U.S. Securities and Exchange Commission v. Spartan Securities Group, LTD

• Court: Court of Appeals for the Eleventh Circuit
• Decided: January 16, 2026
• Docket: 22-13129
• Status: Published

Opinion

USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 1 of 211

FOR PUBLICATION

In the United States Court of Appeals For the Eleventh Circuit ____________________ No. 22-13129 ____________________

U.S. SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, versus

SPARTAN SECURITIES GROUP, LTD, ISLAND CAPITAL MANAGEMENT, CARL E. DILLEY, MICAH J. ELDRED, Defendants-Appellants, DAVID D. LOPEZ, Defendant. ____________________ Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:19-cv-00448-VMC-CPT ____________________

Before BRANCH, LUCK, and TJOFLAT, Circuit Judges. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 2 of 211

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PER CURIAM: The perpetrators of two microcap securities fraud schemes created nineteen shell companies that didn’t maintain actual busi- ness operations or assets, and then sold the companies’ securities at inflated prices after the securities became eligible for public trad- ing. This case is about the firms who helped make those compa- nies’ securities publicly tradeable. Carl Dilley and Micah Eldred owned and operated the two firms—Spartan Securities Group, Ltd., and Island Capital Manage- ment. Spartan, a broker-dealer, submitted Form 211 applications on each shell company’s behalf to the Financial Industry Regula- tory Authority (FINRA). Once a Form 211 was approved by FINRA, Spartan initiated public quotation on the companies’ secu- rities. Then Island, a transfer agent, applied to make the securities eligible for the Depository Trust Company’s (DTC) convenient, electronic settlement process. The Securities and Exchange Commission (SEC) brought this enforcement action against Dilley, Eldred, Spartan, and Island. Count six of its fourteen-count complaint alleged that each defend- ant made false statements to obtain FINRA clearance and DTC el- igibility, in violation of section 10(b) of the Securities Exchange Act of 1934 (codified at 15 U.S.C. section 78j(b)) and SEC rule 10b-5(b) (codified at 17 C.F.R. section 240.10b-5(b)). Ahead of trial, the defendants moved to exclude an SEC ex- pert witness as unqualified and unreliable, and they moved for spe- cial interrogatories on facts that would determine the maximum USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 3 of 211

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possible penalties. The district court denied each motion. The case went to trial, which ended in a jury verdict for the SEC as to count six. Each defendant moved for judgment as a matter of law, and the district court denied that relief too. And then, during the rem- edies phase, the district court enjoined the defendants from violat- ing section 10(b) and rule 10b-5(b) in the future, barred them from having any involvement with penny stocks, ordered that each de- fendant pay civil penalties, and ordered Island to disgorge ill-gotten profits to the United States Treasury. This is Dilley, Eldred, Spartan, and Island’s appeal. They ar- gue the district court erred by denying their motion to exclude the SEC’s expert witness and their motion for judgment as a matter of law. They also contend that the district court abused its discretion when imposing remedies. Most of the remedies were time-barred, they say. As to the disgorgement, they argue (1) the Exchange Act doesn’t authorize ordering disgorgement to the Treasury, (2) the facts of this case made that relief inequitable, (3) the SEC failed to show Island’s profits and wrongdoing were causally related, and (4) the SEC didn’t reasonably approximate the ill-gotten profits. As to the civil penalties, they argue (1) the Seventh Amendment re- quired that a jury find the facts establishing the maximum allowa- ble penalties and (2) the district court failed to consider their ability to pay the fine. After careful consideration, we affirm. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 4 of 211

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FACTUAL BACKGROUND Over-the-Counter Market Regulation Before turning to the defendants’ conduct, we first describe the process they used to take companies public for listing in the over-the-counter market. Microcap securities are low-priced stocks—often called penny stocks—that trade “over the counter,” meaning that they do not trade on a major national exchange. See Microcap Fraud, https://www.sec.gov/securities-topics/microcap-fraud [https://perma.cc/FF7A-BPC7] (last visited Jan. 21, 2025). To pre- vent microcap-securities fraud, the SEC adopted rule 15c2-11. Rule 15c2-11 requires that, before a broker-dealer can “publish any quo- tation for a security or . . . submit any such quotation for publica- tion[]” in the over-the-counter marketplace, it must disclose certain information about the issuing company. 17 C.F.R. § 240.15c2- 11(a)(1), (b)(5)(i). That information includes the issuer’s name and address, the identity of its transfer agent, and a “description of the issuer’s business,” including what products or services it sells and the facilities it operates. Id. § 240.15c2-11(b)(5)(i). A broker-dealer complies with rule 15c2-11 by submitting a Form 211 to FINRA, a private nonprofit organization that regulates broker-dealers. The Form 211 asks the broker-dealer to disclose the information required by rule 15c2-11, including the issuer’s and transfer agent’s identities. It also asks for “circumstances surround- ing the submission of th[e] application,” such as “the identity of any USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 5 of 211

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person(s) for whom the quotation is being submitted and any in- formation provided to [the] firm by such person(s).” A “registered principal of the firm responsible for th[e] Form 211 application[] and all subsequent submissions made in connection with [it]” must certify that he “has a reasonable basis for believing that the information accompanying th[e] form . . . is accurate.” By signing the certification, the principal “acknowledge[s] that copies of th[e] form, accompanying docu- ments, and subsequent submissions made in connection with [the form]” may be given to the SEC, other agencies, and “to the public upon request.” After the broker-dealer certifies and submits the Form 211, FINRA examiners may request more information about the appli- cation, or point out issues of concern (called “red flags”) by sending “deficiency letters” to the broker-dealer. If it still desires FINRA clearance, the broker-dealer will respond and cure the deficiencies; otherwise, the application is abandoned. This back-and-forth pro- cess continues until FINRA’s concerns are resolved and it ultimately approves the application. When FINRA approves a Form 211 application, it clears the issuer’s securities for public quotation on the over-the-counter market. Or, in the words of FINRA compliance analyst Deji Ad- ams, who testified at the defendants’ trial, completing the Form 211 process “essentially open[s] the door” to over-the-coun- ter public trading of the issuer’s securities. Without broker-dealers initiating and completing the Form 211 process, he explained, “the USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 6 of 211

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general public would not be able to invest” in the over-the-counter market. FINRA approval also enables the transfer agent to apply to make the issuer’s securities eligible for clearance and settlement through the DTC. The DTC is a financial clearinghouse and the largest depository for shares of securities in the United States. The DTC facilitates convenient, virtually instant transfers of securities for eligible issuers. It holds stock certificates in trust for eligible issuers and allows eligible issuers to take advantage of electronic settlements of any purchase or sale in the marketplace. The Shell Companies From 2009 through 2014, Spartan was registered with the SEC as a broker-dealer. During that same period, Island was a reg- istered transfer agent. Spartan and Island were “sister companies.” The two com- panies shared the same office space, equipment, and employees. They also shared the same corporate officers. Dilley was a regis- tered principal of Spartan and the president of Island. Eldred was a registered principal of Spartan and the CEO of Island. Eldred testified that he created both companies to “complement” one an- other by providing both broker and transfer-agent services to the same clients. Four of the “clients” who solicited Spartan and Island’s ser- vices were Alvin Mirman, Sheldon Rose, Michael Daniels, and Di- ane Harrison. These four individuals asked Spartan and Island to USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 7 of 211

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help them trade nineteen shell companies through the over-the- counter market. Mirman/Rose Issuers Mirman and Rose, collectively, created fourteen of the shell companies: Kids Germ Defense Corp., Obscene Jeans Corp., On the Move Corp., Rainbow Coral Corp., First Titan Corp., Neutra Corp., Aristocrat Group Corp., First Social Networx Corp., Global Group Enterprises Corp., E-Waste Corp., First Independence Corp., Envoy Group Corp., Changing Technologies, Inc., and First Xeris Corp. (together, the “Mirman/Rose issuers”). Mirman and Rose’s plan from the onset was for these com- panies to be sold as public vehicles. To that end, they recruited an officer for each company to act as CEO in name only. They re- cruited personal friends and family members to fill these positions. Specifically, Mirman and Rose focused on friends and family who “had [a] background in th[e] specific company.” For example, E- Waste’s purported business plan was to open an electronics recy- cling facility, so Rose recruited an electrical engineer to be its direc- tor. Rose testified that these straw officers “knew . . . up front” that Mirman and Rose would sell the companies and give the officers a cut. These officers, Rose explained, had no control over the issu- ers’ business plans—Mirman and Rose “pretty much directed the total company.” After recruiting the straw officers, Mirman and Rose began the process of taking the companies public. The parties stipulated USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 8 of 211

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that Mirman and Rose “prepared false and misleading . . . SEC fil- ings [that] falsely depicted the issuers as actively pursuing a variety of business plans, when the only plan from the onset was for the compan[ies] to be sold as public vehicles.” To discuss the next step—seeking FINRA clearance—Mir- man and Rose “had a couple of lunches” with Dilley and Eldred. Dilley and Eldred would ask “‘what’s in the pipeline’ type of things.” Mirman and Rose responded that they were “working on a couple of things” that they “might be able to provide to [Dilley and Eldred] so that [they] can do some of the FINRA work.” Mir- man testified that Dilley and Eldred told him that “in order for [him] to deal with their broker-dealer, they would want me to deal with their transfer agent as well.” So he and Rose asked Spartan to file the shell companies’ Form 211 applications and for Island to be their transfer agent. Spartan began preparing Form 211 applications for Mirman and Rose, and Mirman and Rose served as Spartan’s “point people” during that process—providing Spartan with any information that it needed to complete the applications. Mirman and Rose for- warded documents necessary to complete the applications to Spar- tan. Spartan, Rose explained, would “take th[e] information” and “put it into the proper language for FINRA,” including “writing ba- sically the company’s plan and what it’s all about, the technical type of work to finally get the company public.” That information in- cluded Mirman and Rose’s purpose for creating the companies— USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 9 of 211

