SEC v. Solomon Lichtenstein, No. 7:25-cv-08742, Southern District of New York (Nov. 26, 2025) — Complaint

Thomas P. Smith, Jr.
Celeste Chase
Peter A. Mancuso
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street
Suite 20-100
New York, NY 10004-2616
(212) 336-5562 (Mancuso)
[email protected]

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE
COMMISSION,
                                             Plaintiff,

                        -against-

SOLOMON LICHTENSTEIN,
                                             Defendant.

COMPLAINT

25 Civ. 8742 (       )

JURY TRIAL DEMANDED

Plaintiff  Securities  and  Exchange  Commission  (the “SEC”),  for  its  Complaint  against
Defendant Solomon Lichtenstein (“Defendant” or “Lichtenstein”), alleges as follows:
SUMMARY
1. Lichtenstein orchestrated a fraudulent investment scheme by misrepresenting how he
would use investors’ funds, by falsely reporting their investment returns, and by misappropriating their
investments for personal purposes.
2. From  approximately  July  2022  through  August  2024 (the  “Relevant  Period”),
Lichtenstein raised at least $2.7 million from over 25 investors—many of whom were Lichtenstein’s

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family members, neighbors, and friends—through two entities: Taraxa Capital Fund, LP (“Taraxa” or
the “Fund”), a pooled investment vehicle, and Lightstone Trading Inc. (“Lightstone”).
3. Lichtenstein, as investment adviser to the Fund, held out Taraxa as a hedge fund that
invested  in  securities  using  a  day-trading  strategy  that  he  claimed  he  had  profited  from  personally.
Similarly, Lichtenstein represented that money from Lightstone investors would be invested using the
same trading strategy; however, instead of being subject to market risk, Lightstone investors were to
receive  a  fixed  interest  payment  of  5%  per  month,  which  was  intended  to  be  generated  from
Lichtenstein’s trading returns.
4. Rather than invest all of the money he raised from Taraxa and Lightstone investors as
promised, Lichtenstein  misappropriated  investor  funds  to  pay  for  personal  expenses,  as  well  as  to
make  Ponzi-like  payments  to  satisfy  redemption  requests  and  interest  obligations  owed  to  other
investors.  Lichtenstein  spent  hundreds  of  thousands  of  dollars  of  investor  funds  on  credit  card
payments, mortgage payments, bars, restaurants, travel, and cash withdrawals. To pay these personal
expenses, Lichtenstein  misappropriated  approximately  $868,000  from  Taraxa and approximately
$98,000 from Lightstone.
5. To the extent that Lichtenstein invested   a portion of investors’ money as promised,
the overall rate of return on the trading was negative. In total, Lichtenstein’s trades on behalf of Taraxa
and Lightstone investors resulted in net losses of approximately $200,000. Rather than disclosing these
losses to  investors,  Lichtenstein fabricated positive  returns  through online dashboards  for  Taraxa
investors that falsely reported significant growth in the value of their investments.
6. In and around the summer of 2024, Lichtenstein’s scheme collapsed when he ran out
of investor money and admitted to several investors that he had used investor funds to pay his personal
expenses. As a result of Lichtenstein’s scheme, investors lost in the aggregate more than $1.5 million.

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VIOLATIONS
7. By virtue of the foregoing conduct and as alleged further herein, Defendant violated
Section 17(a) of the Securities Act of 1933 (“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 thereunder [17
C.F.R. § 240.10b-5], and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940
(“Advisers Act”) [15 U.S.C. §§ 80b-6(1), 80b-6(2), 80b-6(4)] and Rule 206(4)-8 thereunder [17 C.F.R.
§ 275.206(4)-8].
8. Unless Lichtenstein is  restrained  and  enjoined,  he  will  engage  in  the  acts,  practices,
transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, and
courses of business of similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
9. The SEC brings this action pursuant to the authority conferred upon it by Securities
Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)], Exchange Act Section 21(d) [15 U.S.C.
§ 78u(d)], and Advisers Act Sections 209(d) and 209(e) [15 U.S.C. §§ 80b-9(d) and 80b-9(e)].
10. The SEC seeks a final judgment: (a) permanently enjoining Lichtenstein from engaging
in the acts, practices, and courses of business alleged against him herein and from violating the federal
securities laws and rules this Complaint alleges he has violated; (b) permanently enjoining Lichtenstein
from directly or indirectly, including but not limited to, through any entity owned or controlled by
him, participating in the issuance, purchase, offer, or sale of any security; provided, however, that such
injunction shall not prevent him from purchasing or selling securities for his own personal accounts;
(c) permanently restraining and enjoining Lichtenstein from directly or indirectly, acting as or being
associated  with  any  investment  adviser;  (d)  ordering Lichtenstein to  disgorge  all ill-   gotten  gains  he
received as a result of the violations alleged herein and to pay prejudgment interest thereon pursuant
to  Exchange  Act  Sections  21(d)(3),  21(d)(5)  and  21(d)(7)  [15  U.S.C.  §§  78u(d)(3),  78u(d)(5)  &

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78u(d)(7)]; (e) ordering Lichtenstein to pay civil money penalties pursuant to Securities Act Section
20(d) [15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)], and Advisers Act
Section 209(e) [15 U.S.C. § 80b-9(e)]; and (f) ordering any other and further relief the Court may deem
just and proper.
JURISDICTION AND VENUE
11. This Court has jurisdiction over this action pursuant to Securities Act Section 22(a)
[15 U.S.C. § 77v(a)], Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15
U.S.C. § 80b-14].
12. Defendant, directly and indirectly, has made use of the means or instrumentalities of
interstate commerce or of the mails in connection with the transactions, acts, practices, and courses
of business alleged herein.
13. Venue is  proper  in  the  Southern  District  of  New  York  pursuant  to  Securities  Act
Section  22(a)  [15  U.S.C.  §  77v(a)],  Exchange  Act  Section  27  [15  U.S.C.  §  78aa],  and  Advisers  Act
Section 214 [15 U.S.C. § 80b-14]. Lichtenstein resided in Stony Point, New York, in Rockland County,
during the Relevant Period. In addition, Lichtenstein transacted business in the Southern District of
New  York,  and  certain  of  the  acts,  practices,  transactions,  and  courses  of  business  alleged  in  this
Complaint  occurred  within  this  District,  including  that  Lichtenstein’s  operations  were  primarily
located  in  Rockland  County,  New  York  and  several  Taraxa investors resided  in Rockland  County,
New York.
DEFENDANT
14. Lichtenstein,  age  29,  was  a  resident  of  Stony  Point,  New  York  throughout  the
Relevant Period but currently resides in Fort Lee, New Jersey. Lichtenstein is the founder and fund
manager of Taraxa. He is also the manager of Taraxa Capital Group, LLC (“Taraxa Capital”), which
serves as the general partner of Taraxa, as well as the founder and owner of Lightstone.

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RELEVANT ENTITIES
15. Taraxa is a  Delaware  limited  partnership  formed  on  November  9,  2022  with  a
principal  place  of  business  in  Stony  Point,  New  York.  Taraxa  was  created  to  operate  as  a  private
investment partnership in which the Fund’s investors would become limited partners.
16. Lightstone is a New York corporation formed on July 6, 2022 with a principal place
of business in Stony Point, New York. Lichtenstein, through Lightstone, offered and sold notes to
investors, the terms of which were set forth in documents nominally entitled “loan agreements.”
FACTS
I. Background on the Relevant Offerings
17. In or around December 2022, after purportedly finding success trading securities for
himself and a close friend, Lichtenstein left his job as a medical biller and began soliciting investments
in  Taraxa  and  Lightstone  from  family  members,  friends,  and  neighbors  in  his  tight-knit religious
community.
A. Taraxa
18. Lichtenstein, as Taraxa’s fund manager, provided prospective investors in Taraxa with
a  Confidential  Private  Placement  Memorandum  (“PPM”)  and  Limited  Partnership  Agreement  (the
“LPA”),  both  dated  December  2022.  Lichtenstein  signed  the  LPA  on  behalf  of  Taraxa  Capital  as
General Partner to the Fund, and signed the subscription agreement appended to the PPM.
19. Under  the  PPM  and the  LPA,  Lichtenstein  was  “primarily  responsible  for  the
management” of Taraxa and solely vested with the authority for managing Taraxa’s assets and making
investment decisions for the Fund.
20. The PPM trumpeted Lichtenstein’s qualifications as having purportedly spent “years
honing his skills in multifaceted trading strategies using market analysis and risk mitigation.”
21. The PPM and LPA also described Lichtenstein’s day-trading strategy and stated that

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the objective of the Fund was “investing in [s]ecurities.”
22. Additionally, the PPM stated that Taraxa’s “investment program is focused primarily
on trading options and futures on indexes and exchange-traded funds (“ETFs”) [and] aims for small,
consistent returns using high-conviction trades that can capitalize on market volatility.”
23. The PPM further stated that Taraxa’s trades will typically “consist of selling options
on  a  variety  of  ETFs  on  the  major  US  exchanges  using  0-date  expiration  contracts,  trading  only
intraday based on market direction and daily analysis.”
24. Under  the LPA,  Lichtenstein,  through  Taraxa  Capital,  was  entitled  to  receive
compensation in the form of a monthly management fee of 2% per year and an annual “Performance
Allocation” of 20% on investor returns over 25%, and 40% on investor returns over 100%.
25. In  addition  to  the  PPM’s  and  LPA’s  descriptions  of  the  Fund’s  objectives  and
strategies, Lichtenstein made oral representations to Taraxa investors as to how he would use their
money.
26. For instance, Investor A (a resident of Rockland County, New York) invested $40,000
in Taraxa in May 2023. Before this investment, Lichtenstein represented to Investor A that money
invested in Taraxa would be pooled together in a fund and invested in securities.
27. Before  Investor  B  invested  $45,000 in  Taraxa  in  December  2022,  Lichtenstein
represented to Investor B that money invested in Taraxa would be used for trading options and highly
leveraged futures, but that he only invested certain portions of the money over short periods of time
to reduce the risk of large losses.
28. Before  Investor  C  invested  approximately  $100,000 in  Taraxa  in  March  2023,
Lichtenstein represented to Investor C that money invested in Taraxa would be used for strategic day-
trading,  that  he  would  never  leave  money  in  the  market  overnight,  and that investments  would  be
limited to a certain percentage of the Fund’s assets to minimize the risk of loss.

