SEC v. JOHN S. CLAYTON; FIRST EQUITY HOLDINGS CORP.; STANDARD REGISTRAR AND TRANSFER CO., INC.; DANIEL W. JACKSON; DONALD H. PERRY; CLARK M. MOWER, et al., No. 2:24-cv-00918, District of Utah (Dec. 11, 2024) — Complaint

Michael C. Moran
Russell A. Mawn
Alexandra B. Lavin
Jeffrey Olshan
Attorneys for Plaintiff
Securities and Exchange Commission
33 Arch Street, 24th Floor
Boston, MA 02110
(617) 573-8931 (Moran direct)
[email protected]

UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

SECURITIES AND EXCHANGE
COMMISSION,
   Plaintiff,
            v.

JOHN S. CLAYTON, FIRST EQUITY
HOLDINGS CORP., STANDARD
REGISTRAR AND TRANSFER CO.,
INC., DANIEL W. JACKSON, DONALD
H. PERRY, CLARK M. MOWER,
TIMOTHY J. RIEU, AND
CHESAPEAKE GROUP, INC.,

                                    Defendants,

and

BRYAN DEVELOPMENT, LLC,
CAPITAL COMMUNICATIONS, INC.,
COMPASS EQUITY PARTNERS, INC.,
EMPIRE FUND MANAGERS, INC.,
GREENWICH STREET COMMERCIAL
MORTGAGE, LLC, INVESTRIO, INC.,
KLAJA PARTNERS, LLC, LIBERTY
PARTNERS, LLC, AND MAESTRO
INVESTMENTS, INC.,

                                    Relief            Defendants.

 Case No.: 2:24-cv-918

            COMPLAINT
            JURY            TRIAL            DEMANDED

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COMPLAINT
 Plaintiff, United States Securities and Exchange Commission (the “Commission” or the
“SEC”), alleges as follows against Defendants John S. Clayton (“Clayton”), First Equity
Holdings Corp. (“First Equity”), Standard Registrar and Transfer Co., Inc. (“Standard
Registrar”), Daniel W. Jackson (“Jackson”), Donald H. Perry (“Perry”), Clark M. Mower
(“Mower”), Timothy J. Rieu (“Rieu”), and Chesapeake Group, Inc. (“Chesapeake”), and Relief
Defendants Bryan Development, LLC (“Bryan Development”), Capital Communications, Inc.
(“Capital Communications”), Compass Equity Partners, Inc. (“Compass”), Empire Fund
Managers, Inc. (“Empire”), Greenwich Street Commercial Mortgage, LLC (“Greenwich Street”),
Investrio, Inc. (“Investrio”), Klaja Partners, LLC (“Klaja Partners”), Liberty Partners, LLC
(“Liberty Partners”), and Maestro Investments, Inc. (“Maestro”):
SUMMARY
1. From at least 2014 to 2024, Clayton engaged in a securities fraud scheme to
secretly amass and then illegally sell stock of small, publicly traded companies.  Clayton hid his
stock ownership from investors, brokerage firms, and regulators, by spreading his shares among
business entities that he secretly controlled, each of them a Relief Defendant (hereafter, the
“Clayton Nominees”).  While concealing his stock ownership, Clayton retained Rieu, and Rieu’s
investor relations firm, Chesapeake, to promote the stock to investors and to increase the price
and trading volume of the stock.  Clayton then illegally sold his shares in the public securities
markets at inflated prices, leaving behind harmed investors after the price and trading volume
fell.

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2. Clayton engaged in numerous deceptions to conceal his involvement and further
his scheme.  Clayton paid third parties to act as nominal heads of the Clayton Nominees.  In turn,
Clayton impersonated the heads of the Clayton Nominees when communicating with at least one
brokerage firm.  He used blank checkbooks, pre-signed by the head of each Clayton Nominee, to
move money.  And, after learning of the Commission’s investigation that led to this action,
Clayton used a pre-paid cell phone—commonly known as a “burner phone”—to communicate
with Rieu and directed Rieu to himself procure a burner phone.
3. Clayton’s sales were intended to defraud investors.  He deliberately avoided
fundamental safeguards under the federal securities laws designed to protect the investing public
by informing investors about the nature of the stock being sold and the significant holders of that
stock.  Clayton engaged in transactions that were illegal under the federal securities laws because
they were neither registered with the Commission under Section 5 of the Securities Act of 1933
(“Securities Act”) nor exempt from registration.  Clayton’s multifaceted scheme, however, made
it appear that his sales were exempt from such registration.  Clayton was an “affiliate” of the
companies whose stock he sold, and he therefore faced a legal limit on how much stock he could
sell at any one time in unregistered transactions.  By concealing stock among the Clayton
Nominees, Clayton avoided the legal limitations on sales by affiliates, and avoided reporting his
stock ownership as required by federal law, while dumping significant amounts of stock into
public securities markets.
4. Clayton often obtained stock from loans that he made, or purported to make, to
public companies through the Clayton Nominees.  The loans were convertible into stock, which
Clayton, through the Clayton Nominees, then illegally sold.  To the extent that Clayton’s
convertible loans actually took place—i.e., were not fabricated as part of his scheme—Clayton’s

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scheme was designed for him to avoid risk by converting the loans to stock at low prices and
then illegally selling that stock to the public at higher prices during stock promotional
campaigns.
5. Clayton carried out his fraud, in part, through his companies First Equity and
Standard Registrar.  Clayton was aided and abetted in his scheme by Jackson, Perry, Mower,
Rieu, and Chesapeake.
6. Jackson is an attorney who shared an office with Clayton and worked with him on
microcap securities matters for decades.  Jackson issued letters falsely representing that the
Clayton Nominees were not affiliates of the companies with stock that Clayton planned to sell as
part of the scheme, providing a fraudulent paper trail necessary for Clayton to sell the stock.
7. Perry also worked for decades as Clayton’s bookkeeper, managing multiple bank
and brokerage accounts for the numerous Clayton Nominees.  Perry prepared and delivered
materially false information to brokerage firms to facilitate the illegal sale of stock.  Perry acted
on behalf of multiple Clayton Nominees, including one, Empire, that was purportedly run by
Perry’s wife.  Perry worked with Clayton to forge Perry’s wife’s signature on documentation
relating to a brokerage account.  Perry at other times arranged for his wife to sign Empire-related
documents.
8. Mower was CEO of one of the companies whose stock Clayton sold, and Mower
provided Clayton with falsified documentation necessary to the sale of the company’s stock.
9. Rieu and his company Chesapeake were stock promoters whom Clayton retained
to publicly promote, and increase the price and liquidity of, the stock that Clayton sold.  Rieu,
acting on his own behalf and through Chesapeake, engaged in fraudulent trading with the
purpose of deceiving the public about the true demand for the securities that Clayton planned to

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sell as part of his scheme.  Rieu, again acting on his own behalf and through Chesapeake, also
engaged in deceptive trading for other clients—separate and apart from Clayton.  Further, Rieu
engaged in insider trading in the stock of one of Chesapeake’s clients.
10. Finally, as part of the scheme, Clayton used Standard Registrar, which is a stock
transfer agent that he has owned since 2017, to remove the restrictive legends from stocks, which
allowed them to be sold publicly.  Jackson has served on Standard Registrar’s board of directors
since 2017.  Clayton and Jackson knew or recklessly ignored that Standard Registrar removed
restrictive legends on false pretenses.
NATURE OF THE PROCEEDING AND RELIEF SOUGHT
11. The Commission brings this action pursuant to the authority conferred upon it by
Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d)(1) of the Securities
Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78u(d)(1)].
12. The Commission seeks: (i) against Defendants, permanent injunctions, enjoining
them from engaging in the transactions, acts, practices, and courses of business alleged in this
Complaint, including enjoining them from committing or engaging in specified actions or
activities relevant to violations charged herein; (ii) against Defendants and Relief Defendants,
disgorgement of all ill-gotten gains from the unlawful conduct set forth in this Complaint,
together with prejudgment interest, under Sections 21(d)(5) and (7) of the Exchange Act [15
U.S.C. §§ 78u(d)(5) and (7)]; (iii) against Defendants, civil penalties 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) against Defendants, orders barring them from participating in any offering of a
penny stock, pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and Section
21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)]; (v) against Clayton, First Equity, Perry,

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Rieu, and Chesapeake, further permanent injunctive relief prohibiting activity related to their
misconduct; (vi) against Clayton, Jackson, Perry, Mower, and Rieu, orders barring them from
acting as an officer or director of any public company, pursuant to Section 20(e) of the Securities
Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; and
(vii) such other relief as the Court may deem appropriate.
JURISDICTION AND VENUE
13. This Court has subject-matter jurisdiction over this action pursuant to Sections
20(d)(1) and 22(a) of the Securities Act [15 U.S.C. §§ 77t(d)(1) and 77v(a)] and Sections 21(d),
21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), 78aa].
14. The Court has personal jurisdiction over Defendants and Relief Defendants
because, among other things, all Defendants reside in the United States and all Relief Defendants
have principal places of business and transact business in the United States.
15. Venue lies in this district pursuant to Section 22(a) of the Securities Act [15
U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  Clayton, First Equity,
Standard Registrar, Jackson, Perry, and Mower reside in this District and have transacted
business in this District.  Each of the Relief Defendants resides in this District and conducts
business in this District.  Rieu and Chesapeake transacted business with Clayton and/or his
business entities while Clayton was located in this District.  Rieu periodically traveled to this
District to meet with Clayton concerning business transactions.
16. In connection with the transactions, acts, practices, and courses of business
alleged in this Complaint, Defendants, directly or indirectly, singly or in concert, made use of the
means or instrumentalities of transportation or communication in interstate commerce, or the
mails.

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DEFENDANTS
17. John S. Clayton, age 60, resides in Salt Lake City, Utah.  Clayton is self-
employed and is the manager and beneficial owner of First Equity and the owner of Standard
Registrar.  Clayton has also served as an officer and director of ForeverGreen Worldwide, Corp.
18. First Equity Holdings Corp. is a Delaware corporation with its principal place
of business in Salt Lake City, Utah.  First Equity is an operating entity through which Clayton
purchases and manages real estate as well as securities.  Clayton is the beneficial owner of First
Equity, and Jackson is its registered agent.
19. Standard Registrar & Transfer Company, Inc. is a Utah corporation with its
principal place of business in Salt Lake City, Utah.  Standard Registrar is registered as a transfer
agent with the Commission.  Clayton has owned Standard Registrar since 2017 and Jackson has
been a Standard Registrar director since 2017.
20. Daniel W. Jackson, age 73, resides in Salt Lake City, Utah.  Jackson is an
attorney and has served as manager of Bryan Development and Greenwich Street.  Jackson is the
registered agent for First Equity and Standard Registrar, as well as for Klaja Partners and
Investrio.  Jackson has been a director of Standard Registrar since 2017.
21. Donald H. Perry, age 82, resides in Mount Pleasant, Utah.
22. Clark M. Mower, age 77, resides in Woods Cross, Utah.  Mower is the president
and Chief Executive Officer of Flexpoint Sensor Systems, Inc.
23. Timothy J. Rieu, age 65, resides in West Friendship, Maryland.  He is the
founder and president of Chesapeake.

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24. Chesapeake Group, Inc., is a Nevada corporation with its principal place of
business in Maryland.  Chesapeake engages in stock promotion and describes itself as an
“investor relations” firm.
RELIEF DEFENDANTS
25. Bryan Development, LLC is a Utah corporation with its principal place of
business in Salt Lake City, Utah.
26. Capital Communications, Inc. is a Wyoming corporation with its principal place
of business in Salt Lake City, Utah.
27. Compass Equity Partners, Inc. is a Wyoming corporation with its principal
place of business in Salt Lake City, Utah.
28. Empire Fund Managers, Inc. is a Wyoming corporation with its principal place
of business in Salt Lake City, Utah.
29. Investrio, Inc. is a Wyoming corporation with its principal place of business in
Salt Lake City, Utah.
30. Greenwich Street Commercial Mortgage, LLC is a Delaware corporation with
its principal place of business in Salt Lake City, Utah.
31. Klaja Partners LLC is a Utah corporation with its principal place of business in
Salt Lake City, Utah.
32. Liberty Partners, LLC is a Wyoming corporation with its principal place of
business in Sandy, Utah.
33. Maestro Investments, Inc. is a Wyoming corporation with its principal place of
business in Salt Lake City, Utah.

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THE MICROCAP COMPANIES
34. Defendants’ illegal conduct involved stock of microcap companies.  Microcap
companies include companies with stock that trades at less than $5.00 per share, which are
commonly known as “penny stocks.”  Defendants’ actions generally, though not exclusively,
involved stock traded in the over-the-counter (“OTC”) securities market using “alternative
trading systems” (“ATSs”), rather than on the NASDAQ, New York Stock Exchange, or any
other national securities exchange.
Microcap Issuers with Stock Involved in Clayton’s Scheme
35. Flexpoint Sensor Systems, Inc. (“Flexpoint”) is a Delaware corporation, with its
principal place of business in West Jordan, Utah, that manufactures thin-film sensor technology.
Its common stock is registered with the Commission under Section 12(g) of the Exchange Act
and is quoted on OTC Link ATS under the symbol “FLXT.”
36. ForeverGreen Worldwide Corp. (“ForeverGreen”) was a Nevada corporation,
with its principal place of business in Lindon, Utah, that used multi-level marketing to sell meal
replacement shakes, nutritional beverages, and marine phytoplankton products.  Its common
stock was registered with the Commission under Section 12(g) of the Exchange Act and was
quoted on OTC Link ATS under the symbol “FVRG.”  On July 29, 2021, the Commission
revoked the registration of each class of ForeverGreen’s securities pursuant to Section 12(j) of
the Exchange Act.  ForeverGreen subsequently ceased operations.
37. KwikClick, Inc. (“KwikClick”) is a Delaware corporation, with its principal
place of business in Bountiful, Utah, that operates an online referral software platform.  Its
common stock is registered with the Commission under Section 12(g) of the Exchange Act and
is quoted on OTC Link ATS under the symbol “KWIK.”

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38. LZG International Inc. (“LZG International”) was a Florida corporation, with its
principal place of business in New York, New York.  In 2021, it acquired the assets of an
artificial intelligence technology company, FatBrain, LLC.  Its common stock was registered
with the Commission under Section 12(g) of the Exchange Act and was quoted on OTC Link
ATS under the symbol “LZGI.”  In 2024, LZG International merged with Genius Group Limited,
and currently trades on the NYSE American exchange under the symbol “GNS.”
Additional Microcap Clients of Rieu and Chesapeake
39. C-Bond Systems, Inc. (“C-Bond”) is a Colorado corporation, with its principal
place of business in Houston, Texas, that operates a nanotechnology company.  Its common
stock is registered with the Commission under Section 12(g) of the Exchange Act and is quoted
on OTC Link ATS under the symbol “CBNT.”
40. Pressure BioSciences, Inc. (“Pressure BioSciences”) is a Massachusetts
corporation, with its principal place of business in Canton, Massachusetts, that develops high-
pressure technology-based instruments.  Its common stock is registered with the Commission
under Section 12(g) of the Exchange Act and is quoted on OTC Link ATS under the symbol
“PBIO.”
41. Sidus Space, Inc. (“Sidus Space”) is a Delaware corporation, with its principal
place of business in Merritt Island, Florida, that operates a commercial aerospace company.  Its
common stock is registered with the Commission under Section 12(b) of the Exchange Act and
is listed on NASDAQ under the symbol “SIDU.”

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FACTUAL ALLEGATIONS
Background
42. Clayton’s scheme used stock that was issued by a microcap company (the stock’s
“issuer”) as “restricted” in its ability to be sold.  The stock was issued in transactions that were
not registered with the Commission.  Restricted stock bears a legend stating that it is restricted.
Absent an exemption under the federal securities laws and rules, restricted stock cannot legally
be offered or sold to the public unless a securities registration statement has been filed with the
Commission (for an offer) or is in effect (for a sale).
43. An “affiliate” of an issuer is a person or entity, like Clayton, that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with, such issuer (i.e., a control person).  “Control” means the power to direct the
management and policies of the company in question.  Affiliates include officers, directors and
controlling shareholders, as well as any person who is under common control with, or has
common control of, an issuer.  Clayton was at all relevant times an affiliate of Flexpoint,
ForeverGreen, KwikClick, and LZG International (the “Clayton Issuers”).
44. A “transfer agent,” like Standard Registrar, is a company which, among other
things, issues and cancels certificates of a company’s stock to reflect changes in ownership.
Many companies that have publicly traded securities use transfer agents to keep track of the
individuals and entities that own their stock.  Transfer agents also track whether shares are
restricted from resale.  Clayton has owned Standard Registrar since 2017 and had access to
transfer agent records for each of the Clayton Issuers.  Jackson has served as a Standard
Registrar director since 2017.

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45. One exemption to the registration requirements of the federal securities laws is
contained in Section 4(a)(1) of the Securities Act, which exempts “transactions by any person
other than an issuer, underwriter, or dealer.”  In turn, Rule 144 under the Securities Act [17
C.F.R. § 240.144] provides a set of conditions, commonly referred to as a safe harbor, for a seller
of stock to avoid acting as an underwriter.
46. As a critical impediment to Clayton’s scheme, the Rule 144 safe harbor limits the
amount of stock that an affiliate can publicly sell in an unregistered transaction.  As applicable
here, affiliates were limited to selling during a three-month period an amount equal to one
percent of all of a company’s outstanding shares.
47. Transfer agents often require an attorney opinion letter stating that the
requirements of Rule 144 have been met, including representations about whether the
stockholder is an affiliate, before removing restrictive legends from stock on the basis of the
Rule 144 safe harbor.  Brokerage firms also rely on attorney opinion letters in accepting their
customers’ deposit of stock obtained in unregistered transactions.
48. Jackson issued at least fourteen attorney opinion letters relevant to this action.
Jackson opined in pertinent letters that the Rule 144 conditions were met and that the transfer
agent (Standard Registrar) could remove restrictive legends.  Jackson’s letters often included the
proviso that “[i]n issuing this opinion, I am aware that you and the Company’s shareholders and
broker-dealers may rely upon this opinion, and I hereby give my permission and consent to rely
on and exhibit this opinion to those shareholders and broker-dealers.”
49. Jackson’s letters falsely recited facts indicating, among other things, that the
stockholder, a Clayton Nominee, was not an affiliate of the issuer.  Jackson’s statements were
materially false and misleading because, as Jackson knew or was reckless in not knowing,

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Clayton beneficially owned the stock held by the Clayton Nominees and Clayton was an affiliate
of the issuers.  Jackson’s letters allowed Clayton Nominees to publicly sell stock in violation of
the federal securities laws.  Clayton, as owner of Standard Registrar, used or recklessly allowed
Standard Registrar to remove restrictive legends in reliance on Jackson’s opinion letters.
Jackson was also a director of Standard Registrar and knew or recklessly ignored that Standard
Registrar would remove restrictive legends in reliance on his opinion letters.
50. The federal securities laws require certain disclosures when a person acquires
beneficial ownership of more than five percent of a registered class of a company’s equity
securities.  First, those persons or groups are required to file a “beneficial ownership report”
under Schedule 13D or 13G with the Commission.  Second, those persons—and certain
transactions they have entered into with the issuer—must be identified in registration statements
and other company filings with the Commission.  Further, beneficial owners of more than ten
percent of a registered class of an issuer’s stock are required under Section 16(a) of the Exchange
Act to report their ownership with the Commission on a Form 3 within ten days, any changes in
beneficial ownership on a Form 4 within two days, and total beneficial ownership annually on a
Form 5.  Clayton violated these disclosure requirements and did so in furtherance of his scheme.
OVERVIEW OF THE SCHEME
Clayton’s Use of Nominee Entities to Conceal Stock Ownership
51. Clayton acquired, but hid, significant stock holdings in Flexpoint, ForeverGreen,
KwikClick, and LZG International.  Clayton concealed his ownership by acquiring stock in the
name of one or more of the Clayton Nominees.
52. Clayton often acquired shares of stock in the Clayton Issuers from convertible
loans held in the names of Clayton Nominees.  A convertible loan is a form of corporate debt

