Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, December 2, 2009

SEC Charges Canopy Financial with Offering Fraud

The SEC announced that it has filed fraud charges against Canopy Financial Inc., a Chicago-based health care financial services company, and has frozen the assets of its co-founder who allegedly provided investors with forged financial statements to lure them into a $75 million investment scheme.  The SEC alleges that Canopy and its former president and chief operating officer Jeremy J. Blackburn solicited investors for a private placement offering for preferred shares of Canopy. They provided investors with a falsified audit report purportedly from accounting firm KPMG as well as bank and financial statements with false and misleading information exaggerating Canopy's financial condition. Blackburn misappropriated at least $1.7 million from the offering into his personal bank accounts.

The U.S. District Court for the Northern District of Illinois granted the SEC's request for a temporary restraining order and asset freeze against Blackburn. The SEC's case was unsealed today by the court.

The SEC's complaint alleges that Canopy and Blackburn solicited investors from at least October 2008 through August 2009, providing them with documents devised to show that Canopy had a much healthier cash balance and larger client base than it actually did. Blackburn also falsified at least one bank statement to show an account balance of approximately $8.9 million, when in fact it was a custodial account of a Canopy client that held approximately $86,952. The SEC further alleges that Canopy raised approximately $75 million from investors and paid approximately $40 million in redemptions to existing investors, including Blackburn who redeemed 250,000 shares in exchange for approximately $1.625 million.

SEC Action | Permalink

TrackBack URL for this entry:

Listed below are links to weblogs that reference SEC Charges Canopy Financial with Offering Fraud:


Post a comment