SEC v. TOON GOGGLES, INC.; and IRA WARKOL, No. 2:19-cv-07687, Central District of California (Sept. 6, 2019) — Complaint

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DOUGLAS M. MILLER (Cal. Bar No. 240398)
Email:  [email protected]
YOLANDA OCHOA (Cal. Bar No. 267993)
Email:  [email protected]

Attorneys for Plaintiff
Securities and Exchange Commission
Michele Wein Layne, Regional Director
Alka N. Patel, Associate Regional Director
Amy J. Longo, Regional Trial Counsel
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
Facsimile: (213) 443-1904
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,

vs.
TOON GOGGLES, INC., and IRA
WARKOL,
Defendants.

 Case No. 2:19-cv-07687

COMPLAINT

Plaintiff Securities and Exchange Commission (“SEC”) alleges:
JURISDICTION AND VENUE
1. The Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§
77t(b), 77t(d)(1) & 77v(a) and Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the
Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1),
78u(d)(3)(A), 78u(e) & 78aa(a).
2. Defendants have, directly or indirectly, made use of the means or

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instrumentalities of interstate commerce, of the mails, or of the facilities of a national
securities exchange in connection with the transactions, acts, practices and courses of
business alleged in this complaint.
3. Venue is proper in this district pursuant to Section 22(a) of the Securities
Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a).
Because certain of the transactions, acts, practices and courses of conduct constituting
violations of the federal securities laws occurred within this district.  In addition,
venue is proper in this district because Defendant Ira Warkol resides in this district
and Defendant Toon Goggles, Inc.’s (“Toon Goggles”) principal place of business is
located in this district.
SUMMARY
4. This matter involves the unregistered offer and sale of over $19 million
in securities by Toon Goggles, a   privately held company that offers access to cartoons
through its online streaming service, and by the company’s recidivist founder, Ira
Warkol.  The registration violations occurred from approximately August 2012
through late 2016, when Toon Goggles and Warkol (collectively, “defendants”)
conducted at least five private offerings through various entities, raising funds from
approximately 400 investors.  None of the securities Warkol offered and sold to
investors on behalf of Toon Goggles during this time period were registered with the
SEC and none qualified for any of the exemptions from the registration requirements.
5. In addition, Warkol acted as an unregistered broker for these
unregistered offerings, setting up boiler rooms inside Toon Goggles’ offices,
purchasing lead sheets, and engaging sales agents who were paid commissions to
solicit investors.  The sales agents then cold-called   investors throughout the United
States, including California, New York, Arizona, Texas, Missouri, and Washington,
and solicited investments using scripts and offering documents Warkol provided.
Warkol used the funds that he raised from investors to pay large commissions and
transaction-based compensation to  himself and the sales agents.  In fact, it was not

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uncommon for as much as 35% of investor funds to be used towards the payment of
commissions and finder’s fees.  Warkol did this without registering as a broker with
the SEC and without qualifying for any of the exceptions to the registration
requirements.
6. As a result of Toon Goggles’ failure to properly register these offerings,
investors were deprived of information under Section 7(a) of the Securities Act,
which requires a registration statement to contain certain information spe, including
the net proceeds derived from the securities sold during the two years preceding the
offerings, the prices at which those securities were offered to the public, the amount
of money paid to promotors during that time period, and the profit and loss
statements of the issuer.
7. From August 2012 through at least late 2016, Toon Goggles was not a
profitable company and its revenue never exceeded $200,000 a year.
8. Warkol and Toon Goggles failed to maintain accurate and complete
records regarding the identity of each investor, the number of shares sold to each
investor, and the amount of money raised from each investor.  Toon Goggles still
does   not know the total number of investors in Toon Goggles or the total amount of
capital raised from investors.
9. By engaging in this conduct, defendants violated, and may be continuing
to violate, the securities registration provisions of Sections 5(a) and 5(c) of the
Securities Act, 15 U.S.C. § 77f.  Defendant Warkol also has violated, and may be
continuing to violate, the broker-dealer registration requirements of Section 15(a) of
the Exchange Act, 15 U.S.C. § 78o(a).
10. With this action, the SEC seeks permanent injunctive relief against
defendants to prevent future violations of the federal securities laws, disgorgement of
ill  -gotten gains from defendants, along with prejudgment interest, and civil penalties
from defendants.

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THE DEFENDANTS
11. Ira Warkol (a.k.a. Ira Warren) founded Toon Goggles in 2010 and
controlled the company until he terminated his relationship with Toon Goggles in
2017.  Warkol is not, and has never been, registered with the SEC in any capacity.
On June 30, 2011, the California Department of Corporations issued a Desist and
Refrain Order against Warkol (who was then using the name “Ira Warren”),
prohibiting him from engaging in the offer or sale in California of securities of Toon
Goggles’ predecessor that were not qualified, and from the offer and sale of securities
through materially false or misleading communications (the “2011 D&R Order”).  On
November 19, 2018, the California Department of Business Oversight issued another
Desist and Refrain Order against Warkol, prohibiting him from the further offer and
sale in California of non-exempt securities related to a cannabinoids business he
founded after terminating his relationship with Toon Goggles.
12. Toon Goggles, Inc. is a Nevada corporation with its principal place of
business in Los Angeles, California.  The company markets itself as an on-demand
entertainment service for children that offers animated cartoons, live-action shows,
games, and music via the web and mobile applications.
OTHER RELEVANT ENTITIES
13. NetKids LLC (“NetKids”) was a Nevada limited liability company
established in August 2011.  According to offering materials distributed by
defendants, its primary purpose was to handle the raising of capital for Toon Goggles
and Dinomite Apps, Inc. before being dissolved in July 2016.
14. Dinomite Apps, Inc. (“Dinomite”) was a Nevada corporation
established in 2013 to function as the videogame arm for Toon Goggles.  Dinomite
dissolved in 2015.
15. Yeti Productions LLC (“Yeti Productions”) was established in 2014
to develop a cartoon series for Toon Goggles.

