SEC v. Donna Dellomo; Yoon Um; and The Lovesac Company, No. 3:24-cv-01727, District of Connecticut (Oct. 29, 2024) — Complaint

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
___________________________________________
       )
UNITED STATES SECURITIES AND  )
EXCHANGE COMMISSION,   )
       )
Plaintiff,   )  Civil Action No. 24-cv-1727
)
v.      )
      ) JURY TRIAL DEMANDED
DONNA DELLOMO, YOON UM, AND   )
THE LOVESAC COMPANY,   )
       )
   Defendants.   )
___________________________________________ )

COMPLAINT
Plaintiff, the United States Securities and Exchange Commission (the “Commission” or
“SEC”), for its complaint against Defendants, Donna Dellomo (“Dellomo”), Yoon Um (“Um”),
and The Lovesac Company (“Lovesac” or “the Company”), hereby alleges as follows:
SUMMARY
1. This case involves fraudulent accounting treatment of approximately $2.2 million
in shipping expenses that led to materially misleading financial statements being filed with the
Commission and made available to the investing public.  Furniture retailer and publicly traded
company (sometimes referred to as an “issuer” of securities) Lovesac, its former Chief Financial
Officer (“CFO”) and Executive Vice President, Donna Dellomo, and its former C ontroller and
Vice President, Yoon Um, failed to properly account for “last mile” shipping expenses, i.e., the
cost of shipping finished products from Lovesac’s distribution centers to its customers.  Dellomo
and Um instead engaged in a fraudulent scheme to obscure the expenses in the company’s books
and records.
2. In April 2023, Lovesac discovered that $2.2 million in last mile shipping expenses

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were not properly recorded and reported in its previously published financial results for the
periods in which they were incurred.  The $2.2 million in last mile shipping expenses had instead
been inaccurately recorded in the Company’s books and records for the first quarter of fiscal year
2024.  Um, in concert with Dellomo, engaged in a scheme to hide those expenses from investors
and the Commission.  They did this to avoid missing Lovesac’s projected gross margin—an
important financial metric that the Company disclosed in its SEC filings and on conference calls
that are open to investors where the Company discusses financial and other issues (often referred
to as “earnings calls,” which are frequently attended by financial analysts covering the
Company)—and to avoid restating the Company’s prior financial filings for the periods in which
the expenses were incurred.  To accomplish this scheme, Dellomo and Um improperly accounted
for the expenses.  Dellomo and Um, both experienced financial professionals and certified public
accountants (“CPA”), knew, or were reckless in not knowing, that the fraudulent accounting
treatment they devised was not compliant with generally accepted accounting principles in the
United States (“GAAP”) and rendered certain of Lovesac’s financial statements materially false
and misleading.
3. As part of the scheme, Dellomo also submitted a false and misleading
management representation letter to Lovesac’s outside auditor and otherwise failed to alert
Lovesac’s auditors to the fraudulent accounting for the $2.2 million in last mile shipping
expenses.  Further, Lovesac and Dellomo failed to implement sufficient internal controls over
financial reporting—that is, processes, policies and procedures put in place by a company to
provide reasonable assurances as to the accuracy, reliability, and integrity of its financial
reporting—that may have prevented or detected Dellomo and Um’s fraudulent accounting.  In
the end, Lovesac was required to restate its financial statements for fiscal year 2023 and the first

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quarter of fiscal year 2024 to correct Dellomo and Um’s fraud.
4. As a result of the conduct alleged herein, Lovesac violated Section 17(a)(3) of the
Securities Act of 1933 (“Securities Act”), Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the
Securities Exchange Act of 1934 (“Exchange Act”) and Rules 12b-20, 13a-1, 13a-11, and 13a-13
thereunder.  Dellomo violated Sections 17(a)(1) and 17(a)(3) of the Securities Act, Sections
10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2,
thereunder.  Dellomo also aided and abetted Lovesac’s violations of Sections 13(a), 13(b)(2)(A),
and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.
Um violated Sections 17(a)(1) and 17(a)(3) of the Securities Act, and Section 10(b) of the
Exchange Act, and Rules 10b-5(a) and (c) and 13b2-1 thereunder.  Um also aided and abetted
Dellomo’s violations of Exchange Act Section 10(b) and Rule 10b-5(b) thereunder and
Lovesac’s violations of Exchange Act Sections 13(a), and 13(b)(2)(A), and Rules 12b-20, 13a-1,
13a-11, and 13a-13 thereunder.
NATURE OF THE PROCEEDING AND RELIEF SOUGHT
5. 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 Exchange
Act [15 U.S.C. § 78u(d)(1)].
6. The Commission seeks permanent injunctions against Defendants, enjoining them
from engaging in the unlawful conduct alleged in this Complaint, and 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)].  The Commission further seeks an order prohibiting Dellomo and
Um from acting as officers or directors of any public company pursuant to Section 21(d)(2) of
the Exchange Act [15 U.S.C. § 78u(d)(2)], an order barring Dellomo and Um from practicing as

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accountants before the Commission, and such other relief as the Court may deem appropriate.
JURISDICTION AND VENUE
7. This Court has jurisdiction over this action pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)] and Sections 21(d), 21(e), and 27 of the Exchange Act [15
U.S.C. §§ 78u(d), 78u(e), 78aa].
8. Venue lies in this Court 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].  Certain of the acts, practices,
and transactions and courses of business alleged in this Complaint occurred within the District of
Connecticut and elsewhere, and were effected, directly or indirectly, by making use of means or
instrumentalities of transportation or communication in interstate commerce, or the mails.
DEFENDANTS
9. Lovesac, a furniture retailer, is a Delaware corporation with its principal place of
business in Stamford, Connecticut.  Lovesac became a public company through an initial public
offering in 2018.  The Company’s common stock is registered with the Commission pursuant to
Section 12(b) of the Exchange Act and trades on Nasdaq under the symbol “LOVE.”  Lovesac
files periodic reports with the Commission on Forms 10-K (annual financial statements), 8-K
(current reports), and 10-Q (quarterly financial statements), among others.  During the relevant
period, Lovesac issued stock compensation to employees pursuant to a stock incentive plan for
which a Form S-8 registration statement was filed with the Commission on July 8,
2022.  Further, on June 26, 2023, Lovesac issued shares pursuant to the exercise of certain stock
warrants.
10. Donna Dellomo, age 60, is a resident of Williamsburg, Virginia.  Dellomo has
been licensed as a CPA since 1991 and is currently licensed in New York.  Between January
2017 and June 2023, Dellomo served as Lovesac’s Chief Financial Officer and Executive Vice

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President and oversaw finance, accounting, administration and risk management, and legal
departments at the Company.  She retired from Lovesac in June 2023.  After retiring, Dellomo
worked as a strategic consultant for Lovesac for a year through June 2024.
11. Yoon Um, age 41, is a resident of Athens, New York.  Um has been licensed as a
CPA since 2009 and is currently licensed in New York.  She was employed as Lovesac’s
Controller and Vice President starting in November 2022 and agreed to resign in July 2023.
Prior to serving as Lovesac’s Controller, Um was a Controller at another public company for two
years and spent almost a decade in various auditing roles at a large public accounting firm before
that.
FACTS
Lovesac’s Business
12. Lovesac is a furniture company that designs, manufactures, and sells furniture
comprised of modular couches called Sactionals and foam beanbag chairs called Sacs, as well as
accessories.  The Company markets its products primarily through its website and showrooms at
malls throughout the United States.  The Company operates through a direct-to-consumer model
selling its products online and shipping directly to customers.
13. The Company went public on June 26, 2018, with an initial offering priced at
$16.00 per share.  The Company’s common stock trades on Nasdaq under the Symbol “LOVE.”
Lovesac’s Finance and Accounting Group
14. At all relevant times, Lovesac’s finance and accounting group was led by the
Chief Financial Officer and Executive Vice President, Donna Dellomo.  Dellomo, an
experienced financial professional and CPA, began her career as an auditor at various

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companies, and subsequently served as an accounting manager, corporate Controller, and CFO
of another public company.
15. Beginning in 2017, Dellomo served as Lovesac’s CFO, initially working to help
prepare the Company for its initial public offering in 2018.  During the relevant period,
Dellomo’s direct reports included Um (the Company’s Controller), who was hired in November
2022 and oversaw the Company’s accounting functions.  During her ten months as Lovesac’s
Controller, Um and her reports were responsible for internal accounting functions.  Um agreed to
resign in July 2023 and left the Company in September 2023.
Glossary of Relevant Accounting Terminology
16. Fiscal Year:  A public company’s fiscal year (“FY”) is the twelve-month period
in which a company reports quarterly and annual financial results.  Lovesac operates on a 52- or
53-week fiscal year that ends on the Sunday closest to February 1st.  The Company reports
financial results on this schedule to account for increased sales during the November to January
holiday season.  FY 2023 was 52 weeks and ended on January 29, 2023, and FY 2024 was 53
weeks and ended on February 4, 2024.  A public company’s annual financial results based on the
fiscal year are publicly reported on SEC Form 10-K (“Form 10-K”) filed with the Commission,
as required by law.
17. Fiscal Quarter:  Public companies also report quarterly results for the four three-
month quarters in each fiscal year.  Lovesac’s FY 2023 quarters consisted of the first quarter (or
“Q1”) (February through April), the second quarter (or “Q2”) (May through July), the third
quarter (or “Q3”) (August through October), and the fourth quarter (or “Q4”) (November
through January).  Quarterly financial results are often publicly reported in a SEC Form 8-K
(“Form 8-K”) filed with the Commission and, for the first three quarters of the year, additionally

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reported on SEC Form 10-Q (“Form 10-Q”) filed with the Commission, as required by law.  Q4
results are incorporated into the annual Form 10-K.
18. GAAP:  GAAP (Generally Accepted Accounting Principles in the United States)
refers to the standard framework of guidelines for accounting used in the United States as
established by the Financial Accounting Standards Board.  These principles set the rules for
preparing, presenting, and reporting financial statements of public companies, ensuring
consistency, and transparency.  GAAP is used by accountants, auditors, and the investing public
to compare financial information across different organizations, maintaining uniformity in
financial reporting.  Required financial statements, such as Form 10-Q and Form 10-K, must be
prepared in accordance with GAAP.  If such financial statements are not prepared in accordance
with GAAP, they are presumed to be misleading or inaccurate.
19. Accrual:  An “accrual” reflects revenue earned or expenses incurred before the
actual cash transaction has taken place.  An accrual for a shipping expense would reflect a
shipping expense incurred (i.e., when a product has been shipped to the customer) but that has
not yet been paid by the company.
20. Gross margin:  Gross margin is a financial metric that represents the difference
between net sales (net sales refers to the sale of merchandise plus shipping and handling revenue
less returns and discounts) and cost of merchandise sold and is expressed as a percentage of net
sales.  A higher gross margin indicates that a company is retaining more of its revenue after
covering the direct costs associated with producing goods.  For example, if a company sold ten
widgets for $100 each and all the direct costs were $40 per widget, the gross margin would be
60%, meaning that the company retained $600 or 60% of the net sales.

