SEC v. David A. Spargo; CannaCloud, Inc.; and D.A. Spargo & Co., LLC, No. 2:25-cv-01043, District of Arizona (Apr. 29, 2025) — Complaint

COMPLAINT
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ALEC JOHNSON (Cal. Bar No. 270960)
Email:  [email protected]
HEATHER C. GORMAN (Cal. Bar No. 258920)
Email:  [email protected]

Attorneys for Plaintiff
Securities and Exchange Commission
Katharine E. Zoladz, Regional Director
Gary Y. Leung, Associate Regional Director
Douglas M. Miller, 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
DISTRICT OF ARIZONA

Securities and Exchange Commission,
Plaintiff,

vs.
David A. Spargo, CannaCloud, Inc.,
and D.A. Spargo & Co., LLC,
Defendants.

    Case    No.

COMPLAINT

Plaintiff Securities and Exchange Commission (“SEC”) alleges:
SUMMARY
1. This civil enforcement action concerns a fraudulent securities offering
perpetrated by defendant David A. Spargo (“Spargo”) through two defendant
entities that he controlled, CannaCloud, Inc. (“CannaCloud”) and D.A. Spargo &
Co., LLC (“D.A. Spargo”).  From February 2021 to December 2021, Spargo used
these entities to raise at least $1.65 million from approximately 33 investors, who
invested in high-yield notes that could be converted into CannaCloud stock issued
by D.A. Spargo.  When convincing investors, Spargo made false and misleading

COMPLAINT
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representations about the true state of CannaCloud’s business, its financial
condition, and its ability to pay out the 20 percent annual return promised by the
terms of defendants’ high-yield notes.  Once investors had transferred their funds
for investment, Spargo engaged these entities in a scheme to defraud by using
investor funds for his personal use.  CannaCloud is now defunct with
approximately $1.5 million of its investors’ funds having been misappropriated.
2. Spargo represented to investors that he would use their money to fund
CannaCloud’s business, claiming that the company was developing an application
that would give marijuana consumers the ability to access inventories of cannabis
dispensaries and to purchase cannabis products.  Spargo told investors that they
would receive a 20 percent annual return on their investment and that they would
have the option to obtain equity shares in the company once shares were issued.
Spargo provided certain investors with an investor presentation about
CannaCloud’s business showing a 40 percent net profit margin for the prior year
and a $7.25 billion valuation.
3. In reality, Spargo used little of the funds he raised from investors to
develop CannaCloud’s business.  Instead, Spargo spent investors’ money at
casinos and on personal expenses.  He took investor funds via cash withdrawals
and transferred investor funds to his wife’s bank account.  Meanwhile, Spargo told
investors that CannaCloud’s business was doing well and that the company would
soon be sold to a wealthy third-party purchaser, benefitting shareholders.  Spargo
never disclosed to investors that he was using their investments on personal
expenses or that there was no money for CannaCloud to pay them their promised
returns.
4. By engaging in the conduct described in this Complaint, Spargo,
CannaCloud, and D.A. Spargo violated Section 17(a) of the Securities Act of 1933
(“Securities Act”) [15 U.S.C. §§ 77(e)(a), 77(e)(c), 77q(a)], and Section 10(b) of
the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and

COMPLAINT
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Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5(a)-(c)].
5. With this complaint, the SEC seeks: (i) the issuance of findings of fact
and conclusions of law that defendants Spargo, CannaCloud, and D.A. Spargo
committed these securities law violations; (ii) permanent injunctions prohibiting
future violations of the federal securities laws by defendants; (iii) a conduct-based
injunction against defendant Spargo; (iv) an officer and director bar against
defendant Spargo under Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)]
and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; (v) an order
requiring defendants to disgorge their ill-gotten gains with prejudgment interest in
accordance with Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C.
§§ 78u(d)(5) and 78u(d)(7)]; and (vi) an order imposing a civil penalty on
defendant Spargo under Section 21(d)(3) of the Exchange Act [15 U.S.C. §
78u(d)(3)] and Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)].
JURISDICTION AND VENUE
6. This Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1) and 22(a) of the 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 Exchange Act [15
U.S.C. §§ 78u(d)(1), 78u(d)(3)(A), 78u(e) & 78aa(a)].
7. Defendants have, directly or indirectly, made use of the means or
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.
8. 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 Spargo resides in this
district and CannaCloud and D.A. Spargo conducted business in this district.

COMPLAINT
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DEFENDANTS
9. David A. Spargo, age 56, is a resident of Mesa, Arizona.  Spargo is
the director and co-founder of CannaCloud.  Spargo is also the sole member of
D.A. Spargo.  Spargo is not registered with the SEC in any capacity.
10. CannaCloud, Inc. is a Nevada corporation formed in March 2021,
with its principal place of business in Mesa, Arizona.  CannaCloud is controlled by
defendant David Spargo.  CannaCloud is not registered with the SEC in any
capacity, nor has it registered any offering of its securities with the SEC.
11. D.A. Spargo & Co., LLC is an Arizona limited liability company
formed by Spargo in September 2007, with its principal place of business in
Scottsdale.  D.A. Spargo is controlled by defendant David Spargo.  D.A. Spargo is
not registered with the SEC in any capacity, nor has it registered any offering of its
securities with the SEC.
THE ALLEGATIONS
A. CannaCloud’s Purported Business
12. In March 2021, Spargo filed a business license application for
CannaCloud with the Nevada Secretary of State.
13. Two weeks later, Spargo filed an application with the Arizona
Corporation Commission for CannaCloud to conduct business in Arizona.
14. In both applications, Spargo designated himself as the president,
treasurer, and a director of CannaCloud.
15.  When formed in March 2021, CannaCloud’s ostensible business was
to develop and commercialize a software application that would facilitate the
purchase and sale of cannabis products between consumers and marijuana
dispensaries.
16. Spargo, who claimed to have expertise and contacts in the cannabis
industry, had already begun to raise funds from investors purportedly to build
CannaCloud’s business.

