankee Rd., Ottawa Lake, Michigan.  Vital 

Systems, the precursor business to Biogenic, Inc., through its agents and employees, solicited 

investors during the relevant period and received at least $1.5 million from seven investors.   

16. Biotek Holdings LLC (“Biotek”) was incorporated in Michigan in October 2018, 

listing Susann Cargnino’s pseudonym “Ashley Walker” – which are Susann Cargnino’s middle 

name and maiden name – as its registered agent, President, Treasurer, Secretary, and Director.  

Zach Cargnino was Biotek’s primary officer.  The operating address for Biotek is shown as 9194 

Cherry Point Road, Manitou Beach, Michigan, an address otherwise used by Mrs. Cargnino, and 

Susan Cargnino was identified as Biotek’s sole member and owner in communications with the 

IRS.  Biotek purported to offer the same diagnostic equipment, services, and investment 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.5   Filed 09/23/21   Page 5 of 24



6 
 

opportunity as Vital Systems and Biogenic and, along with co-Defendant Tek Wellness, received 

at least $759,000 from seven investors. 

17. Tek Wellness, Inc. (“Tek Wellness”) was incorporated in Michigan in March 

2019, listing Susann Cargnino’s pseudonym “Ashley Walker” as its registered agent, President, 

Treasurer, Secretary, and Director.  Zach Cargnino was the primary officer for Tek Wellness.  

The operating address for Tek Wellness was 13854 Lakeside Circle, 22nd Floor #311, Sterling 

Heights, Michigan.  Tek Wellness purported to offer the same diagnostic equipment, services, 

and investment opportunity as Vital Systems and Biogenic and, along with co-Defendant Biotek, 

received at least $759,000 from seven investors. 

18. Capital Care Management LLC (“Capital Care”) was created in August 2016 

with Susann Cargnino as its sole member and owner, and a principal office at 8000 Yankee Rd., 

Ottawa Lake, Michigan.  Capital Care was registered in Florida in 2016 with a Capital Care 

employee listed as its agent, and remains an active business entity in that state.  The company was 

registered in Michigan in October 2017 listing “Zach Alan,” the pseudonymous first and middle 

name of Defendant Zach Cargnino, as its authorized agent and CFO/Treasurer.   

19. Susann Ashley Cargnino a/k/a Susann Ashley Walker a/k/a Ashley Walker 

(“Susan Cargnino”), age 57, is a Michigan resident of Manitou Beach, Lenawee County, 

Michigan.  Susann Cargnino was the principal if not exclusive owner of all of the Biogenic 

Entities, and at one point the owner of Capital Care, and used defrauded investors’ money to 

purchase three properties for herself and Zach Cargnino.  At various points in time, she used the 

names Susan Ashley Walker or Ashley Walker on documents related to the fraud to disguise her 

connection to her husband, Philip Cargnino, who was previously sentenced to 18 months in 

prison for an unrelated fraud. 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.6   Filed 09/23/21   Page 6 of 24



7 
 

20. Zachari Alan Cargnino a/k/a Zach Alan (“Zach Cargnino”), age 32, is a 

resident of Manitou Beach, Michigan.  He was the CFO of all or most of the Biogenic Entities 

and he operated and controlled Capital Care.  Zach Cargnino admitted that he routinely used the 

pseudonym “Zach Alan” and intentionally omitted Cargnino, to avoid disclosure of Cargnino 

family involvement given prior public allegations against Zach Cargnino as well as his father’s 

unrelated fraud conviction.  Among other activities, Zach Cargnino used Susann Cargnino’s 

credit cards to register and set up websites for Capital Care and the Biogenic Entities with 

GoDaddy and/or other internet service providers, as well as email addresses for the companies 

and/or their employees through those providers, and at times changed the names associated with 

company and employee email accounts when public allegations of misconduct were made 

against one or more of the Defendants.   

21. Gary Youssef a/k/a Gary Joseph (“Gary Youssef”), age 71, is a resident of 

California and is married to Defendant Julie Youssef.  Gary Youssef purported to be the 

President of the Biogenic Entities.  Gary Youssef and his wife Defendant Julie Youssef are long-

time friends and business associates of Susann and her husband, Phil Cargnino.  The Youssefs 

wrote a letter in support of Phil Cargnino at his 2012 sentencing for fraud.  Mr. Youssef 

personally made investment pitches to prospective investors over the telephone, by email, and in 

person, and routinely communicated false information about the company to investors as well as 

to medical sales representatives involved in the process.  Mr. Youssef and his wife collectively 

received at least $500,000 as part of the fraud.  Mr. Youssef asserted his right under the Fifth 

Amendment to the U.S. Constitution not to incriminate himself in response to most substantive 

questions from SEC staff during the SEC’s investigation in this matter. 

