isaac grossman, adriana grossman, dragon-click corp., and ... ·...
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j'1'UNITED STATESDISTRI IWSOUTHERN DISTRICT F 1DA
1.
CASE NO.:
SECURITIESANDEXCHANGECOMMISSION,CIV-
Plaintiff,Z lrnwk
IsAAc GRossM ,AN
ADRIANA GRossM ,ANolu Gox-clulclkcoltr.,and
ou c ox M ANAGEM ENT,Ll-c,
Defendants.
/ (k) -COM PLAINT FOR INJUNCTIVE AND OTHER RELI+;: A'e
FILEDby D.C.
Ij.!-ri rjj..ouv-jliUj z.-.,.oSTIEVENM LARIED RECLERKUbDIW CT.s.D.uffLé.-MIXMI
PlaintiffSeculitiesandExchangeCommissionalleges:
1.INTRODUCTION
TheCommissionbringsthisactiontoenjoinDragon-clickCorp(ttDragon-click''
ortheiscompany'') anditsownerlsaacGrossman (Grossman'')from continuingto defraud
investorsthroughtheongoingsaleofsecurities,andtoenjoinDragon-click,Grossman,Adriana
Grossman Grossman'') and her company Dragon Management (trragon5
Management'')from misappropriatinginvestorftlnds.
From no later than Septem ber 2014 until present, the Defendants have
participated in the offeror sale of securities in the form of Dragon-click steck and Dragon
Partners,LLC(CûDragonPartners'')membershipinterests.
Grossman tellsinvestorsDragon-click isin thebusinessofcreating an internet
application thatlocatesretailers and providesplice-compalisons forany item for which a
shopperuploadsaphotograph(thetûDragonClickApplication'').
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Thus far,the Defendantshaveraisedmore than $2.4 million from atleast26
investorsnationwide,m ostofthem elderly.
lnvestorf'undshavecontinuedtoberaiseduntilatleastApril2018.
To lure investors,Grossm an knowingly orrecklessly m ateriall),m isrepresents
investmentretunxsandhow theDefendantswilluseinvestorfunds.
Forexample,Grossman tellspotentialinvestorshewilldouble,triple oreven
quadnlpletheirmoneybyinvestingitinDragon-clickstock.Thisreprescntationisfalse.Atthe
sametimeGrossmanhasbeenmakingthesepromises,hehasbeenspendingthevastmajorityof
investormoneyto fundhispersonalexpentlitures.
Similarly,Grossm an tellspotentialinvestorshewillusetheirm oney to pay for
thedevelopmentandm arketing oftheDragon-click Application. Thisisfalse. Grossm an and
hiswife,AdrianaGrossman,havebeenmisusingormisappropliatinginvestorftmdstopaytheir
personal living expenses and to fund their lifestyle,which includes f'unding Grossm an's
gamblinghabitsaswellasthepurchaseofluxuryvehiclesandjewelry.
9. GrossmanandA.Grossmanhavespentthemajorityofinvestorf'undsfortheir
ownpersonalusetothetuneofatleast$1.3million.
Through theirconduct,theDefendantsare violating the anti-fraud provisionsof
thefederalsecuritieslaws.
Based on the ongoing nature oftheirviolationsand the scientertheDefendants
havedem onstratedthrough theirwillfulandwanton disregard forthefederalsecuritieslaws,the
Defendants have shown they willcontinue to violate the 1aw unless the Courtgrants the
injunctiveandotherrelieftheCommissionseeks.
2
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II.DEFENDANTjANDRELATEDENTITY
A.Jàefendants
lsaac Grossm an is a residentofParkland,Florida. He entered the securities
industry in l997 and worked atnumerousbroker-dealersin variouscapacitiesuntilNovember
2012,whentheFinanciallndustryRegulatoryAuthority (ûkF1NRA'')permanentlybarredhim
from acting asabrokerorotherwiseassociating with abroker-dealerfirm . In September2013,
theU.S.Commodity FuturesTrading Commission (LûCFTC'')instituted proceedingsagainst
Grossm an forviolations ofthe Com modity Exchange Act. Grossman consented to an Order,
withoutadmittingordenyingliability,finding thatheand hiscompany,LondonM etalsM arket
LLC (ûtlxondon Metals''),engaged in illegal,off-exchange,
tCCFTC Order'').TheCFTCOrder,enteredSeptember4,2013,directedGrossmanandLondon
M etalstopay$121,665.75inrestitutiontotheircustomers,imposedpermanentzegistrationand
preciousmetalstransactions(the
trading banson Grossman,andrequired him to ceaseand desistflom violating the Com modity
ExchangeAct.NeitherGrossm annorLondonM etalshaspaidtherestitution theCFTC ordered.
Grossm an isnotregisteredwiththeSEC inany capacity.
l3. Adriana Grossman is m al-ried to Isaac Grossm an and resideq with him in
Parkland,Flolida. From Septem ber2014 untilJune2016,A.Grossm an,withtm tanylegitim ate
basis,spentatleast$293,000ofinvestorf'undsonherpersonalexpenditures.
14. Dragon-click is a Florida corporation headquartered in Parkland,Flozida that
Grossm an incom orated in July 2014. Grossm an isits sole ofticerand director,itsRegistered
Agent,andthesolesignatoryontheDragon-clickbankaccount.
a Florida limited liability company headquartered in
DeerfieldBeach,Florida,thatAdlianaGrossmanorganizedinJune2014.DragonM anagement
Dragon M anagement is
3
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isthem anagerand investm entadviseroflnragon Partners.A.Grossman isitsonlym em ber,its
RegisteredAgent,andthesolesignatoryontheDragon M anagem entbankaccount.From M arch
2015 through atleastJune 2016,Dragon M anagem ent,withoutany legitim atebasis,received
approximately$293,000ofinvestorfundsemanatingfrom theDefendants'securitiesfraud.