COMPLAINT
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B. Defendants’ Fraudulent Securities Offering
1. Convertible note investments offered and sold by CannaCloud
17. The investments offered by defendants were typically short-term notes
of three to nine months.  These notes offered a 20 percent annual rate of return on
the principal amount invested.
18. These investments were documented as convertible notes for shares in
CannaCloud.
19. According to the terms of the convertible notes, in exchange for the
investor’s transfer of the principal amount to CannaCloud, D.A. Spargo or another
Spargo-controlled entity agreed to pay the note purchaser a 20 percent annual
interest on the principal amount.
20. In addition, these notes would automatically convert to CannaCloud
stock if certain conditions occurred, such as maturity, a financing event, or a
change-in-control event.  Each note provided a conversion price to calculate the
number of CannaCloud shares to be received by the note holder.
2. Defendants’ solicitation of investors
21. Beginning in at least February 2021 and continuing through at least
December 2021, Spargo solicited investment in CannaCloud from individual
investors.
22. In most cases, Spargo either knew or had met these individual
investors, or the investors were the friends or family of people that Spargo knew.
23. When communicating with investors and potential investors about
CannaCloud, Spargo provided information about the company by phone, in text
messages, or via Whatsapp messages.
24. After Spargo convinced an investor to invest in CannaCloud, the
investor transferred their funds to a bank account controlled by Spargo and
executed a convertible note for shares in CannaCloud.
25. When soliciting their investment, Spargo explained to investors that if

COMPLAINT
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CannaCloud became a publicly traded company, investors could profit
considerably by converting their notes into CannaCloud shares.  Spargo further
represented to investors that even if CannaCloud did not become a public
company, he would personally guarantee a 20 percent annual return on their
investment.
26. Following their investment, Spargo continued to communicate with
investors about CannaCloud’s ongoing business prospects in a positive light, and
several investors decided to invest additional funds in CannaCloud on the basis of
these further representations by Spargo.
27. In all, from February 2021 to December 2021, Spargo raised at least
$1.65 million through CannaCloud convertible note agreements with
approximately 33 investors.
3. CannaCloud’s convertible notes are securities
28. Investors in CannaCloud’s convertible notes were primarily motivated
by the generation of profits.
29. Because of the representations made by Spargo and the terms of the
notes themselves, an investor in CannaCloud’s convertible notes would reasonably
have expected to be making an investment.  Indeed, CannaCloud investors
subjectively believed their notes were investments and that their invested funds
would be used to build CannaCloud’s business, such that they would profit if
CannaCloud’s business succeeded.
30. No other regulatory scheme significantly reduced CannaCloud
investors’ risk of investment such that the enforcement of the federal securities law
is unnecessary.
31. Accordingly, the CannaCloud convertible notes that defendants
offered and sold to investors were securities within the meaning of the federal
securities laws.
32. In addition, each CannaCloud convertible note investor transferred

COMPLAINT
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money to a Spargo-controlled entity with the understanding that their funds would
be used to build CannaCloud’s business.  Thus the notes constituted an investment
of money.
33. Defendants pooled the investor funds they received from CannaCloud
convertible note investors in bank accounts controlled by Spargo.
34. Because defendants’ promised return was a percentage of investors’
principal invested, investors were led to believe they would share profits in a
manner proportional to the amount of their investment.
35. If CannaCloud succeeded commercially, then defendants and
CannaCloud convertible note investors all stood to profit.
36. CannaCloud convertible note investors expected the profits from their
investments to be derived solely from CannaCloud’s efforts to develop its
business, which was to commercialize and operate an application that gave
marijuana consumers the ability to access inventories of cannabis dispensaries and
purchase cannabis products.
37. For this separate reason, CannaCloud’s convertible notes are
securities within the meaning of the federal securities laws because they are
investment contracts.
C. Defendants Made False and Misleading Statements When Offering and
Selling Securities to CannaCloud Investors
38. First, Spargo made false or misleading statements to investors and
potential investors in which he represented that their invested funds would be used
to pay for CannaCloud’s business expenses, such as application development costs,
platform fees, professional service fees, and the overall commercialization of
CannaCloud’s cannabis marketplace application.
39. In truth, defendants spent only a small amount of the investor funds
raised on actual development work, making minimal progress in the relevant
period to commercialize CannaCloud’s purported cannabis marketplace

COMPLAINT
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application.  Accordingly, Spargo’s representations about how investor funds
would be used by defendants were false or misleading.
40. Second, Spargo made false or misleading statements to investors and
potential investors about certain unnamed, wealthy third-party investors who,
according to Spargo, would be making a “billion-dollar purchase” of CannaCloud.
41. When Spargo made these representations about a “billion-dollar”
acquisition of CannaCloud to investors and potential investors, there had been no
offer to buy the company.  Accordingly, Spargo’s representations about a putative
buy-out were false or misleading.
42. Third, Spargo made false or misleading statements to investors and
potential investors in which he vastly overstated CannaCloud’s valuation.
43. In mid-2021, Spargo emailed investors a company valuation
document and an investor presentation.  The valuation document stated that
CannaCloud was valued at $7.45 billion.
44. The investor presentation contained an overview of CannaCloud’s
business, described its technology, and presented its purported leadership and
consultancy team.   Further the presentation summarized the investment
opportunity available to investors and set forth CannaCloud’s operating and
revenue models, which included an assertion that CannaCloud had a 40 percent net
profit margin in 2020.
45. At the time that defendants provided investors with these valuation
and investor presentation materials, CannaCloud did not have the described
leadership team in place.
46. At the time that defendants provided investors with these valuation
and investor presentation materials, CannaCloud had not developed its claimed
cannabis marketplace application.
47. At the time that defendants provided investors with these valuation
and investor presentation materials, CannaCloud had never generated any