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THE ALLEGATIONS
A. Toon Goggles’ Streaming Business
16. Warkol founded Toon Goggles in late 2010 as a media service provider
that offered licensing and online streaming of cartoons, games, news, and other
children’s entertainment services.  Toon Goggles offered these services through its
website ToonGoggles.com and through mobile applications.
17.  According to Warkol, Toon Goggles was founded based on the
observation that only a small percentage of professionally-produced cartoon series
end up on television, meaning most are not seen by children anywhere.  Toon
Goggles sought to take advantage of that gap and marketed itself as the “YouTube or
Netflix for kids,” where tens of millions of children every month could watch
thousands of cartoons, most of them never seen before.
18. In its promotional materials, Toon Goggles claimed to have (i) the
ability to track visitors to its website, Toongoggles.com, (ii) the technology to permit
cartoon rights holders to upload their cartoons effortlessly onto its platform, and (iii)
developed mobile applications to allow its streaming services to be taken with anyone
anywhere and to be accessed on almost any mobile device.
B. Toon Goggles’ Unregistered Securities Offerings
19. From mid-2012 through at least 2016, Warkol raised over $19 million
from at least 400 investors in multiple states on behalf of Toon Goggles without a
registration statement being filed or in effect and when no exemption from
registration applied.
20. Warkol engaged in a general solicitation of investors and failed to take
reasonable steps to verify that the individuals who purchased securities were
accredited investors.
21. Warkol purchased lead sheets and hired unregistered sales agents, who
set up boiler rooms inside Toon Goggles’ offices and cold-called investors
throughout the United States, soliciting investors in California, New York, Arizona,

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Texas, Missouri, and Washington.
22. Warkol provided sales agents with sales pitches to use when soliciting
investors and approved commissions and other forms of transaction based
compensation for the sales agents, which they based on a percentage of the funds
raised from investors.
23. Warkol never disclosed the 2011 D&R Order to investors.
24. Warkol failed to maintain accurate and complete records regarding the
offerings, including an inability to identify : each investor, the number of shares sold
to each investor, and the amount of money raised from each investor.
25. Warkol relied on various forms of self-accreditation to determine if
investors were accredited, including having investors fill out questionnaires about
their financial background, and failed to take reasonable steps to verify that
information.
1. The October 2011 NetKids Offering
26. Beginning in or about October 2011 and continuing until approximately
April 28, 2016, Warkol offered   investors units in NetKids (“the October 2011
NetKids offering”).
27. The offering materials for the October 2011 NetKids offering included a
Private Placement Memorandum (“PPM”).
28. The offering materials stated that the offering was exempt from SEC
registration requirements and that it was for “accredited purchasers only,” which the
offering documents described as generally including, among others, “any natural
person whose individual net worth, or joint net worth with that person’s spouse, at the
time of purchase, exceeds $1,000,000.”
29. Warkol sought to raise a total of $4,800,000 through the October 2011
NetKids offering, by offering investors a total of 80 units in NetKids at a cost of
$60,000 per unit.
30. According to the offering materials, NetKids was “directly related” to

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ToonGoggles.com and the purpose of the October 2011 NetKids offering was to
“continue behind the scenes development [of ToonGoggles.com], to acquire more
cartoon content from producers all over the world, to implement advertising and
market ToonGoggles.com all over the world, and to design a specific add campaign
to attract those currently on other children’s and parents’ websites.”
31. The offering materials stated that, if all 80 units were sold and
$4,800,000 was raised, NetKids would acquire a 10% equity stake in Toon Goggles.
32. Investors who participated in the October 2011 NetKids offerings were
issued Toon Goggles stock certificates in exchange for their investment.
33. Defendants did not register the October 2011 NetKids offering with the
SEC.
34. The offering materials contained an “Offeree Questionnaire.”  The
questionnaire requested information about investors’ investment experience, net
worth, and expected annual income.  It also requested that investors sign the
questionnaires representing that the information provided in the questionnaire was to
the best of their knowledge complete, true, correct, and could be relied upon.
2. The September 2013 Dinomite Offering
35. Beginning in or about September 2013 and continuing until
approximately August 24, 2015, Warkol offered investors stock in Dinomite Apps,
Inc. (“Dinomite”) (“the September 2013 Dinomite offering”).
36. The offering materials for the September 2013 Dinomite offering
included an agreement between the prospective investor, Dinomite, and, for purposes
of certain provisions, Warkol.

37. Warkol described Dinomite in offering materials as a company formed
for the purpose of creating and/or publishing mobile games, some of which would be
based on cartoon series appearing on the Toon Goggles platform.
38. According to the offering materials, Dinomite stock was being offered to

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raise approximately $1.5 million in “seed capital” for Toon Goggles, which would be
used to begin the development of mobile games appearing on Toon Goggles.
39. Warkol offered shares of Dinomite stock at $0.50 per share and gave
investors a one-time option to exchange their Dinomite stock for shares of Toon
Goggles that Warkol owned as a founder and principal of Toon Goggles.  One of the
conditions to the exchange options was that investors had to do the exchange within
nine months of purchasing Dinomite stock.
40. Toon Googles purports to have, as of approximately February 26, 2019,
issued shares of Toon Goggles in exchange for all known outstanding shares of
Dinomite stock.
41. Defendants did not register the September 2013 Dinomite offering with
the SEC.
42. The offering materials contained a provision that required investors to
represent and warrant as a part of the investment agreement they signed that they
were “accredited investors” under Rule 501 of Regulation D of the Securities Act.
3. The October 2013 NetKids Offering
43. Beginning in or about October 2013 and continuing until approximately
April 28, 2016, Warkol offered investors additional units in NetKids (“the October
2013 NetKids offering”).
44. The offering materials for the October 2013 NetKids offering included a
PPM.
45. The offering documents stated that the offering was exempt from SEC
registration requirements and that it was for “accredited purchasers only,” which the
offering documents described as generally including, among others, “any natural
person whose individual net worth, or joint net worth with that person’s spouse, at the
time of purchase, exceeds $1,000,000.”
46. Warkol sought to raise a total of $4,500,000 with the October 2013
NetKids offering by offering investors a total of 75 units in NetKids, convertible to

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shares of Toon Goggles, at a cost of $60,000 per unit.
47. According to the offering documents, NetKids’ ability to raise this
working capital was “relevant” to the continued operations of ToonGoggles.com and
the purpose of the October 2013 NetKids offering was to “continue behind the scenes
development [of ToonGoggles.com], to secure more cartoon content from producers
all over the world, to implement advertising and marketing plans for
ToonGoggles.com on a global basis, and to design a specific ad campaign to attract
kids currently on other children’s and parents’ websites.”
48. The offering documents stated that each of the 75 units was designated
as convertible to 30,000 shares of Toon Goggles stock at $2.00 per share and that the
proceeds were deemed to be an adequate level of working capital sufficient to sustain
the continued operations of ToonGoggles.com.
49. Investors who participated in the October 2013 NetKids offerings were
issued Toon Goggles stock certificates in exchange for their investment.
50. Defendants did not register the October 2013 NetKids offering with the
SEC.
51. The offering materials contained an “Offeree Questionnaire.”  The
questionnaires requested information about investors’ investment experience, net
worth, and expected annual income.  It also requested that investors sign the
questionnaires representing that the information provided in the questionnaire was to
the best of their knowledge complete, true, correct, and could be relied upon.
4. The November 2013 NetKids Offering
52. Beginning in or about November 2013 and continuing until
approximately April 28, 2016, Warkol offered investors more units in NetKids (“the
November 2013 NetKids offering”).
53. The offering materials for the November 2013 NetKids offering included
a PPM.
54. The offering materials stated that the offering was exempt from SEC

