SEC v. ROGER NILS-JONAS KARLSSON

RICHARD R. BEST
REGIONAL DIRECTOR
Sanjay  Wadhwa
Thomas  P. Smith,  Jr.
Charu A. Chandras e khar
Richard  Hong
Karen M. Lee
John C. Le hmann
SECURITIES AND EXCHANGE COMMISSION
Ne w York Re gional Office
B rookfie ld Place
200 Vesey Street, Suite 400
Ne w Yo rk , New York 10281-1022
(212) 336-0956 (Hong)
[email protected]

Mika M. Donlon
SECURITIES AND EXCHANGE COMMISSION
100 F Stre e t, N.E.
Washington, DC 20549
Attorne ys  for Plaintiff

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW  YORK

SECURITIES AND EXCHANGE
COMMISSION,

                                             Plaintiff,

                        -agains t-

ROGER NILS-JONAS KARLSSON (a/k/a
EUCLID DIODORUS, STEVE HEYDEN,
JOSHUA MILLARD, AND LARS
GEORGSSON),

                                             De fe ndant.

COMPLAINT

20 Civ. _____ (       )

JURY TRIAL DEMANDED

P laintiff  Securities  and Exchange Commission (“Commission”),   for  its  Complaint   against
Defendant R oge r   N ils-Jonas  Karlsson (a/k/a Euclid  Diodorus,  Steve Heyden, Joshua  Millard,  and
Lars Georgsson)  (“Karlsson”), a lle ge s   a s  f ollow s :

 2
SUMMARY
1. This  case involves  a massive  global  online  offering  fraud targeting  thousands  of
retail  investors  perpetrated  by Karlsson  through  his  entity  Eastern  Metal  Securities
(“EMS”).   Karlsson,  a  Swedish  national   who  resided  in  Thailand,   enticed  and  defrauded
investors,  including  members of the deaf community,  of millions  of dollars  in the United  States
and around  the world with the fanciful  promise  of astronomical  returns resulting  from nominal
investments  in  securities,  the  offer  or  sale  of  which  neither  Karlsson  nor  EMS  registered  with  the
Commission,   or  which  qualified   for  an  exemption   from  registration.
2. From  on  or  about  November  27,  2012  to  on  or  about  June  19,  2019,  through
EMS’s website,  Karlsson orchestrated a fraudulent  scheme in  which  he  offered  and  sold  an
investment  called  a “Pre Funded  Reversed Pension Plan” (“PFRPP”) that claimed  to  be the
world’s  first online  investment  of such type.  The EMS website boasted  that  its  investment
platform  was  run  by  “Mr. X,”  award-winning  economists,   and other  professionals  from  South
Africa and Switzerland.    The EMS website  promised  a huge “payout”  b ased  on  the  value  of  gold
–   e ntitling  investors who purchased PFRPP to  an enormous  w indf a ll for an initial  $98
investment.   Yet no such pre-funded  pension  plan existed,  and n o  payment  of  promised  returns
or repayment  of  any investors’  investments  has occurred.
3. Karlsson  defrauded  at least 2,200 investors  from at least 49 U.S. states, the
District  of Columbia  and P uerto Rico,  and at least 45 countries.   In the 18-month  period
beginning   from December  2017  through  June  2019 alone,  investors  transmitted  more  than  $3.5
million  to  EMS,  through digital  assets such as B itc oin,  or transferred to other digital  asset
payment  processors  such  as  P erfect Money and  C-Gold.      Karlsson  then misappropriated  at least

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$1.5  million  in  investor  funds  for  his  personal  use, including  investing  in  real estate in  Thailand,
during  a  portion  of  that  period.
VIOLATIONS
4. By virtue  of the foregoing  conduct  and as alleged  further herein, Karlsson
viola te d  Sections  5(a), 5(c), 17(a)(1),  and 17(a)(3) of the Securities  Act of 1933  (Securities Act”)
[15  U.S.C. §§ 77e(a), 77e(c),  77q(a)(1)  and 77q(a)(3)] and Section  10(b) of the Securities
Exchange  Act  of  1934  (“Exchange  Act”)  [15  U.S.C.  § 78j(b)]  and  Rules  10b-5(a)  and  10b-5(c)
thereunder  [17  C.F.R.  § 240.10b-5(a) and (c)].
5. Unless  Karlsson  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
6. The  Commission   brings  this  action  pursuant  to  the  authority   conferred  upon  it  by
Section  20(b) of the Securities  Act [15 U.S.C. § 77t(b)]  and  Section  21(d)  of  the  Exchange  Act
[15  U.S.C. § 78u(d)].
7. The Commission   seeks a final  judgment: (a) permanently  enjoining Karlsson  from
violating  the federal securities laws and rules this  Complaint  alleges he has viola te d;  (b) ordering
Karlsson  to disgorge his  ill-gotten   gains  and  to  pay  prejudgment   interest  thereon;
 (c) ordering
Karlsson  to  pay  civil   money  penalties  pursuant  to  Section  20(d) of the Securities  Act [15 U.S.C
§   77t(d)]  and Section  21(d)(3)  of the Exchange Act [15  U.S.C. § 78u(d)(3)];  and (c) ordering  any
other  and  further  relief  the  Court  may  deem  just  and  proper.
JURISDICTION AND VENUE
8. This  Court  has  jurisdiction   over  this  action pursuant  to  Sections 20(b)  and 20(d)

