SEC v. JOSEPH GEROMINI

Scott A. Thompson
Jennifer C. Barry
Michael S. Macko
Oreste P. McClung
SECURITIES AND EXCHANGE COMMISSION
Philadelphia Regional Office
1617 JFK Blvd., Suite 520
Philadelphia, PA 19103
Telephone:  (215) 597-3100
[email protected]

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

SECURITIES AND EXCHANGE
COMMISSION,

       Civil Action No. 21-________
                                               Plaintiff,
       Complaint for Violations of
                                      v.

JOSEPH GEROMINI,

                                               Defendant.
      the Federal Securities Laws

      Jury Trial Demanded

COMPLAINT
Plaintiff Securities and Exchange Commission (the “SEC”), One Penn Center, 1617 JFK
Boulevard, Suite 520, Philadelphia, Pennsylvania 19103, alleges as follows against the following
defendant, whose name and last known address are set forth below:
Joseph Geromini
209 Arlington Avenue
Linwood, NJ 08221

SUMMARY
1. Defendant Joseph Geromini (“Geromini” or “Defendant”) defrauded investors
and misappropriated investors’ proceeds while employed at Group K Diagnostics, Inc. (“Group
K”), an early-stage medical devices company. Between August 2018 and May 2019, Geromini
lied and stole more than $200,000 from Group K investors and used the funds for personal

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expenses, including a car, cosmetic surgery, a vacation, and other entertainment.
2. Geromini misappropriated the Group K investors’ money predominantly by
wiring funds to a bank account he controlled in the District of New Jersey; making unauthorized
ATM cash withdrawals; issuing company checks for cash; and charging personal expenses to
Group K debit and credit cards.
3. While he was misappropriating Group K’s investor proceeds, Geromini
disseminated false and misleading securities offering documents and financial models to existing
and prospective Group K investors that failed to account for his ongoing theft.
4. In connection with his misappropriation, Geromini also made materially false and
misleading statements about Group K’s use of proceeds and cash “burn rate” during
communications with investors. These false and misleading statements induced certain investors
to participate, or increase their participation, in Group K’s offering of common stock.
5. Geromini even told investors—falsely—that “every penny” of their money would
be used in a meaningful, productive manner, when the opposite was true.
6. By engaging in the conduct described in this Complaint, Defendant Geromini
violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)] and
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].
JURISDICTION AND VENUE
7. The SEC brings this action pursuant to Sections 20(b) and 20(d) of the Securities
Act [15 U.S.C. §§ 77t(b) and 77t(d)] and Section 21(d) of the Exchange Act [15 U.S.C.
§ 78u(d)], to enjoin such acts, transactions, practices, and courses of business, and to obtain

3

disgorgement, civil monetary penalties, and such other and further relief as the Court may deem
just and appropriate.
8. This Court has jurisdiction over this action pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)] and Sections 21(d), 21(e), and 27 of the Exchange Act [15
U.S.C. §§ 78u(d), 78u(e), and 78aa].
9. Venue is proper in the District of New Jersey pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
Defendant Geromini resides and conducts business within the District of New Jersey. In
addition, certain of the acts, transactions, practices, and courses of business constituting the
violations of the federal securities laws charged herein occurred within the District of New
Jersey.
10. In connection with the conduct alleged in this Complaint, Geromini, directly or
indirectly, made use of the means or instruments of transportation or communication in, or
instrumentalities of, interstate commerce, or the mails, or the facilities of a national securities
exchange.
DEFENDANT
11. Joseph Geromini, age 54, is a resident of Linwood, New Jersey, and was a
resident of New Jersey at all times relevant to the facts alleged herein. In July 2018, Geromini,
through Xanitos Marketing, LLC (“Xanitos Marketing”), acted as a consultant to Group K. From
August 2018 until his termination in May 2019, Geromini served as Group K’s Chief Operating
Officer.

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OTHER RELEVANT ENTITIES
12. Xanitos Marketing was a New Jersey limited liability company with its principal
place of business in Linwood, New Jersey. At all times relevant to the facts alleged herein,
Geromini solely owned Xanitos Marketing and served as its managing member.
13. Group K is a Delaware corporation with its principal place of business in
Philadelphia, Pennsylvania. Group K develops tests and other diagnostics related to metabolic
functions.
FACTS
I. Geromini Served as Group K’s Chief Operating Officer
14. Founded as a start-up in 2017, Group K is a small company that is developing
point-of-care liver tests and other diagnostics related to metabolic functions. From 2018 through
at least May 2019, Group K had no revenue, and relied solely on investor proceeds to fund its
operations.
15. Group K initially contracted with Geromini to provide consulting services, and
later hired him as an employee to serve as the company’s Chief Operating Officer.
16. By an agreement effective July 2, 2018, Group K retained Joseph Geromini to
provide consulting services through his company, Xanitos Marketing. Pursuant to the agreement,
Group K paid $15,960 to Xanitos Marketing in exchange for Geromini’s consulting services.
17. By an agreement effective August 3, 2018, Group K hired Geromini as Chief
Operating Officer. The employment agreement terminated the compensation provisions of the
July 2018 consulting agreement, and provided for the payment to Geromini of a base salary in
the amount of $200,000, with the possibility of performance bonuses based on achievement of
goals expressly defined in the employment agreement.