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Rose testified that he told Spartan “that the plan from the begin- ning” was to sell “[n]ot only Kids Germ,” but also “anyone down the road [he and Mirman] would be selling.” Rose testified that because he and Mirman were Spartan’s point people, he never told the issuers’ officers to contact Spartan or any of its employees, and he never introduced the officers to Spartan. He explained that Mark Nicholas, his son-in-law and Kids Germ CEO, “didn’t know Carl Dilley” and had “no reason” to con- tact Spartan. Mirman testified he was unaware of Spartan ever ask- ing the issuers’ officers for information. Two of the issuers’ offic- ers—Nigel Lindsay of First Independence and Matt Egna of Chang- ing Technologies—testified that they never contacted Spartan. Lindsay, a friend of Rose’s son, testified he never spoke to anyone from Spartan and had never heard of Dilley’s name. He also said that he never saw the Form 211 that Spartan completed for First Independence. Egna similarly testified that he did not know Dilley or Eldred, never spoke to them, and never interacted with them through Spartan while he was Changing Technologies’ president. Spartan ultimately submitted Form 211 applications for each Mirman/Rose issuer to FINRA between December 2009 and 2014, which Dilley signed as the “principal of the firm responsible for th[e] . . . application[s].” Each of these applications responded to the Form 211’s question asking for “circumstances surrounding the submission of th[e] application,” such as “the identity of any per- son(s) for whom the quotation is being submitted and any infor- mation provided to [the] firm by such person(s),” by saying “see USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 10 of 211

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cover letter for details.” The cross-referenced cover letters were written on Spartan letterhead and signed on Spartan’s behalf by Spartan employees—either Dilley, Anna Krokhina (who was an Is- land employee too), or Taylor Zajonc. All of Spartan’s cover letters opened with an “Introduction to Spartan Securities” section. These introductory sections stated that Spartan was filing the Form 211 applications after Dilley talked to the issuers’ respective officers by phone and electronically. For example, the First Independence Form 211 letter stated “Dilley . . . was telephonically contacted by Nigel Lindsay,” and that Spartan was proceeding with filing a Form 211 “[f]ollowing telephone con- versations and electronic communication over the past two months with the [i]ssuer.” After the introduction, the cover letters included a, “The [i]ssuer described its business as follows:” section. These sections said that “[t]he [i]ssuer[’s] described” business plans included selling consumer products or services (Obscene Jeans—women’s cloth- ing, Kids Germ—germ defense products, On the Move—electronic devices for vehicles, First Xeris—landscaping, Changing Technolo- gies—smartphone apps, Neutra—healthcare products), running a social networking site for parents (First Social), and opening vari- ous types of facilities (E-Waste—an electronics recycling facility, Aristocrat Group—a pregnancy healthcare center, Envoy Group— an “adult day care center,” Global Group—a vodka distillery, Rain- bow Coral—a sea “coral farm,” and First Independence—a food- product labeling and testing facility). Each letter then provided USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 11 of 211

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more information about the issuers, including that “[t]he issuer[s] ha[d] represented” they had not entered into any merger discus- sions, that they “[we]re not working with any consultants,” and that their officers had not “requested a listing quotation on” any other companies. FINRA sent Spartan deficiency letters as to each application, and Spartan responded each time with additional information to address FINRA’s concerns. FINRA ultimately cleared each Mir- man/Rose issuer for public quotation, informing Spartan each time that it was “acting in reliance upon the information” in the applica- tions. The parties stipulated that, after Spartan obtained the issu- ers’ FINRA clearance, Spartan “acted as the exclusive market- maker for the issuer[s] for [thirty] days,” holding itself out to the market as ready to buy and sell the issuers’ securities. Dilley testified that, “for every company that . . . had gone through the Form 211 process[, t]he next thing would be to go and figure out how to get them DTC eligible.” He viewed this next step as important for “brokers that would buy or sell the stock,” acknowledging that DTC eligibility was necessary to “allow[] for electronic settlement of any purchase or sale[] in the marketplace” and to “make[] the transaction easier in the event of a sale or pur- chase.” Then, according to Rose, “once everything was formulated [with FINRA and DTC], the next thing was basically . . . to sell the shell of a company” and the “job was to basically sell the shell”— which he and Mirman did. Island was each Mirman/Rose shell’s transfer agent, with the exception of Envoy Group. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 12 of 211

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Kids Germ, for example, took that path. Kids Germ, accord- ing to Rose, “wasn’t operating” when Spartan submitted its Form 211. After FINRA approved its Form 211 on January 4, 2010, Rose emailed Dilley that same day asking, “What do you recom- mend the company do with the DTC know [sic] the route it is tak- ing?” Rose also asked, “Do you want to speak to the atty interested in the company?” Dilley responded, “We should apply for DTC eligibility[—]Anna [Krokhina] can get that going.” And Dilley of- fered to call the “atty.” When asked about the email exchange at trial, Rose testified that “atty” meant “the attorney for the com- pany, whoever was buying it at the time.” That the attorney was someone who “wanted to purchase the company and wanted to make sure that it’s going to happen” was, Rose explained, “the only thing [he] could think of.” Less than two weeks later, Krokhina, who “did a lot of the work with the guidance of Dilley,” used her Island email address to submit a DTC application for Kids Germ. In January 2010, she sent the required information to Penson Financial Services, a DTC clearing firm, and wrote that “the company is not a shell.” One month later, once Kids Germ became DTC eligible, it sold in a re- verse merger that Island assisted as the transfer agent. 1

1 Generally, a “reverse merger” refers to when a small public shell company acquires a large private company that isn’t a shell. This acquisition essentially allows the private company to go public without having to navigate the regis- tration process. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 13 of 211

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Daniels/Harrison Issuers Eldred knew that Daniels and Harrison (husband and wife) were both active in the “reverse merger business” and that they “dealt extensively” with shell companies. Daniels and Harrison had been friends with Eldred since 2003 or 2004. Aside from their personal friendship, Daniels, Harrison, and Eldred also frequently did business together. Eldred testified that “Spartan and Island pro- vided services to [Daniels’s and Harrison’s] law firm’s clients,” plus “some other things . . . outside of that.” For example, in 2010, Eldred and Harrison discussed becom- ing business partners. Eldred emailed Harrison from his Spartan address about a “partnership approach,” “proposing[] a series of transactions . . . to reorganize certain companies . . . through bank- ruptcy and then sell them.” Eldred mentioned “[one], or maybe [two] projects” that they could “do immediately” and that they could “add [one] or two additional per year.” As for splitting the profits from these projects, Eldred proposed that Harrison would receive a one-third share—telling Harrison that, for example, “if a cleaned up shell is worth $300k, then that’s $100k for you when we sell it.” In 2012, Harrison helped Eldred sell a company called En- deavor to businessman Andy Fan. Eldred emailed Harrison (again from his Spartan address) to “get to work” on a contract for that transaction, which Fan wrote was the “beginning of a beautiful re- lationship.” The parties stipulated that, spanning 2011 through 2014, Daniels and Harrison asked Spartan to file Form 211 applications USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 14 of 211

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for five issuers: a 2011 application for Dinello Restaurant Ventures, Inc.; a 2012 application for Court Document Services, Inc.; another 2012 application for Quality Wallbeds, Inc.; a 2013 application for Top to Bottom Pressure Washing, Inc.; and a 2014 application for PurpleReal.com Corp. (together, the “Daniels/Harrison issuers”). Spartan submitted each of these applications—which Daniels and Harrison had both worked on—to FINRA. Harrison served as each issuer’s attorney. When Spartan submitted these applications on Daniels’s and Harrison’s behalf, Eldred signed the Top to Bottom and PurpleReal forms as the “principal of the firm responsible for th[e] . . . applica- tion[s].” These applications—like the Mirman/Rose applica- tions—included cover letters, written on Spartan letterhead and signed by Zajonc, describing the issuer’s “[i]ntroduction to Spartan Securities.” The Top to Bottom letter stated Spartan’s introduction to the issuer was that the company president’s wife called Eldred, but Spartan “d[id] not have any other relationship with [the presi- dent’s wife], [the president], Top to Bottom . . . , or any of their other representatives.” Daniels served as Top to Bottom’s treas- urer and secretary, and Tina Donnelly—a Dinello employee who “handled all the financial records” for the Daniels/Harrison issu- ers—testified that Daniels’s “role in taking [Top to Bottom] public” was that “[h]e directed everything.” She elaborated that Top to Bottom “didn’t do anything without his direction [and] guidance.” Similarly, the PurpleReal letter’s introduction section stated that Harrison was the company’s CEO and that she called Eldred. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 15 of 211

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Besides “Harrison [being] known to [Spartan] for many years,” the letter wrote, Spartan “d[id] not have any other relationship with [her], the [i]ssuer, and/or its representatives.” When asked about this statement at trial, Eldred testified he “personally did” other business with Harrison, which the application didn’t disclose. Both letters stated that “[t]he [i]ssuer ha[d] represented that they ha[d] not entered into any . . . discussions or negotiations con- cerning potential merger or acquisition candidates.” Donnelly tes- tified that the actual “business model” for these companies began with taking them public by obtaining FINRA clearance. After that, the plan was to “immediately” dispose of all the company’s assets and sell the remaining public shell to an investor—usually for a re- verse merger with one of Fan’s “businesses in China.” Donnelly explained that once FINRA cleared Top to Bottom, its assets were sold off in “a fire sale” and the remaining public shell was “sold to an[] . . . investor that Daniels and Harrison found.” Daniels pro- posed doing the same with PurpleReal, telling Donnelly and two others, “Let’s . . . create a company from scratch, and let’s—let’s take it through the process, take it public, and, you know, you girls would make, you know, tons of money.” But before FINRA could clear PurpleReal, the SEC obtained a stop order. * * * The SEC pursued enforcement actions against Mirman, Rose, Daniels, and Harrison based on fraud and misrepresentations about the nineteen shell companies. It initiated criminal actions USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 16 of 211

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against Mirman and Rose. Mirman, who testified that he con- sented in 2007 to being barred from associating with any FINRA member and “shouldn’t be involved in the . . . filing of [Form] 211s,” pleaded guilty to conspiracy to commit securities fraud re- lating to ten of the Mirman/Rose issuers. So did Rose as to all four- teen Mirman/Rose issuers. The SEC initiated civil enforcement action against Daniels and Harrison, alleging they made misrepresentations as to the other five companies. Daniels, who had a past forgery conviction before working with the defendants, did not admit the allegations but did consent to a judgment. Likewise, Harrison did not admit the allegations but consented to a judgment. PROCEDURAL HISTORY On February 20, 2019, after the enforcement actions against Mirman, Rose, Daniels, and Harrison ended, the SEC filed this en- forcement action against Dilley, Eldred, Spartan, and Island. The SEC’s fourteen-count complaint alleged that the defendants schemed with Mirman, Rose, Daniels, and Harrison to “package[]” the shell companies “for sale as public vehicles,” or at least aided and abetted schemes to do that, while knowing the companies 2 “were pursuing their stated plans under false pretenses.” Most rel-