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29. During  the  Relevant  Period,  Lichtenstein  raised  over  $2.4  million  from  over  20
investors in Taraxa.
30. Most investors transmitted their investments by wire transfer to bank accounts held
by Taraxa, in which their money was pooled with money from other Taraxa investors for the putative
purpose of generating returns through Lichtenstein’s trading on behalf of the Fund.
31. In return for their investments, Taraxa investors received limited partnership interests
in the Fund.
B. Lightstone
32. As  an  alternative  or  additional  way  to  invest,  Lichtenstein  offered  investors  the
opportunity to purchase notes issued by Lightstone (“Lightstone Notes” or “Notes”).
33. For  each  Lightstone  investor,  the  terms  of  the  Note  were  set  forth  in  a  document
called a “Loan Agreement,” pursuant to which the investor agreed to “loan” money to Lightstone in
exchange for Lightstone’s promise to repay the principal amount and interest at the fixed rate of 5%
per month.
34. Lichtenstein signed these agreements on behalf of Lightstone.
35. Lichtenstein   represented   to   prospective   investors   that   the   money   invested   in
Lightstone would, as with Taraxa, be used for trading in securities.
36. Lichtenstein represented to Lightstone investors that they would receive a fixed 5%
monthly interest payment.
37. Lichtenstein  was  entitled  to keep  any  trading  returns  in  excess  of  the  5%  monthly
payment owed to Lightstone’s noteholders.
38. Lightstone  investors  understood  based  on  Lichtenstein’s  representations  that  the
promised interest payments would be funded with Lightstone’s trading returns.
39. Investors  purchased  the  Lightstone  Notes  expecting  to  earn  profits  in  the  form  of

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such interest payments.
40. Investors also  had the option  “not  to collect  the  interest  on  any  given  month”  and
instead  let  it  accrue  to  be  calculated  as  part  of  the  principal  amount  of  their  investment  for  the
following month.
41. During  the  Relevant  Period,  Lichtenstein  raised  over  $300,000  through  the  sale  of
Lightstone Notes to at least 10 investors, including several individuals who also invested in Taraxa.
42. Most investors transmitted their investments by wire transfer to bank accounts held
by Lightstone.
II. Lichtenstein’s Scheme to Defraud
A. Lichtenstein Misrepresented How He Would Use Money from Taraxa Investors
43. Contrary to the representations in the PPM and Lichtenstein’s other communications
with Taraxa investors that he would use their money to trade securities, Lichtenstein used the majority
of the funds he raised for Taraxa for other purposes.
44. Of the over $2.4 million Lichtenstein raised for Taraxa, he transferred a mere $592,000
from Taraxa bank accounts to the brokerage account he used for trading securities—less than a quarter
of the funds raised.
45. Rather than investing the remainder of the Taraxa funds raised in accordance with the
PPM and his representations to investors, Lichtenstein misappropriated approximately $868,000 of
Fund assets for personal use and used at least approximately $900,000 to make   Ponzi-like payments
to fulfill investor redemption requests.
46. These amounts far exceeded the management and performance fees that Lichtenstein
would have been entitled to under the LPA.
47. Lichtenstein  continued  to  use  the  PPM  to  solicit  investors  even  after  he  had  begun
misappropriating Fund assets.

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48. Frequently, Lichtenstein misappropriated Fund assets within days of soliciting a new
investment in the Fund.
49. For example, on or around May 25, 2023, Investor A invested $40,000 in the Fund by
wiring funds to a bank account held by Taraxa. By May 29, 2023, Lichtenstein began transferring that
money to a personal bank account held in his name and spending it on department store purchases,
restaurants and hotels. Lichtenstein also transferred a portion of Investor A’s funds to a bank account
held by Lightstone and used that money to make Ponzi-like payments to Lightstone investors.
50. In  addition,  on  or  around  September  28,  2023,  Investor D  invested  $10,000  in  the
Fund by wiring funds to a bank account held by Taraxa. On October 2, 2023, Lichtenstein transferred
the majority of Investor D’s money to a Lightstone bank account and used that money to make Ponzi-
like payments to Lightstone investors.
51. On or around June 28, 2024, Investor E invested $40,000 in the Fund by wiring funds
to a bank account held by Taraxa. On the same day, Lichtenstein transferred the entirety of Investor
E’s money to a personal bank account held in his name. Over the following two weeks, Lichtenstein
used Investor E’s money to make cash withdrawals, purchases at stores and restaurants, and Ponzi-
like payments to other Taraxa investors.
52. Lichtenstein’s misrepresentations regarding the use of investor funds were important
to investors’ decisions to invest in Taraxa.
B. Lichtenstein Misrepresented Taraxa’s Performance
53. Taraxa’s trades performed poorly. For 11 out of 16 months that Lichtenstein actually
engaged in trading securities during the Relevant Period, Lichtenstein failed to generate profits on his
trades.
54. Even though Lichtenstein did generate profits on his trades during some months, the
losses he sustained during the losing months far exceeded these gains.

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55. Indeed, after May 2023, the historical trading return for the Fund (since inception) was
always negative.
56. In the aggregate, Lichtenstein incurred net losses of approximately $200,000 by trading
securities in Taraxa’s brokerage account.
57. By May of 2024, Taraxa’s brokerage account had a balance of less than $100 due to
Lichtenstein’s  unsuccessful  trading,  withdrawals  he  made  to  pay  for  his  personal  expenses,  and
disbursements he used to make Ponzi-like payments to investors.
58. Throughout the Relevant Period, Lichtenstein concealed Taraxa’s trading losses from
investors.
59. Lichtenstein repeatedly misrepresented the   Fund’s   performance through   oral
statements  to  investors  and  other  deceptive  acts,  including  the  creation  of  online  dashboards  that
provided investors with information about the supposed performance of their investment in the Fund.
60. Lichtenstein controlled the content of these dashboards.
61. For each investor, the dashboards displayed the total amount the investor invested in
the Fund, the purported value of that investment, the annualized return percentage, and a graph to
show the value of the investment over time.
62. These dashboards were accessible to investors online during the Relevant Period and
were updated on a monthly basis.
63. Lichtenstein used these false dashboards to corroborate his oral misrepresentations to
Taraxa investors that the Fund had positive returns and that the value of their investment in the Fund
had increased.
64. Below are illustrative examples of how Lichtenstein misrepresented the performance
of the Fund to Taraxa investors.

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i. Investor A
65. On or around May 25, 2023, Investor A invested $40,000 in the Fund.
66. Throughout the Relevant Period, in repeated conversations, Lichtenstein led investor
A to believe that his investment was growing in value.
67. In  addition,  at  the  end  of  2023,  Lichtenstein  provided  Investor  A  with  a  false  tax
document purporting to show that his $40,000 investment had grown to over $100,000.
68. Lichtenstein caused Investor A’s dashboard to reflect that, over time, his investment
had grown in value.
69. These representations regarding the value of Investor A’s investment were false and
misleading  because—in  addition  to  the  depletion  of  Fund  assets  as  a  result  of  Lichtenstein’s
misappropriation—the  Fund’s  trading  performance  was  not  profitable  during  the  time  period
following Investor A’s investment in Taraxa.
70. Lichtenstein’s  misrepresentations  as  to  the  Fund’s  performance  were  an  important
factor in Investor A’s decision to invest an additional $45,000 into the Fund on or around January 26,
2024.
71. As of August 2024, Investor A’s dashboard reflected historical investment growth
throughout the Relevant Period:

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72. The  dashboard’s  depiction  of  Investor  A’s  investment  performance was  false  and
misleading because, as Lichtenstein knew or recklessly disregarded by virtue of conducting the relevant
trades, controlling Taraxa’s bank and brokerage accounts, and misappropriating Fund assets, Investor
A’s interest in the Fund was worthless by May 2024.
ii. Investor E
73. In or around December 2023, Investor E invested at least $37,000 in the Fund.
74. Throughout  the  Relevant  Period,  Lichtenstein  led  Investor E  to  believe  that  his
investment was growing in value.
75. At  the  end  of  2023,  Lichtenstein  provided  Investor  E  with  a  false  tax  document
purporting to show that his initial investment had grown by over $20,000.
76. Lichtenstein also caused Investor E’s online dashboard to reflect that, over time, his
investment had grown in value.
77. These representations regarding the value of Investor E’s investment were false and
misleading  because—in  addition  to  the  depletion  of  Fund  assets  as  a  result  of  Lichtenstein’s
misappropriation—the  Fund’s  trading  performance  was  not  profitable  during  the  time  period
following Investor E’s investment in Taraxa.
78. As of August 2024, Investor E’s dashboard reflected historical investment growth
throughout the Relevant Period:

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79. The  dashboard’s  depiction  of  Investor  E’s  investment  was  false  and  misleading
because, as Lichtenstein knew or recklessly disregarded by virtue of conducting the relevant trades,
controlling  Taraxa’s  bank and  brokerage  accounts, and  misappropriating  Fund  assets,  Investor E’s
interest in the Fund was worthless by May 2024.
iii. Investor F
80. In or around May 2023, Investor F used $150,000 of his retirement savings to invest
in the Fund.
81. Throughout the Relevant Period, Lichtenstein consistently advised Investor F that his
investment was “doing great” and used the dashboard he created for Investor F to support his claim
of positive returns.
82. Indeed, Lichtenstein caused Investor F’s dashboard to reflect that his investment had
grown at a 409% rate of return in a little over a year from the time of his May 2023 investment.

