Doss v. Ethicon, Inc.

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Daniel J. Wadley (Utah #10358) admitted pro hac vice
[email protected]
Amy J. Oliver (Utah Bar #8785) admitted pro hac vice
[email protected]
James J. Thibodeau (Utah #15473) admitted pro hac vice
[email protected]
Attorneys for Plaintiff
Securities and Exchange Commission
Salt Lake Regional Office
351 South West Temple
Suite 6.100
Salt Lake City, UT 84101-1950
Tel.: (801) 524-5796
Fax: (801) 524-3558

UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA

SECURITIES AND EXCHANGE
    COMMISSION,

                                                        Plaintiff,

v.       Case No. 2:16-cv-1664

ZACHARY BROOKE ROBERTS, an
individual,

Defendant.

COMPLAINT

 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges as follows:
SUMMARY OF THE ACTION

1. Between   December   2011   and   July   2012 (the   “relevant   period”),   Encore
Acceptance  I,  LLC  (“EAI”),  a  Nevada limited  liability  company  then owned  and  controlled  by
Defendant  Zachary  Brooke  Roberts,   raised  approximately  $1.72  million  through  the  sale  of

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promissory note securities to a group of approximately 18 investors for use in connection with an
online  payday  lending  business  operated  in  partnership  with  The  Chippewa  Cree  Tribe  of  the
Rocky  Boy’s  Reservation,  Montana  (the  “Tribe”  or  “Tribal”),  a  federally-recognized Native
American tribe. In furtherance of a fraudulent scheme, neither EAI nor its representatives (which
included  Roberts)  informed  investors  that  certain  persons  and  entities  affiliated  with  EAI  were
then and had previously been making payments to certain members of and officials of the Tribe,
and  that  the  existence  of  these  payments,  if  discovered  by  the  Tribe  and  deemed by  them  to  be
improper  or  fraudulent,  could  materially  threaten  the  safety,  security,  and return  of  the  investor
funds. What statements EAI did make to investors were incomplete and materially misleading.
2. By  engaging  in  this  conduct,   as  further  described  herein,  EAI  and  Roberts
violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)] and
Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and
Rule 10b–5 thereunder [17 C.F.R. § 240.10b–5].
3. In  the  alternative,  as  the  individual  controlling  EAI  during  the  relevant  period,
Roberts, pursuant to Section 20(a) of the Exchange Act [15 U.S.C. § 78t(a)], is liable for EAI’s
violations of Section 10(b) of the Exchange Act and Rule 10b–5 thereunder.
4. Unless  restrained  and  enjoined  by  this  Court,  Roberts may  continue  to  violate
Section  17(a)  of  the  Securities  Act  and  Section  10(b)  of  the  Exchange  Act  and  Rule  10b–5
thereunder.
JURISDICTION AND VENUE
5. The Commission  brings  this  action  pursuant  to  Sections  20(b)  and  20(d) of  the
Securities  Act  [15  U.S.C.  §§ 77t(b)  and  77t(d)]  and Sections  21(d) and 21(e)  of  the  Exchange

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Act [15 U.S.C. §§ 78u(d) and 78u(e)] to enjoin such acts, practices, and courses of business, and
to obtain disgorgement, prejudgment interest, civil money penalties, an officer and director bar,
and such other and further relief as this Court may deem just and appropriate.
6. EAI  and  Roberts,  directly or indirectly, made use of the means or instruments of
transportation or communication in interstate commerce, or of the mails, in connection with the
conduct alleged in this Complaint.
7. This Court has subject matter jurisdiction over this action pursuant to Section 22
of  the  Securities  Act  [15  U.S.C. §  77v]  and  Sections 21(d) and  27  of  the  Exchange  Act  [15
U.S.C. §§ 78u(d) and 78aa].
8. Venue  in  this  District  is  proper  because  Roberts  is  found in,  inhabits,  and/or
transacted  business,  including  through  EAI, in  this  District, and  because  one  or  more  acts  or
transactions constituting the violations occurred in this District.
DEFENDANT
9. Zachary  Brooke  Roberts,  age 45, is a  resident  of  Henderson, Nevada. Roberts,
who possesses a law degree and is an inactive member of the State Bar of California, is  the sole
individual who controlled EAI  during  the  relevant  period. Roberts  also  controlled  Encore
Services,  LLC,  and  possessed  an  undocumented and/or  indirect  ownership  interest  in  and  co-
control over Encore Service Corporation, LLC, during the relevant period.
RELATED PERSONS AND ENTITIES
10. Encore  Acceptance  I,  LLC,  is  a  Nevada  domestic limited  liability  company
formed  on  March  29,  2011,  and  which  maintains  its principal  place  of  business  in  Henderson,
Nevada.

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11. Encore  Acceptance,  LLC  (“EAL”), is  a  Nevada  domestic  limited  liability
company  formed  on  July  21,  2010,  and  which maintains  its  principal  place  of  business  in
Henderson, Nevada.
12. Encore Service  Corporation,  LLC  (“ESC”), is  a  Nevada  domestic  limited
liability  company  formed  on  October  12,  2010,  and  which maintains  its  principal  place  of
business in Henderson, Nevada.
13. Encore Services, LLC (“ESL”), is a Nevada domestic limited liability company
formed  on  May  26,  2011,  and  which  maintains  its  principal  place  of  business  in  Henderson,
Nevada.
14. Richard Lee Broome, age 58, is a business partner of Roberts and is last known
to reside in El Granada, California. Although nominally the owner and manager of ESC during
the relevant period, Broome has stated that he, Roberts, and Martin Gasper Mazzara (another of
Roberts’ business partners) are partners in various different ventures, and that they discuss things
and  take  actions  with  an  understanding  of  the  partnership  agreement  that  underlies  everything.
He has stated that the partnership agreement is verbal, not in writing.
15. First  American  Capital  Resources,  LLC  (“FACR”),  is a limited  liability
company  created,  during  October  2010,  under  the  law  of  the  Tribe  and  is  owned  by  the  Tribe.
FACR, which maintains its principal place of business in Montana, was created by the Tribe to
engage in the online payday lending business under a management agreement with ESC. FACR
has  a  subsidiary,  First  American  Capital  Resources  ONE,  LLC  (“FACR1”),  through  which
some of its activities were conducted.
16. Plain  Green,  LLC,  is  a  limited  liability  company  created,  on  May  13,  2010,