2 Count one alleged Spartan published quotations without the “reasonable ba- sis” required by rule 15c2-11 and count two alleged Dilley and Eldred aided and abetted that violation. Counts three through five and seven through thir- teen alleged either that the defendants engaged in schemes to defraud with, or USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 17 of 211

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evant to this appeal, the SEC alleged in count six that each defend- ant made false statements or misleading omissions about the shell companies to obtain FINRA clearance and DTC eligibility, in vio- lation of Exchange Act section 10(b) and SEC rule 10b-5(b). As re- lief for those violations, the SEC sought a permanent injunction, monetary civil penalties, a penny stock bar as to Spartan, Dilley, and Eldred, and disgorgement as to Island. Pretrial Motions Before trial, the defendants filed three motions relevant to this appeal. First, the defendants moved for summary judgment, argu- ing that “[m]ost of [the] SEC’s claims” were time-barred. Citing 28 U.S.C. section 2462’s five-year statute of limitations for any “action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise,” they contended that “the only acts for which the SEC [could] seek penalties” or disgorgement were those related to Envoy Group, Changing Technologies, First Xeris, Top to Bottom, and PurpleReal. The defendants argued that

aided and abetted frauds conducted by, Mirman, Rose, Daniels, and Harrison. Count six alleged the defendants violated section 10(b) and rule 10b-5(b) through false statements and omissions. And count fourteen alleged that Spar- tan, Island, and Dilley violated the Exchange Act by selling or offering to sell securities without effective registration statements. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 18 of 211

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all conduct concerning the other issuers occurred before October 3 23, 2013. The district court denied the summary judgment motion, concluding that the defendants’ alleged violations “[we]re based on a single course of conduct” spanning from 2009 through 2014. Less than a week after the district court denied the summary judgment motion, Congress enacted the William M. Thornberry National Defense Authorization Act (NDAA). The NDAA created a new ten-year statute of limitations applicable to “claim[s] for any equi- table remedy” under the Exchange Act. See NDAA, Pub. L. No. 116-283, § 6501, 134 Stat. 3388, 4625–26 (2021); 15 U.S.C. § 78u(d)(8)(B). It separately created a new ten-year limitations pe- riod for certain “[d]isgorgement” claims, including those based on violations of section 10(b) or involving scienter. See 15 U.S.C. § 78u(d)(8)(A)(ii)(I), (IV). Second, the defendants moved to exclude any trial testi- mony by the SEC’s expert, James Cangiano. Cangiano is a private securities-regulation consultant. He largely studied English in col- lege and has not published any peer-reviewed work on regulating securities. But Cangiano worked for over forty years in securities regulation. He served as NASDAQ’s chief regulatory officer and spent more than twenty years as a regulator for the National Asso- ciation of Securities Dealers, Inc. (NASD)—FINRA’s predecessor

3 Although five years from the SEC’s February 20, 2019 filing date is February 20, 2014, the parties agreed to toll section 2462’s five-year period by 119 days. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 19 of 211

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organization. During his time with NASD, he oversaw hundreds of investigations, including investigations through which he “iden- tif[ied] and address[ed] major frauds” in the microcap market. Cangiano gave deposition testimony that there would sometimes “be a transfer agent element” involved in those fraud investiga- tions. The SEC proffered Cangiano as an expert witness on “the role of transfer agents and their function in bringing securities to market.” The defendants conceded Cangiano had “extensive cre- dentials as a regulator.” They argued, though, that his “‘jack of all trades’ expertise” did not include any experience specific to transfer agents and thus did not qualify him to testify on practices “in the transfer agent industry.” His inexperience, they contended, ren- dered his opinions unreliable under Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). 4 The district court denied the defendants’ Daubert motion. It found that Cangiano was qualified to testify about transfer agents, explaining that he had extensive relevant experience based on his time as a NASD regulator and consultant, which included consulting on fraud cases where “fraudsters actually owned their own transfer agent and . . . used [it] . . . to clean up the stock and

4 The defendants renewed their objection to Cangiano’s qualifications and re- liability at trial. The district court overruled their objection based on its pre- trial order. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 20 of 211

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get it saleable.” And the district court found that Cangiano’s opin- ions were reliable because he based them on his experience, SEC regulations and guidelines, and his review of the evidence in this case. At trial, Cangiano testified that DTC only accepts free-trading 5 shares, and that the transfer agent must affix a “restrictive legend” to stock certificates if the shares are not free-trading. And he opined that the defendants created “a one-stop shop” to “facilitate[] the cleaning of shells so that they could be sold” at inflated prices. Third, the defendants moved for special interrogatories. Specifically, because section 21(d) of the Exchange Act allows a dis- trict court to impose one of three maximum-penalty “tiers” that increase based on the type of violation, see 15 U.S.C. § 78u(d)(3)(B), the defendants argued that the Seventh Amendment required a special jury finding of “th[e] facts that might be necessary for clas- sification of penalties.” The district court denied this motion, find- ing that the Seventh Amendment did not require a special jury de- termination. Trial and Rule 50 Motions The case proceeded to trial, which lasted thirteen days. At the close of the SEC’s case, both sides moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(a). The

5 Cangiano explained that “free-trading stock” means “unrestricted stock” that can “be freely traded without any restrictions in the marketplace.” Stock that’s controlled by an insider or control person is generally not unrestricted or free- trading. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 21 of 211

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district court reserved ruling on those motions and the jurors be- gan deliberating. A few hours later the jury returned a verdict. The jury found Spartan, Island, Dilley, and Eldred liable on count six—making false statements or omissions under Exchange Act section 10(b) and SEC rule 10b-5(b). It did not find any defendant liable on any other count. The district court then denied the rule 50(a) motions. The defendants filed a renewed motion for judgment as a matter of law under rule 50(b). Their arguments as to Dilley, El- dred, and Spartan focused on the FINRA Form 211 applications. They first argued that Dilley, Eldred, and Spartan did not “make” any false statements in those applications; instead, they contended, they simply repeated statements the issuers told them. Second, they argued that any misrepresentations were immaterial to inves- tors because the statements were made in nonpublic cover letters. Third, they asserted that none of these misrepresentations were made in connection with the purchase or sale of a security. Island, for its part, argued that the only statements relevant to its liability were those made to Penson (the DTC clearing firm) about the status of stocks as free trading. Island specifically argued that the statement to Penson that “[Kids Germ] is not a shell,” was true, immaterial, and not in connection with the purchase or sale of a security. The district court denied the rule 50(b) motion. It concluded that sufficient evidence showed that the defendants made multiple misrepresentations, including that the issuers’ officers contacted USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 22 of 211

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Dilley or Spartan, that Spartan didn’t have relationships with Dan- iels and Harrison, that Island, through Krokhina, told Penson that Kids Germ was “not a shell,” and that Island misrepresented the status of the stocks as free-trading. The district court then rejected that the misrepresentations were immaterial and lacked any con- nection to the purchase or sale of securities. Remedies After the district court denied the rule 50(b) motion, the fo- cus turned to remedies. The SEC moved to permanently enjoin the defendants from violating section 10(b) and rule 10b-5(b) in the future, for the maximum tier-three civil penalties under sec- tion 21(d)(3)(B)(iii) of the Exchange Act, for penny stock bars against Spartan, Dilley, and Eldred, and for disgorgement of Is- land’s ill-gotten profit to the Treasury. As for the amounts of the financial remedies, the SEC ini- tially requested that Island disgorge $147,508, which an SEC ac- countant calculated based on the “fees [Island was paid] from each of the [fourteen] Mirman/Rose companies through the date of the issuer’s bulk sale.” The accountant stated that he arrived at $147,508 after reviewing Island’s financial statements regarding each issuer. After Island argued that it had legitimate expenses that needed to be deducted, the SEC stuck by its initial request. The agency acknowledged, though, that deducting $21,388 regarding “possible” legitimate expenses for line items like “[p]rinting; CUSIP; credit memo; courier; DTC” would result in disgorgement of $125,720 and prejudgment interest of $43,710.74. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 23 of 211

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For penalties, the SEC limited its civil-penalty request to statements about Envoy Group, Changing Technologies, and First Xeris as to Dilley, and Top to Bottom and PurpleReal as to Eldred. It requested “one-time” penalties as to Spartan and Island not spe- cific to any issuer. The defendants opposed each type of proposed remedy. They argued that the SEC asked for an overly broad “obey-the-law” injunction. As to the civil penalties, the defendants contended the SEC did not prove that tier-three penalties were appropriate. Dil- ley, Spartan, and Island also argued that their respective “financial condition[s]” warranted lesser (or no) penalties—Spartan and Is- land were out of business, and Dilley had a negative monthly net income. As for disgorgement, Island made four arguments. First, it argued that the Exchange Act does not authorize ordering dis- gorgement directly to the Treasury. Although the parties stipulated that distributing any disgorged profits to investors instead “would be infeasible,” Island contended that the Exchange Act only allows distributing disgorged profits to harmed investors. For this, Island cited section 21(d)(5), which allows the SEC to seek, and a district court to order, “any equitable relief that may be appropriate or nec- essary for the benefit of investors.” 15 U.S.C. § 78u(d)(5). Second, Island contended that disgorgement was inequita- ble because Island’s profits were paid by the issuers, who “were proven at trial to be fraudsters” and had unclean hands. Further, citing the case’s “unique timing,” Island repeated its argument that USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 24 of 211