22. Julie Ann Youssef a/k/a Julie Ann a/k/a Julie Joseph (“Julie Youssef”), age 53, 

is a resident of California and is married to Defendant Gary Youssef.  Julie Youssef purported to 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.7   Filed 09/23/21   Page 7 of 24



8 
 

be the Director of Business for the Biogenic Entities.  Mrs. Youssef personally made investment 

pitches to prospective investors over the telephone, by email, and in person, and routinely 

communicated false information about the company in the process.  In addition, Mrs. Youssef 

provided investors by email the Biogenic business plans and other investment contract offering 

documents that communicated false information about the company to investors.  Mrs. Youssef 

also communicated false information about the company over the phone and in electronic 

communications to medical sales representatives and doctors.  Mrs. Youssef and her husband 

collectively received at least $500,000 as part of the fraud.  Mrs. Youssef asserted her right under 

the Fifth Amendment to the U.S. Constitution not to incriminate herself in response to all 

substantive questions from SEC staff during the SEC’s investigation in this matter.  

IV. FACTS 

A. DEFENDANTS PROVIDED MATERIALLY FALSE INFORMATION TO 
SCORES OF PROSPECTIVE INVESTORS AROUND THE UNITED STATES  

23. Beginning no later than June 2017, Vital Systems and/or Biogenic (and, in fewer 

instances, one of the other Biogenic Entities) offered investment contract opportunities to hundreds 

of investors around the United States.   

24. No registration statement was ever filed with the Commission or in effect for any of 

these investment contract offerings and no exemption from registration applied. 

25. Gary Youssef, Julie Youssef, or one of the sales representatives they hired and 

had working at their direction, typically were the first and oftentimes the only contacts for 

prospective investors interested in the investment contract opportunity being offered by one of 

the Biogenic Entities. 

26. The Youssefs, and/or one of several sales representatives working in conjunction 

with them and at their direction, provided prospective investors with offering documents, by 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.8   Filed 09/23/21   Page 8 of 24



9 
 

email and in person, about the company and the diagnostic medical device at issue in the 

investment contract offering.  The Youssefs and their sales team also communicated with 

investors by text message and over the phone and repeated offering document information. 

27. Among other materials that the Youssefs and their sales team provided to 

prospective investors were business plans for one of the Biogenic Entities that were written by a 

combination of the Youssefs, Zach Cargnino, and other employees of Capital Care or one of the 

Biogenic Entities acting with their knowledge and at their direction.  

28. These business plans described the respective Biogenic entity as “a World-Class 

Medical Device Manufacturer” that “sells a patented, Life Saving Medical Device in the $3.4 

Trillion Health Care Industry,” with the device described as “a fully integrated, non-invasive 

medical testing system which performs comprehensive neuropathic cardiovascular diagnostics.”   

29. The representations about the Biogenic Entities manufacturing the devices was 

important to investors as it caused them to believe they were dealing with a successful, 

sophisticated U.S. company capable of managing their investments and providing returns.   

30. The representations about the Biogenic Entities manufacturing the devices was 

materially false because none of the defendant entities manufactured any device much less the 

device described in the business plan.  Instead, Zach Cargnino, Capital Care, and/or one of the 

Biogenic Entities purchased the devices from the real manufacturer at a fraction of the price 

investors paid when they purchased their investment contract.  The Youssefs knew or were 

reckless in not knowing as much because at times they received devices directly from the true 

manufacturer when arranging installation at doctors’ offices. 

31. The business plans for whichever of the Biogenic Entities was in effect at the time 

claimed the company “has a long history of success and currently we have 1,404 Diagnostic 

Partners’ systems operating nationwide.”  These statements were materially false because none of 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.9   Filed 09/23/21   Page 9 of 24



10 
 

the Biogenic Entities existed prior to August 2016 and the Biogenic Entities, collectively, never 

purchased more than 70 devices much less had anywhere close to 1,404 Diagnostic Partners.  

32. The business plans offered investors the opportunity to become a “Diagnostic 

Partner” with Vital Systems or Biogenic (or another Biogenic Entity) once they wired to the 

company a “$150,000 Investment,” 1 and ostensibly committed to a $225 monthly service fee.   

