On March 14, the Securities and Exchange Commission charged John David Gessin and two of his businesses, Equifunds, Inc. and Ice Fleet LLC, with defrauding investors and misappropriating investor funds.
According to the SEC’s complaint, filed in the United States District Court for the Central District of California, Gessin presented himself as a successful entrepreneur and used the alias “John David” to disguise his past, including a criminal record and bankruptcies, raising over $1.6 million from five retail investors, including a veteran and an elderly retired nurse. Gessin told investors their money would be used to purchase, sell, and distribute fuel. However, Gessin misappropriated a significant portion of investor funds to pay his personal expenses, including the mortgage and taxes on a home in a gated community, cars, hotel stays, and gifts to friends and family members.
According to the complaint, in March 2020, Gessin suddenly stopped paying investors the amounts they were owed. Gessin falsely told investors that the COVID-19 pandemic had severely impacted his business and that he was unable to repay them, despite receiving nearly $1.3 million in relief funds from the Small Business Administration.
The complaint charges Gessin, Equifunds, and Ice Fleet with violating the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The SEC seeks permanent injunctive relief, including preventing Gessin from participating in the issuance, purchase, offer, or sale of any security with the exception of Gessin purchasing or selling securities for his own personal accounts, disgorgement of ill-gotten gains plus prejudgment interest, civil penalties, and an officer and director bar against Gessin.
The SEC’s investigation was conducted by Joseph Zambuto, Jr. under the supervision of Amy Friedman and Carolyn Welshhans. The litigation will be led by Michelle Zamarin under the supervision of James Carlson.
The SEC’s Office of Investor Education and Advocacy cautions investors to check the background of anyone selling them an investment and to always independently research investment opportunities.