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the SEC’s disgorgement claim was mostly untimely under 28 U.S.C. section 2462. Island also asserted that it would be unfair to retro- actively apply the NDAA’s new ten-year statute of limitations. Third, Island argued that the SEC failed to connect its calculation to evidence from trial. And fourth, it maintained that the SEC did not reasonably approximate Island’s ill-gotten gains because it failed to subtract Island’s legitimate business expenses, like routine operational costs. After an evidentiary hearing, the district court partly granted the SEC’s remedies motion. The court permanently en- joined Dilley, Eldred, and Island from violating section 10(b) and rule 10b-5(b), and it imposed penny stock bars as to Dilley, Eldred, and Spartan. Next, the district court ordered that Island disgorge $114,520 in profits to the Treasury, and it assessed $39,874.05 in prejudgment interest. The district court rejected Island’s contention that the Ex- change Act does not authorize ordering disgorgement directly to the Treasury. It acknowledged that the Supreme Court held, in Liu v. SEC, 591 U.S. 71, 74 (2020), that disgorgement ordered under sec- tion 21(d)(5) must be “awarded for victims.” But it found that Liu left open whether a district court may order disgorgement to the Treasury “when it is impossible to identify defrauded victims.” And, the district court reasoned, section 21(d)(7)—enacted through the NDAA after Liu—allowed ordering disgorgement to the Treas- ury even if doing so does not “benefit . . . investors” under sec- USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 25 of 211

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tion 21(d)(5). See 15 U.S.C. § 78u(d)(7) (“In any action or proceed- ing brought by the Commission under any provision of the securi- ties laws, the Commission may seek, and any Federal court may order, disgorgement.”). Alternatively, the district court weighed the equities and found that it was “more equitable” to order dis- gorgement to the Treasury instead of “the money staying with Is- land, a key player in a scheme to put dubious equities on the mar- ket.” After it found that disgorgement was appropriate, the dis- trict court turned to determining the amount. Although the SEC proposed disgorgement of all fees the Mirman/Rose issuers paid to Island, the district court deducted “legitimate expenses incurred by Island prior to the bulk sale date for each company,” including expenses “for courier services, printing, and regulatory fees.” While the SEC did not concede line items for “[p]rinting; CUSIP; credit memo; courier; DTC” were legitimate, the district court found that the SEC “tacitly agreed” these expenses should be de- ducted. The district court also excluded three $200 payments made after the bulk sale date of Aristocrat Group, Global Group, and On the Move, plus a $3,500 expense related to Kids Germ because of its “odd payment history.” It did not order any disgorgement re- garding Envoy Group, finding that the SEC’s evidence was “insuffi- cient” as to that issuer. Although Island requested more reductions for “fixed costs and overhead,” the district court found that Island USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 26 of 211

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did not show these expenses were legitimate and “any risk of un- certainty necessarily [fell] on Island.” Lastly, for civil penalties, the district court determined that tier-two penalties were appropriate because the jury found the de- fendants liable of violating rule 10b-5(b), “which requires that a material misrepresentation . . . be made with scienter.” To deter- mine the amount, “the [c]ourt look[ed] to” seven factors and “all [of ] the facts and circumstances,” including “whether the pen- alty . . . should be reduced due to defendants’ demonstrated cur- rent and future financial condition.” After weighing these factors, the district court—citing the SEC’s request to “assess penalties for three ‘violations’ against . . . Dilley, two violations against . . . El- dred, and a single violation against the corporate [d]efendants”— ordered that Dilley and Eldred each pay $150,000. It also ordered that Spartan and Island each pay penalties of $250,000 for a “single violation.” The district court noted that the defendants “d[id] not dispute” the number of violations attributable to each defendant. DISCUSSION The defendants appeal on multiple grounds. We first ad- dress their argument that the district court abused its discretion by admitting Cangiano’s expert testimony. Second, we turn to their contention that each defendant was entitled to judgment as a mat- ter of law. And third, we address their assertion that the district court’s remedies order was an abuse of discretion. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 27 of 211

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Cangiano’s Qualifications and Reliability The defendants argue the district court abused its discretion when it allowed Cangiano to testify as an expert witness on transfer agent practices. They first challenge Cangiano’s qualifications, contending that he was a “classic ‘expert on everything,’” but not an expert on Island’s role as a transfer agent. The defendants con- tend that Cangiano was not qualified to testify about “transfer agents and DTC eligibility” under Federal Rule of Evidence 702 “because he had no experience in the transfer agent industry.” They argue that he “never worked for a transfer agent,” and that NASD didn’t directly regulate transfer agents while Cangiano worked there. Further, they highlight that Cangiano wasn’t formally edu- cated concerning transfer agents and has never published any work about them. For these same reasons, the defendants argue Cangi- ano’s opinions were unreliable. We review “a trial court’s evidentiary rulings, including its rulings on the admissibility of expert testimony, for abuse of discre- tion.” Cook ex rel. Est. of Tessier v. Sheriff of Monroe Cnty., 402 F.3d 1092, 1103 (11th Cir. 2005). District courts “enjoy[] ‘considerable leeway’ in making these determinations.” United States v. Frazier, 387 F.3d 1244, 1258–59 (11th Cir. 2004) (en banc) (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999)). Rule 702 “has three basic requirements: the expert must be qualified; his methodology must be reliable; and his testimony must be helpful to the trier of fact.” Doe v. Rollins Coll., 77 F.4th 1340, 1347 (11th Cir. 2023); see also Frazier, 387 F.3d at 1259–60. The USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 28 of 211

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proponent must establish each requirement by a preponderance of evidence. Doe, 77 F.4th at 1347 (citing Fed. R. Evid. 104(a)). While “there is inevitably some overlap among th[ese] basic require- ments . . . they remain distinct concepts.” Frazier, 387 F.3d at 1260 (citing Quiet Tech. DC-8, Inc. v. Hurel-Dubois UK Ltd., 326 F.3d 1333, 1341 (11th Cir. 2003)). We “and litigants must take care not to con- flate” them. Quiet Tech., 326 F.3d at 1341. Only the first two requirements are at issue here—Cangi- ano’s qualifications and the reliability of his testimony. As to qual- ification, a witness “need not be formally educated” on a topic to be an expert on it. United States v. Williams, 865 F.3d 1328, 1338 (11th Cir. 2017). Instead, “experts may be qualified in various ways,” including by knowledge, skill, training, or experience. Fra- zier, 387 F.3d at 1260–61. Nothing in rule 702 “suggest[s] that ex- perience alone . . . may not provide a sufficient foundation for ex- pert testimony.” Fed. R. Evid. 702 Advisory Committee’s Note to 2000 Amendments. “In certain fields, experience is the predomi- nant, if not sole, basis for a great deal of reliable expert testimony.” Id. Through its second requirement—reliability—rule 702 re- quires a district court “to act as a gatekeeper to [e]nsure that spec- ulative . . . opinions do not reach the jury.” McClain v. Metabolife Int’l, Inc., 401 F.3d 1233, 1237 (11th Cir. 2005) (citing Daubert, 509 U.S. at 589 n.7, 597). The district court may take any relevant fac- tors into account. See Seamon v. Remington Arms Co., 813 F.3d 983, 988 (11th Cir. 2016); Quiet Tech., 326 F.3d at 1341. But generally, USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 29 of 211

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“the rejection of expert testimony [as unreliable] is the exception rather than the rule.” Moore v. Intuitive Surgical, Inc., 995 F.3d 839, 850 (11th Cir. 2021) (quoting Fed. R. Evid. 702 Advisory Commit- tee’s Note to 2000 Amendments). Keeping in mind the “limited nature” of “appellate review in this area,” United States v. Brown, 415 F.3d 1257, 1264 (11th Cir. 2005), we cannot say the district court abused its discretion when it found that Cangiano was qualified and that his opinions were re- liable. First, the district court reasonably relied on Cangiano’s ex- tensive job experience in the over-the-counter market when it found he was qualified to testify about Island’s role as a transfer agent in that market. Cangiano had more than forty years of regu- latory experience in the over-the-counter market, including his time as a NASD regulator. In that role, he oversaw hundreds of fraud investigations, including investigations where he “identif[ied] and address[ed] major frauds” in the microcap market. Cf. United States v. Majors, 196 F.3d 1206, 1215–16 (11th Cir. 1999) (concluding district court didn’t abuse its discretion by finding that a financial analyst with eight-and-a-half years of experience, including per- forming fifty-plus analyses in prior fraud cases, was qualified to tes- tify about defendants’ records in fraud case). And since he retired as a regulator, he has continued working in the field by consulting. The defendants contend that Cangiano’s extensive regula- tory and consulting experience likely makes him an expert on something, but not on transfer agents. To that end, they say Cangi- ano “had no experience in the transfer agent industry” and never USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 30 of 211

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worked with transfer agents. But that argument ignores Cangi- ano’s testimony that, when he oversaw fraud investigations, there would sometimes “be a transfer agent element” involved. And he consulted on a case involving similar facts to the ones that the SEC alleged here—involving “fraudsters [who] actually owned their own transfer agent and . . . facilitate[d] the sale of . . . companies” by using the “transfer agent to clean up the stock.” Thus it’s not true that Cangiano has no job-related experience whatsoever in- volving transfer agents. The defendants also argue Cangiano was unqualified to tes- tify about transfer agents because he was never formally educated about them and he has never published peer-reviewed work about them. These arguments also miss the mark. Again, a witness “need not be formally educated” on a topic to be an expert on it. Williams, 865 F.3d at 1338. The district court reasonably found that Cangiano’s experience qualified him to testify about transfer agents. Cf. Fed. R. Evid. 702 Advisory Committee’s Note to 2000 Amendments (“In certain fields, experience is the predominant, if not sole, basis for a great deal of reliable expert testimony.”). Second, the district court didn’t abuse its discretion in find- ing Cangiano’s opinions reliable. Cangiano applied his forty-plus years of experience to the issues in the case. He reached his opin- ions after reviewing a variety of fact sources—including the plead- ings; deposition testimony by Rose, Mirman, Harrison, Eldred, Dil- ley, Lopez, Krokhina, and Zajonc; the defendants’ emails; FINRA and SEC regulations and guidance; and the issuers’ SEC filings. Cf. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 31 of 211

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Fed. R. Evid. 703 (“An expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed.”). Thus, the district court reasonably found that Cangi- ano’s opinions were “properly grounded, well-reasoned, and not speculative.” Fed. R. Evid. 702 Advisory Committee’s Note to 2000 Amendments; cf. United States v. 0.161 Acres of Land, 837 F.2d 1036, 1040 (11th Cir. 1988) (“[W]here the expert’s testimony has a rea- sonable factual basis, a court should not exclude it.”). In short, the district court did not abuse its discretion in ad- mitting Cangiano’s testimony under rule 702. Judgment as a Matter of Law The jury found each defendant liable on count six for violat- ing section 10(b) of the Exchange Act and SEC rule 10b-5(b). Sec- tion 10(b) makes it unlawful “[t]o use . . . , in connection with the purchase or sale of any security . . . , any manipulative or deceptive device.” 15 U.S.C. § 78j(b). And rule 10b-5(b), which “imple- ments” section 10(b), SEC v. Zandford, 535 U.S. 813, 819 (2002), makes it unlawful “[t]o make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made . . . not misleading,” 17 C.F.R. § 240.10b-5(b). “The scope of liability under” these two provisions “is the same.” SEC v. Merch. Cap., LLC, 483 F.3d 747, 766 n.17 (11th Cir. 2007). “To prove a . . . violation, the SEC must show (1) material misrepresen- tations or materially misleading omissions, (2) in connection with the purchase or sale of securities, (3) made with scienter.” Id. at 766 (citing Aaron v. SEC, 446 U.S. 680, 695 (1980)). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 32 of 211