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registration requirements and that it was for “accredited purchasers only,” which the
offering documents described as generally including, among others, “any natural
person whose individual net worth, or joint net worth with that person’s spouse, at the
time of purchase, exceeds $1,000,000.”
55. Warkol sought to raise a total of $3,000,000 with the November 2013
NetKids offering, by offering investors a total of 50 units in NetKids, convertible to
stock in Dinomite, at a cost of $60,000 per unit.
56. According to the offering documents, an additional principal function of
NetKids was also to handle the raising of capital for Dinomite, and the purpose of the
November 2013 NetKids offering was to support Dinomite’s “development of video
games, some based on cartoons resident on certain Internet sites, to create marketing
plans, and to design an intensive global advertising and promotion campaign to
attract kids now on other children’s and gaming sites.”
57. The offering documents stated that Dinomite had entered into an
“exclusive arrangement” with Toon Goggles to allow Dinomite to access its array of
cartoon content and to advertise on Toon Goggles for free in exchange for giving
Toon Goggles 15% of the revenue Dinomite generated from the video games it was
developing.
58. The November 2013 NetKids offering documents stated that each of the
50 units being offered was designated as convertible to 120,000 shares of Dinomite
stock (6,000,000 shares total) at $0.50 per share and that the proceeds were deemed
to be an adequate level of working capital sufficient to sustain the continued
operations of Dinomite.
59. Investors who participated in the November 2013 NetKids offerings
were issued Toon Goggles stock certificates in exchange for their investment.
60. Defendants did not register the November 2013 NetKids offering with
the SEC.
61. The offering materials contained an “Offeree Questionnaire.”  The

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questionnaire requested information about investors’ investment experience, net
worth, and expected annual income.  It also requested that investors to sign the
questionnaire representing that the information provided in the questionnaire was to
the best of their knowledge complete, true, correct, and could be relied upon.
5. The Yeti Offering
62. Beginning in or about mid-2015 and continuing until approximately
November 16, 2016, Warkol offered investors membership interests in Yeti
Productions, LLC (“Yeti”) (“the Yeti offering”).
63. The offering materials for the Yeti offering included an agreement
between the prospective investor and Toon Goggles.
64. The Yeti offering documents that were provided to investors state that
Yeti was formed to create, distribute, license and/or publish a cartoon series,
merchandise and videogames based on an existing concept co-produced with another
content provider entitled “Eddie is a Yeti.”
65. According to the offering documents, Mondo TV had entered into an
agreement with Toon Goggles for the development of the “Eddie is a Yeti” project
and the parties to the investment agreement would be the investor and Toon Goggles.
66. The offering of Yeti membership interests was to raise approximately
$1.5 million in “seed capital” in order to continue the creation, distribution, licensing,
publishing, and merchandising of “Eddie is a Yeti.”
67. Defendants did not register the Yeti offering with the SEC.
68. The offering documents contained a provision that required investors to
represent and warrant as a part of their investment agreement that they had “sufficient
liquid assets” to invest in Yeti’s investment program.
C. Defendants’ Securities Registration Violations
69. All of the units, stock, and membership interests that Warkol offered and
sold to investors in NetKids, Dinomite, and Yeti respectively, were securities.
70. Each investor invested money in a common enterprise, namely the

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continued operations of Toon Goggles, NetKids, Dinomite, and Yeti, with the
expectation that any profits or revenues derived from those operations would come
solely through the efforts of defendants and others.
71. All of the units, stock, and membership interests that Warkol offered
investors in NetKids, Dinomite, and Yeti respectively, were integrated and part of a
single plan of financing.
72. Each of the offerings was for the same general purpose in that they were
to continue   the operations of Toon Goggles through the raising of capital for the
creation, distribution, licensing, and merchandising of media content to be used on its
website and mobile applications.
73. Each of the offerings was for the same type of consideration in that
investors received their units, stock, and membership interests in exchange for
money.
74. Each of the offerings occurred at or around the same time in that they
took place between August 2012 and late 2016, if not consecutive to one another.
75. Toon Goggles was the issuer for each of the offerings.
76. Although Warkol used NetKids, Dinomite, and Yeti to conduct the
offerings, Warkol, acting on behalf of Toon Goggles, controlled all of the offerings
and had the authority, which he regularly exercised, to convert and exchange the
units, stock, and membership interests of NetKids, Dinomite and Yeti into shares of
Toon Goggles.
77. Toon Goggles, NetKids, Dinomite, and Yeti were all engaged in the
same type of business and their business operations overlapped.
78. For example, Toon Goggles entered into an agreement to develop Eddie
is a Yeti and Dinomite agreed to give Toon Goggles 15% of its revenue in exchange
for free advertising.
79. Many of the employees of Toon Goggles also worked on the Dinomite
and Yeti projects.

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80. NetKids, Dinomite and Yeti shared Toon Goggle’s office space.
81. Toon Goggles, Netkids, Dinomite, and Yeti had over 25 bank accounts
combined and investor funds from each of the five offerings were regularly
commingled and transferred between these accounts.
82. Defendants each directly and indirectly participated in the unregistered
offer and sale of Toon Goggles’ securities to investors.
83. Toon Goggles, as the issuer  of the securities, directly offered and sold its
securities in the unregistered offering.
84. Warkol offered and sold Toon Goggles’ securities when he engaged
sales agents to solicit investors, purchased lead sheets for the sales agents, paid and
directed others to pay commissions and finder fees to sales agents, gave himself
“transaction-based” compensation, and reviewed offering materials that were
distributed to investors, all of which made Warkol a necessary participant and
substantial factor in Toon Goggles’ offering.
85. None of the offerings qualified for an exemption from the securities
registration requirements.
86. Neither Warkol nor Toon Goggles maintained complete and accurate
records of the number of securities sold to investors, amount of funds raised from
investors, subscription agreements signed by investors, and the stock certificates
issued to investors.  The defendants also failed to maintain complete records of the
stock that investors converted or exchanged.  As a result, defendants do not know the
current number of investors in Toon Goggles or the total amount of capital raised
from investors.
87. Although some of the offering documents claimed that the offerings
were for “accredited purchasers only” and others purportedly required investors to
“represent and warrant” that they were “accredited investors” and had “sufficient
liquid assets”   to invest, Warkol failed to take reasonable steps to verify that the
investors they sold securities to in connection with the offerings were accredited and