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that can be converted into shares of stock of the issuing corporation in lieu of repayment of the
loan in cash.
53. Clayton often paid employees or friends to act as nominal corporate officers of
the Clayton Nominees that acquired and sold shares of the Clayton Issuers.  These individuals
exercised no real control over the Clayton Nominees despite corporate records identifying them
as the officers.  Clayton used these individuals to sign necessary forms such as brokerage and
bank records.  Clayton, however, controlled and was the beneficial owner of the stock held by
the Clayton Nominees.
54. Clayton controlled and funded the financial accounts of the Clayton Nominees,
and Clayton, with the assistance of First Equity staff, carried out the business of the Clayton
Nominees.  Clayton used generic email addresses in the name of the Clayton Nominees to
conduct this business—for example, sending emails to a brokerage firm through
CompassEquityPartners@[redacted].com—but signing the email with the name of the nominal
officer.  Clayton and First Equity maintained passwords for Clayton and his staff to access the
Clayton Nominees’ email and brokerage accounts.
55. Capital Communications, Liberty Partners, and Maestro Investments: Clayton
used handymen from his property management business to act as the nominal officers of Capital
Communications, Liberty Partners, and Maestro.  Clayton paid those employees nominal annual
sums in exchange for those employees signing documents as the purported heads of the Clayton
Nominees.  In one such practice, the nominal officers would come to First Equity’s offices and
pre-sign blank checkbooks for the relevant entity for Clayton’s later use.
56. Compass Equity Partners: Clayton used a friend, and then subsequently that
friend’s son, to act as the nominal officer of Compass.  That nominal officer understood that

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Clayton controlled the securities held by Compass.  In addition to posing as the nominal officer
in emails, Clayton caused a pre-paid cell phone—a burner phone—to be listed as the nominal
officer’s phone number on brokerage records so that Clayton could further pose as the nominal
officer in phone calls.  A pre-paid cell phone is a cell phone that can be purchased in a store with
pre-paid calling minutes and that has a phone number that is not registered to any particular
name.  Pre-paid phones are colloquially referred to as “burner phones.”  As described further
below, Clayton communicated with Rieu using the same burner phone used for Compass and
directed Rieu to also purchase a burner phone because of the Commission’s investigation.
57. Empire Fund Managers: Clayton, with Perry’s help, used Perry’s wife as the
nominal officer of Empire.  Clayton also paid Perry’s wife a nominal sum for her role.
Nonetheless, the Empire accounts were managed by Clayton, Perry, and First Equity staff in the
same manner as the other Clayton Nominees.  Perry arranged for his wife to sign documentation
relating to Empire’s acquisition and deposit of relevant stock.  In one instance on January 23,
2019, Perry emailed Clayton asking him to affix a copy of Perry’s wife signature to a letter from
Empire to a brokerage firm.  The letter gave Perry and Clayton’s assistant authority to trade in
Empire’s brokerage account and to withdraw trading proceeds.  Clayton affixed Perry’s wife’s
signature to the letter and returned it to Perry that day.
58. Investrio: Clayton used a business associate, who was also at times on Clayton’s
payroll, to act as nominal officer of Investrio.  The business associate understood that Clayton
controlled the securities held by Investrio.
59. Klaja Partners: Clayton used Jackson’s employee’s relative as the nominal
officer of Klaja Partners.  In a February 25, 2019 letter prepared by Clayton and signed by
Jackson, Jackson claimed the Klaja Partners brokerage account as his own, but—consistent with

16
 
Perry’s role in handling the Clayton Nominees’ accounts—Jackson gave Perry “full power and
authority” for the “sale of securities.”
60. Bryan Development and Greenwich Street: Jackson was the head of Bryan
Development and Greenwich Street but held stock for Clayton’s benefit and in aid of Clayton’s
scheme.  Distinct from the other Clayton Nominees, Jackson at times did use these entities for
business activities unrelated to holding stock of the Clayton Issuers.  Nonetheless, Jackson also
used these entities to facilitate Clayton’s scheme.  For example, in 2018, Bryan Development
held stock in Clayton Issuer ForeverGreen, and, in 2019, Bryan Development paid $100,000 to
Capital Communications which was sent to ForeverGreen and other Clayton Nominees.  Clayton
fully repaid the $100,000 in 2022.  Then, in August 2022, Greenwich Street acquired $250,000
of Clayton Issuer KwikClick stock, which Clayton again fully repaid in November 2022.
Jackson’s False Attorney Opinion Letters and Other Services to Aid Clayton’s Scheme
61. Through at least 2020, Clayton kept Jackson as an attorney on a paid retainer, but
Jackson continued to act at Clayton’s behest thereafter.  Jackson provided various services over a
period of years to aid Clayton’s fraudulent scheme.  Most critically, Jackson prepared attorney
opinion letters for at least Clayton Nominees Capital Communications, Compass, Empire,
Liberty, and Maestro, as well as First Equity.  Jackson’s letters stated falsely that the conditions
of Rule 144 were met, and that Standard Registrar could remove restrictive legends from stock,
allowing the stock to be sold publicly without volume limitations.  For each of the Clayton
Nominees, Jackson received the request to prepare the opinion letter from Clayton or Clayton’s
employees, received supporting documentation (to the extent he actually received it) from
Clayton or Clayton’s employees, and delivered finalized letters to Clayton or Clayton’s
employees.  Despite this, Jackson’s letters concealed Clayton’s involvement, falsely stating that

17
 
the nominal officers requested the letters, provided supporting documentation, and received the
final letters.
62. Jackson knew or was reckless in not knowing that Clayton controlled the Clayton
Nominees and was an affiliate of the Clayton Issuers.  Jackson shared an office building with
Clayton for decades.  Jackson knew that the records for the Clayton Nominees were stored in
that same office, and that Clayton had access to records for the Clayton Nominees.  Clayton or
First Equity employees provided Jackson with backup documentation for Jackson’s preparation
of opinion letters for Clayton Nominees.  Not only did Clayton or his employees request and
receive the opinion letters—without the involvement of the Clayton Nominees’ nominal
officers—Clayton’s employees often assisted Jackson in the preparation of opinion letters.
Jackson further knew of or recklessly ignored red flags concerning the Clayton Nominees,
including that they often shared addresses (one such address was the shared office in which
Jackson and Clayton worked).  Jackson also personally knew the nominal officers and knew or
was reckless in not knowing that they likely did not possess the means to make sizeable (often
six-figure) loans to the Clayton Issuers.
Perry’s Fraudulent Conduct with Brokerage Firms in Aid of the Scheme
63. Perry served as bookkeeper for Clayton and his entities for many years.  Perry
maintained records of the Clayton Nominees’ stock holdings.  Perry prepared tax returns for
Clayton Nominees.  He received payments, through a business entity, from the Clayton
Nominees for his services.  Perry also prepared, or assisted in the preparation of, the financial
reporting portions of public filings made with the Commission for publicly traded companies
with which Clayton was involved.
64. Perry often served as the middleman between Clayton and brokerage firms,
coordinating activities for the various Clayton Nominees such as delivering stock deposit forms,

18
 
ordering stock sales, and receiving proceeds of those sales.  Perry knowingly or recklessly
delivered false deposit forms, many purportedly signed by Perry’s wife, concerning the Clayton
Nominees and the stock to be deposited.
Rieu and Chesapeake’s Promotion of the Clayton Issuers to Generate Investor Interest
65. Chesapeake provided promotional services to penny stock companies, which
included typical investor relations services such as drafting press releases and fielding investor
inquiries, but, most importantly, included canvassing investors and brokers to promote purchases
of the stock of issuers.  Although Chesapeake had clients independent of Clayton, Chesapeake
was largely or entirely dependent on Clayton for funding during periods relevant to this
Complaint.
66. Clayton retained Rieu and Chesapeake to generate investor interest in the stock of
companies that Clayton held and wanted to sell.  Clayton paid Chesapeake over $3.6 million
between 2014 and 2024, including payments to Chesapeake that arrived from numerous Clayton
Nominees.
67. Rieu knew or was reckless in not knowing that Clayton was engaged in a
microcap stock selling scheme.  Rieu knew or was reckless in not knowing that Clayton paid
Chesapeake through Clayton Nominees as part of Clayton concealing his involvement in the
scheme.  Rieu knew or was reckless in not knowing that Clayton retained Rieu and Chesapeake
to promote stocks because Clayton held those stocks and wished to sell them into an inflated
market.
68. In 2023, Clayton learned of the Commission’s investigation that led to this action
and accordingly directed Rieu to acquire a burner phone to discuss their ongoing activities, and
Rieu obliged because he knew or was reckless in not knowing that he and Clayton had been
involved in illegal activity.

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69. With respect to Flexpoint and ForeverGreen, Clayton compensated Rieu and
Chesapeake according to the average price and total trading volume of the stock, thus
incentivizing Rieu and Chesapeake to artificially inflate both price and trading volume.  Acting
accordingly, Rieu traded in stock of Flexpoint and ForeverGreen with the intent of artificially
inflating their stock price and trading volume.
70. More broadly, Rieu traded in his own accounts, accounts of a relative, and
Chesapeake accounts to repeatedly buy and sell stock of Chesapeake clients (Clayton Issuers and
others) for the purpose of artificially inflating the price and trading volume of those stocks.
71. Further, acting separately from Clayton’s scheme, Rieu engaged in insider trading
of one of Chesapeake’s only non-microcap clients, Sidus Space, using material non-public
information concerning major upcoming press releases to trade profitably.
FRAUDULENT SALES OF FLEXPOINT STOCK
72. Since at least 2005, Clayton has been intimately involved with financing
Flexpoint, during which time Mower has been the CEO of Flexpoint.  Clayton controlled
Flexpoint and therefore was an affiliate for purposes of his stock sales.  Clayton controlled
Flexpoint in numerous ways, including owning more than ten percent of Flexpoint stock, acting
on Flexpoint’s behalf to arrange for promotion of its stock, directing Flexpoint’s management
(including Mower), accessing Flexpoint’s finances, drafting Commission filings, and often
providing the sole source of funding for Flexpoint.  Further, Mower received a biweekly
paycheck through First Equity’s payroll company from at least 2021 through at least August
2024.
73. Mower knew or was reckless in not knowing that Clayton was an affiliate of
Flexpoint for those same reasons.  Mower also knew or was reckless in not knowing that Clayton

20
 
was the beneficial owner of the Clayton Nominees.  Mower’s company relied on financing from
the Clayton Nominees to survive, yet Mower did not meet with the nominal officers.  Mower
instead dealt exclusively, for over a decade, with Clayton and Clayton’s administrative staff
concerning each such nominee.  Mower repeatedly sought financing from the Clayton Nominees
through Clayton, received that financing through Perry and Clayton’s staff, converted Clayton
Nominee loans to Flexpoint stock at Clayton’s direction, and otherwise acted at Clayton’s
direction for Flexpoint.
74. Jackson knew or was reckless in not knowing that Clayton was an affiliate of
Flexpoint.  Jackson knew that Clayton had made loans to Flexpoint, that Clayton provided advice
or consulting services to Flexpoint, and that Clayton was intimately familiar with Flexpoint’s
operations.  Jackson, who shared office space with Clayton, saw Clayton meet frequently with
Flexpoint’s CEO, Mower, and Jackson performed legal work for Flexpoint coordinated by
Clayton.  Clayton also provided Jackson with documents relating to the issuance of Flexpoint
stock that was the subject of Jackson’s opinion letters.  Jackson intentionally or recklessly
ignored these facts when representing in attorney opinion letters that the Clayton Nominees were
not affiliates of Flexpoint.  Jackson knew, or was reckless in not knowing, that Clayton was
acting through the Clayton Nominees.
75. At various times since 2019, Clayton has beneficially owned through the Clayton
Nominees (including Capital Communications, Compass, Empire, Liberty, and Maestro) and
First Equity greater than five percent of Flexpoint stock, including owning more than ten percent
of Flexpoint stock after transactions on or about January 21, 2021, March 23, 2021, and March
14, 2022.  Clayton failed to file with the Commission required reports of his beneficial
ownership or disposition of stock.

21
 
76. From at least 2014 to 2024, Clayton, aided and abetted by Perry, Jackson, Mower,
Rieu, and Chesapeake, and using Standard Registrar, repeatedly undertook a scheme to
fraudulently sell Flexpoint stock to the public in an artificially inflated securities market.
Transfer and brokerage records show that Clayton repeated this scheme in numerous cycles with
the Clayton Nominees, selling at least 45 million shares of Flexpoint.  Examples include:
Fraudulent Sales of Flexpoint Stock Issued in July 2019
77. Clayton coordinated the conversion and subsequent sale of stock by different
Clayton Nominees.  For example, the Clayton Nominee Capital Communications purportedly
made convertible loans to Flexpoint in 2016.  All of the funds for these loans ultimately came
from Clayton, and the loans were made to benefit Clayton.  To avoid conversion of a reportable
amount of stock by Capital Communications, in 2016 and 2017, those loans were purportedly
assigned to Clayton Nominees Empire and Compass, having the effect of further concealing
Clayton’s ownership.  In 2019, Clayton then undertook a series of deceptive and misleading
steps to sell this Flexpoint stock to investors.  Each of Perry, Jackson, Mower, Rieu, and
Chesapeake aided and abetted Clayton in this process, and Clayton used Standard Registrar to
further effect the scheme.
78. First, Clayton directed Flexpoint’s CEO, Mower, to sign and return two $150,000
promissory notes on July 3, 2019, but backdated to January 20, 2016.  Backdating loans was
important to Clayton’s scheme because the Rule 144 safe harbor includes a holding period
requirement for shares acquired from an issuer in an unregistered transaction before they can be
resold.
79. Second, although the two backdated promissory notes had just been executed by
Mower on July 3, 2019, the Clayton Nominees fraudulently utilized documentation that

22
 
purportedly assigned the notes in years prior: one $150,000 note to Empire on April 15, 2016 and
another to Compass on January 10, 2017.  Splitting the notes between two Clayton Nominees
was also important to Clayton’s scheme, to avoid any one nominee holding an amount of stock
requiring public disclosure through a Commission filing.
80. Third, after splitting the convertible note across the two nominee entities, Clayton
converted the debt to stock.  The same day that Mower signed the backdated notes, July 3, 2019,
Flexpoint issued 3.65 million shares of stock to Empire and then on July 16, 2019, Flexpoint
issued 3.2 million shares to Compass.  In reality, Clayton owned these shares, had the power to
direct their disposition, and benefitted from their sale.  The total 6.85 million shares of Flexpoint
stock would have been approximately six percent of outstanding shares, requiring reporting to
the Commission on Schedule 13D.
81. Fourth, Clayton sought and received attorney opinion letters from Jackson—
containing false representations—in order to remove restrictive legends and deposit the stock at a
brokerage firm.  Jackson issued such attorney opinion letters for both Empire and Compass,
dated July 5, 2019 and November 22, 2019, respectively.  Among other things, Jackson’s letters
falsely stated that the letter was requested by the nominee entity, that the documents had been
provided by the nominee entity, and that the nominee entity had never been an affiliate of
Flexpoint.  Those representations were false, because, as Jackson knew or was reckless in not
knowing, Clayton had requested the letters, Clayton provided any purported supporting
documents, Clayton was the beneficial owner of Empire’s and Compass’s stock holdings, and
Clayton was an affiliate of Flexpoint.
82. Fifth, on July 5, 2019, purportedly in reliance on Jackson’s letter, Standard
Registrar removed restrictive legends for 3.65 million shares of Flexpoint stock for Empire.  On

23
 
July 18, 2019—apparently without receiving the yet-to-be-written November 22, 2019 attorney
opinion letter—Standard Registrar removed restrictive legends on the 3.2 million shares of
Flexpoint stock for Compass.
83. Sixth, Mower signed board resolutions and letters, drafted by Clayton or his staff,
that issued the shares and attested that each of Capital Communications, Empire, and Compass
“are not currently, nor have they ever been an . . . affiliate of Flexpoint.”  Mower then returned
the letters to Clayton or his staff.
84. Seventh, now holding unrestricted stock, Clayton needed to deposit it at a
brokerage firm to sell it to the public.  To do so, Perry assisted Clayton in submitting (a) the false
Jackson letters, (b) the false Mower letters, and (c) false brokerage deposit forms for Empire and
Compass.  For these deposit forms, the brokerage firm required that entities depositing stock
make representations about that stock signed under penalty of perjury (here by Perry’s wife as
nominal officer of Empire, and separately the nominal officer of Compass).  The Empire forms
were signed by Perry’s wife, either at Perry’s direction or by Clayton or Perry affixing a copy of
her signature.  The Compass forms were signed by the nominal officer of Compass at the
direction of Clayton or his staff.  The forms falsely represented to the brokerage firm, among
other things, that Empire and Compass were not:
a. “Affiliates” of Flexpoint, which was false because Clayton controlled each entity and
was an affiliate of Flexpoint;
b. Engaged in “promotional efforts regarding the Issuer,” which was false because
Clayton—at times through Empire and Compass—was paying Rieu and Chesapeake for
stock promotion;

24
 
c. Engaged in a “plan to violate or evade the registration provisions of the Securities Act or
any other federal or state law or regulation,” which was false, because, among other
things, Clayton structured these transactions to evade registration requirements;
d. “Coordinated with possible sales by other stockholders,” which was false because
Clayton was coordinating sales activity with the other Clayton Nominees; and
e. Beneficial owners of more than the number of shares deposited (here 3.2 million and
3.65 million), which was false because Clayton beneficially held additional Flexpoint
stock through the Clayton Nominees.
85. After attempting to deposit the stock, the brokerage firm found Jackson’s attorney
opinion letters to be deficient and required Jackson to submit corrected letters, which Clayton
directed Perry to further assist in obtaining.  The brokerage firm, having received an amended
letter from Jackson, permitted the deposit of Flexpoint shares “based on [Jackson’s] underlying
conclusions that the customer is not an affiliate of the issuer and has been the beneficial owner of
the securities for more than one year.”
86. Eighth, Clayton coordinated with Mower, Rieu, and Chesapeake to issue positive
news to artificially inflate the price and trading volume of Flexpoint stock prior to sales by the
Clayton Nominees.  For example, in late July 2019, Mower sent Clayton and Rieu a press release
announcing Flexpoint’s filing of a new patent; then on August 13, 2019, Mower sent Rieu and
Clayton a draft press release announcing that Flexpoint’s revenue had increased by 1,019
percent; and, on October 3, 2019, Rieu discussed with Mower and Clayton press releases for a
“big announcement that will really move the stock.”  During this same period, Rieu, through his
and Chesapeake’s brokerage accounts, actively traded Flexpoint stock to create an artificial

25
 
appearance of interest by investors.  Rieu did so despite Chesapeake policies prohibiting trading
in the stock of companies to which it provided investor relations services.
87. Finally, Clayton, aided by Perry, needed to sell Flexpoint stock to an artificially
inflated market.  From August 2019 to December 2019, Empire sold over 3.65 million shares of
Flexpoint stock to the public, and from May 2020 to September 2020, Compass sold 3.2 million
shares of Flexpoint stock to the public, both of them exceeding the Rule 144 volume limitation
of one percent of Flexpoint stock in a three-month period.  Clayton’s sales through Empire and
Compass were illegal because Clayton, as both an affiliate of Flexpoint and beneficial owner of
Empire’s and Compass’s shares, could not legally sell Flexpoint stock to the public in an
unregistered transaction.
Fraudulent Sales of Flexpoint Stock Issued in January 2021
88. Clayton repeated the Flexpoint scheme in 2021.  Clayton converted purported
loans made by Capital Communications to Flexpoint in 2016 and 2017, all of the funds for which
ultimately came from Clayton, and the loans were made to benefit Clayton.  These convertible
loans were then purported to be partially assigned from Capital Communications to Empire and
Compass.
89. At least some payments from Empire to Capital Communications to acquire the
2016 Flexpoint loan were sham payments—merely shifting money among Clayton Nominees in
a series of transactions designed to create the false appearance that Empire paid Capital
Communications to acquire the convertible loan:
a. On January 6, 2021, Compass drew $100,000 from a line of credit belonging to Clayton;
b. On January 8, 2021, Compass sent $100,000 to Capital Communications;
c. Later on January 8, 2021, Capital Communications sent $50,000 to Empire;

26
 
d. With a check dated January 12, 2021, Empire sent $40,000 back to
Capital Communications;
e. On January 14, 2021, Capital Communications sent $80,000 to Compass;
f. On January 19, 2021, Compass sent $50,000 back to Capital Communications;
g. On January 20, 2021, Capital Communications sent $50,000 to Empire; and
h. With a check dated January 21, 2021, Empire sent $50,000 back to Capital
Communications.
90. The checks for the January 12, 2021 and January 21, 2021 payments from Empire
to Capital Communications were subsequently submitted to a brokerage firm as part of the
purported proof that Empire paid Capital Communications to acquire its 2016 Flexpoint
convertible loan.  Further, in connection with a different issuance of Flexpoint stock to Capital
Communications and Empire in March 2022, Clayton reused the checks dated January 12, 2021
and January 21, 2021 to purportedly show Empire purchasing from Capital Communications a
different Flexpoint convertible loan purported to be dated in 2020.
91. After the purported assignment of the loans, all three Clayton Nominees
converted the loans to Flexpoint stock.  On January 21, 2021, Flexpoint issued to Empire over
4.2 million shares, Capital Communications over 5.1 million shares, and Compass over
5.2 million shares.
92. Clayton again split shares among Empire, Capital Communications, and Compass
to avoid public disclosure and again hide his overall ownership of Flexpoint.  The total of over
14.5 million shares of Flexpoint stock would have been approximately twelve percent of
outstanding shares, requiring reporting on Schedule 13D, and Forms 3, 4, and 5.