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of the Securities  Act [15 U.S.C. §§ 77t(b), 77t(d)]  and Section  21(d)  of the Exchange Act [15
U.S.C. § 78u(d)].
9. Karlsson,  directly  and  indirectly,   has   made use of the means or instrumentalit ies
of interstate commerce or of the mails  in connection  with the transactions,  acts, practices, and
courses of business  alleged  herein.
10. Venue lie s   in  this   D is tr ic t  unde r   Section  22(a) of the Securities  Act [15 U.S.C.
§   78v(a)]  and Section  27 of the Exchange Act [15 U.S.C. § 78aa].  Certain of the acts, practices,
transactions,  and  courses  of  business  alleged  in  this  Complaint   occurred  within   the Eastern
District  of New York.  Through  EMS,  Karlsson communicated   with  and received funds from
investors loc a te d  in  this   D is tr ic t.
DEFENDANT
11. Karlsson, age 46,   was born  in Sweden and resided  in Thailand.   During  the
relevant period to this  action,  he claimed  to be a “System  Analysis  Manager” in  his  Thai  work
pe r mit.    Karlsson a ls o  used several aliases, including  Euclid  Diodorus,  Steve Heyden, Joshua
Milla r d  ( “Milla r d” ),  and Lars Georgsson (“Georgsson”),  in  connection  with  EMS.  During  the
relevant  period,   Karlsson  controlle d  EMS and  received  investor  funds  through   EMS.
DEFENDANT’S RELATED ENTITY
12. EMS was an entity  that maintained  an Internet presence through  the website
www.easternmetalsecurities.com.    According  to  its  website,  EMS’s  headquarters  were  based in
Singapore,   with  branch  offices  located  in  Thailand   and  Laos.

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FACTS
A. KARLSSON PARTICIPATED IN THE UNREGISTERED OFFER AND SALE OF
SECURITIES THROUGH THE EM S PFRPP  OFFERING.

Karlsson Launches the EMS PFRPP Offering

13. On or about November 27,  2012,  Karlsson created the EMS website,
www.easternmetalsecurities.com,  and  registered the website under one of his  aliases,  “Steve
Heyden,”  using the email  address “euclid.diodor us@gma il.com.”   Karlsson operated the EMS
website by using  and controlling the euclid.diodor [email protected]  account through  an internet
service provider  in Tha ila nd.
14. The EMS website claimed  that  EMS consisted  of  “a group  of highly  educated and
Award Winning  Economisers  [ s ic ] and Think  Tankers from South  Africa and Switzerland  who
have created an unprecedented reputation  within  many areas of global  economy  and have
represented  Nobel  P rize  winner  [sic] within  the Economic  field  the last 7 years.”  The website
added that “[t]he highly  decorated and successful Dr. Steve K. Heyden” was running  this
investment  group.
15. According  to the EMS website,  EMS  claimed  to  “offer a wide range of single-
country,  regional  and  global  capabilities   across  major  equity,  fixed  income  and  alternative  asset
classes, delivered  through  a diverse set of investment  vehicles.”  The website featured an
investment,  the PFRPP.
16. The EMS website did  not explain  what kind  of  an investment a PFRPP was or
how it    would  generate  a return.  However, investors  were told that an individua l named “Mr. X,”
a lle ge dly  an alias for a high-ranking U.S. Federal Reserve of f ic ia l,  was running  the PFRPP
investment  platform.
17. Karlsson,  through  his  aliases,  Millard  and Georgsson, also  provided investment

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updates  to  intermediaries for EMS,  who  would  thereafter  pass  on  the  information   to  investors  in
periodic  investor  conference calls, which were available  as podcasts.
18. According  to the EMS website,  investors  could  dir e c tly  purchase an initial  share
in the PFRPP for  $98  and  subsequent  shares  for  $38.    Alternatively,  the website provided  that
investors  could  purchase  through  intermediaries  in the United  States for $150  for the initial  share
and $65  for each additional  share.
19. To purchase a share, investors  needed to exchange their investment  proceeds for
digita l  a s s e ts   such as Bitcoin using  digital   asset  trading  platforms,   and send their digita l  a s s e ts to
EMS  Bitcoin   deposit  addresses  provided, or to particular  accounts at digital  asset payment
processors such as P erfect Money or C-Gold,  where the investors’ digital  asset payment
processor would  purportedly  be pooled  together for investment  purposes.
20. The EMS website stated that each $98 share or interest  in  the P FRP P  would
entitle  the purchaser to a payout  of 1.15kg  of gold  (valued at tens of thousands  of dollars  during
the period  in  which  the website  operated).  The   r is k  of   los s   w a s   “tota lly   e limina te d,” the  EMS
website claimed,  because the PFRPP was already  funded  through   a  “BG  Bank  Guaranteed
Note.”   According  to the website, the P FRP P  accounts “only  await[ed]  for individua ls  to put
their names on these accounts to be able to benefit  from the payout amount.”
21. In statements made on the EMS website,  a s   w e ll  as during investor  conference
c a lls  for EMS,  investors were urged to wait for their investment  to mature (that  is,  wait  for  the
promised  payout),  and frequently encouraged to invest  more funds in  the P FRP P  and to  recruit
new investors.  For  example,  on  March  6,  2017,  the  website  invited   investors  to  purchase  more
shares because whatever they invested between March 7 and April  17,  2017, would  be matched
by  EMS  and  gifted  to  someone  that  the  investor  would   designate  – the “Angel  Gift.”

