SEC v. HARDAWAY, No. 4:17-CV-00529, Southern District of Texas (Feb. 17, 2017)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
________________________________________________
SECURITIES AND EXCHANGE COMMISSION, §
§
 Plaintiff, §
§
vs. §
§                        Civil            Action            No.            _____________
DARRELL GLENN HARDAWAY and      §
HARDAWAY NET-WORKS, INC.   §
§
Defendants.                                                                        §
________________________________________________§
COMPLAINT
Plaintiff Securities and E
xchange Commission ("SEC") alleges as follows:
SUMMARY
1.This case is about a multi-million-dollar fraud scheme carried out by Defendant
Darrell Glenn Hardaway ("Hardaway") using his private company, Defendant Hardaway Net-
Works, Inc. ("HNW").  Since at least as early as November 2010, the Defendants have
fraudulently raised $4.7 million or more by selling securities issued by HNW.  Hardaway
successfully marketed these securities to over a hundred fellow members of a nationwide
"success club" in which he was a high-ranking leader.  He targeted these victims both because
they had great trust in him and because they had taken an oath not to criticize him.
2.The Defendants lured investor victims using baseless projections about HNW's
business operations.  They falsely claimed that investors stood to reap "massive" returns upon
HNW's ever-imminent public offering.  And they pressured victims to invest through a number
of sham "limited time" incentives.
4:17-CV-00529

Re:  SEC v. Hardaway, et al.   Page 2 of 17
Complaint 
3. In truth, HNW barely had a pulse.  From 2010-16, HNW's total revenue was a
meager $24,812 from only a handful of customers.  By comparison, it had total expenses of
approximately $5 million during the same period—over 200 times revenues.  Nearly $2 million
of these expenses went to fund Hardaway's lifestyle, rather than toward legitimate business
expenses.  These payments took the form of both salary and "expense reimbursements."
Hardaway concealed from investors both HNW's awful financial state and his misuse of funds.
4.   Even when Hardaway did apply a modest amount of investor funds to actual
business expenses, he squandered the money.  Hardaway spent $40,000 to purchase a public
reporting shell company, Vortronnix Technologies, Inc.  However, he botched the acquisition
through incompetence and disregard for SEC reporting rules.  In 2015, he caused Vortronnix to
file with the SEC a Form 10-Q without the company's auditors having reviewed its financial
statements.  Even after the auditors demanded that he withdraw the filing, he failed to comply or
to publicly disclose the impropriety for many months.  That was the last periodic report
Vortronnix filed.  It has now been delinquent for over a year.
5. By engaging in this conduct and other conduct detailed below, the Defendants
violated a number of provisions of the federal securities laws—including the antifraud provisions
of the Securities Act of 1933 ("Securities Act") and the Securities Exchange Act of 1934
("Exchange Act").  Thus, in the interest of protecting the public from further illegal activity, the
SEC brings this action seeking all available relief—including permanent injunctions;
disgorgement of all ill-gotten gains; civil money penalties; and an officer and director bar.
JURISDICTION AND VENUE
6. The Court has jurisdiction over this action under Sections 20(b), 20(d) and 22(a)
of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d) and  77v(a)]; and Sections 21(d), 21(e), and 27

Re:  SEC v. Hardaway, et al.   Page 3 of 17
Complaint 
of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e),  and 78aa].  Venue is proper because a
substantial part of the events and omissions giving rise to the claims occurred in the Southern
District of Texas.
PARTIES

7. Plaintiff SEC is an agency of the United States government.
8. Defendant Hardaway is a natural person residing in Houston, Texas.  Hardaway
has a degree in journalism from Louisiana State University.  He has no professional certifications
or licenses.  He is not and has never been registered with the SEC in any capacity.
9. Defendant HNW is incorporated under Texas law and headquartered in Houston.
Hardaway is HNW's sole officer and owns at least 70% of its stock.  Hardaway has total control
over all aspects of its operations.  In 2010-2011, HNW purportedly provided internet, Wi-Fi, and
other technology support services to a handful of hotels in the Houston area.
FACTS
I.         HARDAWAY TARGETED FELLOW MEMBERS OF HIS "SUCCESS CLUB."

10. Hardaway was a high-level member of an organization called the Global
Information Network ("GIN").  GIN was founded by jailed television pitchman Kevin Trudeau.
In a promotional You Tube video, GIN describes itself as a worldwide "success club."
1
  GIN
claimed that it could help its members achieve whatever they wanted in life—including business
success.  However, according to the Federal Trade Commission, GIN was a classic pyramid
scheme in which only Trudeau and his confidants made money.  Hardaway was a high-ranking
leader of GIN and part of its "Inner Circle."
11. Generally speaking, GIN members were of modest means and education.  They
                                                            
1
 https://www.youtube.com/watch?v=cEY5lurcrLw.

Re:  SEC v. Hardaway, et al.   Page 4 of 17
Complaint 
were trusting of other members—and were required to pledge an oath of ethical conduct and fair
dealing toward their GIN colleagues.  They were prohibited from criticizing fellow members in
any way.  And finally, it was an article of faith among GIN members that skepticism was an
infectious "negative vibration" that could de-rail bold action.
12. Thus, his fellow GIN members were the perfect fraud victims for Hardaway.
They inherently trusted him—since he had taken an oath to treat them ethically and fairly.  They
were reluctant or unwilling to criticize him—both because this was prohibited and because it
could spread damaging "negativity."  And finally, they were simply unwilling to believe that
Hardaway, a member of the "Inner Circle," would cheat them.
II.        T
HE DEFENDANTS ENGAGED IN FRAUDULENT SECURITIES OFFERINGS.

i. The Defendants fraudulently offered HNW convertible preferred stock.
13. At least as early as November 2010, the Defendants began raising money from
investors residing in multiple states throughout the U.S.  They did this through a private offering
of HNW preferred shares at $.50 per share.  These shares had a convertibility feature that
allowed investors to convert them to HNW common stock.  The Defendants marketed the
preferred shares using a Private Placement Memorandum ("PPM").  Hardaway was the source of
all the factual information in the PPM.  Although the PPM stated that the offering would end on
June 30, 2010, it continued through early 2015.
14. The PPM contained a number of false or misleading representations.  For
example, the PPM stated that it was "conservative[ly]" projected that HNW would receive $2.3
million in revenue during the first year after the offering.  It stated that HNW would achieve
break-even cash flow within two years.  And it projected that HNW would generate profits of
more than $3.2 million on gross sales of nearly $5.6 million in the second year after the offering.