27
 
93. Relying on the same process described above, Clayton, aided and abetted by
Jackson, Perry, Mower, Rieu, and Chesapeake, and using Standard Registrar, engaged in a
scheme to deposit the Flexpoint stock and sell it to investors in the public markets.
94. Jackson provided attorney opinion letters for each Clayton Nominee dated
February 2, 2021, March 5, 2021, and May 25, 2021.  Jackson’s letters contained false
statements similar to the false statements made in connection with the July 2019 issuance of
Flexpoint stock, including false statements about affiliation status.
95. Standard Registrar, acting solely at the direction of Clayton or Clayton’s staff for
each Clayton Nominee, issued the Flexpoint shares and removed restrictive legends, purportedly
in reliance on attorney opinion letters from Jackson.
96. Mower again signed letters falsely attesting that the Clayton Nominees were not
affiliates of Flexpoint.  Further, on March 11, 2021, Mower subsequently agreed with Clayton to
falsely backdate the conversion of the Capital Communications debt to December 2020 rather
than in 2021.  This allowed Flexpoint to file a 2020 annual report on March 31, 2021, falsely
reflecting that Flexpoint had decreased its outstanding debt in 2020.
97. Perry further aided in depositing stock for all three Clayton Nominees at
brokerage firms.  Each such deposit required the submission of the Jackson and Mower letters
and brokerage deposit forms, all of them containing false statements.
98. Clayton again coordinated with Mower, Rieu, and Chesapeake to issue positive
news to inflate the price and trading volume of Flexpoint’s stock.  Clayton reviewed numerous
draft press releases created in coordination with Mower, Rieu, and Chesapeake throughout the
period that the Clayton Nominees began to sell stock.  On August 13, 2021, Clayton emailed
Mower that he “had a long conversation with Tim [Rieu] about . . . why [a Flexpoint employee]

28
 
can’t focus on writing releases” and Rieu “said he was going to speak to [the employee].  So #1
I’m looking for a release.”  The purpose of issuing press releases was to generate investor
interest in Flexpoint stock.  During a period of issuing releases from April 2021 to August 2021,
Rieu, trading in his own account and on behalf of Chesapeake, traded in Flexpoint stock on 44
out of 99 business days.  Rieu traded with the purpose of creating an artificial appearance of
interest by investors.
99. Finally, Clayton, aided by Perry, sold over 15 million shares of Flexpoint stock
held by the Clayton Nominees in two promotional periods from April 2021 to September 2021
and April 2022 to February 2023.  Sales by each of Capital Communications, Empire, and
Compass exceeded one percent of Flexpoint stock in a three-month period.  Each of the entities’
sales were illegal because Clayton, as both an affiliate of Flexpoint and a beneficial owner of
each nominee’s shares, could not legally sell Flexpoint stock to the public in an unregistered
transaction.
FRAUDULENT SALES OF FOREVERGREEN STOCK
100. Since at least 2008, Clayton served as a director of ForeverGreen.  He became
ForeverGreen’s secretary in 2014 and its treasurer in 2020.  By virtue of owning over ten percent
of ForeverGreen stock, his positions with ForeverGreen, and his ability to direct its operations
and management, Clayton controlled ForeverGreen and therefore was an affiliate.
101. In 2022, Clayton requested from ForeverGreen a ledger of “my historical loans as
well as my current loans” and received a ledger identifying Empire and Capital Communications
loans as “John Clayton Notes.”
102. Clayton repeated his stock selling scheme in multiple rounds with ForeverGreen.
First Equity, Jackson, Perry, Rieu, Chesapeake, and Standard Registrar each repeated their roles

29
 
from the Flexpoint scheme.  Jackson assisted Clayton in removing restrictive legends, Standard
Registrar removed restrictive legends, Perry deposited shares in brokerage accounts on the basis
of false representations, Rieu and Chesapeake promoted ForeverGreen stock, and Clayton then
sold the stock to the investing public via Clayton Nominees.
103. Since at least 2014, Clayton Nominees have fraudulently sold over 2 million
shares of ForeverGreen.  These sales frequently exceeded the one percent per three-month period
volume limitation for affiliates.  In addition, Clayton failed to file forms related to his beneficial
ownership and disposition of stock as required by the federal securities laws, further concealing
his beneficial ownership of this stock from the public.
104. Rieu and Chesapeake engaged in promotional and trading activity designed to
allow Clayton to sell ForeverGreen stock into an artificial market.  For example, on December
19, 2018, Rieu sought additional promotion of ForeverGreen stock because, after issuing press
releases, Rieu was “[n]ot seeing the effect I thought we would get out of the news.”  Chesapeake
subsequently paid for a stock newsletter company to publish articles on ForeverGreen stock,
variously describing it as “Bargain Hunter’s Paradise?”, “Grossly Undervalued,” and
“Turnaround Underway.”  To artificially affect the market ForeverGreen stock, Rieu, acting on
his own behalf and through Chesapeake, traded in ForeverGreen stock on over 100 days.
105. Clayton, aided and abetted by Jackson, took additional deceptive steps in the
ForeverGreen scheme.  In 2020, a ForeverGreen officer raised concerns with ForeverGreen’s
auditors that the company had engaged in undisclosed related-party transactions with Clayton
Nominees including Jackson’s company Bryan Development.  ForeverGreen engaged Jackson—
despite Jackson’s relationship to Clayton and the investigation involving an entity controlled by
Jackson himself—to conduct an internal investigation to determine if the officer’s allegations

30
 
had merit.  Jackson’s investigation concluded that there were not undisclosed related-party
transactions.  Ultimately, Clayton, in his capacity as ForeverGreen’s board chairman, signed a
letter falsely representing to ForeverGreen’s auditors that the Clayton Nominees “Capital
Communications, Empire Funds Management [sic] . . . Liberty Partners, and Compass Equity
Partners are not currently related parties.”
FRAUDULENT TRANSACTIONS WITH KWIKCLICK STOCK
106. Since at least 2022, Clayton has been involved in the business of KwikClick.
Clayton at times owned more than ten percent of KwikClick stock and directed its operations and
management.  Clayton drafted press releases and dictated schedules for releases, managed
KwikClick’s stock listing process, drafted board resolutions and Commission filings, and had
full access to KwikClick’s corporate records.  In a text message dated October 14, 2023, Clayton
instructed KwikClick’s CEO to make Clayton “feel like I’m your partner and not someone who
has to ask to be involved with [the] ownership or profits.”
107. Together, Clayton Nominees at times held over twenty percent of KwikClick
shares in 2022 and over sixteen percent in 2023.  Clayton failed to file forms with the
Commission related to his beneficial ownership of stock as required by the federal securities
laws.
108. Despite knowing or recklessly not knowing that Clayton had engaged in
fraudulent stock selling schemes for years, Jackson continued to participate in Clayton’s
microcap activity as recently as 2024.  In 2022 and 2024, respectively, Jackson caused
Greenwich Street and Klaja Partners to purchase KwikClick stock that was beneficially owned
by Clayton.  In addition, Jackson—at Clayton’s direction—acted as the escrow agent for
acquisition of KwikClick stock by Clayton Nominees and others.  Finally, Jackson assisted

31
 
Clayton and KwikClick in responding to a regulatory inquiry concerning promotion and sale of
KwikClick stock.  KwikClick’s written response to the regulator was drafted and reviewed by
Jackson and Clayton.  The regulator asked KwikClick to identify a primary contact at Investrio,
which was a Clayton Nominee, and the letter falsely identified the nominal officer for Investrio
while concealing Clayton’s role.
109. Clayton had not sold the KwikClick stock through any known Clayton Nominee
at the time of the Commission’s investigation that led to this action.  Nonetheless, Clayton had
begun the stock promotional phase of his scheme which typically preceded his illicit sales, again
paying Chesapeake and working with Rieu.  In September 2023, Clayton directed Rieu to issue a
series of “6 new press releases” to boost KwikClick stock.  In November 2023, Clayton sought
from KwikClick’s CEO drafts of four “press releases ASAP” to aid “the market, values, and a
capital raise and market uplift.”
FRAUDULENT TRANSACTIONS WITH LZG INTERNATIONAL STOCK
110. Beginning by 2009, Clayton maintained LZG International as a public, non-
operating shell company with the purpose of merging with an operating microcap company.  The
same business associate whom Clayton installed as the nominal officer of Investrio also served
as the nominal officer of LZG International when it was a shell company, but that person had no
control over LZG International.  Instead, the business associate signed required Commission
filings and corporate documents as directed by Clayton or his staff.  The filings contained
various false statements, including that the business associate held stock in LZG International
and that LZG International owed moneys to certain of the Clayton Nominees.
111. Clayton, with Jackson’s assistance, arranged for LZG International to bring
FatBrain LLC public by acquiring its assets.  Following the acquisition, which took place on or

32
 
about October 23, 2021, Clayton at times owned more than five percent of LZG International
stock and directed its operations and management.  Clayton told LZG International management
when to pay certain invoices and he directly paid invoices on behalf of the company.  Clayton
drafted LZG International board resolutions and instructed a board member to sign such a
resolution.  Clayton also managed LZG International’s stock listing process.
112. Clayton used the Clayton Nominees to conceal his ownership of stock in LZG
International.  Clayton directly funded the Clayton Nominees’ acquisition of LZG International
Stock.  For example, on June 7, 2023, Clayton’s staff emailed Perry that “John [Clayton] has a
fairly significant acquisition of shares that will probably make . . . around 7.5 million dollars, do
we have a company that has big losses that we could buy it in and his thoughts were Investrio, or
would Compass, Liberty & Empire be best?”  Perry responded that he had reviewed draft tax
returns for Compass, Empire, Liberty and Maestro, but determined that “Investrio by far has the
biggest losses.”  The next day on June 8, 2023, Clayton directed his bank to “transfer $610,000
from First Equity’s . . . account into Investrio’s new account . . . [t]hen a wire of $600,000 needs
to be sent to the wire instruction below [to FatBrain] from Investrio’s account.”
113. Clayton, through the Clayton Nominees, has beneficially owned over six percent
and over seven percent of LZG International shares in 2023 and 2024, respectively.  Clayton
failed to file forms with the Commission related to his beneficial ownership of stock as required
by the federal securities laws.
114. Again, despite knowing or recklessly not knowing that Clayton had repeatedly
engaged in fraudulent microcap stock selling schemes, Jackson assisted Clayton with preparing
to sell LZG International stock in the public securities markets.  Jackson knew, or was reckless in
not knowing, that Clayton was an affiliate of LZG International.  Among other things, Jackson

33
 
worked closely with Clayton on LZG International’s transaction with FatBrain.  Following the
transaction, Jackson provided attorney opinion letters to assist Clayton in selling LZG
International stock.
115. Clayton had not yet sold LZG International stock through any known Clayton
Nominee at the time of the Commission investigation.  Clayton, however, had begun the process
of depositing stock with a brokerage firm on behalf of First Equity and the Clayton Nominees,
on the basis of false representations.
116. Clayton had also begun the stock promotional phase of his scheme, again paying
Chesapeake and working with Rieu.  For example, in August 2023, Clayton directed Rieu to
“take the financial release and split it in[to] two” press releases to boost LZG International stock.
Chesapeake and Rieu engaged in further promotional and trading activity.
RIEU AND CHESAPEAKE ENGAGED IN SECURITIES FRAUD
WITH CLAYTON AND INDEPENDENT OF CLAYTON
117. Rieu, as president of Chesapeake, gained knowledge about Chesapeake’s investor
relations clients and was privy to inside information about those companies.  He generally held
weekly calls with clients to stay apprised of their business and to discuss potential press releases
and the timing of those releases.  At all times relevant to this action, Chesapeake maintained a
written policy that prohibited employees, including Rieu, from owning or trading in client
securities to avoid employees abusing their access to the companies and trading while “privy to
inside information regarding that Client’s activities which may be deemed to be of a material
nature.”   Rieu, however, regularly traded in client securities in personal and Chesapeake
brokerage accounts.
118. Therefore, in addition to aiding and abetting Clayton’s scheme through investor
relations and promotional work, Rieu and Chesapeake violated the securities laws in three ways.

34
 
First, Rieu, acting on his own behalf and through Chesapeake, traded in client stock with the
intent of benefiting clients by artificially inflating the price of the stock and providing artificial
liquidity to the stocks.  Second, Rieu profited from his illegal trading on the basis of material
non-public information about a client stock.  Third, Rieu and Chesapeake touted clients to the
public without adequately disclosing their compensation, as required by law.
Rieu and Chesapeake Traded Stock to Artificially Affect Price and Trading Volume
119. Rieu often engaged in trading of Chesapeake client stock, not to generate a
trading profit but instead to artificially inflate the price and trading volume of client stocks to
attract investors to the stock.  For both Clayton and other clients, Rieu traded to boost his clients’
stock, so they would continue to compensate Chesapeake.  To do so, Rieu often traded to
stabilize a client’s stock price in falling markets.  Other trading took place around the time of
client press releases and was intended to condition the market ahead of the news.  Rieu, on his
own behalf and through Chesapeake, frequently traded in client securities, and the trading often
constituted a significant percentage of the market for client securities, as shown below:
Issuer
Days
Traded
Days Over 10% of
Traded Volume
Days Over 50% of
Traded Volume
C-Bond Systems  66 15 1
Flexpoint Sensor Systems             203             120             16
ForeverGreen Worldwide  131 104 50
LZG International  22 9 1
Pressure BioSciences  81 45 12
Rieu’s Fraudulent Trading in Clayton Issuer Stock
120. Rieu’s trading in Flexpoint, ForeverGreen, and LZG International was designed to
allow Clayton to sell stock at higher prices.  To incentivize Rieu to artificially inflate the price
and volume of Flexpoint and ForeverGreen specifically, Clayton paid Chesapeake a percentage,
often ten percent, of the overall amount of stock traded in the market, determined by multiplying

35
 
a stock’s average price by all trading volume.  For example, on June 4, 2020, Rieu sought
payment from Clayton by sending him a spreadsheet of “Chesapeake Activity” which showed
the market’s daily traded volume and price for Flexpoint and ForeverGreen.  Rieu identified a
period when the entire market traded $180,000 of Flexpoint and ForeverGreen, and Rieu
requested payment of at least $18,000 from Clayton.
121. Clayton knew that Rieu traded in the Clayton Issuers to artificially inflate the
price of Clayton Issuers.  For example, on February 19, 2019, Clayton emailed Rieu to give
guidance about “how you are currently trading.”  On September 11, 2019, Rieu promised
Clayton for ForeverGreen he would “get the stock [price] up,” and Rieu then purchased 42,217
ForeverGreen shares in Chesapeake accounts the following week.  In another instance with
Flexpoint, on August 25, 2020, Rieu wrote to Clayton asking for his payment because “we did
buy all the FLXT.”  Rieu, through Chesapeake, purchased 258,000 shares of Flexpoint in July
and August 2020.
Rieu’s Fraudulent Trading in Pressure BioSciences Stock
122. Separate from the above-described conduct concerning the Clayton Issuers, Rieu,
acting on his own and through Chesapeake, engaged in a coordinated campaign to artificially
increase the price and trading volume of client Pressure BioSciences’ stock.  Beginning in or
around September 2018, Pressure BioSciences engaged Chesapeake and two other firms for
stock promotional services.
123. On January 22, 2019, Rieu wrote to the other promotional firms memorializing an
agreement to trade in their own accounts to increase the price of Pressure BioSciences stock,
making it appear more attractive, while promoting the security to investors:
Ok team, Friday we all agreed to jump in early and get bids and
take the offer. Chesapeake has done 2000 [shares] at 2.30 and we

36
 
are the bid at 2.10 for 1500 [shares].  The 200 share bids are cute
but can we all jump in as discussed and get some real buying. . . .
Either Lead, Follow or get the f[***] out of the way.  We have
another 1000 [shares] coming at the offer in less then 10 minutes.

124. Rieu later wrote, “Love to get it to 2.60 today,” referring to the stock price.  The
trades described by Rieu were executed in Rieu’s personal brokerage account.  That day, January
22, 2019, Rieu entered orders to buy 6,500 shares and bought 3,000 shares.  In total, Pressure
BioSciences traded 6,800 shares and closed at $2.28 per share compared to 2,380 shares and
$2.20 per share the prior trading day.
125. On January 29, 2019, after Pressure BioSciences’ CEO instructed that a news
release “can’t fail,” i.e., could not fail to increase the price of Pressure BioSciences stock, Rieu-
controlled accounts entered orders to buy 3,500 shares and bought 938 shares.  Pressure
BioSciences traded 10,256 shares and closed at $2.64 per share compared to 2,828 shares and
$2.05 per share the prior trading day.
126. On June 12, 2019, Pressure BioSciences’ CEO wrote to Rieu that after issuing a
press release, “We need market support” and that “We have traded 100 shares today and the
highest current bid is $2.70.”  Rieu responded, “We have buying in at 2.90 and more coming.”
Around the same time as Rieu’s email, Chesapeake and Rieu accounts began sending buy orders
for 1,500 shares with limit prices at $2.80 per share and $2.90 per share, which had the effect of
increasing the price and liquidity of Pressure BioSciences stock.
Rieu’s Fraudulent Trading in C-Bond Systems Stock
127. While not in coordination with other firms, Rieu and Chesapeake traded to
artificially affect client C-Bond’s stock as well.  On April 14, 2021, C-Bond filed with the
Commission its 2020 annual report on Form 10-K, which provides important financial
information to investors.  The next day, on April 15, 2021, C-Bond’s CEO emailed Rieu with the

37
 
directive “Let’s bring it back by close!”  This was a directive to increase C-Bond’s stock price by
that day’s close of trading.  When the stock price decreased, Rieu wrote, “What’s going on? . . .
We have been buying a ton today. . . I personall[y] have bought 600,000 [shares] so far today.”
That day, Rieu bought 650,000 shares of C-Bond stock to arrest the falling stock price.
128. To further incentivize Rieu and Chesapeake’s artificial inflation of C-Bond stock,
beginning in or about October 2021, C-Bond used a compensation model similar to that of
Clayton, paying Chesapeake based on the average closing price of the stock.  On January 31,
2023, C-Bond’s CEO again complained about the price of C-Bond stock.  Rieu advertised his
buying with the hopes of continuing the engagement, stating, “I commit a lot of resources and $$
to the market every week.”
RIEU’S INSIDER TRADING IN SIDUS SPACE STOCK
129. In June 2022, Chesapeake client Sidus Space announced its participation in a
large NASA contract to build the next generation of space suits.  Following the news, Sidus
Space’s stock price rose over 200% from the previous day.  Rieu traded on the basis of material
non-public information about Sidus Space’s announcement, profiting in the amount of $28,641.
130. Chesapeake and Sidus Space entered into an agreement for investor relations
services on March 2, 2022.  Chesapeake and Rieu both owed a duty of confidence to Sidus
Space, and, as an investor relations firm, were temporary insiders of Sidus Space.  Rieu further
told Sidus Space’s CEO that Chesapeake had a duty of confidence to Sidus Space, assuring her
that Chesapeake “can’t share” and “never release[s]” news before it is public.
131. Rieu violated this duty by trading on the basis of his knowledge of drafts that
Sidus Space management provided to him for an upcoming June 15, 2022 press release.  On June
14, 2022 at 12:38 p.m., Rieu wrote to Sidus Space management stating that Sidus Space’s CEO
had requested “to have the draft sent to [Chesapeake’s COO] and I to help with edits.”  In

38
 
response, at 12:58 p.m., Sidus Space staff sent Rieu a draft of the press release concerning the
NASA spacesuit contract, and at 1:22 p.m., Chesapeake’s COO, copying Rieu, responded with
proposed edits to the press release.
132. Starting two minutes later, on June 14, 2022, between 1:24 p.m. and 5:36 p.m.,
Rieu purchased 5,066 shares of Sidus Space stock.
133. Sidus Space published the NASA contract press release at 9:00 a.m. on June 15,
2022.  Sidus Space’s stock price increased to $4.68 per share compared to a closing price of
$1.44 per share on June 14, 2022.  Rieu sold 5,000 shares of Sidus Space on June 15, 2022 at
9:32 a.m.
134. On June 15, 2022 at 1:20 p.m., Rieu wrote to Sidus Space’s CEO, “Big
difference, we were ready for this one, great release stock almost doubling.”
135. The following day, Sidus Space’s stock price continued to increase to over $7.00
per share, and on June 16, 2022, Rieu sold an additional 4,000 shares of Sidus Space stock held
in a relative’s brokerage account.  Rieu had acquired and attempted to sell those shares on the
basis of additional material non-public information the prior month.  Rieu bought the 4,000
shares on May 5, 2022 in a relative’s brokerage account after receiving from Sidus Space, on
May 3, 2022, a draft press release concerning a memorandum of understanding with an Indian
space company, and, on May 4, 2022, a draft quarterly financial report on SEC Form 10-Q.  Rieu
twice attempted to sell shares at higher prices after the release of these two pieces of news, but
he set limit prices that were too high, and his sale orders went unfilled.  Rieu was not able to
profit from his illegal trading until after the NASA contract press release.
136. Rieu knew, or was reckless in not knowing, that the draft press releases and draft
Commission filing he received on May 3, May 4, and June 14, 2022, were nonpublic.  Further, as