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The EMS PFRPP  Offering Solicited Investors, Including Members of the Deaf
Community, in the United States and Worldwide

22. Karlsson  conducted  the PFRPP offering through  EMS  from on or about
November  27,  2012  to  on  or  about  June  19,  2019.  During  the offering,  the EMS website stated
that investors  could  purchase shares in the P FRP P  using  Bitcoin  or  by sending  digital  assets to
the Perfect Money and/or  C-Gold  accounts.  The EMS website, which was accessible in  the
United  States,  solicited   potential   investors  from  around  the  world,   including   in  the  United  States.
23. There were more than 2,200  investors  worldwide,  including  at least 893 investors
in the United  States,  who  invested  in  the PFRPP.  Among  the PFRPP investors  worldwide,  at
least 847 investors  belonged  to a group  called the “Deaf Group.”  Of these 847  Deaf Group
investors,  at least 367  were U.S. investors.
24. Deaf  Group  investors  used  EMS  to  invest  for retirement.  Deaf Group  members
received a discount  to invest  (compared to others who invested  through  intermediaries  and paid
additional  service fees) – $100  for the first share and $50 for each additional  share.
25. The Deaf Group  was led  by  five group  leaders who also invested  in  EMS.  Each
of these group  leaders resided in the United  States and was responsible  for receiving  funds from
members  of  their  group,   converting   those  funds  to  digital   assets and electronic  payments,  and
sending  the digital  assets  to  EMS  on  behalf  of  their  members.
26. Since  2015,  the Deaf Group  sent approximately  $2,030,630  to EMS via Bitc oin
and C-Gold.
The EMS Offer and Sale of PFRPP Was an Offering of Securities
27. Based upon  the foregoing, the PFRPPs offered  and  sold  in  the  EMS PFRPP
offering (the “Offering”) were offered and sold  as “investment  contracts,” and thus securities
within  the meaning  of Section  2(a)(1) of the Securities  Act [15 U.S.C. § 77b(a)(1)] and Section

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3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)].
28. No registration  statement was ever filed  or in  effect for the offers   and sales   of the
PFRPP, and no  exemption   from  registration  was available  for the Offering.
B. KARLSSON ENGAGED  IN DECEPTIVE  CONDUCT DESIGNED TO MISLEAD
THE PFRPP INVESTORS AND DISSEMINATED MATERIAL
MISREPRESENTATIONS TO SELL THE PFRPP.

29. Karlsson knowingly,  recklessly or  negligently   engaged  in  deceptive  conduct
designed  to mis le a d  and steal from PFRPP investors.  As  part  of  his  fraudulent  scheme,  Karlsson
created and operated  the EMS website to disseminate  material  misstatements  to promote a non-
existent  investment,  the PFRPP, during  the  Offering, and thereafter misappropriated  at least $1.5
million  in  investor  funds  for  his  personal  use.
Karlsson Disseminates Material Misrepresentations D uring the EMS PFRPP Offering

30. From  on  or  about  November  27,  2012  to  on  or  about  June  19,  2019,  Karlsson
disseminated  numerous materially  false and/or mis le a ding  statements on  the  EMS  website,  in
blog-s tyle   posts,  and in e ma ils  he sent to investors  using  the aliases Millard  and Georgsson.   For
example, w hile the EMS website was operating:
a) The EMS website claimed that it  was run  by “Mr.  X,”   award-winning
economists  and other professionals  from South  Africa and Switzerland.  In fact, Karlsson,
through  his  aliases,  was running  EMS as a fraudulent scheme;
b) The EMS website claimed  that  EMS offered a range of investments,
“delivered  through  a diverse set of investment  vehicles”  such as the PFRPP.  In fact,
EMS had no such investment  vehicles  and  the P FRP P  was fictitious;
c) The EMS website claimed  that any investor  who purchased a share or
inte r e s t  in  the P FRP P  would be e ntitled   to a payout  of 1.15kg  of gold  – worth more than