Re:  SEC v. Hardaway, et al.   Page 5 of 17
Complaint 
15. As the Defendants knew or were reckless in not knowing, these projections were
completely untethered from reality—and based on nothing more than Hardaway's assumptions.
At the very least, they were unreasonable.  In 2010, HNW generated zero revenue.  It had
$718,629 in expenses for the year.  Its 2011 performance was similarly miserable—with $2,250
in revenue against $1,472,282 in expenses.  HNW's anemic operations never improved.
2

16. The PPM also falsely represented that "The Company should be able to launch on
a national scale no later than the first quarter of 2011."  It further stated that the Company
planned to increase its Houston sales to over $2.3 million and its customer base to 300 hotels by
year-end 2010.  In fact, at the time these claims were made, HNW had only two clients and had
generated no revenue.  They Defendants knew this, and knew or were reckless in not knowing
that these projections were baseless.  At the very least, the projections were unreasonable.
17. The PPM also falsely claimed that HNW would use more than half of the offering
proceeds to build its business—by acquiring equipment, inventory and operating materials ($2.5
million); and by advertising and participating in trade shows ($500,000).  The Defendants knew
or were reckless in not knowing that these representations were false—since HNW had almost
no contracts and no plan to build its business.  At the very least, they were unreasonable.  In fact,
HNW spent only $30,000 for these purposes in 2011-12, acquiring some computer equipment.
ii. The Defendants fraudulently marketed HNW's securities by falsely claiming that a
public stock offering was imminent.
18. In late 2010, the Defendants launched what would be a four-year barrage of e-
                                                            
2
 According to HNW's unaudited financial statements, prepared by an outside bookkeeper, HNW
performed as follows: (i) 2012: $329 in revenue vs. $908,369 in expenses; (ii) 2013: $12,930 in
revenues vs. $1,000,867 in expenses; (iii) 2014: $9,303 in revenues vs. $675,212 in expenses;
and (iv) 2015: $0 revenue vs. $228,705 in expenses.

Re:  SEC v. Hardaway, et al.   Page 6 of 17
Complaint 
mails encouraging investors to buy HNW preferred stock.  Potential investors were told that they
should invest immediately to take advantage of the ever-impending IPO and/or public market for
HNW common stock.  They were told that, upon converting their preferred shares to common
shares, they could sell their common stock into the public market for huge profits.
19. However, this promotional campaign was based on lies.  As the Defendants knew
or were reckless in not knowing, the statements about the impending IPO and the market for
HNW's common stock were false.  At the very least, they were unreasonable.  Always strapped
for money, HNW had no means of making the necessary SEC filings to take HNW public.  Nor
could HNW afford audited financials, an underwriter, a selling syndicate, or market makers.
20. In fact, it was mid-2015 by the time Hardaway attempted with any sincerity to
determine from HNW's outside securities counsel what was required for HNW to conduct an
IPO or develop a public trading market.  And by that time HNW's funds had been too depleted
by Hardaway to pursue either strategy.
iii. The Defendants fraudulently marketed HNW's securities using a variety of
"limited-time" offers.
21. In addition to marketing HNW's securities by falsely touting its business
prospects, Hardaway pressured victims to invest using various "limited-time" offers.
22. From the beginning of the offerings, Hardaway told investors that if they invested
within certain specified time periods, their preferred shares would be convertible to a certain
number of post-IPO common stock shares.  This ratio ranged from 1:3 to 1:6.
23.   In addition, as early as June 2011, Hardaway started a "matching program."  He
promised investors in the program an "equivalent" number of shares in "every company HNW
acquires during the next five years."  Although this was supposedly a limited-time offer,

Re:  SEC v. Hardaway, et al.   Page 7 of 17
Complaint 
Hardaway continued the program over several years.  Finally, he falsely couched this program as
a "personal offering" for "select" investors—even though it was widely offered.
24. In late 2012, Hardaway claimed that HNW had acquired its first company—with
shares in that company forthcoming to program investors.  This was also a lie, as HNW had not
acquired any companies.
25. In September 2012, Hardaway launched a "short term" profit participation
program.  It supposedly allowed investors to receive a share of HNW's profits from its contract
with a hotel chain.  In connection with the pitch, Hardaway falsely stated that HNW was
operating in five cities and was expecting monthly profits.  As he knew, it was not.
26. From 2013-15, Hardaway pressured investors to buy his "personal" preferred
HNW shares at elevated prices.  Although the offerings of the "personal" shares spanned years,
he falsely claimed that they were for a limited time.
27. As part of these "personal" offerings, Hardaway promised beginning in late 2013
that investors would receive a stake in all technology developed by HNW.  However, as
Hardaway knew, HNW was not developing any technology—and never did.
28. Finally, throughout 2014-15 Hardaway fraudulently pitched at least five other
"limited time" incentive programs: (i) a profit participation program in 3D printing technology;
(ii) a profit participation program in GPS technology; (iii) an offer of "personal" shares at a
discounted $.20/share; (iv) a "tenfold" offering in which HNW promised to multiply preferred
shares purchased by ten; and (v) an offer of two-year HNW notes that paid 18% and were
convertible to HNW preferred stock.
29. Like the other programs, each of these programs was a sham—an investment in
the same failing company marketed in a different way.  During the time of these offerings,

Re:  SEC v. Hardaway, et al.   Page 8 of 17
Complaint 
Hardaway never disclosed HNW's awful financial state or any of the other material facts detailed
above.  Nor did he disclose that HNW was not involved in either 3D printing or GPS.
iv. Hardaway misappropriated HNW investor funds to cover his lifestyle.
30. From 2010-16, HNW's total revenues were $24,812 compared to roughly $5
million in expenses.  Vast amounts of these expenses were illegitimate—propping up
Hardaway's lifestyle rather than growing HNW's business, as promised.  This widespread
misappropriation of funds was not disclosed to investors.
31. These illegitimate expenses included:
 $116,000 from 505 separate ATM withdrawals;
 $285,119 on "travel, lodging, entertainment" (mostly to attend GIN-sponsored
conferences and cruises, and on European vacations);
 $64,000 in "loans";
 $50,000 on an investment in a movie production;
 $137,500 in what appears to be a private equity investment;
 $95,000 in highly speculative foreign currency trading; and
 over $210,000 on personal items in credit card point-of-sale transactions
32. In addition, Hardaway paid himself $924,000 in salary during the life of the fraud.
As HNW had virtually no real business operations, Hardaway had no reason for taking a
salary—let alone such a large one.  And because HNW's revenues for the entire period were less
than $25,000, the vast majority of his salary was paid out of investor funds.

