SEC v. CannaCloud Incorporated, No. 2:25-cv-01043, District of Arizona (Apr. 29, 2025) — Judgment

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA

United    States    Securities    and    Exchange
Commission,

Plaintiff,

v.

CannaCloud Incorporated,

Defendant.
No. CV-25-01043-PHX-DJH

FINAL JUDGMENT

The Securities  and  Exchange  Commission (the  “SEC”)  has  filed  a  Motion  to
Approve the parties’ Consent Judgment.  (Doc. 7).  The SEC and Defendant CannaCloud
Incorporated (“Defendant”) have agreed to the entry of this Final Judgment to resolve all
matters in dispute in this action.  (Id.)
Accordingly,
IT IS ORDERED that the SEC’s Motion to Approve the parties’ Consent Judgment
(Doc. 7) is GRANTED.  The Court adopts their stipulated settlement terms (Doc. 7-1) and
enters Final Judgment as follows:
I.
 IT  IS  ORDERED that  Defendant  is  permanently  restrained  and  enjoined  from
violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the
“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R.
§ 240.10b-5],  by  using  any  means  or  instrumentality  of  interstate  commerce,  or  of  the

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mails,  or  of  any  facility  of  any  national  securities  exchange,  in  connection  with  the
purchase or sale of any security:
(a) to employ any device, scheme, or artifice to defraud;
(b) to make any untrue statement of a material fact or to omit 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; or
(c) to engage in any act, practice, or course of business which operates or would
 operate as a fraud or deceit upon any person
by, directly or indirectly, (i) creating a false appearance or otherwise deceiving any person,
or (ii) disseminating false or misleading documents, materials, or information or making,
either orally or in writing, any false or misleading statement in any communication with
any investor or prospective investor, about:
  (A) any investment in or offering of securities,
  (B) the registration status of such offering or of such securities,
  (C) the prospects for success of any product or company,
  (D) the use of investor funds; or
  (E) the misappropriation of investor funds or investment proceeds.
 IT IS FURTHER ORDERED that as provided in Federal Rule of Civil Procedure
65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this
Final  Judgment  by  personal  service  or  otherwise:    (a)  Defendant’s  officers,  agents,
servants, employees, and attorneys; and (b) other persons in active concert or participation
with Defendant or with anyone described in (a).
II.
 IT  IS  FURTHER  ORDERED that  Defendant  is  permanently  restrained  and
enjoined from violating Section 17(a) of the Securities Act of 1933 (the “Securities Act”)
[15  U.S.C.  §  77q(a)]  in  the  offer  or  sale  of  any  security  by  the  use  of  any  means  or
instruments  of  transportation  or  communication  in  interstate  commerce  or  by  use  of  the
mails, directly or indirectly:

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(a) to employ any device, scheme, or artifice to defraud;
(b) to obtain money or property by means of any untrue statement of a material
fact  or any omission of a material fact necessary in order to make the statements
 made,  in  light  of  the  circumstances  under  which  they  were  made,  not
misleading;  or
 (c) to engage in any transaction, practice, or course of business which operates
or    would operate as a fraud or deceit upon the purchaser
by, directly or indirectly, (i) creating a false appearance or otherwise deceiving any person,
or (ii) disseminating false or misleading documents, materials, or information or making,
either orally or in writing, any false or misleading statement in any communication with
any investor or prospective investor, about:
  (A) any investment in or offering of securities,
  (B) the registration status of such offering or of such securities,
  (C) the prospects for success of any product or company,
  (D) the use of investor funds; or
  (E) the misappropriation of investor funds or investment proceeds.
 IT IS FURTHER ORDERED that as provided in Federal Rule of Civil Procedure
65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this
Final  Judgment  by  personal  service  or  otherwise:    (a)  Defendant’s  officers,  agents,
servants, employees, and attorneys; and (b) other persons in active concert or participation
with Defendant or with anyone described in (a).
III.
IT IS FURTHER ORDERED that Defendant is liable, jointly and severally with
co-defendants  David  A.  Spargo  and  D.A.  Spargo  &  Co.  LLC,  for  disgorgement  of
$1,504,559,  representing  net  profits  gained  as  a  result  of  the  conduct  alleged  in  the
Complaint,  together  with  prejudgment  interest  thereon  in  the  amount  of  $313,449,  for  a
total of $1,818,008.  Defendant  shall  satisfy this obligation by  paying $1,818,008 to the
Securities and Exchange Commission within 30 days after entry of this Final Judgment.