B.RelatedEntitv
16. Dragon PartnersisaFloridalim ited liabilitycom panyheadquartered inDeertield
Beach,Florida,thatAdrianaGrossman fonned in June2014. The company wasOrganized to
investinDragon-click securities.A .Grossm anisitsRegisteredAgentandthes()1esignatory on
the com pany's bank account. Dragon M anagem entis the company's sole m anager. From
September2014 throughatleastApril2016,thecompany,withoutanylegitim atebasisreceived
approximately$547,000ofinvestorfundsemanatingfrom theDefendants'securitiesfraud.
111.JURISDICTION AND VENUE
17. TheCourthasjurisdictionoverthisactionpursuanttoSections20(b),20(d),and
22(a)oftheSecuritiesActof1933(tûsectlritiesAct''),15U.S.C.jj77t(b),77t(d),and77v(a);
andSections21(d),21(e),andSection27oftheSecuritiesExchangeActof1934CtExchange
Act''),15U.S.C.jj78u(d),78u(e),and78aa.
ThisCourthaspersonaljurisdictionovertheDefendants,andvenueisproperin
the Southern District of Florida,because m any of the Defendants' acts and transactions
constituting orresulting from violationsofthe SecuritiesActand the ExchangeActoccun-ed,
and continueto occur,in theSouthel'n DistrictofFlorida. Dragon-click,DragonPartners,and
Dragon M anagem entare headquartered in the Southern DistrictofFlorida,Grossm an and A.
Grossm anresidein theSouthernDistrictofFlorida,andGrossman directsinvestorstosendtheir
investmentcontributionstoanaddressorbankaccountintheSouthernDistrictofFlorida.
4
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19. ln connectionwith theconductalleged inthisComplaint,theDefendants,directly
andindirectly,singlyorinconcertwithothers,havem adeuseofthemeansorintstrum entalityof
interstatecolnm erce,them eansorinstrum cntsoftransportationandcomm unicatbon ininterstate
comm erce,andthemails.
1V.THE DR NGON-CLICK FR AUD
A .
From no laterthan June 19,2014 through present,lsaacand AdlianaGrossman
TheDrazon-click O fferinz
have,directly orindirectly through the Corporate Defendantsthey control,participated in the
offerorsaleofDragon-clickstock.
21. Thetennsoftheoffering arem emorialized in aPrivatePlacem entM emorandum
datedJunel9,2014(theCTPM'')issuedbyDragonPartners.
lsaacGrossman andAdlianaGrossmanprovided inputinto thelanguageinthe
PPM and Grossm an personally approved the language in the PPM priorto itsdistribution to
potentialinvestors.
23. Assetforth inthePPM ,DragonPartnersoffersinvestorstheoppoqrtunitytoinvest
in Dragon Partners,which then actsasan investm entfund to purchaseDragon-click stock for
thebenetitofinvestors.
24. The PPM tells investors that Adriana Grossman, on behalf of Dragon
M anagem ent,isthem anageroftheDragon Partnersfund who willkûm anageand adm inisterthe
Fund'sinvestm entportfolio.''
25. According to the PPM ,the success of Dragon Partners is dependent on the
manager'sidentificationofsuccessfulenteprisesorinnovationsinwhichtoinvest,andDragon
M anagementandAdrianaGrossmanarevestedwiththesolediscretiontomakethosedeeisions.
5
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26. Accordingto the PPM ,the!minimum investmentis$25,000 foramembel-ship
interestinDragon PartnersunlessA.Grossman,inherdiscretion,permitsasm allerinvestm ent.
B.Solicjtationoflnvestors
From no later than Septernber 2014 until atleastApril 2018,Dragon-click,
through IsaacGlossman,hassolicited investorcontributionsby contacting potentialinvestors
nationwidebytelephone.
28. Grossman has solicited potentialinvestors he located tlurugh word-of-m outh,
knew during the tim e when he wasin the broker-dealerindustry,orknew because they had
invested with him previously when,
investm entsinLondonM etals.
according to the CFTC Order,he was illegally offering
29. Grossm anhassolicitedm any investorsm orethan once,and someinvestorshave
purchasedmoreDragon-click stockafterGrossm anhassolicitedthem asecondorthirdtim e.
30. GrossmanoffersinvestorssharesofDragon-clickstockfor$25pershare.
31. Grossm an tellspotentialinvestorsthatDragon-click hasan intelmetapplication
thatisgoingtorevolutionizeshoppingontheinternet.
Grossman tellspotentialinvestorsthattheDragonClickApplication willallow a
shoppertouploadaphotor aphoftheitem theshopperwantstopurchaseandwillthenlocateal1
retailersofferingthatproductforsale,toallow theshoppertodoapricecomparison.
33. Grossm an promises potentialinvestors that the Dragon-click technology will
generate huge retum s for the investors and that their m oney would be used to pay for
developmentofthetechnology,legalfeesforthepatents,andmarketingofthetechnology.
34. Grossmanhassolicitedatleast$2.4millionfrom atleast26investorsnationwide,
mostofthem elderly.
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lnvestorshaveinvestedthescfundsin DragonPartnersbyccmtributinginvestment
fundsbycheck orwiretransfer.
36. lnvestors send their m onqy'via check or wire transfer to one of three bank
accountsinthenam esofDragon-click,DragonPartners,orDragonM anagem ent.
37. Adriana Grossm an has emlorsed the investor checks to Dragon Partners and
DragonM anagem entfordepositintothesecompanies'bankaccounts,whichshecontrols.
lsaacGrossm anhasendorsedtheinvestorcheckstoDragon-click fordepositinto
theDragon-clickbankaccount,whichhecontrols.
39. AsofApril2018,onlyatotalofabout$53,000hasbeenretumedtoinvestors.
C. lnvestm entDocum ents
As partofthe solicitation and investmentprocess,Grossm an sends investors
investm entdocum entsviae-m ail,facsim ileorFederalExpress.