Re:  SEC v. Hardaway, et al.   Page 9 of 17
Complaint 
v. Hardaway knowingly, recklessly, or unreasonably misled investors throughout the
time of the offerings.
33. As detailed above, Hardaway continually misled investors about a number of
material facts.  All told, the Defendants fraudulently raised approximately $4.7 million.  They
did this by lying to investors about, or failing to tell them about:
 HNW's business prospects, since in reality HNW was a failing company with
almost no revenue or clients;
 HNW's prospects for going public, since HNW never had any real chance of
going public;
 how investor funds would be used, since Hardaway misappropriated hugs sums
of funds; and
 any number of facts about the "limited time" programs, as detailed above.
34. The Defendants knew that these representations were false.  They knew that
HNW was a failing business, that it was not going public, that Hardaway was looting its coffers,
and that various details of the "limited time" offers were false.  At a minimum, the
representations and/or omissions were reckless or unreasonable—since the Defendants knew so
many facts that contradicted the representations to investors.
35. When investors sought information about their HNW investments or questioned
the truthfulness of the Defendants' claims, they refused to give them the information.  Worse,
Hardaway goaded them into silence—both by threatening legal action and by citing to the GIN
rule that prohibited members from criticizing each other.

Re:  SEC v. Hardaway, et al.   Page 10 of 17
Complaint 
 vi. Hardaway violated or caused Vortronnix to violate a number of SEC regulatory
requirements after it was acquired by HNW.
36. On April 29, 2015, HNW acquired Vortronnix, a public reporting "shell"
company, for $40,000.  Hardaway became Vortronnix's President, CEO, CFO, Treasurer and
Chairman.  At the time, Vortronnix's stock had never traded publicly.  To date, its stock has still
never traded publicly.
37. After it was acquired, Vortronnix filed SEC Forms 10-Q for the first three
quarters of 2015.  Hardaway signed the filings as Vortronnix's President, CEO, CFO, Treasurer
and Chairman.  He also signed management certifications pursuant to Section 302 of the
Sarbanes-Oxley Act ("SOX").  The certifications were attached as exhibits to the 10-Q filings.
38. As Hardaway knew, Vortronnix's third-quarter 2015 10-Q was improper.
Hardaway knew there had been no review of Vortronnix's financial statements by its auditor, as
required.  He signed and certified the 10-Q anyway.
39. To make matters worse, Hardaway intentionally ignored a November 10, 2015
directive from the auditor to withdraw the 10-Q.  The directive stated that he should immediately
withdraw the filing.  It further stated that he should file with the SEC a Form 8-K, notifying the
public that it could not rely on the financial statements—which had not been reviewed.
40. Vortronnix did not publicly disclose this sequence of events until at least March 1,
2016—3 1/2 months after the auditor's directive.  It did this when Vortronnix filed a Form 8-K
announcing the resignation of its auditor.  Even then, the events were only disclosed in the
attached auditor resignation letter—rather than the body of the 8-K report.
41. Since filing the third-quarter Form 10-Q on November 9, 2015, Vortronnix has
not filed any of its required SEC reports.  Therefore, it is over one-year delinquent in its filings.

Re:  SEC v. Hardaway, et al.   Page 11 of 17
Complaint 
42. Finally, Hardaway falsely certified at least three SOX 302 management
certifications—for the first, second, and third quarters of 2015.  The certifications state that: (i)
based on Hardaway's knowledge, the 10-Q reports do not contain any untrue material facts, nor
do they omit to state any material facts; (ii) Vortronnix has designed disclosure controls and
procedures to ensure that material information relating to Vortronnix is made known to
Vortronnix's management within the period in which the report is being prepared; and (iii)
Hardaway has evaluated Vortronnix's disclosure controls and procedures to ensure that they are
operating effectively.
3

43. As Hardaway knew, these statements were false.  He had never designed or
evaluated Vortronnix's disclosure controls and procedures.  Nor had anyone else.  In fact,
Vortronnix has no such controls in place.  Hardaway also knew that Vortronnix's auditor had not
reviewed its third-quarter 2015 Form 10-Q.
FIRST CLAIM
(Against All Defendants)
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder

44. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of
this Complaint as if set forth verbatim.
45. Each Defendant directly or indirectly, singly or in concert, in connection with the
purchase and sale of securities, by use of the means or instrumentalities of interstate commerce,
                                                            
3
 "Disclosure controls and procedures" means  controls and other procedures of an issuer that are
designed to ensure that information required to be disclosed by the issuer in the reports that it
files or submits in certain public filings is recorded, processed, summarized and reported, within
the time periods specified in the SEC's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that information required
to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuer's management, including its principal executive and
principal financial officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.  Exchange Act Rule 13a-15(e) [17 C.F.R.
240.13a-15(e)].

Re:  SEC v. Hardaway, et al.   Page 12 of 17
Complaint 
or of the mails, or of the facilities of a national securities exchange, have: (a) employed devices,
schemes, or artifices to defraud; (b) made untrue statements of material fact, or omitted to state
material facts necessary in order to make statements made, in light of the circumstances under
which they were made, not misleading; and/or (c) engaged in acts, practices, or courses of
business which operate or would operate as a fraud or deceit upon other persons.
46. By reason of the foregoing, the Defendants have violated and, unless enjoined,
will again violate Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. §240.10b-5].
SECOND CLAIM
(Against All Defendants)
Violations of Section 17(a) of the Securities Act

47. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of
this Complaint as if set forth verbatim.
48. Each Defendant directly or indirectly, singly or in concert, in the offer and sale of
securities, by the use of the means or instruments of transportation or communication in
interstate commerce, or by use of the mails, have (a) employed devices, schemes, or artifices to
defraud; (b) obtained money or property by means of untrue statements of material fact, or
omissions of material facts necessary in order to make statements made, in light of the
circumstances under which they were made, not misleading; and/or (c) engaged in transactions,
practices, or courses of business which operate or would operate as a fraud or deceit upon the
purchasers of securities.
49. By reason of the foregoing, the Defendants have violated and, unless enjoined,
will again violate Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

Re:  SEC v. Hardaway, et al.   Page 13 of 17
Complaint 
THIRD CLAIM
(Against All Defendants)
Violations of Sections 5(a) and 5(c) of the Securities Act

50. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of
this Complaint as if set forth verbatim.
51. Each Defendant, directly or indirectly, singly or in concert, has made use of the
means or instruments of transportation or communication in interstate commerce, or the mails, to
offer and sell securities when no registration statements was filed or in effect as to such securities
and when no exemption from registration was applicable.
52. By reason of the foregoing, the Defendants have violated and, unless enjoined,
will continue to violate Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and
77e(c).]
FOURTH CLAIM
(Against Hardaway)
Violations of Section 13(b)(5) of the Exchange Act

53. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of
this Complaint as if set forth verbatim.
54. Hardaway knowingly circumvented or knowingly failed to implement a system of
internal accounting controls for an issuer of securities registered pursuant to Section 12 of the
Exchange Act [15 U.S.C. § 78l].
55. By reason of the foregoing, Hardaway violated and, unless enjoined, will continue
to violate Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m].
FIFTH CLAIM
(Against Hardaway)
Violations of Rule 13a-14 Under the Exchange Act

56. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of

Re:  SEC v. Hardaway, et al.   Page 14 of 17
Complaint 
this Complaint as if set forth verbatim.
57. As the principal financial officer of an issuer of securities registered pursuant to
Section 12 of the Exchange Act [15 U.S.C. § 78l], Hardaway signed personal certifications
falsely indicating that he had reviewed certain periodic reports filed with the SEC and that, based
on his knowledge, these reports did not contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by the
report.  He also falsely certified that he had: (i) designed disclosure controls and procedures; and
(ii) had evaluated the effectiveness of the disclosure controls and procedures to ensure that they
were operating effectively.
58. By reason of the foregoing, Hardaway violated and, unless enjoined, will continue
to violate Rule 13a-14 under the Exchange Act [17 C.F.R. §§ 240.13a-14].
SIXTH CLAIM
(Against Hardaway)
Aiding and Abetting Violations of Section 13(a) of the Exchange Act and Rule 13a-13
thereunder

59. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of
this Complaint as if set forth verbatim.
60. Vortronnix failed to file periodic reports with the SEC, as required by Exchange
Act Section 13(a) and Rule 13a-13 thereunder.  As Vortronnix's President, CEO, CFO, Treasurer
and Chairman, Hardaway was responsible for Vortronnix's failure to file the required reports.
61. By reason of the foregoing, Hardaway aided and abetted violations of and, unless
enjoined, will continue to aid and abet violations of Section 13(a) of the Exchange Act [15 U.S.C.
§ 78m(a)] and Rule 13a-13 thereunder [17 C.F.R. § 240.13a-13].

Re:  SEC v. Hardaway, et al.   Page 15 of 17
Complaint 
SEVENTH CLAIM
(Against Hardaway)
Aiding and Abetting Violations of Section 13(b)(2)(B) of the Exchange Act

62. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of
this Complaint as if set forth verbatim.
63. Vortronnix failed to devise and maintain a sufficient system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions are executed in
accordance with management's general or specific authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements, and to maintain
accountability for assets; (iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.  As Vortronnix's President, CEO, CFO, Treasurer and Chairman, Hardaway was
responsible for this failure to devise and maintain sufficient internal controls.
64. By reason of the foregoing, Hardaway aided and abetted violations of and, unless
enjoined, will continue to aid and abet violations of Section 13(b)(2)(B) of the Exchange Act [15
U.S.C. § 78m(b)(2)(B)].
EIGTH CLAIM
(Against Hardaway)
Aiding and Abetting Violations of Rule 13a-15(a) Under the Exchange Act

65. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of
this Complaint as if set forth verbatim.
66. Vortronnix, which is an issuer with securities registered pursuant to Section 12 of
the Exchange Act, failed to maintain disclosure controls and procedures.  As Vortronnix's

Re:  SEC v. Hardaway, et al.   Page 16 of 17
Complaint 
President, CEO, CFO, Treasurer and Chairman, Hardaway was responsible for Vortronnix's
failure to maintain disclosure controls and procedures.
67. By reason of the foregoing, Hardaway aided and abetted violations of and, unless
enjoined, will continue to aid and abet violations of Rule 13a-15(a) under the Exchange Act [17
C.F.R. 240.13a-15(a)].
REQUEST FOR RELIEF
 The SEC respectfully requests that this Court:
I.
Permanently enjoin Defendant Hardaway from violating: Sections 5(a), 5(c), and 17(a) of
the Securities Act [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)]; Sections 10(b) and 13(b)(5) of the
Exchange Act [15 U.S.C. §§ 78j(b) and 78m]; and Rules 10b-5 and 13a-14 under the Exchange
Act [17 C.F.R. §§ 240.10b-5 and 240.13a-14].  Permanently enjoin Defendant Hardaway from
aiding and abetting violations of: Sections 13(a) and 13(b)(2)(B) of the Exchange Act [15 U.S.C.
§§ 78m(a) and 78m(b)(2)(B)]; and Rules 13a-13 and 13a-15(a) under the Exchange Act [17
C.F.R. §§ 240.13a-13 and 240.13a-15(a)].
II.
Permanently enjoin Defendant HNW from violating: Sections 5(a), 5(c), and 17(a) of the
Securities Act [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)]; Section 10(b) of the Exchange Act [15
U.S.C. §§ 78j(b)]; and Rule 10b-5 under the Exchange Act [17 C.F.R. § 240.10b-5].
III.
Order each Defendant to disgorge an amount equal to the funds and benefits obtained
illegally, or to which that Defendant otherwise has no legitimate claim, as a result of the
violations alleged, plus prejudgment interest on that amount.

Re:  SEC v. Hardaway, et al.   Page 17 of 17
Complaint 
IV.
Order each Defendant to pay a civil penalty in an amount determined by the Court
pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the
Exchange Act [15 U.S.C. § 78u(d)].
V.
Order that Hardaway is barred, pursuant to Section 20(e) of the Securities Act [15 U.S.C.
§ 77t(d)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], from acting as an
officer or director of any issuer that has a class of securities registered under Section 12 of the
Exchange Act [15 U.S.C. § 78l] or that is required to file reports under Section 15(d) of the
Exchange Act [15 U.S.C. § 78o(d)].
VI.
Order such other relief as this Court may deem just and proper.
Respectfully submitted,

February 17, 2016   /s/ Chris Davis
CHRIS DAVIS
Plaintiff's Lead Attorney
Texas Bar No. 24050483
United States Securities and Exchange Commission
Burnett Plaza, Suite 1900
801 Cherry Street, Unit 18
Fort Worth, Texas 76102
Telephone: (817) 900-2638
FAX: (817) 978-4927
E-mail: [email protected]

IN THE UNITED STATES DISTRICT COURT 
FOR THE SOUTHERN DISTRICT OF TEXAS 

HOUSTON DIVISION 
________________________________________________ 
SECURITIES AND EXCHANGE COMMISSION, § 

§ 
 Plaintiff, § 

§ 
vs. § 

§  Civil Action No. _____________
DARRELL GLENN HARDAWAY and   § 
HARDAWAY NET-WORKS, INC.   §   

§ 
Defendants.      § 

________________________________________________§ 

COMPLAINT 

Plaintiff Securities and Exchange Commission ("SEC") alleges as follows: 

SUMMARY 

1. This case is about a multi-million-dollar fraud scheme carried out by Defendant

Darrell Glenn Hardaway ("Hardaway") using his private company, Defendant Hardaway Net-

Works, Inc. ("HNW").  Since at least as early as November 2010, the Defendants have 

fraudulently raised $4.7 million or more by selling securities issued by HNW.  Hardaway 

successfully marketed these securities to over a hundred fellow members of a nationwide 

"success club" in which he was a high-ranking leader.  He targeted these victims both because 

they had great trust in him and because they had taken an oath not to criticize him. 