 9
several hundred  times the   initia l   inve s tme nt  – and that the PFRPP accounts “only
await[ed] for individuals  to put their  names on these accounts to be able to benefit from
the payout  amount.”    In fact, no such payouts occurred; and
d) The EMS website claimed  that the ris k  of   los s   w a s   “tota lly   e limina te d”
because the PFRPP was already funded  through  a “BG Bank Guaranteed Note.”   In fact,
there is  no  evidence  of  such “BG  Bank  Guaranteed  Note” and investors  did  not  receive
repayment  of  any  of  their  investments   (including   their   initia l   inve s tme nts ) .
31. Many  of  the PFRPP investors  were  not  sophisticated   investors  and  lacked  any
investment  experience other than investing  in  401(k) plans  and life  insurance policies.   They
viewed  EMS  as a pension  investment  or  a supplement  for their retirement,  and  believed,  based
upon  the misrepresentations  described above,  that all  they needed to do to receive this
guaranteed  payout  was simply  purchase shares in the  PFRPP and wait  for the investment  to
mature.
32. When some investors  questioned  whether the P FRP P  investment  was truly safe
and secure, the EMS website f a ls e ly  claimed  in  a  December  23,  2017  post  from Karlsson’s alias,
Milla r d  (who claimed  to be based in New York  City),   that “the  Investment  security  ...  [has]
actually  been increased to 98,75%  [sic] of your invested  amount,  so that’s a security for you  thats
[sic] real and gives any Investor the peace of mind  that the Investment itself  can never be lost.”
33. Investors,  including   those  located  in  this  District,  made decisions  to invest  in  the
Offering because the EMS website promised   a large  payout,  especially   relative  to  the s ma ll
initia l   inve s tme nt,   and because the website and the mass emails Karlsson  (using  the  aliases
Millard  and Georgsson) sent to investors  guaranteed   that the payout  would  occur, and that in  the
event  it  did  not,  investors  would  s till  receive at least 98.75%  of  their  investment  back.

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Karlsson Misappropriates At Least $1.5 Million in Investor Funds f or His Personal Use
34. For the period  of December 2017  through  June 2019 alone,  approximately
$3,572,252.70   in   Bitc oin  were sent by EMS investors  to EMS deposit  addresses on the Bitcoin
blockchain.   Most  of  this   Bitc oin  was ultima te ly  sent to a Thai digital  asset trading  platform.
35. Karlsson received Bitcoin  deposits  into  a  personal  account at the  same Thai
digital  asset trading  platform  that received proceeds from the EMS investor  deposits.    Karlsson
then  converted the  Bitc oin  in  his   personal  account at this platform  into   Thai  Baht,  and  then
transferred the Thai Baht to three bank  accounts  in  his  own  name.
36. Karlsson misappropriated  at least $1.5  million  of such investor  funds during a
portion  of that period for  personal  use,  including   investing   in  real  estate  in  Thailand.
FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the  Exchange  Act and
Rules    10b-5(a) and 10b-5(c) The re unde r

37. The Commission  re-alleges  and incorporates  by  reference here the allegations  in
paragraphs 1 through 36.
38. Karlsson,  directly  or  indirectly,   singly  or  in  concert,  in  connection  with  the
purchase or sale of securities and by the use of means or instrumentalit ies  of interstate
commerce, or the mails,  or the facilities  of a national  securities exchange, (a) knowingly   or
recklessly  has  employed   one  or  more  devices,  schemes,  or  artifices  to  defraud  and (b) engaged  in
one or more acts, practices, or courses of business  which operated or would  operate as a fraud or
deceit  upon  other  persons.
39. By reason of the foregoing, Karlsson,  directly   or  indirectly,   singly   or  in  concert,
has   violated   and,  unless  enjoined,   will  again  violate  Section  10(b)  [15  U.S.C.  § 78j(b)] of the
Exchange  Act  and  Rules   10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)].

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SECOND CLAIM FOR RELIEF
Violations  of Se ctions  17(a)(1) and 17(a)(3) of the  Se curitie s  Act
40. The Commission  re-alleges  and incorporates  by  reference here the allegations  in
paragraphs 1 through  36.
41. Karlsson,  directly  or indirectly,  singly  or in  concert, 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, (1) knowingly   or  recklessly  have  employed   one  or  more
devices, schemes or artifices to defraud and (2) knowingly,   recklessly,   or   negligently   have
engaged  in  one  or  more  transactions,   practices,  or  courses of business which  operated or would
operate as a fraud or deceit upon the purchaser.
42. By reason of the foregoing, Karlsson,  directly   or  indirectly,   singly   or  in  concert,
has   violated   and,  unless  enjoined,   will   again  violate  Sections   17(a)(1)  and  17(a)(3)  of  the
Securities  Act  [15  U.S.C. §§ 77q(a)(1)  and 77q(a)(3)].
THIRD CLAIM FOR RELIEF
Violations  of Se ctions    5(a) and 5(c) of the  Se curitie s  Act
43. The Commission  re-alleges  and incorporates  by  reference here the allegations  in
paragraphs 1 through 36.
44. Karlsson directly   or  indirectly,   singly   or  in  concert,  (i)  made  use  of  means  or
instruments  of transportation  or communication  in  interstate commerce or of the mails  to sell,
through  the use or medium  of a prospectus or otherwise,  securities as to which no registration
statement was in  effect; (ii)  for the purpose of sale or for delivery  after sale, carried or caused to
be carried through  the mails  or in  interstate commerce, by any means or instruments  of
transportation,   securities  as  to  which  no  registration  statement was in  effect; or (iii)  made  use of
means or instruments  of transportation  or communication  in interstate commerce or of the mails