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under the law of the Tribe and is owned by the Tribe. Plain Green, which maintains its principal
place of business in Montana, became a business partner with Think Finance, Inc., a large Texas-
based lending entity.
17. James  Howard  Eastlick,  Jr.,  Ph.D.,  age  50,  is  not  a  member  of  the  Tribe  but
formerly served as Clinical Director of the Tribe’s health clinic. Eastlick is last known to reside
in Federal Correctional Institution Sheridan in Sheridan, Oregon, and is believed to have owned
a one-third (⅓) interest in Ideal Consulting, LLC, and full (either individually or with/through his
spouse) interest in Trio Consulting, LLC.
18. Neal Paul Rosette (Sr.), age 54, is a member of the Tribe last known to reside in
Federal Correctional Institution Sheridan in Sheridan, Oregon. Rosette was previously  the  CEO
of two  of  the  Tribe’s  lending  business  entities:  FACR  and Plain  Green.  Rosette  is  believed  to
have owned a one-third (⅓) interest in Ideal Consulting, LLC. Rosette pled guilty in December
2015 to federal criminal charges arising from activity that is discussed herein and was sentenced
to 38 months imprisonment.
19. Billi Anne Raining Bird Morsette, age 40, is a member of the Tribe last known
to   reside   in   Federal   Correctional   Institution   Dublin in Dublin, California.   Morsette   was
previously the COO (and later CEO) of two of the Tribe’s lending business entities: FACR and
Plain  Green.  Morsette  is  believed  to  have  owned  a  one-third  (⅓)  interest  in  Ideal  Consulting,
LLC.  Morsette  pled  guilty  in  December  2015  to  federal  criminal  charges  arising  from  activity
that is discussed herein and was sentenced to 41 months imprisonment.
20. Ideal  Consulting,  LLC  (“Ideal  Consulting”),  is  a  Montana  domestic limited
liability  company  formed  on  August  2,  2011,  and  which  is  believed  to  maintain  its  principal

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place  of  business  in  Havre,  Montana.   Ideal  Consulting  has  been  owned,  during  the  relevant
period, equally by Eastlick, Rosette, and Morsette.
21. Trio  Consulting,  LLC  (“Trio  Consulting”),  is  a  Montana  domestic limited
liability  company  formed  on  September  19,  2011,  and  which  maintains  its  principal  place  of
business  in  Havre,  Montana.  Ideal  Consulting  has  been  owned,  during  the  relevant  period, by
Eastlick, either individually or with/through his spouse.
STATEMENT OF FACTS
22. At  some  point  during early 2010,  Roberts  was  introduced  to  the  Tribe  and,  in
conjunction  with  Broome,  Mazzara,  and,   possibly, other  associates  (collectively,  the  “Encore
associates”), came to an agreement with the Tribe to advise and manage the Tribe’s then nascent
entry  into  the  online  payday  lending  industry  via  the  Tribe’s  newly  formed  FACR  subsidiary
(which, as described above, subsequently included a subsidiary of its own: FACR1).
23. The entity  via  which  Roberts  and  the  other  Encore associates  provided  advisory
and  management  services  to  FACR  was  ESC,  which  was  ostensibly owned  and  managed  by
Broome.
24. To  govern  the  new  advisory  and  management  relationship,  ESC,  the  Tribe, and
FACR entered into a Management Agreement dated October 22, 2010.
25. Among    other    things,    the    Management    Agreement    contained    provisions
prohibiting ESC from interfering in Tribal affairs (§ 8.2), making payments to members of Tribal
government  (§  8.4),  and restricting  Tribal  members’  ability  to  possess  financial  interests  in
FACR or ESC (§ 8.6).
26. Sometime  during  early  2011,  the  Tribe  was  approached  by  and  entered  into

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negotiations  with  Think  Finance,  Inc.,  a  large  Texas-based  lender  that  controlled  a  significant
loan portfolio and which sought to have the Tribe become a business partner with it in regard to
the loan portfolio. Roberts and the other Encore associates assisted the Tribe in performing due
diligence  on the  new  business  opportunity,  and  the  Tribe  eventually  utilized  its Plain  Green
entity to  pursue  the  business  opportunity  with  Think  Finance.  This  business  venture,  due  to  the
size of the loan portfolio, was expected to be lucrative and to generate significant cash flow for
the Tribe through Plain Green.
27. The  Encore  associates  sought  compensation from  the  Tribe  in  the  amount  of
$15,000.00  for  their  due  diligence  work on  the  Think  Finance  proposal  and a  retainer  equal  to
10% of the future gross income of Plain Green in exchange for providing ongoing advice to the
Tribe in regard to the Think Finance‒Plain Green business venture.
28. This compensation proposal was not accepted by the Tribe.
29. During  May  2011, an  amended  Management  Agreement  (dated  April  14,  2011)
was  executed  between  ESC  and  FACR.  This  amended  agreement,  in  addition  to  increasing
ESC’s share of FACR’s profits to 49% from 40%, also introduced language that had the effect of
providing  ESC  with  a  significantly  expanded  revenue  pool  over  which  it  could  assert  its
management fee claims.
30. While   the   original   Management   Agreement   pertained   only   to   FACR   and
subsidiaries  thereof,  the  amended  agreement  pertained  to  “one  or  more  instrumentalities  and
commercial subdivisions of the Tribe” and included “FACR and any other entity formed by the
Tribe to undertake business of the type conducted by FACR.”  ESC’s objective in executing the
amended Management  Agreement  was  to  obtain  a  share  of  the  expected  profits  from  the  Think