83. These representations regarding the value of Investor F’s investment were false and
misleading because, as Lichtenstein knew or recklessly disregarded by virtue of conducting the relevant
trades,  controlling  Taraxa’s  bank  and  brokerage  accounts,  and  misappropriating  Fund  assets,  the
Fund’s trading was not profitable during the time period following Investor F’s investment in Taraxa,
and Investor F’s interest in the Fund was worthless by May 2024.
C. Lichtenstein Misrepresented How He Would Use Lightstone Investors’ Money
84. Similar  to  his  conduct  with  respect  to  Taraxa,  Lichtenstein  orally  represented    to
Lightstone investors that he would invest their money in securities using a day trading strategy that he
claimed to have profited from personally.
85. These representations regarding Lichtenstein’s use of investors’ funds were important
to their decisions to purchase Lightstone Notes.
86. Contrary   to   Lichtenstein’s   representations,   throughout   the   Relevant   Period

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Lichtenstein invested at most $10,000 out of the over $300,000 he raised through Lightstone.
87. Meanwhile, Lichtenstein used approximately $98,000 of Lightstone investor funds for
his  personal  expenses and  at  least  $200,000  for Ponzi-like  payments  that  gave  the false appearance
that  Lightstone  was  generating  sufficient  trading  revenue  to  fulfill its  interest  obligations  under  the
Notes.
88. For example, on or around March 1, 2023, Investor F purchased $30,000 of Lightstone
Notes by transferring funds to a Lightstone bank account.
89. Within one week of this deposit Lichtenstein used $25,000 of Investor F’s money to
make a Ponzi-like payment to a different Lightstone investor.
90. In  addition,  on  or  around  August  24,  2023,  Investor  G  purchased  $25,000  of
Lightstone Notes by wiring her investment to a Lightstone bank account.
91. Within two weeks of this deposit, Lichtenstein misappropriated nearly all of Investor
G’s  $25,000  investment  by  transferring  over  $14,000  to  Lichtenstein’s  personal  bank  accounts  and
using  over  $10,000  of  Investor  G’s  money  to  make  Ponzi-like  payments  to  two  other  Lightstone
investors.
92. On or around September 22, 2023, Investor H purchased $25,000 of Lightstone Notes
by wiring her investment to a Lightstone bank account.
93. By  just  one  week  later,  Lichtenstein  had  withdrawn  $22,000  of  Investor  H’s  money
out of the Lightstone bank account and deposited it into his personal accounts.
94. Lichtenstein’s Ponzi-like  payments  gave  investors  confidence  in  the  legitimacy  of
Lightstone and in some cases caused them to increase their investments.
III. Lichtenstein Misappropriated Investor Money to Fund his Lifestyle
95. Out of the approximately $2.7 million that Lichtenstein raised from investors in Taraxa
and Lightstone, he misappropriated over $966,000 for personal use.

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96. Lichtenstein  began  misappropriating  money  from  Taraxa  and  from Lightstone
investors by at latest May 2023.
97. Throughout  the  Relevant  Period,  Lichtenstein regularly  transferred  investor funds
from Taraxa and Lightstone bank accounts to his personal bank accounts and made direct debits from
the Taraxa and Lightstone accounts to pay for personal expenses.
98. For example, on or around May 25, 2023, Investor A invested $40,000 in the Fund,
which  was  deposited  in  a  Taraxa  bank  account,  but  within  12  days  Lichtenstein  had  used
approximately  $13,000  of  that  money  to  pay  for  personal  expenses  and  to  make  transfers  to  his
personal bank account.
99. On or around December 29, 2023, Investor E invested at least $37,000 in the Fund,
which was deposited in a Taraxa bank account, but within a week Lichtenstein had transferred $17,000
of it to his personal bank account.
100. On or around May 31, 2024, Investor G purchased $11,000 in Lightstone Notes, which
was deposited in a Lightstone bank account, but on the same day Lichtenstein misappropriated the
majority of Investor G’s money by transferring it to his personal bank accounts.
101. In  total,  during  the  Relevant  Period,  Lichtenstein  used  funds  from  Taraxa  and
Lightstone  investors  to  pay  approximately  $315,000  in  credit  card  purchases;  $99,000  in  mortgage
payments; $63,000 in expenditures at bars, restaurants, and lounges; and $21,000 in travel expenses.
Lichtenstein also withdrew approximately $150,000 in cash from Taraxa and Lightstone accounts.
102. Even   after   Lichtenstein   began   misappropriating   money   from   the   Taraxa   and
Lightstone bank accounts, he continued to solicit investors by falsely and misleadingly representing to
them that their money would be used to invest and trade in securities.
IV. Lichtenstein Admitted to His Fraudulent Conduct After His Scheme Collapsed
103. By in or around July 2024, Lichtenstein had   drained the Taraxa and Lightstone bank

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and brokerage accounts of almost all their funds through misappropriation, Ponzi-like payments, and
unsuccessful trading.
104. Around that time, Lichtenstein admitted to Taraxa investors in an e-mail dated July
24, 2024, that he falsely inflated investor earnings in April and May of 2024.
105. Nonetheless, Lichtenstein claimed in oral conversations with some investors that their
principal remained intact. This was false because Taraxa and Lightstone had virtually no assets by July
2024.
106. In his July 24, 2024 e-mail to investors, Lichtenstein also committed to convening an
oversight board consisting “of two current investors who ha[d] a background in and understanding
of  market  trading”  in  order  to  ensure  future  transparency  and  propriety  of  Taraxa  and  Lightstone
investments.
107. Although Lichtenstein formed the oversight board, he never gave its members access
to the Taraxa and Lightstone brokerage accounts.
108. When several investors attempted   to redeem their investments during July and August
2024, Lichtenstein was unable to meet the redemption requests.
109. Ultimately, in  or  around  September  2024,  in a  phone  call  between  Lichtenstein and
Investor A, Lichtenstein admitted that the Taraxa dashboards were fabricated, that the investments
he  did  make  suffered  “[a]  little  bit  over  a  million”  in  losses,  and  that  he  used  the  remainder  of  the
money “to cover his lifestyle” expenses and the Ponzi-like payments made to investors.
FIRST CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)

110. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1
through 109.
111. By engaging in the conduct described above, Lichtenstein, directly or indirectly, in the
offer  or  sale  of  securities  and  by  the  use  of  the  means  or  instruments  of  transportation  or

17

communication in interstate commerce or the mails, (i) knowingly or recklessly has employed one or
more devices, schemes or artifices to defraud, (ii) knowingly, recklessly, or negligently has obtained
money or property by means of one or more untrue statements of a material fact or omissions of a
material  fact  necessary  in  order  to  make  the  statements  made,  in  light  of  the  circumstances  under
which they were made, not misleading, and/or (iii) knowingly, recklessly, or negligently has engaged
in one or more transactions, practices, or courses of business which operated or would operate as a
fraud or deceit upon the purchaser.
112. By  reason  of  the  foregoing,  Lichtenstein,  directly  or  indirectly,  has  violated—and
unless enjoined Lichtenstein will again violate—Securities Act Section 17(a) [15 U.S.C. § 77q(a)].
SECOND CLAIM FOR RELIEF
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder

113. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1
through 109.
114. By  engaging  in  the  conduct  described  above,  Lichtenstein,  directly  or  indirectly,  in
connection  with  the  purchase  or  sale  of  securities  and  by  the  use  of  means  or  instrumentalities  of
interstate  commerce,  or  the  mails,  or  the  facilities  of  a  national  securities  exchange,  knowingly  or
recklessly  has  (i)  employed  one  or  more  devices,  schemes,  or  artifices  to  defraud,  (ii)  made  one  or
more untrue statements of a material fact or omitted to state one or more material facts necessary in
order to make the statements made, in light of the circumstances under which they were made, not
misleading, and/or (iii) engaged in one or more acts, practices, or courses of business which operated
or would operate as a fraud or deceit upon other persons.
115. By  reason  of  the  foregoing,  Lichtenstein,  directly  or  indirectly,  has  violated—and
unless enjoined Lichtenstein will again violate—Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and
Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

18

THIRD CLAIM FOR RELIEF
Violations of Advisers Act Sections 206(1) and (2)

116. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1
through 31, 43 through 83, and 95 through 109.
117. At  all  relevant  times,  Lichtenstein  was  an  investment  adviser,  under  Advisers  Act
Section 202(11) [15 U.S.C. § 80b-2(11)].
118. By engaging in the conduct described above, Lichtenstein, directly or indirectly, by the
use  of  means  or  instrumentalities  of  interstate  commerce  or  the  mails,  (i)  knowingly  or  recklessly
employed one or more devices, schemes, or artifices to defraud any client or prospective client, and/or
(ii) knowingly, recklessly, or negligently engaged in one or more transactions, practices, and courses
of business which operated or would operate as a fraud or deceit upon any client or prospective client.
119. By  reason  of  the  foregoing,  Lichtenstein,  directly  or  indirectly,  has  violated—and
unless enjoined Lichtenstein will again violate—Advisers  Act  Sections 206(1) and (2) [15 U.S.C. §§
80b-6(1) and 80b-6(2)].
FOURTH CLAIM FOR RELIEF
Violations of Advisers Act Section 206(4) and Rule 206(4)-8 Thereunder

120. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1
through 31, 43 through 83, and 95 through 109.
121. At  all  relevant  times,  Lichtenstein  was  an  investment  adviser,  under  Advisers  Act
Section 202(11) [15 U.S.C. § 80b-2(11)], to a pooled investment vehicle, as defined in Rule 206(4)-8(b)
[17 C.F.R. § 275.206(4)-8(b)].
122. By  engaging  in  the  conduct  described  above,  Lichtenstein knowingly,  recklessly,  or
negligently (i) made one or more untrue statements of a material fact or omitted to state one or more
material  facts  necessary  in  order  to  make  the  statements  made,  in  light  of  the  circumstances  under
which  they  were  made,  not  misleading,  to  any  investor  or  prospective  investor  in  the  pooled

19

investment vehicle, and/or (ii) engaged in one or more acts, practices, or courses of business that were
fraudulent,  deceptive,  or  manipulative,  with  respect  to  any  investor  or  prospective  investor  in  the
pooled investment vehicle.
123. By  reason  of  the  foregoing,  Lichtenstein,  directly  or  indirectly,  has  violated—and
unless enjoined Lichtenstein will again violate—Advisers Act Sections 206(4) [15 U.S.C. §§ 80b-6(4)]
and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-8(a)(2)].
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that this Court enter a Final Judgment:
I.
Permanently  restraining  and  enjoining  Lichtenstein  and  his  agents,  servants,  employees  and
attorneys and all persons in active concert or participation with any of them from violating, directly
or indirectly, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange
Act  [15  U.S.C.  §  78j(b)]  and  Rule  10b-5  thereunder  [17  C.F.R.  §  240.10b-5],  and  Sections  206(1),
206(2), and 206(4) of the Advisers Act [15 U.S.C. §§ 80b-6(1), 80(b)-6(2), 80b-6(4)] and Rule 206(4)-
8 thereunder [17 C.F.R. § 275.206(4)-8];
II.
Ordering Lichtenstein  to  disgorge  all  ill-gotten  gains  he  received  directly  or  indirectly,  with
prejudgment interest thereon, as a result of the alleged violations pursuant to Exchange Act Sections
21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)];
III.
Ordering Lichtenstein  to  pay  civil  monetary  penalties  pursuant  to  Section  20(d)  of  the
Securities Act [15 U.S.C. § 77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)], and
Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9];

20

IV.
Permanently restraining and enjoining Lichtenstein from directly or indirectly, including, but
not limited to, through any entity owned or controlled by him, participating in the issuance, purchase,
offer,  or  sale  of  any  security;  provided,  however,  that  such  injunction  shall  not  prevent  him  from
purchasing or selling securities for his own personal accounts.
V.
Permanently restraining  and  enjoining Lichtenstein  from  directly  or  indirectly,  acting  as  or
being associated with any investment adviser.
VII.
Granting any other and further relief this Court may deem just and proper.
Dated: New York, New York
October 22, 2025

/s/ Peter A. Mancuso
Thomas P. Smith, Jr.
Celeste Chase
Peter A. Mancuso
Securities and Exchange Commission
New York Regional Office
100 Pearl Street, Suite 20-100
New York, NY 10004-2616
(212) 336-5562 (Mancuso)
Email: [email protected]

Attorneys for Plaintiff

Thomas P. Smith, Jr. 
Celeste Chase 
Peter A. Mancuso 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street  
Suite 20-100 
New York, NY 10004-2616 
(212) 336-5562 (Mancuso) 
[email protected] 
 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
 

SECURITIES AND EXCHANGE 
COMMISSION, 

                                             Plaintiff, 

 

                        -against- 

 

SOLOMON LICHTENSTEIN,    

                                             Defendant. 