 12
to offer to sell or offer to buy,  through  the use or medium  of a prospectus or otherwise,  securities
as to  which no registration  statement had been filed.
45. By reason of the foregoing, Karlsson,  directly   or  indirectly,   singly   or  in  concert,
has   violated   and,  unless  enjoined,   will   again  violate  Sections  5(a) and 5(c) of the Securities  Act
[15  U.S.C. §§ 77e(a) and 77e(c)].
PRAYER FOR RELIEF
 WHEREFORE, the Commission  respectfully  requests that the Court enter a Final
Judgment:
I.
P ermanently  enjoining  Karlsson  and his  agents,  servants,  employees  and  attorneys  and  all
persons  in  active  concert  or  participation   with  any  of them  from  violating,   directly  or  indirectly,
Sections   5(a), 5(c), 17(a)(1),  and 17(a)(3)  of the Securities Act [15 U.S.C. §§   77e(a),
77e(c),77q(a)(1),  and  77q(a)(3)]  and Section  10(b)  of  the  Exchange  Act [15  U.S.C. § 78j(b)]  and
Rules  10b-5(a)  and  10b-5(c)  thereunder  [17  C.F.R.  § 240.10b-5(a) and 10b-5(c)];
II.
Ordering  Karlsson  to  disgorge  all  ill-gotten  gains  he received directly  or indirectly,  with
prejudgment  interest thereon,  as a result of the alleged  violations;
III.
Ordering Karlsson  to pay civil  monetary  penalties  under Section 20(d)  of the Securities
Act [15  U.S.C. § 77t(d)]
and Section  21(d)(3)  of the Exchange Act [15 U.S.C. § 78u(d)(3)];  and

 13
IV.
Granting   any  other  and  further  relief  this  Court  may  deem  just  and  proper.
DEMAND FOR JURY TRIAL
P ursuant to Rule 38 of the Federal Rules of Civil  P rocedure, the Commission  demands tria l
by  jury  in  this  action  issues  so  triable.

Dated:  New York,  New York
September  29,  2020

    Respectfully  submitted,

/s/ Richard R. Best
Richard R. Best
Sanjay  Wadhwa
Thomas  P . Smith,  Jr.
Charu A. Chandrasekhar
Richard  Hong
Karen M. Lee
John C. Lehmann
SECURITIES AND EXCHANGE COMMISSION
New York  Regional  Office
Brookfield  P lace
200  Vesey  Street,  Suite  400
New York,  New York  10281-1022
(212)  336-0956  (Hong)
[email protected]

Mika D. Donlon
SECURITIES AND EXCHANGE COMMISSION
100  F  Street,  N.E.
Washington,  DC 20549

Attorneys for P laintiff

RICHARD R. BEST  
REGIONAL DIRECTOR 
Sanjay Wadhwa 
Thomas P. Smith, Jr. 
Charu A. Chandrasekhar 
Richard Hong 
Karen M. Lee  
John C. Lehmann  
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
Brookfield Place  
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
(212) 336-0956 (Hong) 
[email protected]  
 
Mika M. Donlon 
SECURITIES AND EXCHANGE COMMISSION 
100 F Street, N.E. 
Washington, DC 20549 
Attorneys for Plaintiff 
 
UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
 
SECURITIES AND EXCHANGE 
COMMISSION, 
 
                                             Plaintiff, 
 
                        -against- 
 
ROGER NILS-JONAS KARLSSON (a/k/a 
EUCLID DIODORUS, STEVE HEYDEN, 
JOSHUA MILLARD, AND LARS 
GEORGSSON),    
  
                                             Defendant.                  
 

 
 
COMPLAINT 

   
20 Civ. _____ (       ) 

 
   

JURY TRIAL DEMANDED 
  

           
          

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

Defendant Roger Nils-Jonas Karlsson (a/k/a Euclid Diodorus, Steve Heyden, Joshua Millard, and 

Lars Georgsson) (“Karlsson”), alleges as follows: 

 

Case 1:20-cv-04615   Document 1   Filed 09/29/20   Page 1 of 13 PageID #: 1



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SUMMARY  

1. This case involves a massive global online offering fraud targeting thousands of 

retail investors perpetrated by Karlsson through his entity Eastern Metal Securities 

(“EMS”).  Karlsson, a Swedish national who resided in Thailand, enticed and defrauded 

investors, including members of the deaf community, of millions of dollars in the United States 

and around the world with the fanciful promise of astronomical returns resulting from nominal 

investments in securities, the offer or sale of which neither Karlsson nor EMS registered with the 

Commission, or which qualified for an exemption from registration.   

2. From on or about November 27, 2012 to on or about June 19, 2019, through 

EMS’s website, Karlsson orchestrated a fraudulent scheme in which he offered and sold an 

investment called a “Pre Funded Reversed Pension Plan” (“PFRPP”) that claimed to be the 

world’s first online investment of such type.  The EMS website boasted that its investment 

platform was run by “Mr. X,” award-winning economists, and other professionals from South 

Africa and Switzerland.  The EMS website promised a huge “payout” based on the value of gold 

– entitling investors who purchased PFRPP to an enormous windfall for an initial $98 

investment.  Yet no such pre-funded pension plan existed, and no payment of promised returns 

or repayment of any investors’ investments has occurred.   