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Finance – Plain Green business venture.
31. Around the same time that the amended Management Agreement came into being,
Roberts and/or one of the other Encore associates also created a new Fee Agreement among ESL,
several  of  the  Tribe’s  lending  businesses  (including  FACR  and Plain  Green  but specifically
excluding FACR1, as to which ESC continued to assert a claim to 49% of the profits pursuant to
the amended Management Agreement),  and, ostensibly, the Tribe itself.
32. Pursuant to the Fee Agreement, which was supposedly executed on June 1, 2011,
but was more likely executed in late July 2011 and also contained one or more forged signatures
on behalf of the Tribe’s entities, ESL became entitled to receive 15% “of all Gross Revenues in
the  course  of  their  [(i.e.,  various  of  the  Tribe’s  lending  entities,  including  those  created
subsequent to the date of the agreement)] online lending business[es] in perpetuity for as long as
the Tribe or its lending entities receive revenue from lending activities.”
33. As  for  the  reason  for  the  new  Fee  Agreement,  Roberts,  in  connection  with  an
arbitration proceeding between ESL and the Tribe et al.,   testified that ESC, apparently in view of
the terms of the amended Management Agreement, believed it possessed exclusive management
rights over the Tribe’s lending business activities, and this exclusivity entitled ESC to 49% of the
Tribe’s profits derived from Plain Green’s activities.
34. Recognizing  that  seeking  to  take  49%  of  the  Tribe’s  profits  derived from Plain
Green—a  business  that  was  established  before  the Management  Agreement  was  amended  to
include  the  purported exclusivity  provisions—was,  as  Roberts  testified  in  connection  with  the
aforementioned arbitration,  “just  too  much  to  expect,”  Roberts  and  the  other  Encore  associates
instead decided to seek 15% of the Tribe’s profits via the Fee Agreement (in addition to the 49%

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ostensibly   granted   to   them   on   FACR1’s   profits   pursuant   to   the   terms   of   the   amended
Management Agreement).
35. Roberts and the other Encore associates initially were unsuccessful in having their
proposed Fee  Agreement  adopted and  implemented  by  the  Tribe  and  its  various  lending
businesses.
36. Roberts  and  the  other  Encore  associates  only achieved success  in  having  their
proposed Fee Agreement adopted and implemented by the Tribe once they  enlisted the services
of Eastlick  and  reached  an  agreement  through  him  to  pass  through  one-third  (⅓)  of  ESL’s
expected  receipts  under  the  proposed Fee  Agreement  to  Ideal  Consulting,  a  shell  entity  then
believed by Roberts and the other Encore associates to be owned in equal shares by Rosette and
Morsette, both of whom were then senior officers of FACR and Plain Green in addition to being
members of the Tribe.
37. For his services, Eastlick is also believed to have secured an unwritten agreement
with Roberts and the other Encore associates to receive, via another shell entity, Trio Consulting,
20%  of  ESL’s  remaining  two-thirds  (⅔)  of  its anticipated receipts  received  under  the  Fee
Agreement.
38. Consistent  with  these  agreements,  banking  records  of  ESL  show  that,  between
September  2011  and  July  2013,  a  total  of  $1,157,476.37  was  paid  by  ESL  to  Ideal  Consulting,
and a total of $463,748.09 was paid by ESL to Trio Consulting. Additionally, on or about August
5,  2011,  a  wire  in  the  amount  of  $50,652.40  was  received  by  Ideal  Consulting  from  an  entity
named Worldwide  Portfolio  Management,  LLC,  which  shares  the  same  physical  address  as
numerous other entities affiliated with Roberts.

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39. During  the  period  when the  amended  Management Agreement  and  the Fee
Agreement  were  put  into  effect,  Roberts  and the  other  Encore  associates  continued  to  move
forward with establishing the FACR lending business.
40. Needing  additional  capital  to  fund  FACR  after  funding  from  a  Salt  Lake  City,
Utah-based  private  fund  proved  insufficient,  Roberts  caused  EAI  to  offer  and  sell  promissory
notes to investors.
41. The EAI promissory notes issued and sold to investors are securities.
42. Between December 2011 and July 2012, EAI offered and sold, via Roberts and at
least  one  other  individual,  approximately  $1.72  million  of  high-interest (24%) promissory  note
securities  to  approximately  18  investors  via  a  private  placement  memorandum  (the  “PPM”)
which  contained  various  information  about  EAI  and  the  planned  use  of  investor  funds  in
connection with FACR and its subsidiary, FACR1.
43. EAI failed to disclose in the PPM, and Roberts and the other EAI promissory note
salesman  failed  to  orally  disclose  to  investors,  information  concerning  (a)  the  payments  ESL
made  and  was  continuing  to  make  to  Ideal  Consulting  and  to  Trio  Consulting,  (b)  the
agreements,  written  or  otherwise,  pursuant  to  which  those  payments  were  being  made,  (c)  the
identities  of  the  individuals  behind  Ideal  Consulting  and  Trio  Consulting  and  the  nature  of  the
relationships between those individuals and the Tribe, (d) the close association between Roberts,
EAI,  ESC,  ESL,  and  EAL,  (e)  that  such  payments  by  ESL  to  Ideal  Consulting  and  to  Trio
Consulting (along with an ownership interests in ESC that Eastlick obtained in connection with
certain loans  he  made  to  EAL)  violated    the  terms  of  the  Management  Agreement  and  the
amended Management  Agreement  (e.g.,  §§  8.2,  8.4,  and  8.6)  and would be deemed  to  be  an

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instance wherein “...[ESC], or a principal, director or officer of [ESC], has committed an act of
personal dishonesty or breach of fiduciary duty to [FACR] that results or was intended to result
in a personal profit to [ESC]” (§ 9.3 [Termination for Cause] of the Management Agreement and
the  amended  Management  Agreement),  and  (f)  that  if  the  Tribe/its  entities  terminated  the
amended Management  Agreement  and ceased  to  continue  to  do  business  with  ESC,  such  an
action  would  materially  threaten  the  safety  and  viability  of  the  investors’  EAI  promissory  note
investments  as  their  return  was  significantly  dependent  upon  the  continued  existence  of  a
harmonious  business  relationship  between  ESC,  the  Tribe,  and  the  Tribe’s  FACR  and FACR1
entities.
44. There is a substantial likelihood that a reasonable investor would have considered
the omitted information material in deciding whether or not to invest in the EAI promissory note
securities.
45. EAI  was  under  a  duty  to  disclose  this  information  to  investors  and  potential
investors   in   view   of   the   materiality   of   the   information   and   EAI’s   fiduciary   or   agency
relationship, course of prior dealings, and attendant circumstances such that investors had   placed
trust and confidence in EAI.
46. In  addition  to  these  omissions,  EAI  engaged  in  one  or  more  misstatements  of
material fact or omissions to state a material fact necessary in order to make the statements made
not misleading.
47. In the  PPM,  EAI and  Roberts  stated  to  investors  that:  “Our  ability  to  make  the
required  payments  under  the  [terms  of  the  promissory  notes]  is  directly  related  to  [FACR  (or
FACR1)  ]’s  and  [ESC’s]  ability  to  successfully  operate  an  Internet-based  consumer  lending