41. Specitically,when Grossm an solicitspotentialinvestors,hesendsthem aDragon
Partners,LLCSubscriptionAgreement(theStsubscriptionAgreemenf')andtheP'PM.
42. AfterGrossman successfullysolicitsinvestorsand theDefendantsreceivetheir
funds,Grossman sends investorsa one-page confirm aticm documentretlecting the investor's
purchaseofacertainnumberofDragon-cliekshares(tûlnvestmentConfirmation').
7. TheDragon PartnersSubscrlptionAgreem ent
43. TheSubscriptionAgreem entdetinesDragon PartnersasthettFund''andprovides
thattheinvestorisbuyingtiM embershiplnterestsintheFund.''
44. TheSubscriptionAmeementrequiresinvestorstosignrepresentingthat,among
things,they received and read thePPM andunderstandthecompensationtoAdrianaGrossm an,
asfundm anager,assetforthinthePPM .
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45. The Subscription Agreement
SubscriptionAgreem entbytheDragonPartnersm anager.
states that itis binding upon acceptance of the
UponreceiptoftheexecutedSubscriptionAgreements,AdrianaGrossm ansigned
toapprovetheinvestmentsinhercàpacityastheauthorizedm em berofDragonM anagem ent.
J. TheD ragonPartnersPPM
47. The PPM details the relationship between Dragon Partners and Dragon
M anageluentanddescribeshow investorproceedswillbeused.
ThePPM statesthatDragonPartnerswasorganizedtooperateasaprivatepooled
investmentvehicle forthe benetitofinvestors who seek exposure to stock in Dragon-click,
whichintendedtogopublic,beacquired,orm ergeasthefinaloutcom eoftheinvestm ent.
49. The PPM further states that the manager and investm ent adviser of Dragon
PartnersisDragon M anagem ent,and Adliana Grossm an,theprincipalofDragon M anagem ent,
willm anageandadm inistertheFund'sinvestmentportfolio.
50. ThePPM statesthatproceedsraisedwillbeusedtopurchaseDragon-click stock
and to pay Dragon Partners'expenses,including m anagem entfees,legaland accounting costs,
corporateGlingfeesandotherday-to-dayoperationalexpenses.
PursuanttothePM M ,DragonM anagem entreceivesam anagementfeeof2% per
yearOfaSSCtSunderm anagem ent.
52. Additionally,thePPM providesthatDragonM anagem entchargesaperfolnnance-
basedfeeatarateof251$,tobepaidattheendofaticapitalEvent.''
lnthePPM ,tûcapitalEvent''isdefinedasoneofthefollowing:aperiodafteran
1PO ofDragon-click;thesaleormergerofDragon-click;thesalebytheDragonPartnersofany
8
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rem ainingprivately-held Dragon-click sharesafterthe expiration ofaone-yearsalerestriction
periodunderRule144,.orthesaleofa11orsubstantiallya1lofDragonPartner'sassets.
NoCapitalEventhaseveroccurred.
3. The InvestntentCbzz-/irpzfz///a
After investors send the Defendants theirinvestm entcontlibutions,Grossm an,
through Dragon-click, provides investors with an lnvestment Continuation retlecting the
investor'snam e,thedateofthe investm ent,theam ountofsharespurchased,artd thepurchase
price.
56.
anentitycalled ûçDragon-click LLC.''
57. Dragon-clickLLC doesnotexist.
AccordingtothelnvestmentConfinuation,investors'fundspurchasedsharesin
D.M isrepresentationsand Om issionsin theSecuritiesOfferinq
ln connection with theDragon Partnersoffering,theDefendantshaveknowingly
orrecklesslymadematerialmisrepresentationsand omissionsabouttheuseofinvestorftmds,
investmentreturns,andAdrianaGrossm an'scompensation.
7. IsaacGrossm an'sOralM isrepresentationsAbout..
(a)TheUseOflnvestorFunds;And(b)LargeInvestmentReturns
59. From no laterthan September2014untilatleastApril2018,lsaacGrossm anhas
made m aterially false and misleading statementsand om issions to investors when he solicits
them bytelephone.
60. Grossm an hasmade atleasttwo misrepresentationsto investors- nam ely,that:
(a)theirinvestmentf'undswillbeusedtodeveloptheDragonClickApplicationandrelated
patent;and(b)aninvestmentinDragon-clickstockwillproducemassiveinvestmentreturns.
9
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Forexam ple,in M arch 2016,Grossman solicited by telephone a male investor
withtheinitialsD.H.whois80yearsoldandresidesinM urfreesboro,Tennessee.
62. During the call,Grossman told D.H.that Dragon-click would revolutionize
shopping on the intem et,and thathe needed investorfundsforthe tinaldevelopm entofthe
technologyandpatents.
63. Based on theserepresentations,on M arch l8,2016,D.H.purchasad 2,000shares
ofDragon-clickstockfor$25pershare,foratotalinvestmentof$50,000viaapersonalcheck.
lnOctober20l6,Grossman calledD.H.to solicithim asecond tirae. Duringthis
call,Grossm an told D.H.m orem oney wasneeded to com plete the technology and obtain the
patents,andthatD.H.woulddoublehism oneywhenthepatentsweresold.
65. Based on theserepresentations,on aboutOctober18,2016,D.H.purchased 500
additionalsharesofDragon-clickstockfor$12,500.
66. InFebruary 2018,Grossm an called D.H.to solicithim athird time. Duringthis
call,GrossmantoldD.H.heneededmorem oneytopaythepatentattorneys.
67. Based on Grossm an'srepresentationsand theseeminglyurgentneed to conclude
theprojectinordertoreceiveinvestmentproceeds,D.H.purchasedanadditional400sharesof
Dragon-clickstockfor$10,000onFebruary22,2018.