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Each defendant argues that no reasonable jury could have found that the SEC proved the first two elements. So, the defend- ants contend, the district court erred in denying their motions for judgment as a matter of law. We review de novo a district court’s ruling on a motion for judgment as a matter of law, “applying the same standard that the district court applied.” Mamani v. Sánchez Bustamante, 968 F.3d 1216, 1230 (11th Cir. 2020) (citation omitted). Viewing all evidence and drawing all reasonable inferences in the nonmovant’s favor, our “sole consideration” is whether sufficient evidence supported the jury’s verdict. Chaney v. City of Orlando, 483 F.3d 1221, 1227 (11th Cir. 2007). Because the defendants do not argue that a reasonable jury couldn’t find the third element of a rule 10b-5(b) violation—scien- ter—we focus on whether the defendants made material misrepre- 6 sentations in connection with the purchase or sale of securities.

6 We need not consider whether sufficient evidence showed the defendants made misrepresentations as to the three Daniels/Harrison issuers—Dinello, Quality Wallbeds, and Court Document Services—because any violation as to those issuers didn’t result in a remedy before us on appeal. The district court ordered Dilley’s civil penalty based on three violations regarding Envoy Group, Changing Technologies, and First Xeris, and it ordered Eldred’s pen- alty based on two violations regarding Top to Bottom and PurpleReal. The district court ordered Spartan and Island’s civil penalties based on a “single violation” without specifying a particular company. The disgorgement award was based on the Mirman/Rose issuers, with the exception of Envoy Group. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 33 of 211

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See Merch. Cap., 483 F.3d at 766. As to those two elements, suffi- cient evidence supported the jury’s verdict. First, a reasonable jury could find that Spartan and Dilley made material misrepresenta- tions, in connection with the purchase or sale of securities, on the FINRA Form 211 applications for the Mirman/Rose issuers. Sec- ond, a reasonable jury could find that Spartan and Eldred did the same on the FINRA applications for Top to Bottom and Purple- Real. Third, a reasonable jury could find that Island made a mate- rially false statement, in connection with the purchase or sale of a security, to obtain Kids Germ’s DTC eligibility. Mirman/Rose FINRA Applications (Spartan and Dilley) We begin with the Mirman/Rose issuers’ FINRA applica- tions, which Spartan submitted and Dilley certified as the “principal of the firm responsible for th[e] application[s].” We divide our dis- cussion of the first rule 10b-5(b) element—material misrepresenta- tion—into two parts: whether Spartan and Dilley actually made any false statements or misrepresentations and, if so, whether the misrepresented information was material. We then address the second rule 10b-5(b) element—the misrepresentations’ connection to the purchase or sale of securities. 1. Misrepresentations or omissions Spartan and Dilley argue that they didn’t actually “make” any false statements in the Mirman/Rose Form 211 applications. They also contend that they did not have a duty to disclose any omitted facts necessary to make the applications’ statements not USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 34 of 211

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misleading. A reasonable jury could find that they affirmatively made false statements in the applications, independent of any mis- leading omissions. There was evidence that Spartan and Dilley made false state- ments in the Form 211 cover letters about who solicited them to file the applications and why. Each Form 211 asked for “circum- stances surrounding the submission,” “[i]nclud[ing] the identity of any person(s) for whom the quotation[s were] being submitted and any information provided . . . by such person(s).” On each Mir- man/Rose application, Spartan responded by saying “see [an at- tached] cover letter for details.” Each cross-referenced cover letter, written on Spartan letterhead, began with an “Introduction to Spar- tan Securities” section stating that the issuers’ officers “telephoni- cally contacted” Dilley to initiate the Form 211 process. Then, after each introduction, Spartan included a section with statements detailing the issuers’ business plans. Each of these sections stated that “[t]he [i]ssuer described its business as” plan- ning to maintain future active operations or tangible assets. Spar- tan’s letters said that “[t]he [i]ssuer[s’] described” operations in- cluded selling consumer products or services (Obscene Jeans, Kids Germ, On the Move, First Xeris, Changing Technologies, Neutra), running a social networking site for parents (First Social), and open- ing various types of facilities—an electronics recycling facility (E- Waste), a healthcare center for pregnant mothers (Aristocrat), an “adult day care center” (Envoy), a vodka distillery (Global Group), USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 35 of 211

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a “coral farm” (Rainbow Coral), and a food-product labeling and testing facility (First Independence). These statements that Spartan and Dilley made were false because the issuers never “described [their] business[es]” as plan- ning to maintain real operations or assets—not to Dilley and not to anyone else at Spartan. The Mirman/Rose issuers’ officers never planned to actively operate the companies. Mirman and Rose re- cruited personal friends or family to be straw officers, or, in other words, CEOs in name only. These officers, Rose testified, had no control over the issuers’ business plans; Mirman and Rose “pretty much directed the total company.” The officers “knew . . . up front” that Mirman and Rose would sell the companies and give them a cut. Rose also testified that he never told the issuers’ officers to contact Spartan or any of its employees, and that he never intro- duced the officers to Spartan. Mirman echoed this testimony—ex- plaining that he was unaware of Spartan ever asking the issuers’ officers for information. Two of the officers—Lindsay (First Inde- pendence) and Egna (Changing Technologies)—testified they didn’t even know who Dilley was. Instead of the issuers’ officers, it was Mirman and Rose who contacted Spartan to file the Mirman/Rose FINRA applications. In that process, Mirman and Rose served as Spartan’s “point peo- ple”—providing Spartan with any information that it needed to complete the applications. And there was evidence that those “point people” never told Dilley, or anyone else at Spartan, that the USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 36 of 211

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issuers planned to actively operate the businesses. Rose testified that he told Spartan “that the plan from the beginning” was to sell “[n]ot only Kids Germ,” but also “anyone down the road [he and Mirman] would be selling” as shells. According to Rose, he and Mirman “controlled the compan[ies]” and never had any intention of running them. Spartan and Dilley argue that they didn’t “make” these false statements because “all the statements provided to FINRA were from the issuers themselves.” In other words, because the cover letters prefaced some statements with language like “[t]he [i]ssuer described” or “[t]he issuer has represented,” they argue that the is- suers sent them statements to include in the applications and they simply repeated those statements to FINRA. Spartan and Dilley contend they had no control over the issuers’ statements, “false or not.” But a reasonable jury could find Spartan and Dilley had “ul- timate authority over the statement[s], including [their] content and whether and how to communicate it,” for two independent reasons. Janus Cap. Grp., Inc. v. First Derivative Traders, 564 U.S. 135, 142 (2011). First, although the Mirman/Rose FINRA letters did attrib- ute some statements to the issuers, they didn’t attribute everything to the issuers. Every “Introduction to Spartan Securities” section of the letters stated that the issuers’ respective officers “telephoni- cally contacted” Dilley, and that Spartan then had more “telephone conversations and electronic communication” with the issuers. But not once did a cover letter qualify those statements by saying USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 37 of 211

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“[t]he issuer has represented” its officer called Dilley or Spartan. Just as attributing a statement to someone else is evidence that its maker was “the party to whom it is attributed,” Janus, 564 U.S. at 142–43, speaking without attributing suggests that the statement’s speaker is the statement’s maker, cf. id. at 142 (“One ‘makes’ a state- ment by stating it.”). So because Spartan didn’t qualify the state- ments that the issuers’ officers called Dilley and Spartan—in letters with Spartan letterhead for applications that Dilley certified as the responsible principal—a reasonable jury could find Spartan and Dil- ley had “ultimate authority over the statement[s],” id. at 142. In- deed, Rose testified that he delegated that authority to Spartan— explaining that Spartan would “take th[e] information” and “put it into the proper language for FINRA,” including “writing basically the company’s plan and what it’s all about.” Second, there was evidence that the attributions themselves were false statements made by Spartan and Dilley. Whenever Spartan’s letters stated that “[t]he [i]ssuer described” its business as planning to maintain future operations and assets, Spartan and Dil- ley made a statement that the issuers told Spartan that was the plan. But again, there was evidence that the issuers’ officers never told anyone at Spartan about any plans to maintain active business op- erations or assets. Rose testified that he told Spartan the opposite— that he and Mirman created the companies to use as shells. 2. Materiality Next, Spartan and Dilley argue no reasonable jury could have found that the misrepresentations in the applications were USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 38 of 211

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material. Spartan and Dilley contend that, although the misrepre- sentations might’ve mattered to FINRA regulators, those misrep- resentations couldn’t have impacted an investor’s investment deci- sion because Form 211 applications are not publicly available. But because there was evidence that the misrepresentations could have impacted an investment decision, a reasonable jury could find ma- teriality. A misrepresented fact is material under rule 10b-5(b) if “a reasonable man would attach importance to [it] . . . in determining his course of action.” SEC v. Goble, 682 F.3d 934, 943 (11th Cir. 2012) (quoting Merch. Cap., 483 F.3d at 766). “Course of action” means “an investment decision.” Id. (quotation omitted); cf. In re Galectin Therapeutics, Inc. Secs. Litig., 843 F.3d 1257, 1275 (11th Cir. 2016) (“The omission of facts is actionable only to the extent that the ab- sence of those facts would, under the circumstances, render an- other reported statement misleading to the ‘reasonable investor, in the exercise of due care.’” (quoting FindWhat Inv. Grp. v. Findwhat.com, 658 F.3d 1282, 1305 (11th Cir. 2011)). In weighing materiality, we consider “the ‘total mix’ of in- formation available to a hypothetical reasonable investor” deter- mining his course of action, not just the information available “to the public at large.” SEC v. Morgan Keegan & Co., 678 F.3d 1233, 1248 (11th Cir. 2012) (citing Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 38 (2011)). When we consider what inferences an in- vestor would draw from that information, we must keep in mind USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 39 of 211