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business.”
48. This  statement,  and  the  explanation  that  followed  it  in  the  PPM,  were  materially
misleading  because  they  failed  to  also  inform  investors  that  EAI’s  ability  to  make  the  required
payments was also, as developments have shown, directly related to the Tribe not terminating its
business relationship with ESC upon discovery of the payment scheme described herein.
49. The EAI PPM  also  stated  to  investors  that:  “Debt  instruments  bearing  high
interest rates, such as the Loan, are often associated with ponzi [sic] schemes, particularly in the
payday loan business... We have no evidence that [FACR (or FACR1)] or [ESC] is, or would be,
involved  in  such  a  scheme;  however,  fraud  is  common  in  situations  in  which  notes  with  high
rates of interest are issued and in the payday loan industry. Noteholders of [EAI] may lose some
or all of its [sic] investments because of fraud or other illegal practice by  [FACR (or FACR1)],
[ESC] or an affiliate.”
50. This  statement was  materially  misleading  because  it  failed  to  disclose  the
existence of the payment scheme discussed herein that was operational before this statement was
provided to investors via the PPM (i.e., the alleged fraud was an actuality and not a potentiality).
51. The EAI PPM also stated to investors that: “Additional risks and uncertainties not
presently  known  to  us  or  that  we  currently  deem  immaterial  may  also  impair  our  business
operations and your investment.”
52. This  statement  was  materially  misleading  because  existence  of  the  payment
scheme described  herein  and  the  likely  result  of  its  potential  discovery  by  the  Tribe  was  a  risk
known to EAI and to Roberts that could not credibly be deemed immaterial.
53. Following the Tribe’s discovery of the payment scheme described herein and the

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consequent termination by it of its business relationship with ESC, EAI and Roberts misled and
lulled the  EAI  promissory  note  investors  by  stating  to  them,  via  an  Information Statement,  that
the business disruption was due to a change in Tribal leadership.
54. The Information Statement failed to disclose the existence of the payment scheme
described  herein.  As  such,  it  was  materially  misleading  and  made  in  furtherance  of  EAI’s  and
Roberts’ fraudulent scheme.
55. EAI, via its and Roberts’ fraudulent omissions, misstatements, and scheme, thus
improperly obtained at least $1,719,832.50 in investor funds.
CAUSES OF ACTION
First Cause of Action
Violation of Section 17(a) of the Securities Act
[15 U.S.C. § 77q(a)]

56. The   Commission   re-alleges   and   incorporates   by   reference   each   and   every
allegation in paragraphs 1-  55, inclusive, as if they were fully set forth herein.
57. By  engaging  in  the  conduct  described  above,  Roberts,  in  the  offer  or  sale  of
securities  by  the  use  of  means  or  instruments  of  transportation  or  communication  in  interstate
commerce or by use of the mails, directly or indirectly, employed a device, scheme, or artifice to
defraud; obtained  money  or  property  by  means  of  one  or  more  untrue  statements  of  a  material
fact or omissions 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 engaged in transactions,
practices, or courses of business which operated as a fraud or deceit upon the purchasers of the
EAI promissory note securities.
58. Roberts, acting through EAI, intentionally or recklessly engaged in the fraudulent

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or deceitful conduct described above.
59. By  reason  of  the  foregoing, Roberts  violated  Section  17(a)  of  the  Securities  Act
[15 U.S.C. § 77q(a)] and, unless enjoined, will continue to violate Section 17(a) of the Securities
Act.
Second Cause of Action
Violation of Section 10(b) of the Exchange Act and Rule 10b–5(b) Thereunder
[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b–5]

60. The   Commission   re-alleges   and   incorporates   by   reference   each   and   every
allegation in paragraphs 1-  55, inclusive, as if they were fully set forth herein.
61. By  engaging  in  the  conduct  described  above,  Roberts,   in  connection  with  the
purchase  or  sale  of  a  security,  and  while making  use  of  means  or  instrumentalities  of  interstate
commerce or of the mails, employed a device, scheme, or artifice to defraud; made one or more
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  an  act,  practice,  or  course  of  business  which  operated  as  a  fraud  or
deceit upon one or more persons.
62. Roberts, as the sole person that controlled EAI,  was the maker of the one or more
untrue  statements  of  a  material  fact  or  omissions  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.
63. Roberts, acting through EAI, intentionally or recklessly engaged in the fraudulent
or deceitful conduct described above.
64. By  reason  of  the  foregoing,  Roberts  violated  Section  10(  b)  of  the  Exchange  Act

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[15  U.S.C.  §  78j(b)]  and  Rule  10b–5 thereunder  [17  C.F.R.  §  240.10b–5]  and, unless  enjoined,
will continue to violate Section 10(b) of the Exchange Act and Rule 10b–5 thereunder.
Third Cause of Action
Violation, as a Control Person, of Section 10(b) of the Exchange Act and Rule 10b–5(b)
Thereunder
[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b–5 via 15 U.S.C. § 78t(a)]

65. The   Commission   re-alleges   and   incorporates   by   reference   each   and   every
allegation in paragraphs 1-  55, inclusive, as if they were fully set forth herein.
66. During the relevant period, Roberts was the sole person who controlled EAI.
67. Pursuant to Section 20(a) of the Exchange Act [15 U.S.C. § 78t(a)], every person
who, directly or indirectly, controls any entity liable under any provision of the Exchange Act or
of any rule or regulation thereunder shall also be liable jointly and severally with and to the same
extent as such controlled entity to any person to whom such controlled person is liable (including
the  Commission),  unless  the  controlling  person  acted  in  good  faith  and  did  not  directly  or
indirectly induce the act or acts constituting the violation or cause of action.
68. Roberts did not act in good faith and directly induced the act or acts constituting
EAI’s violations of the Exchange Act and the rules promulgated thereunder.
69. By  reason  of  the  foregoing,  and  in  the  alternative  to  his  direct  violations  of  the
Exchange  Act  and  the  rules  promulgated  thereunder  described  above,  Roberts  violated  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]  through  his  control  of  EAI  and,  unless  enjoined,  will continue  to  violate  Section
10(b) of the Exchange Act and Rule 10b–5 thereunder.
PRAYER FOR RELIEF

 WHEREFORE, the Commission respectfully requests that this Court find that Defendant

16

Zachary Brooke Roberts committed the violations alleged herein and enter a final judgment:
I.