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at least 8 investors were unaccredited.
88. Warkol never required investors to provide any Internal Revenue Service
forms reporting the investor’s income, bank statements, brokerage statements,
certificates of deposit, tax assessments, or an appraisal report issued by an
independent third party to verify their accredited status.
89. Warkol never disclosed to investors a reasonable time prior to sale of the
securities that on June 30, 2011, the California Department of Corporations issued a
Desist and Refrain Order against Warkol (who was then using the name “Ira
Warren”), prohibiting him from the offer or sale in California of securities that were
not qualified and from the offer and sale of securities through materially false or
misleading communications.
90. Because Warkol controlled Toon Goggles and was acting within the
scope of his authority and on behalf of Toon Goggles when he conducted the
offerings, his conduct can be imputed to Toon Goggles.
D. Defendant Warkol Acted as an   Unregistered Broker
91. Between in or about August 2012 through early 2017, Warkol acted as
an unregistered broker for Toon Goggles’ five integrated offerings identified above.
92. Warkol raised over $19 million from at least 400 investors in connection
with these offerings and personally received at least approximately $1,748,985.42 in
transaction-based compensation.
93. Warkol directly and indirectly participated in these offerings and in the
business of offering, selling, or otherwise effecting transactions in securities for the
accounts of others.
94. Warkol purchased lead sheets for the five offerings identified above and
hired sales agents to solicit investors and to answer questions investors had about the
offerings.
95. Warkol oversaw a general solicitation of investors located throughout
the United States, including California, New York, Arizona, Texas, Missouri, and

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Washington.
96. Warkol setup a boiler room inside Toon Goggles’ offices and received
transaction-based compensation for himself and paid the sales agents a large
commission when securities were sold to investors.  It was not uncommon for as
much as 35% of investor funds from the five offerings to be used towards the
payment of commissions and finder’s fees.
97. Warkol reviewed the offering documents that the sales agents used to
solicit investors and various marking materials.
98. Warkol typically signed and issued the stock certificates that investors
received when they purchased securities.
99. Warkol was the signatory on at least ten of the bank accounts that
received investor funds and directed how investor money should be spent.
100. Warkol never registered as a broker-dealer with the SEC in accordance
with Section 15(b) of the Exchange Act and was never associated with a registered
broker-dealer during any of the five offerings identified above.
TOLLING OF THE STATUTE OF LIMITATIONS
101. Pursuant to a tolling agreement between Toon Goggles and the SEC, the
statute of limitations applicable to the SEC’s claims against Toon Goggles was tolled
and suspended for the period beginning on August 10, 2017 through February 12,
2020.
102. Pursuant to a tolling agreement between Warkol and the SEC, the statute
of limitations applicable to the SEC’s claims against Warkol was tolled and
suspended for the period beginning on August 10, 2017 through August 10, 2019.
FIRST CLAIM FOR RELIEF
Unregistered Offer and Sale of Securities
Violations of Sections 5(a) and 5(c) of the Securities Act
(against all Defendants)
103. The SEC realleges and incorporates by reference paragraphs 1 through

COMPLAINT
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102 above.
104. None of the five offerings defendants conducted through NetKids,
Dinomite, and Yeti were registered with the SEC, and no exemption from the
registration requirements applied to them.
105. By engaging in the conduct described above, Defendants Warkol and
Toon Goggles, and each of them, directly or indirectly, singly and in concert with
others, has made use of the means or instruments of transportation or communication
in interstate commerce, or of the mails, to offer to sell or to sell securities, or carried
or caused to be carried through the mails or in interstate commerce, by means or
instruments of transportation, securities for the purpose of sale or for delivery after
sale, when no registration statement had been filed or was in effect as to such
securities, and when no exemption from registration was applicable.
106. By engaging in the conduct described above, Defendant Warkol and
Toon Goggles have violated, and unless restrained and enjoined, are reasonably likely
to continue to violate, Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§
77e(a) & 77e(c).
SECOND CLAIM FOR RELIEF
Unregistered Broker-Dealer
Violation of Section 15(a) of the Exchange Act
(against Defendant Warkol)
107. The SEC realleges and incorporates by reference paragraphs 1 through
102 above.
108. Defendant Warkol acted as an unregistered broker by, among other
things, purchasing lead sheets, hiring sales representatives to solicit investors, paying
sale agents’ commissions and receiving transaction-based compensation for selling
securities, reviewing offering documents sent out to investors, and generating stock
certificates issued to investors.
109. By engaging in the conduct described above, Defendant Warkol made

COMPLAINT
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use of the mails and means or instrumentalities of interstate commerce to effect
transactions in, and induced and attempted to induce the purchase or sale of,
securities (other than exempted securities or commercial paper, bankers’ acceptances,
or commercial bills) without being registered with the SEC in accordance with
Section 15(b) of the Exchange Act, 15 U.S.C. § 78o(b), and without complying with
any exemptions promulgated pursuant to Section 15(a)(2), 15 U.S.C. § 78o(a)(2).
110. By engaging in the conduct described above, Defendant Warkol has
violated, and unless restrained and enjoined, is reasonably likely to continue to
violate, Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a).
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that Defendants committed the
alleged violations.
II.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendants Warkol and Toon Goggles, and
their officers, agents, servants, employees and attorneys, and those persons in active
concert or participation with any of them, who receive actual notice of the judgment
by personal service or otherwise, and each of them, from violating Sections 5(a) and
5(c) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c)].
III.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendant Warkol, and his officers, agents,
servants, employees and attorneys, and those persons in active concert or
participation with any of them, who receive actual notice of the judgment by personal
service or otherwise, and each of them, from violating Section 15(a) of the Exchange
Act [15 U.S.C. §§ 78o(a)].

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IV.
Order Defendants to disgorge all funds received from their illegal conduct,
together with prejudgment interest thereon.
V.
Order Defendants to pay civil 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)].
VI.
Retain jurisdiction of this action in accordance with the principles of equity and
the Federal Rules of Civil Procedure in order to implement and carry out the terms of
all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.
VII.
Grant such other and further relief as this Court may determine to be just and
necessary.

Dated: September 5, 2019

/s/ Douglas M. Miller
Douglas M. Miller
Yolanda Ochoa
Attorneys for Plaintiff
Securities and Exchange Commission

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DOUGLAS M. MILLER (Cal. Bar No. 240398) 
Email:  [email protected] 
YOLANDA OCHOA (Cal. Bar No. 267993) 
Email:  [email protected] 
 
Attorneys for Plaintiff 
Securities and Exchange Commission 
Michele Wein Layne, Regional Director 
Alka N. Patel, Associate Regional Director 
Amy J. Longo, Regional Trial Counsel 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 
Facsimile: (213) 443-1904 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 
 

vs. 