33. The business plans told investors they would not have to do anything as 

Diagnostic Partners in order to profit from their investment: 

Biogenic does everything for you. We procure the clinic site and negotiate a Fee-
for-Service (FFS) Agreement with the physicians on your behalf.  Biogenic 
programs your system with our proprietary software, delivers and installs 
computerized testing equipment and thoroughly trains the medical staff in the 
proper way to administer the tests. . . .  The test takes under 15 minutes and 
identifies the risk of sudden death, silent heart attack and much, much more.   
(Emphasis added). 
 
34. The business plans further explained the financial returns investors could expect 

by becoming a Diagnostic Partner with Vital Systems, Biogenic, or another Biogenic Entity: 

The Biogenic system is FDA Approved and each time a test is performed, you will 
be paid a Fee of $250 (per the F-F-S) by the clinic.  The clinic is reimbursed an 
average of $500 per test by Medicare, Medicaid and on average about 11% more 
per test from Private Insurers. . . .  The Biogenic testing systems can be utilized 
up to ten or more times per day in some locations, and even at a substandard 
utilization rate of three tests per day, breakeven on a system purchase price of 
$150,000 is under 12 months.  Nationally, our Partners are [sic] average 5.1 tests 
per day in the summer and test 5.5 tests per day in the winter testing five days per 
week. (Emphasis in Original) 
 

                                                           
1 In some instances, particularly when investors were purchasing more than one investment 
contract, the purchase price went as low as $110,000.  In many instances, investors were offered 
the opportunity to finance up to 50% of the purchase price through Capital Care after paying at 
least $75,000 when purchasing the investment contract.  In fact, no financing was ever arranged 
and this financing offer was merely a false inducement to receive partial payment from investors 
who had less money to invest. 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.10   Filed 09/23/21   Page 10 of 24



11 
 

These statements were materially false because doctors were hardly if ever using the devices 

much less at a rate of five times per day or five days per week, and were not being reimbursed for 

the handful of times the devices were used much less at $500 or more per test.  The Youssefs, 

Zach Cargnino, and Capital Care were involved in placing devices in doctors’ offices and 

communicated with doctors or their staff about actual usage and actual insurance reimbursement 

rates, and thus knew or were reckless in not knowing that actual usage and actual insurance 

reimbursement was materially lower than claimed in the business plans. 

35. While investors were offered the possibility of managing their own system and 

billing doctors directly, Defendants’ business plans explained how investors could receive 

“‘totally and purely passive’ income” as a Diagnostic Partner if they signed on to have Biogenic 

provide “additional accounting services and support for the modest monthly fee of $225.”2  The 

business plans explained the services and support the company would provide if investors signed 

on as Diagnostic Partners: 

i. Establishing a separate checking account into which the system(s) revenues 
shall be deposited each month, copies of which shall be provided to the 
Diagnostic Partner  

ii.   Tracking the number of tests performed each month 

iii.  Billing the medical facility for the appropriate number of tests 

iv. Collecting the amount payable by the medical facility under the FFS Agreement 

v. Disabling the unit for failure to pay in a timely [manner], subject to agreed-
upon cure periods 

vi. If necessary, and on a best efforts basis, identifying new system locations 

vii. Preparing a monthly Servicer Report setting forth data points such as: 

a. Billings 
b. Number of tests 

                                                           
2 Zach Cargnino admitted in testimony during the SEC’s investigation that at no point in time did 
Capital Care or any of the Biogenic Entities ever bill investors for the $225 service fee but 
nevertheless purported to offer and provide the accounting services and support. 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.11   Filed 09/23/21   Page 11 of 24



12 
 

c. Collections 
d. Account reconciliations 

All of the above activities (excepting v. above) can be performed by the Diagnostic 
Partner at their discretion, or Biogenic will perform these services for those who 
want “totally and purely passive” income. 
 
36. Virtually all of the investors who entered into investment contracts with 

Defendants agreed to be Diagnostic Partners and accept the proffered “accounting services and 

support,” yet the offered services and support were entirely illusory.  Defendants never 

established separate checking accounts to collect revenues for any of the investors who signed on 

as Diagnostic Partners.  While investors were told that they would receive reports showing tests 

conducted by their machines, Julie Youssef, Zach Cargnino, and/or an employee working at her 

or his direction manufactured fake usage reports and doctor billing invoices.  Further, Zach 

Cargnino, or Susann Cargnino operating at his direction, made “revenue” payments to investors, 

if at all, out of a Capital Care bank account or one of the Biogenic Entities’ bank accounts using 

money obtained from investors who were duped into purchasing investment contracts.    