2. The Defendants lured investor victims using baseless projections about HNW's

business operations.  They falsely claimed that investors stood to reap "massive" returns upon 

HNW's ever-imminent public offering.  And they pressured victims to invest through a number 

of sham "limited time" incentives. 

4:17-CV-00529

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 1 of 17



Re:  SEC v. Hardaway, et al.   Page 2 of 17 
Complaint 

3. In truth, HNW barely had a pulse.  From 2010-16, HNW's total revenue was a 

meager $24,812 from only a handful of customers.  By comparison, it had total expenses of 

approximately $5 million during the same period—over 200 times revenues.  Nearly $2 million 

of these expenses went to fund Hardaway's lifestyle, rather than toward legitimate business 

expenses.  These payments took the form of both salary and "expense reimbursements."  

Hardaway concealed from investors both HNW's awful financial state and his misuse of funds.   

4.   Even when Hardaway did apply a modest amount of investor funds to actual 

business expenses, he squandered the money.  Hardaway spent $40,000 to purchase a public 

reporting shell company, Vortronnix Technologies, Inc.  However, he botched the acquisition 

through incompetence and disregard for SEC reporting rules.  In 2015, he caused Vortronnix to 

file with the SEC a Form 10-Q without the company's auditors having reviewed its financial 

statements.  Even after the auditors demanded that he withdraw the filing, he failed to comply or 

to publicly disclose the impropriety for many months.  That was the last periodic report 

Vortronnix filed.  It has now been delinquent for over a year. 

5. By engaging in this conduct and other conduct detailed below, the Defendants 

violated a number of provisions of the federal securities laws—including the antifraud provisions 

of the Securities Act of 1933 ("Securities Act") and the Securities Exchange Act of 1934 

("Exchange Act").  Thus, in the interest of protecting the public from further illegal activity, the 

SEC brings this action seeking all available relief—including permanent injunctions; 

disgorgement of all ill-gotten gains; civil money penalties; and an officer and director bar. 

JURISDICTION AND VENUE 

6. The Court has jurisdiction over this action under Sections 20(b), 20(d) and 22(a) 

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

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 2 of 17



Re:  SEC v. Hardaway, et al.   Page 3 of 17 
Complaint 

of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e),  and 78aa].  Venue is proper because a 

substantial part of the events and omissions giving rise to the claims occurred in the Southern 

District of Texas. 

PARTIES 
 

7. Plaintiff SEC is an agency of the United States government.  

8. Defendant Hardaway is a natural person residing in Houston, Texas.  Hardaway 

has a degree in journalism from Louisiana State University.  He has no professional certifications 

or licenses.  He is not and has never been registered with the SEC in any capacity. 

9. Defendant HNW is incorporated under Texas law and headquartered in Houston.  

Hardaway is HNW's sole officer and owns at least 70% of its stock.  Hardaway has total control 

over all aspects of its operations.  In 2010-2011, HNW purportedly provided internet, Wi-Fi, and 

other technology support services to a handful of hotels in the Houston area.  

FACTS 

I. HARDAWAY TARGETED FELLOW MEMBERS OF HIS "SUCCESS CLUB." 
 

10. Hardaway was a high-level member of an organization called the Global 

Information Network ("GIN").  GIN was founded by jailed television pitchman Kevin Trudeau.  

In a promotional You Tube video, GIN describes itself as a worldwide "success club."1  GIN 

claimed that it could help its members achieve whatever they wanted in life—including business 

success.  However, according to the Federal Trade Commission, GIN was a classic pyramid 

scheme in which only Trudeau and his confidants made money.  Hardaway was a high-ranking 

leader of GIN and part of its "Inner Circle." 

11. Generally speaking, GIN members were of modest means and education.  They 

                                                            
1 https://www.youtube.com/watch?v=cEY5lurcrLw. 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 3 of 17



Re:  SEC v. Hardaway, et al.   Page 4 of 17 
Complaint 

were trusting of other members—and were required to pledge an oath of ethical conduct and fair 

dealing toward their GIN colleagues.  They were prohibited from criticizing fellow members in 

any way.  And finally, it was an article of faith among GIN members that skepticism was an 

infectious "negative vibration" that could de-rail bold action. 

12. Thus, his fellow GIN members were the perfect fraud victims for Hardaway.  

They inherently trusted him—since he had taken an oath to treat them ethically and fairly.  They 

were reluctant or unwilling to criticize him—both because this was prohibited and because it 

could spread damaging "negativity."  And finally, they were simply unwilling to believe that 

Hardaway, a member of the "Inner Circle," would cheat them. 

II. THE DEFENDANTS ENGAGED IN FRAUDULENT SECURITIES OFFERINGS. 
 

i. The Defendants fraudulently offered HNW convertible preferred stock. 

13. At least as early as November 2010, the Defendants began raising money from 

investors residing in multiple states throughout the U.S.  They did this through a private offering 

of HNW preferred shares at $.50 per share.  These shares had a convertibility feature that 

allowed investors to convert them to HNW common stock.  The Defendants marketed the 

preferred shares using a Private Placement Memorandum ("PPM").  Hardaway was the source of 

all the factual information in the PPM.  Although the PPM stated that the offering would end on 

June 30, 2010, it continued through early 2015. 

14. The PPM contained a number of false or misleading representations.  For 

example, the PPM stated that it was "conservative[ly]" projected that HNW would receive $2.3 

million in revenue during the first year after the offering.  It stated that HNW would achieve 

break-even cash flow within two years.  And it projected that HNW would generate profits of 

more than $3.2 million on gross sales of nearly $5.6 million in the second year after the offering. 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 4 of 17



Re:  SEC v. Hardaway, et al.   Page 5 of 17 
Complaint 

15. As the Defendants knew or were reckless in not knowing, these projections were 

completely untethered from reality—and based on nothing more than Hardaway's assumptions.  

At the very least, they were unreasonable.  In 2010, HNW generated zero revenue.  It had 

$718,629 in expenses for the year.  Its 2011 performance was similarly miserable—with $2,250 

in revenue against $1,472,282 in expenses.  HNW's anemic operations never improved.2 

16. The PPM also falsely represented that "The Company should be able to launch on 

a national scale no later than the first quarter of 2011."  It further stated that the Company 

planned to increase its Houston sales to over $2.3 million and its customer base to 300 hotels by 

year-end 2010.  In fact, at the time these claims were made, HNW had only two clients and had 

generated no revenue.  They Defendants knew this, and knew or were reckless in not knowing 

that these projections were baseless.  At the very least, the projections were unreasonable. 