3. Karlsson defrauded at least 2,200 investors from at least 49 U.S. states, the 

District of Columbia and Puerto Rico, and at least 45 countries.  In the 18-month period 

beginning from December 2017 through June 2019 alone, investors transmitted more than $3.5 

million to EMS, through digital assets such as Bitcoin, or transferred to other digital asset 

payment processors such as Perfect Money and C-Gold.  Karlsson then misappropriated at least 

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$1.5 million in investor funds for his personal use, including investing in real estate in Thailand, 

during a portion of that period. 

VIOLATIONS 

4. By virtue of the foregoing conduct and as alleged further herein, Karlsson 

violated Sections 5(a), 5(c), 17(a)(1), and 17(a)(3) of the Securities Act of 1933 (Securities Act”) 

[15 U.S.C. §§ 77e(a), 77e(c), 77q(a)(1) and 77q(a)(3)] and Section 10(b) of the Securities 

Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and 10b-5(c) 

thereunder [17 C.F.R. § 240.10b-5(a) and (c)]. 

5. Unless Karlsson 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 

6. The Commission brings this action pursuant to the authority conferred upon it by 

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

[15 U.S.C. § 78u(d)].  

7. The Commission seeks a final judgment: (a) permanently enjoining Karlsson from 

violating the federal securities laws and rules this Complaint alleges he has violated; (b) ordering 

Karlsson to disgorge his ill-gotten gains and to pay prejudgment interest thereon; (c) ordering 

Karlsson to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C 

§ 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and (c) ordering any 

other and further relief the Court may deem just and proper. 

JURISDICTION AND VENUE 

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

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

U.S.C. § 78u(d)].  

9. Karlsson, 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. 

10. Venue lies in this District under Section 22(a) of the Securities Act [15 U.S.C. 

§ 78v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  Certain of the acts, practices, 

transactions, and courses of business alleged in this Complaint occurred within the Eastern 

District of New York.  Through EMS, Karlsson communicated with and received funds from 

investors located in this District. 

DEFENDANT 

11. Karlsson, age 46, was born in Sweden and resided in Thailand.  During the 

relevant period to this action, he claimed to be a “System Analysis Manager” in his Thai work 

permit.  Karlsson also used several aliases, including Euclid Diodorus, Steve Heyden, Joshua 

Millard (“Millard”), and Lars Georgsson (“Georgsson”), in connection with EMS.  During the 

relevant period, Karlsson controlled EMS and received investor funds through EMS.   

DEFENDANT’S RELATED ENTITY 

12. EMS was an entity that maintained an Internet presence through the website 

www.easternmetalsecurities.com.  According to its website, EMS’s headquarters were based in 

Singapore, with branch offices located in Thailand and Laos.    

 

  

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FACTS 

A. KARLSSON PARTICIPATED IN THE UNREGISTERED OFFER AND SALE OF 
SECURITIES THROUGH THE EMS PFRPP OFFERING. 

 
Karlsson Launches the EMS PFRPP Offering 

 
13. On or about November 27, 2012, Karlsson created the EMS website, 

www.easternmetalsecurities.com, and registered the website under one of his aliases, “Steve 

Heyden,” using the email address “[email protected].”  Karlsson operated the EMS 

website by using and controlling the [email protected] account through an internet 

service provider in Thailand.            

14. The EMS website claimed that EMS consisted of “a group of highly educated and 

Award Winning Economisers [sic] and Think Tankers from South Africa and Switzerland who 

have created an unprecedented reputation within many areas of global economy and have 

represented Nobel Prize winner [sic] within the Economic field the last 7 years.”  The website 

added that “[t]he highly decorated and successful Dr. Steve K. Heyden” was running this 

investment group.        

15. According to the EMS website, EMS claimed to “offer a wide range of single-

country, regional and global capabilities across major equity, fixed income and alternative asset 

classes, delivered through a diverse set of investment vehicles.”  The website featured an 

investment, the PFRPP.   

16. The EMS website did not explain what kind of an investment a PFRPP was or 

how it would generate a return.  However, investors were told that an individual named “Mr. X,” 

allegedly an alias for a high-ranking U.S. Federal Reserve official, was running the PFRPP 

investment platform. 

17. Karlsson, through his aliases, Millard and Georgsson, also provided investment 

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updates to intermediaries for EMS, who would thereafter pass on the information to investors in 

periodic investor conference calls, which were available as podcasts.        

18. According to the EMS website, investors could directly purchase an initial share 

in the PFRPP for $98 and subsequent shares for $38.  Alternatively, the website provided that 

investors could purchase through intermediaries in the United States for $150 for the initial share 

and $65 for each additional share.   

19. To purchase a share, investors needed to exchange their investment proceeds for 

digital assets such as Bitcoin using digital asset trading platforms, and send their digital assets to 

EMS Bitcoin deposit addresses provided, or to particular accounts at digital asset payment 

processors such as Perfect Money or C-Gold, where the investors’ digital asset payment 

processor would purportedly be pooled together for investment purposes.   