37. Defendants’ business plans repeated that the investment contract offered investors 

“a potentially large passive income for you”:  “Some Diagnostic Partners initially have a 

preference to have their systems close to their place of residence.  As you will learn, that is 

certainly not necessary, as this business is totally passive and requires no hands-on whatsoever 

as we remotely poll all systems.” (Emphasis added) 

38. The Youssefs, Zach Cargnino, and others working under their direction sent emails 

and text messages to prospective investors that routinely repeated many of the false claims 

reflected in the business plans and other offering documents, including that Biogenic entity 

manufactured the devices, had been in business for as much as 14 years, and had placed more 

than 1,400 diagnostic testing machines in doctors’ offices. 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.12   Filed 09/23/21   Page 12 of 24



13 
 

39. The Youssefs, Zach Cargnino, and/or others working under their direction also 

provided prospective investors with information about the company and the investment contract 

opportunity verbally over the telephone and in face-to-face meetings.  These communications 

typically regurgitated the false information contained in Defendants’ business plans about the 

Biogenic Entities manufacturing the devices, how many devices had been put into use for 

investors, how often those devices were being used by doctors, and how much passive revenue 

those investors were receiving from such use. 

40. The Youssefs and Zach Cargnino knew or were reckless in not knowing that none 

of the entities had any history much less “a long history of success” because Zach Cargnino 

created new email addresses for the Youssefs and others working at his and their direction 

whenever a defendant entity was created, starting in 2016, and in many instances had their last 

names on the email changed to shield their true identity from investors in light of public 

allegations of misconduct and fraud. 

41. The Youssefs and Zach Cargnino also knew or were reckless in not knowing that 

the Biogenic entities did not even collectively have 1,404 Diagnostic Partners because they were 

involved in nearly all of the investment contract purchases related to the fewer than 70 devices 

that were ever actually purchased by Zach Cargnino, Capital Care, or one of the Biogenic 

Entities from the third-party manufacturer. 

42. The Youssefs and their sales team advertised the investment contract opportunity 

nationwide in the major print and electronic news media, on franchise recruitment websites, as well 

as on the find-businesses-for-sale website, BizBuySell.com.  These advertisements often described 

the investment contract as “a wonderful, Passive/Absentee offering for someone who wants to keep 

their current job or for a retired individual that desires to put their hard-earned retirement funds to 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.13   Filed 09/23/21   Page 13 of 24



14 
 

work.”  The advertisements mimicked the materially false statements in the business plans, 

including that “Our 1,404 diagnostic partners are ALL Netting $10,000/mo or More!”   

43. The Youssefs and their team routinely put prospective investors in contact with at 

least three individuals who purported to be reaping the financial rewards of their relationship with 

the Biogenic Entities.  In fact, none of these individuals had ever paid for one of the devices, to 

the extent they even owned one at all, and none were receiving any revenue from the use of such 

devices.  Instead, at least one was a personal friend of the Youssefs and all were paid to lie to 

prospective investors and fabricate successful experiences with one of the Biogenic Entities. 

44. At several points during the relevant period, public allegations of misconduct 

and/or fraud were made against the Youssefs, Zach Cargnino, Capital Care, or one of the 

Biogenic Entities, including lawsuits filed in state court in Texas and California and public 

condemnations on the Ripoff Report website for reporting scams (www.ripoffreport.com).   

45. After such publicity, Zach Cargnino worked with an employee of Capital Care or 

one of the Biogenic Entities to change the name of the operative Biogenic entity and all associated 

email addresses, including changing offering documents and other company materials and email 

addresses to falsely identify Gary Youssef as “Gary Joseph,” Julie Youssef as either “Julie Joseph” 

or “Julie Ann,” Zach Cargnino as “Zach Alan,” and also to use Susan Cargnino’s “Susan Walker” 

or “Ashley Walker” pseudonyms on company filings and other public documents.   

46. In investigative testimony with the SEC, Susann Cargnino admitted that she was 

aware the Biogenic Entities that were offering the medical devices were changing names several 

times, all while using her aliases when she incorporated the later businesses.  Despite knowing this 

information, she neither sought nor received any explanation from Zach Cargnino as to why the 

changes were taking place.  Susann Cargnino also was the agent for service of process for at least 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.14   Filed 09/23/21   Page 14 of 24

http://www.ripoffreport.com/


15 
 

one investor lawsuit against one of the Biogenic Entities, but disclaimed in testimony any 

knowledge of the lawsuit. 

47. As a result of Defendants’ false communications and deceptive practices, at least 

55 investors collectively paid roughly $6.8 million to purchase investment contracts from and 

engage as Diagnostic Partners with one or more of the Biogenic Entities.   