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II. Geromini Communicated with Investors about Group K’s Offerings of Notes and
Common Stock

18. While he was Chief Operating Officer of Group K, Geromini regularly
communicated with prospective investors in Group K’s securities offerings through email
correspondence, phone calls, and in-person meetings.
19. In one such securities offering, in August 2018, Group K raised over $400,000
through the offer and sale of convertible promissory notes (the “Notes”), which were convertible
into Group K common stock.
20. Geromini provided prospective investors with an offering document for Group
K’s Notes and communicated with them regarding the terms of the offering and Group K’s
business. He also furnished wiring instructions and coordinated the logistics of receiving investor
funds and subscription materials.
21. In a second securities offering, in October 2018, Group K raised nearly $2 million
through the offer and sale of Group K common stock (the “Common Stock”).
22. Geromini reviewed and approved offering documents for the Common Stock, and
he communicated with Group K investors about the offering.
23. On some occasions, Geromini emailed Common Stock subscription agreement
packages to prospective investors. On other occasions, he prepared or reviewed slide decks,
financial models, and other materials that were disseminated to prospective investors along with
the Common Stock offering documents.
24. Group K’s Notices of Exempt Offering of Securities on Form D dated September
5, 2018 and November 29, 2018, which were filed with the SEC, identified Geromini as a
promoter of both the Notes and Common Stock offerings.

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III. Geromini Misrepresented the Use of Offering Proceeds to Group K’s Investors

25. During the course of his scheme, Geromini made a variety of material
misrepresentations and omissions to several investors and prospective investors—including, but
not limited to, two of Group K’s largest investors—which induced certain investors to
participate, or increase their participation in, Group K’s Common Stock offering, and to
recommend to others that they consider investing in Group K.
26. Geromini concealed from all investors that he planned to and did use some of
their money for his own benefit.
27. Orally, and in writing, Geromini deceived investors and prospective investors by
representing that money raised in the Notes and Common Stock offerings—about $2.4 million,
in total—would be used to implement Group K’s business plan.
28. For example, from at least August 2018 through October 2018, Geromini
prepared or reviewed slide decks, financial models, and other materials that were disseminated to
prospective investors along with the Common Stock offering documents.
29. These materials were false and misleading, because they failed to account for
Geromini’s ongoing theft of investor proceeds, described more fully below.
30. At about the same time, in October 2018, Geromini also emailed subscription
agreement packages to prospective investors in Group K’s offer of Common Stock. The
packages informed investors that Group K was seeking to raise up to $2.5 million needed to
further fund its substantial expenses related to “product development, marketing, and
operations.”
31. None of the information distributed to prospective investors in the slide decks,
financial models, subscription agreement, or other materials accounted for Geromini’s ongoing

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misappropriation of investor proceeds and its impact on the company’s finances.
32. Furthermore, Geromini made materially false and misleading statements about
Group K’s cash “burn rate”—the rate at which cash raised from investors remained available to
subsidize the company’s operating costs—during communications with investors and
prospective investors in the Common Stock offering.
33. Group K’s cash burn rate was important to investors given the company’s status
as a pre-revenue startup whose only source of cash was from investors. The faster the company
“burned” through its cash, the more investor capital it would need to sustain operations, which
would in turn dilute existing shareholders.
34. According to his cash burn model disseminated to investors, Geromini projected
that Group K’s Notes and Common Stock offerings would enable the company to pay for various
budgeted operating costs for the next two years, without disclosing that he had been—and would
continue to be—using investor funds for his own personal expenses. Because of this, Geromini
knew, or was reckless in not knowing, that the burn rate was false.
35. Further, the cash burn model falsely assumed that Group K would incur costs of
only $15,600 a month to pay Geromini, failing to take into account the higher amounts that he
paid himself from Group K investor funds.
36. Geromini made an additional false statement to investors in a press release.
Specifically, he authorized the issuance of a November 5, 2018 press release quoting him as
stating, with respect to the Common Stock offering: “The operations efficiencies our team has
been able to achieve will ensure that every penny of this funding will be used in a meaningful,
productive manner that helps to bring our technology closer to fruition” (emphasis added).

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37. After the Notes and Common Stock offerings, Geromini continued to
misrepresent the cash burn rate and failed to account for his personal use of investor proceeds in
communications with Group K investors, including, but not limited to, a 2019 conference call
with investors concerning Group K’s operational and financial developments.
IV. Geromini Misappropriated Investor Proceeds to Pay His Personal Expenses
38. Between August 21, 2018 and May 31, 2019, Geromini misappropriated over
$200,000 from money invested in Group K, while at the same time receiving a salary for his
services.
39. Geromini began laying the foundation for his scheme leading up to the Notes
offering.
40. Soon after he became Chief Operating Officer, Geromini convinced Group K’s
Chief Executive Officer to move Group K’s banking relationship to a different institution. After
the transition of the banking relationship, Geromini exercised control over Group K’s primary
operating bank account, which included his ability to initiate wire transfers.
41. On numerous occasions, under false pretenses, such as by claiming wire transfers
were for the payment of salary or bonuses, Geromini initiated or approved wire transfers from
Group K’s bank account to a New Jersey bank account that Geromini controlled in the name of
Xanitos Marketing.
42. Between at least August 21, 2018 and May 2, 2019, Geromini made unauthorized
wire transfers amounting to more than $180,000.
43. In one such unauthorized transfer, on January 14, 2019, Geromini took $40,000
from Group K’s investor proceeds.