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operating revenue.
48. Accordingly, defendants’ foregoing representations about
CannaCloud’s supposed leadership, valuation, and past and projected financial
performance were false or misleading.
49. Fourth, Spargo made false or misleading statements to at least one
investor claiming that they would be able to withdraw their investment at any time.
50. When Spargo made this representation, CannaCloud had insufficient
funds to honor investor redemption requests.
51. Accordingly, Spargo’s representations about the liquidity of an
investment in CannaCloud were false or misleading.
52. The false and misleading statements alleged above were
communicated by Spargo either orally or via email communications that Spargo
had ultimate authority over, including their content and the manner in which they
were communicated.
53. In addition, the convertible notes purchased by CannaCloud investors
were all counter-signed by Spargo on the issuer’s behalf and were sent by Spargo
to investors.
54. Accordingly, Spargo made all of the false and misleading statements
alleged above.
D. Defendants Engaged in a Scheme to Defraud
1. Misappropriation of investor funds
55. Instead of using the investor funds raised to grow CannaCloud’s
claimed business, defendants misappropriated investors’ money.
56. Of the approximately $1,651,609 that defendants took from investors
in their securities offering, they misappropriated approximately $1,500,000.
57. Within days of an investor deposit, Spargo often depleted the funds by
spending the money at casinos in Las Vegas or Arizona, withdrawing the money at
ATMs or paying for personal expenses.

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58. Spargo also used investor funds to pay down his personal credit cards,
car loans, or luxury hotel account balances.
59. Spargo also used investor money to pay for personal expenses,
including purchases at retail stores, restaurants, grocery stores, gas stations, as well
as the payment of Spargo’s personal federal taxes.
60. Spargo also transferred investor money to bank accounts controlled by
him or his spouse.
61. When misappropriating investor funds for Spargo’s personal use,
defendants engaged in a scheme to defraud.
2. Lulling of defrauded investors
62. In time, CannaCloud’s convertible note investors had received neither
their promised 20 percent annual return nor their stock in CannaCloud.
63. When certain investors requested their money back, Spargo did not
honor those requests.
64. Instead, Spargo made further false and misleading representations
about CannaCloud and its business prospects.  Specifically, Spargo falsely claimed
to these investors that CannaCloud would soon be purchased by an unnamed third-
party investor.  Spargo claimed that existing CannaCloud convertible note
investors stood to profit from that acquisition but only if they continued with their
investment in the company.
65. Through this pattern of additional false and misleading lulling
statements, Spargo intended to conceal defendants’ ongoing fraud from detection.
66. Defendants’ lulling efforts alleged above were made in furtherance of
their scheme to defraud.
E. Defendants’ False and Misleading Statements and Scheme to Defraud
Were Material
67. Any reasonable investor would consider it significant to their
investment decision to know that defendants’ representations about how their

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funds would be used were false or misleading.  Moreover, any reasonable investor
would have considered it important to know that Spargo spent only a de minimis
amount of investor funds on development expenses, and instead engaged in a
widescale misappropriation of investor funds for his personal use.
68. Any reasonable investor would also consider it significant to their
investment decision to know that defendants’ representations about CannaCloud’s
commercial progress and the status of its business were false or misleading.
Moreover, any reasonable investor would have considered it important to know
that CannaCloud never developed its claimed cannabis marketplace application,
generated no operating revenues, and took no meaningful steps to achieve its
business goals.
69. Any reasonable investor would consider it significant to their
investment decision to know that the business valuation and investor presentation
materials defendants provided to investors and potential investors—claiming,
among other things, that CannaCloud had been valued at $7.25 billion and had
realized a 40 percent net profit margin in FY 2020—were false or misleading.
70. Any reasonable investor would consider it significant to their
investment decision to know that defendants’ representations concerning
CannaCloud’s anticipated acquisition by a third-party were false or misleading.
Moreover, any reasonable investor would have considered it important to know
that there had been no offer to buy CannaCloud.
71. Any reasonable investor would consider it significant to their
investment decision to know that defendants’ claims that investors could take their
money out of CannaCloud at any time were false or misleading.  Moreover, any
reasonable investor would have considered it important to know that CannaCloud
lacked the funds to honor any such redemption requests.
F. Defendants Acted with Scienter and Their Conduct was Negligent
72. Spargo knew or was reckless in not knowing that defendants’

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representations to investors and potential investors—concerning the use of their
funds, the true state of CannaCloud’s business, the prospect of CannaCloud’s
acquisition by a well-financed third-party, the liquidity of their CannaCloud
investments, and CannaCloud’s asserted multi-billion valuation and track record of
profit—were all false or misleading.
73. Because Spargo controlled the financial accounts receiving investor
funds, Spargo knew that defendants were misappropriating investor funds for his
personal use.
74. Spargo’s conduct in making the foregoing false or misleading
statements to investors and potential investors was unreasonable, and therefore
negligent.
75. Spargo’s conduct in directing the misuse of investor funds through his
control of the financial accounts receiving investor funds was unreasonable, and
therefore negligent.
76. Spargo’s knowledge, intent, and negligence is imputed to defendants
CannaCloud and D.A. Spargo because he controlled both entity defendants.
G. Defendants’ Fraudulent Scheme Collapses and Investors Sustain a
Seven-Figure Investment Loss
77. Contrary to defendants’ representations, CannaCloud has not
commercialized its cannabis marketplace application.  Further, CannaCloud has
not become a publicly-traded company or been sold to a new buyer.
78. Defendants refused the redemption requests from their convertible
note investors.  With all of the notes having now reached maturity, defendants’
investor victims have sustained pecuniary harm, with approximately $1.5 million
of investor funds having been misappropriated.