TOON GOGGLES, INC., and IRA 
WARKOL, 

Defendants. 
 

 Case No. 2:19-cv-07687 
 
 
COMPLAINT 
 

 
 

Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 

77t(b), 77t(d)(1) & 77v(a) and Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the 

Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1), 

78u(d)(3)(A), 78u(e) & 78aa(a). 

2. Defendants have, directly or indirectly, made use of the means or 

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

securities exchange in connection with the transactions, acts, practices and courses of 

business alleged in this complaint.  

3. Venue is proper in this district pursuant to Section 22(a) of the Securities 

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

Because certain of the transactions, acts, practices and courses of conduct constituting 

violations of the federal securities laws occurred within this district.  In addition, 

venue is proper in this district because Defendant Ira Warkol resides in this district 

and Defendant Toon Goggles, Inc.’s (“Toon Goggles”) principal place of business is 

located in this district. 

SUMMARY 

4. This matter involves the unregistered offer and sale of over $19 million 

in securities by Toon Goggles, a privately held company that offers access to cartoons 

through its online streaming service, and by the company’s recidivist founder, Ira 

Warkol.  The registration violations occurred from approximately August 2012 

through late 2016, when Toon Goggles and Warkol (collectively, “defendants”) 

conducted at least five private offerings through various entities, raising funds from 

approximately 400 investors.  None of the securities Warkol offered and sold to 

investors on behalf of Toon Goggles during this time period were registered with the 

SEC and none qualified for any of the exemptions from the registration requirements.     

5. In addition, Warkol acted as an unregistered broker for these 

unregistered offerings, setting up boiler rooms inside Toon Goggles’ offices, 

purchasing lead sheets, and engaging sales agents who were paid commissions to 

solicit investors.  The sales agents then cold-called investors throughout the United 

States, including California, New York, Arizona, Texas, Missouri, and Washington, 

and solicited investments using scripts and offering documents Warkol provided.  

Warkol used the funds that he raised from investors to pay large commissions and 

transaction-based compensation to himself and the sales agents.  In fact, it was not 

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uncommon for as much as 35% of investor funds to be used towards the payment of 

commissions and finder’s fees.  Warkol did this without registering as a broker with 

the SEC and without qualifying for any of the exceptions to the registration 

requirements.   

6. As a result of Toon Goggles’ failure to properly register these offerings, 

investors were deprived of information under Section 7(a) of the Securities Act, 

which requires a registration statement to contain certain information spe, including 

the net proceeds derived from the securities sold during the two years preceding the 

offerings, the prices at which those securities were offered to the public, the amount 

of money paid to promotors during that time period, and the profit and loss 

statements of the issuer.    

7. From August 2012 through at least late 2016, Toon Goggles was not a 

profitable company and its revenue never exceeded $200,000 a year.   

8. Warkol and Toon Goggles failed to maintain accurate and complete 

records regarding the identity of each investor, the number of shares sold to each 

investor, and the amount of money raised from each investor.  Toon Goggles still 

does not know the total number of investors in Toon Goggles or the total amount of 

capital raised from investors.   

9. By engaging in this conduct, defendants violated, and may be continuing 

to violate, the securities registration provisions of Sections 5(a) and 5(c) of the 

Securities Act, 15 U.S.C. § 77f.  Defendant Warkol also has violated, and may be 

continuing to violate, the broker-dealer registration requirements of Section 15(a) of 

the Exchange Act, 15 U.S.C. § 78o(a). 

10. With this action, the SEC seeks permanent injunctive relief against 

defendants to prevent future violations of the federal securities laws, disgorgement of 

ill-gotten gains from defendants, along with prejudgment interest, and civil penalties 

from defendants. 

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THE DEFENDANTS 

11. Ira Warkol (a.k.a. Ira Warren) founded Toon Goggles in 2010 and 

controlled the company until he terminated his relationship with Toon Goggles in 

2017.  Warkol is not, and has never been, registered with the SEC in any capacity.  

On June 30, 2011, the California Department of Corporations issued a Desist and 

Refrain Order against Warkol (who was then using the name “Ira Warren”), 

prohibiting him from engaging in the offer or sale in California of securities of Toon 

Goggles’ predecessor that were not qualified, and from the offer and sale of securities 

through materially false or misleading communications (the “2011 D&R Order”).  On 

November 19, 2018, the California Department of Business Oversight issued another 

Desist and Refrain Order against Warkol, prohibiting him from the further offer and 

sale in California of non-exempt securities related to a cannabinoids business he 

founded after terminating his relationship with Toon Goggles.  

12. Toon Goggles, Inc. is a Nevada corporation with its principal place of 

business in Los Angeles, California.  The company markets itself as an on-demand 

entertainment service for children that offers animated cartoons, live-action shows, 

games, and music via the web and mobile applications.   

OTHER RELEVANT ENTITIES 

13. NetKids LLC (“NetKids”) was a Nevada limited liability company 

established in August 2011.  According to offering materials distributed by 

defendants, its primary purpose was to handle the raising of capital for Toon Goggles 

and Dinomite Apps, Inc. before being dissolved in July 2016. 

14. Dinomite Apps, Inc. (“Dinomite”) was a Nevada corporation 

established in 2013 to function as the videogame arm for Toon Goggles.  Dinomite 

dissolved in 2015.   

15. Yeti Productions LLC (“Yeti Productions”) was established in 2014 

to develop a cartoon series for Toon Goggles.   

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THE ALLEGATIONS 

A. Toon Goggles’ Streaming Business 

16. Warkol founded Toon Goggles in late 2010 as a media service provider 

that offered licensing and online streaming of cartoons, games, news, and other 

children’s entertainment services.  Toon Goggles offered these services through its 

website ToonGoggles.com and through mobile applications.  

17.  According to Warkol, Toon Goggles was founded based on the 

observation that only a small percentage of professionally-produced cartoon series 

end up on television, meaning most are not seen by children anywhere.  Toon 

Goggles sought to take advantage of that gap and marketed itself as the “YouTube or 

Netflix for kids,” where tens of millions of children every month could watch 

thousands of cartoons, most of them never seen before. 

18. In its promotional materials, Toon Goggles claimed to have (i) the 

ability to track visitors to its website, Toongoggles.com, (ii) the technology to permit 

cartoon rights holders to upload their cartoons effortlessly onto its platform, and (iii) 

developed mobile applications to allow its streaming services to be taken with anyone 

anywhere and to be accessed on almost any mobile device.   

B. Toon Goggles’ Unregistered Securities Offerings  

19. From mid-2012 through at least 2016, Warkol raised over $19 million 

from at least 400 investors in multiple states on behalf of Toon Goggles without a 

registration statement being filed or in effect and when no exemption from 

registration applied.   