 Permanently  restraining  and  enjoining  Roberts  from,  directly  or  indirectly,  engaging  in
conduct in violation of 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];
II.

 Ordering  Roberts  to  disgorge  all  ill-gotten  gains  derived  from  the  activities  set  forth  in
this Complaint, together with prejudgment interest thereon;
III.

 Ordering Roberts  to  pay  a civil  penalty  pursuant  to  Section  20(d)  of  the  Securities  Act
[15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)];
IV.
 Permanently prohibiting,  pursuant  to  Section  21(d)(2)  of  the  Exchange  Act  [15  U.S.C.
§ 78u(d)(2)],   Roberts  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  [15  U.S.C.  § 78l]  or  that  is
required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)];
V.
Retaining  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; and,

17

VI.
 Granting such other and further relief as this Court may deem just, equitable, or necessary
in  connection  with  the  enforcement  of  the  federal  securities  laws  and  for  the  protection  of
investors.
 Dated: July 14, 2016
      Respectfully submitted,

 / s/ Daniel J. Wadley
Daniel J. Wadley
Amy J. Oliver
James J. Thibodeau
Attorneys for Plaintiff
U.S. Securities and Exchange Commission

1 
 

Daniel J. Wadley (Utah #10358) admitted pro hac vice 
[email protected] 
Amy J. Oliver (Utah Bar #8785) admitted pro hac vice 
[email protected] 
James J. Thibodeau (Utah #15473) admitted pro hac vice 
[email protected] 
Attorneys for Plaintiff 
Securities and Exchange Commission 
Salt Lake Regional Office 
351 South West Temple 
Suite 6.100 
Salt Lake City, UT 84101-1950 
Tel.: (801) 524-5796 
Fax: (801) 524-3558 

 
UNITED STATES DISTRICT COURT 

DISTRICT OF NEVADA 
 
  
SECURITIES AND EXCHANGE 
    COMMISSION, 

 

  
                                                        Plaintiff,  

  
v.       Case No. 2:16-cv-1664 

                               
ZACHARY BROOKE ROBERTS, an 
individual, 

 

                                                    
Defendant. 

 

  
 

COMPLAINT 
 
 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges as follows:  

SUMMARY OF THE ACTION 
 

1. Between December 2011 and July 2012 (the “relevant period”), Encore 

Acceptance I, LLC (“EAI”), a Nevada limited liability company then owned and controlled by 

Defendant Zachary Brooke Roberts, raised approximately $1.72 million through the sale of 

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promissory note securities to a group of approximately 18 investors for use in connection with an 

online payday lending business operated in partnership with The Chippewa Cree Tribe of the 

Rocky Boy’s Reservation, Montana (the “Tribe” or “Tribal”), a federally-recognized Native 

American tribe. In furtherance of a fraudulent scheme, neither EAI nor its representatives (which 

included Roberts) informed investors that certain persons and entities affiliated with EAI were 

then and had previously been making payments to certain members of and officials of the Tribe, 

and that the existence of these payments, if discovered by the Tribe and deemed by them to be 

improper or fraudulent, could materially threaten the safety, security, and return of the investor 

funds. What statements EAI did make to investors were incomplete and materially misleading. 

2. By engaging in this conduct, as further described herein, EAI and Roberts 

violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)] and 

Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and 

Rule 10b–5 thereunder [17 C.F.R. § 240.10b–5]. 

3. In the alternative, as the individual controlling EAI during the relevant period, 

Roberts, pursuant to Section 20(a) of the Exchange Act [15 U.S.C. § 78t(a)], is liable for EAI’s 

violations of Section 10(b) of the Exchange Act and Rule 10b–5 thereunder. 

4. Unless restrained and enjoined by this Court, Roberts may continue to violate 

Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b–5 

thereunder. 

JURISDICTION AND VENUE 

5. The Commission brings this action pursuant to Sections 20(b) and 20(d) of the 

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

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Act [15 U.S.C. §§ 78u(d) and 78u(e)] to enjoin such acts, practices, and courses of business, and 

to obtain disgorgement, prejudgment interest, civil money penalties, an officer and director bar, 

and such other and further relief as this Court may deem just and appropriate. 

6. EAI and Roberts, directly or indirectly, made use of the means or instruments of 

transportation or communication in interstate commerce, or of the mails, in connection with the 

conduct alleged in this Complaint. 

7. This Court has subject matter jurisdiction over this action pursuant to Section 22 

of the Securities Act [15 U.S.C. § 77v] and Sections 21(d) and 27 of the Exchange Act [15 

U.S.C. §§ 78u(d) and 78aa]. 

8. Venue in this District is proper because Roberts is found in, inhabits, and/or 

transacted business, including through EAI, in this District, and because one or more acts or 

transactions constituting the violations occurred in this District. 

DEFENDANT 

9. Zachary Brooke Roberts, age 45, is a resident of Henderson, Nevada. Roberts, 

who possesses a law degree and is an inactive member of the State Bar of California, is the sole 

individual who controlled EAI during the relevant period. Roberts also controlled Encore 

Services, LLC, and possessed an undocumented and/or indirect ownership interest in and co-

control over Encore Service Corporation, LLC, during the relevant period. 

RELATED PERSONS AND ENTITIES 

10. Encore Acceptance I, LLC, is a Nevada domestic limited liability company 

formed on March 29, 2011, and which maintains its principal place of business in Henderson, 

Nevada. 

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4 
 

11. Encore Acceptance, LLC (“EAL”), is a Nevada domestic limited liability 

company formed on July 21, 2010, and which maintains its principal place of business in 

Henderson, Nevada. 

12. Encore Service Corporation, LLC (“ESC”), is a Nevada domestic limited 

liability company formed on October 12, 2010, and which maintains its principal place of 

business in Henderson, Nevada. 

13. Encore Services, LLC (“ESL”), is a Nevada domestic limited liability company 

formed on May 26, 2011, and which maintains its principal place of business in Henderson, 

Nevada. 

