Federal law prohibits the sale of unregistered securities. See 15 U.S.C. § 77e. No exemption from federal registration requirements applied to the sale of the ADOT-owned shares of Biomoda stock that Robins flooded into the market in the spring of 2007.

Plaintiffs properly pleaded the necessary facts to support this claim at Paragraphs 34, 37-52, 56-65, 104-110, 126-130 of the Complaint. (ii) Plaintiffs Properly Pleaded Alternative Control- Person Liability Claims Under 15 U.S.C. § 77o(a) As an alternative to the claims alleged in Counts I and III, and if the Court were to determine that the acts and omissions complained of in Counts I and III are found to be those of LRM and not Defendant, Plaintiffs properly alleged claims for control-person-liability under 15 U.S.C. § 77o in Counts II and IV arising from Case 1:14-cv-07495-JHR-JS Document 129 Filed 07/03/17 Page 24 of 33 PageID: 1234 3891099_1 20 violations of 15 U.S.C. § 77l(a)(1) and (2) and 15 U.S.C. § 77e(a). It bears repeating, Plaintiffs are not seeking to pierce LRM’s corporate veil, merely to allege an independent and alternative claim of control-person liability.

There is no dispute that the SEC has proven all elements required to establish that Mapp violated Sections 5(a) and 5(c), namely that Mapp offered and sold Servergy securities through the use of interstate commerce when no registration was in effect or filed. 15 U.S.C. § 77e(a), (c). As the company’s primary fundraiser and CEO with signatory authority on all of Servergy’s accounts, there is no question that Mapp was a necessary participant in the offer and sale of Servergy’s common stock from 2009 through 2013.

A prima facie violation of 24 Section 5 is established by showing that (1) no registration statement was in effect 25 or had been filed as to the securties offering, (2) the Defendants, directly or 26 indirectly, sold or offered to sell the securities, and (3) the offer or sale was made 27 through the use of interstate facilities or the mails. 15 U.S.C. §§ 77e(a) & 77e(c). 28 See also SEC v. Continental Tobacco Co. of S.C., Inc., 463 F.2d 137, 155 (5th Cir. 11 Case 2:10-cv-06835-RGK -JCG Document 3 Filed 09/14/10 Page 17 of 25 Page ID #:33 1 1972).

In order to establish a prima facie case for a violation of Sections 5(a) and 5(c), the Commission need only prove that: (1) defendants, directly or indirectly, offered or sold securities; (2) no registration was in effect or filed with the Commission for the offer or sale of those securities; and (3) interstate transportation or communication, or the mails, were used in connection with the offer and sale. See 15 U.S.C. §§ 77e(a) & 77e(c); see Cont’l Tobacco, 463 F.2d at 155. Once a prima facie case is established, the burden shifts to Defendants to prove that their acts fall within an exemption to Section 5.

On November 30, 2009, in SEC v. Compass Capital Group, Inc., et al., Case No. 2:08-CV-00457 (D. Nev.), final judgment was entered against Compass Capital whereby it was permanently enjoined from violating Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)] and Sections 10(b) (antifraud provision), 13(d), and 15(a) of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(d), 78o(a)] and Rules 10b-5 and 13d-1 thereunder [17 C.F.R. §§ 240.10b-5 and 240.13d-1]; was barred for a period of five years from participating in an offering of penny stock; and was ordered to pay disgorgement of $750,000, jointly and severally with Lefkowitz. 15.

Because no prospectus was issued here, subpart (A)(3) adds nothing to the unregistered sale claim. Case 2:17-cv-04677-NJB-JVM Document 21-1 Filed 07/12/17 Page 20 of 26 - 21 - 1229944v5 Section 705(a)(1)'s prohibition of the sale of an unregistered, non-exempt "security," and Section 714(A) rescission remedy for such sales, are Louisiana's equivalents of Sections 5 and 12, respectively, of the '33 Act (codified at 15 U.S.C. §§77e, 77l). Courts recognize that Louisiana's securities laws were "modeled after the federal system, specifically the Securities Act of 1933 and the Securities Exchange Act of 1934."

This, in turn, caused the issuance of TBI stock to have taken place without an effective registration statement being filed with the SEC, which violates Section 5 of the Securities Act. See 15 U.S.C. § 77e(a) (2016). As a result, Plaintiff is entitled to have the transaction rescinded pursuant to Section 12(a)(1) of the Securities Act.

And Verdmont’s recent filing for liquidation, which closely tracked the Commission’s pursuit of additional discovery, does not absolve Verdmont of its obligation to produce the relevant materials. STATEMENT OF FACTS The Commission’s Amended Complaint alleges that Verdmont engaged in the unregistered and unlawful sales of penny stock of three issuers, Goff Corp. (“Goff”), Norstra Energy Inc. (“Norstra”) and Xumanii, Inc. (“Xumanii”), in violation of Section 5 of the Securities Case 1:15-cv-00894-WHP-JLC Document 181 Filed 02/12/16 Page 5 of 29 - 2 - Act of 1933, 15 U.S.C. § 77e. (Amend.

1 ¶¶ 24-25. 5 See 15 U.S.C. § 77e; see also 15 U.S.C. § 77f. Case 1:11-cv-02598-DLC-HBP Document 521 Filed 07/29/15 Page 14 of 29 11 11.