Fact pattern

By Sanchez00

  • Boots & Cats, Inc. was incorporated in Delaware

  • Hudson was hired in 2014

  • hEARo was released

  • Period: to

    176,766 shares of Boots and Cats were sold

  • Period: to

    SEC alleges Lens engaged in a scheme to defraud aided by Castellano

    BC's senior accountant Lens engaged in a situation, aided by chief financial officer Castellano, to defraud BC's shareholders. The scheme involved a
    fraudulent accounting model, against generally accepted accounting principles (“GAAP”)
    and various provisions of federal securities laws.

  • Boots & Cats, Inc. went public

  • WB submitted accounting to Lens on July 12, 2021 via email in anticipation of BC’s upcoming board meeting on August 14, 2021;

  • Hudson submitted an accounting to Charlotte/Charlie Lens ("Lens")

  • Email from Hudson, K. to Lens asking for accounting redo

  • WB’s accounting noted that a substantial amount of BC’s publicly traded shares were sold during fiscal year 2021 (“FY21”) due, at least in part, to BC’s delay in releasing its highly-sought product, hEARo

  • Castellano knowingly and willingly approved the fraudulent accounting

  • Lens made Castellano aware of the fraudulent accounting model via email

  • Lens submitted the fraudulent accounting to Castellano

  • BC’s publicly traded stock was valued at $75 per share

  • Castellano presented the fraudulent accounting to BC’s board

  • BC’s had 300,000 outstanding and available shares for purchase on the public securities exchange

  • Simone made a public statement regarding its projections for FY22 and FY 2023

  • BC’s publicly traded stock was valued at $188 per share

  • Kyle/Kylie Hudson reported the accounting to Chase Ahmed ("Ahmed")

  • BC and its agents, represented by Marx Brothers file its answer

  • Confidential Whistleblower complaint is filed to the commission

  • Chase Ahmed concluded his investigation

  • Kyle/Kylie Hudson filed the whistleblower complaint

    reported the accounting to the SEC
  • Period: to

    WB created an accounting of BC’s projected sales, working capital, outstanding shares, and made predictions for BC’s financial position for fiscal year 2022 (“FY22”) and fiscal year 2023 (“FY23”);

  • SEC began its investigation into Boots and Cats pursuant to Hudson's report

  • Lens and Castellano resigned

  • Hudson was fired

  • SEC filed its complaint against BC and its agents

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