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44. Again, on May 2, 2019, Geromini took another $50,000 from Group K’s investor
proceeds through an unauthorized wire transfer.
45. In addition to the unauthorized wire transfers, Geromini used Group K’s debit
card for personal expenses more than a half-dozen times between March 28, 2019 and May 17,
2019, amounting to more than $20,000 in unauthorized charges that were not made for business
purposes.
46. Geromini also made unauthorized cash withdrawals from Group K’s accounts
using ATMs at least five times between October 10, 2018 and April 25, 2019, withdrawing more
than $3,000 in cash from Group K’s investor proceeds.
47. On more than half of these occasions, Geromini immediately deposited the cash
into his personal bank account using the same ATM.
48. Geromini also wrote at least $10,000 in unauthorized checks from Group K’s
bank account to pay for his own personal expenses in December 2018.
V. Geromini Lied to Group K Personnel about His Misappropriation
49. To facilitate his misappropriation, Geromini lied to Group K personnel about the
nature of wire transfers, ATM withdrawals, checks, debit card transactions, and credit card
transactions.
50. For example, for one of the unauthorized payments (of $40,000), Geromini falsely
stated to Group K that he had entered into an agreement with a hospital system whereby the
hospital system would pay Group K for use of the liver function test, purportedly entitling him to
a bonus payment under his employment contract.
51. To support his false assertion, Geromini forged a statement of work, purportedly
countersigned by a principal from a hospital system, and presented it to Group K as a

10

justification. At no point did the principal of the hospital system or the principal’s employer enter
into any such agreement with Group K or Geromini.
52. In another example, Geromini falsely claimed to Group K personnel that he used
a cash withdrawal to purchase lab equipment, when, in fact, he had increased the amount of the
withdrawal to keep the extra cash for himself.
53. In still another example, Geromini falsely represented to Group K personnel that a
certain payment was to a local hospital to establish a clinical trial, when, in reality, the payment
was for his acquaintance’s plastic surgery.
54. Additional, non-exhaustive examples of Geromini’s unauthorized personal
spending with Group K investors’ funds, besides the cash withdrawals, include:
a. Purchasing a Land Rover from a luxury-car dealership;
b. Leasing a summer home for a month in Nantucket;
c. Purchasing Philadelphia 76ers tickets, with suite access and an associated
food and beverage package;
d. Renting a hotel room in Woodlands, Texas, so that he could participate in
the local Ironman competition;
e. Paying the premium on a personal life insurance policy; and
f. Paying a tax relief company to assist him with his unpaid tax issues.
55. Money that Geromini misappropriated from Group K’s bank account came from
proceeds raised from investors in connection with the Notes and Common Stock offerings.
VI. Geromini Violated the Federal Securities Laws
56. The Notes and Common Stock sold to investors by Group K Diagnostics, Inc. are
securities within the meaning of Section 2(a)(1) of the Securities Act [15 U.S.C. § 77b(a)(1)] and

11

Section 3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)], and the fraud and other
misconduct described herein was in the offer of, and/or in connection with the purchase or sale
of securities.
57. All of the misrepresentations and omissions set forth herein, individually and in
the aggregate, are material. A reasonable investor would have considered the misrepresented
facts and omitted information important in deciding whether or not to purchase Group K
securities, and the disclosure of the omitted facts or accurate information would have altered the
“total mix” of information available to investors. In particular, because Group K’s only source of
cash was investor proceeds, Geromini’s misappropriation directly affected the company’s
financial health and rendered the financial information he provided to investors materially
misleading.
58. Geromini used the means or instrumentalities of interstate transportation, or
communication, or of the mails, including, but not limited to, using the internet and interstate
phone calls in communicating with investors and potential investors.
59. In connection with the conduct described herein, Geromini acted knowingly
and/or recklessly. Among other things, Geromini knew or was reckless in not knowing that he
was making material misrepresentations and omitting to state material facts necessary to make
certain statements not misleading under the circumstances in connection with selling or offering
to sell Group K securities to investors. Geromini knew or was reckless in not knowing, for
example, that the financial information he was providing to, and discussing with, investors was
misleading because it did not account of the funds he was misappropriating.
60. Geromini had ultimate authority for false and misleading statements and
omissions made orally and in writing to current and prospective investors.