17. The PPM also falsely claimed that HNW would use more than half of the offering 

proceeds to build its business—by acquiring equipment, inventory and operating materials ($2.5 

million); and by advertising and participating in trade shows ($500,000).  The Defendants knew 

or were reckless in not knowing that these representations were false—since HNW had almost 

no contracts and no plan to build its business.  At the very least, they were unreasonable.  In fact, 

HNW spent only $30,000 for these purposes in 2011-12, acquiring some computer equipment. 

ii. The Defendants fraudulently marketed HNW's securities by falsely claiming that a 

public stock offering was imminent. 

18. In late 2010, the Defendants launched what would be a four-year barrage of e-

                                                            
2 According to HNW's unaudited financial statements, prepared by an outside bookkeeper, HNW 
performed as follows: (i) 2012: $329 in revenue vs. $908,369 in expenses; (ii) 2013: $12,930 in 
revenues vs. $1,000,867 in expenses; (iii) 2014: $9,303 in revenues vs. $675,212 in expenses; 
and (iv) 2015: $0 revenue vs. $228,705 in expenses. 
 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 5 of 17



Re:  SEC v. Hardaway, et al.   Page 6 of 17 
Complaint 

mails encouraging investors to buy HNW preferred stock.  Potential investors were told that they 

should invest immediately to take advantage of the ever-impending IPO and/or public market for 

HNW common stock.  They were told that, upon converting their preferred shares to common 

shares, they could sell their common stock into the public market for huge profits. 

19. However, this promotional campaign was based on lies.  As the Defendants knew 

or were reckless in not knowing, the statements about the impending IPO and the market for 

HNW's common stock were false.  At the very least, they were unreasonable.  Always strapped 

for money, HNW had no means of making the necessary SEC filings to take HNW public.  Nor 

could HNW afford audited financials, an underwriter, a selling syndicate, or market makers.   

20. In fact, it was mid-2015 by the time Hardaway attempted with any sincerity to 

determine from HNW's outside securities counsel what was required for HNW to conduct an 

IPO or develop a public trading market.  And by that time HNW's funds had been too depleted 

by Hardaway to pursue either strategy. 

iii. The Defendants fraudulently marketed HNW's securities using a variety of 

"limited-time" offers. 

21. In addition to marketing HNW's securities by falsely touting its business 

prospects, Hardaway pressured victims to invest using various "limited-time" offers. 

22. From the beginning of the offerings, Hardaway told investors that if they invested 

within certain specified time periods, their preferred shares would be convertible to a certain 

number of post-IPO common stock shares.  This ratio ranged from 1:3 to 1:6. 

23.   In addition, as early as June 2011, Hardaway started a "matching program."  He 

promised investors in the program an "equivalent" number of shares in "every company HNW 

acquires during the next five years."  Although this was supposedly a limited-time offer, 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 6 of 17



Re:  SEC v. Hardaway, et al.   Page 7 of 17 
Complaint 

Hardaway continued the program over several years.  Finally, he falsely couched this program as 

a "personal offering" for "select" investors—even though it was widely offered.  

24. In late 2012, Hardaway claimed that HNW had acquired its first company—with 

shares in that company forthcoming to program investors.  This was also a lie, as HNW had not 

acquired any companies. 

25. In September 2012, Hardaway launched a "short term" profit participation 

program.  It supposedly allowed investors to receive a share of HNW's profits from its contract 

with a hotel chain.  In connection with the pitch, Hardaway falsely stated that HNW was 

operating in five cities and was expecting monthly profits.  As he knew, it was not. 

26. From 2013-15, Hardaway pressured investors to buy his "personal" preferred 

HNW shares at elevated prices.  Although the offerings of the "personal" shares spanned years, 

he falsely claimed that they were for a limited time.   

27. As part of these "personal" offerings, Hardaway promised beginning in late 2013 

that investors would receive a stake in all technology developed by HNW.  However, as 

Hardaway knew, HNW was not developing any technology—and never did. 

28. Finally, throughout 2014-15 Hardaway fraudulently pitched at least five other 

"limited time" incentive programs: (i) a profit participation program in 3D printing technology; 

(ii) a profit participation program in GPS technology; (iii) an offer of "personal" shares at a 

discounted $.20/share; (iv) a "tenfold" offering in which HNW promised to multiply preferred 

shares purchased by ten; and (v) an offer of two-year HNW notes that paid 18% and were 

convertible to HNW preferred stock.   

29. Like the other programs, each of these programs was a sham—an investment in 

the same failing company marketed in a different way.  During the time of these offerings, 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 7 of 17



Re:  SEC v. Hardaway, et al.   Page 8 of 17 
Complaint 

Hardaway never disclosed HNW's awful financial state or any of the other material facts detailed 

above.  Nor did he disclose that HNW was not involved in either 3D printing or GPS. 

iv. Hardaway misappropriated HNW investor funds to cover his lifestyle. 

30. From 2010-16, HNW's total revenues were $24,812 compared to roughly $5 

million in expenses.  Vast amounts of these expenses were illegitimate—propping up 

Hardaway's lifestyle rather than growing HNW's business, as promised.  This widespread 

misappropriation of funds was not disclosed to investors. 

31. These illegitimate expenses included:  

 $116,000 from 505 separate ATM withdrawals; 

 $285,119 on "travel, lodging, entertainment" (mostly to attend GIN-sponsored 

conferences and cruises, and on European vacations); 

 $64,000 in "loans"; 

 $50,000 on an investment in a movie production;  

 $137,500 in what appears to be a private equity investment;   

 $95,000 in highly speculative foreign currency trading; and 

 over $210,000 on personal items in credit card point-of-sale transactions 

32. In addition, Hardaway paid himself $924,000 in salary during the life of the fraud.  

As HNW had virtually no real business operations, Hardaway had no reason for taking a 

salary—let alone such a large one.  And because HNW's revenues for the entire period were less 

than $25,000, the vast majority of his salary was paid out of investor funds. 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 8 of 17



Re:  SEC v. Hardaway, et al.   Page 9 of 17 
Complaint 

v. Hardaway knowingly, recklessly, or unreasonably misled investors throughout the 

time of the offerings. 

33. As detailed above, Hardaway continually misled investors about a number of 

material facts.  All told, the Defendants fraudulently raised approximately $4.7 million.  They 

did this by lying to investors about, or failing to tell them about: 

 HNW's business prospects, since in reality HNW was a failing company with 

almost no revenue or clients; 

 HNW's prospects for going public, since HNW never had any real chance of 

going public; 

 how investor funds would be used, since Hardaway misappropriated hugs sums 

of funds; and 

 any number of facts about the "limited time" programs, as detailed above. 