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the Supreme Court’s caution that materiality “assessments are pe- culiarly ones for the trier of fact.” Id. at 1253 (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 450 (1976)); SEC v. Ginsburg, 362 F.3d 1292, 1302 (11th Cir. 2004) (quoting TSC Indus., Inc., 426 U.S. at 450). Here, Spartan and Dilley misrepresented who solicited them to file FINRA applications for the issuers—Mirman and Rose. And Spartan and Dilley misrepresented why—Mirman and Rose wanted to create public shells and sell them. A reasonable investor “would attach importance” to each of these facts in making “an in- vestment decision.” Goble, 682 F.3d at 943. First, a reasonable investor would attach importance to Mir- man and Rose’s involvement in the issuers, including their hiring of Spartan to take the companies public. An investor would have wanted to know that Mirman and Rose, while not officers of the issuers, controlled the issuers and served as Spartan’s point people for filing the FINRA applications. SEC v. Blackburn, 15 F.4th 676, 681 (5th Cir. 2021) (reasoning that, “[e]ven though [an undisclosed control person] was not an officer of [a company whose stock sold over the counter], there [wa]s ‘little doubt that a reasonable inves- tor would have wanted to know the true identity’ of who was lead- ing the company” (citation omitted)). A company’s leadership “might . . . matter[] to investors for a number of reasons,” includ- ing whether that leadership engaged in past criminal conduct or simply has a “good, bad, or nonexistent” reputation. Id. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 40 of 211

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That Mirman and Rose enlisted Spartan to take the compa- nies public would matter to investors because Mirman and Rose were related to the issuers’ officers and shareholders, which Adams testified could “call into question the control of ownership.” It would also matter because when Mirman and Rose selected straw officers, they picked a friend or relative who “had [a] background in th[e] specific company”; for example, E-Waste’s purported busi- ness plan was to open an electronics recycling facility, so Rose picked an electrical engineer to be its director. An investor would want to know that these expert straw officers actually had no say in the issuers’ business plans and that nonexperts (Mirman and Rose) were taking them public. And an investor would want to know Mirman’s involvement, specifically, because of his past disci- pline—FINRA barred Mirman from associating with any FINRA member, which, as Mirman described it, meant “basically [that he] shouldn’t be involved in the . . . filing of [Form] 211s” at all. Second, a reasonable investor would attach importance to why Mirman and Rose solicited Spartan to file the applications. Mirman and Rose wanted public shells—their “job was to basically sell the shell” after Spartan secured FINRA clearance. Mirman and Rose’s plan to sell the companies as shells, rather than to actively operate them, was material because a plan to sell the company re- lates to its future. And “material facts include . . . those facts which affect the probable future of the company.” SEC v. Tex. Gulf Sulphur Co., 401 F.2d 833, 849 (2d Cir. 1968) (en banc). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 41 of 211

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Spartan and Dilley argue that their misrepresentations weren’t material because it was “undisputed” that completed FINRA applications are not public, making their misrepresenta- tions inaccessible by anyone outside of FINRA. To that end, they analogize this case to our decision in Goble—where we held that a defendant’s recording of a sham transaction in its internal books, given to FINRA during an audit, wouldn’t have influenced an in- vestor’s investment decision. See 682 F.3d at 941, 943–44. Contrary to Spartan and Dilley’s suggestion, their misrepre- sentations on FINRA applications aren’t like the Goble defendant’s recording of a sham transaction in internal books. There was evi- dence that the completed FINRA applications here—including the cover letters—could’ve been accessed by the investing public. The acknowledgement that Dilley signed on each Form 211 certified that he “acknowledge[d] that copies of th[e] form, accompanying documents, and subsequent submissions made in connection with [the form]” could be given to the SEC, other agencies, and “to the public upon request.” So, for example, if a hypothetical investor wanted to access the FINRA application for Obscene Jeans before making an investment decision about it, there was evidence that it was possible for the investor to request the application, obtain it, 7 and see Spartan and Dilley’s misrepresentations.

7 Spartan and Dilley cite how Adams testified that the Form 211 applications and any related correspondence were not publicly available. But we view the facts in the SEC’s favor, see Chaney, 483 F.3d at 1227, and the jury was free to credit the terms of the Form 211’s acknowledgment over Adams’s testimony. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 42 of 211

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3. Connection with the purchase or sale of securities Spartan and Dilley next argue that even if they made mate- rial misrepresentations on the FINRA applications, the misrepre- sentations were not “in connection with” the sale or purchase of securities. 17 C.F.R. § 240.10b-5(b). They contend that there was no evidence of a connection because their misrepresentations 8 didn’t “coincide with” a securities transaction. They also argue that there was no connection because rule 10b-5(b) doesn’t apply to false statements “directed at FINRA.” Because Spartan and Dil- ley’s misrepresentations enabled the issuers’ stocks to be bought and sold, we conclude that a reasonable jury could find they were made in connection with the sale or purchase of securities. The Supreme Court interprets the “in connection with” re- quirement “flexibly,” Zandford, 535 U.S. at 819 (quoting Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 151 (1972)), so we do as well, see Goble, 682 F.3d at 945–46. “The [Supreme] Court [has] made clear that a direct or close relation between the fraud and the securities transaction [i]s not required.” Smallwood v. Pearl Brewing

Indeed, Spartan and Dilley’s codefendant—Eldred—testified that he thought that the Form 211 applications were “publicly available” based on the ac- knowledgment, just not “correspondence between [the defendants] and FINRA.” 8 Spartan and Dilley also repeat their materiality argument that the statements couldn’t have impacted a securities transaction because completed Form 211 applications aren’t publicly accessible. Because we’ve already explained why a jury could find that the forms were publicly accessible, we will not address the argument further. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 43 of 211

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Co., 489 F.2d 579, 595 (5th Cir. 1974) (citing Superintendent of Ins. v. Bankers Life & Cas. Co., 404 U.S. 6, 12–13 (1971)). Instead, “it is enough that the fraud ‘touch’ the sale in some manner,” Rudolph v. Arthur Anderson & Co., 800 F.2d 1040, 1046 (11th Cir. 1986) (quot- ing Bankers Life, 404 U.S. at 12–13), or “coincide” with it, Zandford, 535 U.S. at 822. “The requirement is satisfied, for example, if the purchase or sale of a security and the proscribed conduct are ‘part of the same fraudulent scheme.’” Rudolph, 800 F.2d at 1046 (quot- ing Alley v. Miramon, 614 F.2d 1372, 1378 n.11 (5th Cir. 1980)). Thus the requirement can be satisfied even if the misrepresentations ex- isted before any actual purchase or sale. See id. (“[I]f a scheme to defraud is formulated before a sale or purchase, the fraud when carried out is . . . ‘in connection’ with the security transaction even if the scheme does not culminate until after the transaction.” (cit- ing Brown v. Ivie, 661 F.2d 62, 65–66 (5th Cir. Unit B Nov. 1981); Smallwood, 489 F.2d at 594–95)). Indeed, “[i]n some instances,” there can be a rule 10b-5(b) violation “without an actual purchase or sale of securities” ever occurring. Goble, 682 F.3d at 946 (citing Grippo v. Perazzo, 357 F.3d 1218, 1223–24 (11th Cir. 2004)). There was sufficient evidence here that Spartan and Dilley’s misrepresentations “touch[ed]” the purchase or sale of securities. Rudolph, 800 F.2d at 1046. Adams testified that broker-dealers like Spartan “essentially open the door” to over-the-counter public in- vesting by obtaining FINRA clearance. Spartan obtained FINRA clearance for the issuers here by making false statements in the ap- plications—relied on by FINRA—which in turn enabled Spartan to initiate quotations in the issuers’ securities. And Spartan actually USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 44 of 211

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marketed those securities soon after obtaining FINRA clearance. The parties stipulated that it acted as each issuer’s exclusive market- maker for thirty days after obtaining FINRA clearance—holding it- self out to the market as ready to buy and sell the issuers’ securities. Without Spartan initiating and completing the Form 211 process for each Mirman/Rose issuer, Spartan wouldn’t have been able to market the securities and “the general public would not [have] be[en] able to invest” in them. Spartan and Dilley argue that there was insufficient evidence supporting the “in connection with” element for two reasons. First, they contend that rule 10b-5(b)’s “in connection with” ele- ment doesn’t “encompass[] any step in the process of going public”; instead, citing the Supreme Court’s decision in Zandford, they say that it requires that “the violation and the sale of securities . . . , at a minimum, ‘coincide.’” They argue that a misrepresentation and securities transaction only “coincide” if the “misrepresentation . . . and [the] securities transaction . . . occur at the same time.” Spar- tan and Dilley contend that because their misrepresentations were made “well before any securities transaction,” those misrepresen- tations didn’t coincide with a securities transaction. Second, they argue that rule 10b-5(b) “was not targeted at misleading statements to regulators like FINRA, so [the connection element] does not en- compass [false statements] directed at FINRA.” We find each of these arguments unpersuasive. First, while “[i]t is enough” for a connection “that the scheme to defraud and the sale of securities coincide,” Zandford, USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 45 of 211

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535 U.S. at 822, Spartan and Dilley are mistaken that a discrete mis- representation and securities transaction must always occur at the same time” for the connection element to be satisfied. “[I]n con- nection with the purchase or sale of any security,” 17 C.F.R. § 240.10b-5, is broad. See Zandford, 535 U.S. at 819–20. And it is broad enough to cover a situation where—as here—a defendant makes a false statement intentionally calculated to facilitate the purchase or sale of a security on a later date. See Rudolph, 800 F.2d at 1046 (citing Brown, 661 F.2d at 65–66; Smallwood, 489 F.2d at 594– 95); see also Brown, 661 F.2d at 65–66 (holding that the plaintiff, a corporate officer, alleged a connection where the defendants, other officers, convinced him to sign an agreement requiring that persons leaving the corporation sell their shares back to it—without telling the plaintiff they planned to oust him seven days later); Smallwood, 489 F.2d at 594–95 (concluding that a letter’s misleading omissions about a proposed merger “touch[ed]” the actual merger, which happened forty-three days after the letter was mailed); SEC v. Pirate Inv. LLC, 580 F.3d 233, 248 (4th Cir. 2009) (discussing cases where defendant’s “intent to induce a securities transaction” supported connectivity). Zandford itself—where the Supreme Court held that a stockbroker’s misrepresentation and securities transactions “co- incide[d]”—involved an initial misrepresentation that the stock- broker would “conservatively invest” a man’s money, followed by a “series of transactions” completed “throughout [a two]-year pe- riod.” 535 U.S. at 815, 819–21. There may be cases where the alleged deceit is too remote to “touch” or “coincide” with the purchase or sale of securities. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 46 of 211