12

61. Through his material misrepresentations and omissions, Geromini knowingly,
recklessly, or negligently obtained money or property.
62. Geromini used a device, scheme and/or artifice to defraud investors, and engaged
in acts, transactions, practices, or courses of business that operated as a fraud or deceit upon
offerees, purchasers and prospective purchasers of Group K securities.
63. As part of his fraud, Geromini misappropriated for his personal use more than
$200,000 raised from investors.
CLAIMS FOR RELIEF
FIRST CLAIM
Violations of Section 17(a) of the Securities Act
64. The SEC realleges and incorporates by reference each and every allegation in
paragraphs 1 through 61, inclusive, as if they were fully set forth herein.
65. By engaging in the conduct described above, Defendant Geromini, in the offer or
sale of securities, directly or indirectly, by the use of any means or instruments of transportation
or communication in interstate commerce or by use of the mails:
a. knowingly or recklessly employed devices, schemes, or artifices to defraud;
b. knowingly, recklessly, or negligently obtained money or property by means of an
untrue statement of a material fact or an omission 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
c. knowingly, recklessly, or negligently engaged in transactions, practices, or
courses of business which operated or would operate as a fraud or deceit upon the
purchaser.

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66. By engaging in the foregoing conduct, Defendant Geromini violated, and unless
enjoined will continue to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
SECOND CLAIM
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
67. The SEC realleges and incorporates by reference each and every allegation in
paragraphs 1 through 64, inclusive, as if they were fully set forth herein.
68. By engaging in the conduct described above, Defendant Geromini knowingly or
recklessly, in connection with the purchase or sale of securities, directly or indirectly, by the use
of means or instrumentalities of interstate commerce, or the mails, or the facilities of a national
securities exchange:
a. employed devices, schemes, or artifices to defraud;
b. made untrue statements of material fact or omitted to state material facts
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading; and
c. engaged in acts, practices, or courses of business which operated or would operate
as a fraud or deceit upon any person.
69. By engaging in the foregoing conduct, Defendant Geromini violated, and unless
enjoined will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and
Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that this Court enter a final judgment:
I.
Permanently restraining and enjoining Defendant Geromini from, directly or indirectly,
violating Section 17(a) of the Securities Act, 15 U.S.C § 77q(a);

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II.
Permanently restraining and enjoining Defendant Geromini from, directly or indirectly,
violating 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];
III.
Pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] and Section
20(e) of the Securities Act [15 U.S.C. § 77t(e)], prohibiting Defendant Geromini from acting as
an officer or director of any issuer that has a class of securities registered pursuant to Section 12
of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d)
of the Exchange Act [15 U.S.C. § 78o(d)];
IV.
Ordering Defendant Geromini to disgorge all ill-gotten gains derived from the activities
set forth in this Complaint pursuant to Section 21(d)(7) of the Exchange Act [15 U.S.C.
§ 78u(d)(7)], together with prejudgment interest thereon;
V.
Ordering Defendant Geromini to pay a civil penalty pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t] and Section 21(d)(3) of the Exchange Act [15 U.S.C.
§ 78u(d)(3)]; and
VI.
Granting such other and further relief as this Court may deem just, equitable, or necessary
in connection with the enforcement of the federal securities laws.

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JURY DEMAND
Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff demands that this
case be tried to a jury.
Respectfully submitted,

          By:

                                                                        Scott            A.            Thompson
      Jennifer C. Barry
                                                                        Michael            S.            Macko
                                                                        Oreste            P.            McClung

                                                           SECURITIES AND EXCHANGE COMMISSION
                                                           1617 JFK Blvd., Suite 520
                                                        Philadelphia, PA 19103
                                               Telephone:  (215) 597-3100
                                               Facsimile:  (215) 597-2740

                                               ATTORNEYS FOR PLAINTIFF
                                               SECURITIES AND EXCHANGE COMMISSION

Dated:  June 23, 2021

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

SECURITIES AND EXCHANGE
COMMISSION,

 DESIGNATION OF
AGENT FOR SERVICE
                                               Plaintiff,

                                      v.

JOSEPH GEROMINI,

                                               Defendant.

 Pursuant to Local Rule 101.1(f), because the Securities and Exchange Commission (the
“Commission”) does not have an office in this district, the United States Attorney for the District
of New Jersey is hereby designated as eligible as an alternative to the Commission to receive
service of all notices or papers in the captioned action. Therefore, service upon the United States
or its authorized designee, David Dauenheimer, Deputy Chief, Civil Division, United States
Attorney’s Office for the District of New Jersey, 970 Broad Street, 7th Floor, Newark, NJ 07102
shall constitute service upon the Commission for purposes of this action.
Respectfully submitted,

Michael S. Macko

Attorney for Plaintiff
U.S. Securities and Exchange Commission
Philadelphia Regional Office
1617 JFK Boulevard, Suite 520
Philadelphia, PA  19103
Telephone:  (215) 597-3100
Facsimile:  (215) 597-2740
[email protected]
June 23, 2021

Scott A. Thompson 
Jennifer C. Barry 
Michael S. Macko 
Oreste P. McClung 
SECURITIES AND EXCHANGE COMMISSION 
Philadelphia Regional Office 
1617 JFK Blvd., Suite 520 
Philadelphia, PA 19103 
Telephone:  (215) 597-3100 
[email protected] 

 
IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY 
 

  
SECURITIES AND EXCHANGE 
COMMISSION, 

 

       Civil Action No. 21-________ 
                                               Plaintiff,  
       Complaint for Violations of          
                                      v. 
 