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21. Capitalization:  Capitalization is an accounting concept that refers to the process
of recording an expenditure as an asset rather than an expense.  When an expense is capitalized,
the underlying expense is spread out over the useful life of the asset instead of the full cost being
recorded in the company’s books and records and reported in its financial statements (sometimes
referred to as revenue being “recognized”).  Capitalization is applied to expenditures that provide
future economic benefits under certain circumstances.  For example, a company may capitalize
the cost of manufacturing machinery that will allow the company to manufacture products over
time.  Through capitalizing such costs, companies match the cost of an asset with the revenue
that it generates over time.  This contrasts with expenses that do not provide a future economic
benefit, such as outbound shipping costs, that are recorded in the period in which the expenses
were incurred and the revenue recognized.
22. Amortization:  Amortization refers to the financial concept of allocating the cost
of an intangible asset over its useful life.  This process records the cost of the asset over the
period it is expected to generate economic benefits.  Thus, for example, a company might divide
the cost of an intangible asset, such as a patent, over the useful life of the patent.  In this
example, if the patent was expected to generate revenue from sales of a patented invention for
ten years, the cost of the patent would be spread out over the same ten-year period.
23. General Ledger:  The general ledger is a record of a company’s financial
transactions, where all journal entries are recorded.  A journal entry is the initial record of each
of the company’s transactions, detailing the date, accounts affected, amounts, and a brief
description.  These journal entries are “posted” to the general ledger, which organizes them by
account (such as assets, liabilities, equity, revenue, and expenses) and serves as the foundation
for preparing a company’s financial statements, such as the balance sheet and income statement.

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Last Mile Shipping
24. “Last mile shipping” is the term used by Lovesac to reflect the cost of
transporting Lovesac’s finished products from a distribution center to the customer.  At all
relevant times, Lovesac used large shipping companies like FedEx for its last mile shipping.
25. With respect to last mile shipping expenses, Lovesac publicly disclosed in its FY
2023 Form 10-K that it “records the expenses for shipping and handling activities at the same
time the Company recognizes revenue.  Shipping and handling costs incurred are included in
cost of merchandise sold and include inbound freight and tariff costs relative to inventory sold,
warehousing, and last mile shipping to our customers.”  As set forth below, Lovesac’s
accounting for last mile shipping expenses was inconsistent with this public disclosure, as was
Dellomo and Um’s scheme to hide last mile shipping expenses.
26. On average, there was at least a two-week delay between the shipping date (the
date when a product was shipped by FedEx) and the invoice date (the date when the FedEx
invoice was received by Lovesac).  Lovesac accounted for this timing discrepancy through an
accrual process whereby the Company calculated and recorded a monthly estimate of shipping
expenses incurred, but not yet recorded in its books and records.  The accrual was later
reconciled against actual amounts paid to shipping companies based on invoices.
27. However, during the relevant period, Lovesac’s monthly accrual methodology
was flawed and inconsistently applied.  In certain circumstances, relevant shipment data for the
period was not used in the shipping container count estimate and improper assumptions were
used for the cost per shipment calculation.  As a result, the estimated accrual was understated,
which was not compliant with GAAP because the expenses incurred in the period were not
properly recorded.

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Dellomo and Um Devised a Scheme to Obscure the Last Mile Shipping
Expenses in Lovesac’s Q1 2024 Books
28. While performing an analysis in April 2023 as part of Lovesac’s monthly
financial closing process, Lovesac’s finance and accounting group employees discovered that
last mile shipping expenses were significantly higher in Q1 2024 than what the Company had
previously budgeted for the month.  Specifically, Lovesac’s finance and accounting group
employees estimated that approximately $2.2 million of last mile shipping expenses were
improperly recorded in Q1 2024 rather than having been recorded in FY 2023, the period in
which they believed the expenses were actually incurred.
29. On Sunday, April 23, 2023, Dellomo, in an email to employees including
members of the finance and accounting group, indicated that the out-of-period shipping expenses
would cause Lovesac’s gross margin for Q1 2024 to be lower than expected.  As explained
above, gross margin is a financial metric, and a higher gross margin figure is more positive for a
company.  In the same email, Dellomo expressed concern about not meeting Lovesac’s 50.1%
gross margin projection, which had been publicly disclosed by Lovesac during a March 28, 2023
earnings call.  Minutes later, Dellomo forwarded her email to Um and requested that she
investigate the issue.
30. The next day, Monday, April 24, 2023, members of Lovesac’s finance and
accounting group met to discuss the problem with last mile shipping expenses having been
improperly recorded in Q1 2024.  On April 25, 2023, Dellomo emailed Um and the same group,
noting that the gross margin estimate for Q1 2024 was, as of that day, only 48.7%.  This was 140
basis points lower than Lovesac’s Q1 2024 gross margin projection of 50.1%, which, as noted
above, was publicly disclosed to investors during the March 28, 2023 earnings call.

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31. On or about Tuesday, April 25, 2023, Um and other members of Lovesac’s
finance and accounting group concluded that there were approximately $2.2 million of last mile
shipping invoices for shipping expenses incurred in FY 2023 that were not recorded until Q1
2024.
32. On the same day, members of the finance and accounting group, including
Dellomo and Um, discussed the $2.2 million out-of-period expenses and the impact on
Lovesac’s gross margin for Q1 2024.  Um stated in a Microsoft Teams chat that she could not
justify, as an accounting matter, reversing the $2.2 million shipping expenses.  Another finance
and accounting group employee who reported to Um communicated to her that reversing the
$2.2 million from the Q1 2024 books would be “a giant black eye for the auditors to pick out.”
33. Also on April 25, Um communicated with a senior member of Lovesac’s financial
planning and analysis (“FP&A”) group.  Um told that individual, in a Microsoft Teams chat, that
the only way to meet the Q1 2024 gross margin projection was to capitalize the $2.2 million last
mile shipping expenses and amortize them evenly over the remaining three quarters of FY 2024
starting in Q2 2024.  Um replied: “I just don’t know how I can support [it].”  Indeed, capitalizing
the $2.2 million in shipping expenses would not comply with GAAP because the expenses did
not provide any future economic benefit.
34. The following day, on April 26, 2023, in a Microsoft Teams chat with the same
senior member of the FP&A group, Um stated that the Company was going to miss its publicly
disclosed gross margin projection for Q1 2024 unless the $2.2 million in last mile shipping
expenses were removed from Lovesac’s Q1 2024 financial results.  Um additionally expressed
concern over being fired from Lovesac because of the last mile shipping issue.  Around the same

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time, in a Microsoft Teams chat with another finance and accounting group employee, Um
expressed further concern over her job security.
35. Also on April 26, 2023, Um and Dellomo again discussed the $2.2 million out-of-
period expenses during a call and, working in concert, decided to remove the expenses from
Lovesac’s Q1 2024 financial results.  Their solution was to capitalize the expenses in the
Company’s general ledger and then amortize the total over the last three quarters of FY 2024
starting in Q2 2024.  This was the same proposed accounting treatment that Um had indicated
she could not justify the day before.  This accounting treatment would have two consequences:
first, it would improperly avoid the cost, time, and negative reflection on the Company
associated with reopening and restating the FY 2023 books to properly account for the expenses
in the period they were actually incurred and, second, it would improperly allow the Company to
meet its previously disclosed Q1 2024 gross margin projection.
36. After talking to Dellomo on April 26, Um again communicated with a senior
member of Lovesac’s FP&A group to ask if the proposed accounting treatment would result in
the Q1 2024 gross margin being the same as the publicly disclosed projection of 50.1%.
37. On April 26, 2023, after consulting Dellomo on the details of the entry, Um
improperly booked a journal entry in the Company’s general ledger to capitalize the $2.2 million
expenses as an asset with the plan to spread out the expenses over the last three quarters of FY
2024.  Dellomo approved Um’s journal entry in Lovesac’s accounting system the following day,
April 27, 2023.  As a result of this improper journal entry, the Company’s expenses in Q1 2024
were decreased by $2.2 million, which had the effect of meeting the Q1 2024 gross margin
projection of 50.1%.  As noted above, this accounting treatment was not in compliance with
GAAP and obscured the $2.2 million of out-of-period shipping expenses in the Company’s 2024

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books and records.    In effect, Dellomo and Um improperly pushed the last mile shipping
expenses into the future, even though they believed that they had been incurred in the prior fiscal
year.
38. With respect to the journal entry, Um stated in a Microsoft Teams chat: “I don’t
know how to tell [Dellomo] I don’t feel comfortable with it[.]”  She nevertheless booked the
journal entry and stated that she hoped it would “do the trick” for Lovesac to meet its gross
margin target for Q1 2024.
39. On June 7, 2023, as the result of the inappropriate accounting treatment for the
$2.2 million out-of-period last mile shipping expenses, Lovesac reported in a Form 8-K filed
with the Commission that its gross margin for Q1 2024 was 50.1%, exactly as the Company had
earlier publicly disclosed.  That same information was incorporated into Lovesac’s Form 10-Q
for Q1 2024, filed with the Commission on June 9, 2023.
40. With respect to journal entries, Dellomo, as Lovesac’s CFO, typically required
detailed accounting support prior to approval.  Contrary to Dellomo’s normal practice, no such
accounting support was attached to Um’s journal entry.  In particular, at the time the $2.2 million
journal entry was made, Dellomo and Um did not perform a documented materiality analysis,
i.e., a written analysis of whether the out-of-period last mile shipping expenses significantly
impacted Lovesac’s FY 2023 financial results.  Nor was there any other supporting
documentation justifying the improper accounting treatment they devised.
Lovesac’s Periodic Financial Reports Were Materially Misstated as a Result of
Dellomo and Um’s Misconduct
41. As a result of Dellomo and Um’s scheme, four of Lovesac’s public financial
reports filed with the Commission were rendered materially false and misleading.

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42. Lovesac’s FY 2023 Form 10-K.  Lovesac’s Form 10-K for FY 2023, filed with the
Commission on March 29, 2023, was materially false and misleading because last mile shipping
expenses were not included in the period in which they were actually incurred and the Form 10-
K did not disclose material weaknesses in Lovesac’s internal accounting controls environment,
including that management did not sufficiently implement, promote, monitor, or enforce
appropriate accounting policies and procedures.
43. Form 8-K Filed March 28, 2023.  A Form 8-K announcing Lovesac’s FY 2023
financial results, filed with the Commission on March 28, 2023, was materially false and the
Form 10-K misleading because last mile shipping expenses were not included in the period in
which they were incurred and did not disclose material weaknesses in Lovesac’s internal
accounting control environment including that management did not sufficiently implement,
promote, monitor, or enforce appropriate accounting policies and procedures.
44. Lovesac’s Q1 2024 Form 10-Q.  Lovesac’s Form 10-Q for Q1 2024, filed with the
Commission on June 9, 2023, omitted financial and other information required to make the
report not misleading because the report:
a. did not disclose the existence of out-of-period last mile shipping expenses;
b. did not disclose that the Company’s financial statements improperly reported the
last mile shipping expenses as an asset;
c.  did not disclose Dellomo and Um’s fraudulent $2.2 million journal entry
removing those expenses from Lovesac’s Q1 2024 results;
d. did not disclose that the gross margin figure of 50.1% in Lovesac’s Form 10-Q for
Q1 2024 was manipulated by Dellomo and Um’s misconduct in removing last
mile shipping expenses from the quarter;

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e. did not disclose that financial statements included in Lovesac’s Form 10-Q were
not prepared in accordance with GAAP; and
f. did not disclose material weaknesses in the control environment including that
management did not sufficiently implement, promote, monitor, or enforce
appropriate accounting policies and procedures.
45. Form 8-K filed June 7, 2023.  A Form 8-K announcing Lovesac’s financial results
for Q1 2024, which was filed with the Commission on June 7, 2023, omitted financial and other
information required to make the report not misleading because the report:
a. did not disclose the existence of out-of-period last mile shipping expenses;
b. did not disclose that the Company’s financial statements improperly reported the
last mile shipping expenses as an asset;
c. did not disclose Dellomo and Um’s fraudulent $2.2 million journal entry
removing those expenses from Lovesac’s Q1 2024 results;
d. did not disclose that the financial results announced in Lovesac’s Form 8-K were
not prepared in accordance with GAAP; and
e. did not disclose material weaknesses in the control environment including that
management did not sufficiently implement, promote, monitor, or enforce
appropriate accounting policies and procedures.
46. By knowingly making a fraudulent journal entry that was not compliant with
GAAP and had the effect of obscuring the $2.2 million in last mile shipping expenses in the
Company’s FY 2024 books and records, Um engaged in fraudulent conduct that rendered the
above filings false and misleading.  By knowingly approving Um’s improper April 27, 2023
journal entry that capitalized the $2.2 million in last mile shipping expenses, Dellomo engaged in