20. The EMS website stated that each $98 share or interest in the PFRPP would 

entitle the purchaser to a payout of 1.15kg of gold (valued at tens of thousands of dollars during 

the period in which the website operated).  The risk of loss was “totally eliminated,” the EMS 

website claimed, because the PFRPP was already funded through a “BG Bank Guaranteed 

Note.”  According to the website, the PFRPP accounts “only await[ed] for individuals to put 

their names on these accounts to be able to benefit from the payout amount.”   

21. In statements made on the EMS website, as well as during investor conference 

calls for EMS, investors were urged to wait for their investment to mature (that is, wait for the 

promised payout), and frequently encouraged to invest more funds in the PFRPP and to recruit 

new investors.  For example, on March 6, 2017, the website invited investors to purchase more 

shares because whatever they invested between March 7 and April 17, 2017, would be matched 

by EMS and gifted to someone that the investor would designate – the “Angel Gift.” 

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The EMS PFRPP Offering Solicited Investors, Including Members of the Deaf 
Community, in the United States and Worldwide 
 
22. Karlsson conducted the PFRPP offering through EMS from on or about 

November 27, 2012 to on or about June 19, 2019.  During the offering, the EMS website stated 

that investors could purchase shares in the PFRPP using Bitcoin or by sending digital assets to 

the Perfect Money and/or C-Gold accounts.  The EMS website, which was accessible in the 

United States, solicited potential investors from around the world, including in the United States.   

23. There were more than 2,200 investors worldwide, including at least 893 investors 

in the United States, who invested in the PFRPP.  Among the PFRPP investors worldwide, at 

least 847 investors belonged to a group called the “Deaf Group.”  Of these 847 Deaf Group 

investors, at least 367 were U.S. investors.   

24. Deaf Group investors used EMS to invest for retirement.  Deaf Group members 

received a discount to invest (compared to others who invested through intermediaries and paid 

additional service fees) – $100 for the first share and $50 for each additional share. 

25. The Deaf Group was led by five group leaders who also invested in EMS.  Each 

of these group leaders resided in the United States and was responsible for receiving funds from 

members of their group, converting those funds to digital assets and electronic payments, and 

sending the digital assets to EMS on behalf of their members. 

26. Since 2015, the Deaf Group sent approximately $2,030,630 to EMS via Bitcoin 

and C-Gold. 

The EMS Offer and Sale of PFRPP Was an Offering of Securities 

27. Based upon the foregoing, the PFRPPs offered and sold in the EMS PFRPP 

offering (the “Offering”) were offered and sold as “investment contracts,” and thus securities 

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

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3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)]. 

28. No registration statement was ever filed or in effect for the offers and sales of the 

PFRPP, and no exemption from registration was available for the Offering. 

B. KARLSSON ENGAGED IN DECEPTIVE CONDUCT DESIGNED TO MISLEAD 
THE PFRPP INVESTORS AND DISSEMINATED MATERIAL 
MISREPRESENTATIONS TO SELL THE PFRPP. 

 
29. Karlsson knowingly, recklessly or negligently engaged in deceptive conduct 

designed to mislead and steal from PFRPP investors.  As part of his fraudulent scheme, Karlsson 

created and operated the EMS website to disseminate material misstatements to promote a non-

existent investment, the PFRPP, during the Offering, and thereafter misappropriated at least $1.5 

million in investor funds for his personal use.  

Karlsson Disseminates Material Misrepresentations During the EMS PFRPP Offering 
 
30. From on or about November 27, 2012 to on or about June 19, 2019, Karlsson 

disseminated numerous materially false and/or misleading statements on the EMS website, in 

blog-style posts, and in emails he sent to investors using the aliases Millard and Georgsson.  For 

example, while the EMS website was operating:  

a) The EMS website claimed that it was run by “Mr. X,” award-winning 

economists and other professionals from South Africa and Switzerland.  In fact, Karlsson, 

through his aliases, was running EMS as a fraudulent scheme;   

b) The EMS website claimed that EMS offered a range of investments, 

“delivered through a diverse set of investment vehicles” such as the PFRPP.  In fact, 

EMS had no such investment vehicles and the PFRPP was fictitious;  

c) The EMS website claimed that any investor who purchased a share or 

interest in the PFRPP would be entitled to a payout of 1.15kg of gold – worth more than 

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several hundred times the initial investment – and that the PFRPP accounts “only 

await[ed] for individuals to put their names on these accounts to be able to benefit from 

the payout amount.”  In fact, no such payouts occurred; and    

d) The EMS website claimed that the risk of loss was “totally eliminated” 

because the PFRPP was already funded through a “BG Bank Guaranteed Note.”  In fact, 

there is no evidence of such “BG Bank Guaranteed Note” and investors did not receive 

repayment of any of their investments (including their initial investments).   

31. Many of the PFRPP investors were not sophisticated investors and lacked any 

investment experience other than investing in 401(k) plans and life insurance policies.  They 

viewed EMS as a pension investment or a supplement for their retirement, and believed, based 

upon the misrepresentations described above, that all they needed to do to receive this 

guaranteed payout was simply purchase shares in the PFRPP and wait for the investment to 

mature. 