14. Richard Lee Broome, age 58, is a business partner of Roberts and is last known 

to reside in El Granada, California. Although nominally the owner and manager of ESC during 

the relevant period, Broome has stated that he, Roberts, and Martin Gasper Mazzara (another of 

Roberts’ business partners) are partners in various different ventures, and that they discuss things 

and take actions with an understanding of the partnership agreement that underlies everything.  

He has stated that the partnership agreement is verbal, not in writing.  

15. First American Capital Resources, LLC (“FACR”), is a limited liability 

company created, during October 2010, under the law of the Tribe and is owned by the Tribe. 

FACR, which maintains its principal place of business in Montana, was created by the Tribe to 

engage in the online payday lending business under a management agreement with ESC. FACR 

has a subsidiary, First American Capital Resources ONE, LLC (“FACR1”), through which 

some of its activities were conducted. 

16. Plain Green, LLC, is a limited liability company created, on May 13, 2010, 

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5 
 

under the law of the Tribe and is owned by the Tribe. Plain Green, which maintains its principal 

place of business in Montana, became a business partner with Think Finance, Inc., a large Texas-

based lending entity. 

17. James Howard Eastlick, Jr., Ph.D., age 50, is not a member of the Tribe but 

formerly served as Clinical Director of the Tribe’s health clinic. Eastlick is last known to reside 

in Federal Correctional Institution Sheridan in Sheridan, Oregon, and is believed to have owned 

a one-third (⅓) interest in Ideal Consulting, LLC, and full (either individually or with/through his 

spouse) interest in Trio Consulting, LLC. 

18. Neal Paul Rosette (Sr.), age 54, is a member of the Tribe last known to reside in 

Federal Correctional Institution Sheridan in Sheridan, Oregon. Rosette was previously the CEO 

of two of the Tribe’s lending business entities: FACR and Plain Green. Rosette is believed to 

have owned a one-third (⅓) interest in Ideal Consulting, LLC. Rosette pled guilty in December 

2015 to federal criminal charges arising from activity that is discussed herein and was sentenced 

to 38 months imprisonment. 

19. Billi Anne Raining Bird Morsette, age 40, is a member of the Tribe last known 

to reside in Federal Correctional Institution Dublin in Dublin, California. Morsette was 

previously the COO (and later CEO) of two of the Tribe’s lending business entities: FACR and 

Plain Green. Morsette is believed to have owned a one-third (⅓) interest in Ideal Consulting, 

LLC. Morsette pled guilty in December 2015 to federal criminal charges arising from activity 

that is discussed herein and was sentenced to 41 months imprisonment. 

20. Ideal Consulting, LLC (“Ideal Consulting”), is a Montana domestic limited 

liability company formed on August 2, 2011, and which is believed to maintain its principal 

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6 
 

place of business in Havre, Montana. Ideal Consulting has been owned, during the relevant 

period, equally by Eastlick, Rosette, and Morsette. 

21. Trio Consulting, LLC (“Trio Consulting”), is a Montana domestic limited 

liability company formed on September 19, 2011, and which maintains its principal place of 

business in Havre, Montana. Ideal Consulting has been owned, during the relevant period, by 

Eastlick, either individually or with/through his spouse. 

STATEMENT OF FACTS 

22. At some point during early 2010, Roberts was introduced to the Tribe and, in 

conjunction with Broome, Mazzara, and, possibly, other associates (collectively, the “Encore 

associates”), came to an agreement with the Tribe to advise and manage the Tribe’s then nascent 

entry into the online payday lending industry via the Tribe’s newly formed FACR subsidiary 

(which, as described above, subsequently included a subsidiary of its own: FACR1). 

23. The entity via which Roberts and the other Encore associates provided advisory 

and management services to FACR was ESC, which was ostensibly owned and managed by 

Broome. 

24. To govern the new advisory and management relationship, ESC, the Tribe, and 

FACR entered into a Management Agreement dated October 22, 2010. 

25. Among other things, the Management Agreement contained provisions 

prohibiting ESC from interfering in Tribal affairs (§ 8.2), making payments to members of Tribal 

government (§ 8.4), and restricting Tribal members’ ability to possess financial interests in 

FACR or ESC (§ 8.6). 

26. Sometime during early 2011, the Tribe was approached by and entered into 

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7 
 

negotiations with Think Finance, Inc., a large Texas-based lender that controlled a significant 

loan portfolio and which sought to have the Tribe become a business partner with it in regard to 

the loan portfolio. Roberts and the other Encore associates assisted the Tribe in performing due 

diligence on the new business opportunity, and the Tribe eventually utilized its Plain Green 

entity to pursue the business opportunity with Think Finance. This business venture, due to the 

size of the loan portfolio, was expected to be lucrative and to generate significant cash flow for 

the Tribe through Plain Green. 

27. The Encore associates sought compensation from the Tribe in the amount of 

$15,000.00 for their due diligence work on the Think Finance proposal and a retainer equal to 

10% of the future gross income of Plain Green in exchange for providing ongoing advice to the 

Tribe in regard to the Think Finance‒Plain Green business venture. 

28. This compensation proposal was not accepted by the Tribe. 

29. During May 2011, an amended Management Agreement (dated April 14, 2011) 

was executed between ESC and FACR. This amended agreement, in addition to increasing 

ESC’s share of FACR’s profits to 49% from 40%, also introduced language that had the effect of 

providing ESC with a significantly expanded revenue pool over which it could assert its 

management fee claims. 

30. While the original Management Agreement pertained only to FACR and 

subsidiaries thereof, the amended agreement pertained to “one or more instrumentalities and 

commercial subdivisions of the Tribe” and included “FACR and any other entity formed by the 

Tribe to undertake business of the type conducted by FACR.”  ESC’s objective in executing the 

amended Management Agreement was to obtain a share of the expected profits from the Think 

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8 
 

Finance – Plain Green business venture. 

31. Around the same time that the amended Management Agreement came into being, 

Roberts and/or one of the other Encore associates also created a new Fee Agreement among ESL, 

several of the Tribe’s lending businesses (including FACR and Plain Green but specifically 

excluding FACR1, as to which ESC continued to assert a claim to 49% of the profits pursuant to 

the amended Management Agreement), and, ostensibly, the Tribe itself.  