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fraudulent conduct that rendered the above filings false and misleading.  Dellomo also had
ultimate authority over Lovesac’s public filings and falsely certified Lovesac’s Form 10-Q for
Q1 2024 while knowing that it was materially false and misleading.  Um made the inappropriate
journal entry that she knew, or was reckless in not knowing, would render Lovesac’s Q1 2024
financial filings false and misleading.
47. Public companies like Lovesac are further required to make and keep books,
records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of their assets.  Lovesac’s books and records did not accurately and fairly reflect
the $2.2 million in last mile shipping expenses.  Dellomo and Um’s conduct rendered Lovesac’s
books and records inaccurate by obscuring the $2.2 million in last mile shipping expenses.
Dellomo Falsely Certified Lovesac’s Q1 2024 Form 10-Q
48. Periodic financial reports filed with the Commission must also include a
certification signed by the issuer’s principal financial officer (here, Dellomo) that, based on the
certifier’s knowledge, the financial statements, and other financial information included in the
report, fairly present in all material respects the financial condition, results of operations, and
cash flows of the issuer as of, and for, the periods presented in the report, t  hat the report does not
contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by the report.  Dellomo falsely certified Lovesac’s
Form 10-Q for Q1 2024 while knowing that the filing omitted information necessary to make the
filing not false and misleading.  Specifically, among other things, Dellomo’s certification falsely
stated that: (a) Lovesac designed “internal controls over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with [GAAP];” (b) the financial statements, and

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other financial information included in the Company’s filings, fairly presented in all material
respects the financial condition of the Company; and (c) Dellomo disclosed to the Company’s
audit committee and outside auditor “[a]ll significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting” and “[a]ny fraud, whether or not
material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.”
Dellomo Misled Lovesac’s Outside Auditor about Their Misleading Accounting
Treatment of the Last Mile Shipping Expenses
49. Dellomo did not inform Lovesac’s outside auditor, a large public accounting firm,
of the $2.2 million in out-of-period last mile shipping expenses inappropriately recorded in Q1
2024 and the subsequent journal entry that removed the expenses from Q1 2024, which was not
compliant with GAAP.  Dellomo did not disclose or discuss the issue with the outside auditor’s
personnel responsible for auditing Lovesac’s books and records even though she had an
obligation to do so.  Dellomo also made false and misleading representations to Lovesac’s
outside auditor in the management representation letter she signed and submitted to the outside
auditor as part of its Q1 2024 review.  The management representation letter was misleading
because it falsely represented that:
Item 1.  The interim financial information referred to above has been prepared and
presented in conformity with GAAP applicable to interim financial information.
Item 2.  The Company has provided to you all relevant information and access as
agreed in the terms of the audit engagement letter.
Item 11.  The methods, significant assumptions, and the data used by us in
making the accounting estimates and the related disclosures are appropriate to
achieve recognition, measurement, or disclosure that is in conformity with GAAP.
Item 22.  There are no transactions that have not been properly recorded and
reflected in the interim financial information.

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Item 36.  We believe that all expenditures that have been deferred to future
periods are recoverable.
50. Further, Dellomo was asked by Lovesac’s outside auditor’s personnel whether
there were any unusual transactions or entries in the Company’s books and records that were not
GAAP compliant.  Dellomo failed to inform the outside auditor of the $2.2 million out-of-period
last mile shipping expenses and the journal entry capitalizing those expenses.  Had the auditor
been informed, it would have instructed Lovesac to perform an appropriate and documented
materiality assessment and would have reviewed the Dellomo and Um’s decision to capitalize
those expenses for compliance with GAAP.
Lovesac and Dellomo Failed to Devise and Maintain Sufficient Internal
Accounting Controls Over Financial Reporting
51. Lovesac was required to make and keep books, records, and accounts which, in
reasonable detail, accurately and fairly reflect the Company’s transactions and dispositions of the
assets.  Lovesac was also required to devise and maintain a system of internal accounting
controls sufficient to provide reasonable assurances that its financial statements are prepared in
conformity with GAAP or any other criteria applicable to those statements.
52. During the relevant period, Lovesac did not maintain a system of internal
accounting controls sufficient to provide reasonable assurances that shipping expenses incurred,
but not yet recorded, were properly accrued for and that journal entries were properly booked,
which caused the Company to restate its SEC filings.
53. Dellomo knowingly failed to implement an appropriate system of internal
accounting controls.  Dellomo, as the CFO, was responsible for Lovesac’s internal control
structure, and was aware of the issues underlying Lovesac’s internal control failures.
Additionally, Dellomo engaged in the misconduct of approving Um’s journal entry capitalizing

19
the $2.2 million out-of-period last mile shipping expenses that she knew, or was reckless in not
knowing, was not compliant with GAAP.
Lovesac Restates Its FY 2023 and Q1 2024 SEC Filings

54. On June 13, 2023, an employee of Lovesac reported the April 26, 2023 journal
entry to Lovesac’s outside auditor.  This report triggered an internal investigation.  On August
16, 2023, Lovesac filed a Form 8-K with the Commission announcing that its previously filed
financial statements for FY 2023 and Q1 2024—as well as any previously issued or filed
earnings releases, investor presentations, or other communications describing the prior financial
statements and other related financial information covering these periods—could no longer be
relied upon.  Lovesac restated its financials for FY 2023 and the Q1 2024 to correct for the last
mile shipping expenses Dellomo and Um had improperly recorded in a manner that was not
compliant with GAAP to avoid restating Lovesac’s FY 2023 SEC filings and to avoid missing
the Company’s gross margin projection for Q1 2024.
FIRST CLAIM
FRAUD IN THE OFFER OR SALE OF SECURITIES AGAINST DELLOMO AND UM

(Violations of Securities Act Sections 17(a)(1) and (3))
55. Paragraphs 1 through 54 are re-alleged and incorporated by reference.
56. By reason of the conduct described above, Dellomo and Um, 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, acted knowingly or recklessly in violation of Securities Act
Section 17(a)(1) by employing devices, schemes, or artifices to defraud and/or acted knowingly,
recklessly, or negligently in violation of Securities Act Section 17(a)(3) by engaging 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 the securities.

20
57. As a result, Dellomo and Um violated Securities Act Sections 17(a)(1) and (3) [15
U.S.C. § 77q(a)(1) and (3)].
SECOND CLAIM
FRAUD IN THE OFFER OR SALE OF SECURITIES AGAINST LOVESAC

(Violations of Securities Act Section 17(a)(3))
58. Paragraphs 1 through 57 are re-alleged and incorporated by reference.
59. By reason of the conduct described above, Lovesac, 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, acted negligently in violation of Securities Act Section 17(a)(3) by
engaging 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 the securities.
60. As a result, Lovesac violated Securities Act Section 17(a)(3) [15 U.S.C.
§ 77q(a)(3)].
THIRD CLAIM
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES
AGAINST DELLOMO AND UM

(Violations of Exchange Act Section 10(b) and Rules 10b-5(a) and (c) thereunder)
61. Paragraphs 1 through 60 are re-alleged and incorporated by reference.
62. By reason of the conduct described above, Dellomo and Um, directly or
indirectly, in connection with the purchase or sale of securities and by the use of means or
instrumentalities of interstate commerce, or the mails, or the facilities of a national securities
exchange, knowingly or recklessly employed devices, schemes, or artifices to defraud and/or
engaged in acts, practices, or courses of business which operated or would operate as a fraud or
deceit upon other persons.

21
63. As a result, Dellomo and Um 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].
FOURTH CLAIM
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES
AGAINST DELLOMO

(Violations of Exchange Act Section 10(b) and Rule 10b-5(b) thereunder)
64. Paragraphs 1 through 63 are re-alleged and incorporated by reference.
65. By reason of the conduct described above, Dellomo, directly or indirectly, in
connection with the purchase or sale of securities and by the use of means or instrumentalities of
interstate commerce, or the mails, or the facilities of a national securities exchange, knowingly or
recklessly made one or more untrue statements of a material fact or omitted to state one or more
material facts necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
66. As a result, Dellomo violated Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]
and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
FIFTH CLAIM
AIDING AND ABETTING DELLOMO’S VIOLATIONS OF EXCHANGE ACT
SECTION 10(b) AND RULE 10b-5(b) THEREUNDER AGAINST UM

(Aiding and abetting Dellomo’s violations of Exchange Act Section 10(b) and Rule 10b-5
thereunder)
67. Paragraphs 1 through 66 are re-alleged and incorporated by reference.
68. By reason of the conduct described above, Dellomo, directly or indirectly, in
connection with the purchase or sale of securities and by the use of means or instrumentalities of
interstate commerce, or the mails, or the facilities of a national securities exchange, knowingly or
recklessly made one or more untrue statements of a material fact or omitted to state one or more

22
material facts necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
69. As a result, pursuant to Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)],
Um knowingly or recklessly provided substantial assistance to Dellomo in her violations of
Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R.
§ 240.10b-5]  .
SIXTH CLAIM
KNOWINGLY CIRCUMVENTING INTERNAL CONTROLS, FAILING TO
IMPLEMENT INTERNAL CONTROLS, OR FALSIFYING BOOKS AND RECORDS
AGAINST DELLOMO

(Violations of Exchange Act Section 13(b)(5))
70. Paragraphs 1 through 69 are re-alleged and incorporated by reference.
71. By reason of the conduct described above, Dellomo knowingly circumvented
and/or knowingly failed to implement a system of internal accounting controls and/or knowingly
falsified, or caused to be falsified, Lovesac’s books and records.
72. As a result, Dellomo violated Exchange Act Section 13(b)(5) [15 U.S.C. §
78m(b)(5)].
SEVENTH CLAIM
FALSIFYING ANY BOOK, RECORD, OR ACCOUNT AGAINST DELLOMO AND UM

(Violations of Exchange Act Rule 13b2-1)
73. Paragraphs 1 through 72 are re-alleged and incorporated by reference.
74. By reason of the conduct described above, Dellomo and Um, directly or
indirectly, falsified or caused to be falsified, books, records, or accounts described in Section
13(b)(2)(A) of the Exchange Act [15 U.S.C. § 13(b)(2)(A)].
75. As a result, Dellomo and Um violated Exchange Act Rule 13b2-1 [17 C.F.R §

23
240.13b2-1].
EIGHTH CLAIM
LYING, COERCING, OR IMPROPERLY INFLUENCING AN ACCOUNTANT
AGAINST DELLOMO

(Violations of Section Exchange Act Rule 13b2-2)
76. Paragraphs 1 through 75 are re-alleged and incorporated by reference.
77. By reason of the conduct described above, Dellomo omitted to state, or caused
another person to omit to state, material fact necessary in order to make statements made, in light
of the circumstances under which such statements were made, not misleading, to an accountant
in connection with (1) any audit, review, or examination of the financial statements of the issuer;
or (2) the preparation or filing of any document or report required to be filed with the
Commission.
78. As a result, Dellomo violated Exchange Act Rule 13b2-2 [17 C.F.R § 240.13b2-
2].
NINTH CLAIM
MATERIAL MISSTATEMENTS OR OMISSIONS IN PERIODIC OR OTHER
REPORTS AGAINST LOVESAC
(Violations of Exchange Act Section 13(a) and Rules 12b-20, 13a-1, 13a-11, and 13a-13
thereunder)
79. Paragraphs 1 through 78 are re-alleged and incorporated by reference.
80. Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 13a-1, 13a-11,
and 13a-13 thereunder [17 C.F.R. §§ 240.13a-1, 240.13a-11, and 240.13a-13] require issuers of
registered securities to file with the Commision materially accurate annual reports (on Form 10-
K), current reports (on Form 8-K), and quarterly reports (on Form 10-Q).   Exchange Act Rule
12b-20 [17 C.F.R. § 240.12b20] provides that, in addition to the information expressly required