48. Investor funds were initially deposited into the bank accounts of one of the 

Biogenic Entities that were controlled by Susann Cargnino.  Zach Cargnino had direct online 

access to the accounts, including using Susann Cargnino’s login information, and he made 

numerous electronic transfers and ACH payments out of the accounts.  Susann Cargnino 

generally made deposits into and withdrawals from the accounts, including by obtaining 

cashiers’ checks or directing wire transfers from the accounts.  Zach Cargnino layered investor 

funds between multiple Biogenic Entity and CCM bank accounts to avoid detection. 

49. From these company bank accounts Susann Cargnino or Zach Cargnino also 

made bank-to-bank transfer payments to the Youssefs, paying the Youssefs and their team 

collectively more than $2 million of illicit proceeds for their work in defrauding investors. 

B. ZACH CARGNINO, CAPITAL CARE, AND JULIE YOUSSEF PROVIDED 
INVESTORS WITH PHONY USAGE REPORTS ALONG WITH “USAGE 
REVENUE” THAT WAS IN FACT MONEY FROM INVESTORS   

50. After investors purchased their investment contracts from one of the Biogenic 

Entities, Zach Cargnino and Capital Care arranged to purchase devices from the third-party 

manufacturer and directed a Capital Care employee to travel to doctors’ offices around the United 

States to install the devices.  Rarely if ever did these installations occur at locations near to the 

investor who had purchased the device, and investors often were instructed by the Youssefs and 

their sales team not to contact the doctors or their staff about the installation and use of the devices. 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.15   Filed 09/23/21   Page 15 of 24



16 
 

51. Defendants typically did not tell doctors about the investors.  Instead, documents 

provided to doctors indicated they were engaging with a “CONTRACTOR,” which they 

typically believed to be Capital Care or the relevant Biogenic entity.  Doctors only learned about 

investors when they received calls from investors complaining that they were not receiving any 

payments.  Doctors have stated to the SEC during its investigation that if they had been told that 

investors were involved they would not have engaged with Capital Care or the Biogenic entity.  

52. Doctors and their staff typically were provided little to no meaningful training by 

Capital Care and its employees on how to use the device or arrange for billing to Medicare, 

Medicaid, or private insurance when the device was used.  As result, doctors generally stopped 

trying to use the devices fairly quickly after receiving them and either asked to have them picked 

up by Capital Care or put the devices in storage or otherwise disposed of them.    

53. To deceive investors about how often the devices were being used, Zach Cargnino 

created fake device usage reports and doctor billing invoices that reflected fictitious usage of 

investors’ machines and fictitious collection of fees from doctors.  Zach Cargnino and Capital 

Care then emailed these phony documents directly to investors, or emailed the documents to 

Julie Youssef who then emailed them to investors herself or through one of her employees.    

54. After directly or indirectly sending phony usage reports and doctor invoices to 

investors, Zach Cargnino and Capital Care used online banking systems to arrange payments to 

investors through bank-to-bank money transfers from defendant entity bank accounts that only 

he or Susann Cargnino could access or control. 

55. Zach Cargnino and/or Julie Youssef, or others working at their direction, falsely 

communicated to investors by email, text, or in phone calls that these payments to investors were 

derived from device usage and payments from doctors, when they knew or were reckless in not 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.16   Filed 09/23/21   Page 16 of 24



17 
 

knowing that the money actually came from the proceeds of new investors’ purchases of 

investment contracts. 

56. In total, Zach Cargnino sent about $537,000 of Ponzi payments to investors 

through ACH transfers from bank accounts belonging to Capital Care or one of the Biogenic 

Entities, making it appear as though the investors were receiving income from actual usage of the 

medical devices.  In addition, Zach Cargnino requested Susann Cargnino withdraw at least 

$124,000 in cashier’s checks from bank accounts of one of the Biogenic Entities to pay four 

complaining investors as contractual “buyouts” which were funded out of money received from 

more recent investment contract investors. 

57. In investigative testimony with the SEC, Susann Cargnino testified that she knew 

about the medical device offerings to investors and acknowledged that she received and handled 

investor funds in bank accounts for the Biogenic Entities that she controlled.  She disclaimed 

understanding of the bank transactions she made, stating that she performed them at Zach 

Cargnino’s request and direction despite being the person with responsibility for and authority 

over the company bank accounts.  As to the cashier check “buyouts” and other refunds, she 

admitted knowing they were being paid to investors.  She also testified that she neither sought 

nor received any explanation as to why the investors were complaining or demanding refunds.   