68. Grossm an nevertold D.H.thatinvestorproceedswould beused forany purpose
otherthanthedevelopm entoftheDragon-clickApplication,patentattorneys,and tom arketthe
Dragon-clickproduct.
ln reality,Grossmanused D.H.'Sinvestorfundsforpersonalexpenditures. For
example,ofthe$10,000ftmdsD.H.wired on February 22,2018,Grossman spentmorethan
$5,000gamblingatacasinoandusedtheremainingf'undsforotherpersonalexpenditures.
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70. Sim ilarly,in aboutDecember20l4,Grossm an solicitedbytelephoneam an with
theinitialsP.Z.whois75yearsoldandlivesinA del,lowa.
During this call,Grossmarttold P.Z.thathe hoped to sellthe Dragon Click
ApplicationtoGoogleand thatifP.Z.invt,stedhestoodto tripleorquadruplehisinvestm entin
lessthansixm onths.
72. Based on these representations,on about December l8,2014,P.Z.purchased
1,000sharesofDragonClick stockfor$x'.'!5,000. Thesefundsweredeposited into theDragon
Partnersbankaccount.
Similarly,in lateM ayoreallyJune2015,Grossman solicitedbytelephoneamale
investorwiththeinitialsR.B.whois79yearso1dandresidesin Broom tield,Colorado.
74. Duringthiscall,Grossm an lrldR.B.thatifheinvestedinDragon-clickhewould
m orethan doublehismoneybecauseDragon-clickwouldbeacquiredby alargecom pany such
asGoogleorAmazonfor$1billionormore.
Also during thiscall,Grossman told R.B.thathewould useR.13.'s investment
fundsto completetheDragon-click software,pay thepatentattomeys'fees,andmarketthe
technology.
76. Based on these representations,on aboutJune 17,
sharesofDragon-click stock for$25
20l5,R.B.purchased 500
pershare,foratotalof$12,500. These fundswere
depositedintotheDragonPartnersbankaccount.
Grossmandidnotuseanyofthe$12,500R.B.investedinJune2015topaypatent
attorneys'feesorotherbusinessexpensesashehadprom ised.
lnaboutJulyorAugust2016,GrossmansolicitedR.B.asecondtime.
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79. Duringthiscall,Grossm an told R.B.heneeded additionalm oney to pay forthe
lastphaseOfthepatentprocess.onaboutAugust29,2016,R.B.investedanother$12,500 for
500sharesofDragon-clickstockviawirelransferintotheDragon-clickbankaccount.
Sim ilarly,inM ay2015,Grossman solicitedbytelephoneamaleinvestorwiththe
initialsR.N.whois77yearsoldandresidesin Temple,Texas.
During thiscall,Grossm an toldR.N.thatDragon-click neededto raisemoneyto
payforthefinaldevelopm entofDragon-clickteclmologyandpatents.
82. Based on these representations,on aboutJuly 20,2015,R.N .purchased 2,500
sharesofDragon-clickstockfor$25pershare,foratotalof$62,500.
Duringthiscall,Grossm an
toldR.N.m oremoney wasneededtocom pletethetechnologyandobtainthepatents.Grossm an
promisedR.N.hewoulddoublehism oneywhentheDragon-clickpatentsweres()ld.
84. Grossm an solicited R.N.bytelephonefivemoretimes:in M ay2016,April2017,
lnearly20l6,Grossman solicitedR.N.asecondtim e.
August2017,December20l7,andJanuary2018.
During each ofthesetivecalls,Grossman told R.N .Dragon-click needed m ore
m oney to complete the patentapplication processand to pay attonaeys'fees,thathewasvery
closetocompletingthesaleofDragon-clicktoanunidentifiedbuyer,andthatR.N.wouldbe
receiving$500,000afterthesaleclosed.
Based on Grossm an'srepresentationsduringtheM ay20l6 call,R..N.investedan
additional$12,500onM ay12,2016,topurchase500moresharesofDragon-clickstockfor$25
pershare.
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BasedonGrossm an'srepresentationsduringtheApril2017call,R.N .investedan
additional$25,000viaanApril12,2017M'iretransfertoDragon-click,topurchase1,000more
sharesofDragon-clickstockfor$25pershare.
Based on Grossman'srepresentationsduring theAugust2017 call,R.N.invested
anadditional$150,000onaboutAugust14,2017,topurchase500moresharesofDragon-click
stockfor$25pershare.
89. Based
invested an additional$16,000 via a
on Grossm an's representations during the December 2t)17 call, R.N.
Decem ber 18,2017 wire transfer to Dlugon-click,to
purchasemoresharesofDragon-clickstock.
90. Based on Grossman'srepresentationsduringtheJanuary 20l8call,R.N.invested
an additional$5,000 viaaJanuary 19,2()18 wiretransferto Dragon-click,to purchasemore
sharesofDragon-clickstock,foratotalof$271,000.
Grossman'sprom isesto investors aboutinvestm entretum s and representations
abouttheuseofinvestorfundsaremateliallyfalse.
AtthesametimeGrossmanwasmakingtheserepresentationstoinvestors,hewas
spending themajority ofinvestorfundsintheDragon-clickbank accounton hispersonal
expendituresandnotonDragon-click.
Grossm an lacks any personalbank accountand has instead used the investor
fundsintheDragon-clickbankaccounttopayhispersonalexpenditures.
94. Grossman had no reasonable basis forprom ising investorsm assive investm ent
retur'nsbasedon thesuccessoftheDragon-click businessbecausehe wasspending investor
moneyonhim selfandhisfam ily,ratherthan ondevelopingthebusiness.
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Contrary to Grosslman's rellresentationsto investors in 2015 and 20l6 thathe
required funds to pay attonzeys' fees,Glossm an did notmake his first paymentfor patent
attomeys'feesuntilApril27,2017,foronlsk,$2,400.