24
to be included in a statement or report, there shall be added such further material information, if
any, as may be necessary to make the required statements, in light of the circumstances under
which they were made, not misleading.
81. By reason of  the conduct described above, Lovesac, as an issuer of a security
registered pursuant to Exchange Act Section 12 [15 U.S.C. § 78l], filed (1) a Form 10-K for FY
2023 on March 29, 2023, (2) a Form 8-K for FY 2023 on March 28, 2023, (3) a Form 10-Q for
Q1 2024 on June 9, 2023, and (4) a Form 8-K for Q1 2024 on June 7, 2023, that each contained
materially false or misleading statements and/or material omissions that rendered the statements
in these filings, in light of the circumstances under which they were made, misleading.
82. As a result, Lovesac violated Exchange Act Section 13(a) [15 U.S.C. § 78m(a)]
and Rules 12b-20, 13a-1, 13a-11, and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11,
and 240.13a-13] thereunder.
TENTH CLAIM
AIDING AND ABETTING LOVESAC’S MATERIAL MISSTATEMENTS OR
OMISSIONS IN PERIODIC OR OTHER REPORTS AGAINST DELLOMO AND UM
(Aiding and abetting Lovesac’s violations of Exchange Act Section 13(a) and Rules 12b-20,
13a-1, 13a-11, and 13a-13 thereunder)
83. Paragraphs 1 through 82 are re-alleged and incorporated by reference.
84. Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 13a-1, 13a-11,
and 13a-13 thereunder [17 C.F.R. §§ 240.13a-1, 240.13a-11, and 240.13a-13] require issuers of
registered securities to file with the Commission materially accurate annual reports (on Form 10-
K), current reports (on Form 8-K), and quarterly reports (on Form 10-Q).  Exchange Act Rule
12b-20 [17 C.F.R. § 240.12b20] provides that, in addition to the information expressly required
to be included in a statement or report, there shall be added such further material information, if
any, as may be necessary to make the required statements, in light of the circumstances under

25
which they were made, not misleading.
85. By reason of the conduct described above, Lovesac, as an issuer of a security
registered pursuant to Exchange Act Section 12 [15 U.S.C. § 78l], filed (1) a Form 10-K for FY
2023 on March 29, 2023, (2) a Form 8-K for FY 2023 on March 28, 2023, (3) a Form 10-Q for
Q1 2024 on June 9, 2023, and (4) a Form 8-K for Q1 2024 on June 7, 2023, that each contained
materially false or misleading statements and/or material omissions that rendered the statements
in these filings, in light of the circumstances under which they were made, misleading.
86. As a result, pursuant to Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)],
Dellomo and Um knowingly or recklessly provided substantial assistance to Lovesac in its
violations of Exchange Act Section 13(a) [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1, 13a-11,
and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11, and 240.13a-13]
ELEVENTH CLAIM
FALSE CERTIFICATION OF FINANCIAL REPORTS AGAINST DELLOMO

(Violations of Exchange Act Rule 13a-14)
87. Paragraphs 1 through 86 are re-alleged and incorporated by reference.
88. By reason of the conduct described above, Dellomo falsely certified, pursuant to
Section 301 of the Sarbanes-Oxley Act of 2002 and Exchange Act Rule 13a-14, Lovesac’s Q1
2024 Form 10-Q.  Dellomo violated Rule 13a-14 when she signed certification for Lovesac’s
public filing that, among other things, failed to disclose the fraudulent accounting treatment of
the last mile shipping expenses.
89. As a result, Dellomo violated Exchange Act Rule 13a-14 [17 C.F.R. § 204.13a-
14].

26

TWELFTH CLAIM
FAILURE TO MAKE AND KEEP BOOKS AND RECORDS IN REASONABLE DETAIL
AGAINST LOVESAC

(Violations of Exchange Act Section 13(b)(2)(A))
90. Paragraphs 1 through 89 are re-alleged and incorporated by reference.
91. Exchange Act Section 13(b)(2)(A) requires an issuer such as Lovesac to make and
keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of its assets.
92. By failing to make or keep books, records and accounts that in reasonable detail
accurately and fairly reflected its transactions and disposition of its assets, Lovesac violated
Exchange Act Section 13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)].
THIRTEENTH CLAIM
AIDING AND ABETTING LOVESAC’S FAILURE TO MAKE AND KEEP BOOKS
AND RECORDS IN REASONABLE DETAIL AGAINST DELLOMO AND UM

(Aiding and abetting Lovesac’s violations of Exchange Act Section 13(b)(2)(A))
93. Paragraphs 1 through 92 are re-alleged and incorporated by reference.
94. By failing to make or keep books, records and accounts that in reasonable detail
accurately and fairly reflected its transactions and disposition of its assets, Lovesac violated
Exchange Act Section 13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)].
95. As a result, pursuant to Exchange Act Section 20(e) [15 U.S.C. § 78t(e)], Dellomo
and Um knowingly or recklessly provided substantial assistance to Lovesac in its violations of
Exchange Act Section 13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)].

27
FOURTEENTH CLAIM
FAILURE TO DEVISE AND MAINTAIN A SYSTEM OF INTERNAL ACCOUNTING
CONTROLS AGAINST LOVESAC
(Violations of Exchange Act Section 13(b)(2)(B))
96. Paragraphs 1 through 95 are re-alleged and incorporated by reference.
97. Exchange Act Section 13(b)(2)(B) requires an issuer such as Lovesac to devise
and maintain a system of internal accounting controls sufficient to provide reasonable assurances
that its financial statements are prepared in conformity with GAAP or any other criteria
applicable to those statements.
98. By failing to devise and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that its financial statements are prepared in
conformity with GAAP or any other criteria applicable to those statements, Lovesac violated
Exchange Act Section 13(b)(2)(B) [15 U.S.C. § 78m(b)(2)(A)].
FIFTEENTH CLAIM
AIDING AND ABETTING LOVESAC’S FAILURE TO DEVISE AND MAINTAIN A
SYSTEM OF INTERNAL ACCOUNTING CONTROLS AGAINST DELLOMO

(Aiding and abetting Lovesac’s violations of Exchange Act Section 13(b)(2)(B))
99. Paragraphs 1 through 98 are re-alleged and incorporated by reference.

100. By failing to devise and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that its financial statements are prepared in
conformity with GAAP or any other criteria applicable to those statements, Lovesac violated
Exchange Act Section 13(b)(2)(B) [15 U.S.C. § 78m(b)(2)(A)].
101. As a result, pursuant to Exchange Act Section 20(e) [15 U.S.C. § 78t(e)], Dellomo
and Um knowingly or recklessly provided substantial assistance to Lovesac in its violations of
Exchange Act Section 13(b)(2)(B) [15 U.S.C. § 78m(b)(2)(B)].

28
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court enter a Final
Judgment:
I.
Permanently restraining and enjoining Lovesac, its officers, agents, servants, employees
and attorneys, and those persons in active concert or participation with them who receive actual
notice of the injunction by personal service or otherwise, from violating Section 17(a)(3) of the
Securities Act;
II.
Permanently restraining and enjoining Lovesac, its officers, agents, servants, employees
and attorneys, and those persons in active concert or participation with them who receive actual
notice of the injunction by personal service or otherwise, from violating Sections 13(a),
13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13
thereunder;
III.
Permanently restraining and enjoining Dellomo, and those persons in active concert or
participation with her who receive actual notice of the injunction by personal service or
otherwise, from violating Section 17(a) of the Securities Act and Sections 10(b) and 13(b)(5) of
the Exchange Act and Rules 10b-5, 13b2-1, 13b2-2 and 13a-14 thereunder;
IV.
Permanently restraining and enjoining Dellomo, and those persons in active concert or
participation with her who receive actual notice of the injunction by personal service or

29
otherwise, from aiding and abetting Lovesac’s violations of 13(b)(2)(A) and 13(b)(2)(B) of the
Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder;
V.
Permanently restraining and enjoining Um, and those persons in active concert or
participation with her who receive actual notice of the injunction by personal service or
otherwise, from violating Section 17(a) of the Securities Act and Sections 10(b) of the Exchange
Act and Rules 10b-5 and 13b2-1 thereunder;
VI.
Permanently restraining and enjoining Um, and those persons in active concert or
participation with her who receive actual notice of the injunction by personal service or
otherwise, from aiding and abetting Dellomo’s violations of Exchange Act Section 10(b) and
Rule 10b-5(b) thereunder;
VII.
Permanently restraining and enjoining Um, and those persons in active concert or
participation with her who receive actual notice of the injunction by personal service or
otherwise, from aiding and abetting Lovesac’s violations of Sections 13(a) and 13(b)(2)(A) of
the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 thereunder;
VIII.
Enter an order pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]
prohibiting Dellomo and Um from acting as an officer or director of any issuer that has a class of
securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is
required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)];

30
IX.
Enter an order pursuant to the Court’s equitable power prohibiting Dellomo and Um from
acting in an accounting or financial reporting role at a public company in connection with the
preparation of financial statements filed with the Commission, providing substantial assistance to
a public company in the preparation of financial statements filed with the Commission, or acting
as an auditor on a public company audit.  For purposes of this requested relief, the following
definitions apply: “Accounting or financial reporting role” means participating in the preparation
of financial statements; decisions about financial reporting; the creation or implementation of
accounting policies; or decisions about accounting treatment.  “Public company” means a
company, foreign or domestic, that files financial statements with the Securities and Exchange
Commission;
X.
Ordering the Defendants to each pay civil monetary 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)]; and
XI.
Granting such other and further relief as this Court may deem just and proper.

31
JURY DEMAND
The Commission demands a jury trial in this matter.
DATED: October 29, 2024.

      Respectfully submitted,
UNITED STATES SECURITIES AND
EXCHANGE C OMMISSION

      By its attorneys,

/s/ Alfred A. Day
Alfred A. Day (Mass. BBO No. 654436)
Xinyue Angela Lin (Mass. BBO No. 672786)
Martin F. Healey (Mass. BBO No. 227550)
Boston Regional Offi   ce
33 Arch Street, 24th F loor
Boston, Massachusetts  02110
(617) 573-8900 (Main)
(617) 573-4590 (Facsimile)
daya@ sec.gov (Day)
[email protected] (Lin)
[email protected] (Healey)

UNITED STATES DISTRICT COURT 
DISTRICT OF CONNECTICUT 

___________________________________________ 
       ) 
UNITED STATES SECURITIES AND  )  
EXCHANGE COMMISSION,   ) 
       )   

Plaintiff,   )  Civil Action No. 24-cv-1727 
)   

v.      ) 
      ) JURY TRIAL DEMANDED  

DONNA DELLOMO, YOON UM, AND   ) 
THE LOVESAC COMPANY,   )   
       ) 
   Defendants.   )   
___________________________________________ ) 
 

COMPLAINT 

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

“SEC”), for its complaint against Defendants, Donna Dellomo (“Dellomo”), Yoon Um (“Um”), 

and The Lovesac Company (“Lovesac” or “the Company”), hereby alleges as follows: 

SUMMARY   

1. This case involves fraudulent accounting treatment of approximately $2.2 million 

in shipping expenses that led to materially misleading financial statements being filed with the 

Commission and made available to the investing public.  Furniture retailer and publicly traded 

company (sometimes referred to as an “issuer” of securities) Lovesac, its former Chief Financial 

Officer (“CFO”) and Executive Vice President, Donna Dellomo, and its former Controller and 

Vice President, Yoon Um, failed to properly account for “last mile” shipping expenses, i.e., the 

cost of shipping finished products from Lovesac’s distribution centers to its customers.  Dellomo 

and Um instead engaged in a fraudulent scheme to obscure the expenses in the company’s books 

and records. 