58. In order to induce the purchase of additional investment contracts, at least one 

investor, D.K., received what Zach Cargnino communicated to him was device usage revenue 

related to D.K.’s first few investment contracts.  In reality, in Ponzi-like fashion, Mr. Cargnino 

made payments to D.K. using money that D.K. previously had sent to purchase additional 

investment contracts from Defendants.  Zach Cargnino admitted in testimony during the SEC’s 

investigation that no money had been received from any doctor in connection with these 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.17   Filed 09/23/21   Page 17 of 24



18 
 

payments to D.K. and, tellingly, could not provide a single explanation as to why he was making 

any payments to this investor.  

C. SUSANN CARGNINO AND ZACH CARGNINO USED INVESTOR PROCEEDS 
TO PURCHASE RESIDENTIAL PROPERTIES AND LIVE LAVISHLY  

 
59. In June 2018, Susann Cargnino used $675,000 of investor proceeds to purchase a 

residential property located at 9182 Cherry Point Road in Manitou Beach, Michigan.  She made 

the purchase in the name of 9182 Cherry Point Road LLC, a Michigan company that she or Zach 

Cargnino organized using her “Ashley Walker” pseudonym.  In June 2020, ownership of this 

property was re-titled into Zach Cargnino’s name using a quitclaim deed, with Zach Cargnino 

signing on behalf of 9182 Cherry Point Road LLC in the paperwork process.  The property has a 

current estimated value of roughly $850,000.   

60. In August 2018, Susann Cargnino used $325,000 of investor proceeds to purchase 

a residential property located at 9194 Cherry Point Road in Manitou Beach, Michigan.  She 

made the purchase in the name of 9194 Cherry Point Road LLC, a Michigan company that she or 

Zach Cargnino organized using her “Ashley Walker” pseudonym.  On March 26, 2021, shortly 

after the SEC served investigative subpoenas on Defendants, the Cargninos listed the property 

for sale, and it sold on May 26, 2021, for $500,000. 

61. In March 2019, Susann Cargnino used $800,000 of investor proceeds to purchase 

a residential property located at 8962 Cherry Point Road in Manitou Beach, Michigan, which she 

titled in her name.  The property has a current estimated value of roughly $950,000. 

62. Susan Cargnino and/or Zach Cargnino used at least $175,000 of investor proceeds 

to buy two jet skis and a jet ski trailer, nearly $10,000 of jewelry, more than $8,000 of VRBO 

vacation rentals, more than $15,000 of home improvements, and spent nearly $100,000 to 

extinguish creditor claims from a prior bankruptcy.  

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.18   Filed 09/23/21   Page 18 of 24



19 
 

VI.  CLAIMS FOR RELIEF 

CLAIM ONE 
Violation of Section 5(a) and (c) of the Securities Act  

[15 U.S.C. § 77(a) and (c)] 
(Against All Defendants) 

 
63. Paragraphs 1 through 62 are re-alleged and incorporated by reference 

64. Section 5(a) of the Securities Act provides that unless a registration statement is 

in effect as to a security, it shall be unlawful any person, directly or directly, (1) to make use of 

any means or instruments of transportation or communication in interstate commerce or of the 

mails to sell such security through the use or medium of any prospectus or otherwise; or (2) to 

carry or cause to be carried through the mails or in interstate commerce, by any means or 

instruments of transportation, any such security for the purpose of sale or for delivery after sale. 

65. Section 5(c) of the Securities Act provides that it shall be unlawful for any person, 

directly or indirectly, to make use of any means or instruments of transportation or 

communication in interstate commerce or of the mails to offer to sell or offer to buy through the 

use or medium of any prospectus or otherwise any security, unless a registration statement has 

been filed as to such security, or while the registration statement is the subject of a refusal order 

or stop order or (prior to the effective date of the registration statement) any public proceeding or 

examination under section 77h of this title. 

66. No registration statement had been filed or was in effect for any of the investment 

contract securities offered and sold by Defendants and no exemption applied.   

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

made use of means or instruments of transportation or communication in interstate commerce or 

of the mails to offer to sell or to sell such investment contract securities. 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.19   Filed 09/23/21   Page 19 of 24

https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-308039014-452767506&term_occur=999&term_src=title:15:chapter:2A:subchapter:I:section:77e
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-949122880-452767500&term_occur=999&term_src=
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-2038877482-1150890660&term_occur=999&term_src=title:15:chapter:2A:subchapter:I:section:77e
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-308039014-452767506&term_occur=999&term_src=title:15:chapter:2A:subchapter:I:section:77e
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-949122880-452767500&term_occur=999&term_src=


20 
 

68. By reason of the foregoing, Defendants violated, and unless enjoined will again 

violate, Section 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)]. 