 

 

COMPLAINT 

   

25 Civ. 8742 (       ) 

 

JURY TRIAL DEMANDED 

  

           

          

 

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

Defendant Solomon Lichtenstein (“Defendant” or “Lichtenstein”), alleges as follows: 

SUMMARY 

1. Lichtenstein orchestrated a fraudulent investment scheme by misrepresenting how he 

would use investors’ funds, by falsely reporting their investment returns, and by misappropriating their 

investments for personal purposes. 

2. From approximately July 2022 through August 2024 (the “Relevant Period”), 

Lichtenstein raised at least $2.7 million from over 25 investors—many of whom were Lichtenstein’s 

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family members, neighbors, and friends—through two entities: Taraxa Capital Fund, LP (“Taraxa” or 

the “Fund”), a pooled investment vehicle, and Lightstone Trading Inc. (“Lightstone”).   

3. Lichtenstein, as investment adviser to the Fund, held out Taraxa as a hedge fund that 

invested in securities using a day-trading strategy that he claimed he had profited from personally. 

Similarly, Lichtenstein represented that money from Lightstone investors would be invested using the 

same trading strategy; however, instead of being subject to market risk, Lightstone investors were to 

receive a fixed interest payment of 5% per month, which was intended to be generated from 

Lichtenstein’s trading returns.  

4. Rather than invest all of the money he raised from Taraxa and Lightstone investors as 

promised, Lichtenstein misappropriated investor funds to pay for personal expenses, as well as to 

make Ponzi-like payments to satisfy redemption requests and interest obligations owed to other 

investors. Lichtenstein spent hundreds of thousands of dollars of investor funds on credit card 

payments, mortgage payments, bars, restaurants, travel, and cash withdrawals. To pay these personal 

expenses, Lichtenstein misappropriated approximately $868,000 from Taraxa and approximately 

$98,000 from Lightstone. 

5. To the extent that Lichtenstein invested a portion of investors’ money as promised, 

the overall rate of return on the trading was negative. In total, Lichtenstein’s trades on behalf of Taraxa 

and Lightstone investors resulted in net losses of approximately $200,000. Rather than disclosing these 

losses to investors, Lichtenstein fabricated positive returns through online dashboards for Taraxa 

investors that falsely reported significant growth in the value of their investments. 

6. In and around the summer of 2024, Lichtenstein’s scheme collapsed when he ran out 

of investor money and admitted to several investors that he had used investor funds to pay his personal 

expenses. As a result of Lichtenstein’s scheme, investors lost in the aggregate more than $1.5 million. 

  

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VIOLATIONS 

7. By virtue of the foregoing conduct and as alleged further herein, Defendant violated 

Section 17(a) of the Securities Act of 1933 (“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 thereunder [17 

C.F.R. § 240.10b-5], and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 

(“Advisers Act”) [15 U.S.C. §§ 80b-6(1), 80b-6(2), 80b-6(4)] and Rule 206(4)-8 thereunder [17 C.F.R. 

§ 275.206(4)-8]. 

8. Unless Lichtenstein is restrained and enjoined, he will engage in the acts, practices, 

transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, and 

courses of business of similar type and object. 

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

9. The SEC brings this action pursuant to the authority conferred upon it by Securities 

Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)], Exchange Act Section 21(d) [15 U.S.C. 

§ 78u(d)], and Advisers Act Sections 209(d) and 209(e) [15 U.S.C. §§ 80b-9(d) and 80b-9(e)]. 

10. The SEC seeks a final judgment: (a) permanently enjoining Lichtenstein from engaging 

in the acts, practices, and courses of business alleged against him herein and from violating the federal 

securities laws and rules this Complaint alleges he has violated; (b) permanently enjoining Lichtenstein 

from directly or indirectly, including but not limited to, through any entity owned or controlled by 

him, participating in the issuance, purchase, offer, or sale of any security; provided, however, that such 

injunction shall not prevent him from purchasing or selling securities for his own personal accounts; 

(c) permanently restraining and enjoining Lichtenstein from directly or indirectly, acting as or being 

associated with any investment adviser; (d) ordering Lichtenstein to disgorge all ill-gotten gains he 

received as a result of the violations alleged herein and to pay prejudgment interest thereon pursuant 

to Exchange Act Sections 21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) & 

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78u(d)(7)]; (e) ordering Lichtenstein to pay civil money penalties pursuant to Securities Act Section 

20(d) [15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)], and Advisers Act 

Section 209(e) [15 U.S.C. § 80b-9(e)]; and (f) ordering any other and further relief the Court may deem 

just and proper. 

JURISDICTION AND VENUE 

11. This Court has jurisdiction over this action pursuant to Securities Act Section 22(a) 

[15 U.S.C. § 77v(a)], Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 

U.S.C. § 80b-14]. 

12. Defendant, directly and indirectly, has made use of the means or instrumentalities of 

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

of business alleged herein. 

13. Venue is proper in the Southern District of New York pursuant to Securities Act 

Section 22(a) [15 U.S.C. § 77v(a)], Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act 

Section 214 [15 U.S.C. § 80b-14]. Lichtenstein resided in Stony Point, New York, in Rockland County, 

during the Relevant Period. In addition, Lichtenstein transacted business in the Southern District of 

New York, and certain of the acts, practices, transactions, and courses of business alleged in this 

Complaint occurred within this District, including that Lichtenstein’s operations were primarily 

located in Rockland County, New York and several Taraxa investors resided in Rockland County, 

New York.  

DEFENDANT 

14. Lichtenstein, age 29, was a resident of Stony Point, New York throughout the 

Relevant Period but currently resides in Fort Lee, New Jersey. Lichtenstein is the founder and fund 

manager of Taraxa. He is also the manager of Taraxa Capital Group, LLC (“Taraxa Capital”), which 

serves as the general partner of Taraxa, as well as the founder and owner of Lightstone. 

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RELEVANT ENTITIES 

15. Taraxa is a Delaware limited partnership formed on November 9, 2022 with a 

principal place of business in Stony Point, New York. Taraxa was created to operate as a private 

investment partnership in which the Fund’s investors would become limited partners.  

16. Lightstone is a New York corporation formed on July 6, 2022 with a principal place 

of business in Stony Point, New York. Lichtenstein, through Lightstone, offered and sold notes to 

investors, the terms of which were set forth in documents nominally entitled “loan agreements.”   

FACTS 

I. Background on the Relevant Offerings 

17. In or around December 2022, after purportedly finding success trading securities for 

himself and a close friend, Lichtenstein left his job as a medical biller and began soliciting investments 

in Taraxa and Lightstone from family members, friends, and neighbors in his tight-knit religious 

community. 

A. Taraxa 

18. Lichtenstein, as Taraxa’s fund manager, provided prospective investors in Taraxa with 

a Confidential Private Placement Memorandum (“PPM”) and Limited Partnership Agreement (the 

“LPA”), both dated December 2022. Lichtenstein signed the LPA on behalf of Taraxa Capital as 

General Partner to the Fund, and signed the subscription agreement appended to the PPM. 

19. Under the PPM and the LPA, Lichtenstein was “primarily responsible for the 

management” of Taraxa and solely vested with the authority for managing Taraxa’s assets and making 

investment decisions for the Fund. 

20. The PPM trumpeted Lichtenstein’s qualifications as having purportedly spent “years 

honing his skills in multifaceted trading strategies using market analysis and risk mitigation.”  

21. The PPM and LPA also described Lichtenstein’s day-trading strategy and stated that 

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the objective of the Fund was “investing in [s]ecurities.” 

22. Additionally, the PPM stated that Taraxa’s “investment program is focused primarily 

on trading options and futures on indexes and exchange-traded funds (“ETFs”) [and] aims for small, 

consistent returns using high-conviction trades that can capitalize on market volatility.”  

23. The PPM further stated that Taraxa’s trades will typically “consist of selling options 

on a variety of ETFs on the major US exchanges using 0-date expiration contracts, trading only 

intraday based on market direction and daily analysis.” 

24. Under the LPA, Lichtenstein, through Taraxa Capital, was entitled to receive 

compensation in the form of a monthly management fee of 2% per year and an annual “Performance 

Allocation” of 20% on investor returns over 25%, and 40% on investor returns over 100%.  

25. In addition to the PPM’s and LPA’s descriptions of the Fund’s objectives and 

strategies, Lichtenstein made oral representations to Taraxa investors as to how he would use their 

money. 

26. For instance, Investor A (a resident of Rockland County, New York) invested $40,000 

in Taraxa in May 2023. Before this investment, Lichtenstein represented to Investor A that money 

invested in Taraxa would be pooled together in a fund and invested in securities.   

27. Before Investor B invested $45,000 in Taraxa in December 2022, Lichtenstein 

represented to Investor B that money invested in Taraxa would be used for trading options and highly 

leveraged futures, but that he only invested certain portions of the money over short periods of time 

to reduce the risk of large losses.  

28. Before Investor C invested approximately $100,000 in Taraxa in March 2023, 

Lichtenstein represented to Investor C that money invested in Taraxa would be used for strategic day-

trading, that he would never leave money in the market overnight, and that investments would be 

limited to a certain percentage of the Fund’s assets to minimize the risk of loss.  

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29. During the Relevant Period, Lichtenstein raised over $2.4 million from over 20 

investors in Taraxa. 

30. Most investors transmitted their investments by wire transfer to bank accounts held 

by Taraxa, in which their money was pooled with money from other Taraxa investors for the putative 

purpose of generating returns through Lichtenstein’s trading on behalf of the Fund.  

31. In return for their investments, Taraxa investors received limited partnership interests 

in the Fund. 