2. In April 2023, Lovesac discovered that $2.2 million in last mile shipping expenses 

Case 3:24-cv-01727     Document 1     Filed 10/29/24     Page 1 of 31



2 

were not properly recorded and reported in its previously published financial results for the 

periods in which they were incurred.  The $2.2 million in last mile shipping expenses had instead 

been inaccurately recorded in the Company’s books and records for the first quarter of fiscal year 

2024.  Um, in concert with Dellomo, engaged in a scheme to hide those expenses from investors 

and the Commission.  They did this to avoid missing Lovesac’s projected gross margin—an 

important financial metric that the Company disclosed in its SEC filings and on conference calls 

that are open to investors where the Company discusses financial and other issues (often referred 

to as “earnings calls,” which are frequently attended by financial analysts covering the 

Company)—and to avoid restating the Company’s prior financial filings for the periods in which 

the expenses were incurred.  To accomplish this scheme, Dellomo and Um improperly accounted 

for the expenses.  Dellomo and Um, both experienced financial professionals and certified public 

accountants (“CPA”), knew, or were reckless in not knowing, that the fraudulent accounting 

treatment they devised was not compliant with generally accepted accounting principles in the 

United States (“GAAP”) and rendered certain of Lovesac’s financial statements materially false 

and misleading.   

3. As part of the scheme, Dellomo also submitted a false and misleading 

management representation letter to Lovesac’s outside auditor and otherwise failed to alert 

Lovesac’s auditors to the fraudulent accounting for the $2.2 million in last mile shipping 

expenses.  Further, Lovesac and Dellomo failed to implement sufficient internal controls over 

financial reporting—that is, processes, policies and procedures put in place by a company to 

provide reasonable assurances as to the accuracy, reliability, and integrity of its financial 

reporting—that may have prevented or detected Dellomo and Um’s fraudulent accounting.  In 

the end, Lovesac was required to restate its financial statements for fiscal year 2023 and the first 

Case 3:24-cv-01727     Document 1     Filed 10/29/24     Page 2 of 31



3 

quarter of fiscal year 2024 to correct Dellomo and Um’s fraud.   

4. As a result of the conduct alleged herein, Lovesac violated Section 17(a)(3) of the 

Securities Act of 1933 (“Securities Act”), Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the 

Securities Exchange Act of 1934 (“Exchange Act”) and Rules 12b-20, 13a-1, 13a-11, and 13a-13 

thereunder.  Dellomo violated Sections 17(a)(1) and 17(a)(3) of the Securities Act, Sections 

10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2, 

thereunder.  Dellomo also aided and abetted Lovesac’s violations of Sections 13(a), 13(b)(2)(A), 

and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.  

Um violated Sections 17(a)(1) and 17(a)(3) of the Securities Act, and Section 10(b) of the 

Exchange Act, and Rules 10b-5(a) and (c) and 13b2-1 thereunder.  Um also aided and abetted 

Dellomo’s violations of Exchange Act Section 10(b) and Rule 10b-5(b) thereunder and 

Lovesac’s violations of Exchange Act Sections 13(a), and 13(b)(2)(A), and Rules 12b-20, 13a-1, 

13a-11, and 13a-13 thereunder. 

NATURE OF THE PROCEEDING AND RELIEF SOUGHT 

5. 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 Exchange 

Act [15 U.S.C. § 78u(d)(1)].   

6. The Commission seeks permanent injunctions against Defendants, enjoining them 

from engaging in the unlawful conduct alleged in this Complaint, and 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)].  The Commission further seeks an order prohibiting Dellomo and 

Um from acting as officers or directors of any public company pursuant to Section 21(d)(2) of 

the Exchange Act [15 U.S.C. § 78u(d)(2)], an order barring Dellomo and Um from practicing as 

Case 3:24-cv-01727     Document 1     Filed 10/29/24     Page 3 of 31



4 

accountants before the Commission, and such other relief as the Court may deem appropriate. 

JURISDICTION AND VENUE 

7. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

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

U.S.C. §§ 78u(d), 78u(e), 78aa]. 

8. Venue lies in this Court 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].  Certain of the acts, practices, 

and transactions and courses of business alleged in this Complaint occurred within the District of 

Connecticut and elsewhere, and were effected, directly or indirectly, by making use of means or 

instrumentalities of transportation or communication in interstate commerce, or the mails.  

DEFENDANTS 

9. Lovesac, a furniture retailer, is a Delaware corporation with its principal place of 

business in Stamford, Connecticut.  Lovesac became a public company through an initial public 

offering in 2018.  The Company’s common stock is registered with the Commission pursuant to 

Section 12(b) of the Exchange Act and trades on Nasdaq under the symbol “LOVE.”  Lovesac 

files periodic reports with the Commission on Forms 10-K (annual financial statements), 8-K 

(current reports), and 10-Q (quarterly financial statements), among others.  During the relevant 

period, Lovesac issued stock compensation to employees pursuant to a stock incentive plan for 

which a Form S-8 registration statement was filed with the Commission on July 8, 

2022.  Further, on June 26, 2023, Lovesac issued shares pursuant to the exercise of certain stock 

warrants.   

10. Donna Dellomo, age 60, is a resident of Williamsburg, Virginia.  Dellomo has 

been licensed as a CPA since 1991 and is currently licensed in New York.  Between January 

2017 and June 2023, Dellomo served as Lovesac’s Chief Financial Officer and Executive Vice 

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5 

President and oversaw finance, accounting, administration and risk management, and legal 

departments at the Company.  She retired from Lovesac in June 2023.  After retiring, Dellomo 

worked as a strategic consultant for Lovesac for a year through June 2024.   

11. Yoon Um, age 41, is a resident of Athens, New York.  Um has been licensed as a 

CPA since 2009 and is currently licensed in New York.  She was employed as Lovesac’s 

Controller and Vice President starting in November 2022 and agreed to resign in July 2023.  

Prior to serving as Lovesac’s Controller, Um was a Controller at another public company for two 

years and spent almost a decade in various auditing roles at a large public accounting firm before 

that.   

FACTS  

Lovesac’s Business 

12. Lovesac is a furniture company that designs, manufactures, and sells furniture 

comprised of modular couches called Sactionals and foam beanbag chairs called Sacs, as well as 

accessories.  The Company markets its products primarily through its website and showrooms at 

malls throughout the United States.  The Company operates through a direct-to-consumer model 

selling its products online and shipping directly to customers. 

13. The Company went public on June 26, 2018, with an initial offering priced at 

$16.00 per share.  The Company’s common stock trades on Nasdaq under the Symbol “LOVE.”  

Lovesac’s Finance and Accounting Group 

14. At all relevant times, Lovesac’s finance and accounting group was led by the 

Chief Financial Officer and Executive Vice President, Donna Dellomo.  Dellomo, an 

experienced financial professional and CPA, began her career as an auditor at various 

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6 

companies, and subsequently served as an accounting manager, corporate Controller, and CFO 

of another public company.   

15. Beginning in 2017, Dellomo served as Lovesac’s CFO, initially working to help 

prepare the Company for its initial public offering in 2018.  During the relevant period, 

Dellomo’s direct reports included Um (the Company’s Controller), who was hired in November 

2022 and oversaw the Company’s accounting functions.  During her ten months as Lovesac’s 

Controller, Um and her reports were responsible for internal accounting functions.  Um agreed to 

resign in July 2023 and left the Company in September 2023.   

Glossary of Relevant Accounting Terminology 

16. Fiscal Year:  A public company’s fiscal year (“FY”) is the twelve-month period 

in which a company reports quarterly and annual financial results.  Lovesac operates on a 52- or 

53-week fiscal year that ends on the Sunday closest to February 1st.  The Company reports 

financial results on this schedule to account for increased sales during the November to January 

holiday season.  FY 2023 was 52 weeks and ended on January 29, 2023, and FY 2024 was 53 

weeks and ended on February 4, 2024.  A public company’s annual financial results based on the 

fiscal year are publicly reported on SEC Form 10-K (“Form 10-K”) filed with the Commission, 

as required by law.  

17. Fiscal Quarter:  Public companies also report quarterly results for the four three-

month quarters in each fiscal year.  Lovesac’s FY 2023 quarters consisted of the first quarter (or 

“Q1”) (February through April), the second quarter (or “Q2”) (May through July), the third 

quarter (or “Q3”) (August through October), and the fourth quarter (or “Q4”) (November 

through January).  Quarterly financial results are often publicly reported in a SEC Form 8-K 

(“Form 8-K”) filed with the Commission and, for the first three quarters of the year, additionally 

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7 

reported on SEC Form 10-Q (“Form 10-Q”) filed with the Commission, as required by law.  Q4 

results are incorporated into the annual Form 10-K. 

18. GAAP:  GAAP (Generally Accepted Accounting Principles in the United States) 

refers to the standard framework of guidelines for accounting used in the United States as 

established by the Financial Accounting Standards Board.  These principles set the rules for 

preparing, presenting, and reporting financial statements of public companies, ensuring 

consistency, and transparency.  GAAP is used by accountants, auditors, and the investing public 

to compare financial information across different organizations, maintaining uniformity in 

financial reporting.  Required financial statements, such as Form 10-Q and Form 10-K, must be 

prepared in accordance with GAAP.  If such financial statements are not prepared in accordance 

with GAAP, they are presumed to be misleading or inaccurate. 

19. Accrual:  An “accrual” reflects revenue earned or expenses incurred before the 

actual cash transaction has taken place.  An accrual for a shipping expense would reflect a 

shipping expense incurred (i.e., when a product has been shipped to the customer) but that has 

not yet been paid by the company.   

20. Gross margin:  Gross margin is a financial metric that represents the difference 

between net sales (net sales refers to the sale of merchandise plus shipping and handling revenue 

less returns and discounts) and cost of merchandise sold and is expressed as a percentage of net 

sales.  A higher gross margin indicates that a company is retaining more of its revenue after 

covering the direct costs associated with producing goods.  For example, if a company sold ten 

widgets for $100 each and all the direct costs were $40 per widget, the gross margin would be 

60%, meaning that the company retained $600 or 60% of the net sales.  

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8 

21. Capitalization:  Capitalization is an accounting concept that refers to the process 

of recording an expenditure as an asset rather than an expense.  When an expense is capitalized, 

the underlying expense is spread out over the useful life of the asset instead of the full cost being 

recorded in the company’s books and records and reported in its financial statements (sometimes 

referred to as revenue being “recognized”).  Capitalization is applied to expenditures that provide 

future economic benefits under certain circumstances.  For example, a company may capitalize 

the cost of manufacturing machinery that will allow the company to manufacture products over 

time.  Through capitalizing such costs, companies match the cost of an asset with the revenue 

that it generates over time.  This contrasts with expenses that do not provide a future economic 

benefit, such as outbound shipping costs, that are recorded in the period in which the expenses 

were incurred and the revenue recognized.   

22. Amortization:  Amortization refers to the financial concept of allocating the cost 

of an intangible asset over its useful life.  This process records the cost of the asset over the 

period it is expected to generate economic benefits.  Thus, for example, a company might divide 

the cost of an intangible asset, such as a patent, over the useful life of the patent.  In this 

example, if the patent was expected to generate revenue from sales of a patented invention for 

ten years, the cost of the patent would be spread out over the same ten-year period.   