39
 
an investor relations consultant with decades of experience and who regularly opined on the
impact that press releases would have on the stock market, Rieu knew, or was reckless in not
knowing, that the information in these releases was material.
RIEU AND CHESAPEAKE ILLEGALLY TOUTED CLIENT STOCK
137. Since at least January 2019, Chesapeake promoted stock of various clients while
failing to disclose the compensation that Rieu and Chesapeake received for the promotions.
Chesapeake staff, at Rieu’s direction, engaged in mass email and calling campaigns to share
information and encourage investors to purchase the stock of Chesapeake clients.  To the extent
Chesapeake staff disclosed that Chesapeake was compensated, they disclosed only that
Chesapeake was “compensated, either directly or via a third party to provide investor relations
services.”  This disclosure failed to state the amount of compensation received by Chesapeake
and Rieu as is required by the securities laws.
138. Clayton paid Rieu and Chesapeake to promote Flexpoint, ForeverGreen, LZG
International, and KwikClick.  Other clients, Pressure BioSciences, C-Bond, and Sidus Space,
separately retained and compensated Chesapeake to promote their stock.
139. Rieu and Chesapeake executed statute of limitations tolling agreements with the
Commission tolling the period March 25, 2024 through August 23, 2024.
FIRST CLAIM FOR RELIEF
FRAUD IN THE OFFER OR SALE OF SECURITIES

Violations of Section 17(a)(2) of the Securities Act
(Clayton, First Equity)

140. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
141. By reason of the conduct described above, Clayton and First Equity, directly or
indirectly, in connection with the offer or sale of securities, by the use of the means or

40
 
instrumentalities of interstate commerce or of the mails, directly or indirectly, acting
intentionally, knowingly, recklessly, or negligently, obtained money or property by means of
untrue statements of material fact or by omitting to state material facts necessary in order to
make statements made, in the light of the circumstances under which they were made, not
misleading.
142. By reason of the conduct described above, Clayton and First Equity violated
Securities Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)] and will continue to violate that section
unless enjoined.
SECOND CLAIM FOR RELIEF
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder
(Clayton, First Equity)

143. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
144. By reason of the conduct described above, Clayton and First Equity, directly or
indirectly, in connection with the purchase or sale of securities, by the use of the means or
instrumentalities of interstate commerce or of the mails, or of any facility of any national
securities exchange, intentionally, knowingly, or recklessly made untrue statements of material
fact or omitted to state material facts necessary in order to make the statements made, in light of
the circumstances under which they were made, not misleading.
145. By reason of the conduct described above, Clayton and First Equity violated
Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5(b) [17 C.F.R. §
 240.10b-5(b)]
thereunder and will continue to violate that section and rule unless enjoined.

41
 
THIRD CLAIM FOR RELIEF
FRAUD IN THE OFFER OR SALE OF SECURITIES

Violations of Sections 17(a)(1) and (3) of the Securities Act
(Clayton, First Equity, Standard Registrar, Rieu, Chesapeake)

146. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
147. By reason of the conduct described above, Clayton, First Equity, Standard
Registrar, Rieu, and Chesapeake, directly or indirectly, in connection with the offer or sale of
securities, by the use of the means or instrumentalities of interstate commerce or of the mails,
directly or indirectly, acting intentionally, knowingly, recklessly, or negligently: (i) employed
devices, schemes, or artifices to defraud; and (ii) engaged in transactions, practices, or courses of
business which operated or would operate as a fraud or deceit upon any persons, including
purchasers or sellers of securities.
148. By reason of the conduct described above, Clayton, First Equity, Standard
Registrar, Rieu, and Chesapeake violated Securities Act Sections 17(a)(1) and (3) [15 U.S.C.
§ 77q(a)(1) and (3)] and will continue to violate those sections unless enjoined.
FOURTH CLAIM FOR RELIEF
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES

Violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder
(Clayton, First Equity, Standard Registrar, Rieu, Chesapeake)

149. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
150. By reason of the conduct described above, Clayton, First Equity, Standard
Registrar, Rieu, and Chesapeake, directly or indirectly, in connection with the purchase or sale of
securities, by the use of the means or instrumentalities of interstate commerce or of the mails, or

42
 
of any facility of any national securities exchange, intentionally, knowingly, or recklessly: (i)
employed devices, schemes, or artifices to defraud; and (ii) engaged in acts, practices, or courses
of business which operated or would operate as a fraud or deceit upon any persons, including
purchasers or sellers of securities.
151. By reason of the conduct described above, the Clayton, First Equity, Standard
Registrar, Rieu, and Chesapeake violated Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and
Rules 10b-5(a) and (c) thereunder [17 C.F.R. §
 240.10b-5(a) and (c)] and will continue to violate
that section and those rules unless enjoined.
FIFTH CLAIM FOR RELIEF
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES
INSIDER TRADING

Violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder
(Rieu)

152. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
153. By reason of the conduct described above, Rieu, directly or indirectly, in
connection with the purchase or sale of securities, by the use of the means or instrumentalities of
interstate commerce or of the mails, or of any facility of any national securities exchange,
intentionally, knowingly, or recklessly, (i) employed devices, schemes, or artifices to defraud;
and (ii) engaged in acts, practices, or courses of business which operated or would operate as a
fraud or deceit upon any persons, including purchasers or sellers of securities.
154. By reason of the conduct described above, Rieu violated Exchange Act Section
10(b) [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. §
 240.10b-5(a) and
(c)] and will continue to violate that section and those rules unless enjoined.

43
 
SIXTH CLAIM FOR RELIEF
UNREGISTERED OFFERINGS OF SECURITIES

Violations of Sections 5(a) and 5(c) of the Securities Act
(Clayton, Jackson, Standard Registrar)

155. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
156. By reason of the conduct described above, Clayton, Jackson, and Standard
Registrar, directly or indirectly: (a) made use of the means or instruments of transportation or
communication in interstate commerce or of the mails to sell, through the use or medium of a
prospectus or otherwise, Flexpoint securities as to which no registration statement has been in
effect and for which no exemption from registration has been available; and/or (b) made use of
the means or instruments of transportation or communication in interstate commerce or of the
mails to offer to sell, through the use or medium of a prospectus or otherwise, Flexpoint
securities, as to which no registration statement has been filed.
157. As a result, Clayton, Jackson, and Standard Registrar violated Section 5(a) and (c)
of the Securities Act [15 U.S.C. § 77e(a) and (c)] and will continue to violate those sections
unless enjoined.
SEVENTH CLAIM FOR RELIEF
AIDING AND ABETTING

Aiding and Abetting Violations of Section 17(a)(1) and (3) of the Securities Act
(Jackson, Perry, Mower, Rieu, Chesapeake)
158. Paragraphs 1 through 139 above are re-alleged an incorporated by reference as if
fully set forth herein.
159. By reason of the conduct described above, Clayton and First Equity, directly or
indirectly, in the offer or sale of securities, by the use of the means or instrumentalities of
interstate commerce or of the mails, or of any facility of any national securities exchange,

44
 
intentionally, knowingly, recklessly, or negligently: (i) employed devices, schemes, or artifices
to defraud; and (ii) engaged in transactions, practices, or courses of business which operated or
would operate as a fraud or deceit upon any persons, including purchasers or sellers of securities.
160. Jackson, Perry, Mower, Rieu, and Chesapeake each knowingly or recklessly
provided substantial assistance to Clayton and First Equity in their violations of Section 17(a)(1)
and (3) of the Securities Act.  Therefore, per Section 15(b) of the Securities Act [15 U.S.C.
§ 77o(b)], Jackson, Perry, Mower, Rieu, and Chesapeake each violated Sections 17(a)(1) and (3)
of the Securities Act and will continue to violate those sections unless enjoined.
EIGHTH CLAIM FOR RELIEF
AIDING AND ABETTING

Aiding and Abetting Violations of Section 10(b) of the
Exchange Act and Rules 10b-5(a) and (c) Thereunder
(Jackson, Perry, Mower, Rieu, Chesapeake)
161. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
162. By reason of the conduct described above, Clayton and First Equity, directly or
indirectly, in connection with the purchase or sale of securities, by the use of the means or
instrumentalities of interstate commerce or of the mails, or of any facility of any national
securities exchange, intentionally, knowingly, or recklessly: (i) employed devices, schemes, or
artifices to defraud; and (ii) engaged in acts, practices, or courses of business which operated or
would operate as a fraud or deceit upon any persons, including purchasers or sellers of securities.
163. Jackson, Perry, Mower, Rieu, and Chesapeake knowingly or recklessly provided
substantial assistance to Clayton and First Equity in their violations of Section 10(b) of the
Exchange Act and Rules 10b-5(a) and (c) thereunder.  Therefore, per Section 20(e) of the
Exchange Act [15 U.S.C. § 78t(e)], Jackson, Perry, Mower, Rieu, and Chesapeake each violated

45
 
Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder and will continue to
violate that section and those rules unless enjoined.
NINTH CLAIM FOR RELIEF
FAILURE TO DISCLOSE SECURITIES HOLDINGS

Violation of Section 13(d) of the Exchange Act and Rule 13d-1 thereunder
(Clayton)
164. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
165. Pursuant to Exchange Act Section 13(d) and Rule 13d-1 thereunder, persons who
are directly or indirectly the beneficial owners of more than five percent of the outstanding
shares of a class of voting equity securities registered under the Exchange Act are required to file
a Schedule 13D within ten days of the date on which their ownership exceeds five percent.
166. Clayton had an obligation to file with the Commission true and accurate reports
with respect to his ownership of Flexpoint, KwikClick, and LZG International stock pursuant to
Exchange Act Section 13(d) and Rule 13d-1 thereunder, but failed to do so.
167. By reason of the foregoing, Clayton violated, and, unless enjoined and restrained
will continue to violate, Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)] and Rule 13d-1
thereunder [17 C.F.R. § 240.13d-1].
TENTH CLAIM FOR RELIEF
FAILURE TO DISCLOSE SECURITIES HOLDINGS

Violations of Section 16(a) of the Exchange Act and Rule 16a-3 thereunder
(Clayton)
168. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
169. Clayton, after acquiring, directly or indirectly, the beneficial ownership of more
than ten percent of a class of equity securities of Flexpoint and KwikClick registered pursuant to

46
 
Section 12 of the Exchange Act [15 U.S.C. § 78l], failed to file with the Commission a Form 3
providing an initial statement of beneficial ownership and, after effecting transactions in the
securities, failed to file with the Commission Forms 4 and 5 providing statements of changes in
beneficial ownership.
170. By reason of the foregoing, Clayton has violated, and unless restrained and
enjoined will in the future violate, Section 16(a) of the Exchange Act [15 U.S.C. § 78p(a)] and
Rule 16a-3 thereunder [17 C.F.R. § 240.16a-3].
ELEVENTH CLAIM FOR RELIEF
UNLAWFUL TOUTING

Violations of Section 17(b) of the Securities Act
(Rieu, Chesapeake)
171. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
172. By their conduct alleged herein, Rieu and Chesapeake, by the use of any means or
instruments of transportation or communication in interstate commerce or by the use of the
mails, published, gave publicity to, or circulated a notice, advertisement, or communication,
which, though not purporting to offer a security for sale, described a security, for a consideration
received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without
fully disclosing the receipt of such consideration and the amount thereof.
173. Rieu and Chesapeake thus violated, and unless restrained and enjoined will
continue to violate, Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)].

47
 
TWELFTH CLAIM FOR RELIEF
OTHER EQUITABLE RELIEF, INCLUDING
UNJUST ENRICHMENT AND CONSTRUCTIVE TRUST

(Relief Defendants)
174. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if
fully set forth herein.
175. Section 21(d)(5) of the Exchange Act states, “In any action or proceeding brought
or instituted by the Commission under any provision of the securities laws, the Commission may
seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary
for the benefit of investors.”
176. Relief Defendants received ill-gotten funds by means of a fraudulent stock selling
scheme.  Relief Defendants have no legitimate claim to this property.  In equity and good
conscience, Relief Defendants should not be allowed to retain such funds.
177. As a result, Relief Defendants are liable for unjust enrichment and should each be
required to return their share of ill-gotten gains, in an amount to be determined by the Court.
The Court should also impose a constructive trust on the ill-gotten gains in the possession of
Relief Defendants.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court grant the following
relief:
I.
Enter a Final Judgment permanently restraining and enjoining Defendants, as well as
their agents, servants, employees, attorneys, and those persons in active concert or participation
with them, from directly or indirectly engaging in the conduct described above, or in conduct of
similar purpose and effect, in violation of Section 17(a) of the Securities Act [15 U.S.C.

48
 
§ 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.
 Enter a Final Judgment permanently enjoining Clayton, Jackson, and Standard Registrar,
as well as their officers, agents, servants, employees, attorneys, and those persons in active
concert or participation with them who receive actual notice of the injunction by personal service
or otherwise, and each of them, from violating Section 5(a) and 5(c) of the Securities Act
[15 U.S.C. § 77e(a) and (c)];
III.
Enter a Final Judgment permanently enjoining Clayton, as well as his officers, agents,
servants, employees, attorneys, and those persons in active concert or participation with them
who receive actual notice of the injunction by personal service or otherwise, and each of them,
from violating Sections 13(d) and 16(a) of the Exchange Act [15 U.S.C. §§ 78m(d) and 78p(a)],
and Rules 13d-1 and 16a-3 thereunder [17 C.F.R. §§ 240.13d-1 and 240.16a-3];
IV.
Enter a Final Judgment permanently enjoining Rieu and Chesapeake, as well as their
officers, agents, servants, employees, attorneys, and those persons in active concert or
participation with them who receive actual notice of the injunction by personal service or
otherwise, and each of them, from violating Section 17(b) of the Securities Act [15 U.S.C. §
77q(b)];

49
 
V.
Enter a Final Judgment ordering Defendants to disgorge their ill-gotten gains and pay
prejudgment interest thereon pursuant to Sections 21(d)(5) and (7) of the Exchange Act [15
U.S.C. § 78u(d)(5) and (7)];
VI.
Enter a Final Judgment imposing civil money penalties upon Defendants 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)];
VII.
Enter a Final Judgment prohibiting Defendants from participating in any offering of a
penny stock, pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and Section
21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)];
VIII.
Enter a Final Judgment barring Clayton, Jackson, Perry, Mower, and Rieu from acting as
an officer or director of any public company, pursuant to Section 20(e) of the Securities Act [15
U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)];
IX.
Enter a Final Judgment permanently enjoining Clayton from directly or indirectly,
including, but not limited to, through any entity owned or controlled by Clayton: (i) participating
in the issuance, purchase, offer, or sale of any security; (ii) being the controlling shareholder of
any issuer (which term “controlling shareholder” means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of an issuer, whether
through the ownership of voting securities, by contract, or otherwise); (iii) promoting any issuer

50
 
of any security, causing the promotion of any issuer of any security, or deriving compensation
from the promotion of any issuer of any security; for purposes of this injunction, “promoting” or
“promotion” means, for direct or indirect compensation or pecuniary benefit, directly or
indirectly, engaging in, publishing, giving publicity to, or circulating any communication, the
goal of which is to generate interest in any security; or (iv) soliciting any person or entity to
purchase or sell any security, or to hold any security, as nominee; provided, however, that such
injunction shall not prevent Clayton from purchasing or selling securities listed on a national
securities exchange for his own personal account;
X.
Enter a Final Judgment permanently enjoining First Equity from directly or indirectly,
including, but not limited to, through any entity owned or controlled by First Equity:
(i) participating in the issuance, purchase, offer, or sale of any security; (ii) being the controlling
shareholder of any issuer (which term “controlling shareholder” means the possession, direct or
indirect, of the power to direct or cause the direction of the management and policies of an
issuer, whether through the ownership of voting securities, by contract, or otherwise); or
(iii) promoting any issuer of any security, causing the promotion of any issuer of any security, or
deriving compensation from the promotion of any issuer of any security; for purposes of this
injunction, “promoting” or “promotion” means, for direct or indirect compensation or pecuniary
benefit, directly or indirectly, engaging in, publishing, giving publicity to, or circulating any
communication, the goal of which is to generate interest in any security;
XI.
Enter a Final Judgment permanently enjoining Perry from directly or indirectly,
including, but not limited to, through any entity owned or controlled by Perry, participating in
the issuance, purchase, offer, or sale of any security; provided, however, that such injunction

51
 
shall not prevent Perry from purchasing or selling securities listed on a national securities
exchange for his own personal account;
XII.
Enter a Final Judgment permanently enjoining Rieu from directly or indirectly, including,
but not limited to, through any entity owned or controlled by Rieu: (i) participating in the
issuance, purchase, offer, or sale of any security; (ii) promoting any issuer of any security,
causing the promotion of any issuer of any security, or deriving compensation from the
promotion of any issuer of any security; for purposes of this injunction, “promoting” or
“promotion” means, for direct or indirect compensation or pecuniary benefit, directly or
indirectly, engaging in, publishing, giving publicity to, or circulating any communication, the
goal of which is to generate interest in any security; or (iii) soliciting any person or entity to
purchase or sell any security, or to hold any security, as nominee; provided, however, that such
injunction shall not prevent Rieu from purchasing or selling securities listed on a national
securities exchange for his own personal account;
XIII.
Enter a Final Judgment permanently enjoining Chesapeake from directly or indirectly:
(i) participating in the issuance, purchase, offer, or sale of any security; (ii) promoting any issuer
of any security, causing the promotion of any issuer of any security, or deriving compensation
from the promotion of any issuer of any security; for purposes of this injunction, “promoting” or
“promotion” means, for direct or indirect compensation or pecuniary benefit, directly or
indirectly, engaging in, publishing, giving publicity to, or circulating any communication, the
goal of which is to generate interest in any security; or (iii) soliciting any person or entity to
purchase or sell any security, or to hold any security, as nominee;

52
 
XIV.
Enter a Final Judgment ordering Relief Defendants to disgorge their ill-gotten gains and
pay prejudgment interest thereon
 pursuant to Section 21(d)(5) and (7) of the Exchange Act [15
U.S.C. § 78u(d)(5) and (7)]; and
XV.
Granting such other and further relief as this Court deems just and proper.
JURY DEMAND
Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff demands that this
case be tried to a jury.

DATED: December 11, 2024.   Respectfully submitted,
/s/            Michael            C.            Moran
Michael C. Moran (Mass. Bar No. 666885)
Russell A. Mawn (Mass. Bar No. 712095)
Alexandra B. Lavin (Mass. Bar No. 687785)
Jeffrey Olshan (Mass Bar. No. 693337)
SECURITIES AND EXCHANGE
COMMISSION
Boston Regional Office
33 Arch St., 24th Floor
Boston, MA 02110
Phone:  617-573-8931 (Moran direct)
Email:  [email protected]
Fax:      617-573-4590

Michael C. Moran 
Russell A. Mawn 
Alexandra B. Lavin 
Jeffrey Olshan 
Attorneys for Plaintiff 
Securities and Exchange Commission 
33 Arch Street, 24th Floor 
Boston, MA 02110 
(617) 573-8931 (Moran direct) 
[email protected] 

 
 

UNITED STATES DISTRICT COURT 
DISTRICT OF UTAH, CENTRAL DIVISION 

 

 
SECURITIES AND EXCHANGE 
COMMISSION, 

   Plaintiff, 
 v. 
 
JOHN S. CLAYTON, FIRST EQUITY 
HOLDINGS CORP., STANDARD 
REGISTRAR AND TRANSFER CO., 
INC., DANIEL W. JACKSON, DONALD 
H. PERRY, CLARK M. MOWER, 
TIMOTHY J. RIEU, AND 
CHESAPEAKE GROUP, INC., 
 
   Defendants, 
 

and 
 

BRYAN DEVELOPMENT, LLC, 
CAPITAL COMMUNICATIONS, INC., 
COMPASS EQUITY PARTNERS, INC., 
EMPIRE FUND MANAGERS, INC., 
GREENWICH STREET COMMERCIAL 
MORTGAGE, LLC, INVESTRIO, INC., 
KLAJA PARTNERS, LLC, LIBERTY 
PARTNERS, LLC, AND MAESTRO 
INVESTMENTS, INC., 
 
   Relief Defendants. 
 