34. The Defendants knew that these representations were false.  They knew that 

HNW was a failing business, that it was not going public, that Hardaway was looting its coffers, 

and that various details of the "limited time" offers were false.  At a minimum, the 

representations and/or omissions were reckless or unreasonable—since the Defendants knew so 

many facts that contradicted the representations to investors. 

35. When investors sought information about their HNW investments or questioned 

the truthfulness of the Defendants' claims, they refused to give them the information.  Worse, 

Hardaway goaded them into silence—both by threatening legal action and by citing to the GIN 

rule that prohibited members from criticizing each other. 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 9 of 17



Re:  SEC v. Hardaway, et al.   Page 10 of 17 
Complaint 

 vi. Hardaway violated or caused Vortronnix to violate a number of SEC regulatory 

requirements after it was acquired by HNW. 

36. On April 29, 2015, HNW acquired Vortronnix, a public reporting "shell" 

company, for $40,000.  Hardaway became Vortronnix's President, CEO, CFO, Treasurer and 

Chairman.  At the time, Vortronnix's stock had never traded publicly.  To date, its stock has still 

never traded publicly. 

37. After it was acquired, Vortronnix filed SEC Forms 10-Q for the first three 

quarters of 2015.  Hardaway signed the filings as Vortronnix's President, CEO, CFO, Treasurer 

and Chairman.  He also signed management certifications pursuant to Section 302 of the 

Sarbanes-Oxley Act ("SOX").  The certifications were attached as exhibits to the 10-Q filings. 

38. As Hardaway knew, Vortronnix's third-quarter 2015 10-Q was improper.  

Hardaway knew there had been no review of Vortronnix's financial statements by its auditor, as 

required.  He signed and certified the 10-Q anyway.   

39. To make matters worse, Hardaway intentionally ignored a November 10, 2015 

directive from the auditor to withdraw the 10-Q.  The directive stated that he should immediately 

withdraw the filing.  It further stated that he should file with the SEC a Form 8-K, notifying the 

public that it could not rely on the financial statements—which had not been reviewed.   

40. Vortronnix did not publicly disclose this sequence of events until at least March 1, 

2016—3 1/2 months after the auditor's directive.  It did this when Vortronnix filed a Form 8-K 

announcing the resignation of its auditor.  Even then, the events were only disclosed in the 

attached auditor resignation letter—rather than the body of the 8-K report. 

41. Since filing the third-quarter Form 10-Q on November 9, 2015, Vortronnix has 

not filed any of its required SEC reports.  Therefore, it is over one-year delinquent in its filings. 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 10 of 17



Re:  SEC v. Hardaway, et al.   Page 11 of 17 
Complaint 

42. Finally, Hardaway falsely certified at least three SOX 302 management 

certifications—for the first, second, and third quarters of 2015.  The certifications state that: (i) 

based on Hardaway's knowledge, the 10-Q reports do not contain any untrue material facts, nor 

do they omit to state any material facts; (ii) Vortronnix has designed disclosure controls and 

procedures to ensure that material information relating to Vortronnix is made known to 

Vortronnix's management within the period in which the report is being prepared; and (iii) 

Hardaway has evaluated Vortronnix's disclosure controls and procedures to ensure that they are 

operating effectively.3 

43. As Hardaway knew, these statements were false.  He had never designed or 

evaluated Vortronnix's disclosure controls and procedures.  Nor had anyone else.  In fact, 

Vortronnix has no such controls in place.  Hardaway also knew that Vortronnix's auditor had not 

reviewed its third-quarter 2015 Form 10-Q. 

FIRST CLAIM  
(Against All Defendants) 

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

44. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of 

this Complaint as if set forth verbatim. 

45. Each Defendant directly or indirectly, singly or in concert, in connection with the 

purchase and sale of securities, by use of the means or instrumentalities of interstate commerce, 

                                                            
3 "Disclosure controls and procedures" means  controls and other procedures of an issuer that are 
designed to ensure that information required to be disclosed by the issuer in the reports that it 
files or submits in certain public filings is recorded, processed, summarized and reported, within 
the time periods specified in the SEC's rules and forms. Disclosure controls and procedures 
include, without limitation, controls and procedures designed to ensure that information required 
to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is 
accumulated and communicated to the issuer's management, including its principal executive and 
principal financial officers, or persons performing similar functions, as appropriate to allow 
timely decisions regarding required disclosure.  Exchange Act Rule 13a-15(e) [17 C.F.R. 
240.13a-15(e)]. 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 11 of 17



Re:  SEC v. Hardaway, et al.   Page 12 of 17 
Complaint 

or of the mails, or of the facilities of a national securities exchange, have: (a) employed devices, 

schemes, or artifices to defraud; (b) made untrue statements of material fact, or omitted to state 

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

which they were made, not misleading; and/or (c) engaged in acts, practices, or courses of 

business which operate or would operate as a fraud or deceit upon other persons. 

46. By reason of the foregoing, the Defendants have violated and, unless enjoined, 

will again violate Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. §240.10b-5]. 

SECOND CLAIM  
(Against All Defendants) 

Violations of Section 17(a) of the Securities Act 
 

47. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of 

this Complaint as if set forth verbatim. 

48. Each Defendant directly or indirectly, singly or in concert, in the offer and sale of 

securities, by the use of the means or instruments of transportation or communication in 

interstate commerce, or by use of the mails, have (a) employed devices, schemes, or artifices to 

defraud; (b) obtained money or property by means of untrue statements of material fact, or 

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

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

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

purchasers of securities. 

49. By reason of the foregoing, the Defendants have violated and, unless enjoined, 

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

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 12 of 17



Re:  SEC v. Hardaway, et al.   Page 13 of 17 
Complaint 

THIRD CLAIM  
(Against All Defendants) 

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

50. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of 

this Complaint as if set forth verbatim. 

51. Each Defendant, directly or indirectly, singly or in concert, has made use of the 

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

offer and sell securities when no registration statements was filed or in effect as to such securities 

and when no exemption from registration was applicable. 

52. By reason of the foregoing, the Defendants have violated and, unless enjoined, 

will continue to violate Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 

77e(c).] 

FOURTH CLAIM  
(Against Hardaway) 

Violations of Section 13(b)(5) of the Exchange Act 
 

53. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of 

this Complaint as if set forth verbatim. 

54. Hardaway knowingly circumvented or knowingly failed to implement a system of 

internal accounting controls for an issuer of securities registered pursuant to Section 12 of the 

Exchange Act [15 U.S.C. § 78l]. 

55. By reason of the foregoing, Hardaway violated and, unless enjoined, will continue 

to violate Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m]. 