23. General Ledger:  The general ledger is a record of a company’s financial 

transactions, where all journal entries are recorded.  A journal entry is the initial record of each 

of the company’s transactions, detailing the date, accounts affected, amounts, and a brief 

description.  These journal entries are “posted” to the general ledger, which organizes them by 

account (such as assets, liabilities, equity, revenue, and expenses) and serves as the foundation 

for preparing a company’s financial statements, such as the balance sheet and income statement. 

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9 

Last Mile Shipping  

24. “Last mile shipping” is the term used by Lovesac to reflect the cost of 

transporting Lovesac’s finished products from a distribution center to the customer.  At all 

relevant times, Lovesac used large shipping companies like FedEx for its last mile shipping.   

25. With respect to last mile shipping expenses, Lovesac publicly disclosed in its FY 

2023 Form 10-K that it “records the expenses for shipping and handling activities at the same 

time the Company recognizes revenue.  Shipping and handling costs incurred are included in 

cost of merchandise sold and include inbound freight and tariff costs relative to inventory sold, 

warehousing, and last mile shipping to our customers.”  As set forth below, Lovesac’s 

accounting for last mile shipping expenses was inconsistent with this public disclosure, as was 

Dellomo and Um’s scheme to hide last mile shipping expenses. 

26. On average, there was at least a two-week delay between the shipping date (the 

date when a product was shipped by FedEx) and the invoice date (the date when the FedEx 

invoice was received by Lovesac).  Lovesac accounted for this timing discrepancy through an 

accrual process whereby the Company calculated and recorded a monthly estimate of shipping 

expenses incurred, but not yet recorded in its books and records.  The accrual was later 

reconciled against actual amounts paid to shipping companies based on invoices.   

27. However, during the relevant period, Lovesac’s monthly accrual methodology 

was flawed and inconsistently applied.  In certain circumstances, relevant shipment data for the 

period was not used in the shipping container count estimate and improper assumptions were 

used for the cost per shipment calculation.  As a result, the estimated accrual was understated, 

which was not compliant with GAAP because the expenses incurred in the period were not 

properly recorded.   

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10 

Dellomo and Um Devised a Scheme to Obscure the Last Mile Shipping  
Expenses in Lovesac’s Q1 2024 Books 

28. While performing an analysis in April 2023 as part of Lovesac’s monthly 

financial closing process, Lovesac’s finance and accounting group employees discovered that 

last mile shipping expenses were significantly higher in Q1 2024 than what the Company had 

previously budgeted for the month.  Specifically, Lovesac’s finance and accounting group 

employees estimated that approximately $2.2 million of last mile shipping expenses were 

improperly recorded in Q1 2024 rather than having been recorded in FY 2023, the period in 

which they believed the expenses were actually incurred.   

29. On Sunday, April 23, 2023, Dellomo, in an email to employees including 

members of the finance and accounting group, indicated that the out-of-period shipping expenses 

would cause Lovesac’s gross margin for Q1 2024 to be lower than expected.  As explained 

above, gross margin is a financial metric, and a higher gross margin figure is more positive for a 

company.  In the same email, Dellomo expressed concern about not meeting Lovesac’s 50.1% 

gross margin projection, which had been publicly disclosed by Lovesac during a March 28, 2023 

earnings call.  Minutes later, Dellomo forwarded her email to Um and requested that she 

investigate the issue.   

30. The next day, Monday, April 24, 2023, members of Lovesac’s finance and 

accounting group met to discuss the problem with last mile shipping expenses having been 

improperly recorded in Q1 2024.  On April 25, 2023, Dellomo emailed Um and the same group, 

noting that the gross margin estimate for Q1 2024 was, as of that day, only 48.7%.  This was 140 

basis points lower than Lovesac’s Q1 2024 gross margin projection of 50.1%, which, as noted 

above, was publicly disclosed to investors during the March 28, 2023 earnings call.  

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11 

31. On or about Tuesday, April 25, 2023, Um and other members of Lovesac’s 

finance and accounting group concluded that there were approximately $2.2 million of last mile 

shipping invoices for shipping expenses incurred in FY 2023 that were not recorded until Q1 

2024.   

32. On the same day, members of the finance and accounting group, including 

Dellomo and Um, discussed the $2.2 million out-of-period expenses and the impact on 

Lovesac’s gross margin for Q1 2024.  Um stated in a Microsoft Teams chat that she could not 

justify, as an accounting matter, reversing the $2.2 million shipping expenses.  Another finance 

and accounting group employee who reported to Um communicated to her that reversing the 

$2.2 million from the Q1 2024 books would be “a giant black eye for the auditors to pick out.”  

33. Also on April 25, Um communicated with a senior member of Lovesac’s financial 

planning and analysis (“FP&A”) group.  Um told that individual, in a Microsoft Teams chat, that 

the only way to meet the Q1 2024 gross margin projection was to capitalize the $2.2 million last 

mile shipping expenses and amortize them evenly over the remaining three quarters of FY 2024 

starting in Q2 2024.  Um replied: “I just don’t know how I can support [it].”  Indeed, capitalizing 

the $2.2 million in shipping expenses would not comply with GAAP because the expenses did 

not provide any future economic benefit.   

34. The following day, on April 26, 2023, in a Microsoft Teams chat with the same 

senior member of the FP&A group, Um stated that the Company was going to miss its publicly 

disclosed gross margin projection for Q1 2024 unless the $2.2 million in last mile shipping 

expenses were removed from Lovesac’s Q1 2024 financial results.  Um additionally expressed 

concern over being fired from Lovesac because of the last mile shipping issue.  Around the same 

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12 

time, in a Microsoft Teams chat with another finance and accounting group employee, Um 

expressed further concern over her job security.  

35. Also on April 26, 2023, Um and Dellomo again discussed the $2.2 million out-of-

period expenses during a call and, working in concert, decided to remove the expenses from 

Lovesac’s Q1 2024 financial results.  Their solution was to capitalize the expenses in the 

Company’s general ledger and then amortize the total over the last three quarters of FY 2024 

starting in Q2 2024.  This was the same proposed accounting treatment that Um had indicated 

she could not justify the day before.  This accounting treatment would have two consequences:  

first, it would improperly avoid the cost, time, and negative reflection on the Company 

associated with reopening and restating the FY 2023 books to properly account for the expenses 

in the period they were actually incurred and, second, it would improperly allow the Company to 

meet its previously disclosed Q1 2024 gross margin projection.   

36. After talking to Dellomo on April 26, Um again communicated with a senior 

member of Lovesac’s FP&A group to ask if the proposed accounting treatment would result in 

the Q1 2024 gross margin being the same as the publicly disclosed projection of 50.1%. 

37. On April 26, 2023, after consulting Dellomo on the details of the entry, Um 

improperly booked a journal entry in the Company’s general ledger to capitalize the $2.2 million 

expenses as an asset with the plan to spread out the expenses over the last three quarters of FY 

2024.  Dellomo approved Um’s journal entry in Lovesac’s accounting system the following day, 

April 27, 2023.  As a result of this improper journal entry, the Company’s expenses in Q1 2024 

were decreased by $2.2 million, which had the effect of meeting the Q1 2024 gross margin 

projection of 50.1%.  As noted above, this accounting treatment was not in compliance with 

GAAP and obscured the $2.2 million of out-of-period shipping expenses in the Company’s 2024 

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13 

books and records.  In effect, Dellomo and Um improperly pushed the last mile shipping 

expenses into the future, even though they believed that they had been incurred in the prior fiscal 

year.  

38. With respect to the journal entry, Um stated in a Microsoft Teams chat: “I don’t 

know how to tell [Dellomo] I don’t feel comfortable with it[.]”  She nevertheless booked the 

journal entry and stated that she hoped it would “do the trick” for Lovesac to meet its gross 

margin target for Q1 2024.   

39. On June 7, 2023, as the result of the inappropriate accounting treatment for the 

$2.2 million out-of-period last mile shipping expenses, Lovesac reported in a Form 8-K filed 

with the Commission that its gross margin for Q1 2024 was 50.1%, exactly as the Company had 

earlier publicly disclosed.  That same information was incorporated into Lovesac’s Form 10-Q 

for Q1 2024, filed with the Commission on June 9, 2023.   

40. With respect to journal entries, Dellomo, as Lovesac’s CFO, typically required 

detailed accounting support prior to approval.  Contrary to Dellomo’s normal practice, no such 

accounting support was attached to Um’s journal entry.  In particular, at the time the $2.2 million 

journal entry was made, Dellomo and Um did not perform a documented materiality analysis, 

i.e., a written analysis of whether the out-of-period last mile shipping expenses significantly 

impacted Lovesac’s FY 2023 financial results.  Nor was there any other supporting 

documentation justifying the improper accounting treatment they devised. 

Lovesac’s Periodic Financial Reports Were Materially Misstated as a Result of 
Dellomo and Um’s Misconduct 

41. As a result of Dellomo and Um’s scheme, four of Lovesac’s public financial 

reports filed with the Commission were rendered materially false and misleading. 

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14 

42. Lovesac’s FY 2023 Form 10-K.  Lovesac’s Form 10-K for FY 2023, filed with the 

Commission on March 29, 2023, was materially false and misleading because last mile shipping 

expenses were not included in the period in which they were actually incurred and the Form 10-

K did not disclose material weaknesses in Lovesac’s internal accounting controls environment, 

including that management did not sufficiently implement, promote, monitor, or enforce 

appropriate accounting policies and procedures. 

43. Form 8-K Filed March 28, 2023.  A Form 8-K announcing Lovesac’s FY 2023 

financial results, filed with the Commission on March 28, 2023, was materially false and the 

Form 10-K misleading because last mile shipping expenses were not included in the period in 

which they were incurred and did not disclose material weaknesses in Lovesac’s internal 

accounting control environment including that management did not sufficiently implement, 

promote, monitor, or enforce appropriate accounting policies and procedures.  

44. Lovesac’s Q1 2024 Form 10-Q.  Lovesac’s Form 10-Q for Q1 2024, filed with the 

Commission on June 9, 2023, omitted financial and other information required to make the 

report not misleading because the report: 

a. did not disclose the existence of out-of-period last mile shipping expenses; 

b. did not disclose that the Company’s financial statements improperly reported the 

last mile shipping expenses as an asset; 

c.  did not disclose Dellomo and Um’s fraudulent $2.2 million journal entry 

removing those expenses from Lovesac’s Q1 2024 results; 

d. did not disclose that the gross margin figure of 50.1% in Lovesac’s Form 10-Q for 

Q1 2024 was manipulated by Dellomo and Um’s misconduct in removing last 

mile shipping expenses from the quarter; 

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15 

e. did not disclose that financial statements included in Lovesac’s Form 10-Q were 

not prepared in accordance with GAAP; and 

f. did not disclose material weaknesses in the control environment including that 

management did not sufficiently implement, promote, monitor, or enforce 

appropriate accounting policies and procedures.  

45. Form 8-K filed June 7, 2023.  A Form 8-K announcing Lovesac’s financial results 

for Q1 2024, which was filed with the Commission on June 7, 2023, omitted financial and other 

information required to make the report not misleading because the report: 

a. did not disclose the existence of out-of-period last mile shipping expenses; 

b. did not disclose that the Company’s financial statements improperly reported the 

last mile shipping expenses as an asset; 

c. did not disclose Dellomo and Um’s fraudulent $2.2 million journal entry 

removing those expenses from Lovesac’s Q1 2024 results;  

d. did not disclose that the financial results announced in Lovesac’s Form 8-K were 

not prepared in accordance with GAAP; and 

e. did not disclose material weaknesses in the control environment including that 

management did not sufficiently implement, promote, monitor, or enforce 

appropriate accounting policies and procedures.  