COMPLAINT
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FIRST CLAIM FOR RELIEF
Fraud in the Offer or Sale of Securities
Violations of Section 17(a) of the Securities Act
79. The SEC realleges and incorporates by reference paragraphs 1
through 78 above.
80. From at least February 2021 to December 2021, Spargo carried out an
offering of securities in the form of convertible promissory notes through
CannaCloud and D.A. Spargo, entities that he controlled.  Defendants raised
approximately $1.65 million from approximately 33 convertible note investors
through representations concerning CannaCloud’s business and its future
prospects.  Defendants misrepresented to investors CannaCloud’s financial
performance in 2020, the company’s valuation, the liquidity of their investments in
CannaCloud, the prospect of the company’s acquisition by a third-party, and how
defendants would use investor funds to further CannaCloud’s business operations.
These representations were materially false or misleading as CannaCloud engaged
in no meaningful operations and generated no revenue.  Instead, defendants
engaged in a broad misappropriation of investor funds for Spargo’s personal use.
81. By engaging in the conduct described above, Defendants Spargo,
CannaCloud, and D.A. Spargo, directly or indirectly, in the offer or sale of
securities, and by the use of means or instruments of transportation or
communication in interstate commerce or by use of the mails directly or indirectly:
(a) employed devices, schemes, or artifices to defraud; (b) obtained money or
property by means of untrue statements of a material fact or by omitting to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and (c) engaged in
transactions, practices, or courses of business which operated or would operate as a
fraud or deceit upon the purchaser.
82. Defendants Spargo, CannaCloud, and D.A. Spargo, with scienter,

COMPLAINT
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employed devices, schemes and artifices to defraud; with scienter or negligence,
obtained money or property by means of untrue statements of a material fact or by
omitting to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading; and, with
scienter or negligence, engaged in transactions, practices, or courses of business
which operated or would operate as a fraud or deceit upon the purchaser.
83. CannaCloud and D.A. Spargo acted entirely through Spargo and his
knowledge, recklessness, or negligence, which may be imputed to CannaCloud and
D.A. Spargo.
84. By engaging in the conduct described above, Defendants Spargo,
CannaCloud, and D.A. Spargo violated, and unless restrained and enjoined will
continue to violate, Section 17(a) of the Securities Act, 15 U.S.C. §§ 77q(a)(1),
77q(a)(2), & 77q(a)(3).
SECOND CLAIM FOR RELIEF
Fraud in Connection with the Purchase and Sale of Securities
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
85. The SEC realleges and incorporates by reference paragraphs 1
through 84 above.
86. From at least February 2021 to December 2021, Spargo carried out an
offering of securities in the form of convertible promissory notes through
CannaCloud and D.A. Spargo, entities that he controlled.  Defendants raised
approximately $1.65 million from approximately 33 convertible note investors
through representations concerning CannaCloud’s business and its future
prospects.  Defendants misrepresented to investors CannaCloud’s financial
performance in 2020, the company’s valuation, the liquidity of their investments in
CannaCloud, the prospect of the company’s acquisition by a third-party, and how
defendants would use investor funds to further CannaCloud’s business operations.
These representations were materially false or misleading as CannaCloud engaged

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in no meaningful operations and generated no revenue.  Instead, defendants
engaged in a broad misappropriation of investor funds for Spargo’s personal use.
87. By engaging in the conduct described above, Defendants Spargo,
CannaCloud, and D.A. Spargo, directly or indirectly, in connection with the
purchase or sale of a security, by the use of means or instrumentalities of interstate
commerce, of the mails, or of the facilities of a national securities exchange:  (a)
employed devices, schemes, or artifices to defraud; (b) made untrue statements of a
material fact or omitted to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading; and (c) engaged in acts, practices, or courses of business which
operated or would operate as a fraud or deceit upon other persons.
88. Defendants Spargo, CannaCloud, and D.A. Spargo, with scienter,
employed devices, schemes and artifices to defraud; made untrue statements of a
material fact or omitted to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading; and engaged in acts, practices or courses of conduct that operated
as a fraud on the investing public by the conduct described in detail above.
89. By engaging in the conduct described above, Defendants Spargo,
CannaCloud, and D.A. Spargo violated, and unless restrained and enjoined will
continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and
Rules 10b-5(a), 10b-5(b), and 10b-5(c) thereunder, 17 C.F.R. §§ 240.10b-5(a),
240.10b-5(b) & 240.10b-5(c).
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that Defendants Spargo,
CannaCloud, and D.A. Spargo committed the alleged violations.

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II.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendants Spargo, CannaCloud, and D.A.
Spargo, 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 Section 17(a) of the Securities Act [15 U.S.C. §77q(a)], and Section
10(b) of the Exchange Act [15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17
C.F.R. § 240.10b-5].
III.
Issue an order, pursuant to Section 20(e) of the Securities Act, 15 U.S.C.
§ 77t(e), and Section 21(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2),
prohibiting Defendant Spargo from acting as an officer or director of any issuer
that has a class of securities registered pursuant to Section 12 of the Exchange
Act, 12 U.S.C. § 78l, or that is required to file reports pursuant to Section 15(d) of
the Exchange Act, 15 U.S.C. § 780(d).
IV.
Issue judgements, in forms consistent with Rule 65(d) of the Federal Rules
of Civil Procedure, permanently enjoining Defendant Spargo from, directly or
indirectly, including but not limited to, through any entity owned or controlled by
him, participating in the issuance, purchase, offer, or sale of any security in an
unregistered offering, provided, however, that such injunction shall not prevent
him from purchasing or selling securities for his own personal account.
V.
Order Defendants Spargo, CannaCloud, and D.A. Spargo to disgorge all
funds received from their illegal conduct, together with prejudgment interest
thereon, pursuant to Exchange Act Sections 21(d)(5) and 21(d)(7) [15 U.S.C.
§§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)].

COMPLAINT
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VI.
Order Defendant Spargo 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)].
VII.
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.
VIII.
Grant such other and further relief as this Court may determine to be just and
necessary.
Dated:  March 28, 2025
 /s/ Alec Johnson
Alec Johnson
Heather C. Gorman
Attorneys for Plaintiff
Securities and Exchange Commission

COMPLAINT 1 
 

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ALEC JOHNSON (Cal. Bar No. 270960) 
Email:  [email protected]  
HEATHER C. GORMAN (Cal. Bar No. 258920) 
Email:  [email protected] 
 
Attorneys for Plaintiff 
Securities and Exchange Commission 
Katharine E. Zoladz, Regional Director 
Gary Y. Leung, Associate Regional Director 
Douglas M. Miller, 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 

DISTRICT OF ARIZONA 

 

Securities and Exchange Commission, 

Plaintiff, 
 

vs. 

