Michael Liberty et al.

Litigation Release No. 25607 / January 4, 2023

Securities and Exchange Commission v. Michael Liberty et al., Civil Action No. 2:18-cv-00139 (D. Maine filed Mar. 30, 2018)

On December 23, 2022, the United States District Court for the District of Maine entered a final judgment against Paul Hess ordering him to pay approximately $2,977,000 in disgorgement, prejudgment interest, and penalties.

The SEC’s complaint alleged that Hess schemed with co-defendants, including Michael Liberty, to induce investors to purchase unregistered interests in shell companies controlled by Michael Liberty that supposedly owned transferrable interests in a fintech startup then known as Mozido, LLC. In reality, the shell companies either did not own, or were not permitted to transfer, interests in the company. The SEC’s complaint also alleged that Paul Hess and Michael Liberty lied to investors about Mozido’s valuation and finances, the amount Michael Liberty had personally invested in Mozido, and the use of their funds. In total, Hess, Liberty, and the other co-defendants fraudulently raised more than $48 million from 2010 through 2016.

Hess consented to a final judgment in the SEC action that permanently enjoins him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; the broker-dealer registration requirements of Section 15(a) of the Exchange Act; and the securities offering registration requirements of Sections 5(a) and 5(c) of the Securities Act. The judgment also prohibits Hess from participating in the issuance, purchase, offer, or sale of any security with the exception of Hess purchasing or selling securities for his own personal accounts, and finds him liable for disgorgement of $2,382,116, prejudgment interest of $434,670, and a civil penalty of $160,000.

The SEC’s case, which remains ongoing against Liberty and other defendants, is being handled by Peter Bryan Moores, Marc Jones, and Kevin Currid of the Boston Regional Office.

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