 
 
         
 Case No.: 2:24-cv-918 
  
 
        COMPLAINT 
 JURY TRIAL DEMANDED 
 
 

Case 2:24-cv-00918   Document 1   Filed 12/11/24   PageID.1   Page 1 of 52



2 
 

 

COMPLAINT 

 Plaintiff, United States Securities and Exchange Commission (the “Commission” or the 

“SEC”), alleges as follows against Defendants John S. Clayton (“Clayton”), First Equity 

Holdings Corp. (“First Equity”), Standard Registrar and Transfer Co., Inc. (“Standard 

Registrar”), Daniel W. Jackson (“Jackson”), Donald H. Perry (“Perry”), Clark M. Mower 

(“Mower”), Timothy J. Rieu (“Rieu”), and Chesapeake Group, Inc. (“Chesapeake”), and Relief 

Defendants Bryan Development, LLC (“Bryan Development”), Capital Communications, Inc. 

(“Capital Communications”), Compass Equity Partners, Inc. (“Compass”), Empire Fund 

Managers, Inc. (“Empire”), Greenwich Street Commercial Mortgage, LLC (“Greenwich Street”), 

Investrio, Inc. (“Investrio”), Klaja Partners, LLC (“Klaja Partners”), Liberty Partners, LLC 

(“Liberty Partners”), and Maestro Investments, Inc. (“Maestro”): 

SUMMARY 

1. From at least 2014 to 2024, Clayton engaged in a securities fraud scheme to 

secretly amass and then illegally sell stock of small, publicly traded companies.  Clayton hid his 

stock ownership from investors, brokerage firms, and regulators, by spreading his shares among 

business entities that he secretly controlled, each of them a Relief Defendant (hereafter, the 

“Clayton Nominees”).  While concealing his stock ownership, Clayton retained Rieu, and Rieu’s 

investor relations firm, Chesapeake, to promote the stock to investors and to increase the price 

and trading volume of the stock.  Clayton then illegally sold his shares in the public securities 

markets at inflated prices, leaving behind harmed investors after the price and trading volume 

fell.   

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2. Clayton engaged in numerous deceptions to conceal his involvement and further 

his scheme.  Clayton paid third parties to act as nominal heads of the Clayton Nominees.  In turn, 

Clayton impersonated the heads of the Clayton Nominees when communicating with at least one 

brokerage firm.  He used blank checkbooks, pre-signed by the head of each Clayton Nominee, to 

move money.  And, after learning of the Commission’s investigation that led to this action, 

Clayton used a pre-paid cell phone—commonly known as a “burner phone”—to communicate 

with Rieu and directed Rieu to himself procure a burner phone.   

3. Clayton’s sales were intended to defraud investors.  He deliberately avoided 

fundamental safeguards under the federal securities laws designed to protect the investing public 

by informing investors about the nature of the stock being sold and the significant holders of that 

stock.  Clayton engaged in transactions that were illegal under the federal securities laws because 

they were neither registered with the Commission under Section 5 of the Securities Act of 1933 

(“Securities Act”) nor exempt from registration.  Clayton’s multifaceted scheme, however, made 

it appear that his sales were exempt from such registration.  Clayton was an “affiliate” of the 

companies whose stock he sold, and he therefore faced a legal limit on how much stock he could 

sell at any one time in unregistered transactions.  By concealing stock among the Clayton 

Nominees, Clayton avoided the legal limitations on sales by affiliates, and avoided reporting his 

stock ownership as required by federal law, while dumping significant amounts of stock into 

public securities markets.            

4. Clayton often obtained stock from loans that he made, or purported to make, to 

public companies through the Clayton Nominees.  The loans were convertible into stock, which 

Clayton, through the Clayton Nominees, then illegally sold.  To the extent that Clayton’s 

convertible loans actually took place—i.e., were not fabricated as part of his scheme—Clayton’s 

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scheme was designed for him to avoid risk by converting the loans to stock at low prices and 

then illegally selling that stock to the public at higher prices during stock promotional 

campaigns.     

5. Clayton carried out his fraud, in part, through his companies First Equity and 

Standard Registrar.  Clayton was aided and abetted in his scheme by Jackson, Perry, Mower, 

Rieu, and Chesapeake.   

6. Jackson is an attorney who shared an office with Clayton and worked with him on 

microcap securities matters for decades.  Jackson issued letters falsely representing that the 

Clayton Nominees were not affiliates of the companies with stock that Clayton planned to sell as 

part of the scheme, providing a fraudulent paper trail necessary for Clayton to sell the stock.   

7. Perry also worked for decades as Clayton’s bookkeeper, managing multiple bank 

and brokerage accounts for the numerous Clayton Nominees.  Perry prepared and delivered 

materially false information to brokerage firms to facilitate the illegal sale of stock.  Perry acted 

on behalf of multiple Clayton Nominees, including one, Empire, that was purportedly run by 

Perry’s wife.  Perry worked with Clayton to forge Perry’s wife’s signature on documentation 

relating to a brokerage account.  Perry at other times arranged for his wife to sign Empire-related 

documents. 

8. Mower was CEO of one of the companies whose stock Clayton sold, and Mower 

provided Clayton with falsified documentation necessary to the sale of the company’s stock.   

9. Rieu and his company Chesapeake were stock promoters whom Clayton retained 

to publicly promote, and increase the price and liquidity of, the stock that Clayton sold.  Rieu, 

acting on his own behalf and through Chesapeake, engaged in fraudulent trading with the 

purpose of deceiving the public about the true demand for the securities that Clayton planned to 

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sell as part of his scheme.  Rieu, again acting on his own behalf and through Chesapeake, also 

engaged in deceptive trading for other clients—separate and apart from Clayton.  Further, Rieu 

engaged in insider trading in the stock of one of Chesapeake’s clients.   

10. Finally, as part of the scheme, Clayton used Standard Registrar, which is a stock 

transfer agent that he has owned since 2017, to remove the restrictive legends from stocks, which 

allowed them to be sold publicly.  Jackson has served on Standard Registrar’s board of directors 

since 2017.  Clayton and Jackson knew or recklessly ignored that Standard Registrar removed 

restrictive legends on false pretenses.               

NATURE OF THE PROCEEDING AND RELIEF SOUGHT 

11. The Commission brings this action pursuant to the authority conferred upon it by 

Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d)(1) of the Securities 

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

12. The Commission seeks: (i) against Defendants, permanent injunctions, enjoining 

them from engaging in the transactions, acts, practices, and courses of business alleged in this 

Complaint, including enjoining them from committing or engaging in specified actions or 

activities relevant to violations charged herein; (ii) against Defendants and Relief Defendants, 

disgorgement of all ill-gotten gains from the unlawful conduct set forth in this Complaint, 

together with prejudgment interest, under Sections 21(d)(5) and (7) of the Exchange Act [15 

U.S.C. §§ 78u(d)(5) and (7)]; (iii) against Defendants, civil penalties 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) against Defendants, orders barring them from participating in any offering of a 

penny stock, pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and Section 

21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)]; (v) against Clayton, First Equity, Perry, 

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Rieu, and Chesapeake, further permanent injunctive relief prohibiting activity related to their 

misconduct; (vi) against Clayton, Jackson, Perry, Mower, and Rieu, orders barring them from 

acting as an officer or director of any public company, pursuant to Section 20(e) of the Securities 

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

(vii) such other relief as the Court may deem appropriate.     

JURISDICTION AND VENUE 

13. This Court has subject-matter jurisdiction over this action pursuant to Sections 

20(d)(1) and 22(a) of the Securities Act [15 U.S.C. §§ 77t(d)(1) and 77v(a)] and Sections 21(d), 

21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), 78aa].   

14. The Court has personal jurisdiction over Defendants and Relief Defendants 

because, among other things, all Defendants reside in the United States and all Relief Defendants 

have principal places of business and transact business in the United States. 

15. Venue lies in this district pursuant to Section 22(a) of the Securities Act [15 

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

Standard Registrar, Jackson, Perry, and Mower reside in this District and have transacted 

business in this District.  Each of the Relief Defendants resides in this District and conducts 

business in this District.  Rieu and Chesapeake transacted business with Clayton and/or his 

business entities while Clayton was located in this District.  Rieu periodically traveled to this 

District to meet with Clayton concerning business transactions.       

16. In connection with the transactions, acts, practices, and courses of business 

alleged in this Complaint, Defendants, directly or indirectly, singly or in concert, made use of the 

means or instrumentalities of transportation or communication in interstate commerce, or the 

mails.   

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DEFENDANTS 

17. John S. Clayton, age 60, resides in Salt Lake City, Utah.  Clayton is self-

employed and is the manager and beneficial owner of First Equity and the owner of Standard 

Registrar.  Clayton has also served as an officer and director of ForeverGreen Worldwide, Corp.         

18. First Equity Holdings Corp. is a Delaware corporation with its principal place 

of business in Salt Lake City, Utah.  First Equity is an operating entity through which Clayton 

purchases and manages real estate as well as securities.  Clayton is the beneficial owner of First 

Equity, and Jackson is its registered agent.   

19. Standard Registrar & Transfer Company, Inc. is a Utah corporation with its 

principal place of business in Salt Lake City, Utah.  Standard Registrar is registered as a transfer 

agent with the Commission.  Clayton has owned Standard Registrar since 2017 and Jackson has 

been a Standard Registrar director since 2017.   

20. Daniel W. Jackson, age 73, resides in Salt Lake City, Utah.  Jackson is an 

attorney and has served as manager of Bryan Development and Greenwich Street.  Jackson is the 

registered agent for First Equity and Standard Registrar, as well as for Klaja Partners and 

Investrio.  Jackson has been a director of Standard Registrar since 2017.   

21. Donald H. Perry, age 82, resides in Mount Pleasant, Utah.   

22. Clark M. Mower, age 77, resides in Woods Cross, Utah.  Mower is the president 

and Chief Executive Officer of Flexpoint Sensor Systems, Inc.   

23. Timothy J. Rieu, age 65, resides in West Friendship, Maryland.  He is the 

founder and president of Chesapeake.   

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24. Chesapeake Group, Inc., is a Nevada corporation with its principal place of 

business in Maryland.  Chesapeake engages in stock promotion and describes itself as an 

“investor relations” firm. 

RELIEF DEFENDANTS 

25. Bryan Development, LLC is a Utah corporation with its principal place of 

business in Salt Lake City, Utah. 

26. Capital Communications, Inc. is a Wyoming corporation with its principal place 

of business in Salt Lake City, Utah. 

27. Compass Equity Partners, Inc. is a Wyoming corporation with its principal 

place of business in Salt Lake City, Utah.   

28. Empire Fund Managers, Inc. is a Wyoming corporation with its principal place 

of business in Salt Lake City, Utah.   

29. Investrio, Inc. is a Wyoming corporation with its principal place of business in 

Salt Lake City, Utah.   

30. Greenwich Street Commercial Mortgage, LLC is a Delaware corporation with 

its principal place of business in Salt Lake City, Utah. 

31. Klaja Partners LLC is a Utah corporation with its principal place of business in 

Salt Lake City, Utah. 

32. Liberty Partners, LLC is a Wyoming corporation with its principal place of 

business in Sandy, Utah. 

33. Maestro Investments, Inc. is a Wyoming corporation with its principal place of 

business in Salt Lake City, Utah. 

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THE MICROCAP COMPANIES 

34. Defendants’ illegal conduct involved stock of microcap companies.  Microcap 

companies include companies with stock that trades at less than $5.00 per share, which are 

commonly known as “penny stocks.”  Defendants’ actions generally, though not exclusively, 

involved stock traded in the over-the-counter (“OTC”) securities market using “alternative 

trading systems” (“ATSs”), rather than on the NASDAQ, New York Stock Exchange, or any 

other national securities exchange.         

Microcap Issuers with Stock Involved in Clayton’s Scheme 

35. Flexpoint Sensor Systems, Inc. (“Flexpoint”) is a Delaware corporation, with its 

principal place of business in West Jordan, Utah, that manufactures thin-film sensor technology.  

Its common stock is registered with the Commission under Section 12(g) of the Exchange Act 

and is quoted on OTC Link ATS under the symbol “FLXT.” 

36. ForeverGreen Worldwide Corp. (“ForeverGreen”) was a Nevada corporation, 

with its principal place of business in Lindon, Utah, that used multi-level marketing to sell meal 

replacement shakes, nutritional beverages, and marine phytoplankton products.  Its common 

stock was registered with the Commission under Section 12(g) of the Exchange Act and was 

quoted on OTC Link ATS under the symbol “FVRG.”  On July 29, 2021, the Commission 

revoked the registration of each class of ForeverGreen’s securities pursuant to Section 12(j) of 

the Exchange Act.  ForeverGreen subsequently ceased operations.  

37. KwikClick, Inc. (“KwikClick”) is a Delaware corporation, with its principal 

place of business in Bountiful, Utah, that operates an online referral software platform.  Its 

common stock is registered with the Commission under Section 12(g) of the Exchange Act and 

is quoted on OTC Link ATS under the symbol “KWIK.” 

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38. LZG International Inc. (“LZG International”) was a Florida corporation, with its 

principal place of business in New York, New York.  In 2021, it acquired the assets of an 

artificial intelligence technology company, FatBrain, LLC.  Its common stock was registered 

with the Commission under Section 12(g) of the Exchange Act and was quoted on OTC Link 

ATS under the symbol “LZGI.”  In 2024, LZG International merged with Genius Group Limited, 

and currently trades on the NYSE American exchange under the symbol “GNS.” 

Additional Microcap Clients of Rieu and Chesapeake 

39. C-Bond Systems, Inc. (“C-Bond”) is a Colorado corporation, with its principal 

place of business in Houston, Texas, that operates a nanotechnology company.  Its common 

stock is registered with the Commission under Section 12(g) of the Exchange Act and is quoted 

on OTC Link ATS under the symbol “CBNT.” 

40. Pressure BioSciences, Inc. (“Pressure BioSciences”) is a Massachusetts 

corporation, with its principal place of business in Canton, Massachusetts, that develops high-

pressure technology-based instruments.  Its common stock is registered with the Commission 

under Section 12(g) of the Exchange Act and is quoted on OTC Link ATS under the symbol 

“PBIO.” 

41. Sidus Space, Inc. (“Sidus Space”) is a Delaware corporation, with its principal 

place of business in Merritt Island, Florida, that operates a commercial aerospace company.  Its 

common stock is registered with the Commission under Section 12(b) of the Exchange Act and 

is listed on NASDAQ under the symbol “SIDU.”   

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FACTUAL ALLEGATIONS 

Background 

42. Clayton’s scheme used stock that was issued by a microcap company (the stock’s 

“issuer”) as “restricted” in its ability to be sold.  The stock was issued in transactions that were 

not registered with the Commission.  Restricted stock bears a legend stating that it is restricted.  

Absent an exemption under the federal securities laws and rules, restricted stock cannot legally 

be offered or sold to the public unless a securities registration statement has been filed with the 

Commission (for an offer) or is in effect (for a sale).   

43. An “affiliate” of an issuer is a person or entity, like Clayton, that directly or 

indirectly through one or more intermediaries, controls, is controlled by, or is under common 

control with, such issuer (i.e., a control person).  “Control” means the power to direct the 

management and policies of the company in question.  Affiliates include officers, directors and 

controlling shareholders, as well as any person who is under common control with, or has 

common control of, an issuer.  Clayton was at all relevant times an affiliate of Flexpoint, 

ForeverGreen, KwikClick, and LZG International (the “Clayton Issuers”).   

44. A “transfer agent,” like Standard Registrar, is a company which, among other 

things, issues and cancels certificates of a company’s stock to reflect changes in ownership.  

Many companies that have publicly traded securities use transfer agents to keep track of the 

individuals and entities that own their stock.  Transfer agents also track whether shares are 

restricted from resale.  Clayton has owned Standard Registrar since 2017 and had access to 

transfer agent records for each of the Clayton Issuers.  Jackson has served as a Standard 

Registrar director since 2017. 

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45. One exemption to the registration requirements of the federal securities laws is 

contained in Section 4(a)(1) of the Securities Act, which exempts “transactions by any person 

other than an issuer, underwriter, or dealer.”  In turn, Rule 144 under the Securities Act [17 

C.F.R. § 240.144] provides a set of conditions, commonly referred to as a safe harbor, for a seller 

of stock to avoid acting as an underwriter.   

46. As a critical impediment to Clayton’s scheme, the Rule 144 safe harbor limits the 

amount of stock that an affiliate can publicly sell in an unregistered transaction.  As applicable 

here, affiliates were limited to selling during a three-month period an amount equal to one 

percent of all of a company’s outstanding shares.   

47. Transfer agents often require an attorney opinion letter stating that the 

requirements of Rule 144 have been met, including representations about whether the 

stockholder is an affiliate, before removing restrictive legends from stock on the basis of the 

Rule 144 safe harbor.  Brokerage firms also rely on attorney opinion letters in accepting their 

customers’ deposit of stock obtained in unregistered transactions.     

48. Jackson issued at least fourteen attorney opinion letters relevant to this action.  

Jackson opined in pertinent letters that the Rule 144 conditions were met and that the transfer 

agent (Standard Registrar) could remove restrictive legends.  Jackson’s letters often included the 

proviso that “[i]n issuing this opinion, I am aware that you and the Company’s shareholders and 

broker-dealers may rely upon this opinion, and I hereby give my permission and consent to rely 

on and exhibit this opinion to those shareholders and broker-dealers.”   

49. Jackson’s letters falsely recited facts indicating, among other things, that the 

stockholder, a Clayton Nominee, was not an affiliate of the issuer.  Jackson’s statements were 

materially false and misleading because, as Jackson knew or was reckless in not knowing, 

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Clayton beneficially owned the stock held by the Clayton Nominees and Clayton was an affiliate 

of the issuers.  Jackson’s letters allowed Clayton Nominees to publicly sell stock in violation of 

the federal securities laws.  Clayton, as owner of Standard Registrar, used or recklessly allowed 

Standard Registrar to remove restrictive legends in reliance on Jackson’s opinion letters.  

Jackson was also a director of Standard Registrar and knew or recklessly ignored that Standard 

Registrar would remove restrictive legends in reliance on his opinion letters.     

50. The federal securities laws require certain disclosures when a person acquires 

beneficial ownership of more than five percent of a registered class of a company’s equity 

securities.  First, those persons or groups are required to file a “beneficial ownership report” 

under Schedule 13D or 13G with the Commission.  Second, those persons—and certain 

transactions they have entered into with the issuer—must be identified in registration statements 

and other company filings with the Commission.  Further, beneficial owners of more than ten 

percent of a registered class of an issuer’s stock are required under Section 16(a) of the Exchange 

Act to report their ownership with the Commission on a Form 3 within ten days, any changes in 

beneficial ownership on a Form 4 within two days, and total beneficial ownership annually on a 

Form 5.  Clayton violated these disclosure requirements and did so in furtherance of his scheme.      

OVERVIEW OF THE SCHEME 

Clayton’s Use of Nominee Entities to Conceal Stock Ownership 

51. Clayton acquired, but hid, significant stock holdings in Flexpoint, ForeverGreen, 

KwikClick, and LZG International.  Clayton concealed his ownership by acquiring stock in the 

name of one or more of the Clayton Nominees.   

52. Clayton often acquired shares of stock in the Clayton Issuers from convertible 

loans held in the names of Clayton Nominees.  A convertible loan is a form of corporate debt 

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that can be converted into shares of stock of the issuing corporation in lieu of repayment of the 

loan in cash.       

53. Clayton often paid employees or friends to act as nominal corporate officers of 

the Clayton Nominees that acquired and sold shares of the Clayton Issuers.  These individuals 

exercised no real control over the Clayton Nominees despite corporate records identifying them 

as the officers.  Clayton used these individuals to sign necessary forms such as brokerage and 

bank records.  Clayton, however, controlled and was the beneficial owner of the stock held by 

the Clayton Nominees.   

54. Clayton controlled and funded the financial accounts of the Clayton Nominees, 

and Clayton, with the assistance of First Equity staff, carried out the business of the Clayton 

Nominees.  Clayton used generic email addresses in the name of the Clayton Nominees to 

conduct this business—for example, sending emails to a brokerage firm through 

CompassEquityPartners@[redacted].com—but signing the email with the name of the nominal 

officer.  Clayton and First Equity maintained passwords for Clayton and his staff to access the 

Clayton Nominees’ email and brokerage accounts.   