David A. Spargo, CannaCloud, Inc., 
and D.A. Spargo & Co., LLC, 

Defendants. 
 

 Case No. 
 
 
COMPLAINT 
 

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

SUMMARY 

1. This civil enforcement action concerns a fraudulent securities offering 

perpetrated by defendant David A. Spargo (“Spargo”) through two defendant 

entities that he controlled, CannaCloud, Inc. (“CannaCloud”) and D.A. Spargo & 

Co., LLC (“D.A. Spargo”).  From February 2021 to December 2021, Spargo used 

these entities to raise at least $1.65 million from approximately 33 investors, who 

invested in high-yield notes that could be converted into CannaCloud stock issued 

by D.A. Spargo.  When convincing investors, Spargo made false and misleading 

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COMPLAINT 2 
 

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representations about the true state of CannaCloud’s business, its financial 

condition, and its ability to pay out the 20 percent annual return promised by the 

terms of defendants’ high-yield notes.  Once investors had transferred their funds 

for investment, Spargo engaged these entities in a scheme to defraud by using 

investor funds for his personal use.  CannaCloud is now defunct with 

approximately $1.5 million of its investors’ funds having been misappropriated.             

2. Spargo represented to investors that he would use their money to fund 

CannaCloud’s business, claiming that the company was developing an application 

that would give marijuana consumers the ability to access inventories of cannabis 

dispensaries and to purchase cannabis products.  Spargo told investors that they 

would receive a 20 percent annual return on their investment and that they would 

have the option to obtain equity shares in the company once shares were issued.  

Spargo provided certain investors with an investor presentation about 

CannaCloud’s business showing a 40 percent net profit margin for the prior year 

and a $7.25 billion valuation.   

3. In reality, Spargo used little of the funds he raised from investors to 

develop CannaCloud’s business.  Instead, Spargo spent investors’ money at 

casinos and on personal expenses.  He took investor funds via cash withdrawals 

and transferred investor funds to his wife’s bank account.  Meanwhile, Spargo told 

investors that CannaCloud’s business was doing well and that the company would 

soon be sold to a wealthy third-party purchaser, benefitting shareholders.  Spargo 

never disclosed to investors that he was using their investments on personal 

expenses or that there was no money for CannaCloud to pay them their promised 

returns.   

4. By engaging in the conduct described in this Complaint, Spargo, 

CannaCloud, and D.A. Spargo violated Section 17(a) of the Securities Act of 1933 

(“Securities Act”) [15 U.S.C. §§ 77(e)(a), 77(e)(c), 77q(a)], and Section 10(b) of 

the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and 

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COMPLAINT 3 
 

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

5. With this complaint, the SEC seeks: (i) the issuance of findings of fact 

and conclusions of law that defendants Spargo, CannaCloud, and D.A. Spargo 

committed these securities law violations; (ii) permanent injunctions prohibiting 

future violations of the federal securities laws by defendants; (iii) a conduct-based 

injunction against defendant Spargo; (iv) an officer and director bar against 

defendant Spargo under Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] 

and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; (v) an order 

requiring defendants to disgorge their ill-gotten gains with prejudgment interest in 

accordance with Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. 

§§ 78u(d)(5) and 78u(d)(7)]; and (vi) an order imposing a civil penalty on 

defendant Spargo under Section 21(d)(3) of the Exchange Act [15 U.S.C. § 

78u(d)(3)] and Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)].    

JURISDICTION AND VENUE 

6. This Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d)(1) and 22(a) of the 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 Exchange Act [15 

U.S.C. §§ 78u(d)(1), 78u(d)(3)(A), 78u(e) & 78aa(a)]. 

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

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.  

8. 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 Spargo resides in this 

district and CannaCloud and D.A. Spargo conducted business in this district. 

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COMPLAINT 4 
 

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DEFENDANTS 

9. David A. Spargo, age 56, is a resident of Mesa, Arizona.  Spargo is 

the director and co-founder of CannaCloud.  Spargo is also the sole member of 

D.A. Spargo.  Spargo is not registered with the SEC in any capacity. 

10. CannaCloud, Inc. is a Nevada corporation formed in March 2021, 

with its principal place of business in Mesa, Arizona.  CannaCloud is controlled by 

defendant David Spargo.  CannaCloud is not registered with the SEC in any 

capacity, nor has it registered any offering of its securities with the SEC. 

11. D.A. Spargo & Co., LLC is an Arizona limited liability company 

formed by Spargo in September 2007, with its principal place of business in 

Scottsdale.  D.A. Spargo is controlled by defendant David Spargo.  D.A. Spargo is 

not registered with the SEC in any capacity, nor has it registered any offering of its 

securities with the SEC.   

THE ALLEGATIONS 

A. CannaCloud’s Purported Business 

12. In March 2021, Spargo filed a business license application for 

CannaCloud with the Nevada Secretary of State. 

13. Two weeks later, Spargo filed an application with the Arizona 

Corporation Commission for CannaCloud to conduct business in Arizona.   

14. In both applications, Spargo designated himself as the president, 

treasurer, and a director of CannaCloud. 

15.  When formed in March 2021, CannaCloud’s ostensible business was 

to develop and commercialize a software application that would facilitate the 

purchase and sale of cannabis products between consumers and marijuana 

dispensaries.  

16. Spargo, who claimed to have expertise and contacts in the cannabis 

industry, had already begun to raise funds from investors purportedly to build 

CannaCloud’s business.  

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COMPLAINT 5 
 

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B. Defendants’ Fraudulent Securities Offering 

1. Convertible note investments offered and sold by CannaCloud 

17. The investments offered by defendants were typically short-term notes 

of three to nine months.  These notes offered a 20 percent annual rate of return on 

the principal amount invested. 

18. These investments were documented as convertible notes for shares in 

CannaCloud.  