CLAIM TWO 
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder 

[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5] 
(Against the Biogenic Entities, Capital Care, Julie Youssef, Gary Youssef, Zach Cargnino) 

 
69. Paragraphs 1 through 62 are re-alleged and incorporated by reference.   

70. Section 10(b) of the Exchange Act provides that it shall be unlawful for any person, 

directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the 

mails, or of any facility of any national securities exchange to use or employ, in connection with 

the purchase or sale of any security registered on a national securities exchange or any security not 

so registered, or any securities-based swap agreement, any manipulative or deceptive device or 

contrivance in contravention of such rules and regulations as the Commission may prescribe as 

necessary or appropriate in the public interest or for the protection of investors. 

71. Rule 10b-5 provide that it shall be unlawful for any person, directly or indirectly, 

by the use of any means or instrumentality of interstate commerce, or of the mails or of any 

facility of any national securities exchange, (a) to employ any device, scheme, or artifice to 

defraud, (b) to make any untrue statement of a material fact or to omit to state a material fact 

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

they were made, not misleading, or (c) to engage in any act, practice, or course of business which 

operates or would operate as a fraud or deceit upon any person, in connection with the purchase 

or sale of any security. 

72. By reason of the foregoing, the Biogenic Entities, Capital Care, Julie Youssef, 

Gary Youssef, and Zach Cargnino violated, and unless enjoined will again violate, 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].   

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.20   Filed 09/23/21   Page 20 of 24



21 
 

CLAIM THREE 
Violations of Section 17(a) of the Securities Act  

[15 U.S.C. § 77q(a)] 
(Against the Biogenic Entities, Capital Care, Julie Youssef, Gary Youssef, Zach Cargnino) 

 
73. Paragraphs 1 through 62 are re-alleged and incorporated by reference.   

74. Section 17(a) of the Securities Act provides that it shall be unlawful for any 

person in the offer in the offer and sale of securities, by use of the means or instruments of 

transportation or communication in interstate commerce, or of the mails, directly or indirectly (1) 

to employ any device, scheme or artifice to defraud, (2) to obtain money or property by means of 

untrue statements of material fact or by omitting to state material facts necessary to make the 

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

(3) to engage in transactions, practices, or courses of business that operated or would operate as a 

fraud or deceit upon the purchasers of such securities. 

75. By reason of the foregoing, the Biogenic Entities, Capital Care, Julie Youssef, 

Gary Youssef, and Zach Cargnino violated, and unless enjoined will again violate, Section 17(a) 

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

CLAIM FOUR 
Violations of Section 17(a)(3) of the Securities Act  

[15 U.S.C. § 77q(a)] 
(Against Susann Cargnino) 

76. Paragraphs 1 through 62 are re-alleged and incorporated by reference. 

77. Section 17(a)(3) of the Securities Act provides that it shall be unlawful for any 

person in the offer in the offer and sale of securities, by use of the means or instruments of 

transportation or communication in interstate commerce, or of the mails, directly or indirectly, to 

engage in transactions, practices, or courses of business that operated or would operate as a fraud 

or deceit upon the purchasers of such securities. 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.21   Filed 09/23/21   Page 21 of 24



22 
 

78. By reason of the foregoing, Susann Cargnino violated, and unless enjoined will 

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

CLAIM FIVE 
Control Person Liability Under Section 20(a) of the Exchange Act 

[15 U.S.C. § 78t(a)] 
 (Against Susann Cargnino and Zach Cargnino) 

79. Paragraphs 1 through 62 are re-alleged and incorporated by reference.   

80. Section 20(a) of the Exchange Act provides that every person who, directly or 

indirectly, controls any person liable under any provision of this chapter or of any rule or 

regulation thereunder shall also be liable jointly and severally with and to the same extent as 

such controlled person to any person to whom such controlled person is liable, unless the 

controlling person acted in good faith and did not directly or indirectly induce the act or acts 

constituting the violation or cause of action. 

81. As alleged above, Susan Cargnino and Zach Cargnino were the only principals, 

owners, and officers of each of the Biogenic Entities and Capital Care and at no point in time 

acted in good faith. 

82. As alleged above, the Biogenic Entities and Capital Care violated Sections 5(a), (c), 

and 17(a) of the Securities Act [15 U.S.C. § 77(a) and (c), 15 U.S.C. § 77q(a)], and 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]. 