55. Capital Communications, Liberty Partners, and Maestro Investments: Clayton 

used handymen from his property management business to act as the nominal officers of Capital 

Communications, Liberty Partners, and Maestro.  Clayton paid those employees nominal annual 

sums in exchange for those employees signing documents as the purported heads of the Clayton 

Nominees.  In one such practice, the nominal officers would come to First Equity’s offices and 

pre-sign blank checkbooks for the relevant entity for Clayton’s later use.   

56. Compass Equity Partners: Clayton used a friend, and then subsequently that 

friend’s son, to act as the nominal officer of Compass.  That nominal officer understood that 

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Clayton controlled the securities held by Compass.  In addition to posing as the nominal officer 

in emails, Clayton caused a pre-paid cell phone—a burner phone—to be listed as the nominal 

officer’s phone number on brokerage records so that Clayton could further pose as the nominal 

officer in phone calls.  A pre-paid cell phone is a cell phone that can be purchased in a store with 

pre-paid calling minutes and that has a phone number that is not registered to any particular 

name.  Pre-paid phones are colloquially referred to as “burner phones.”  As described further 

below, Clayton communicated with Rieu using the same burner phone used for Compass and 

directed Rieu to also purchase a burner phone because of the Commission’s investigation.   

57. Empire Fund Managers: Clayton, with Perry’s help, used Perry’s wife as the 

nominal officer of Empire.  Clayton also paid Perry’s wife a nominal sum for her role.  

Nonetheless, the Empire accounts were managed by Clayton, Perry, and First Equity staff in the 

same manner as the other Clayton Nominees.  Perry arranged for his wife to sign documentation 

relating to Empire’s acquisition and deposit of relevant stock.  In one instance on January 23, 

2019, Perry emailed Clayton asking him to affix a copy of Perry’s wife signature to a letter from 

Empire to a brokerage firm.  The letter gave Perry and Clayton’s assistant authority to trade in 

Empire’s brokerage account and to withdraw trading proceeds.  Clayton affixed Perry’s wife’s 

signature to the letter and returned it to Perry that day.    

58. Investrio: Clayton used a business associate, who was also at times on Clayton’s 

payroll, to act as nominal officer of Investrio.  The business associate understood that Clayton 

controlled the securities held by Investrio.  

59. Klaja Partners: Clayton used Jackson’s employee’s relative as the nominal 

officer of Klaja Partners.  In a February 25, 2019 letter prepared by Clayton and signed by 

Jackson, Jackson claimed the Klaja Partners brokerage account as his own, but—consistent with 

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Perry’s role in handling the Clayton Nominees’ accounts—Jackson gave Perry “full power and 

authority” for the “sale of securities.”   

60. Bryan Development and Greenwich Street: Jackson was the head of Bryan 

Development and Greenwich Street but held stock for Clayton’s benefit and in aid of Clayton’s 

scheme.  Distinct from the other Clayton Nominees, Jackson at times did use these entities for 

business activities unrelated to holding stock of the Clayton Issuers.  Nonetheless, Jackson also 

used these entities to facilitate Clayton’s scheme.  For example, in 2018, Bryan Development 

held stock in Clayton Issuer ForeverGreen, and, in 2019, Bryan Development paid $100,000 to 

Capital Communications which was sent to ForeverGreen and other Clayton Nominees.  Clayton 

fully repaid the $100,000 in 2022.  Then, in August 2022, Greenwich Street acquired $250,000 

of Clayton Issuer KwikClick stock, which Clayton again fully repaid in November 2022. 

Jackson’s False Attorney Opinion Letters and Other Services to Aid Clayton’s Scheme 

61. Through at least 2020, Clayton kept Jackson as an attorney on a paid retainer, but 

Jackson continued to act at Clayton’s behest thereafter.  Jackson provided various services over a 

period of years to aid Clayton’s fraudulent scheme.  Most critically, Jackson prepared attorney 

opinion letters for at least Clayton Nominees Capital Communications, Compass, Empire, 

Liberty, and Maestro, as well as First Equity.  Jackson’s letters stated falsely that the conditions 

of Rule 144 were met, and that Standard Registrar could remove restrictive legends from stock, 

allowing the stock to be sold publicly without volume limitations.  For each of the Clayton 

Nominees, Jackson received the request to prepare the opinion letter from Clayton or Clayton’s 

employees, received supporting documentation (to the extent he actually received it) from 

Clayton or Clayton’s employees, and delivered finalized letters to Clayton or Clayton’s 

employees.  Despite this, Jackson’s letters concealed Clayton’s involvement, falsely stating that 

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the nominal officers requested the letters, provided supporting documentation, and received the 

final letters.   

62. Jackson knew or was reckless in not knowing that Clayton controlled the Clayton 

Nominees and was an affiliate of the Clayton Issuers.  Jackson shared an office building with 

Clayton for decades.  Jackson knew that the records for the Clayton Nominees were stored in 

that same office, and that Clayton had access to records for the Clayton Nominees.  Clayton or 

First Equity employees provided Jackson with backup documentation for Jackson’s preparation 

of opinion letters for Clayton Nominees.  Not only did Clayton or his employees request and 

receive the opinion letters—without the involvement of the Clayton Nominees’ nominal 

officers—Clayton’s employees often assisted Jackson in the preparation of opinion letters.  

Jackson further knew of or recklessly ignored red flags concerning the Clayton Nominees, 

including that they often shared addresses (one such address was the shared office in which 

Jackson and Clayton worked).  Jackson also personally knew the nominal officers and knew or 

was reckless in not knowing that they likely did not possess the means to make sizeable (often 

six-figure) loans to the Clayton Issuers.      

Perry’s Fraudulent Conduct with Brokerage Firms in Aid of the Scheme 

63. Perry served as bookkeeper for Clayton and his entities for many years.  Perry 

maintained records of the Clayton Nominees’ stock holdings.  Perry prepared tax returns for 

Clayton Nominees.  He received payments, through a business entity, from the Clayton 

Nominees for his services.  Perry also prepared, or assisted in the preparation of, the financial 

reporting portions of public filings made with the Commission for publicly traded companies 

with which Clayton was involved.   

64. Perry often served as the middleman between Clayton and brokerage firms, 

coordinating activities for the various Clayton Nominees such as delivering stock deposit forms, 

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ordering stock sales, and receiving proceeds of those sales.  Perry knowingly or recklessly 

delivered false deposit forms, many purportedly signed by Perry’s wife, concerning the Clayton 

Nominees and the stock to be deposited.   

Rieu and Chesapeake’s Promotion of the Clayton Issuers to Generate Investor Interest 

65. Chesapeake provided promotional services to penny stock companies, which 

included typical investor relations services such as drafting press releases and fielding investor 

inquiries, but, most importantly, included canvassing investors and brokers to promote purchases 

of the stock of issuers.  Although Chesapeake had clients independent of Clayton, Chesapeake 

was largely or entirely dependent on Clayton for funding during periods relevant to this 

Complaint.   

66. Clayton retained Rieu and Chesapeake to generate investor interest in the stock of 

companies that Clayton held and wanted to sell.  Clayton paid Chesapeake over $3.6 million 

between 2014 and 2024, including payments to Chesapeake that arrived from numerous Clayton 

Nominees.   

67. Rieu knew or was reckless in not knowing that Clayton was engaged in a 

microcap stock selling scheme.  Rieu knew or was reckless in not knowing that Clayton paid 

Chesapeake through Clayton Nominees as part of Clayton concealing his involvement in the 

scheme.  Rieu knew or was reckless in not knowing that Clayton retained Rieu and Chesapeake 

to promote stocks because Clayton held those stocks and wished to sell them into an inflated 

market.   

68. In 2023, Clayton learned of the Commission’s investigation that led to this action 

and accordingly directed Rieu to acquire a burner phone to discuss their ongoing activities, and 

Rieu obliged because he knew or was reckless in not knowing that he and Clayton had been 

involved in illegal activity.   

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69. With respect to Flexpoint and ForeverGreen, Clayton compensated Rieu and 

Chesapeake according to the average price and total trading volume of the stock, thus 

incentivizing Rieu and Chesapeake to artificially inflate both price and trading volume.  Acting 

accordingly, Rieu traded in stock of Flexpoint and ForeverGreen with the intent of artificially 

inflating their stock price and trading volume.   

70. More broadly, Rieu traded in his own accounts, accounts of a relative, and 

Chesapeake accounts to repeatedly buy and sell stock of Chesapeake clients (Clayton Issuers and 

others) for the purpose of artificially inflating the price and trading volume of those stocks. 

71. Further, acting separately from Clayton’s scheme, Rieu engaged in insider trading 

of one of Chesapeake’s only non-microcap clients, Sidus Space, using material non-public 

information concerning major upcoming press releases to trade profitably. 

FRAUDULENT SALES OF FLEXPOINT STOCK 

72. Since at least 2005, Clayton has been intimately involved with financing 

Flexpoint, during which time Mower has been the CEO of Flexpoint.  Clayton controlled 

Flexpoint and therefore was an affiliate for purposes of his stock sales.  Clayton controlled 

Flexpoint in numerous ways, including owning more than ten percent of Flexpoint stock, acting 

on Flexpoint’s behalf to arrange for promotion of its stock, directing Flexpoint’s management 

(including Mower), accessing Flexpoint’s finances, drafting Commission filings, and often 

providing the sole source of funding for Flexpoint.  Further, Mower received a biweekly 

paycheck through First Equity’s payroll company from at least 2021 through at least August 

2024.   

73. Mower knew or was reckless in not knowing that Clayton was an affiliate of 

Flexpoint for those same reasons.  Mower also knew or was reckless in not knowing that Clayton 

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was the beneficial owner of the Clayton Nominees.  Mower’s company relied on financing from 

the Clayton Nominees to survive, yet Mower did not meet with the nominal officers.  Mower 

instead dealt exclusively, for over a decade, with Clayton and Clayton’s administrative staff 

concerning each such nominee.  Mower repeatedly sought financing from the Clayton Nominees 

through Clayton, received that financing through Perry and Clayton’s staff, converted Clayton 

Nominee loans to Flexpoint stock at Clayton’s direction, and otherwise acted at Clayton’s 

direction for Flexpoint. 

74. Jackson knew or was reckless in not knowing that Clayton was an affiliate of 

Flexpoint.  Jackson knew that Clayton had made loans to Flexpoint, that Clayton provided advice 

or consulting services to Flexpoint, and that Clayton was intimately familiar with Flexpoint’s 

operations.  Jackson, who shared office space with Clayton, saw Clayton meet frequently with 

Flexpoint’s CEO, Mower, and Jackson performed legal work for Flexpoint coordinated by 

Clayton.  Clayton also provided Jackson with documents relating to the issuance of Flexpoint 

stock that was the subject of Jackson’s opinion letters.  Jackson intentionally or recklessly 

ignored these facts when representing in attorney opinion letters that the Clayton Nominees were 

not affiliates of Flexpoint.  Jackson knew, or was reckless in not knowing, that Clayton was 

acting through the Clayton Nominees.   

75. At various times since 2019, Clayton has beneficially owned through the Clayton 

Nominees (including Capital Communications, Compass, Empire, Liberty, and Maestro) and 

First Equity greater than five percent of Flexpoint stock, including owning more than ten percent 

of Flexpoint stock after transactions on or about January 21, 2021, March 23, 2021, and March 

14, 2022.  Clayton failed to file with the Commission required reports of his beneficial 

ownership or disposition of stock. 

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76. From at least 2014 to 2024, Clayton, aided and abetted by Perry, Jackson, Mower, 

Rieu, and Chesapeake, and using Standard Registrar, repeatedly undertook a scheme to 

fraudulently sell Flexpoint stock to the public in an artificially inflated securities market.  

Transfer and brokerage records show that Clayton repeated this scheme in numerous cycles with 

the Clayton Nominees, selling at least 45 million shares of Flexpoint.  Examples include: 

Fraudulent Sales of Flexpoint Stock Issued in July 2019 

77. Clayton coordinated the conversion and subsequent sale of stock by different 

Clayton Nominees.  For example, the Clayton Nominee Capital Communications purportedly 

made convertible loans to Flexpoint in 2016.  All of the funds for these loans ultimately came 

from Clayton, and the loans were made to benefit Clayton.  To avoid conversion of a reportable 

amount of stock by Capital Communications, in 2016 and 2017, those loans were purportedly 

assigned to Clayton Nominees Empire and Compass, having the effect of further concealing 

Clayton’s ownership.  In 2019, Clayton then undertook a series of deceptive and misleading 

steps to sell this Flexpoint stock to investors.  Each of Perry, Jackson, Mower, Rieu, and 

Chesapeake aided and abetted Clayton in this process, and Clayton used Standard Registrar to 

further effect the scheme. 

78. First, Clayton directed Flexpoint’s CEO, Mower, to sign and return two $150,000 

promissory notes on July 3, 2019, but backdated to January 20, 2016.  Backdating loans was 

important to Clayton’s scheme because the Rule 144 safe harbor includes a holding period 

requirement for shares acquired from an issuer in an unregistered transaction before they can be 

resold.   

79. Second, although the two backdated promissory notes had just been executed by 

Mower on July 3, 2019, the Clayton Nominees fraudulently utilized documentation that 

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purportedly assigned the notes in years prior: one $150,000 note to Empire on April 15, 2016 and 

another to Compass on January 10, 2017.  Splitting the notes between two Clayton Nominees 

was also important to Clayton’s scheme, to avoid any one nominee holding an amount of stock 

requiring public disclosure through a Commission filing.    

80. Third, after splitting the convertible note across the two nominee entities, Clayton 

converted the debt to stock.  The same day that Mower signed the backdated notes, July 3, 2019, 

Flexpoint issued 3.65 million shares of stock to Empire and then on July 16, 2019, Flexpoint 

issued 3.2 million shares to Compass.  In reality, Clayton owned these shares, had the power to 

direct their disposition, and benefitted from their sale.  The total 6.85 million shares of Flexpoint 

stock would have been approximately six percent of outstanding shares, requiring reporting to 

the Commission on Schedule 13D.   

81. Fourth, Clayton sought and received attorney opinion letters from Jackson—

containing false representations—in order to remove restrictive legends and deposit the stock at a 

brokerage firm.  Jackson issued such attorney opinion letters for both Empire and Compass, 

dated July 5, 2019 and November 22, 2019, respectively.  Among other things, Jackson’s letters 

falsely stated that the letter was requested by the nominee entity, that the documents had been 

provided by the nominee entity, and that the nominee entity had never been an affiliate of 

Flexpoint.  Those representations were false, because, as Jackson knew or was reckless in not 

knowing, Clayton had requested the letters, Clayton provided any purported supporting 

documents, Clayton was the beneficial owner of Empire’s and Compass’s stock holdings, and 

Clayton was an affiliate of Flexpoint.   

82. Fifth, on July 5, 2019, purportedly in reliance on Jackson’s letter, Standard 

Registrar removed restrictive legends for 3.65 million shares of Flexpoint stock for Empire.  On 

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July 18, 2019—apparently without receiving the yet-to-be-written November 22, 2019 attorney 

opinion letter—Standard Registrar removed restrictive legends on the 3.2 million shares of 

Flexpoint stock for Compass.   

83. Sixth, Mower signed board resolutions and letters, drafted by Clayton or his staff, 

that issued the shares and attested that each of Capital Communications, Empire, and Compass 

“are not currently, nor have they ever been an . . . affiliate of Flexpoint.”  Mower then returned 

the letters to Clayton or his staff. 

84. Seventh, now holding unrestricted stock, Clayton needed to deposit it at a 

brokerage firm to sell it to the public.  To do so, Perry assisted Clayton in submitting (a) the false 

Jackson letters, (b) the false Mower letters, and (c) false brokerage deposit forms for Empire and 

Compass.  For these deposit forms, the brokerage firm required that entities depositing stock 

make representations about that stock signed under penalty of perjury (here by Perry’s wife as 

nominal officer of Empire, and separately the nominal officer of Compass).  The Empire forms 

were signed by Perry’s wife, either at Perry’s direction or by Clayton or Perry affixing a copy of 

her signature.  The Compass forms were signed by the nominal officer of Compass at the 

direction of Clayton or his staff.  The forms falsely represented to the brokerage firm, among 

other things, that Empire and Compass were not: 

a. “Affiliates” of Flexpoint, which was false because Clayton controlled each entity and 

was an affiliate of Flexpoint; 

b. Engaged in “promotional efforts regarding the Issuer,” which was false because 

Clayton—at times through Empire and Compass—was paying Rieu and Chesapeake for 

stock promotion; 

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c. Engaged in a “plan to violate or evade the registration provisions of the Securities Act or 

any other federal or state law or regulation,” which was false, because, among other 

things, Clayton structured these transactions to evade registration requirements; 

d. “Coordinated with possible sales by other stockholders,” which was false because 

Clayton was coordinating sales activity with the other Clayton Nominees; and 

e. Beneficial owners of more than the number of shares deposited (here 3.2 million and 

3.65 million), which was false because Clayton beneficially held additional Flexpoint 

stock through the Clayton Nominees. 

85. After attempting to deposit the stock, the brokerage firm found Jackson’s attorney 

opinion letters to be deficient and required Jackson to submit corrected letters, which Clayton 

directed Perry to further assist in obtaining.  The brokerage firm, having received an amended 

letter from Jackson, permitted the deposit of Flexpoint shares “based on [Jackson’s] underlying 

conclusions that the customer is not an affiliate of the issuer and has been the beneficial owner of 

the securities for more than one year.” 

86. Eighth, Clayton coordinated with Mower, Rieu, and Chesapeake to issue positive 

news to artificially inflate the price and trading volume of Flexpoint stock prior to sales by the 

Clayton Nominees.  For example, in late July 2019, Mower sent Clayton and Rieu a press release 

announcing Flexpoint’s filing of a new patent; then on August 13, 2019, Mower sent Rieu and 

Clayton a draft press release announcing that Flexpoint’s revenue had increased by 1,019 

percent; and, on October 3, 2019, Rieu discussed with Mower and Clayton press releases for a 

“big announcement that will really move the stock.”  During this same period, Rieu, through his 

and Chesapeake’s brokerage accounts, actively traded Flexpoint stock to create an artificial 

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appearance of interest by investors.  Rieu did so despite Chesapeake policies prohibiting trading 

in the stock of companies to which it provided investor relations services.     

87. Finally, Clayton, aided by Perry, needed to sell Flexpoint stock to an artificially 

inflated market.  From August 2019 to December 2019, Empire sold over 3.65 million shares of 

Flexpoint stock to the public, and from May 2020 to September 2020, Compass sold 3.2 million 

shares of Flexpoint stock to the public, both of them exceeding the Rule 144 volume limitation 

of one percent of Flexpoint stock in a three-month period.  Clayton’s sales through Empire and 

Compass were illegal because Clayton, as both an affiliate of Flexpoint and beneficial owner of 

Empire’s and Compass’s shares, could not legally sell Flexpoint stock to the public in an 

unregistered transaction.   

Fraudulent Sales of Flexpoint Stock Issued in January 2021 

88. Clayton repeated the Flexpoint scheme in 2021.  Clayton converted purported 

loans made by Capital Communications to Flexpoint in 2016 and 2017, all of the funds for which 

ultimately came from Clayton, and the loans were made to benefit Clayton.  These convertible 

loans were then purported to be partially assigned from Capital Communications to Empire and 

Compass.   

89. At least some payments from Empire to Capital Communications to acquire the 

2016 Flexpoint loan were sham payments—merely shifting money among Clayton Nominees in 

a series of transactions designed to create the false appearance that Empire paid Capital 

Communications to acquire the convertible loan: 

a. On January 6, 2021, Compass drew $100,000 from a line of credit belonging to Clayton;   

b. On January 8, 2021, Compass sent $100,000 to Capital Communications; 

c. Later on January 8, 2021, Capital Communications sent $50,000 to Empire; 

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d. With a check dated January 12, 2021, Empire sent $40,000 back to  

Capital Communications; 

e. On January 14, 2021, Capital Communications sent $80,000 to Compass; 

f. On January 19, 2021, Compass sent $50,000 back to Capital Communications; 

g. On January 20, 2021, Capital Communications sent $50,000 to Empire; and 

h. With a check dated January 21, 2021, Empire sent $50,000 back to Capital 

Communications.   

90. The checks for the January 12, 2021 and January 21, 2021 payments from Empire 

to Capital Communications were subsequently submitted to a brokerage firm as part of the 

purported proof that Empire paid Capital Communications to acquire its 2016 Flexpoint 

convertible loan.  Further, in connection with a different issuance of Flexpoint stock to Capital 

Communications and Empire in March 2022, Clayton reused the checks dated January 12, 2021 

and January 21, 2021 to purportedly show Empire purchasing from Capital Communications a 

different Flexpoint convertible loan purported to be dated in 2020. 