19. According to the terms of the convertible notes, in exchange for the 

investor’s transfer of the principal amount to CannaCloud, D.A. Spargo or another 

Spargo-controlled entity agreed to pay the note purchaser a 20 percent annual 

interest on the principal amount.   

20. In addition, these notes would automatically convert to CannaCloud 

stock if certain conditions occurred, such as maturity, a financing event, or a 

change-in-control event.  Each note provided a conversion price to calculate the 

number of CannaCloud shares to be received by the note holder. 

2. Defendants’ solicitation of investors 

21. Beginning in at least February 2021 and continuing through at least 

December 2021, Spargo solicited investment in CannaCloud from individual 

investors. 

22. In most cases, Spargo either knew or had met these individual 

investors, or the investors were the friends or family of people that Spargo knew.  

23. When communicating with investors and potential investors about 

CannaCloud, Spargo provided information about the company by phone, in text 

messages, or via Whatsapp messages.  

24. After Spargo convinced an investor to invest in CannaCloud, the 

investor transferred their funds to a bank account controlled by Spargo and 

executed a convertible note for shares in CannaCloud. 

25. When soliciting their investment, Spargo explained to investors that if 

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COMPLAINT 6 
 

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CannaCloud became a publicly traded company, investors could profit 

considerably by converting their notes into CannaCloud shares.  Spargo further 

represented to investors that even if CannaCloud did not become a public 

company, he would personally guarantee a 20 percent annual return on their 

investment. 

26. Following their investment, Spargo continued to communicate with 

investors about CannaCloud’s ongoing business prospects in a positive light, and 

several investors decided to invest additional funds in CannaCloud on the basis of 

these further representations by Spargo. 

27. In all, from February 2021 to December 2021, Spargo raised at least 

$1.65 million through CannaCloud convertible note agreements with 

approximately 33 investors. 

3. CannaCloud’s convertible notes are securities 

28. Investors in CannaCloud’s convertible notes were primarily motivated 

by the generation of profits.  

29. Because of the representations made by Spargo and the terms of the 

notes themselves, an investor in CannaCloud’s convertible notes would reasonably 

have expected to be making an investment.  Indeed, CannaCloud investors 

subjectively believed their notes were investments and that their invested funds 

would be used to build CannaCloud’s business, such that they would profit if 

CannaCloud’s business succeeded.  

30. No other regulatory scheme significantly reduced CannaCloud 

investors’ risk of investment such that the enforcement of the federal securities law 

is unnecessary. 

31. Accordingly, the CannaCloud convertible notes that defendants 

offered and sold to investors were securities within the meaning of the federal 

securities laws. 

32. In addition, each CannaCloud convertible note investor transferred 

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COMPLAINT 7 
 

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money to a Spargo-controlled entity with the understanding that their funds would 

be used to build CannaCloud’s business.  Thus the notes constituted an investment 

of money. 

33. Defendants pooled the investor funds they received from CannaCloud 

convertible note investors in bank accounts controlled by Spargo. 

34. Because defendants’ promised return was a percentage of investors’ 

principal invested, investors were led to believe they would share profits in a 

manner proportional to the amount of their investment. 

35. If CannaCloud succeeded commercially, then defendants and 

CannaCloud convertible note investors all stood to profit. 

36. CannaCloud convertible note investors expected the profits from their 

investments to be derived solely from CannaCloud’s efforts to develop its 

business, which was to commercialize and operate an application that gave 

marijuana consumers the ability to access inventories of cannabis dispensaries and 

purchase cannabis products. 

37. For this separate reason, CannaCloud’s convertible notes are 

securities within the meaning of the federal securities laws because they are 

investment contracts. 

C. Defendants Made False and Misleading Statements When Offering and 

Selling Securities to CannaCloud Investors 

38. First, Spargo made false or misleading statements to investors and 

potential investors in which he represented that their invested funds would be used 

to pay for CannaCloud’s business expenses, such as application development costs, 

platform fees, professional service fees, and the overall commercialization of 

CannaCloud’s cannabis marketplace application.  

39. In truth, defendants spent only a small amount of the investor funds 

raised on actual development work, making minimal progress in the relevant 

period to commercialize CannaCloud’s purported cannabis marketplace 

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COMPLAINT 8 
 

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application.  Accordingly, Spargo’s representations about how investor funds 

would be used by defendants were false or misleading. 

40. Second, Spargo made false or misleading statements to investors and 

potential investors about certain unnamed, wealthy third-party investors who, 

according to Spargo, would be making a “billion-dollar purchase” of CannaCloud.  

41. When Spargo made these representations about a “billion-dollar” 

acquisition of CannaCloud to investors and potential investors, there had been no 

offer to buy the company.  Accordingly, Spargo’s representations about a putative 

buy-out were false or misleading. 

42. Third, Spargo made false or misleading statements to investors and 

potential investors in which he vastly overstated CannaCloud’s valuation.  

43. In mid-2021, Spargo emailed investors a company valuation 

document and an investor presentation.  The valuation document stated that 

CannaCloud was valued at $7.45 billion. 

44. The investor presentation contained an overview of CannaCloud’s 

business, described its technology, and presented its purported leadership and 

consultancy team.   Further the presentation summarized the investment 

opportunity available to investors and set forth CannaCloud’s operating and 

revenue models, which included an assertion that CannaCloud had a 40 percent net 

profit margin in 2020. 

45. At the time that defendants provided investors with these valuation 

and investor presentation materials, CannaCloud did not have the described 

leadership team in place. 

46. At the time that defendants provided investors with these valuation 

and investor presentation materials, CannaCloud had not developed its claimed 

cannabis marketplace application. 

47. At the time that defendants provided investors with these valuation 

and investor presentation materials, CannaCloud had never generated any 

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COMPLAINT 9 
 

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operating revenue. 

48. Accordingly, defendants’ foregoing representations about 

CannaCloud’s supposed leadership, valuation, and past and projected financial 

performance were false or misleading. 

49. Fourth, Spargo made false or misleading statements to at least one 

investor claiming that they would be able to withdraw their investment at any time. 