Contrary to Grossm an's representations in Decem ber 2017 and January 20l8
aboutusinginvestorfundsto paypatentattorneys,Grossm an hasnotpaid patentattorney fees
sinceAugustl7,2017,for$33,100.ThispaymentandtheApril2017paymentof$2,400arethe
only fundsusedby Grossm an andthecom paniestopaypatentattorneyfees,andhedidnotpay
patentattonzeysafterAugust2017.
Additionally,contrary to Grossman's representations thatGooglc and Am azon
were potentialbuyers
withthesecompaniesandtherewasneveranypotentialdealwith them .
ofDragon-click'stechnology,Grossm an has neverhad any discussion
J.IsaacGrossman'sMisappropriationoflnvestorFunds
98. Approximately $1.6 million ofinvestorfundswasdeposited into theDragon-
ClickbalzkaccountGrossman controls.
99. From October 2014 through Aplil Grossm an m isappropriated at least
$1,019,000ofthe$1.6millionOfinvestorfundsintheDragon-clickaccount,asfollows:
lnvestorFundsSpentFor Itemsand ServicesPurchased
PersonalUse$426,000 Gambling,primarilythroughslotmachinesandtable
gamçs,atacasinoinBrowardCounty,Flolîda
Atleast$500,000 CashwithdrawalsforpersonaluseAtleast$15,000 Groceries,gas,andfoodAtleast$29,000 AutoleasepaymentstoM anhattanLeasingandGM
Financial
$6,000 Jewelry$19,000 Heatthandcarinsurance$12,000 TheGrossman'schildren'sschooltuitionpayments
$12,000 W almartpurchases
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100. Atno tim e did Grossm an tellinvestors he was misappropriating or misusing
investorftmdsforhisownpersonaluse.
However,thePPM Grossm cngavetoinvestorsstatesthatnocom missionswillbe
paidinconnectionwith investors'contribulions.
102. Nothing in thePPM Grossnlan gaveto investorsauthorized Grossman to receive
theinvestorf'undsasdescribedinparagrapl!99above.
103. According to thePPM ,Dragon M anagem entcan pay broker-dealersfinding fees
forlocatinginvestors.
104. However,Grossm anisnotabroker-dealer. lndeed,FINRA hasbarred him from
workingasorassociatingwith anybroker-dealer.
105. TheDefendants did notdisclose Grossm an'sregulatory history with FINRA or
withtheCFTC toinvestors.
J.AdrianaGrossman'sMisappropriationoflnvestorFunds
106. From nolaterthan September2014untilatleastJune2016,AdlianaGrossman
misappropriatedatleast$293,000ofinvestorf'undsforherpersonaluse.
107. Approximately $840,000 ofinvestors'funds were deposited into the Dragon
PartnersandDragonM anagementbankaccounts,whichAdrianaGrossm ancontrolled.
108. AdrianaGrossmanhasknownherDragonPartnersandDragonM anagementbank
accountsreceived investorfundsthatlsaacGrossm an solicited,and sheknowingly spentthose
fundsonpersonallivingexpensesinstead()finvestinginDragon-clickstock.
From September2014untilJune2016,A.Grossmanmisappropriated$293,000of
investorfundsfrom theDragonPartnersandDragonM anagem entaccounts,asfollows:
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lnvestorFundsSpent ltem sand ServicesPurchased
ForPersonalUse
$35,000 Gamblingatacasino$98,000 PaymentsforaChevroletCorvetteandChevroletTahoe$67,000 M ortgagepaymentsontheGrossmanfamilyhome
$26,000 Hea1thandcarinsurance$51,000 Jewelry,includinga3.8caratyellow diamond
$16,800 W almal4purchases
1l0. TheDefendantshavenotdisclosed to investorsA.Grossman'smisappropriation
andm isuseofinvestorfundstopaypersonalexpenses.
1ll. A.Grossman'smisappropriationandmisuseofinvestorfundsisomittedfrom the
DragonPartnersPPM andotherluarketingm aterials.
ThePPM statesthatA.Grossman'scompany,Dragon M anagem ent,willreceive
a25percentStperformance-BasedFee''attheendofaCapitalEvent,asdefinedinthePPM .
113. No CapitalEventhas ever occurred. Accordingly,Dragon M anagem enthas
neverbeenentitledtoreceiveanyPerformance-BasedFee.
COUNT I
FraudinViolationofSection10(b)andRule10b-5(a)oftheExchanzeAct
(AgainstAllDefendants)
The Comm ission repeats and realleges Paragraphs 1 through 113 of this
Complaint.
l15. Dragon-click,Isaac Grossman,Adriana Grossm an,and Dragon M anagem ent,
beginning no laterthan September2014,directly and indirectly,by use ofany means or
instrumentality ofinterstate comm erce,orofthem ails,knowingly orrecklessly employed any
device,schemeorartiticetodefraudincolmectionwiththepurchaseorsaleofanysecurity.
116. By reason ofthe foregoing,lsaacGrossm an,Adriana Grossm an,Dragon-click,
andDragonManagement,violated,and,unlessrestrainedandenjoined,arereasonablylikelyto
Case 0:18-cv-61234-BB Document 1 Entered on FLSD Docket 06/04/2018 Page 16 of 22
eontinuetoviolateSection10(b)andRule10b-5(a)oftheExchangeAct,15U.S.C.j78j(b)and
l7C.F.R.j240.10b-5(a).
II'K2OUNT 11
FraudinViolationofSection 10(b)andRule10b-5(b)oftheExchanjteAct
(AgainstDragon-clickandlsaacGrossman)
The Comm ission realleges and incop orates paragraphs 1 through 113 ofthis
Complaint.
118. Dragon-click and lsaac Grossman,beginning no later than September 2014,
directly orindirectly,by useofthe meansorinstrum entality ofinterstate comm erce,orofthe
m ails,in connectionwith thepurchaseorsaleofsecurities,knowinglyorrecklesslym adeuntrue
statementsofmaterialfactsoromitted to statematerialfactsin ordertomakethestatements
m ade,inthelightofthecircum stancesunderwhichtheywerem ade,notm isleading.