91. After the purported assignment of the loans, all three Clayton Nominees 

converted the loans to Flexpoint stock.  On January 21, 2021, Flexpoint issued to Empire over 

4.2 million shares, Capital Communications over 5.1 million shares, and Compass over 

5.2 million shares.   

92. Clayton again split shares among Empire, Capital Communications, and Compass 

to avoid public disclosure and again hide his overall ownership of Flexpoint.  The total of over 

14.5 million shares of Flexpoint stock would have been approximately twelve percent of 

outstanding shares, requiring reporting on Schedule 13D, and Forms 3, 4, and 5.     

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93. Relying on the same process described above, Clayton, aided and abetted by 

Jackson, Perry, Mower, Rieu, and Chesapeake, and using Standard Registrar, engaged in a 

scheme to deposit the Flexpoint stock and sell it to investors in the public markets.   

94. Jackson provided attorney opinion letters for each Clayton Nominee dated 

February 2, 2021, March 5, 2021, and May 25, 2021.  Jackson’s letters contained false 

statements similar to the false statements made in connection with the July 2019 issuance of 

Flexpoint stock, including false statements about affiliation status.   

95. Standard Registrar, acting solely at the direction of Clayton or Clayton’s staff for 

each Clayton Nominee, issued the Flexpoint shares and removed restrictive legends, purportedly 

in reliance on attorney opinion letters from Jackson. 

96. Mower again signed letters falsely attesting that the Clayton Nominees were not 

affiliates of Flexpoint.  Further, on March 11, 2021, Mower subsequently agreed with Clayton to 

falsely backdate the conversion of the Capital Communications debt to December 2020 rather 

than in 2021.  This allowed Flexpoint to file a 2020 annual report on March 31, 2021, falsely 

reflecting that Flexpoint had decreased its outstanding debt in 2020. 

97. Perry further aided in depositing stock for all three Clayton Nominees at 

brokerage firms.  Each such deposit required the submission of the Jackson and Mower letters 

and brokerage deposit forms, all of them containing false statements.  

98. Clayton again coordinated with Mower, Rieu, and Chesapeake to issue positive 

news to inflate the price and trading volume of Flexpoint’s stock.  Clayton reviewed numerous 

draft press releases created in coordination with Mower, Rieu, and Chesapeake throughout the 

period that the Clayton Nominees began to sell stock.  On August 13, 2021, Clayton emailed 

Mower that he “had a long conversation with Tim [Rieu] about . . . why [a Flexpoint employee] 

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can’t focus on writing releases” and Rieu “said he was going to speak to [the employee].  So #1 

I’m looking for a release.”  The purpose of issuing press releases was to generate investor 

interest in Flexpoint stock.  During a period of issuing releases from April 2021 to August 2021, 

Rieu, trading in his own account and on behalf of Chesapeake, traded in Flexpoint stock on 44 

out of 99 business days.  Rieu traded with the purpose of creating an artificial appearance of 

interest by investors. 

99. Finally, Clayton, aided by Perry, sold over 15 million shares of Flexpoint stock 

held by the Clayton Nominees in two promotional periods from April 2021 to September 2021 

and April 2022 to February 2023.  Sales by each of Capital Communications, Empire, and 

Compass exceeded one percent of Flexpoint stock in a three-month period.  Each of the entities’ 

sales were illegal because Clayton, as both an affiliate of Flexpoint and a beneficial owner of 

each nominee’s shares, could not legally sell Flexpoint stock to the public in an unregistered 

transaction. 

FRAUDULENT SALES OF FOREVERGREEN STOCK 

100. Since at least 2008, Clayton served as a director of ForeverGreen.  He became 

ForeverGreen’s secretary in 2014 and its treasurer in 2020.  By virtue of owning over ten percent 

of ForeverGreen stock, his positions with ForeverGreen, and his ability to direct its operations 

and management, Clayton controlled ForeverGreen and therefore was an affiliate. 

101. In 2022, Clayton requested from ForeverGreen a ledger of “my historical loans as 

well as my current loans” and received a ledger identifying Empire and Capital Communications 

loans as “John Clayton Notes.”     

102. Clayton repeated his stock selling scheme in multiple rounds with ForeverGreen.  

First Equity, Jackson, Perry, Rieu, Chesapeake, and Standard Registrar each repeated their roles 

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from the Flexpoint scheme.  Jackson assisted Clayton in removing restrictive legends, Standard 

Registrar removed restrictive legends, Perry deposited shares in brokerage accounts on the basis 

of false representations, Rieu and Chesapeake promoted ForeverGreen stock, and Clayton then 

sold the stock to the investing public via Clayton Nominees.   

103. Since at least 2014, Clayton Nominees have fraudulently sold over 2 million 

shares of ForeverGreen.  These sales frequently exceeded the one percent per three-month period 

volume limitation for affiliates.  In addition, Clayton failed to file forms related to his beneficial 

ownership and disposition of stock as required by the federal securities laws, further concealing 

his beneficial ownership of this stock from the public. 

104. Rieu and Chesapeake engaged in promotional and trading activity designed to 

allow Clayton to sell ForeverGreen stock into an artificial market.  For example, on December 

19, 2018, Rieu sought additional promotion of ForeverGreen stock because, after issuing press 

releases, Rieu was “[n]ot seeing the effect I thought we would get out of the news.”  Chesapeake 

subsequently paid for a stock newsletter company to publish articles on ForeverGreen stock, 

variously describing it as “Bargain Hunter’s Paradise?”, “Grossly Undervalued,” and 

“Turnaround Underway.”  To artificially affect the market ForeverGreen stock, Rieu, acting on 

his own behalf and through Chesapeake, traded in ForeverGreen stock on over 100 days.   

105. Clayton, aided and abetted by Jackson, took additional deceptive steps in the 

ForeverGreen scheme.  In 2020, a ForeverGreen officer raised concerns with ForeverGreen’s 

auditors that the company had engaged in undisclosed related-party transactions with Clayton 

Nominees including Jackson’s company Bryan Development.  ForeverGreen engaged Jackson—

despite Jackson’s relationship to Clayton and the investigation involving an entity controlled by 

Jackson himself—to conduct an internal investigation to determine if the officer’s allegations 

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had merit.  Jackson’s investigation concluded that there were not undisclosed related-party 

transactions.  Ultimately, Clayton, in his capacity as ForeverGreen’s board chairman, signed a 

letter falsely representing to ForeverGreen’s auditors that the Clayton Nominees “Capital 

Communications, Empire Funds Management [sic] . . . Liberty Partners, and Compass Equity 

Partners are not currently related parties.”   

FRAUDULENT TRANSACTIONS WITH KWIKCLICK STOCK 

106. Since at least 2022, Clayton has been involved in the business of KwikClick.  

Clayton at times owned more than ten percent of KwikClick stock and directed its operations and 

management.  Clayton drafted press releases and dictated schedules for releases, managed 

KwikClick’s stock listing process, drafted board resolutions and Commission filings, and had 

full access to KwikClick’s corporate records.  In a text message dated October 14, 2023, Clayton 

instructed KwikClick’s CEO to make Clayton “feel like I’m your partner and not someone who 

has to ask to be involved with [the] ownership or profits.”     

107. Together, Clayton Nominees at times held over twenty percent of KwikClick 

shares in 2022 and over sixteen percent in 2023.  Clayton failed to file forms with the 

Commission related to his beneficial ownership of stock as required by the federal securities 

laws. 

108. Despite knowing or recklessly not knowing that Clayton had engaged in 

fraudulent stock selling schemes for years, Jackson continued to participate in Clayton’s 

microcap activity as recently as 2024.  In 2022 and 2024, respectively, Jackson caused 

Greenwich Street and Klaja Partners to purchase KwikClick stock that was beneficially owned 

by Clayton.  In addition, Jackson—at Clayton’s direction—acted as the escrow agent for 

acquisition of KwikClick stock by Clayton Nominees and others.  Finally, Jackson assisted 

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Clayton and KwikClick in responding to a regulatory inquiry concerning promotion and sale of 

KwikClick stock.  KwikClick’s written response to the regulator was drafted and reviewed by 

Jackson and Clayton.  The regulator asked KwikClick to identify a primary contact at Investrio, 

which was a Clayton Nominee, and the letter falsely identified the nominal officer for Investrio 

while concealing Clayton’s role. 

109. Clayton had not sold the KwikClick stock through any known Clayton Nominee 

at the time of the Commission’s investigation that led to this action.  Nonetheless, Clayton had 

begun the stock promotional phase of his scheme which typically preceded his illicit sales, again 

paying Chesapeake and working with Rieu.  In September 2023, Clayton directed Rieu to issue a 

series of “6 new press releases” to boost KwikClick stock.  In November 2023, Clayton sought 

from KwikClick’s CEO drafts of four “press releases ASAP” to aid “the market, values, and a 

capital raise and market uplift.”   

FRAUDULENT TRANSACTIONS WITH LZG INTERNATIONAL STOCK 

110. Beginning by 2009, Clayton maintained LZG International as a public, non-

operating shell company with the purpose of merging with an operating microcap company.  The 

same business associate whom Clayton installed as the nominal officer of Investrio also served 

as the nominal officer of LZG International when it was a shell company, but that person had no 

control over LZG International.  Instead, the business associate signed required Commission 

filings and corporate documents as directed by Clayton or his staff.  The filings contained 

various false statements, including that the business associate held stock in LZG International 

and that LZG International owed moneys to certain of the Clayton Nominees.   

111. Clayton, with Jackson’s assistance, arranged for LZG International to bring 

FatBrain LLC public by acquiring its assets.  Following the acquisition, which took place on or 

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about October 23, 2021, Clayton at times owned more than five percent of LZG International 

stock and directed its operations and management.  Clayton told LZG International management 

when to pay certain invoices and he directly paid invoices on behalf of the company.  Clayton 

drafted LZG International board resolutions and instructed a board member to sign such a 

resolution.  Clayton also managed LZG International’s stock listing process.   

112. Clayton used the Clayton Nominees to conceal his ownership of stock in LZG 

International.  Clayton directly funded the Clayton Nominees’ acquisition of LZG International 

Stock.  For example, on June 7, 2023, Clayton’s staff emailed Perry that “John [Clayton] has a 

fairly significant acquisition of shares that will probably make . . . around 7.5 million dollars, do 

we have a company that has big losses that we could buy it in and his thoughts were Investrio, or 

would Compass, Liberty & Empire be best?”  Perry responded that he had reviewed draft tax 

returns for Compass, Empire, Liberty and Maestro, but determined that “Investrio by far has the 

biggest losses.”  The next day on June 8, 2023, Clayton directed his bank to “transfer $610,000 

from First Equity’s . . . account into Investrio’s new account . . . [t]hen a wire of $600,000 needs 

to be sent to the wire instruction below [to FatBrain] from Investrio’s account.”   

113. Clayton, through the Clayton Nominees, has beneficially owned over six percent 

and over seven percent of LZG International shares in 2023 and 2024, respectively.  Clayton 

failed to file forms with the Commission related to his beneficial ownership of stock as required 

by the federal securities laws.  

114. Again, despite knowing or recklessly not knowing that Clayton had repeatedly 

engaged in fraudulent microcap stock selling schemes, Jackson assisted Clayton with preparing 

to sell LZG International stock in the public securities markets.  Jackson knew, or was reckless in 

not knowing, that Clayton was an affiliate of LZG International.  Among other things, Jackson 

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worked closely with Clayton on LZG International’s transaction with FatBrain.  Following the 

transaction, Jackson provided attorney opinion letters to assist Clayton in selling LZG 

International stock.     

115. Clayton had not yet sold LZG International stock through any known Clayton 

Nominee at the time of the Commission investigation.  Clayton, however, had begun the process 

of depositing stock with a brokerage firm on behalf of First Equity and the Clayton Nominees, 

on the basis of false representations.   

116. Clayton had also begun the stock promotional phase of his scheme, again paying 

Chesapeake and working with Rieu.  For example, in August 2023, Clayton directed Rieu to 

“take the financial release and split it in[to] two” press releases to boost LZG International stock.  

Chesapeake and Rieu engaged in further promotional and trading activity.   

RIEU AND CHESAPEAKE ENGAGED IN SECURITIES FRAUD  
WITH CLAYTON AND INDEPENDENT OF CLAYTON 

117. Rieu, as president of Chesapeake, gained knowledge about Chesapeake’s investor 

relations clients and was privy to inside information about those companies.  He generally held 

weekly calls with clients to stay apprised of their business and to discuss potential press releases  

and the timing of those releases.  At all times relevant to this action, Chesapeake maintained a 

written policy that prohibited employees, including Rieu, from owning or trading in client 

securities to avoid employees abusing their access to the companies and trading while “privy to 

inside information regarding that Client’s activities which may be deemed to be of a material 

nature.”   Rieu, however, regularly traded in client securities in personal and Chesapeake 

brokerage accounts.   

118. Therefore, in addition to aiding and abetting Clayton’s scheme through investor 

relations and promotional work, Rieu and Chesapeake violated the securities laws in three ways.  

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First, Rieu, acting on his own behalf and through Chesapeake, traded in client stock with the 

intent of benefiting clients by artificially inflating the price of the stock and providing artificial 

liquidity to the stocks.  Second, Rieu profited from his illegal trading on the basis of material 

non-public information about a client stock.  Third, Rieu and Chesapeake touted clients to the 

public without adequately disclosing their compensation, as required by law.     

Rieu and Chesapeake Traded Stock to Artificially Affect Price and Trading Volume 

119. Rieu often engaged in trading of Chesapeake client stock, not to generate a 

trading profit but instead to artificially inflate the price and trading volume of client stocks to 

attract investors to the stock.  For both Clayton and other clients, Rieu traded to boost his clients’ 

stock, so they would continue to compensate Chesapeake.  To do so, Rieu often traded to 

stabilize a client’s stock price in falling markets.  Other trading took place around the time of 

client press releases and was intended to condition the market ahead of the news.  Rieu, on his 

own behalf and through Chesapeake, frequently traded in client securities, and the trading often 

constituted a significant percentage of the market for client securities, as shown below: 

Issuer 
Days 
Traded 

Days Over 10% of 
Traded Volume 

Days Over 50% of 
Traded Volume 

C-Bond Systems  66 15 1 

Flexpoint Sensor Systems 203 120 16 

ForeverGreen Worldwide  131 104 50 

LZG International  22 9 1 

Pressure BioSciences  81 45 12 

Rieu’s Fraudulent Trading in Clayton Issuer Stock 

120. Rieu’s trading in Flexpoint, ForeverGreen, and LZG International was designed to 

allow Clayton to sell stock at higher prices.  To incentivize Rieu to artificially inflate the price 

and volume of Flexpoint and ForeverGreen specifically, Clayton paid Chesapeake a percentage, 

often ten percent, of the overall amount of stock traded in the market, determined by multiplying 

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a stock’s average price by all trading volume.  For example, on June 4, 2020, Rieu sought 

payment from Clayton by sending him a spreadsheet of “Chesapeake Activity” which showed 

the market’s daily traded volume and price for Flexpoint and ForeverGreen.  Rieu identified a 

period when the entire market traded $180,000 of Flexpoint and ForeverGreen, and Rieu 

requested payment of at least $18,000 from Clayton.   

121. Clayton knew that Rieu traded in the Clayton Issuers to artificially inflate the 

price of Clayton Issuers.  For example, on February 19, 2019, Clayton emailed Rieu to give 

guidance about “how you are currently trading.”  On September 11, 2019, Rieu promised 

Clayton for ForeverGreen he would “get the stock [price] up,” and Rieu then purchased 42,217 

ForeverGreen shares in Chesapeake accounts the following week.  In another instance with 

Flexpoint, on August 25, 2020, Rieu wrote to Clayton asking for his payment because “we did 

buy all the FLXT.”  Rieu, through Chesapeake, purchased 258,000 shares of Flexpoint in July 

and August 2020.   

Rieu’s Fraudulent Trading in Pressure BioSciences Stock 

122. Separate from the above-described conduct concerning the Clayton Issuers, Rieu, 

acting on his own and through Chesapeake, engaged in a coordinated campaign to artificially 

increase the price and trading volume of client Pressure BioSciences’ stock.  Beginning in or 

around September 2018, Pressure BioSciences engaged Chesapeake and two other firms for 

stock promotional services.   

123. On January 22, 2019, Rieu wrote to the other promotional firms memorializing an 

agreement to trade in their own accounts to increase the price of Pressure BioSciences stock, 

making it appear more attractive, while promoting the security to investors: 

Ok team, Friday we all agreed to jump in early and get bids and 
take the offer. Chesapeake has done 2000 [shares] at 2.30 and we 

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are the bid at 2.10 for 1500 [shares].  The 200 share bids are cute 
but can we all jump in as discussed and get some real buying. . . . 
Either Lead, Follow or get the f[***] out of the way.  We have 
another 1000 [shares] coming at the offer in less then 10 minutes. 

 
124. Rieu later wrote, “Love to get it to 2.60 today,” referring to the stock price.  The 

trades described by Rieu were executed in Rieu’s personal brokerage account.  That day, January 

22, 2019, Rieu entered orders to buy 6,500 shares and bought 3,000 shares.  In total, Pressure 

BioSciences traded 6,800 shares and closed at $2.28 per share compared to 2,380 shares and 

$2.20 per share the prior trading day.   

125. On January 29, 2019, after Pressure BioSciences’ CEO instructed that a news 

release “can’t fail,” i.e., could not fail to increase the price of Pressure BioSciences stock, Rieu-

controlled accounts entered orders to buy 3,500 shares and bought 938 shares.  Pressure 

BioSciences traded 10,256 shares and closed at $2.64 per share compared to 2,828 shares and 

$2.05 per share the prior trading day.   

126. On June 12, 2019, Pressure BioSciences’ CEO wrote to Rieu that after issuing a 

press release, “We need market support” and that “We have traded 100 shares today and the 

highest current bid is $2.70.”  Rieu responded, “We have buying in at 2.90 and more coming.”  

Around the same time as Rieu’s email, Chesapeake and Rieu accounts began sending buy orders 

for 1,500 shares with limit prices at $2.80 per share and $2.90 per share, which had the effect of 

increasing the price and liquidity of Pressure BioSciences stock.  

Rieu’s Fraudulent Trading in C-Bond Systems Stock 

127. While not in coordination with other firms, Rieu and Chesapeake traded to 

artificially affect client C-Bond’s stock as well.  On April 14, 2021, C-Bond filed with the 

Commission its 2020 annual report on Form 10-K, which provides important financial 

information to investors.  The next day, on April 15, 2021, C-Bond’s CEO emailed Rieu with the 

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directive “Let’s bring it back by close!”  This was a directive to increase C-Bond’s stock price by 

that day’s close of trading.  When the stock price decreased, Rieu wrote, “What’s going on? . . . 

We have been buying a ton today. . . I personall[y] have bought 600,000 [shares] so far today.”  

That day, Rieu bought 650,000 shares of C-Bond stock to arrest the falling stock price.   

128. To further incentivize Rieu and Chesapeake’s artificial inflation of C-Bond stock, 

beginning in or about October 2021, C-Bond used a compensation model similar to that of 

Clayton, paying Chesapeake based on the average closing price of the stock.  On January 31, 

2023, C-Bond’s CEO again complained about the price of C-Bond stock.  Rieu advertised his 

buying with the hopes of continuing the engagement, stating, “I commit a lot of resources and $$ 

to the market every week.” 

RIEU’S INSIDER TRADING IN SIDUS SPACE STOCK 

129. In June 2022, Chesapeake client Sidus Space announced its participation in a 

large NASA contract to build the next generation of space suits.  Following the news, Sidus 

Space’s stock price rose over 200% from the previous day.  Rieu traded on the basis of material 

non-public information about Sidus Space’s announcement, profiting in the amount of $28,641. 

130. Chesapeake and Sidus Space entered into an agreement for investor relations 

services on March 2, 2022.  Chesapeake and Rieu both owed a duty of confidence to Sidus 

Space, and, as an investor relations firm, were temporary insiders of Sidus Space.  Rieu further 

told Sidus Space’s CEO that Chesapeake had a duty of confidence to Sidus Space, assuring her 

that Chesapeake “can’t share” and “never release[s]” news before it is public. 

131. Rieu violated this duty by trading on the basis of his knowledge of drafts that 

Sidus Space management provided to him for an upcoming June 15, 2022 press release.  On June 

14, 2022 at 12:38 p.m., Rieu wrote to Sidus Space management stating that Sidus Space’s CEO 

had requested “to have the draft sent to [Chesapeake’s COO] and I to help with edits.”  In 

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response, at 12:58 p.m., Sidus Space staff sent Rieu a draft of the press release concerning the 

NASA spacesuit contract, and at 1:22 p.m., Chesapeake’s COO, copying Rieu, responded with 

proposed edits to the press release. 