32. Pursuant to the Fee Agreement, which was supposedly executed on June 1, 2011, 

but was more likely executed in late July 2011 and also contained one or more forged signatures 

on behalf of the Tribe’s entities, ESL became entitled to receive 15% “of all Gross Revenues in 

the course of their [(i.e., various of the Tribe’s lending entities, including those created 

subsequent to the date of the agreement)] online lending business[es] in perpetuity for as long as 

the Tribe or its lending entities receive revenue from lending activities.” 

33. As for the reason for the new Fee Agreement, Roberts, in connection with an 

arbitration proceeding between ESL and the Tribe et al., testified that ESC, apparently in view of 

the terms of the amended Management Agreement, believed it possessed exclusive management 

rights over the Tribe’s lending business activities, and this exclusivity entitled ESC to 49% of the 

Tribe’s profits derived from Plain Green’s activities.  

34. Recognizing that seeking to take 49% of the Tribe’s profits derived from Plain 

Green—a business that was established before the Management Agreement was amended to 

include the purported exclusivity provisions—was, as Roberts testified in connection with the 

aforementioned arbitration, “just too much to expect,” Roberts and the other Encore associates 

instead decided to seek 15% of the Tribe’s profits via the Fee Agreement (in addition to the 49% 

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9 
 

ostensibly granted to them on FACR1’s profits pursuant to the terms of the amended 

Management Agreement). 

35. Roberts and the other Encore associates initially were unsuccessful in having their 

proposed Fee Agreement adopted and implemented by the Tribe and its various lending 

businesses. 

36. Roberts and the other Encore associates only achieved success in having their 

proposed Fee Agreement adopted and implemented by the Tribe once they enlisted the services 

of Eastlick and reached an agreement through him to pass through one-third (⅓) of ESL’s 

expected receipts under the proposed Fee Agreement to Ideal Consulting, a shell entity then 

believed by Roberts and the other Encore associates to be owned in equal shares by Rosette and 

Morsette, both of whom were then senior officers of FACR and Plain Green in addition to being 

members of the Tribe.  

37. For his services, Eastlick is also believed to have secured an unwritten agreement 

with Roberts and the other Encore associates to receive, via another shell entity, Trio Consulting, 

20% of ESL’s remaining two-thirds (⅔) of its anticipated receipts received under the Fee 

Agreement. 

38. Consistent with these agreements, banking records of ESL show that, between 

September 2011 and July 2013, a total of $1,157,476.37 was paid by ESL to Ideal Consulting, 

and a total of $463,748.09 was paid by ESL to Trio Consulting. Additionally, on or about August 

5, 2011, a wire in the amount of $50,652.40 was received by Ideal Consulting from an entity 

named Worldwide Portfolio Management, LLC, which shares the same physical address as 

numerous other entities affiliated with Roberts. 

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10 
 

39. During the period when the amended Management Agreement and the Fee 

Agreement were put into effect, Roberts and the other Encore associates continued to move 

forward with establishing the FACR lending business. 

40. Needing additional capital to fund FACR after funding from a Salt Lake City, 

Utah-based private fund proved insufficient, Roberts caused EAI to offer and sell promissory 

notes to investors. 

41. The EAI promissory notes issued and sold to investors are securities. 

42. Between December 2011 and July 2012, EAI offered and sold, via Roberts and at 

least one other individual, approximately $1.72 million of high-interest (24%) promissory note 

securities to approximately 18 investors via a private placement memorandum (the “PPM”) 

which contained various information about EAI and the planned use of investor funds in 

connection with FACR and its subsidiary, FACR1. 

43. EAI failed to disclose in the PPM, and Roberts and the other EAI promissory note 

salesman failed to orally disclose to investors, information concerning (a) the payments ESL 

made and was continuing to make to Ideal Consulting and to Trio Consulting, (b) the 

agreements, written or otherwise, pursuant to which those payments were being made, (c) the 

identities of the individuals behind Ideal Consulting and Trio Consulting and the nature of the 

relationships between those individuals and the Tribe, (d) the close association between Roberts, 

EAI, ESC, ESL, and EAL, (e) that such payments by ESL to Ideal Consulting and to Trio 

Consulting (along with an ownership interests in ESC that Eastlick obtained in connection with 

certain loans he made to EAL) violated the terms of the Management Agreement and the 

amended Management Agreement (e.g., §§ 8.2, 8.4, and 8.6) and would be deemed to be an 

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11 
 

instance wherein “…[ESC], or a principal, director or officer of [ESC], has committed an act of 

personal dishonesty or breach of fiduciary duty to [FACR] that results or was intended to result 

in a personal profit to [ESC]” (§ 9.3 [Termination for Cause] of the Management Agreement and 

the amended Management Agreement), and (f) that if the Tribe/its entities terminated the 

amended Management Agreement and ceased to continue to do business with ESC, such an 

action would materially threaten the safety and viability of the investors’ EAI promissory note 

investments as their return was significantly dependent upon the continued existence of a 

harmonious business relationship between ESC, the Tribe, and the Tribe’s FACR and FACR1 

entities. 

44. There is a substantial likelihood that a reasonable investor would have considered 

the omitted information material in deciding whether or not to invest in the EAI promissory note 

securities.  

45. EAI was under a duty to disclose this information to investors and potential 

investors in view of the materiality of the information and EAI’s fiduciary or agency 

relationship, course of prior dealings, and attendant circumstances such that investors had placed 

trust and confidence in EAI. 

46. In addition to these omissions, EAI engaged in one or more misstatements of 

material fact or omissions to state a material fact necessary in order to make the statements made 

not misleading. 

47. In the PPM, EAI and Roberts stated to investors that: “Our ability to make the 

required payments under the [terms of the promissory notes] is directly related to [FACR (or 

FACR1)]’s and [ESC’s] ability to successfully operate an Internet-based consumer lending 

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12 
 

business.” 

48. This statement, and the explanation that followed it in the PPM, were materially 

misleading because they failed to also inform investors that EAI’s ability to make the required 

payments was also, as developments have shown, directly related to the Tribe not terminating its 

business relationship with ESC upon discovery of the payment scheme described herein.  