B. Lightstone 

32. As an alternative or additional way to invest, Lichtenstein offered investors the 

opportunity to purchase notes issued by Lightstone (“Lightstone Notes” or “Notes”). 

33. For each Lightstone investor, the terms of the Note were set forth in a document 

called a “Loan Agreement,” pursuant to which the investor agreed to “loan” money to Lightstone in 

exchange for Lightstone’s promise to repay the principal amount and interest at the fixed rate of 5% 

per month. 

34. Lichtenstein signed these agreements on behalf of Lightstone. 

35. Lichtenstein represented to prospective investors that the money invested in 

Lightstone would, as with Taraxa, be used for trading in securities. 

36. Lichtenstein represented to Lightstone investors that they would receive a fixed 5% 

monthly interest payment. 

37. Lichtenstein was entitled to keep any trading returns in excess of the 5% monthly 

payment owed to Lightstone’s noteholders. 

38. Lightstone investors understood based on Lichtenstein’s representations that the 

promised interest payments would be funded with Lightstone’s trading returns. 

39. Investors purchased the Lightstone Notes expecting to earn profits in the form of 

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such interest payments. 

40. Investors also had the option “not to collect the interest on any given month” and 

instead let it accrue to be calculated as part of the principal amount of their investment for the 

following month.  

41. During the Relevant Period, Lichtenstein raised over $300,000 through the sale of 

Lightstone Notes to at least 10 investors, including several individuals who also invested in Taraxa.  

42. Most investors transmitted their investments by wire transfer to bank accounts held 

by Lightstone.  

II. Lichtenstein’s Scheme to Defraud 

A. Lichtenstein Misrepresented How He Would Use Money from Taraxa Investors 

43. Contrary to the representations in the PPM and Lichtenstein’s other communications 

with Taraxa investors that he would use their money to trade securities, Lichtenstein used the majority 

of the funds he raised for Taraxa for other purposes. 

44. Of the over $2.4 million Lichtenstein raised for Taraxa, he transferred a mere $592,000 

from Taraxa bank accounts to the brokerage account he used for trading securities—less than a quarter 

of the funds raised. 

45. Rather than investing the remainder of the Taraxa funds raised in accordance with the 

PPM and his representations to investors, Lichtenstein misappropriated approximately $868,000 of 

Fund assets for personal use and used at least approximately $900,000 to make Ponzi-like payments 

to fulfill investor redemption requests. 

46. These amounts far exceeded the management and performance fees that Lichtenstein 

would have been entitled to under the LPA. 

47. Lichtenstein continued to use the PPM to solicit investors even after he had begun 

misappropriating Fund assets. 

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48. Frequently, Lichtenstein misappropriated Fund assets within days of soliciting a new 

investment in the Fund.  

49. For example, on or around May 25, 2023, Investor A invested $40,000 in the Fund by 

wiring funds to a bank account held by Taraxa. By May 29, 2023, Lichtenstein began transferring that 

money to a personal bank account held in his name and spending it on department store purchases, 

restaurants and hotels. Lichtenstein also transferred a portion of Investor A’s funds to a bank account 

held by Lightstone and used that money to make Ponzi-like payments to Lightstone investors.  

50. In addition, on or around September 28, 2023, Investor D invested $10,000 in the 

Fund by wiring funds to a bank account held by Taraxa. On October 2, 2023, Lichtenstein transferred 

the majority of Investor D’s money to a Lightstone bank account and used that money to make Ponzi-

like payments to Lightstone investors.   

51. On or around June 28, 2024, Investor E invested $40,000 in the Fund by wiring funds 

to a bank account held by Taraxa. On the same day, Lichtenstein transferred the entirety of Investor 

E’s money to a personal bank account held in his name. Over the following two weeks, Lichtenstein 

used Investor E’s money to make cash withdrawals, purchases at stores and restaurants, and Ponzi-

like payments to other Taraxa investors.  

52. Lichtenstein’s misrepresentations regarding the use of investor funds were important 

to investors’ decisions to invest in Taraxa.  

B. Lichtenstein Misrepresented Taraxa’s Performance  

53. Taraxa’s trades performed poorly. For 11 out of 16 months that Lichtenstein actually 

engaged in trading securities during the Relevant Period, Lichtenstein failed to generate profits on his 

trades.  

54. Even though Lichtenstein did generate profits on his trades during some months, the 

losses he sustained during the losing months far exceeded these gains.  

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55. Indeed, after May 2023, the historical trading return for the Fund (since inception) was 

always negative. 

56. In the aggregate, Lichtenstein incurred net losses of approximately $200,000 by trading 

securities in Taraxa’s brokerage account.   

57. By May of 2024, Taraxa’s brokerage account had a balance of less than $100 due to 

Lichtenstein’s unsuccessful trading, withdrawals he made to pay for his personal expenses, and 

disbursements he used to make Ponzi-like payments to investors.   

58. Throughout the Relevant Period, Lichtenstein concealed Taraxa’s trading losses from 

investors. 

59. Lichtenstein repeatedly misrepresented the Fund’s performance through oral 

statements to investors and other deceptive acts, including the creation of online dashboards that 

provided investors with information about the supposed performance of their investment in the Fund. 

60. Lichtenstein controlled the content of these dashboards. 

61. For each investor, the dashboards displayed the total amount the investor invested in 

the Fund, the purported value of that investment, the annualized return percentage, and a graph to 

show the value of the investment over time. 

62. These dashboards were accessible to investors online during the Relevant Period and 

were updated on a monthly basis. 

63. Lichtenstein used these false dashboards to corroborate his oral misrepresentations to 

Taraxa investors that the Fund had positive returns and that the value of their investment in the Fund 

had increased. 

64. Below are illustrative examples of how Lichtenstein misrepresented the performance 

of the Fund to Taraxa investors. 

 

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i. Investor A 

65. On or around May 25, 2023, Investor A invested $40,000 in the Fund.  

66. Throughout the Relevant Period, in repeated conversations, Lichtenstein led investor 

A to believe that his investment was growing in value. 

67. In addition, at the end of 2023, Lichtenstein provided Investor A with a false tax 

document purporting to show that his $40,000 investment had grown to over $100,000. 

68. Lichtenstein caused Investor A’s dashboard to reflect that, over time, his investment 

had grown in value.  

69. These representations regarding the value of Investor A’s investment were false and 

misleading because—in addition to the depletion of Fund assets as a result of Lichtenstein’s 

misappropriation—the Fund’s trading performance was not profitable during the time period 

following Investor A’s investment in Taraxa.   

70. Lichtenstein’s misrepresentations as to the Fund’s performance were an important 

factor in Investor A’s decision to invest an additional $45,000 into the Fund on or around January 26, 

2024. 

71. As of August 2024, Investor A’s dashboard reflected historical investment growth 

throughout the Relevant Period:                    

 

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72. The dashboard’s depiction of Investor A’s investment performance was false and 

misleading because, as Lichtenstein knew or recklessly disregarded by virtue of conducting the relevant 

trades, controlling Taraxa’s bank and brokerage accounts, and misappropriating Fund assets, Investor 

A’s interest in the Fund was worthless by May 2024. 

ii. Investor E 

73. In or around December 2023, Investor E invested at least $37,000 in the Fund.  

74. Throughout the Relevant Period, Lichtenstein led Investor E to believe that his 

investment was growing in value. 

75. At the end of 2023, Lichtenstein provided Investor E with a false tax document 

purporting to show that his initial investment had grown by over $20,000. 

76. Lichtenstein also caused Investor E’s online dashboard to reflect that, over time, his 

investment had grown in value.  

77. These representations regarding the value of Investor E’s investment were false and 

misleading because—in addition to the depletion of Fund assets as a result of Lichtenstein’s 

misappropriation—the Fund’s trading performance was not profitable during the time period 

following Investor E’s investment in Taraxa.   

78. As of August 2024, Investor E’s dashboard reflected historical investment growth 

throughout the Relevant Period:       

 

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79. The dashboard’s depiction of Investor E’s investment was false and misleading 

because, as Lichtenstein knew or recklessly disregarded by virtue of conducting the relevant trades, 

controlling Taraxa’s bank and brokerage accounts, and misappropriating Fund assets, Investor E’s 

interest in the Fund was worthless by May 2024. 

iii. Investor F 

80. In or around May 2023, Investor F used $150,000 of his retirement savings to invest 

in the Fund.   

81. Throughout the Relevant Period, Lichtenstein consistently advised Investor F that his 

investment was “doing great” and used the dashboard he created for Investor F to support his claim 

of positive returns. 

82. Indeed, Lichtenstein caused Investor F’s dashboard to reflect that his investment had 

grown at a 409% rate of return in a little over a year from the time of his May 2023 investment.  

83. These representations regarding the value of Investor F’s investment were false and 

misleading because, as Lichtenstein knew or recklessly disregarded by virtue of conducting the relevant 

trades, controlling Taraxa’s bank and brokerage accounts, and misappropriating Fund assets, the 

Fund’s trading was not profitable during the time period following Investor F’s investment in Taraxa, 

and Investor F’s interest in the Fund was worthless by May 2024. 

C. Lichtenstein Misrepresented How He Would Use Lightstone Investors’ Money 

84. Similar to his conduct with respect to Taraxa, Lichtenstein orally represented to 

Lightstone investors that he would invest their money in securities using a day trading strategy that he 

claimed to have profited from personally. 

85. These representations regarding Lichtenstein’s use of investors’ funds were important 

to their decisions to purchase Lightstone Notes.  

86. Contrary to Lichtenstein’s representations, throughout the Relevant Period 

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Lichtenstein invested at most $10,000 out of the over $300,000 he raised through Lightstone. 

87. Meanwhile, Lichtenstein used approximately $98,000 of Lightstone investor funds for 

his personal expenses and at least $200,000 for Ponzi-like payments that gave the false appearance 

that Lightstone was generating sufficient trading revenue to fulfill its interest obligations under the 

Notes. 

88. For example, on or around March 1, 2023, Investor F purchased $30,000 of Lightstone 

Notes by transferring funds to a Lightstone bank account.  

89. Within one week of this deposit Lichtenstein used $25,000 of Investor F’s money to 

make a Ponzi-like payment to a different Lightstone investor. 

90. In addition, on or around August 24, 2023, Investor G purchased $25,000 of 

Lightstone Notes by wiring her investment to a Lightstone bank account.  

91. Within two weeks of this deposit, Lichtenstein misappropriated nearly all of Investor 

G’s $25,000 investment by transferring over $14,000 to Lichtenstein’s personal bank accounts and 

using over $10,000 of Investor G’s money to make Ponzi-like payments to two other Lightstone 

investors. 