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But we need not resolve where that line should be drawn because the misrepresentations here were not so remote or “well before any securities transaction” as Spartan and Dilley argue. See Smallwood, 489 F.2d at 595 (“It is important that the standard be fleshed out by a cautious case-by-case approach.”). The misrepresentations were an “integral part” of getting FINRA clearance to initiate quotations in the issuers’ stock. Cf. Brown, 661 F.2d at 65–66 (distinguishing cases where the connection between fraud and transactions were too remote because, in those cases, “the defendants . . . did not as an integral part of their scheme induce the plaintiffs to enter into [a] stock-retirement agreement” (citations omitted)). Second, although Spartan and Dilley made their statements directly to FINRA rather than face-to-face to an investor, the “in connection with” element doesn’t require that a misrepresentation be made directly to investors. See Graham v. SEC, 222 F.3d 994, 1001–03 (D.C. Cir. 2000) (concluding that fraud perpetrated on brokers who executed securities transactions, rather than the ac- tual investors, was in connection with the transactions); cf. United States v. Naftalin, 441 U.S. 768, 772–73 & n.4 (1979) (holding that “in the offer or sale of any securities,” which Congress “ha[s] on occa- sion used . . . interchangeably” with “in connection with,” “does not require that the victim of [a] fraud be an investor”). In any event, despite Spartan and Dilley making their statements to FINRA, there was evidence that investors could have had access to, and could have relied on, the false statements. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 47 of 211

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* * * To summarize, there was sufficient evidence that Spartan and Dilley made materially false statements in connection with the purchase or sale of securities on each FINRA application for the Mirman/Rose issuers. Daniels/Harrison FINRA Applications (Spartan and Eldred) We now turn to the FINRA applications for the relevant Daniels/Harrison issuers—Top to Bottom and PurpleReal—which Spartan submitted and Eldred signed as the “principal of the firm responsible for th[e] . . . application[s].” The evidence showed that Spartan, through Eldred, made materially false statements about these issuers “in connection with the purchase or sale of . . . secu- rit[ies].” See 17 C.F.R. § 240.10b-5(b). First, there was evidence that Spartan and Eldred made false statements about Daniels’s and Harrison’s role in taking the com- panies public. Spartan and Eldred made a false statement about Daniels’s involvement and relationship with Spartan in the Top to Bottom application. The cover letter stated that the issuer’s presi- dent’s spouse introduced the company to Spartan, and that Spartan “d[id] not have any other relationship with” the company “or any of [its] other representatives.” But there was evidence that Spartan filed the Top to Bottom application at Daniels’s request—and Dan- iels was Top to Bottom’s secretary and treasurer. The parties stip- ulated that Daniels (and Harrison) “requested [that] Spartan file” the Form 211 for Top to Bottom. Indeed, Daniels’s “role in taking USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 48 of 211

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[Top to Bottom] public” was that “[h]e directed everything. [They] didn’t do anything without his direction [and] guidance.” There was also evidence that Spartan had other business with Daniels. The parties stipulated that Daniels (and Harrison) had solicited Spartan to file three earlier FINRA applications—those for Dinello, Court Document Services, and Quality Wallbeds. Similarly, Spartan and Eldred made a false statement about Spartan’s relationship with Harrison in the PurpleReal application. The cover letter stated that Spartan “d[id] not have any other rela- tionship with Diane Harrison” beyond (1) Harrison calling Eldred about taking the company public and (2) Harrison being “known to [Spartan] for many years.” When asked about this statement at trial, Eldred himself—Spartan’s majority owner—testified that he had done “other business with Diane Harrison.” Other evidence showed that their “other business” included a partnership arrange- ment to sell shell companies. Eldred emailed Harrison in 2010 pro- posing that “if a cleaned up shell is worth $300k, then that’s $100k for you when we sell it.” Eldred also wrote that “there [we]re ac- tually [one] or maybe [two] projects to do immediately,” and that he thought “we could add [one] or two additional per year.” And after the 2010 email, but before the 2014 PurpleReal ap- plication, Spartan and Harrison continued collaborating on “other business.” Spartan filed three other FINRA applications at Harri- son and Daniels’s request—those for Court Document Services, USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 49 of 211

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9 Quality Wallbeds, and Top to Bottom. In 2012, Harrison helped Eldred sell a company to Fan. Eldred emailed (from his Spartan address) Harrison to “get to work” on a contract for that transac- tion, which Fan wrote was the “beginning of a beautiful relation- ship.” Second, the false statements downplaying Daniels’s and Harrison’s involvement and relationships with Spartan were mate- rial because a reasonable investor would attach importance to how Spartan was working with Daniels and Harrison to take multiple issuers public, one after the other. Adams testified that when “cer- tain individuals . . . get market makers to file [Form] 211s for mul- tiple companies,” it raises a red flag that those individuals are en- gaging in “possible manipulation of the market.” Adams explained that it “is very, very uncommon” for “one individual [to] be be- hind . . . a [Form] 211 being filed for multiple issues.” Cangiano testified similarly, explaining that “hav[ing] numerous companies in the pipeline” is an “indication . . . that they’re in the business of selling . . . shells.” He further testified that it “indicates . . . that the[] companies are not being brought forward and, you know, op- erating as real companies but they’re being formed to be sold.” There was also evidence that the SEC has informed investors, through bulletins and proposed rules, that these indicators suggest that a shell company is being used to manipulate the market. From

9 Their “other business” also included Spartan’s filing of the Dinello applica- tion, but the PurpleReal application did disclose that fact. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 50 of 211

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this, a reasonable investor familiar with these indicators could be- lieve that Spartan, Daniels, and Harrison were working together to maintain a shell factory and manipulate the over-the-counter mar- ket. That belief would “affect the [investor’s] desire . . . to buy, sell, or hold the compan[ies’] securities.” Tex. Gulf Sulphur Co., 401 F.2d at 849. That those indicators would’ve affected an investor’s deci- sion to buy, sell, or hold the securities Spartan brought to market at Daniels’s and Harrison’s behest is supported by the evidence of their “general reputation[s] . . . in the . . . industry.” Blackburn, 15 F.4th at 681. The parties stipulated that Daniels and Harrison “were active in the reverse merger business and had consummated a number of reverse mergers prior for clients who wanted to enter the public market.” And Daniels, for his part, had a past forgery conviction. Third, there was evidence that the false statements in the Top to Bottom and PurpleReal applications were made “in connec- tion with the purchase or sale of . . . securit[ies].” 17 C.F.R. § 240.10b-5. Donnelly testified that the “business model” for all Daniels/Harrison issuers had three steps: (1) to take the company public by obtaining FINRA clearance; (2) to “immediately” dispose of all the company’s assets; and (3) to sell the remaining public shell to an investor—usually for reverse mergers with Fan’s “businesses in China.” That’s what happened once Spartan’s misrepresenta- tions secured Top to Bottom’s FINRA clearance. Donnelly ex- plained that once FINRA cleared Top to Bottom, its assets were USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 51 of 211

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sold off in “a fire sale” and the remaining public shell was “sold to an[] . . . investor that Daniels and Harrison found.” And Daniels and Harrison planned to do the same with PurpleReal once Spartan obtained its FINRA clearance—a sale that Spartan and Eldred’s mis- representations would’ve facilitated but for the SEC’s intervention. See Goble, 682 F.3d at 946 (“In some instances a [section] 10(b) fraud may occur even without an actual purchase or sale of securities.” (citing Grippo, 357 F.3d at 1223–24)); cf. Grippo, 357 F.3d at 1223 (giving the example of “a broker who accepts payment for securi- ties that he never intends to deliver” (quoting Zandford, 535 U.S. at 819)). So, as to both Top to Bottom and PurpleReal, Spartan’s mis- representations—calculated to allow Daniels and Harrison to sell public shells—“‘touch[ed]’ the sale” of securities “in some man- ner.” Rudolph, 800 F.2d at 1046 (quoting Bankers Life, 404 U.S. at 12–13). Spartan and Eldred challenge the sufficiency of the evidence as to these issuers by making the same arguments that we’ve al- ready addressed in the context of the Mirman/Rose issuers. Spe- cifically, they contend that they didn’t make any statements in the Daniels/Harrison applications because they only repeated the issu- ers’ statements; that they didn’t have any duty to disclose omitted facts; that their misrepresentations weren’t material because they weren’t publicly accessible; and that the connection between their deceit and the purchase or sale of securities was too remote. These arguments fail for the same reasons we’ve already discussed. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 52 of 211

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We conclude that a reasonable jury could find that Spartan and Eldred made materially false statements in connection with the purchase or sale of securities as to Top to Bottom and PurpleReal. Statements for DTC Clearance (Island) We now turn to Island. The district court instructed the jury that the SEC alleged Island violated rule 10b-5(b) in three ways— by: (1) stating that issuers weren’t shell companies in applications filed for DTC clearance; (2) representing the restricted securities as “free trading,” and (3) omitting restrictive legends from the stock certificates. Island argues that there wasn’t enough evidence for the jury to find it liable under the first theory. Island also contends that the jury couldn’t have found it liable under the second or third theories because it found Island not liable on count fourteen, which alleged that Island offered to sell securities without any effective registration statements for them. We conclude that sufficient evi- dence supported Island’s liability under the first theory, which is 10 enough to affirm the verdict as to Island on count six.