FIFTH CLAIM  
(Against Hardaway) 

Violations of Rule 13a-14 Under the Exchange Act 
 

56. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 13 of 17



Re:  SEC v. Hardaway, et al.   Page 14 of 17 
Complaint 

this Complaint as if set forth verbatim. 

57. As the principal financial officer of an issuer of securities registered pursuant to 

Section 12 of the Exchange Act [15 U.S.C. § 78l], Hardaway signed personal certifications 

falsely indicating that he had reviewed certain periodic reports filed with the SEC and that, based 

on his knowledge, these reports did not contain any untrue statement of material fact or omit to 

state a material fact necessary to make the statements made, in light of the circumstances under 

which such statements were made, not misleading with respect to the period covered by the 

report.  He also falsely certified that he had: (i) designed disclosure controls and procedures; and 

(ii) had evaluated the effectiveness of the disclosure controls and procedures to ensure that they 

were operating effectively. 

58. By reason of the foregoing, Hardaway violated and, unless enjoined, will continue 

to violate Rule 13a-14 under the Exchange Act [17 C.F.R. §§ 240.13a-14]. 

SIXTH CLAIM  
(Against Hardaway) 

Aiding and Abetting Violations of Section 13(a) of the Exchange Act and Rule 13a-13 
thereunder 

 
59. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of 

this Complaint as if set forth verbatim. 

60. Vortronnix failed to file periodic reports with the SEC, as required by Exchange 

Act Section 13(a) and Rule 13a-13 thereunder.  As Vortronnix's President, CEO, CFO, Treasurer 

and Chairman, Hardaway was responsible for Vortronnix's failure to file the required reports. 

61. By reason of the foregoing, Hardaway aided and abetted violations of and, unless 

enjoined, will continue to aid and abet violations of Section 13(a) of the Exchange Act [15 U.S.C. 

§ 78m(a)] and Rule 13a-13 thereunder [17 C.F.R. § 240.13a-13]. 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 14 of 17



Re:  SEC v. Hardaway, et al.   Page 15 of 17 
Complaint 

SEVENTH CLAIM  
(Against Hardaway) 

Aiding and Abetting Violations of Section 13(b)(2)(B) of the Exchange Act 
 

62. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of 

this Complaint as if set forth verbatim. 

63. Vortronnix failed to devise and maintain a sufficient system of internal accounting 

controls sufficient to provide reasonable assurance that: (i) transactions are executed in 

accordance with management's general or specific authorization; (ii) transactions are recorded as 

necessary to permit preparation of financial statements in conformity with generally accepted 

accounting principles or any other criteria applicable to such statements, and to maintain 

accountability for assets; (iii) access to assets is permitted only in accordance with management's 

general or specific authorization; and (iv) the recorded accountability for assets is compared with 

the existing assets at reasonable intervals and appropriate action is taken with respect to any 

differences.  As Vortronnix's President, CEO, CFO, Treasurer and Chairman, Hardaway was 

responsible for this failure to devise and maintain sufficient internal controls. 

64. By reason of the foregoing, Hardaway aided and abetted violations of and, unless 

enjoined, will continue to aid and abet violations of Section 13(b)(2)(B) of the Exchange Act [15 

U.S.C. § 78m(b)(2)(B)]. 

EIGTH CLAIM  
(Against Hardaway) 

Aiding and Abetting Violations of Rule 13a-15(a) Under the Exchange Act 
 

65. Plaintiff SEC realleges and incorporates by reference paragraphs 1 through 43 of 

this Complaint as if set forth verbatim. 

66. Vortronnix, which is an issuer with securities registered pursuant to Section 12 of 

the Exchange Act, failed to maintain disclosure controls and procedures.  As Vortronnix's 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 15 of 17



Re:  SEC v. Hardaway, et al.   Page 16 of 17 
Complaint 

President, CEO, CFO, Treasurer and Chairman, Hardaway was responsible for Vortronnix's 

failure to maintain disclosure controls and procedures. 

67. By reason of the foregoing, Hardaway aided and abetted violations of and, unless 

enjoined, will continue to aid and abet violations of Rule 13a-15(a) under the Exchange Act [17 

C.F.R. 240.13a-15(a)]. 

REQUEST FOR RELIEF 

 The SEC respectfully requests that this Court: 

I. 

Permanently enjoin Defendant Hardaway from violating: Sections 5(a), 5(c), and 17(a) of 

the Securities Act [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)]; Sections 10(b) and 13(b)(5) of the 

Exchange Act [15 U.S.C. §§ 78j(b) and 78m]; and Rules 10b-5 and 13a-14 under the Exchange 

Act [17 C.F.R. §§ 240.10b-5 and 240.13a-14].  Permanently enjoin Defendant Hardaway from 

aiding and abetting violations of: Sections 13(a) and 13(b)(2)(B) of the Exchange Act [15 U.S.C. 

§§ 78m(a) and 78m(b)(2)(B)]; and Rules 13a-13 and 13a-15(a) under the Exchange Act [17 

C.F.R. §§ 240.13a-13 and 240.13a-15(a)]. 

II. 

Permanently enjoin Defendant HNW from violating: Sections 5(a), 5(c), and 17(a) of the 

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

U.S.C. §§ 78j(b)]; and Rule 10b-5 under the Exchange Act [17 C.F.R. § 240.10b-5]. 

III. 

Order each Defendant to disgorge an amount equal to the funds and benefits obtained 

illegally, or to which that Defendant otherwise has no legitimate claim, as a result of the 

violations alleged, plus prejudgment interest on that amount. 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 16 of 17



Re:  SEC v. Hardaway, et al.   Page 17 of 17 
Complaint 

IV. 

Order each Defendant to pay a civil penalty in an amount determined by the Court 

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

Exchange Act [15 U.S.C. § 78u(d)]. 

V. 

Order that Hardaway is barred, pursuant to Section 20(e) of the Securities Act [15 U.S.C. 

§ 77t(d)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], from acting as an 

officer or director of any issuer that has a class of securities registered under Section 12 of the 

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

Exchange Act [15 U.S.C. § 78o(d)]. 

VI. 

Order such other relief as this Court may deem just and proper. 

Respectfully submitted,  
 

February 17, 2016   /s/ Chris Davis 
CHRIS DAVIS  
Plaintiff's Lead Attorney  
Texas Bar No. 24050483  
United States Securities and Exchange Commission  
Burnett Plaza, Suite 1900  
801 Cherry Street, Unit 18  
Fort Worth, Texas 76102  
Telephone: (817) 900-2638  
FAX: (817) 978-4927  
E-mail: [email protected] 

 

 

Case 4:17-cv-00529   Document 1   Filed in TXSD on 02/17/17   Page 17 of 17