92. On or around September 22, 2023, Investor H purchased $25,000 of Lightstone Notes 

by wiring her investment to a Lightstone bank account.  

93. By just one week later, Lichtenstein had withdrawn $22,000 of Investor H’s money 

out of the Lightstone bank account and deposited it into his personal accounts.  

94. Lichtenstein’s Ponzi-like payments gave investors confidence in the legitimacy of 

Lightstone and in some cases caused them to increase their investments. 

III. Lichtenstein Misappropriated Investor Money to Fund his Lifestyle  

95. Out of the approximately $2.7 million that Lichtenstein raised from investors in Taraxa 

and Lightstone, he misappropriated over $966,000 for personal use. 

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96. Lichtenstein began misappropriating money from Taraxa and from Lightstone 

investors by at latest May 2023. 

97. Throughout the Relevant Period, Lichtenstein regularly transferred investor funds 

from Taraxa and Lightstone bank accounts to his personal bank accounts and made direct debits from 

the Taraxa and Lightstone accounts to pay for personal expenses.  

98. For example, on or around May 25, 2023, Investor A invested $40,000 in the Fund, 

which was deposited in a Taraxa bank account, but within 12 days Lichtenstein had used 

approximately $13,000 of that money to pay for personal expenses and to make transfers to his 

personal bank account.   

99. On or around December 29, 2023, Investor E invested at least $37,000 in the Fund, 

which was deposited in a Taraxa bank account, but within a week Lichtenstein had transferred $17,000 

of it to his personal bank account.   

100. On or around May 31, 2024, Investor G purchased $11,000 in Lightstone Notes, which 

was deposited in a Lightstone bank account, but on the same day Lichtenstein misappropriated the 

majority of Investor G’s money by transferring it to his personal bank accounts.   

101. In total, during the Relevant Period, Lichtenstein used funds from Taraxa and 

Lightstone investors to pay approximately $315,000 in credit card purchases; $99,000 in mortgage 

payments; $63,000 in expenditures at bars, restaurants, and lounges; and $21,000 in travel expenses. 

Lichtenstein also withdrew approximately $150,000 in cash from Taraxa and Lightstone accounts. 

102. Even after Lichtenstein began misappropriating money from the Taraxa and 

Lightstone bank accounts, he continued to solicit investors by falsely and misleadingly representing to 

them that their money would be used to invest and trade in securities.  

IV. Lichtenstein Admitted to His Fraudulent Conduct After His Scheme Collapsed 

103. By in or around July 2024, Lichtenstein had drained the Taraxa and Lightstone bank 

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and brokerage accounts of almost all their funds through misappropriation, Ponzi-like payments, and 

unsuccessful trading.   

104. Around that time, Lichtenstein admitted to Taraxa investors in an e-mail dated July 

24, 2024, that he falsely inflated investor earnings in April and May of 2024. 

105. Nonetheless, Lichtenstein claimed in oral conversations with some investors that their 

principal remained intact. This was false because Taraxa and Lightstone had virtually no assets by July 

2024. 

106. In his July 24, 2024 e-mail to investors, Lichtenstein also committed to convening an 

oversight board consisting “of two current investors who ha[d] a background in and understanding 

of market trading” in order to ensure future transparency and propriety of Taraxa and Lightstone 

investments. 

107. Although Lichtenstein formed the oversight board, he never gave its members access 

to the Taraxa and Lightstone brokerage accounts.  

108. When several investors attempted to redeem their investments during July and August 

2024, Lichtenstein was unable to meet the redemption requests.  

109. Ultimately, in or around September 2024, in a phone call between Lichtenstein and 

Investor A, Lichtenstein admitted that the Taraxa dashboards were fabricated, that the investments 

he did make suffered “[a] little bit over a million” in losses, and that he used the remainder of the 

money “to cover his lifestyle” expenses and the Ponzi-like payments made to investors. 

FIRST CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a) 

 
110. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1 

through 109. 

111. By engaging in the conduct described above, Lichtenstein, directly or indirectly, in the 

offer or sale of securities and by the use of the means or instruments of transportation or 

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communication in interstate commerce or the mails, (i) knowingly or recklessly has employed one or 

more devices, schemes or artifices to defraud, (ii) knowingly, recklessly, or negligently has obtained 

money or property by means of one or more untrue statements of a material fact or omissions of a 

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

which they were made, not misleading, and/or (iii) knowingly, recklessly, or negligently has engaged 

in one or more transactions, practices, or courses of business which operated or would operate as a 

fraud or deceit upon the purchaser. 

112. By reason of the foregoing, Lichtenstein, directly or indirectly, has violated—and 

unless enjoined Lichtenstein will again violate—Securities Act Section 17(a) [15 U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF 
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder 

 
113. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1 

through 109. 

114. By engaging in the conduct described above, Lichtenstein, directly or indirectly, in 

connection with the purchase or sale of securities and by the use of means or instrumentalities of 

interstate commerce, or the mails, or the facilities of a national securities exchange, knowingly or 

recklessly has (i) employed one or more devices, schemes, or artifices to defraud, (ii) made one or 

more untrue statements of a material fact or omitted to state one or more material facts necessary in 

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

misleading, and/or (iii) engaged in one or more acts, practices, or courses of business which operated 

or would operate as a fraud or deceit upon other persons. 

115. By reason of the foregoing, Lichtenstein, directly or indirectly, has violated—and 

unless enjoined Lichtenstein will again violate—Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and 

Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

 

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THIRD CLAIM FOR RELIEF 
Violations of Advisers Act Sections 206(1) and (2) 

 
116. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1 

through 31, 43 through 83, and 95 through 109. 

117. At all relevant times, Lichtenstein was an investment adviser, under Advisers Act 

Section 202(11) [15 U.S.C. § 80b-2(11)].  

118. By engaging in the conduct described above, Lichtenstein, directly or indirectly, by the 

use of means or instrumentalities of interstate commerce or the mails, (i) knowingly or recklessly 

employed one or more devices, schemes, or artifices to defraud any client or prospective client, and/or 

(ii) knowingly, recklessly, or negligently engaged in one or more transactions, practices, and courses 

of business which operated or would operate as a fraud or deceit upon any client or prospective client. 

119. By reason of the foregoing, Lichtenstein, directly or indirectly, has violated—and 

unless enjoined Lichtenstein will again violate—Advisers Act Sections 206(1) and (2) [15 U.S.C. §§ 

80b-6(1) and 80b-6(2)].  

FOURTH CLAIM FOR RELIEF 
Violations of Advisers Act Section 206(4) and Rule 206(4)-8 Thereunder 

 
120. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1 

through 31, 43 through 83, and 95 through 109. 

121. At all relevant times, Lichtenstein was an investment adviser, under Advisers Act 

Section 202(11) [15 U.S.C. § 80b-2(11)], to a pooled investment vehicle, as defined in Rule 206(4)-8(b) 

[17 C.F.R. § 275.206(4)-8(b)].  

122. By engaging in the conduct described above, Lichtenstein knowingly, recklessly, or 

negligently (i) made one or more untrue statements of a material fact or omitted to state one or more 

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

which they were made, not misleading, to any investor or prospective investor in the pooled 

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investment vehicle, and/or (ii) engaged in one or more acts, practices, or courses of business that were 

fraudulent, deceptive, or manipulative, with respect to any investor or prospective investor in the 

pooled investment vehicle.   

123. By reason of the foregoing, Lichtenstein, directly or indirectly, has violated—and 

unless enjoined Lichtenstein will again violate—Advisers Act Sections 206(4) [15 U.S.C. §§ 80b-6(4)] 

and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-8(a)(2)]. 

PRAYER FOR RELIEF 

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

I. 

Permanently restraining and enjoining Lichtenstein and his agents, servants, employees and 

attorneys and all persons in active concert or participation with any of them from violating, directly 

or indirectly, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange 

Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Sections 206(1), 

206(2), and 206(4) of the Advisers Act [15 U.S.C. §§ 80b-6(1), 80(b)-6(2), 80b-6(4)] and Rule 206(4)-

8 thereunder [17 C.F.R. § 275.206(4)-8]; 

II. 

Ordering Lichtenstein to disgorge all ill-gotten gains he received directly or indirectly, with 

prejudgment interest thereon, as a result of the alleged violations pursuant to Exchange Act Sections 

21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)]; 

III. 

Ordering Lichtenstein to pay civil monetary penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)], and 

Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9]; 

 

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IV. 

Permanently restraining and enjoining Lichtenstein from directly or indirectly, including, but 

not limited to, through any entity owned or controlled by him, participating in the issuance, purchase, 

offer, or sale of any security; provided, however, that such injunction shall not prevent him from 

purchasing or selling securities for his own personal accounts. 

V. 

Permanently restraining and enjoining Lichtenstein from directly or indirectly, acting as or 

being associated with any investment adviser. 

VII. 

Granting any other and further relief this Court may deem just and proper. 

Dated: New York, New York 
October 22, 2025 

 

/s/ Peter A. Mancuso 
Thomas P. Smith, Jr. 
Celeste Chase 
Peter A. Mancuso 
Securities and Exchange Commission 
New York Regional Office 
100 Pearl Street, Suite 20-100 
New York, NY 10004-2616 
(212) 336-5562 (Mancuso) 
Email: [email protected] 
 
Attorneys for Plaintiff 

 

 

 

 