20. Warkol engaged in a general solicitation of investors and failed to take 

reasonable steps to verify that the individuals who purchased securities were 

accredited investors. 

21. Warkol purchased lead sheets and hired unregistered sales agents, who 

set up boiler rooms inside Toon Goggles’ offices and cold-called investors 

throughout the United States, soliciting investors in California, New York, Arizona, 

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Texas, Missouri, and Washington.  

22. Warkol provided sales agents with sales pitches to use when soliciting 

investors and approved commissions and other forms of transaction based 

compensation for the sales agents, which they based on a percentage of the funds 

raised from investors. 

23. Warkol never disclosed the 2011 D&R Order to investors.   

24. Warkol failed to maintain accurate and complete records regarding the 

offerings, including an inability to identify: each investor, the number of shares sold 

to each investor, and the amount of money raised from each investor.     

25. Warkol relied on various forms of self-accreditation to determine if 

investors were accredited, including having investors fill out questionnaires about 

their financial background, and failed to take reasonable steps to verify that 

information.   

1. The October 2011 NetKids Offering 

26. Beginning in or about October 2011 and continuing until approximately 

April 28, 2016, Warkol offered investors units in NetKids (“the October 2011 

NetKids offering”).   

27. The offering materials for the October 2011 NetKids offering included a 

Private Placement Memorandum (“PPM”).   

28. The offering materials stated that the offering was exempt from SEC 

registration requirements and that it was for “accredited purchasers only,” which the 

offering documents described as generally including, among others, “any natural 

person whose individual net worth, or joint net worth with that person’s spouse, at the 

time of purchase, exceeds $1,000,000.” 

29. Warkol sought to raise a total of $4,800,000 through the October 2011 

NetKids offering, by offering investors a total of 80 units in NetKids at a cost of 

$60,000 per unit.   

30. According to the offering materials, NetKids was “directly related” to 

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ToonGoggles.com and the purpose of the October 2011 NetKids offering was to 

“continue behind the scenes development [of ToonGoggles.com], to acquire more 

cartoon content from producers all over the world, to implement advertising and 

market ToonGoggles.com all over the world, and to design a specific add campaign 

to attract those currently on other children’s and parents’ websites.”   

31. The offering materials stated that, if all 80 units were sold and 

$4,800,000 was raised, NetKids would acquire a 10% equity stake in Toon Goggles.   

32. Investors who participated in the October 2011 NetKids offerings were 

issued Toon Goggles stock certificates in exchange for their investment. 

33. Defendants did not register the October 2011 NetKids offering with the 

SEC.   

34. The offering materials contained an “Offeree Questionnaire.”  The 

questionnaire requested information about investors’ investment experience, net 

worth, and expected annual income.  It also requested that investors sign the 

questionnaires representing that the information provided in the questionnaire was to 

the best of their knowledge complete, true, correct, and could be relied upon. 

2. The September 2013 Dinomite Offering  

35. Beginning in or about September 2013 and continuing until 

approximately August 24, 2015, Warkol offered investors stock in Dinomite Apps, 

Inc. (“Dinomite”) (“the September 2013 Dinomite offering”).   

36. The offering materials for the September 2013 Dinomite offering 

included an agreement between the prospective investor, Dinomite, and, for purposes 

of certain provisions, Warkol.   

 

37. Warkol described Dinomite in offering materials as a company formed 

for the purpose of creating and/or publishing mobile games, some of which would be 

based on cartoon series appearing on the Toon Goggles platform.   

38. According to the offering materials, Dinomite stock was being offered to 

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raise approximately $1.5 million in “seed capital” for Toon Goggles, which would be 

used to begin the development of mobile games appearing on Toon Goggles.   

39. Warkol offered shares of Dinomite stock at $0.50 per share and gave 

investors a one-time option to exchange their Dinomite stock for shares of Toon 

Goggles that Warkol owned as a founder and principal of Toon Goggles.  One of the 

conditions to the exchange options was that investors had to do the exchange within 

nine months of purchasing Dinomite stock. 

40. Toon Googles purports to have, as of approximately February 26, 2019, 

issued shares of Toon Goggles in exchange for all known outstanding shares of 

Dinomite stock. 

41. Defendants did not register the September 2013 Dinomite offering with 

the SEC.   

42. The offering materials contained a provision that required investors to 

represent and warrant as a part of the investment agreement they signed that they 

were “accredited investors” under Rule 501 of Regulation D of the Securities Act. 

3. The October 2013 NetKids Offering 

43. Beginning in or about October 2013 and continuing until approximately 

April 28, 2016, Warkol offered investors additional units in NetKids (“the October 

2013 NetKids offering”). 

44. The offering materials for the October 2013 NetKids offering included a 

PPM.   

45. The offering documents stated that the offering was exempt from SEC 

registration requirements and that it was for “accredited purchasers only,” which the 

offering documents described as generally including, among others, “any natural 

person whose individual net worth, or joint net worth with that person’s spouse, at the 

time of purchase, exceeds $1,000,000.” 

46. Warkol sought to raise a total of $4,500,000 with the October 2013 

NetKids offering by offering investors a total of 75 units in NetKids, convertible to 

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shares of Toon Goggles, at a cost of $60,000 per unit.   

47. According to the offering documents, NetKids’ ability to raise this 

working capital was “relevant” to the continued operations of ToonGoggles.com and 

the purpose of the October 2013 NetKids offering was to “continue behind the scenes 

development [of ToonGoggles.com], to secure more cartoon content from producers 

all over the world, to implement advertising and marketing plans for 

ToonGoggles.com on a global basis, and to design a specific ad campaign to attract 

kids currently on other children’s and parents’ websites.”   

48. The offering documents stated that each of the 75 units was designated 

as convertible to 30,000 shares of Toon Goggles stock at $2.00 per share and that the 

proceeds were deemed to be an adequate level of working capital sufficient to sustain 

the continued operations of ToonGoggles.com.   

49. Investors who participated in the October 2013 NetKids offerings were 

issued Toon Goggles stock certificates in exchange for their investment. 

50. Defendants did not register the October 2013 NetKids offering with the 

SEC.   

51. The offering materials contained an “Offeree Questionnaire.”  The 

questionnaires requested information about investors’ investment experience, net 

worth, and expected annual income.  It also requested that investors sign the 

questionnaires representing that the information provided in the questionnaire was to 

the best of their knowledge complete, true, correct, and could be relied upon. 

4. The November 2013 NetKids Offering  

52. Beginning in or about November 2013 and continuing until 

approximately April 28, 2016, Warkol offered investors more units in NetKids (“the 

November 2013 NetKids offering”).   