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Defendant  may  transmit  payment  electronically  to  the  Commission,  which  will
provide detailed ACH transfer/Fedwire instructions upon request.   Payment may also be
made   directly   from   a   bank   account   via   Pay.gov   through   the   SEC   website   at
http://www.sec.gov/about/offices/ofm.htm.    Defendant  may  also  pay  by  certified  check,
bank cashier’s check, or United States postal money order payable to the Securities and
Exchange Commission, which shall be delivered or mailed to
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and  shall  be  accompanied  by  a  letter  identifying  the  case  title,  civil  action  number,  and
name  of  this  Court;  CannaCloud,  Inc.  as  a  defendant  in  this  action;  and  specifying  that
payment is made pursuant to this Final Judgment.
Defendant shall simultaneously transmit photocopies of evidence of payment and
case identifying information to the Commission’s counsel in this action.  By making this
payment,  Defendant  relinquishes  all  legal  and  equitable  right,  title,  and  interest  in  such
funds and no part of the funds shall be returned to Defendant.
The Commission shall hold the funds (collectively, the “Fund”) until further order
of this Court.  The SEC may propose a plan to distribute the Fund subject to the Court’s
approval, and the Court shall retain jurisdiction over the administration of any distribution
of the Fund.
The  Commission  may  enforce  the  Court’s  judgment  for  disgorgement  and
prejudgment interest by using all collection procedures authorized by law, including, but
not limited to, moving for civil contempt at any time after 30 days following entry of this
Final Judgment.  Defendant shall pay post judgment interest on any amounts due after 30
days of entry of this Final Judgment pursuant to 28 U.S.C. § 1961.
/ / /
/ / /
/ / /

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IV.
 IT IS FINALLY ORDERED that this Court shall retain jurisdiction of this matter
for the purposes of enforcing the terms of this Final Judgment.
 Dated this 24th day of April, 2025.

Honorable Diane J. Humetewa
United States District Judge

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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 
 

 
United States Securities and Exchange 
Commission, 
 

Plaintiff, 
 
v.  
 
CannaCloud Incorporated, 
 

Defendant. 

No. CV-25-01043-PHX-DJH 
 
FINAL JUDGMENT 
 

 
 

The Securities and Exchange Commission (the “SEC”) has filed a Motion to 

Approve the parties’ Consent Judgment.  (Doc. 7).  The SEC and Defendant CannaCloud 

Incorporated (“Defendant”) have agreed to the entry of this Final Judgment to resolve all 

matters in dispute in this action.  (Id.)    

Accordingly,  

IT IS ORDERED that the SEC’s Motion to Approve the parties’ Consent Judgment 

(Doc. 7) is GRANTED.  The Court adopts their stipulated settlement terms (Doc. 7-1) and 

enters Final Judgment as follows:  

I. 

 IT IS ORDERED that Defendant is permanently restrained and enjoined from 

violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the 

“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. 

§ 240.10b-5], by using any means or instrumentality of interstate commerce, or of the 

Case 2:25-cv-01043-DJH     Document 18     Filed 04/24/25     Page 1 of 5



 

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mails, or of any facility of any national securities exchange, in connection with the 

purchase or sale of any security: 

(a) to employ any device, scheme, or artifice to defraud; 

(b) to make any untrue statement of a material fact or to omit 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; or 

(c) to engage in any act, practice, or course of business which operates or would 

 operate as a fraud or deceit upon any person 

by, directly or indirectly, (i) creating a false appearance or otherwise deceiving any person, 

or (ii) disseminating false or misleading documents, materials, or information or making, 

either orally or in writing, any false or misleading statement in any communication with 

any investor or prospective investor, about: 

  (A) any investment in or offering of securities, 

  (B) the registration status of such offering or of such securities, 

  (C) the prospects for success of any product or company,  

  (D) the use of investor funds; or 

  (E) the misappropriation of investor funds or investment proceeds. 