119. By reason of the foregoing, Dragon-click and lsaac Grossm an,directly or
indirectly violated,and,unlessrestrained and enjoined,arereasonablylikelytocontinueto
violate,Sectionl0(b)andRule10b-5(b)oftheExchangeAct,15U.S.C.j78j(b)and17C.F.R.
j240.l0b-5(b).
COUNT lll
FraudinViolationofSection10(b)andRule10b-5(c)oftheExchan'zeA-ct
(AgainstAllDefendants)
120. The Com mission repeats and realleges Paragraphs through 113 of this
Com plaint.
Dragon-click,lsaac Grossman,Adliana Grossman,and Dragon M anagement,
beginning no laterthan September 2014,directly and indirectly,by use of'any means or
instrum entalityofinterstatecom merce,orofthem ails,knowingly orrecklessly engaged in acts,
Case 0:18-cv-61234-BB Document 1 Entered on FLSD Docket 06/04/2018 Page 17 of 22
practicesand coursesofbusinesswhich operated orwould have operated as a fraud ordeceit
uponanypersoninconnectionwiththepurchaseorsaleofanysecurity.
By reason ofthe foregoingylsaacGrossman,Adriana Grossman,Dragon-click,
andDragonManagementviolated,and,unlessrestrainedandenjoined,arereasonablylikelyto
continuetoviolate,Section 10(b)andRule10b-5(c)oftheExchangeAct,15U.S.C.j78j(b),
and17C.F.R.j240.10b-5(c).
t-=(II;ICIFlAf
FraudinViolationofSection17(a)(1)oftheSecuritiesAct
(AgainstAIlDefendants)
The Comm ission repeats and realleges Paragraphs l tluough 113 Of this
Complaint.
124. Dragon-click,lsaac Grossman,Adriana Grossm an,and Dragon M anagem ent,
beginningnolaterthan September2014,intheofferorsaleofanysecuritiesby'theuseofany
meansorinstrum entsoftransportation orcomm unication ininterstatecomm erce.arbyuseofthe
mails,directly orindirectly knowingly orrecklessly employed any device,schemeorartificeto
defraud.
125.
andDragonManagement,violated,and,unlessrestrainedandenjoined,arereasonablylikelyto
By reason ofthe foregoing,lsaac Grossm an,Adriana Grossm anpDragon-click,
continuetoviolate,Section17(a)(1)oftheSecuritiesAct,15U.S.C.j77q(a)(1).
COUNT V
Fraud in Violat-ionofSection 17(a)(2)oftheSecuritiesAct
(AgainstAllDefendants)
The Commission repeats and realleges paragraphs l through this
Complaint.
Case 0:18-cv-61234-BB Document 1 Entered on FLSD Docket 06/04/2018 Page 18 of 22
127. Dragon-click,
beginningno laterthan Septem ber2014,directly orindirectly,in theofferorsaleofsecurities,
bytheuseofm eansorinstrum entsoftransportationorcom municationininterstatecom m erceor
ofthe m ailshave negligently obtained m oney orproperty by m eans ofuntnle statements of
materialfactsand omissionsto statem aterialfactsnecessary in orderto m ake thestatem ents
lsaac Grosslnan,Adriana Grossm an,and Dragon M anagem ent,
m ade,inthelightofthecircum stancesunderwhichtheywerem ade,notm isleading.
128. By reason ofthe foregoing,lsaac Grossman,Adriana Grossman,Dragon-click,
andDragonManagement,directlyorindirectlyviolated,and,unlessrestrainedandenjoined,are
reasonablylikelytocontinuetoviolate,Section l7(a)(2)oftheSecuritiesActg15U.S.C.j
77q(a)(2)q.
COUNT VI
FraudinViolationofSection17(a)(3)oftheSecuritiesAct
(AgainstAllDefendants)
129. The Commission repeats and realleges Paragraphs 1 through 113 of this
Complaint.
130. Dragon-click,lsaac Grossm an,Adriana Grossm an,and Dragon M anagem ent,
beginningno laterthan September2014,in theofferorsaleofany securitiesby theuseofany
meansorinstnlm entsoftransportation orcomm unicationin interstatecomm ereeorbyuseofthe
mails,directlyorindirectlynegligentlyengagedintransactions,practicesandcoursesofbusiness
whichoperatedorwould haveoperatedasafraudordeceitupon thepurchasersandprospective
purchasersofsuchsecurities.
By reason ofthe foregoing,lsaac Grossm an,Adriana Grossm an,Dragon-click,
andDragonManagement,directlyorindirectlyviolated,and,unlessrestrainedandenjoined,are
19
Case 0:18-cv-61234-BB Document 1 Entered on FLSD Docket 06/04/2018 Page 19 of 22
reasonably likely to
j77q(a)(3).
continueto violate,Section l7(a)(3)oftheSecuritiesAct,15 U.S.C.
RELIE:,FREOUESTED
Comm issioll respectfully requests that the Court find thatW HEREFORE, the
Defendantscomm ittedtheviolationsallegedand:
1.
Tem porarvRestraininaOrder,Prelim inaryInl'unction and Perm anentln.iunction
Issue a Temporary Restraining Order,a Preliminary Injunction and a Pennanent
lnjunction,restraining and enjoining:Defendantslsaac Grossman and Dragan-click,their
officers,agents,servants,employees,attonleys,andal1personsin activeconcertarparticipation
withthem,andeach ofthem,from violatingSection 17(a)oftheSecuritiesActand Section
l0(b)andRule10b-5oftheExchangeAct,andDefendantsDragonManagementandAdriana
Grossm an,theirofticers,agents,servants,em ployees,attolmeys,anda11personsin activeconcert
orparticipationwiththem,andeachofthem,from violatingSectionl7(a)oftheSecuritiesAct
andSection10(b)andRulesl0b-5(a)and(c)oftheExchangeAct..