53. The offering materials for the November 2013 NetKids offering included 

a PPM.   

54. The offering materials stated that the offering was exempt from SEC 

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registration requirements and that it was for “accredited purchasers only,” which the 

offering documents described as generally including, among others, “any natural 

person whose individual net worth, or joint net worth with that person’s spouse, at the 

time of purchase, exceeds $1,000,000.” 

55. Warkol sought to raise a total of $3,000,000 with the November 2013 

NetKids offering, by offering investors a total of 50 units in NetKids, convertible to 

stock in Dinomite, at a cost of $60,000 per unit.   

56. According to the offering documents, an additional principal function of 

NetKids was also to handle the raising of capital for Dinomite, and the purpose of the 

November 2013 NetKids offering was to support Dinomite’s “development of video 

games, some based on cartoons resident on certain Internet sites, to create marketing 

plans, and to design an intensive global advertising and promotion campaign to 

attract kids now on other children’s and gaming sites.”   

57. The offering documents stated that Dinomite had entered into an 

“exclusive arrangement” with Toon Goggles to allow Dinomite to access its array of 

cartoon content and to advertise on Toon Goggles for free in exchange for giving 

Toon Goggles 15% of the revenue Dinomite generated from the video games it was 

developing.   

58. The November 2013 NetKids offering documents stated that each of the 

50 units being offered was designated as convertible to 120,000 shares of Dinomite 

stock (6,000,000 shares total) at $0.50 per share and that the proceeds were deemed 

to be an adequate level of working capital sufficient to sustain the continued 

operations of Dinomite.   

59. Investors who participated in the November 2013 NetKids offerings 

were issued Toon Goggles stock certificates in exchange for their investment. 

60. Defendants did not register the November 2013 NetKids offering with 

the SEC.   

61. The offering materials contained an “Offeree Questionnaire.”  The 

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questionnaire requested information about investors’ investment experience, net 

worth, and expected annual income.  It also requested that investors to sign the 

questionnaire representing that the information provided in the questionnaire was to 

the best of their knowledge complete, true, correct, and could be relied upon. 

5. The Yeti Offering 

62. Beginning in or about mid-2015 and continuing until approximately 

November 16, 2016, Warkol offered investors membership interests in Yeti 

Productions, LLC (“Yeti”) (“the Yeti offering”).   

63. The offering materials for the Yeti offering included an agreement 

between the prospective investor and Toon Goggles.   

64. The Yeti offering documents that were provided to investors state that 

Yeti was formed to create, distribute, license and/or publish a cartoon series, 

merchandise and videogames based on an existing concept co-produced with another 

content provider entitled “Eddie is a Yeti.”   

65. According to the offering documents, Mondo TV had entered into an 

agreement with Toon Goggles for the development of the “Eddie is a Yeti” project 

and the parties to the investment agreement would be the investor and Toon Goggles.   

66. The offering of Yeti membership interests was to raise approximately 

$1.5 million in “seed capital” in order to continue the creation, distribution, licensing, 

publishing, and merchandising of “Eddie is a Yeti.”   

67. Defendants did not register the Yeti offering with the SEC.   

68. The offering documents contained a provision that required investors to 

represent and warrant as a part of their investment agreement that they had “sufficient 

liquid assets” to invest in Yeti’s investment program. 

C. Defendants’ Securities Registration Violations 

69. All of the units, stock, and membership interests that Warkol offered and 

sold to investors in NetKids, Dinomite, and Yeti respectively, were securities.   

70. Each investor invested money in a common enterprise, namely the 

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continued operations of Toon Goggles, NetKids, Dinomite, and Yeti, with the 

expectation that any profits or revenues derived from those operations would come 

solely through the efforts of defendants and others. 

71. All of the units, stock, and membership interests that Warkol offered 

investors in NetKids, Dinomite, and Yeti respectively, were integrated and part of a 

single plan of financing.   

72. Each of the offerings was for the same general purpose in that they were 

to continue the operations of Toon Goggles through the raising of capital for the 

creation, distribution, licensing, and merchandising of media content to be used on its 

website and mobile applications. 

73. Each of the offerings was for the same type of consideration in that 

investors received their units, stock, and membership interests in exchange for 

money. 

74. Each of the offerings occurred at or around the same time in that they 

took place between August 2012 and late 2016, if not consecutive to one another.   

75. Toon Goggles was the issuer for each of the offerings.   

76. Although Warkol used NetKids, Dinomite, and Yeti to conduct the 

offerings, Warkol, acting on behalf of Toon Goggles, controlled all of the offerings 

and had the authority, which he regularly exercised, to convert and exchange the 

units, stock, and membership interests of NetKids, Dinomite and Yeti into shares of 

Toon Goggles. 

77. Toon Goggles, NetKids, Dinomite, and Yeti were all engaged in the 

same type of business and their business operations overlapped.   

78. For example, Toon Goggles entered into an agreement to develop Eddie 

is a Yeti and Dinomite agreed to give Toon Goggles 15% of its revenue in exchange 

for free advertising.   

79. Many of the employees of Toon Goggles also worked on the Dinomite 

and Yeti projects. 

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COMPLAINT 13  
 

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80. NetKids, Dinomite and Yeti shared Toon Goggle’s office space. 

81. Toon Goggles, Netkids, Dinomite, and Yeti had over 25 bank accounts 

combined and investor funds from each of the five offerings were regularly 

commingled and transferred between these accounts.   

82. Defendants each directly and indirectly participated in the unregistered 

offer and sale of Toon Goggles’ securities to investors.   

83. Toon Goggles, as the issuer of the securities, directly offered and sold its 

securities in the unregistered offering.  

84. Warkol offered and sold Toon Goggles’ securities when he engaged 

sales agents to solicit investors, purchased lead sheets for the sales agents, paid and 

directed others to pay commissions and finder fees to sales agents, gave himself 

“transaction-based” compensation, and reviewed offering materials that were 

distributed to investors, all of which made Warkol a necessary participant and 

substantial factor in Toon Goggles’ offering. 

85. None of the offerings qualified for an exemption from the securities 

registration requirements.   

86. Neither Warkol nor Toon Goggles maintained complete and accurate 

records of the number of securities sold to investors, amount of funds raised from 

investors, subscription agreements signed by investors, and the stock certificates 

issued to investors.  The defendants also failed to maintain complete records of the 

stock that investors converted or exchanged.  As a result, defendants do not know the 

current number of investors in Toon Goggles or the total amount of capital raised 

from investors.   