49. The EAI PPM also stated to investors that: “Debt instruments bearing high 

interest rates, such as the Loan, are often associated with ponzi [sic] schemes, particularly in the 

payday loan business… We have no evidence that [FACR (or FACR1)] or [ESC] is, or would be, 

involved in such a scheme; however, fraud is common in situations in which notes with high 

rates of interest are issued and in the payday loan industry. Noteholders of [EAI] may lose some 

or all of its [sic] investments because of fraud or other illegal practice by [FACR (or FACR1)], 

[ESC] or an affiliate.”  

50. This statement was materially misleading because it failed to disclose the 

existence of the payment scheme discussed herein that was operational before this statement was 

provided to investors via the PPM (i.e., the alleged fraud was an actuality and not a potentiality). 

51. The EAI PPM also stated to investors that: “Additional risks and uncertainties not 

presently known to us or that we currently deem immaterial may also impair our business 

operations and your investment.” 

52. This statement was materially misleading because existence of the payment 

scheme described herein and the likely result of its potential discovery by the Tribe was a risk 

known to EAI and to Roberts that could not credibly be deemed immaterial. 

53. Following the Tribe’s discovery of the payment scheme described herein and the 

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13 
 

consequent termination by it of its business relationship with ESC, EAI and Roberts misled and 

lulled the EAI promissory note investors by stating to them, via an Information Statement, that 

the business disruption was due to a change in Tribal leadership. 

54. The Information Statement failed to disclose the existence of the payment scheme 

described herein. As such, it was materially misleading and made in furtherance of EAI’s and 

Roberts’ fraudulent scheme. 

55. EAI, via its and Roberts’ fraudulent omissions, misstatements, and scheme, thus 

improperly obtained at least $1,719,832.50 in investor funds. 

CAUSES OF ACTION 

First Cause of Action 
Violation of Section 17(a) of the Securities Act 

[15 U.S.C. § 77q(a)] 
 

56. The Commission re-alleges and incorporates by reference each and every 

allegation in paragraphs 1-55, inclusive, as if they were fully set forth herein. 

57. By engaging in the conduct described above, Roberts, in the offer or sale of 

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

commerce or by use of the mails, directly or indirectly, employed a device, scheme, or artifice to 

defraud; obtained money or property by means of one or more untrue statements of a material 

fact or omissions 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 engaged in transactions, 

practices, or courses of business which operated as a fraud or deceit upon the purchasers of the 

EAI promissory note securities. 

58. Roberts, acting through EAI, intentionally or recklessly engaged in the fraudulent 

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14 
 

or deceitful conduct described above. 

59. By reason of the foregoing, Roberts violated Section 17(a) of the Securities Act 

[15 U.S.C. § 77q(a)] and, unless enjoined, will continue to violate Section 17(a) of the Securities 

Act.  

Second Cause of Action 
Violation of Section 10(b) of the Exchange Act and Rule 10b–5(b) Thereunder 

[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b–5] 
 

60. The Commission re-alleges and incorporates by reference each and every 

allegation in paragraphs 1-55, inclusive, as if they were fully set forth herein. 

61. By engaging in the conduct described above, Roberts, in connection with the 

purchase or sale of a security, and while making use of means or instrumentalities of interstate 

commerce or of the mails, employed a device, scheme, or artifice to defraud; made one or more 

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 an act, practice, or course of business which operated as a fraud or 

deceit upon one or more persons. 

62. Roberts, as the sole person that controlled EAI, was the maker of the one or more 

untrue statements of a material fact or omissions 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. 

63. Roberts, acting through EAI, intentionally or recklessly engaged in the fraudulent 

or deceitful conduct described above. 

64. By reason of the foregoing, Roberts violated Section 10(b) of the Exchange Act 

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15 
 

[15 U.S.C. § 78j(b)] and Rule 10b–5 thereunder [17 C.F.R. § 240.10b–5] and, unless enjoined, 

will continue to violate Section 10(b) of the Exchange Act and Rule 10b–5 thereunder. 

Third Cause of Action 
Violation, as a Control Person, of Section 10(b) of the Exchange Act and Rule 10b–5(b) 

Thereunder 
[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b–5 via 15 U.S.C. § 78t(a)] 

 
65. The Commission re-alleges and incorporates by reference each and every 

allegation in paragraphs 1-55, inclusive, as if they were fully set forth herein. 

66. During the relevant period, Roberts was the sole person who controlled EAI. 

67. Pursuant to Section 20(a) of the Exchange Act [15 U.S.C. § 78t(a)], every person 

who, directly or indirectly, controls any entity liable under any provision of the Exchange Act or 

of any rule or regulation thereunder shall also be liable jointly and severally with and to the same 

extent as such controlled entity to any person to whom such controlled person is liable (including 

the Commission), unless the controlling person acted in good faith and did not directly or 

indirectly induce the act or acts constituting the violation or cause of action. 

68. Roberts did not act in good faith and directly induced the act or acts constituting 

EAI’s violations of the Exchange Act and the rules promulgated thereunder. 

69. By reason of the foregoing, and in the alternative to his direct violations of the 

Exchange Act and the rules promulgated thereunder described above, Roberts violated 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] through his control of EAI and, unless enjoined, will continue to violate Section 

10(b) of the Exchange Act and Rule 10b–5 thereunder. 

PRAYER FOR RELIEF 
 

 WHEREFORE, the Commission respectfully requests that this Court find that Defendant 

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16 
 

Zachary Brooke Roberts committed the violations alleged herein and enter a final judgment: 

I. 
 

 Permanently restraining and enjoining Roberts from, directly or indirectly, engaging in 

conduct in violation of 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]; 

II. 
 

 Ordering Roberts to disgorge all ill-gotten gains derived from the activities set forth in 

this Complaint, together with prejudgment interest thereon; 

III. 
 

 Ordering Roberts to pay a civil penalty pursuant to Section 20(d) of the Securities Act 

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

IV. 

 Permanently prohibiting, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. 

§ 78u(d)(2)], Roberts 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 [15 U.S.C. § 78l] or that is 

required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]; 

V. 

Retaining 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; and,  

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17 
 

VI. 

 Granting such other and further relief as this Court may deem just, equitable, or necessary 

in connection with the enforcement of the federal securities laws and for the protection of 

investors. 

 Dated: July 14, 2016 
      Respectfully submitted, 
 

      
       

 /s/ Daniel J. Wadley   
Daniel J. Wadley 
Amy J. Oliver 
James J. Thibodeau 
Attorneys for Plaintiff 
U.S. Securities and Exchange Commission 
 

 

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