I1.
AssetFreezeand Sworn Accountinzs
IssueanOrderfreezingtheassetsofallDefendantsuntilfurtherOrderoftheCourtand
requiringtheDefendantsto fileswol'naccountingswiththisCourt.
111.
RecordsPreservation
lssueanOrderrequiringal1Defendantstopreserveanyrecordsrelatedtothesubject
matterofthislawsuitthatareintheircustodyorpossessionorsubjecttotheircontrol.
20
Case 0:18-cv-61234-BB Document 1 Entered on FLSD Docket 06/04/2018 Page 20 of 22
IV.
Eiszoraement
all Defbndants tolssue an Order directing disgorge all ill-gotten gains, including
prejudgmentinterest,resultingf'rom theactsorcoursesofconductallegedinthisComplaint.
V.
Penalties
lssuean Orderdirecting a11Defendantsto paycivilm oneypenaltiespursuantto Section
20(d)oftheSecuritiesAct,15U.S.C.j77t(d),andSection21(d)oftheExchangeAct,15U.S.C.
j78u(d).
Vl.
FurtherRelief
Grantsuchotherandfurtherreliefasm aybenecessaryandappropriate.
VIl.
RetentionofJurisdiction
Further,theCommissionrespectfullyrequeststhattheCourtretainjurisdictionoverthis
actioninordertoimplem entandcarryoutthetermsofallordersanddecreesthatitmayenter,or
toentertain anysuitableapplicationormotionbytheComm ission foradditionalreliefwithinthe
jurisdictionofthisCourt.
Case 0:18-cv-61234-BB Document 1 Entered on FLSD Docket 06/04/2018 Page 21 of 22
DEM AND FOR JURY TRIAL
TheSecuritiesandExchangeCommùssionherebydemandsajul'ytrialinthiscase.
June4,2018 Respectfull submitted,
.. 'e /
j.. j .î,q..--
. Q. .--g.. ...j . r--.By: v--.-; ,:;. -
11%'eRiggleBerlin,Esq.
Se iorTlialCounsel
FloridaBarNo.630020
Direcr:Dial:(305)982-6322Email:[email protected]
AttonàeyforPlaintiff
SECI.JRITIESAND EXCHANGE COM H ISSION
801BrickellAvenue,Suite1800
M iam i,Flolida 33131
Telephone:(305)982-6300Facsirnile: (305)536-4154
22
Case 0:18-cv-61234-BB Document 1 Entered on FLSD Docket 06/04/2018 Page 22 of 22
Js44(Rev.()6/17)FnsoRevised06/01,2017 CIVIL COVER SHE '+ ,Ap
'l'heJS44civilcoversheetandtheinformationcontainedhereipneitherreplac ..%zl':l l entthetill.*l ceqfplea or er es . ui 'IaN$.'sexceptas'localrqlesofcourt.Thisfo
.rm appro,vedbytheJudlcialConfe.rencebru StatesinSeptember 974 ls(equirt for us e r'o C rtforthepurposePpvidedbàotInitiatingthecivlldocketsheet.(LYlf'h/N.l'7??t/(II()Ns()NNA'Az7'PA(;l,'(.)1.pzf/-$'l.'('JRM.)NOTICE:AttorneysMI-ISTInàicateAllRe-filedCasesBelow. ' .
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1.(a) PLAINTIFFS SECURITIESANDEXCHAN ILEDbv 'ib
'
. .
AXTS IsaacGrossman,AdrianaGrossman, ragon-clicl
COM M ISSION * ? Corp.andDragonManagement,LLC
. Ij.;,j.()jlrsy!y sysward(b)CountyotResidenceofFirstListedPlaintiff J 6 .ountyo.ltesidenceofFirstListedDefendant
(1L'X('/:'/:I'IN'é1..$.I''I.AINI11.12('z1.'WLh'.,) (1NI/.S.l'lvAINI1I.'1''('ASES()NI.1,)'STEVENM,LARI?kr
U.s.Dls/'. .: VINULUAVNUDACCVONTjjxstjTjxlovNk/j,AvsjjEss.USErHELOCATlONOFCLERK, S.D.ofFLh,-MJ (yKnvjv,nl(c)Attorneysr/.,r,??hame'Aclareabs,andlèlephoneNumber) .-- .-..-----.-
AmieRiggleBerlin,Esq.,SEC,80lBrickellAve.,Suite1800,Miami,FL 33131,305-982-6322
(dlcheckCountyWhereActionArose: D MIAMI-DADE D MONROE # BROwARDDPALMBBACHDMARTINDsT.LIJCIEDINDIANRIVERElOKEECHOBEEElHIGHLANDS
I1.BASISOFJURISDICTION (Placean''x''inonesf?x()nl.v) 111.CITIZENSHIPOFPRINCIPAL PARTIES(1%we(',?.'.v''???()$'e/oxt()v/'/t/,,?n//?(l''ç)rljtlv:r.çitl;('('$'c.î'(?/?14,) f7l?t/(?/lgIf().%/k)/'/)Q,(Q'l'tILll'l)
C1l U.S.Government (:l3 FederalQuestion PTF DEF P'FF DEFPlaintiff (11..%(iovernmenlNt??a/lJr/)?? CitizenofThisState IZI1 Q I Incorporated()rPrincipalPlace IZI4 E:l4
ofBusinesslnThisState
I-I2 tl.S.GovernlnentDetkndant
I-I4 Diversity(Indicale('illzenshlp/?/'#Jr??trA'ln/ke'l??JJJ?