JOSEPH GEROMINI, 
 
 
                                               Defendant. 

      the Federal Securities Laws 
       
      Jury Trial Demanded 
 

  
 

COMPLAINT 

Plaintiff Securities and Exchange Commission (the “SEC”), One Penn Center, 1617 JFK 

Boulevard, Suite 520, Philadelphia, Pennsylvania 19103, alleges as follows against the following 

defendant, whose name and last known address are set forth below: 

Joseph Geromini 
209 Arlington Avenue 
Linwood, NJ 08221 

 
SUMMARY 

1. Defendant Joseph Geromini (“Geromini” or “Defendant”) defrauded investors 

and misappropriated investors’ proceeds while employed at Group K Diagnostics, Inc. (“Group 

K”), an early-stage medical devices company. Between August 2018 and May 2019, Geromini 

lied and stole more than $200,000 from Group K investors and used the funds for personal 

Case 1:21-cv-12880   Document 1   Filed 06/23/21   Page 1 of 16 PageID: 1



2 
 

expenses, including a car, cosmetic surgery, a vacation, and other entertainment.  

2. Geromini misappropriated the Group K investors’ money predominantly by 

wiring funds to a bank account he controlled in the District of New Jersey; making unauthorized 

ATM cash withdrawals; issuing company checks for cash; and charging personal expenses to 

Group K debit and credit cards. 

3. While he was misappropriating Group K’s investor proceeds, Geromini 

disseminated false and misleading securities offering documents and financial models to existing 

and prospective Group K investors that failed to account for his ongoing theft.  

4. In connection with his misappropriation, Geromini also made materially false and 

misleading statements about Group K’s use of proceeds and cash “burn rate” during 

communications with investors. These false and misleading statements induced certain investors 

to participate, or increase their participation, in Group K’s offering of common stock. 

5. Geromini even told investors—falsely—that “every penny” of their money would 

be used in a meaningful, productive manner, when the opposite was true. 

6. By engaging in the conduct described in this Complaint, Defendant Geromini 

violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)] and 

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]. 

JURISDICTION AND VENUE 

7. The SEC brings this action pursuant to Sections 20(b) and 20(d) of the Securities 

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

§ 78u(d)], to enjoin such acts, transactions, practices, and courses of business, and to obtain 

Case 1:21-cv-12880   Document 1   Filed 06/23/21   Page 2 of 16 PageID: 2



3 
 

disgorgement, civil monetary penalties, and such other and further relief as the Court may deem 

just and appropriate. 

8. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

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

U.S.C. §§ 78u(d), 78u(e), and 78aa]. 

9. Venue is proper in the District of New Jersey pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. 

Defendant Geromini resides and conducts business within the District of New Jersey. In 

addition, certain of the acts, transactions, practices, and courses of business constituting the 

violations of the federal securities laws charged herein occurred within the District of New 

Jersey. 

10. In connection with the conduct alleged in this Complaint, Geromini, directly or 

indirectly, made use of the means or instruments of transportation or communication in, or 

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

exchange. 

DEFENDANT 

11. Joseph Geromini, age 54, is a resident of Linwood, New Jersey, and was a 

resident of New Jersey at all times relevant to the facts alleged herein. In July 2018, Geromini, 

through Xanitos Marketing, LLC (“Xanitos Marketing”), acted as a consultant to Group K. From 

August 2018 until his termination in May 2019, Geromini served as Group K’s Chief Operating 

Officer. 

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4 
 

OTHER RELEVANT ENTITIES 

12. Xanitos Marketing was a New Jersey limited liability company with its principal 

place of business in Linwood, New Jersey. At all times relevant to the facts alleged herein, 

Geromini solely owned Xanitos Marketing and served as its managing member.  

13. Group K is a Delaware corporation with its principal place of business in 

Philadelphia, Pennsylvania. Group K develops tests and other diagnostics related to metabolic 

functions. 

FACTS 

I. Geromini Served as Group K’s Chief Operating Officer 

14. Founded as a start-up in 2017, Group K is a small company that is developing 

point-of-care liver tests and other diagnostics related to metabolic functions. From 2018 through 

at least May 2019, Group K had no revenue, and relied solely on investor proceeds to fund its 

operations. 

15. Group K initially contracted with Geromini to provide consulting services, and 

later hired him as an employee to serve as the company’s Chief Operating Officer. 

16. By an agreement effective July 2, 2018, Group K retained Joseph Geromini to 

provide consulting services through his company, Xanitos Marketing. Pursuant to the agreement, 

Group K paid $15,960 to Xanitos Marketing in exchange for Geromini’s consulting services. 

17. By an agreement effective August 3, 2018, Group K hired Geromini as Chief 

Operating Officer. The employment agreement terminated the compensation provisions of the 

July 2018 consulting agreement, and provided for the payment to Geromini of a base salary in 

the amount of $200,000, with the possibility of performance bonuses based on achievement of 

goals expressly defined in the employment agreement. 