32. When some investors questioned whether the PFRPP investment was truly safe 

and secure, the EMS website falsely claimed in a December 23, 2017 post from Karlsson’s alias, 

Millard (who claimed to be based in New York City), that “the Investment security … [has] 

actually been increased to 98,75% [sic] of your invested amount, so that’s a security for you thats 

[sic] real and gives any Investor the peace of mind that the Investment itself can never be lost.” 

33. Investors, including those located in this District, made decisions to invest in the 

Offering because the EMS website promised a large payout, especially relative to the small 

initial investment, and because the website and the mass emails Karlsson (using the aliases 

Millard and Georgsson) sent to investors guaranteed that the payout would occur, and that in the 

event it did not, investors would still receive at least 98.75% of their investment back.  

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Karlsson Misappropriates At Least $1.5 Million in Investor Funds for His Personal Use  

34. For the period of December 2017 through June 2019 alone, approximately 

$3,572,252.70 in Bitcoin were sent by EMS investors to EMS deposit addresses on the Bitcoin 

blockchain.  Most of this Bitcoin was ultimately sent to a Thai digital asset trading platform.   

35. Karlsson received Bitcoin deposits into a personal account at the same Thai 

digital asset trading platform that received proceeds from the EMS investor deposits.  Karlsson 

then converted the Bitcoin in his personal account at this platform into Thai Baht, and then 

transferred the Thai Baht to three bank accounts in his own name.   

36. Karlsson misappropriated at least $1.5 million of such investor funds during a 

portion of that period for personal use, including investing in real estate in Thailand. 

FIRST CLAIM FOR RELIEF 
Violations of Section 10(b) of the Exchange Act and 

Rules 10b-5(a) and 10b-5(c) Thereunder 
 

37. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 36. 

38. Karlsson, directly or indirectly, singly or in concert, 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, (a) knowingly or 

recklessly has employed one or more devices, schemes, or artifices to defraud and (b) engaged in 

one or more acts, practices, or courses of business which operated or would operate as a fraud or 

deceit upon other persons. 

39. By reason of the foregoing, Karlsson, directly or indirectly, singly or in concert, 

has violated and, unless enjoined, will again violate Section 10(b) [15 U.S.C. § 78j(b)] of the 

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

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SECOND CLAIM FOR RELIEF 
Violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act 

40. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 36. 

41. Karlsson, directly or indirectly, singly or in concert, 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, (1) knowingly or recklessly have employed one or more 

devices, schemes or artifices to defraud and (2) knowingly, recklessly, or negligently have 

engaged in one or more transactions, practices, or courses of business which operated or would 

operate as a fraud or deceit upon the purchaser. 

42. By reason of the foregoing, Karlsson, directly or indirectly, singly or in concert, 

has violated and, unless enjoined, will again violate Sections 17(a)(1) and 17(a)(3) of the 

Securities Act [15 U.S.C. §§ 77q(a)(1) and 77q(a)(3)]. 

THIRD CLAIM FOR RELIEF 
Violations of Sections 5(a) and 5(c) of the Securities Act 

43. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 36. 

44. Karlsson directly or indirectly, singly or in concert, (i) made use of means or 

instruments of transportation or communication in interstate commerce or of the mails to sell, 

through the use or medium of a prospectus or otherwise, securities as to which no registration 

statement was in effect; (ii) for the purpose of sale or for delivery after sale, carried or caused to 

be carried through the mails or in interstate commerce, by any means or instruments of 

transportation, securities as to which no registration statement was in effect; or (iii) made use of 

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

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to offer to sell or offer to buy, through the use or medium of a prospectus or otherwise, securities 

as to which no registration statement had been filed. 

45. By reason of the foregoing, Karlsson, directly or indirectly, singly or in concert, 

has violated and, unless enjoined, will again violate Sections 5(a) and 5(c) of the Securities Act 

[15 U.S.C. §§ 77e(a) and 77e(c)]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

I. 

Permanently enjoining Karlsson and his agents, servants, employees and attorneys and all 

persons in active concert or participation with any of them from violating, directly or indirectly, 

Sections 5(a), 5(c), 17(a)(1), and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77e(a), 

77e(c),77q(a)(1), and 77q(a)(3)] and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and 

Rules 10b-5(a) and 10b-5(c) thereunder [17 C.F.R. § 240.10b-5(a) and 10b-5(c)];  

II. 

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

prejudgment interest thereon, as a result of the alleged violations; 

III. 

Ordering Karlsson to pay civil monetary penalties under Section 20(d) of the Securities 

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

 

 

 

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IV. 

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

DEMAND FOR JURY TRIAL  

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the Commission demands trial 

by jury in this action issues so triable.    

 
Dated: New York, New York 

September 29, 2020 
 
 
    Respectfully submitted, 
 

/s/ Richard R. Best  
Richard R. Best 
Sanjay Wadhwa 
Thomas P. Smith, Jr. 
Charu A. Chandrasekhar 
Richard Hong 
Karen M. Lee  
John C. Lehmann 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
Brookfield Place  
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
(212) 336-0956 (Hong) 
[email protected] 
 
Mika D. Donlon 
SECURITIES AND EXCHANGE COMMISSION 
100 F Street, N.E. 
Washington, DC 20549 
 
Attorneys for Plaintiff 

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