 IT IS FURTHER ORDERED that as provided in Federal Rule of Civil Procedure 

65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this 

Final Judgment by personal service or otherwise:  (a) Defendant’s officers, agents, 

servants, employees, and attorneys; and (b) other persons in active concert or participation 

with Defendant or with anyone described in (a). 

II. 

 IT IS FURTHER ORDERED that Defendant is permanently restrained and 

enjoined from violating Section 17(a) of the Securities Act of 1933 (the “Securities Act”) 

[15 U.S.C. § 77q(a)] in the offer or sale of any security by the use of any means or 

instruments of transportation or communication in interstate commerce or by use of the 

mails, directly or indirectly: 

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(a) to employ any device, scheme, or artifice to defraud; 

(b) to obtain money or property by means of any untrue statement of a material 

fact  or any omission of a material fact necessary in order to make the statements 

 made, in light of the circumstances under which they were made, not 

misleading;  or 

 (c) to engage in any transaction, practice, or course of business which operates 

or    would operate as a fraud or deceit upon the purchaser 

by, directly or indirectly, (i) creating a false appearance or otherwise deceiving any person, 

or (ii) disseminating false or misleading documents, materials, or information or making, 

either orally or in writing, any false or misleading statement in any communication with 

any investor or prospective investor, about: 

  (A) any investment in or offering of securities, 

  (B) the registration status of such offering or of such securities, 

  (C) the prospects for success of any product or company,  

  (D) the use of investor funds; or 

  (E) the misappropriation of investor funds or investment proceeds. 

 IT IS FURTHER ORDERED that as provided in Federal Rule of Civil Procedure 

65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this 

Final Judgment by personal service or otherwise:  (a) Defendant’s officers, agents, 

servants, employees, and attorneys; and (b) other persons in active concert or participation 

with Defendant or with anyone described in (a). 

III. 

IT IS FURTHER ORDERED that Defendant is liable, jointly and severally with 

co-defendants David A. Spargo and D.A. Spargo & Co. LLC, for disgorgement of 

$1,504,559, representing net profits gained as a result of the conduct alleged in the 

Complaint, together with prejudgment interest thereon in the amount of $313,449, for a 

total of $1,818,008.  Defendant shall satisfy this obligation by paying $1,818,008 to the 

Securities and Exchange Commission within 30 days after entry of this Final Judgment. 

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Defendant may transmit payment electronically to the Commission, which will 

provide detailed ACH transfer/Fedwire instructions upon request.   Payment may also be 

made directly from a bank account via Pay.gov through the SEC website at 

http://www.sec.gov/about/offices/ofm.htm.  Defendant may also pay by certified check, 

bank cashier’s check, or United States postal money order payable to the Securities and 

Exchange Commission, which shall be delivered or mailed to  

Enterprise Services Center 

Accounts Receivable Branch 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

and shall be accompanied by a letter identifying the case title, civil action number, and 

name of this Court; CannaCloud, Inc. as a defendant in this action; and specifying that 

payment is made pursuant to this Final Judgment.   

Defendant shall simultaneously transmit photocopies of evidence of payment and 

case identifying information to the Commission’s counsel in this action.  By making this 

payment, Defendant relinquishes all legal and equitable right, title, and interest in such 

funds and no part of the funds shall be returned to Defendant.   

The Commission shall hold the funds (collectively, the “Fund”) until further order 

of this Court.  The SEC may propose a plan to distribute the Fund subject to the Court’s 

approval, and the Court shall retain jurisdiction over the administration of any distribution 

of the Fund.   

The Commission may enforce the Court’s judgment for disgorgement and 

prejudgment interest by using all collection procedures authorized by law, including, but 

not limited to, moving for civil contempt at any time after 30 days following entry of this 

Final Judgment.  Defendant shall pay post judgment interest on any amounts due after 30 

days of entry of this Final Judgment pursuant to 28 U.S.C. § 1961.   

/ / / 

/ / / 

/ / / 

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IV. 

 IT IS FINALLY ORDERED that this Court shall retain jurisdiction of this matter 

for the purposes of enforcing the terms of this Final Judgment. 

 Dated this 24th day of April, 2025. 

 

 
 

Honorable Diane J. Humetewa 
United States District Judge 

 

 

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