83. Accordingly, Susann Cargnino and Zach Cargnino are liable as a controlling 

person for the securities violations committed by the Biogenic Entities and Capital Care pursuant 

to Section 20(a) of the Exchange Act [15 U.S.C. § 78t(a)]. 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.22   Filed 09/23/21   Page 22 of 24

https://1.next.westlaw.com/Link/Document/FullText?findType=L&pubNum=1000546&cite=15USCAS78T&originatingDoc=Iaa897770d97b11e7929ecf6e705a87cd&refType=RB&originationContext=document&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_8b3b0000958a4
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-991716523-482320180&term_occur=999&term_src=title:15:chapter:2B:section:78t
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-991716523-482320180&term_occur=999&term_src=title:15:chapter:2B:section:78t
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-991716523-482320180&term_occur=999&term_src=title:15:chapter:2B:section:78t
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-991716523-482320180&term_occur=999&term_src=title:15:chapter:2B:section:78t
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-991716523-482320180&term_occur=999&term_src=title:15:chapter:2B:section:78t
https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=15-USC-991716523-482320180&term_occur=999&term_src=
https://1.next.westlaw.com/Link/Document/FullText?findType=L&pubNum=1000546&cite=15USCAS78J&originatingDoc=Iaa897770d97b11e7929ecf6e705a87cd&refType=RB&originationContext=document&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_a83b000018c76
https://1.next.westlaw.com/Link/Document/FullText?findType=L&pubNum=1000547&cite=17CFRS240.10B-5&originatingDoc=Iaa897770d97b11e7929ecf6e705a87cd&refType=LQ&originationContext=document&transitionType=DocumentItem&contextData=(sc.Search)
https://1.next.westlaw.com/Link/Document/FullText?findType=L&pubNum=1000546&cite=15USCAS78T&originatingDoc=Iaa897770d97b11e7929ecf6e705a87cd&refType=RB&originationContext=document&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_8b3b0000958a4


23 
 

VII. PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court enter a Final Judgment: 

1. Finding that Defendants committed the securities law violations alleged in this 

Complaint; 

2. Permanently enjoining Defendants from violating, directly or indirectly, Sections 

5 (a), (c), and 17 of the Securities Act [15 U.S.C. §§ 77(a) and (c), 77q(a)], and 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]; 

3. Permanently enjoining Defendants from directly or indirectly, including, but not 

limited to, through any entity owned or controlled by Defendants, participating in the issuance, 

purchase, offer, or sale of any security in an unregistered transaction, including but not limited to 

investment contracts or other securities related to medical testing devices or medical equipment; 

provided, however, that such injunction shall not prevent Defendants from purchasing or selling 

securities listed on a national securities exchange for his/her/its own personal account; 

4. Ordering that each of the Defendants disgorge any and all ill-gotten gains, 

together with pre-judgment and post-judgment interest, derived from the securities law violations 

set forth in this Complaint; 

5. Imposing civil monetary penalties against Defendants for each of their securities 

law violations, 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)];  

6. Retain jurisdiction over this action in order to implement and carry out the terms 

of all orders and decrees that it may enter, or to entertain any suitable application or motion for 

additional relief within the jurisdiction of this Court; and  

7. Granting such other relief as this Court may deem just or appropriate. 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.23   Filed 09/23/21   Page 23 of 24

https://1.next.westlaw.com/Link/Document/FullText?findType=L&pubNum=1000546&cite=15USCAS78J&originatingDoc=Iaa897770d97b11e7929ecf6e705a87cd&refType=RB&originationContext=document&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_a83b000018c76
https://1.next.westlaw.com/Link/Document/FullText?findType=L&pubNum=1000547&cite=17CFRS240.10B-5&originatingDoc=Iaa897770d97b11e7929ecf6e705a87cd&refType=LQ&originationContext=document&transitionType=DocumentItem&contextData=(sc.Search)


24 
 

VIII. JURY DEMAND 

 The SEC demands a jury in this matter.  

 Dated:  September 23, 2021 
Respectfully submitted, 

s/ Christian D. H. Schultz   
Christian D. H. Schultz 

Assistant Chief Litigation Counsel 
Timothy England 

Assistant Director 
Stephen Kaiser 

Senior Counsel 
Matthew Reisig 

Senior Counsel 
U.S. Securities and Exchange Commission 
100 F Street NE 
Washington, DC 20549 
(202) 551-4740 (Schultz) 
[email protected] 
 

 

Case 5:21-cv-12236-MFL-DRG   ECF No. 1, PageID.24   Filed 09/23/21   Page 24 of 24

mailto:[email protected]

	COMPLAINT
	CLAIM THREE
	CLAIM FOUR