Case 1:21-cv-12880   Document 1   Filed 06/23/21   Page 4 of 16 PageID: 4



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II. Geromini Communicated with Investors about Group K’s Offerings of Notes and 
Common Stock 

 
18. While he was Chief Operating Officer of Group K, Geromini regularly 

communicated with prospective investors in Group K’s securities offerings through email 

correspondence, phone calls, and in-person meetings. 

19. In one such securities offering, in August 2018, Group K raised over $400,000 

through the offer and sale of convertible promissory notes (the “Notes”), which were convertible 

into Group K common stock.  

20. Geromini provided prospective investors with an offering document for Group 

K’s Notes and communicated with them regarding the terms of the offering and Group K’s 

business. He also furnished wiring instructions and coordinated the logistics of receiving investor 

funds and subscription materials. 

21. In a second securities offering, in October 2018, Group K raised nearly $2 million 

through the offer and sale of Group K common stock (the “Common Stock”). 

22. Geromini reviewed and approved offering documents for the Common Stock, and 

he communicated with Group K investors about the offering.  

23. On some occasions, Geromini emailed Common Stock subscription agreement 

packages to prospective investors. On other occasions, he prepared or reviewed slide decks, 

financial models, and other materials that were disseminated to prospective investors along with 

the Common Stock offering documents.   

24. Group K’s Notices of Exempt Offering of Securities on Form D dated September 

5, 2018 and November 29, 2018, which were filed with the SEC, identified Geromini as a 

promoter of both the Notes and Common Stock offerings. 

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III. Geromini Misrepresented the Use of Offering Proceeds to Group K’s Investors  
  

25. During the course of his scheme, Geromini made a variety of material 

misrepresentations and omissions to several investors and prospective investors—including, but 

not limited to, two of Group K’s largest investors—which induced certain investors to 

participate, or increase their participation in, Group K’s Common Stock offering, and to 

recommend to others that they consider investing in Group K. 

26. Geromini concealed from all investors that he planned to and did use some of 

their money for his own benefit. 

27. Orally, and in writing, Geromini deceived investors and prospective investors by 

representing that money raised in the Notes and Common Stock offerings—about $2.4 million, 

in total—would be used to implement Group K’s business plan. 

28. For example, from at least August 2018 through October 2018, Geromini 

prepared or reviewed slide decks, financial models, and other materials that were disseminated to 

prospective investors along with the Common Stock offering documents.   

29. These materials were false and misleading, because they failed to account for 

Geromini’s ongoing theft of investor proceeds, described more fully below. 

30. At about the same time, in October 2018, Geromini also emailed subscription 

agreement packages to prospective investors in Group K’s offer of Common Stock. The 

packages informed investors that Group K was seeking to raise up to $2.5 million needed to 

further fund its substantial expenses related to “product development, marketing, and 

operations.”  

31. None of the information distributed to prospective investors in the slide decks, 

financial models, subscription agreement, or other materials accounted for Geromini’s ongoing 

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misappropriation of investor proceeds and its impact on the company’s finances. 

32. Furthermore, Geromini made materially false and misleading statements about 

Group K’s cash “burn rate”—the rate at which cash raised from investors remained available to 

subsidize the company’s operating costs—during communications with investors and 

prospective investors in the Common Stock offering.  

33. Group K’s cash burn rate was important to investors given the company’s status 

as a pre-revenue startup whose only source of cash was from investors. The faster the company 

“burned” through its cash, the more investor capital it would need to sustain operations, which 

would in turn dilute existing shareholders. 

34. According to his cash burn model disseminated to investors, Geromini projected 

that Group K’s Notes and Common Stock offerings would enable the company to pay for various 

budgeted operating costs for the next two years, without disclosing that he had been—and would 

continue to be—using investor funds for his own personal expenses. Because of this, Geromini 

knew, or was reckless in not knowing, that the burn rate was false.  

35. Further, the cash burn model falsely assumed that Group K would incur costs of 

only $15,600 a month to pay Geromini, failing to take into account the higher amounts that he 

paid himself from Group K investor funds. 

36. Geromini made an additional false statement to investors in a press release. 

Specifically, he authorized the issuance of a November 5, 2018 press release quoting him as 

stating, with respect to the Common Stock offering: “The operations efficiencies our team has 

been able to achieve will ensure that every penny of this funding will be used in a meaningful, 

productive manner that helps to bring our technology closer to fruition” (emphasis added). 

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37. After the Notes and Common Stock offerings, Geromini continued to 

misrepresent the cash burn rate and failed to account for his personal use of investor proceeds in 

communications with Group K investors, including, but not limited to, a 2019 conference call 

with investors concerning Group K’s operational and financial developments. 

IV. Geromini Misappropriated Investor Proceeds to Pay His Personal Expenses 

38. Between August 21, 2018 and May 31, 2019, Geromini misappropriated over 

$200,000 from money invested in Group K, while at the same time receiving a salary for his 

services. 

39. Geromini began laying the foundation for his scheme leading up to the Notes 

offering.  