50. When Spargo made this representation, CannaCloud had insufficient 

funds to honor investor redemption requests.  

51. Accordingly, Spargo’s representations about the liquidity of an 

investment in CannaCloud were false or misleading. 

52. The false and misleading statements alleged above were 

communicated by Spargo either orally or via email communications that Spargo 

had ultimate authority over, including their content and the manner in which they 

were communicated.  

53. In addition, the convertible notes purchased by CannaCloud investors 

were all counter-signed by Spargo on the issuer’s behalf and were sent by Spargo 

to investors. 

54. Accordingly, Spargo made all of the false and misleading statements 

alleged above. 

D. Defendants Engaged in a Scheme to Defraud  

1. Misappropriation of investor funds 

55. Instead of using the investor funds raised to grow CannaCloud’s 

claimed business, defendants misappropriated investors’ money.  

56. Of the approximately $1,651,609 that defendants took from investors 

in their securities offering, they misappropriated approximately $1,500,000. 

57. Within days of an investor deposit, Spargo often depleted the funds by 

spending the money at casinos in Las Vegas or Arizona, withdrawing the money at 

ATMs or paying for personal expenses.   

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COMPLAINT 10 
 

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58. Spargo also used investor funds to pay down his personal credit cards, 

car loans, or luxury hotel account balances.   

59. Spargo also used investor money to pay for personal expenses, 

including purchases at retail stores, restaurants, grocery stores, gas stations, as well 

as the payment of Spargo’s personal federal taxes. 

60. Spargo also transferred investor money to bank accounts controlled by 

him or his spouse.  

61. When misappropriating investor funds for Spargo’s personal use, 

defendants engaged in a scheme to defraud. 

2. Lulling of defrauded investors 

62. In time, CannaCloud’s convertible note investors had received neither 

their promised 20 percent annual return nor their stock in CannaCloud.  

63. When certain investors requested their money back, Spargo did not 

honor those requests.   

64. Instead, Spargo made further false and misleading representations 

about CannaCloud and its business prospects.  Specifically, Spargo falsely claimed 

to these investors that CannaCloud would soon be purchased by an unnamed third-

party investor.  Spargo claimed that existing CannaCloud convertible note 

investors stood to profit from that acquisition but only if they continued with their 

investment in the company. 

65. Through this pattern of additional false and misleading lulling 

statements, Spargo intended to conceal defendants’ ongoing fraud from detection.  

66. Defendants’ lulling efforts alleged above were made in furtherance of 

their scheme to defraud. 

E. Defendants’ False and Misleading Statements and Scheme to Defraud 

Were Material 

67. Any reasonable investor would consider it significant to their 

investment decision to know that defendants’ representations about how their 

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COMPLAINT 11 
 

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funds would be used were false or misleading.  Moreover, any reasonable investor 

would have considered it important to know that Spargo spent only a de minimis 

amount of investor funds on development expenses, and instead engaged in a 

widescale misappropriation of investor funds for his personal use. 

68. Any reasonable investor would also consider it significant to their 

investment decision to know that defendants’ representations about CannaCloud’s 

commercial progress and the status of its business were false or misleading.  

Moreover, any reasonable investor would have considered it important to know 

that CannaCloud never developed its claimed cannabis marketplace application, 

generated no operating revenues, and took no meaningful steps to achieve its 

business goals. 

69. Any reasonable investor would consider it significant to their 

investment decision to know that the business valuation and investor presentation 

materials defendants provided to investors and potential investors—claiming, 

among other things, that CannaCloud had been valued at $7.25 billion and had 

realized a 40 percent net profit margin in FY 2020—were false or misleading.   

70. Any reasonable investor would consider it significant to their 

investment decision to know that defendants’ representations concerning 

CannaCloud’s anticipated acquisition by a third-party were false or misleading.  

Moreover, any reasonable investor would have considered it important to know 

that there had been no offer to buy CannaCloud. 

71. Any reasonable investor would consider it significant to their 

investment decision to know that defendants’ claims that investors could take their 

money out of CannaCloud at any time were false or misleading.  Moreover, any 

reasonable investor would have considered it important to know that CannaCloud 

lacked the funds to honor any such redemption requests. 

F. Defendants Acted with Scienter and Their Conduct was Negligent 

72. Spargo knew or was reckless in not knowing that defendants’ 

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representations to investors and potential investors—concerning the use of their 

funds, the true state of CannaCloud’s business, the prospect of CannaCloud’s 

acquisition by a well-financed third-party, the liquidity of their CannaCloud 

investments, and CannaCloud’s asserted multi-billion valuation and track record of 

profit—were all false or misleading. 

73. Because Spargo controlled the financial accounts receiving investor 

funds, Spargo knew that defendants were misappropriating investor funds for his 

personal use.  

74. Spargo’s conduct in making the foregoing false or misleading 

statements to investors and potential investors was unreasonable, and therefore 

negligent. 

75. Spargo’s conduct in directing the misuse of investor funds through his 

control of the financial accounts receiving investor funds was unreasonable, and 

therefore negligent.  

76. Spargo’s knowledge, intent, and negligence is imputed to defendants 

CannaCloud and D.A. Spargo because he controlled both entity defendants.     

G. Defendants’ Fraudulent Scheme Collapses and Investors Sustain a 

Seven-Figure Investment Loss 

77. Contrary to defendants’ representations, CannaCloud has not 

commercialized its cannabis marketplace application.  Further, CannaCloud has 

not become a publicly-traded company or been sold to a new buyer. 

78. Defendants refused the redemption requests from their convertible 

note investors.  With all of the notes having now reached maturity, defendants’ 

investor victims have sustained pecuniary harm, with approximately $1.5 million 

of investor funds having been misappropriated. 

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COMPLAINT 13 
 

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FIRST CLAIM FOR RELIEF 

Fraud in the Offer or Sale of Securities 

Violations of Section 17(a) of the Securities Act 

79. The SEC realleges and incorporates by reference paragraphs 1 

through 78 above. 