Case 7:25-cv-08742     Document 1     Filed 10/22/25     Page 20 of 20


	SECURITIES AND EXCHANGE COMMISSION
	New York Regional Office
	100 Pearl Street
	Suite 20-100
	Plaintiff Securities and Exchange Commission (the “SEC”), for its Complaint against Defendant Solomon Lichtenstein (“Defendant” or “Lichtenstein”), alleges as follows:
	SUMMARY
	1. Lichtenstein orchestrated a fraudulent investment scheme by misrepresenting how he would use investors’ funds, by falsely reporting their investment returns, and by misappropriating their investments for personal purposes.
	2. From approximately July 2022 through August 2024 (the “Relevant Period”), Lichtenstein raised at least $2.7 million from over 25 investors—many of whom were Lichtenstein’s family members, neighbors, and friends—through two entities: Taraxa Capital ...
	3. Lichtenstein, as investment adviser to the Fund, held out Taraxa as a hedge fund that invested in securities using a day-trading strategy that he claimed he had profited from personally. Similarly, Lichtenstein represented that money from Lightston...
	4. Rather than invest all of the money he raised from Taraxa and Lightstone investors as promised, Lichtenstein misappropriated investor funds to pay for personal expenses, as well as to make Ponzi-like payments to satisfy redemption requests and inte...
	5. To the extent that Lichtenstein invested a portion of investors’ money as promised, the overall rate of return on the trading was negative. In total, Lichtenstein’s trades on behalf of Taraxa and Lightstone investors resulted in net losses of appro...
	6. In and around the summer of 2024, Lichtenstein’s scheme collapsed when he ran out of investor money and admitted to several investors that he had used investor funds to pay his personal expenses. As a result of Lichtenstein’s scheme, investors lost...
	VIOLATIONS
	8. Unless Lichtenstein is restrained and enjoined, he will engage in the acts, practices, transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, and courses of business of similar type and object.
	NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
	9. The SEC brings this action pursuant to the authority conferred upon it by Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b) and 77t(d)], Exchange Act Section 21(d) [15 U.S.C. § 78u(d)], and Advisers Act Sections 209(d) and 209(e) [15 U.S...
	10. The SEC seeks a final judgment: (a) permanently enjoining Lichtenstein from engaging in the acts, practices, and courses of business alleged against him herein and from violating the federal securities laws and rules this Complaint alleges he has ...
	JURISDICTION AND VENUE
	11. This Court has jurisdiction over this action pursuant to Securities Act Section 22(a) [15 U.S.C. § 77v(a)], Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 U.S.C. § 80b-14].
	12. Defendant, directly and indirectly, has made use of the means or instrumentalities of interstate commerce or of the mails in connection with the transactions, acts, practices, and courses of business alleged herein.
	13. Venue is proper in the Southern District of New York pursuant to Securities Act Section 22(a) [15 U.S.C. § 77v(a)], Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 U.S.C. § 80b-14]. Lichtenstein resided in Stony Point,...
	DEFENDANT
	14. Lichtenstein, age 29, was a resident of Stony Point, New York throughout the Relevant Period but currently resides in Fort Lee, New Jersey. Lichtenstein is the founder and fund manager of Taraxa. He is also the manager of Taraxa Capital Group, LLC...
	RELEVANT ENTITIES
	15. Taraxa is a Delaware limited partnership formed on November 9, 2022 with a principal place of business in Stony Point, New York. Taraxa was created to operate as a private investment partnership in which the Fund’s investors would become limited p...
	16. Lightstone is a New York corporation formed on July 6, 2022 with a principal place of business in Stony Point, New York. Lichtenstein, through Lightstone, offered and sold notes to investors, the terms of which were set forth in documents nominall...
	FACTS
	I. Background on the Relevant Offerings
	17. In or around December 2022, after purportedly finding success trading securities for himself and a close friend, Lichtenstein left his job as a medical biller and began soliciting investments in Taraxa and Lightstone from family members, friends, ...
	A. Taraxa
	18. Lichtenstein, as Taraxa’s fund manager, provided prospective investors in Taraxa with a Confidential Private Placement Memorandum (“PPM”) and Limited Partnership Agreement (the “LPA”), both dated December 2022. Lichtenstein signed the LPA on behal...
	19. Under the PPM and the LPA, Lichtenstein was “primarily responsible for the management” of Taraxa and solely vested with the authority for managing Taraxa’s assets and making investment decisions for the Fund.
	20. The PPM trumpeted Lichtenstein’s qualifications as having purportedly spent “years honing his skills in multifaceted trading strategies using market analysis and risk mitigation.”
	21. The PPM and LPA also described Lichtenstein’s day-trading strategy and stated that the objective of the Fund was “investing in [s]ecurities.”
	22. Additionally, the PPM stated that Taraxa’s “investment program is focused primarily on trading options and futures on indexes and exchange-traded funds (“ETFs”) [and] aims for small, consistent returns using high-conviction trades that can capital...
	23. The PPM further stated that Taraxa’s trades will typically “consist of selling options on a variety of ETFs on the major US exchanges using 0-date expiration contracts, trading only intraday based on market direction and daily analysis.”
	24. Under the LPA, Lichtenstein, through Taraxa Capital, was entitled to receive compensation in the form of a monthly management fee of 2% per year and an annual “Performance Allocation” of 20% on investor returns over 25%, and 40% on investor return...
	25. In addition to the PPM’s and LPA’s descriptions of the Fund’s objectives and strategies, Lichtenstein made oral representations to Taraxa investors as to how he would use their money.
	26. For instance, Investor A (a resident of Rockland County, New York) invested $40,000 in Taraxa in May 2023. Before this investment, Lichtenstein represented to Investor A that money invested in Taraxa would be pooled together in a fund and invested...
	27. Before Investor B invested $45,000 in Taraxa in December 2022, Lichtenstein represented to Investor B that money invested in Taraxa would be used for trading options and highly leveraged futures, but that he only invested certain portions of the m...
	28. Before Investor C invested approximately $100,000 in Taraxa in March 2023, Lichtenstein represented to Investor C that money invested in Taraxa would be used for strategic day-trading, that he would never leave money in the market overnight, and t...
	29. During the Relevant Period, Lichtenstein raised over $2.4 million from over 20 investors in Taraxa.
	30. Most investors transmitted their investments by wire transfer to bank accounts held by Taraxa, in which their money was pooled with money from other Taraxa investors for the putative purpose of generating returns through Lichtenstein’s trading on ...
	31. In return for their investments, Taraxa investors received limited partnership interests in the Fund.
	B. Lightstone
	32. As an alternative or additional way to invest, Lichtenstein offered investors the opportunity to purchase notes issued by Lightstone (“Lightstone Notes” or “Notes”).
	33. For each Lightstone investor, the terms of the Note were set forth in a document called a “Loan Agreement,” pursuant to which the investor agreed to “loan” money to Lightstone in exchange for Lightstone’s promise to repay the principal amount and ...
	34. Lichtenstein signed these agreements on behalf of Lightstone.
	35. Lichtenstein represented to prospective investors that the money invested in Lightstone would, as with Taraxa, be used for trading in securities.
	36. Lichtenstein represented to Lightstone investors that they would receive a fixed 5% monthly interest payment.
	37. Lichtenstein was entitled to keep any trading returns in excess of the 5% monthly payment owed to Lightstone’s noteholders.
	38. Lightstone investors understood based on Lichtenstein’s representations that the promised interest payments would be funded with Lightstone’s trading returns.
	39. Investors purchased the Lightstone Notes expecting to earn profits in the form of such interest payments.
	40. Investors also had the option “not to collect the interest on any given month” and instead let it accrue to be calculated as part of the principal amount of their investment for the following month.
	41. During the Relevant Period, Lichtenstein raised over $300,000 through the sale of Lightstone Notes to at least 10 investors, including several individuals who also invested in Taraxa.
	42. Most investors transmitted their investments by wire transfer to bank accounts held by Lightstone.
	II. Lichtenstein’s Scheme to Defraud
	A. Lichtenstein Misrepresented How He Would Use Money from Taraxa Investors
	43. Contrary to the representations in the PPM and Lichtenstein’s other communications with Taraxa investors that he would use their money to trade securities, Lichtenstein used the majority of the funds he raised for Taraxa for other purposes.
	44. Of the over $2.4 million Lichtenstein raised for Taraxa, he transferred a mere $592,000 from Taraxa bank accounts to the brokerage account he used for trading securities—less than a quarter of the funds raised.
	45. Rather than investing the remainder of the Taraxa funds raised in accordance with the PPM and his representations to investors, Lichtenstein misappropriated approximately $868,000 of Fund assets for personal use and used at least approximately $90...
	46. These amounts far exceeded the management and performance fees that Lichtenstein would have been entitled to under the LPA.
	47. Lichtenstein continued to use the PPM to solicit investors even after he had begun misappropriating Fund assets.
	48. Frequently, Lichtenstein misappropriated Fund assets within days of soliciting a new investment in the Fund.
	49. For example, on or around May 25, 2023, Investor A invested $40,000 in the Fund by wiring funds to a bank account held by Taraxa. By May 29, 2023, Lichtenstein began transferring that money to a personal bank account held in his name and spending ...
	50. In addition, on or around September 28, 2023, Investor D invested $10,000 in the Fund by wiring funds to a bank account held by Taraxa. On October 2, 2023, Lichtenstein transferred the majority of Investor D’s money to a Lightstone bank account an...
	51. On or around June 28, 2024, Investor E invested $40,000 in the Fund by wiring funds to a bank account held by Taraxa. On the same day, Lichtenstein transferred the entirety of Investor E’s money to a personal bank account held in his name. Over th...
	52. Lichtenstein’s misrepresentations regarding the use of investor funds were important to investors’ decisions to invest in Taraxa.
	B. Lichtenstein Misrepresented Taraxa’s Performance
	53. Taraxa’s trades performed poorly. For 11 out of 16 months that Lichtenstein actually engaged in trading securities during the Relevant Period, Lichtenstein failed to generate profits on his trades.
	54. Even though Lichtenstein did generate profits on his trades during some months, the losses he sustained during the losing months far exceeded these gains.
	55. Indeed, after May 2023, the historical trading return for the Fund (since inception) was always negative.
	56. In the aggregate, Lichtenstein incurred net losses of approximately $200,000 by trading securities in Taraxa’s brokerage account.
	57. By May of 2024, Taraxa’s brokerage account had a balance of less than $100 due to Lichtenstein’s unsuccessful trading, withdrawals he made to pay for his personal expenses, and disbursements he used to make Ponzi-like payments to investors.
	58. Throughout the Relevant Period, Lichtenstein concealed Taraxa’s trading losses from investors.
	59. Lichtenstein repeatedly misrepresented the Fund’s performance through oral statements to investors and other deceptive acts, including the creation of online dashboards that provided investors with information about the supposed performance of the...
	60. Lichtenstein controlled the content of these dashboards.
	61. For each investor, the dashboards displayed the total amount the investor invested in the Fund, the purported value of that investment, the annualized return percentage, and a graph to show the value of the investment over time.