40. Soon after he became Chief Operating Officer, Geromini convinced Group K’s 

Chief Executive Officer to move Group K’s banking relationship to a different institution. After 

the transition of the banking relationship, Geromini exercised control over Group K’s primary 

operating bank account, which included his ability to initiate wire transfers.   

41. On numerous occasions, under false pretenses, such as by claiming wire transfers 

were for the payment of salary or bonuses, Geromini initiated or approved wire transfers from 

Group K’s bank account to a New Jersey bank account that Geromini controlled in the name of 

Xanitos Marketing. 

42. Between at least August 21, 2018 and May 2, 2019, Geromini made unauthorized 

wire transfers amounting to more than $180,000.  

43. In one such unauthorized transfer, on January 14, 2019, Geromini took $40,000 

from Group K’s investor proceeds. 

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44. Again, on May 2, 2019, Geromini took another $50,000 from Group K’s investor 

proceeds through an unauthorized wire transfer.  

45. In addition to the unauthorized wire transfers, Geromini used Group K’s debit 

card for personal expenses more than a half-dozen times between March 28, 2019 and May 17, 

2019, amounting to more than $20,000 in unauthorized charges that were not made for business 

purposes. 

46. Geromini also made unauthorized cash withdrawals from Group K’s accounts 

using ATMs at least five times between October 10, 2018 and April 25, 2019, withdrawing more 

than $3,000 in cash from Group K’s investor proceeds.  

47. On more than half of these occasions, Geromini immediately deposited the cash 

into his personal bank account using the same ATM. 

48. Geromini also wrote at least $10,000 in unauthorized checks from Group K’s 

bank account to pay for his own personal expenses in December 2018. 

V. Geromini Lied to Group K Personnel about His Misappropriation 

49. To facilitate his misappropriation, Geromini lied to Group K personnel about the 

nature of wire transfers, ATM withdrawals, checks, debit card transactions, and credit card 

transactions.  

50. For example, for one of the unauthorized payments (of $40,000), Geromini falsely 

stated to Group K that he had entered into an agreement with a hospital system whereby the 

hospital system would pay Group K for use of the liver function test, purportedly entitling him to 

a bonus payment under his employment contract.  

51. To support his false assertion, Geromini forged a statement of work, purportedly 

countersigned by a principal from a hospital system, and presented it to Group K as a 

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justification. At no point did the principal of the hospital system or the principal’s employer enter 

into any such agreement with Group K or Geromini.  

52. In another example, Geromini falsely claimed to Group K personnel that he used 

a cash withdrawal to purchase lab equipment, when, in fact, he had increased the amount of the 

withdrawal to keep the extra cash for himself. 

53. In still another example, Geromini falsely represented to Group K personnel that a 

certain payment was to a local hospital to establish a clinical trial, when, in reality, the payment 

was for his acquaintance’s plastic surgery. 

54. Additional, non-exhaustive examples of Geromini’s unauthorized personal 

spending with Group K investors’ funds, besides the cash withdrawals, include: 

a. Purchasing a Land Rover from a luxury-car dealership; 

b. Leasing a summer home for a month in Nantucket; 

c. Purchasing Philadelphia 76ers tickets, with suite access and an associated 

food and beverage package; 

d. Renting a hotel room in Woodlands, Texas, so that he could participate in 

the local Ironman competition;  

e. Paying the premium on a personal life insurance policy; and 

f. Paying a tax relief company to assist him with his unpaid tax issues. 

55. Money that Geromini misappropriated from Group K’s bank account came from 

proceeds raised from investors in connection with the Notes and Common Stock offerings. 

VI. Geromini Violated the Federal Securities Laws 

56. The Notes and Common Stock sold to investors by Group K Diagnostics, Inc. are 

securities within the meaning of Section 2(a)(1) of the Securities Act [15 U.S.C. § 77b(a)(1)] and 

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Section 3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)], and the fraud and other 

misconduct described herein was in the offer of, and/or in connection with the purchase or sale 

of securities. 

57. All of the misrepresentations and omissions set forth herein, individually and in 

the aggregate, are material. A reasonable investor would have considered the misrepresented 

facts and omitted information important in deciding whether or not to purchase Group K 

securities, and the disclosure of the omitted facts or accurate information would have altered the 

“total mix” of information available to investors. In particular, because Group K’s only source of 

cash was investor proceeds, Geromini’s misappropriation directly affected the company’s 

financial health and rendered the financial information he provided to investors materially 

misleading. 

58. Geromini used the means or instrumentalities of interstate transportation, or 

communication, or of the mails, including, but not limited to, using the internet and interstate 

phone calls in communicating with investors and potential investors. 

59. In connection with the conduct described herein, Geromini acted knowingly 

and/or recklessly. Among other things, Geromini knew or was reckless in not knowing that he 

was making material misrepresentations and omitting to state material facts necessary to make 

certain statements not misleading under the circumstances in connection with selling or offering 

to sell Group K securities to investors. Geromini knew or was reckless in not knowing, for 

example, that the financial information he was providing to, and discussing with, investors was 

misleading because it did not account of the funds he was misappropriating.  