80. From at least February 2021 to December 2021, Spargo carried out an 

offering of securities in the form of convertible promissory notes through 

CannaCloud and D.A. Spargo, entities that he controlled.  Defendants raised 

approximately $1.65 million from approximately 33 convertible note investors 

through representations concerning CannaCloud’s business and its future 

prospects.  Defendants misrepresented to investors CannaCloud’s financial 

performance in 2020, the company’s valuation, the liquidity of their investments in 

CannaCloud, the prospect of the company’s acquisition by a third-party, and how 

defendants would use investor funds to further CannaCloud’s business operations.  

These representations were materially false or misleading as CannaCloud engaged 

in no meaningful operations and generated no revenue.  Instead, defendants 

engaged in a broad misappropriation of investor funds for Spargo’s personal use.  

81. By engaging in the conduct described above, Defendants Spargo, 

CannaCloud, and D.A. Spargo, directly or indirectly, in the offer or sale of 

securities, and by the use of means or instruments of transportation or 

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

(a) employed devices, schemes, or artifices to defraud; (b) obtained money or 

property by means of untrue statements of a material fact or by omitting to state a 

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

circumstances under which they were made, not misleading; and (c) engaged in 

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

fraud or deceit upon the purchaser. 

82. Defendants Spargo, CannaCloud, and D.A. Spargo, with scienter, 

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employed devices, schemes and artifices to defraud; with scienter or negligence, 

obtained money or property by means of untrue statements of a material fact or by 

omitting to state a material fact necessary in order to make the statements made, in 

light of the circumstances under which they were made, not misleading; and, with 

scienter or negligence, engaged in transactions, practices, or courses of business 

which operated or would operate as a fraud or deceit upon the purchaser. 

83. CannaCloud and D.A. Spargo acted entirely through Spargo and his 

knowledge, recklessness, or negligence, which may be imputed to CannaCloud and 

D.A. Spargo. 

84. By engaging in the conduct described above, Defendants Spargo, 

CannaCloud, and D.A. Spargo violated, and unless restrained and enjoined will 

continue to violate, Section 17(a) of the Securities Act, 15 U.S.C. §§ 77q(a)(1), 

77q(a)(2), & 77q(a)(3). 

SECOND CLAIM FOR RELIEF 

Fraud in Connection with the Purchase and Sale of Securities 

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

85. The SEC realleges and incorporates by reference paragraphs 1 

through 84 above. 

86. From at least February 2021 to December 2021, Spargo carried out an 

offering of securities in the form of convertible promissory notes through 

CannaCloud and D.A. Spargo, entities that he controlled.  Defendants raised 

approximately $1.65 million from approximately 33 convertible note investors 

through representations concerning CannaCloud’s business and its future 

prospects.  Defendants misrepresented to investors CannaCloud’s financial 

performance in 2020, the company’s valuation, the liquidity of their investments in 

CannaCloud, the prospect of the company’s acquisition by a third-party, and how 

defendants would use investor funds to further CannaCloud’s business operations.  

These representations were materially false or misleading as CannaCloud engaged 

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in no meaningful operations and generated no revenue.  Instead, defendants 

engaged in a broad misappropriation of investor funds for Spargo’s personal use.  

87. By engaging in the conduct described above, Defendants Spargo, 

CannaCloud, and D.A. Spargo, directly or indirectly, in connection with the 

purchase or sale of a security, by the use of means or instrumentalities of interstate 

commerce, of the mails, or of the facilities of a national securities exchange:  (a) 

employed devices, schemes, or artifices to defraud; (b) made untrue statements of a 

material fact or omitted to state a material fact necessary in order to make the 

statements made, in the light of the circumstances under which they were made, 

not misleading; and (c) engaged in acts, practices, or courses of business which 

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

88. Defendants Spargo, CannaCloud, and D.A. Spargo, with scienter, 

employed devices, schemes and artifices to defraud; made untrue statements of a 

material fact or omitted to state a material fact necessary in order to make the 

statements made, in the light of the circumstances under which they were made, 

not misleading; and engaged in acts, practices or courses of conduct that operated 

as a fraud on the investing public by the conduct described in detail above. 

89. By engaging in the conduct described above, Defendants Spargo, 

CannaCloud, and D.A. Spargo violated, and unless restrained and enjoined will 

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

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

240.10b-5(b) & 240.10b-5(c). 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that Defendants Spargo, 

CannaCloud, and D.A. Spargo committed the alleged violations. 

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II. 

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

Civil Procedure, permanently enjoining Defendants Spargo, CannaCloud, and D.A. 

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

10(b) of the Exchange Act [15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 

C.F.R. § 240.10b-5]. 

III. 

Issue an order, pursuant to Section 20(e) of the Securities Act, 15 U.S.C. 

§ 77t(e), and Section 21(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2), 

prohibiting Defendant Spargo from acting as an officer or director of any issuer 

that has a class of securities registered pursuant to Section 12 of the Exchange 

Act, 12 U.S.C. § 78l, or that is required to file reports pursuant to Section 15(d) of 

the Exchange Act, 15 U.S.C. § 780(d). 

IV. 

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

of Civil Procedure, permanently enjoining Defendant Spargo from, directly or 

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

him, participating in the issuance, purchase, offer, or sale of any security in an 

unregistered offering, provided, however, that such injunction shall not prevent 

him from purchasing or selling securities for his own personal account.   

V. 

Order Defendants Spargo, CannaCloud, and D.A. Spargo to disgorge all 

funds received from their illegal conduct, together with prejudgment interest 

thereon, pursuant to Exchange Act Sections 21(d)(5) and 21(d)(7) [15 U.S.C. 

§§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)]. 

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VI. 

Order Defendant Spargo 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)]. 

VII. 

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. 

VIII. 

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

necessary. 

Dated:  March 28, 2025  

 /s/ Alec Johnson 
Alec Johnson 
Heather C. Gorman 
Attorneys for Plaintiff 
Securities and Exchange Commission 
 

 
 

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