CitizenofAnetherState 1 2 D
lV.NATUREO FSUIT (Plucean''A'.'lnoneatk.v()nly)CONTRACT TORTS
CitizenorSubjectofa IZI3 E13 ForeignNationForeignCountry
Clickherefor:Nalllret)l!..9t.11l(J(3(lu'tllk''scl'llltl(hl1F.FORFEITURE*ENAVTY BANKR Y
D 625DrugRelatedSeizure D 422Appeal28USCl58ofProperty21USC88l Q 423Withdrawal
Q 690Other 28USC157
lncorporatedandPrincipalPlaceofBtlsinessInAnotherState
D 6 I:J6
OTHERSTATUTES
E1ll0Insurance PERSONALINJURYI::1l20Marlne Z 310AirplaneIZIl30MillerAct E1315AirplaneProductI::Il40NegotiableInstrtllnent LiabilityIZII50RecoveryofOverpayment Q 320Assaulq.Libel&
& EntbrcementofJudglnent SlanderIZIl5lMedicareAct Q 330FederalEmployers'(:ll52Rectlverl'ofDefatllted '' Liability
FERSONALINJURY
D 365PersonalInjur.y-ProductLiability
E:1367HealthCare/Pharmaceutical
PersonalInjuryProductLiability
E)368AsbestosPersonal
I-I375FalseClailnsActI-I376QtliTam (31USC
3729(a))I-I40OStateReapportionluentI-I4l0AntitrustI-I430BanksandBankingI-I450Commerce
PROPERTYRIGHTS(:1820copyrightsI:::1830Patent835Patent-AbbresriatedC1NewDrugApplication
I:::)840TrademarkStudentLoans
(Excl.Veterans)n l53RecoveryofOverpayment
ofVeteran'sBenetitsr-1l60Stotklloltlers-Stlitsr'1I90OtherContrjctr-'1195ContractProductLiabilityI'-I196Franclllse
IZI340MarineIZI345MarineProdtlct
LiabilityIZI350MotorVehicltQ 355MotorVehicle
ProductLiabilityD 360OtherPersonal
InjuryE1362Personalinjur.y-
Med.MalpracticeCIVILRIGIITS
D 440OtherCivilRights(:1441VotingE1442Employment443Housing/E:lAccommodations
5 445Alner.w/Disabilities-r'''l530General
REALPROPERTYIZI210LandConde,nnationEl220ForeclosureIZI230RentLease&Ejectlnent
IZI240TortstoLand1-I245TortProductLiability
r''-1290AllOtherRealProperty Employment C1535DeatbPenaltyD446Amtr.w/llisabilities-E:l540Mandamus&(hher
Other Q 550CivilRightsC:I448Education I::I555PrisonCondititpn
560CiyilDetainee-E1Conditlonsof
Confinement
IMMIGAATION
CI462NaturalizationApplicationD 465OtherImmigration
Actions
lnjuryProductLiability IABOR
PERSONALPROPERTY E1710FairLaborStandardsQ 370OtherFraud ActC)371TruthinLending IZI720LaborN gmt.RelationsQ 380OtherPersonal IZI740RailwayLaborAct
PropertyDamage Z 75lFamïlyandMedicalIZI385PropertyDamape LeaveAct
ProductLiabîlity Q 790OtherLaborLitigationD 79JEmpl.Rel.Jnc.
PRISONERIITITIONS SecurityActHabeasCorpus:
(:1463AlienDetainee510Motionsto VacateZSentence
Other:
Q 460DeportatiollI:I470RacketeerIntltlenqedand
SOCIALSECURI'I'Y CorruptOrganizationsQ 86IHIA(1395f9 Z 480ConsumerCreditEl862BlackLtmg(923) Z 490Cable/SatTVIZI863DIWC/DIWW 1405(g)) K 850Sectirities/'colnlllodities/C1864SSIDTitleXVI ExchangeD 865RSl(405(g)) I::1890OtherStatutory'Actlolls
D 891AgriculttlralActsE1893EnvironnlentalMattersC1895Freedoll,oflnfonllatlon
FEIIERAVTu SUITS ActC1870Taxes(U.S.Plaintfff Q 896Arbitration
orDefendant) IZI899AdlninistratlveProcedtll'e87I IRs-Tllird Party 26 . i . A leajofIZI 9 AddReveuor p!USC760
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950ConstittltionalityofStatcSsatlltes
v ORIGIN (l'laL.eJ??''X''lnOnc8oxOnIy)* 1 origlnal I:l2 Removed I::I3Re-tiled D Reinstated D ''fransferrqdfrom 6Mullidistrict r-l7 A ealto r7 8 utjtjtjjstrjcyr-j
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JtldKzlnent File
VI.RELATED/ (Seeinstructions):a)Re-filedCase nYES d NO b)RelatedCases LYES é NORE-FILEDCASEIS) JUDGE: DOCKETNtIMBER:
CitetheU.S.CivilStatuteunderwhichl'cluarefilingandWriteaBriefStatementofCause(DozJ#/citejurlàdictinnalstatutesva/fs.NdiversilbsïvII.CAUSEOFACTION 15USCj77q(a)(1-3),'15USCj7%(b);l7CFRj240.10b-5(a-c)
LENGTHOFTRIALvia daysestimated(forbothsidestotr.yentirecase)
VIII.REQUESTEDIN CHECKIFTHISISACLASSACTION ,E1 DEMAND$ CHECKfESonlyifdemandedincomplaint:COM PLAINT: UNDERF.R.C.P.23
JtIRYDEMAND: k Yes IZINo .
ABOVE INFORM ATION ISTRUE& CORRECT TO THE BEST OFM Y KNOW L ,DGEDATL SIGNATURE.OFATT NEYX OD
June4,2018 ,s/AmieRiggleBerlin --
r .e..? .- <.
FOROFFICEUSEONLYRECEIPT# AMOUNT MAGJUDGE
Case 0:18-cv-61234-BB Document 1-1 Entered on FLSD Docket 06/04/2018 Page 1 of 1