60. Geromini had ultimate authority for false and misleading statements and 

omissions made orally and in writing to current and prospective investors. 

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61. Through his material misrepresentations and omissions, Geromini knowingly, 

recklessly, or negligently obtained money or property. 

62. Geromini used a device, scheme and/or artifice to defraud investors, and engaged 

in acts, transactions, practices, or courses of business that operated as a fraud or deceit upon 

offerees, purchasers and prospective purchasers of Group K securities. 

63. As part of his fraud, Geromini misappropriated for his personal use more than 

$200,000 raised from investors. 

CLAIMS FOR RELIEF 

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

64. The SEC realleges and incorporates by reference each and every allegation in 

paragraphs 1 through 61, inclusive, as if they were fully set forth herein. 

65. By engaging in the conduct described above, Defendant Geromini, in the offer or 

sale of securities, directly or indirectly, by the use of any means or instruments of transportation 

or communication in interstate commerce or by use of the mails: 

a. knowingly or recklessly employed devices, schemes, or artifices to defraud; 

b. knowingly, recklessly, or negligently obtained money or property by means of an 

untrue statement of a material fact or an omission 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 

c. knowingly, recklessly, or negligently engaged in transactions, practices, or 

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

purchaser. 

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66. By engaging in the foregoing conduct, Defendant Geromini violated, and unless 

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

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

67. The SEC realleges and incorporates by reference each and every allegation in 

paragraphs 1 through 64, inclusive, as if they were fully set forth herein. 

68. By engaging in the conduct described above, Defendant Geromini knowingly or 

recklessly, in connection with the purchase or sale of securities, directly or indirectly, by the use 

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

securities exchange: 

a. employed devices, schemes, or artifices to defraud; 

b. made untrue statements of material fact or omitted to state material facts 

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

under which they were made, not misleading; and 

c. engaged in acts, practices, or courses of business which operated or would operate 

as a fraud or deceit upon any person. 

69. By engaging in the foregoing conduct, Defendant Geromini violated, and unless 

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

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

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that this Court enter a final judgment: 

I. 

Permanently restraining and enjoining Defendant Geromini from, directly or indirectly, 

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

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II. 

Permanently restraining and enjoining Defendant Geromini from, directly or indirectly, 

violating 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]; 

III. 

Pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] and Section 

20(e) of the Securities Act [15 U.S.C. § 77t(e)], prohibiting Defendant Geromini from acting as 

an officer or director of any issuer that has a class of securities registered pursuant to Section 12 

of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) 

of the Exchange Act [15 U.S.C. § 78o(d)]; 

IV. 

Ordering Defendant Geromini to disgorge all ill-gotten gains derived from the activities 

set forth in this Complaint pursuant to Section 21(d)(7) of the Exchange Act [15 U.S.C. 

§ 78u(d)(7)], together with prejudgment interest thereon; 

V. 

Ordering Defendant Geromini to pay a civil penalty pursuant to Section 20(d) of the 

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

§ 78u(d)(3)]; and 

VI. 

Granting such other and further relief as this Court may deem just, equitable, or necessary 

in connection with the enforcement of the federal securities laws. 

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JURY DEMAND 

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff demands that this 

case be tried to a jury. 

Respectfully submitted, 
 
              

          By:        
       
      Scott A. Thompson 
      Jennifer C. Barry 
      Michael S. Macko 
      Oreste P. McClung 
 

                                                           SECURITIES AND EXCHANGE COMMISSION 
                                                           1617 JFK Blvd., Suite 520 

                                                        Philadelphia, PA 19103 
                                               Telephone:  (215) 597-3100 
                                               Facsimile:  (215) 597-2740 
 
                                               ATTORNEYS FOR PLAINTIFF 
                                               SECURITIES AND EXCHANGE COMMISSION 
  

 
Dated:  June 23, 2021 
  

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IN THE UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF NEW JERSEY 

 
  
SECURITIES AND EXCHANGE 
COMMISSION, 

 

 DESIGNATION OF 
AGENT FOR SERVICE 

                                               Plaintiff,  
 
                                      v. 
 
JOSEPH GEROMINI, 
 
 
                                               Defendant. 
  

 
 Pursuant to Local Rule 101.1(f), because the Securities and Exchange Commission (the 

“Commission”) does not have an office in this district, the United States Attorney for the District 

of New Jersey is hereby designated as eligible as an alternative to the Commission to receive 

service of all notices or papers in the captioned action. Therefore, service upon the United States 

or its authorized designee, David Dauenheimer, Deputy Chief, Civil Division, United States 

Attorney’s Office for the District of New Jersey, 970 Broad Street, 7th Floor, Newark, NJ 07102 

shall constitute service upon the Commission for purposes of this action.     

Respectfully submitted, 

 

     
Michael S. Macko 
 
Attorney for Plaintiff 
U.S. Securities and Exchange Commission 
Philadelphia Regional Office 
1617 JFK Boulevard, Suite 520 
Philadelphia, PA  19103 
Telephone:  (215) 597-3100 
Facsimile:  (215) 597-2740 
[email protected] 

June 23, 2021 

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