87. Although some of the offering documents claimed that the offerings 

were for “accredited purchasers only” and others purportedly required investors to 

“represent and warrant” that they were “accredited investors” and had “sufficient 

liquid assets” to invest, Warkol failed to take reasonable steps to verify that the 

investors they sold securities to in connection with the offerings were accredited and 

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COMPLAINT 14  
 

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at least 8 investors were unaccredited. 

88. Warkol never required investors to provide any Internal Revenue Service 

forms reporting the investor’s income, bank statements, brokerage statements, 

certificates of deposit, tax assessments, or an appraisal report issued by an 

independent third party to verify their accredited status. 

89. Warkol never disclosed to investors a reasonable time prior to sale of the 

securities that on June 30, 2011, the California Department of Corporations issued a 

Desist and Refrain Order against Warkol (who was then using the name “Ira 

Warren”), prohibiting him from the offer or sale in California of securities that were 

not qualified and from the offer and sale of securities through materially false or 

misleading communications.   

90. Because Warkol controlled Toon Goggles and was acting within the 

scope of his authority and on behalf of Toon Goggles when he conducted the 

offerings, his conduct can be imputed to Toon Goggles. 

D. Defendant Warkol Acted as an Unregistered Broker 

91. Between in or about August 2012 through early 2017, Warkol acted as 

an unregistered broker for Toon Goggles’ five integrated offerings identified above. 

92. Warkol raised over $19 million from at least 400 investors in connection 

with these offerings and personally received at least approximately $1,748,985.42 in 

transaction-based compensation. 

93. Warkol directly and indirectly participated in these offerings and in the 

business of offering, selling, or otherwise effecting transactions in securities for the 

accounts of others.   

94. Warkol purchased lead sheets for the five offerings identified above and 

hired sales agents to solicit investors and to answer questions investors had about the 

offerings.   

95. Warkol oversaw a general solicitation of investors located throughout 

the United States, including California, New York, Arizona, Texas, Missouri, and 

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COMPLAINT 15  
 

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Washington. 

96. Warkol setup a boiler room inside Toon Goggles’ offices and received 

transaction-based compensation for himself and paid the sales agents a large 

commission when securities were sold to investors.  It was not uncommon for as 

much as 35% of investor funds from the five offerings to be used towards the 

payment of commissions and finder’s fees.   

97. Warkol reviewed the offering documents that the sales agents used to 

solicit investors and various marking materials. 

98. Warkol typically signed and issued the stock certificates that investors 

received when they purchased securities.    

99. Warkol was the signatory on at least ten of the bank accounts that 

received investor funds and directed how investor money should be spent.   

100. Warkol never registered as a broker-dealer with the SEC in accordance 

with Section 15(b) of the Exchange Act and was never associated with a registered 

broker-dealer during any of the five offerings identified above. 

TOLLING OF THE STATUTE OF LIMITATIONS 

101. Pursuant to a tolling agreement between Toon Goggles and the SEC, the 

statute of limitations applicable to the SEC’s claims against Toon Goggles was tolled 

and suspended for the period beginning on August 10, 2017 through February 12, 

2020. 

102. Pursuant to a tolling agreement between Warkol and the SEC, the statute 

of limitations applicable to the SEC’s claims against Warkol was tolled and 

suspended for the period beginning on August 10, 2017 through August 10, 2019. 

FIRST CLAIM FOR RELIEF 

Unregistered Offer and Sale of Securities 

Violations of Sections 5(a) and 5(c) of the Securities Act 

(against all Defendants) 

103. The SEC realleges and incorporates by reference paragraphs 1 through 

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COMPLAINT 16  
 

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102 above. 

104. None of the five offerings defendants conducted through NetKids, 

Dinomite, and Yeti were registered with the SEC, and no exemption from the 

registration requirements applied to them. 

105. By engaging in the conduct described above, Defendants Warkol and 

Toon Goggles, and each of them, directly or indirectly, singly and in concert with 

others, has made use of the means or instruments of transportation or communication 

in interstate commerce, or of the mails, to offer to sell or to sell securities, or carried 

or caused to be carried through the mails or in interstate commerce, by means or 

instruments of transportation, securities for the purpose of sale or for delivery after 

sale, when no registration statement had been filed or was in effect as to such 

securities, and when no exemption from registration was applicable. 

106. By engaging in the conduct described above, Defendant Warkol and 

Toon Goggles have violated, and unless restrained and enjoined, are reasonably likely 

to continue to violate, Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 

77e(a) & 77e(c). 

SECOND CLAIM FOR RELIEF 

Unregistered Broker-Dealer 

Violation of Section 15(a) of the Exchange Act 

(against Defendant Warkol) 

107. The SEC realleges and incorporates by reference paragraphs 1 through 

102 above. 

108. Defendant Warkol acted as an unregistered broker by, among other 

things, purchasing lead sheets, hiring sales representatives to solicit investors, paying 

sale agents’ commissions and receiving transaction-based compensation for selling 

securities, reviewing offering documents sent out to investors, and generating stock 

certificates issued to investors.   

109. By engaging in the conduct described above, Defendant Warkol made 

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COMPLAINT 17  
 

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use of the mails and means or instrumentalities of interstate commerce to effect 

transactions in, and induced and attempted to induce the purchase or sale of, 

securities (other than exempted securities or commercial paper, bankers’ acceptances, 

or commercial bills) without being registered with the SEC in accordance with 

Section 15(b) of the Exchange Act, 15 U.S.C. § 78o(b), and without complying with 

any exemptions promulgated pursuant to Section 15(a)(2), 15 U.S.C. § 78o(a)(2).  

110. By engaging in the conduct described above, Defendant Warkol has 

violated, and unless restrained and enjoined, is reasonably likely to continue to 

violate, Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a). 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that Defendants committed the 

alleged violations. 

II. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendants Warkol and Toon Goggles, and 

their officers, agents, servants, employees and attorneys, and those persons in active 

concert or participation with any of them, who receive actual notice of the judgment 

by personal service or otherwise, and each of them, from violating Sections 5(a) and 

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

III. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendant Warkol, and his officers, agents, 

servants, employees and attorneys, and those persons in active concert or 

participation with any of them, who receive actual notice of the judgment by personal 

service or otherwise, and each of them, from violating Section 15(a) of the Exchange 

Act [15 U.S.C. §§ 78o(a)]. 

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COMPLAINT 18  
 

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IV. 

Order Defendants to disgorge all funds received from their illegal conduct, 

together with prejudgment interest thereon. 

V. 

Order Defendants to pay civil 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)]. 

VI. 

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

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

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

VII. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

 

Dated: September 5, 2019  
 /s/ Douglas M. Miller 

Douglas M. Miller 
Yolanda Ochoa 
Attorneys for Plaintiff 
Securities and Exchange Commission 
 

 
 

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