	62. These dashboards were accessible to investors online during the Relevant Period and were updated on a monthly basis.
	63. Lichtenstein used these false dashboards to corroborate his oral misrepresentations to Taraxa investors that the Fund had positive returns and that the value of their investment in the Fund had increased.
	64. Below are illustrative examples of how Lichtenstein misrepresented the performance of the Fund to Taraxa investors.
	i.  Investor A
	65. On or around May 25, 2023, Investor A invested $40,000 in the Fund.
	66. Throughout the Relevant Period, in repeated conversations, Lichtenstein led investor A to believe that his investment was growing in value.
	67. In addition, at the end of 2023, Lichtenstein provided Investor A with a false tax document purporting to show that his $40,000 investment had grown to over $100,000.
	68. Lichtenstein caused Investor A’s dashboard to reflect that, over time, his investment had grown in value.
	69. These representations regarding the value of Investor A’s investment were false and misleading because—in addition to the depletion of Fund assets as a result of Lichtenstein’s misappropriation—the Fund’s trading performance was not profitable dur...
	70. Lichtenstein’s misrepresentations as to the Fund’s performance were an important factor in Investor A’s decision to invest an additional $45,000 into the Fund on or around January 26, 2024.
	71. As of August 2024, Investor A’s dashboard reflected historical investment growth throughout the Relevant Period:
	72. The dashboard’s depiction of Investor A’s investment performance was false and misleading because, as Lichtenstein knew or recklessly disregarded by virtue of conducting the relevant trades, controlling Taraxa’s bank and brokerage accounts, and mi...
	ii.  Investor E
	73. In or around December 2023, Investor E invested at least $37,000 in the Fund.
	74. Throughout the Relevant Period, Lichtenstein led Investor E to believe that his investment was growing in value.
	75. At the end of 2023, Lichtenstein provided Investor E with a false tax document purporting to show that his initial investment had grown by over $20,000.
	76. Lichtenstein also caused Investor E’s online dashboard to reflect that, over time, his investment had grown in value.
	77. These representations regarding the value of Investor E’s investment were false and misleading because—in addition to the depletion of Fund assets as a result of Lichtenstein’s misappropriation—the Fund’s trading performance was not profitable dur...
	78. As of August 2024, Investor E’s dashboard reflected historical investment growth throughout the Relevant Period:
	79. The dashboard’s depiction of Investor E’s investment was false and misleading because, as Lichtenstein knew or recklessly disregarded by virtue of conducting the relevant trades, controlling Taraxa’s bank and brokerage accounts, and misappropriati...
	iii.  Investor F
	80. In or around May 2023, Investor F used $150,000 of his retirement savings to invest in the Fund.
	81. Throughout the Relevant Period, Lichtenstein consistently advised Investor F that his investment was “doing great” and used the dashboard he created for Investor F to support his claim of positive returns.
	82. Indeed, Lichtenstein caused Investor F’s dashboard to reflect that his investment had grown at a 409% rate of return in a little over a year from the time of his May 2023 investment.
	83. These representations regarding the value of Investor F’s investment were false and misleading because, as Lichtenstein knew or recklessly disregarded by virtue of conducting the relevant trades, controlling Taraxa’s bank and brokerage accounts, a...
	C. Lichtenstein Misrepresented How He Would Use Lightstone Investors’ Money
	84. Similar to his conduct with respect to Taraxa, Lichtenstein orally represented to Lightstone investors that he would invest their money in securities using a day trading strategy that he claimed to have profited from personally.
	85. These representations regarding Lichtenstein’s use of investors’ funds were important to their decisions to purchase Lightstone Notes.
	86. Contrary to Lichtenstein’s representations, throughout the Relevant Period Lichtenstein invested at most $10,000 out of the over $300,000 he raised through Lightstone.
	87. Meanwhile, Lichtenstein used approximately $98,000 of Lightstone investor funds for his personal expenses and at least $200,000 for Ponzi-like payments that gave the false appearance that Lightstone was generating sufficient trading revenue to ful...
	88. For example, on or around March 1, 2023, Investor F purchased $30,000 of Lightstone Notes by transferring funds to a Lightstone bank account.
	89. Within one week of this deposit Lichtenstein used $25,000 of Investor F’s money to make a Ponzi-like payment to a different Lightstone investor.
	90. In addition, on or around August 24, 2023, Investor G purchased $25,000 of Lightstone Notes by wiring her investment to a Lightstone bank account.
	91. Within two weeks of this deposit, Lichtenstein misappropriated nearly all of Investor G’s $25,000 investment by transferring over $14,000 to Lichtenstein’s personal bank accounts and using over $10,000 of Investor G’s money to make Ponzi-like paym...
	92. On or around September 22, 2023, Investor H purchased $25,000 of Lightstone Notes by wiring her investment to a Lightstone bank account.
	93. By just one week later, Lichtenstein had withdrawn $22,000 of Investor H’s money out of the Lightstone bank account and deposited it into his personal accounts.
	94. Lichtenstein’s Ponzi-like payments gave investors confidence in the legitimacy of Lightstone and in some cases caused them to increase their investments.
	III. Lichtenstein Misappropriated Investor Money to Fund his Lifestyle
	95. Out of the approximately $2.7 million that Lichtenstein raised from investors in Taraxa and Lightstone, he misappropriated over $966,000 for personal use.
	96. Lichtenstein began misappropriating money from Taraxa and from Lightstone investors by at latest May 2023.
	97. Throughout the Relevant Period, Lichtenstein regularly transferred investor funds from Taraxa and Lightstone bank accounts to his personal bank accounts and made direct debits from the Taraxa and Lightstone accounts to pay for personal expenses.
	98. For example, on or around May 25, 2023, Investor A invested $40,000 in the Fund, which was deposited in a Taraxa bank account, but within 12 days Lichtenstein had used approximately $13,000 of that money to pay for personal expenses and to make tr...
	99. On or around December 29, 2023, Investor E invested at least $37,000 in the Fund, which was deposited in a Taraxa bank account, but within a week Lichtenstein had transferred $17,000 of it to his personal bank account.
	100. On or around May 31, 2024, Investor G purchased $11,000 in Lightstone Notes, which was deposited in a Lightstone bank account, but on the same day Lichtenstein misappropriated the majority of Investor G’s money by transferring it to his personal ...
	101. In total, during the Relevant Period, Lichtenstein used funds from Taraxa and Lightstone investors to pay approximately $315,000 in credit card purchases; $99,000 in mortgage payments; $63,000 in expenditures at bars, restaurants, and lounges; an...
	102. Even after Lichtenstein began misappropriating money from the Taraxa and Lightstone bank accounts, he continued to solicit investors by falsely and misleadingly representing to them that their money would be used to invest and trade in securities.
	IV. Lichtenstein Admitted to His Fraudulent Conduct After His Scheme Collapsed
	103. By in or around July 2024, Lichtenstein had drained the Taraxa and Lightstone bank and brokerage accounts of almost all their funds through misappropriation, Ponzi-like payments, and unsuccessful trading.
	104. Around that time, Lichtenstein admitted to Taraxa investors in an e-mail dated July 24, 2024, that he falsely inflated investor earnings in April and May of 2024.
	105. Nonetheless, Lichtenstein claimed in oral conversations with some investors that their principal remained intact. This was false because Taraxa and Lightstone had virtually no assets by July 2024.
	106. In his July 24, 2024 e-mail to investors, Lichtenstein also committed to convening an oversight board consisting “of two current investors who ha[d] a background in and understanding of market trading” in order to ensure future transparency and p...
	107. Although Lichtenstein formed the oversight board, he never gave its members access to the Taraxa and Lightstone brokerage accounts.
	108. When several investors attempted to redeem their investments during July and August 2024, Lichtenstein was unable to meet the redemption requests.
	109. Ultimately, in or around September 2024, in a phone call between Lichtenstein and Investor A, Lichtenstein admitted that the Taraxa dashboards were fabricated, that the investments he did make suffered “[a] little bit over a million” in losses, a...
	FIRST CLAIM FOR RELIEF
	Violations of Securities Act Section 17(a)
	110. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1 through 109.
	111. By engaging in the conduct described above, Lichtenstein, directly or indirectly, in the offer or sale of securities and by the use of the means or instruments of transportation or communication in interstate commerce or the mails, (i) knowingly ...
	112. By reason of the foregoing, Lichtenstein, directly or indirectly, has violated—and unless enjoined Lichtenstein will again violate—Securities Act Section 17(a) [15 U.S.C. § 77q(a)].
	SECOND CLAIM FOR RELIEF
	Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder
	113. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1 through 109.
	114. By engaging in the conduct described above, Lichtenstein, directly or indirectly, in connection with the purchase or sale of securities and by the use of means or instrumentalities of interstate commerce, or the mails, or the facilities of a nati...
	115. By reason of the foregoing, Lichtenstein, directly or indirectly, has violated—and unless enjoined Lichtenstein will again violate—Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
	THIRD CLAIM FOR RELIEF
	Violations of Advisers Act Sections 206(1) and (2)
	116. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1 through 31, 43 through 83, and 95 through 109.
	118. By engaging in the conduct described above, Lichtenstein, directly or indirectly, by the use of means or instrumentalities of interstate commerce or the mails, (i) knowingly or recklessly employed one or more devices, schemes, or artifices to def...
	119. By reason of the foregoing, Lichtenstein, directly or indirectly, has violated—and unless enjoined Lichtenstein will again violate—Advisers Act Sections 206(1) and (2) [15 U.S.C. §§ 80b-6(1) and 80b-6(2)].
	FOURTH CLAIM FOR RELIEF
	Violations of Advisers Act Section 206(4) and Rule 206(4)-8 Thereunder
	120. The SEC re-alleges and incorporates by reference here the allegations in paragraphs 1 through 31, 43 through 83, and 95 through 109.
	122. By engaging in the conduct described above, Lichtenstein knowingly, recklessly, or negligently (i) made one or more untrue statements of a material fact or omitted to state one or more material facts necessary in order to make the statements made...
	123. By reason of the foregoing, Lichtenstein, directly or indirectly, has violated—and unless enjoined Lichtenstein will again violate—Advisers Act Sections 206(4) [15 U.S.C. §§ 80b-6(4)] and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-8(a...
	PRAYER FOR RELIEF
	WHEREFORE, the SEC respectfully requests that this Court enter a Final Judgment:
	I.
	Permanently restraining and enjoining Lichtenstein and his agents, servants, employees and attorneys and all persons in active concert or participation with any of them from violating, directly or indirectly, Section 17(a) of the Securities Act [15 U....
	II.
	Ordering Lichtenstein to disgorge all ill-gotten gains he received directly or indirectly, with prejudgment interest thereon, as a result of the alleged violations pursuant to Exchange Act Sections 21(d)(3), 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(...
	III.
	IV.
	V.
	VII.
	Granting any other and further relief this Court may deem just and proper.
	Dated: New York, New York
	October 22, 2025
	/s/ Peter A. Mancuso
	Thomas P. Smith, Jr.
	Celeste Chase
	Peter A. Mancuso
	Securities and Exchange Commission
	New York Regional Office
	100 Pearl Street, Suite 20-100
	New York, NY 10004-2616
	(212) 336-5562 (Mancuso)
	Email: [email protected]
	Attorneys for Plaintiff