46. By knowingly making a fraudulent journal entry that was not compliant with 

GAAP and had the effect of obscuring the $2.2 million in last mile shipping expenses in the 

Company’s FY 2024 books and records, Um engaged in fraudulent conduct that rendered the 

above filings false and misleading.  By knowingly approving Um’s improper April 27, 2023 

journal entry that capitalized the $2.2 million in last mile shipping expenses, Dellomo engaged in 

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16 

fraudulent conduct that rendered the above filings false and misleading.  Dellomo also had 

ultimate authority over Lovesac’s public filings and falsely certified Lovesac’s Form 10-Q for 

Q1 2024 while knowing that it was materially false and misleading.  Um made the inappropriate 

journal entry that she knew, or was reckless in not knowing, would render Lovesac’s Q1 2024 

financial filings false and misleading.   

47. Public companies like Lovesac are further required to make and keep books, 

records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions 

and dispositions of their assets.  Lovesac’s books and records did not accurately and fairly reflect 

the $2.2 million in last mile shipping expenses.  Dellomo and Um’s conduct rendered Lovesac’s 

books and records inaccurate by obscuring the $2.2 million in last mile shipping expenses. 

Dellomo Falsely Certified Lovesac’s Q1 2024 Form 10-Q 

48. Periodic financial reports filed with the Commission must also include a 

certification signed by the issuer’s principal financial officer (here, Dellomo) that, based on the 

certifier’s knowledge, the financial statements, and other financial information included in the 

report, fairly present in all material respects the financial condition, results of operations, and 

cash flows of the issuer as of, and for, the periods presented in the report, that the report does not 

contain any untrue statement of a material fact or omit to state a material fact necessary to make 

the statements made, in light of the circumstances under which such statements were made, not 

misleading with respect to the period covered by the report.  Dellomo falsely certified Lovesac’s 

Form 10-Q for Q1 2024 while knowing that the filing omitted information necessary to make the 

filing not false and misleading.  Specifically, among other things, Dellomo’s certification falsely 

stated that: (a) Lovesac designed “internal controls over financial reporting to provide reasonable 

assurance regarding the reliability of financial reporting and the preparation of financial 

statements for external purposes in accordance with [GAAP];” (b) the financial statements, and 

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17 

other financial information included in the Company’s filings, fairly presented in all material 

respects the financial condition of the Company; and (c) Dellomo disclosed to the Company’s 

audit committee and outside auditor “[a]ll significant deficiencies and material weaknesses in the 

design or operation of internal control over financial reporting” and “[a]ny fraud, whether or not 

material, that involves management or other employees who have a significant role in the 

registrant’s internal control over financial reporting.” 

Dellomo Misled Lovesac’s Outside Auditor about Their Misleading Accounting 
Treatment of the Last Mile Shipping Expenses  

49. Dellomo did not inform Lovesac’s outside auditor, a large public accounting firm, 

of the $2.2 million in out-of-period last mile shipping expenses inappropriately recorded in Q1 

2024 and the subsequent journal entry that removed the expenses from Q1 2024, which was not 

compliant with GAAP.  Dellomo did not disclose or discuss the issue with the outside auditor’s 

personnel responsible for auditing Lovesac’s books and records even though she had an 

obligation to do so.  Dellomo also made false and misleading representations to Lovesac’s 

outside auditor in the management representation letter she signed and submitted to the outside 

auditor as part of its Q1 2024 review.  The management representation letter was misleading 

because it falsely represented that: 

Item 1.  The interim financial information referred to above has been prepared and 
presented in conformity with GAAP applicable to interim financial information.  

Item 2.  The Company has provided to you all relevant information and access as 
agreed in the terms of the audit engagement letter.  

Item 11.  The methods, significant assumptions, and the data used by us in 
making the accounting estimates and the related disclosures are appropriate to 
achieve recognition, measurement, or disclosure that is in conformity with GAAP.  

Item 22.  There are no transactions that have not been properly recorded and 
reflected in the interim financial information.  

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18 

Item 36.  We believe that all expenditures that have been deferred to future 
periods are recoverable. 

50. Further, Dellomo was asked by Lovesac’s outside auditor’s personnel whether 

there were any unusual transactions or entries in the Company’s books and records that were not 

GAAP compliant.  Dellomo failed to inform the outside auditor of the $2.2 million out-of-period 

last mile shipping expenses and the journal entry capitalizing those expenses.  Had the auditor 

been informed, it would have instructed Lovesac to perform an appropriate and documented 

materiality assessment and would have reviewed the Dellomo and Um’s decision to capitalize 

those expenses for compliance with GAAP.  

Lovesac and Dellomo Failed to Devise and Maintain Sufficient Internal 
Accounting Controls Over Financial Reporting 

51. Lovesac was required to make and keep books, records, and accounts which, in 

reasonable detail, accurately and fairly reflect the Company’s transactions and dispositions of the 

assets.  Lovesac was also required to devise and maintain a system of internal accounting 

controls sufficient to provide reasonable assurances that its financial statements are prepared in 

conformity with GAAP or any other criteria applicable to those statements. 

52. During the relevant period, Lovesac did not maintain a system of internal 

accounting controls sufficient to provide reasonable assurances that shipping expenses incurred, 

but not yet recorded, were properly accrued for and that journal entries were properly booked, 

which caused the Company to restate its SEC filings. 

53. Dellomo knowingly failed to implement an appropriate system of internal 

accounting controls.  Dellomo, as the CFO, was responsible for Lovesac’s internal control 

structure, and was aware of the issues underlying Lovesac’s internal control failures.  

Additionally, Dellomo engaged in the misconduct of approving Um’s journal entry capitalizing 

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19 

the $2.2 million out-of-period last mile shipping expenses that she knew, or was reckless in not 

knowing, was not compliant with GAAP.   

Lovesac Restates Its FY 2023 and Q1 2024 SEC Filings 
 

54. On June 13, 2023, an employee of Lovesac reported the April 26, 2023 journal 

entry to Lovesac’s outside auditor.  This report triggered an internal investigation.  On August 

16, 2023, Lovesac filed a Form 8-K with the Commission announcing that its previously filed 

financial statements for FY 2023 and Q1 2024—as well as any previously issued or filed 

earnings releases, investor presentations, or other communications describing the prior financial 

statements and other related financial information covering these periods—could no longer be 

relied upon.  Lovesac restated its financials for FY 2023 and the Q1 2024 to correct for the last 

mile shipping expenses Dellomo and Um had improperly recorded in a manner that was not 

compliant with GAAP to avoid restating Lovesac’s FY 2023 SEC filings and to avoid missing 

the Company’s gross margin projection for Q1 2024.   

FIRST CLAIM 

FRAUD IN THE OFFER OR SALE OF SECURITIES AGAINST DELLOMO AND UM 
 

(Violations of Securities Act Sections 17(a)(1) and (3)) 

55. Paragraphs 1 through 54 are re-alleged and incorporated by reference. 

56. By reason of the conduct described above, Dellomo and Um, 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, acted knowingly or recklessly in violation of Securities Act 

Section 17(a)(1) by employing devices, schemes, or artifices to defraud and/or acted knowingly, 

recklessly, or negligently in violation of Securities Act Section 17(a)(3) by engaging 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 the securities.   

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20 

57. As a result, Dellomo and Um violated Securities Act Sections 17(a)(1) and (3) [15 

U.S.C. § 77q(a)(1) and (3)]. 

SECOND CLAIM 

FRAUD IN THE OFFER OR SALE OF SECURITIES AGAINST LOVESAC 
 

(Violations of Securities Act Section 17(a)(3)) 

58. Paragraphs 1 through 57 are re-alleged and incorporated by reference. 

59. By reason of the conduct described above, Lovesac, 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, acted negligently in violation of Securities Act Section 17(a)(3) by 

engaging 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 the securities.   

60. As a result, Lovesac violated Securities Act Section 17(a)(3) [15 U.S.C. 

§ 77q(a)(3)]. 

THIRD CLAIM 

FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES 
AGAINST DELLOMO AND UM 

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

61. Paragraphs 1 through 60 are re-alleged and incorporated by reference.   

62. By reason of the conduct described above, Dellomo and Um, directly or 

indirectly, in connection with the purchase or sale of securities and by the use of means or 

instrumentalities of interstate commerce, or the mails, or the facilities of a national securities 

exchange, knowingly or recklessly employed devices, schemes, or artifices to defraud and/or 

engaged in acts, practices, or courses of business which operated or would operate as a fraud or 

deceit upon other persons.  

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63. As a result, Dellomo and Um 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]. 

FOURTH CLAIM 

FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES 
AGAINST DELLOMO 

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

64. Paragraphs 1 through 63 are re-alleged and incorporated by reference. 

65. By reason of the conduct described above, Dellomo, directly or indirectly, in 

connection with the purchase or sale of securities and by the use of means or instrumentalities of 

interstate commerce, or the mails, or the facilities of a national securities exchange, knowingly or 

recklessly made one or more untrue statements of a material fact or omitted to state one or more 

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

under which they were made, not misleading.   

66. As a result, Dellomo violated Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] 

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

FIFTH CLAIM 

AIDING AND ABETTING DELLOMO’S VIOLATIONS OF EXCHANGE ACT 
SECTION 10(b) AND RULE 10b-5(b) THEREUNDER AGAINST UM 

 
(Aiding and abetting Dellomo’s violations of Exchange Act Section 10(b) and Rule 10b-5 

thereunder) 

67. Paragraphs 1 through 66 are re-alleged and incorporated by reference. 

68. By reason of the conduct described above, Dellomo, directly or indirectly, in 

connection with the purchase or sale of securities and by the use of means or instrumentalities of 

interstate commerce, or the mails, or the facilities of a national securities exchange, knowingly or 

recklessly made one or more untrue statements of a material fact or omitted to state one or more 

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22 

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

under which they were made, not misleading.   

69. As a result, pursuant to Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)], 

Um knowingly or recklessly provided substantial assistance to Dellomo in her violations of 

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

§ 240.10b-5]. 

SIXTH CLAIM 

KNOWINGLY CIRCUMVENTING INTERNAL CONTROLS, FAILING TO 
IMPLEMENT INTERNAL CONTROLS, OR FALSIFYING BOOKS AND RECORDS 

AGAINST DELLOMO 
 

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

70. Paragraphs 1 through 69 are re-alleged and incorporated by reference. 

71. By reason of the conduct described above, Dellomo knowingly circumvented 

and/or knowingly failed to implement a system of internal accounting controls and/or knowingly 

falsified, or caused to be falsified, Lovesac’s books and records. 

72. As a result, Dellomo violated Exchange Act Section 13(b)(5) [15 U.S.C. § 

78m(b)(5)]. 

SEVENTH CLAIM 

FALSIFYING ANY BOOK, RECORD, OR ACCOUNT AGAINST DELLOMO AND UM 
 

(Violations of Exchange Act Rule 13b2-1) 

73. Paragraphs 1 through 72 are re-alleged and incorporated by reference. 

74. By reason of the conduct described above, Dellomo and Um, directly or 

indirectly, falsified or caused to be falsified, books, records, or accounts described in Section 

13(b)(2)(A) of the Exchange Act [15 U.S.C. § 13(b)(2)(A)]. 

75. As a result, Dellomo and Um violated Exchange Act Rule 13b2-1 [17 C.F.R § 

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23 

240.13b2-1]. 

EIGHTH CLAIM 

LYING, COERCING, OR IMPROPERLY INFLUENCING AN ACCOUNTANT 
AGAINST DELLOMO  

 
(Violations of Section Exchange Act Rule 13b2-2) 

76. Paragraphs 1 through 75 are re-alleged and incorporated by reference. 

77. By reason of the conduct described above, Dellomo omitted to state, or caused 

another person to omit to state, material fact necessary in order to make statements made, in light 

of the circumstances under which such statements were made, not misleading, to an accountant 

in connection with (1) any audit, review, or examination of the financial statements of the issuer; 

or (2) the preparation or filing of any document or report required to be filed with the 

Commission. 