132. Starting two minutes later, on June 14, 2022, between 1:24 p.m. and 5:36 p.m., 

Rieu purchased 5,066 shares of Sidus Space stock. 

133. Sidus Space published the NASA contract press release at 9:00 a.m. on June 15, 

2022.  Sidus Space’s stock price increased to $4.68 per share compared to a closing price of 

$1.44 per share on June 14, 2022.  Rieu sold 5,000 shares of Sidus Space on June 15, 2022 at 

9:32 a.m. 

134. On June 15, 2022 at 1:20 p.m., Rieu wrote to Sidus Space’s CEO, “Big 

difference, we were ready for this one, great release stock almost doubling.” 

135. The following day, Sidus Space’s stock price continued to increase to over $7.00 

per share, and on June 16, 2022, Rieu sold an additional 4,000 shares of Sidus Space stock held 

in a relative’s brokerage account.  Rieu had acquired and attempted to sell those shares on the 

basis of additional material non-public information the prior month.  Rieu bought the 4,000 

shares on May 5, 2022 in a relative’s brokerage account after receiving from Sidus Space, on 

May 3, 2022, a draft press release concerning a memorandum of understanding with an Indian 

space company, and, on May 4, 2022, a draft quarterly financial report on SEC Form 10-Q.  Rieu 

twice attempted to sell shares at higher prices after the release of these two pieces of news, but 

he set limit prices that were too high, and his sale orders went unfilled.  Rieu was not able to 

profit from his illegal trading until after the NASA contract press release. 

136. Rieu knew, or was reckless in not knowing, that the draft press releases and draft 

Commission filing he received on May 3, May 4, and June 14, 2022, were nonpublic.  Further, as 

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an investor relations consultant with decades of experience and who regularly opined on the 

impact that press releases would have on the stock market, Rieu knew, or was reckless in not 

knowing, that the information in these releases was material. 

RIEU AND CHESAPEAKE ILLEGALLY TOUTED CLIENT STOCK 

137. Since at least January 2019, Chesapeake promoted stock of various clients while 

failing to disclose the compensation that Rieu and Chesapeake received for the promotions.  

Chesapeake staff, at Rieu’s direction, engaged in mass email and calling campaigns to share 

information and encourage investors to purchase the stock of Chesapeake clients.  To the extent 

Chesapeake staff disclosed that Chesapeake was compensated, they disclosed only that 

Chesapeake was “compensated, either directly or via a third party to provide investor relations 

services.”  This disclosure failed to state the amount of compensation received by Chesapeake 

and Rieu as is required by the securities laws. 

138. Clayton paid Rieu and Chesapeake to promote Flexpoint, ForeverGreen, LZG 

International, and KwikClick.  Other clients, Pressure BioSciences, C-Bond, and Sidus Space, 

separately retained and compensated Chesapeake to promote their stock.   

139. Rieu and Chesapeake executed statute of limitations tolling agreements with the 

Commission tolling the period March 25, 2024 through August 23, 2024.   

FIRST CLAIM FOR RELIEF 
FRAUD IN THE OFFER OR SALE OF SECURITIES 

 
Violations of Section 17(a)(2) of the Securities Act 

(Clayton, First Equity) 
 

140. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

141. By reason of the conduct described above, Clayton and First Equity, directly or 

indirectly, in connection with the offer or sale of securities, by the use of the means or 

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instrumentalities of interstate commerce or of the mails, directly or indirectly, acting 

intentionally, knowingly, recklessly, or negligently, obtained money or property by means of 

untrue statements of material fact or by omitting to state material facts necessary in order to 

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

misleading. 

142. By reason of the conduct described above, Clayton and First Equity violated 

Securities Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)] and will continue to violate that section 

unless enjoined. 

SECOND CLAIM FOR RELIEF 
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES 

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

(Clayton, First Equity)  
 

143. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

144. By reason of the conduct described above, Clayton and First Equity, directly or 

indirectly, in connection with the purchase or sale of securities, by the use of the means or 

instrumentalities of interstate commerce or of the mails, or of any facility of any national 

securities exchange, intentionally, knowingly, or recklessly made untrue statements of material 

fact or omitted to state material facts necessary in order to make the statements made, in light of 

the circumstances under which they were made, not misleading. 

145. By reason of the conduct described above, Clayton and First Equity violated 

Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5(b) [17 C.F.R. § 240.10b-5(b)] 

thereunder and will continue to violate that section and rule unless enjoined. 

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THIRD CLAIM FOR RELIEF 
FRAUD IN THE OFFER OR SALE OF SECURITIES 

 
Violations of Sections 17(a)(1) and (3) of the Securities Act  

(Clayton, First Equity, Standard Registrar, Rieu, Chesapeake)  
 

146. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

147. By reason of the conduct described above, Clayton, First Equity, Standard 

Registrar, Rieu, and Chesapeake, directly or indirectly, in connection with the offer or sale of 

securities, by the use of the means or instrumentalities of interstate commerce or of the mails, 

directly or indirectly, acting intentionally, knowingly, recklessly, or negligently: (i) employed 

devices, schemes, or artifices to defraud; and (ii) engaged in transactions, practices, or courses of 

business which operated or would operate as a fraud or deceit upon any persons, including 

purchasers or sellers of securities. 

148. By reason of the conduct described above, Clayton, First Equity, Standard 

Registrar, Rieu, and Chesapeake violated Securities Act Sections 17(a)(1) and (3) [15 U.S.C. 

§ 77q(a)(1) and (3)] and will continue to violate those sections unless enjoined. 

FOURTH CLAIM FOR RELIEF 
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES 

 
Violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder  

(Clayton, First Equity, Standard Registrar, Rieu, Chesapeake) 
 

149. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

150. By reason of the conduct described above, Clayton, First Equity, Standard 

Registrar, Rieu, and Chesapeake, directly or indirectly, in connection with the purchase or sale of 

securities, by the use of the means or instrumentalities of interstate commerce or of the mails, or 

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of any facility of any national securities exchange, intentionally, knowingly, or recklessly: (i) 

employed devices, schemes, or artifices to defraud; and (ii) engaged in acts, practices, or courses 

of business which operated or would operate as a fraud or deceit upon any persons, including 

purchasers or sellers of securities. 

151. By reason of the conduct described above, the Clayton, First Equity, Standard 

Registrar, Rieu, and Chesapeake violated Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and 

Rules 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)] and will continue to violate 

that section and those rules unless enjoined. 

FIFTH CLAIM FOR RELIEF  
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES 

INSIDER TRADING 
 
Violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder 

(Rieu)  
 

152. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

153. By reason of the conduct described above, Rieu, directly or indirectly, in 

connection with the purchase or sale of securities, by the use of the means or instrumentalities of 

interstate commerce or of the mails, or of any facility of any national securities exchange, 

intentionally, knowingly, or recklessly, (i) employed devices, schemes, or artifices to defraud; 

and (ii) engaged in acts, practices, or courses of business which operated or would operate as a 

fraud or deceit upon any persons, including purchasers or sellers of securities. 

154. By reason of the conduct described above, Rieu violated Exchange Act Section 

10(b) [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a) and 

(c)] and will continue to violate that section and those rules unless enjoined. 

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SIXTH CLAIM FOR RELIEF 
UNREGISTERED OFFERINGS OF SECURITIES 

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

(Clayton, Jackson, Standard Registrar) 
 

155. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

156. By reason of the conduct described above, Clayton, Jackson, and Standard 

Registrar, directly or indirectly: (a) made use of the means or instruments of transportation or 

communication in interstate commerce or of the mails to sell, through the use or medium of a 

prospectus or otherwise, Flexpoint securities as to which no registration statement has been in 

effect and for which no exemption from registration has been available; and/or (b) made use of 

the means or instruments of transportation or communication in interstate commerce or of the 

mails to offer to sell, through the use or medium of a prospectus or otherwise, Flexpoint 

securities, as to which no registration statement has been filed. 

157. As a result, Clayton, Jackson, and Standard Registrar violated Section 5(a) and (c) 

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

unless enjoined.  

SEVENTH CLAIM FOR RELIEF 
AIDING AND ABETTING 

 
Aiding and Abetting Violations of Section 17(a)(1) and (3) of the Securities Act  

(Jackson, Perry, Mower, Rieu, Chesapeake) 

158. Paragraphs 1 through 139 above are re-alleged an incorporated by reference as if 

fully set forth herein. 

159. By reason of the conduct described above, Clayton and First Equity, directly or 

indirectly, in the offer or sale of securities, by the use of the means or instrumentalities of 

interstate commerce or of the mails, or of any facility of any national securities exchange, 

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intentionally, knowingly, recklessly, or negligently: (i) employed devices, schemes, or artifices 

to defraud; and (ii) engaged in transactions, practices, or courses of business which operated or 

would operate as a fraud or deceit upon any persons, including purchasers or sellers of securities. 

160. Jackson, Perry, Mower, Rieu, and Chesapeake each knowingly or recklessly 

provided substantial assistance to Clayton and First Equity in their violations of Section 17(a)(1) 

and (3) of the Securities Act.  Therefore, per Section 15(b) of the Securities Act [15 U.S.C. 

§ 77o(b)], Jackson, Perry, Mower, Rieu, and Chesapeake each violated Sections 17(a)(1) and (3) 

of the Securities Act and will continue to violate those sections unless enjoined. 

EIGHTH CLAIM FOR RELIEF 
AIDING AND ABETTING 

 
Aiding and Abetting Violations of Section 10(b) of the  
Exchange Act and Rules 10b-5(a) and (c) Thereunder 

(Jackson, Perry, Mower, Rieu, Chesapeake) 

161. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein.  

162. By reason of the conduct described above, Clayton and First Equity, directly or 

indirectly, in connection with the purchase or sale of securities, by the use of the means or 

instrumentalities of interstate commerce or of the mails, or of any facility of any national 

securities exchange, intentionally, knowingly, or recklessly: (i) employed devices, schemes, or 

artifices to defraud; and (ii) engaged in acts, practices, or courses of business which operated or 

would operate as a fraud or deceit upon any persons, including purchasers or sellers of securities. 

163. Jackson, Perry, Mower, Rieu, and Chesapeake knowingly or recklessly provided 

substantial assistance to Clayton and First Equity in their violations of Section 10(b) of the 

Exchange Act and Rules 10b-5(a) and (c) thereunder.  Therefore, per Section 20(e) of the 

Exchange Act [15 U.S.C. § 78t(e)], Jackson, Perry, Mower, Rieu, and Chesapeake each violated 

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Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder and will continue to 

violate that section and those rules unless enjoined.   

NINTH CLAIM FOR RELIEF 
FAILURE TO DISCLOSE SECURITIES HOLDINGS 

 
Violation of Section 13(d) of the Exchange Act and Rule 13d-1 thereunder  

(Clayton) 

164. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

165. Pursuant to Exchange Act Section 13(d) and Rule 13d-1 thereunder, persons who 

are directly or indirectly the beneficial owners of more than five percent of the outstanding 

shares of a class of voting equity securities registered under the Exchange Act are required to file 

a Schedule 13D within ten days of the date on which their ownership exceeds five percent.  

166. Clayton had an obligation to file with the Commission true and accurate reports 

with respect to his ownership of Flexpoint, KwikClick, and LZG International stock pursuant to 

Exchange Act Section 13(d) and Rule 13d-1 thereunder, but failed to do so.  

167. By reason of the foregoing, Clayton violated, and, unless enjoined and restrained 

will continue to violate, Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)] and Rule 13d-1 

thereunder [17 C.F.R. § 240.13d-1]. 

TENTH CLAIM FOR RELIEF 
FAILURE TO DISCLOSE SECURITIES HOLDINGS 

 
Violations of Section 16(a) of the Exchange Act and Rule 16a-3 thereunder  

(Clayton) 

168. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

169. Clayton, after acquiring, directly or indirectly, the beneficial ownership of more 

than ten percent of a class of equity securities of Flexpoint and KwikClick registered pursuant to 

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Section 12 of the Exchange Act [15 U.S.C. § 78l], failed to file with the Commission a Form 3 

providing an initial statement of beneficial ownership and, after effecting transactions in the 

securities, failed to file with the Commission Forms 4 and 5 providing statements of changes in 

beneficial ownership.  

170. By reason of the foregoing, Clayton has violated, and unless restrained and 

enjoined will in the future violate, Section 16(a) of the Exchange Act [15 U.S.C. § 78p(a)] and 

Rule 16a-3 thereunder [17 C.F.R. § 240.16a-3]. 

ELEVENTH CLAIM FOR RELIEF 
UNLAWFUL TOUTING 

 
Violations of Section 17(b) of the Securities Act  

(Rieu, Chesapeake) 

171. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

172. By their conduct alleged herein, Rieu and Chesapeake, by the use of any means or 

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

mails, published, gave publicity to, or circulated a notice, advertisement, or communication, 

which, though not purporting to offer a security for sale, described a security, for a consideration 

received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without 

fully disclosing the receipt of such consideration and the amount thereof. 

173. Rieu and Chesapeake thus violated, and unless restrained and enjoined will 

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

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TWELFTH CLAIM FOR RELIEF 
OTHER EQUITABLE RELIEF, INCLUDING  

UNJUST ENRICHMENT AND CONSTRUCTIVE TRUST 
 

(Relief Defendants) 

174. Paragraphs 1 through 139 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

175. Section 21(d)(5) of the Exchange Act states, “In any action or proceeding brought 

or instituted by the Commission under any provision of the securities laws, the Commission may 

seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary 

for the benefit of investors.” 

176. Relief Defendants received ill-gotten funds by means of a fraudulent stock selling 

scheme.  Relief Defendants have no legitimate claim to this property.  In equity and good 

conscience, Relief Defendants should not be allowed to retain such funds.   

177. As a result, Relief Defendants are liable for unjust enrichment and should each be 

required to return their share of ill-gotten gains, in an amount to be determined by the Court.  

The Court should also impose a constructive trust on the ill-gotten gains in the possession of 

Relief Defendants.  

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court grant the following 

relief: 

I. 

Enter a Final Judgment permanently restraining and enjoining Defendants, as well as 

their agents, servants, employees, attorneys, and those persons in active concert or participation 

with them, from directly or indirectly engaging in the conduct described above, or in conduct of 

similar purpose and effect, in violation of Section 17(a) of the Securities Act [15 U.S.C. 

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§ 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. 

 Enter a Final Judgment permanently enjoining Clayton, Jackson, and Standard Registrar, 

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

concert or participation with them who receive actual notice of the injunction by personal service 

or otherwise, and each of them, from violating Section 5(a) and 5(c) of the Securities Act 

[15 U.S.C. § 77e(a) and (c)]; 

III. 

Enter a Final Judgment permanently enjoining Clayton, as well as his officers, agents, 

servants, employees, attorneys, and those persons in active concert or participation with them 

who receive actual notice of the injunction by personal service or otherwise, and each of them, 

from violating Sections 13(d) and 16(a) of the Exchange Act [15 U.S.C. §§ 78m(d) and 78p(a)], 

and Rules 13d-1 and 16a-3 thereunder [17 C.F.R. §§ 240.13d-1 and 240.16a-3];  

IV.  

Enter a Final Judgment permanently enjoining Rieu and Chesapeake, as well as their 

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

participation with them who receive actual notice of the injunction by personal service or 

otherwise, and each of them, from violating Section 17(b) of the Securities Act [15 U.S.C. § 

77q(b)]; 

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V. 

Enter a Final Judgment ordering Defendants to disgorge their ill-gotten gains and pay 

prejudgment interest thereon pursuant to Sections 21(d)(5) and (7) of the Exchange Act [15 

U.S.C. § 78u(d)(5) and (7)]; 

VI. 

Enter a Final Judgment imposing civil money penalties upon Defendants 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)];  

VII. 

Enter a Final Judgment prohibiting Defendants from participating in any offering of a 

penny stock, pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and Section 

21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)];  

VIII. 

Enter a Final Judgment barring Clayton, Jackson, Perry, Mower, and Rieu from acting as 

an officer or director of any public company, pursuant to Section 20(e) of the Securities Act [15 

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

IX. 

Enter a Final Judgment permanently enjoining Clayton from directly or indirectly, 

including, but not limited to, through any entity owned or controlled by Clayton: (i) participating 

in the issuance, purchase, offer, or sale of any security; (ii) being the controlling shareholder of 

any issuer (which term “controlling shareholder” means the possession, direct or indirect, of the 

power to direct or cause the direction of the management and policies of an issuer, whether 

through the ownership of voting securities, by contract, or otherwise); (iii) promoting any issuer 

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of any security, causing the promotion of any issuer of any security, or deriving compensation 

from the promotion of any issuer of any security; for purposes of this injunction, “promoting” or 

“promotion” means, for direct or indirect compensation or pecuniary benefit, directly or 

indirectly, engaging in, publishing, giving publicity to, or circulating any communication, the 

goal of which is to generate interest in any security; or (iv) soliciting any person or entity to 

purchase or sell any security, or to hold any security, as nominee; provided, however, that such 

injunction shall not prevent Clayton from purchasing or selling securities listed on a national 

securities exchange for his own personal account; 

X.  

Enter a Final Judgment permanently enjoining First Equity from directly or indirectly, 

including, but not limited to, through any entity owned or controlled by First Equity: 

(i) participating in the issuance, purchase, offer, or sale of any security; (ii) being the controlling 

shareholder of any issuer (which term “controlling shareholder” means the possession, direct or 

indirect, of the power to direct or cause the direction of the management and policies of an 

issuer, whether through the ownership of voting securities, by contract, or otherwise); or 

(iii) promoting any issuer of any security, causing the promotion of any issuer of any security, or 

deriving compensation from the promotion of any issuer of any security; for purposes of this 

injunction, “promoting” or “promotion” means, for direct or indirect compensation or pecuniary 

benefit, directly or indirectly, engaging in, publishing, giving publicity to, or circulating any 

communication, the goal of which is to generate interest in any security; 

XI.  

Enter a Final Judgment permanently enjoining Perry from directly or indirectly, 

including, but not limited to, through any entity owned or controlled by Perry, participating in 

the issuance, purchase, offer, or sale of any security; provided, however, that such injunction 

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shall not prevent Perry from purchasing or selling securities listed on a national securities 

exchange for his own personal account; 

XII.  

Enter a Final Judgment permanently enjoining Rieu from directly or indirectly, including, 

but not limited to, through any entity owned or controlled by Rieu: (i) participating in the 

issuance, purchase, offer, or sale of any security; (ii) promoting any issuer of any security, 

causing the promotion of any issuer of any security, or deriving compensation from the 

promotion of any issuer of any security; for purposes of this injunction, “promoting” or 

“promotion” means, for direct or indirect compensation or pecuniary benefit, directly or 

indirectly, engaging in, publishing, giving publicity to, or circulating any communication, the 

goal of which is to generate interest in any security; or (iii) soliciting any person or entity to 

purchase or sell any security, or to hold any security, as nominee; provided, however, that such 

injunction shall not prevent Rieu from purchasing or selling securities listed on a national 

securities exchange for his own personal account; 

XIII.  

Enter a Final Judgment permanently enjoining Chesapeake from directly or indirectly: 

(i) participating in the issuance, purchase, offer, or sale of any security; (ii) promoting any issuer 

of any security, causing the promotion of any issuer of any security, or deriving compensation 

from the promotion of any issuer of any security; for purposes of this injunction, “promoting” or 

“promotion” means, for direct or indirect compensation or pecuniary benefit, directly or 

indirectly, engaging in, publishing, giving publicity to, or circulating any communication, the 

goal of which is to generate interest in any security; or (iii) soliciting any person or entity to 

purchase or sell any security, or to hold any security, as nominee; 

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XIV. 

Enter a Final Judgment ordering Relief Defendants to disgorge their ill-gotten gains and 

pay prejudgment interest thereon pursuant to Section 21(d)(5) and (7) of the Exchange Act [15 

U.S.C. § 78u(d)(5) and (7)]; and  

XV. 

Granting such other and further relief as this Court deems just and proper. 

JURY DEMAND 

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff demands that this 

case be tried to a jury.   

                                                 
DATED: December 11, 2024.   Respectfully submitted, 

/s/ Michael C. Moran      
Michael C. Moran (Mass. Bar No. 666885)  
Russell A. Mawn (Mass. Bar No. 712095) 
Alexandra B. Lavin (Mass. Bar No. 687785) 
Jeffrey Olshan (Mass Bar. No. 693337) 
SECURITIES AND EXCHANGE 
COMMISSION  
Boston Regional Office  
33 Arch St., 24th Floor  
Boston, MA 02110  
Phone:  617-573-8931 (Moran direct) 
Email:  [email protected] 
Fax:      617-573-4590  
 

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