78. As a result, Dellomo violated Exchange Act Rule 13b2-2 [17 C.F.R § 240.13b2-

2]. 

NINTH CLAIM 

MATERIAL MISSTATEMENTS OR OMISSIONS IN PERIODIC OR OTHER 
REPORTS AGAINST LOVESAC 

(Violations of Exchange Act Section 13(a) and Rules 12b-20, 13a-1, 13a-11, and 13a-13 
thereunder) 

79. Paragraphs 1 through 78 are re-alleged and incorporated by reference. 

80. Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 13a-1, 13a-11, 

and 13a-13 thereunder [17 C.F.R. §§ 240.13a-1, 240.13a-11, and 240.13a-13] require issuers of 

registered securities to file with the Commision materially accurate annual reports (on Form 10-

K), current reports (on Form 8-K), and quarterly reports (on Form 10-Q).  Exchange Act Rule 

12b-20 [17 C.F.R. § 240.12b20] provides that, in addition to the information expressly required 

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to be included in a statement or report, there shall be added such further material information, if 

any, as may be necessary to make the required statements, in light of the circumstances under 

which they were made, not misleading. 

81. By reason of  the conduct described above, Lovesac, as an issuer of a security 

registered pursuant to Exchange Act Section 12 [15 U.S.C. § 78l], filed (1) a Form 10-K for FY 

2023 on March 29, 2023, (2) a Form 8-K for FY 2023 on March 28, 2023, (3) a Form 10-Q for 

Q1 2024 on June 9, 2023, and (4) a Form 8-K for Q1 2024 on June 7, 2023, that each contained 

materially false or misleading statements and/or material omissions that rendered the statements 

in these filings, in light of the circumstances under which they were made, misleading. 

82. As a result, Lovesac violated Exchange Act Section 13(a) [15 U.S.C. § 78m(a)] 

and Rules 12b-20, 13a-1, 13a-11, and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11, 

and 240.13a-13] thereunder. 

TENTH CLAIM 

AIDING AND ABETTING LOVESAC’S MATERIAL MISSTATEMENTS OR 
OMISSIONS IN PERIODIC OR OTHER REPORTS AGAINST DELLOMO AND UM 

(Aiding and abetting Lovesac’s violations of Exchange Act Section 13(a) and Rules 12b-20, 
13a-1, 13a-11, and 13a-13 thereunder) 

83. Paragraphs 1 through 82 are re-alleged and incorporated by reference. 

84. Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 13a-1, 13a-11, 

and 13a-13 thereunder [17 C.F.R. §§ 240.13a-1, 240.13a-11, and 240.13a-13] require issuers of 

registered securities to file with the Commission materially accurate annual reports (on Form 10-

K), current reports (on Form 8-K), and quarterly reports (on Form 10-Q).  Exchange Act Rule 

12b-20 [17 C.F.R. § 240.12b20] provides that, in addition to the information expressly required 

to be included in a statement or report, there shall be added such further material information, if 

any, as may be necessary to make the required statements, in light of the circumstances under 

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25 

which they were made, not misleading. 

85. By reason of the conduct described above, Lovesac, as an issuer of a security 

registered pursuant to Exchange Act Section 12 [15 U.S.C. § 78l], filed (1) a Form 10-K for FY 

2023 on March 29, 2023, (2) a Form 8-K for FY 2023 on March 28, 2023, (3) a Form 10-Q for 

Q1 2024 on June 9, 2023, and (4) a Form 8-K for Q1 2024 on June 7, 2023, that each contained 

materially false or misleading statements and/or material omissions that rendered the statements 

in these filings, in light of the circumstances under which they were made, misleading. 

86. As a result, pursuant to Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)], 

Dellomo and Um knowingly or recklessly provided substantial assistance to Lovesac in its 

violations of Exchange Act Section 13(a) [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1, 13a-11, 

and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11, and 240.13a-13] 

ELEVENTH CLAIM 

FALSE CERTIFICATION OF FINANCIAL REPORTS AGAINST DELLOMO 
 

(Violations of Exchange Act Rule 13a-14) 

87. Paragraphs 1 through 86 are re-alleged and incorporated by reference. 

88. By reason of the conduct described above, Dellomo falsely certified, pursuant to 

Section 301 of the Sarbanes-Oxley Act of 2002 and Exchange Act Rule 13a-14, Lovesac’s Q1 

2024 Form 10-Q.  Dellomo violated Rule 13a-14 when she signed certification for Lovesac’s 

public filing that, among other things, failed to disclose the fraudulent accounting treatment of 

the last mile shipping expenses. 

89. As a result, Dellomo violated Exchange Act Rule 13a-14 [17 C.F.R. § 204.13a-

14]. 

 

 

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TWELFTH CLAIM 

FAILURE TO MAKE AND KEEP BOOKS AND RECORDS IN REASONABLE DETAIL 
AGAINST LOVESAC 

 
(Violations of Exchange Act Section 13(b)(2)(A)) 

90. Paragraphs 1 through 89 are re-alleged and incorporated by reference. 

91. Exchange Act Section 13(b)(2)(A) requires an issuer such as Lovesac to make and 

keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect the 

transactions and dispositions of its assets. 

92. By failing to make or keep books, records and accounts that in reasonable detail 

accurately and fairly reflected its transactions and disposition of its assets, Lovesac violated 

Exchange Act Section 13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)]. 

THIRTEENTH CLAIM 

AIDING AND ABETTING LOVESAC’S FAILURE TO MAKE AND KEEP BOOKS 
AND RECORDS IN REASONABLE DETAIL AGAINST DELLOMO AND UM 

 
(Aiding and abetting Lovesac’s violations of Exchange Act Section 13(b)(2)(A)) 

93. Paragraphs 1 through 92 are re-alleged and incorporated by reference. 

94. By failing to make or keep books, records and accounts that in reasonable detail 

accurately and fairly reflected its transactions and disposition of its assets, Lovesac violated 

Exchange Act Section 13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)]. 

95. As a result, pursuant to Exchange Act Section 20(e) [15 U.S.C. § 78t(e)], Dellomo 

and Um knowingly or recklessly provided substantial assistance to Lovesac in its violations of 

Exchange Act Section 13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)]. 

 

 

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FOURTEENTH CLAIM 

FAILURE TO DEVISE AND MAINTAIN A SYSTEM OF INTERNAL ACCOUNTING 
CONTROLS AGAINST LOVESAC 

(Violations of Exchange Act Section 13(b)(2)(B)) 

96. Paragraphs 1 through 95 are re-alleged and incorporated by reference. 

97. Exchange Act Section 13(b)(2)(B) requires an issuer such as Lovesac to devise 

and maintain a system of internal accounting controls sufficient to provide reasonable assurances 

that its financial statements are prepared in conformity with GAAP or any other criteria 

applicable to those statements.   

98. By failing to devise and maintain a system of internal accounting controls 

sufficient to provide reasonable assurances that its financial statements are prepared in 

conformity with GAAP or any other criteria applicable to those statements, Lovesac violated 

Exchange Act Section 13(b)(2)(B) [15 U.S.C. § 78m(b)(2)(A)]. 

FIFTEENTH CLAIM 

AIDING AND ABETTING LOVESAC’S FAILURE TO DEVISE AND MAINTAIN A 
SYSTEM OF INTERNAL ACCOUNTING CONTROLS AGAINST DELLOMO 

 
(Aiding and abetting Lovesac’s violations of Exchange Act Section 13(b)(2)(B)) 

99. Paragraphs 1 through 98 are re-alleged and incorporated by reference. 
 
100. By failing to devise and maintain a system of internal accounting controls 

sufficient to provide reasonable assurances that its financial statements are prepared in 

conformity with GAAP or any other criteria applicable to those statements, Lovesac violated 

Exchange Act Section 13(b)(2)(B) [15 U.S.C. § 78m(b)(2)(A)]. 

101. As a result, pursuant to Exchange Act Section 20(e) [15 U.S.C. § 78t(e)], Dellomo 

and Um knowingly or recklessly provided substantial assistance to Lovesac in its violations of 

Exchange Act Section 13(b)(2)(B) [15 U.S.C. § 78m(b)(2)(B)]. 

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PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court enter a Final 

Judgment: 

I. 

Permanently restraining and enjoining Lovesac, its officers, agents, servants, employees 

and attorneys, and those persons in active concert or participation with them who receive actual 

notice of the injunction by personal service or otherwise, from violating Section 17(a)(3) of the 

Securities Act; 

II. 

Permanently restraining and enjoining Lovesac, its officers, agents, servants, employees 

and attorneys, and those persons in active concert or participation with them who receive actual 

notice of the injunction by personal service or otherwise, from violating Sections 13(a), 

13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 

thereunder;  

III. 

Permanently restraining and enjoining Dellomo, and those persons in active concert or 

participation with her who receive actual notice of the injunction by personal service or 

otherwise, from violating Section 17(a) of the Securities Act and Sections 10(b) and 13(b)(5) of 

the Exchange Act and Rules 10b-5, 13b2-1, 13b2-2 and 13a-14 thereunder; 

IV. 

Permanently restraining and enjoining Dellomo, and those persons in active concert or 

participation with her who receive actual notice of the injunction by personal service or 

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otherwise, from aiding and abetting Lovesac’s violations of 13(b)(2)(A) and 13(b)(2)(B) of the 

Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder; 

V. 

Permanently restraining and enjoining Um, and those persons in active concert or 

participation with her who receive actual notice of the injunction by personal service or 

otherwise, from violating Section 17(a) of the Securities Act and Sections 10(b) of the Exchange 

Act and Rules 10b-5 and 13b2-1 thereunder; 

VI.  

Permanently restraining and enjoining Um, and those persons in active concert or 

participation with her who receive actual notice of the injunction by personal service or 

otherwise, from aiding and abetting Dellomo’s violations of Exchange Act Section 10(b) and 

Rule 10b-5(b) thereunder; 

VII.  

Permanently restraining and enjoining Um, and those persons in active concert or 

participation with her who receive actual notice of the injunction by personal service or 

otherwise, from aiding and abetting Lovesac’s violations of Sections 13(a) and 13(b)(2)(A) of 

the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 thereunder; 

VIII.  

Enter an order pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] 

prohibiting Dellomo and Um from acting as an officer or director of any issuer that has a class of 

securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is 

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

 

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IX.  

Enter an order pursuant to the Court’s equitable power prohibiting Dellomo and Um from 

acting in an accounting or financial reporting role at a public company in connection with the 

preparation of financial statements filed with the Commission, providing substantial assistance to 

a public company in the preparation of financial statements filed with the Commission, or acting 

as an auditor on a public company audit.  For purposes of this requested relief, the following 

definitions apply: “Accounting or financial reporting role” means participating in the preparation 

of financial statements; decisions about financial reporting; the creation or implementation of 

accounting policies; or decisions about accounting treatment.  “Public company” means a 

company, foreign or domestic, that files financial statements with the Securities and Exchange 

Commission;  

X.  

Ordering the Defendants to each pay civil monetary 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)]; and  

XI.  

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

  

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31 

JURY DEMAND 

The Commission demands a jury trial in this matter. 

DATED: October 29, 2024. 
 
      Respectfully submitted, 

UNITED STATES SECURITIES AND 
EXCHANGE COMMISSION 

 
      By its attorneys, 
 
 

/s/ Alfred A. Day      
Alfred A. Day (Mass. BBO No. 654436) 
Xinyue Angela Lin (Mass. BBO No. 672786) 
Martin F. Healey (Mass. BBO No. 227550) 
Boston Regional Office 
33 Arch Street, 24th Floor 
Boston, Massachusetts  02110 
(617) 573-8900 (Main) 
(617) 573-4590 (Facsimile) 
daya@ sec.gov (Day) 
[email protected] (Lin) 
[email protected] (Healey) 

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