10 To the extent the jury found Island liable on count six under the second and third theories, Island forfeited any argument that the jury’s finding was irrec- oncilable with its verdict on count fourteen. “A party must object to a verdict as inconsistent before the jury has been dismissed,” and “failure to object to an inconsistent verdict before the jury is excused forfeits the objection.” Reider v. Philip Morris USA, Inc., 793 F.3d 1254, 1259–60 (11th Cir. 2015) (citations omitted). Island didn’t raise its inconsistency objection before the jury was excused; instead, it raised the argument in its later renewed motion for judg- ment as a matter of law. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 53 of 211

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Island made a false statement to Penson—a DTC clearing firm—about Kids Germ’s shell status. Island employee Anna Krokhina, who “did a lot of the work with the guidance of [Island president] Dilley,” emailed Penson from her Island email address, stating “the company is not a shell.” There was evidence that this statement was false. Rose testified that Kids Germ “wasn’t operat- ing” and that the plan from the beginning was to sell it as a public shell, which Dilley knew. The misrepresentation that Kids Germ wasn’t a shell com- pany was material. There was evidence that the entire point of obtaining DTC clearance was to facilitate selling Kids Germ in a reverse merger. Rose informed Dilley of a potential buyer for the Kids Germ shell on the same day that Dilley told him Krokhina would file a DTC application. In a January 4, 2010 email exchange (on the same day FINRA cleared Kids Germ), Rose asked Dilley, “Do you want to speak to the atty interested in the company?” and “What do you recommend the company do with the DTC know [sic] the route it is taking?” Dilley responded that he could call the interested attorney and that they “should apply for DTC eligibil- ity[—]Anna [Krokhina] can get that going.” Rose testified that “atty” meant “the attorney for the company, whoever was buying it at the time.” That the attorney was someone who “wanted to purchase the company and wanted to make sure that it’s going to happen” was, as Rose explained, “the only thing [he] could think of.” This actual plan to use Kids Germ for a reverse merger “af- fect[ed] the probable future of the company.” Tex. Gulf Sulphur Co., USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 54 of 211

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401 F.2d at 849; see also Ginsburg, 362 F.3d at 1302 (“A merger is an event of considerable magnitude to an investor . . . .”). And the misrepresentation was in connection with the pur- chase or sale of securities. Based on Dilley and Rose’s email ex- change, a reasonable jury could find Island’s misrepresentations to Penson were calculated to facilitate Kids Germ’s sale to the “atty.” In February 2010—shortly after obtaining DTC eligibility—Kids Germ was sold in a reverse merger that Island assisted as the trans- fer agent. Island argues that insufficient evidence showed the “not a shell” statement violated rule 10b-5(b) for two reasons. First, it ar- gues that Krokhina told Penson the truth. It contends Kids Germ wasn’t a shell because its SEC filings showed that the company “had ‘nominal’ assets and operations.” They specifically cite how Rose testified about a Kids Germ 2009 Form 10-K filing with the SEC, where he “had Kids Germ report” to the SEC “that it had [$25,254 in] cash” assets and that it had “spent approximately $62,000 over the year in its operations.” Second, it argues that the misrepresentation wasn’t in connection with the purchase or sale of securities because it was made in “nonpublic communications” to Penson, rather than to any investors. They characterize the DTC application as “but one step in the process” too remote from the purchase or sale of a security. As for Island’s first argument about the Form 10-K, that fil- ing doesn’t conclusively establish that Kids Germ maintained cash assets and active operations. There was evidence that the Form 10- USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 55 of 211

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K itself misrepresented Kids Germ’s assets and operations. The par- ties stipulated that the issuers’ registration statements “and subse- quent SEC filings . . . falsely depicted the issuers as actively pursu- ing a variety of business plans, when the only plan from the onset was for the compan[ies] to be sold as public vehicles.” And Rose repeatedly testified that Kids Germ was a shell company. Island’s second argument fares no better. Even if the “not a shell” statement wasn’t publicly visible to investors, Island’s mis- representation wasn’t too remote from the sale of Kids Germ’s se- curities because, as Dilley himself testified, Island sought Kids Germ’s DTC eligibility to “make[] the transaction easier in the event of a sale or purchase.” He viewed obtaining DTC eligibility after FINRA clearance as important for “brokers that would buy or sell the stock,” acknowledging that DTC eligibility was necessary to “allow[] for electronic settlement of any purchase or sales in the marketplace.” Cangiano similarly testified that obtaining Kids Germ’s DTC clearance was “important” to “the route it [wa]s tak- ing”—being sold in a reverse merger. He explained that it was “im- portant” to facilitate that merger because getting DTC eligibility allows for convenient, less expensive public trading—“the whole process [through DTC] is electronic.” Without DTC clearance, Cangiano explained further, a security would be “ex-clearing,” which means that trading it would require “physical delivery of the shares and a physical check.” Critically, he testified that “no one would buy or sell a security that’s ex-clearing usually because it’s very expensive to do that.” USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 56 of 211

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So, in short, there was sufficient evidence that Island made a materially false statement to Penson about at least one issuer’s shell status. Because that misrepresentation was material and in connection with the purchase or sale of securities, a reasonable jury could find Island liable on count six. 11 Remedies The defendants next argue that, even if sufficient evidence supported the jury’s verdict, the district court erred when it (1) or- dered Island to disgorge its ill-gotten gains to the Treasury and (2) imposed civil penalties on the defendants. We review for abuse of discretion a district court’s award of disgorgement, civil penalties, and injunctive relief under the secu- rities laws, see SEC v. Diversified Corp. Consultant Grp., 378 F.3d 1219, 1228 (11th Cir. 2004), including the “amount of a[ny] monetary remedy.” SEC v. Warren, 534 F.3d 1368, 1369 (11th Cir. 2008); see also SEC v. Monterosso, 756 F.3d 1326, 1337–38 (11th Cir. 2014). We

11 After oral argument, we ordered the parties to brief what impact, if any, the Supreme Court’s recent decision in Macquarie Infrastructure Corp. v. Moab Part- ners, L.P. had on this appeal. 601 U.S. 257 (2024). Macquarie held that “pure omissions” are not actionable under SEC rule 10b-5(b). Id. at 266. “A pure omission occurs when a speaker says nothing[.]” Id. at 263. Pure omissions are distinct from “[h]alf-truths,” which are “representations that state the truth only so far as it goes, while omitting critical qualifying information.” Id. (quot- ing Universal Health Servs., Inc. v. United States, 579 U.S. 176, 188 (2016)). Half- truths are covered by section 10b-5(b). Id. Because, in the end, our decision rests on the defendants’ misstatements and half-truths, and not on any pure omissions by the defendants, Macquarie does not affect our analysis. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 57 of 211

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review de novo the timeliness of these remedies under the govern- ing statutes of limitations. See Berman v. Blount Parrish & Co., 525 F.3d 1057, 1058 (11th Cir. 2008). The defendants argue that the district court ordered reme- dies based on conduct that was time-barred. Beyond timeliness, they make several disgorgement- and penalty-specific arguments. 12 We address their contentions below. Statute of Limitations We begin with the defendants’ timeliness argument. They contend the district court erred when it “ordered sanctions based on . . . time-barred conduct,” citing 28 U.S.C. section 2462. It did not. The defendants concede on appeal, as they did in the district court, that the civil penalties claims for five issuers—Envoy Group, Changing Technologies, First Xeris, Top to Bottom, and Purple- Real—were timely under 28 U.S.C. section 2462’s five-year statute of limitations. The defendants did not request summary judgment based on timeliness as to those five issuers. The defendants’ concession is key because these were the only issuers that the district court relied on when it ordered the

12 We reject one of the defendants’ conclusory arguments at the outset—that

the district court violated due process by “order[ing] remedies based on con- duct that the jury found did not violate the law.” The district court based the ordered remedies on the defendants’ false statements in violation of count six, and not on any violation alleged in other counts. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 58 of 211

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civil penalties. The court cited the SEC’s request to “assess penal- ties for three ‘violations’ against . . . Dilley,” which the SEC based on Envoy Group, Changing Technologies, and First Xeris. And it cited the SEC’s request to “assess penalties for . . . two violations against . . . Eldred,” which the SEC based on Top to Bottom and PurpleReal. Based on the defendants’ concession, the district court’s civil penalties were timely. All other relief granted by the district court—the disgorge- ment, penny stock bar, and injunction—was timely as well. Con- gress enacted the NDAA while this case was pending, and we apply an amended statute of limitations if Congress “clearly manifest[s] an intent to have an amended limitations statute apply to existing causes of action.” Sarfati v. Wood Holly Assocs., 874 F.2d 1523, 1525 (11th Cir. 1989). Under section 21(d)(8), as enacted through the NDAA, see Pub. L. No. 116-283, section 6501, 134 Stat. at 4625–26, the statute of limitations applicable to a “claim for any equitable remedy” is ten years. 15 U.S.C. § 78u(d)(8)(B). A ten-year period also controls claims for “[d]isgorgement” based on violations of section 10(b) or those that involve scienter—which is what count six alleged. Id. § 78u(d)(8)(A)(ii)(I), (IV). Congress “clearly manifest[ed]” its intent for these new, Ex- change Act-specific provisions—not 28 U.S.C. section 2462—to ap- ply to this action while it was pending. See Sarfati, 874 F.2d at 1525. The NDAA provided that these amendments “appl[ied] with re- spect to any action or proceeding that [wa]s pending on . . . the date of enactment.” NDAA, Pub. L. No. 116-283, § 6501(b), 134 Stat. at USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 59 of 211

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4626. Island does not dispute that the injunctive relief, penny stock bar, and disgorgement—based on statements about the Mir- man/Rose issuers that occurred, at the earliest, after December 2009—are timely under the new statute of limitations. So, in sum, the statutes of limitations did not bar any of the relief ordered by the district court. 13 Disgorgement Disgorgement “is a form of ‘[r]estitution measured by the defendant’s wrongful gain.’” Kokesh v. SEC, 581 U.S. 455, 458–59 (2017) (quoting Restatement (Third) of Restitution & Unjust En- richment § 51, cmt. a, at 204 (Am. L. Inst. 2010)). The district court ordered Island to disgorge $114,520 to the Treasury, plus $39,874.05 in prejudgment interest. Island appeals the disgorge- ment award on four different grounds. Island first argues that the Exchange Act bars a district court from ordering disgorgement to the Treasury. It contends that be- cause disgorgement is an equitable remedy and Exchange Act sec- tion 21(d)(5) requires that “any equitable relief” be “for the benefit

13 Because the district court relied only on timely conduct when it ordered remedies, we need not resolve the defendants’ argument that the district court erred by applying the continuing violations doctrine at summary judgment, or that it relied on untimely conduct when it denied the rule 50(b) motion. Nor do we resolve their argument that the district court’s order denying sum- mary judgment is appealable after a full trial on the merits under Dupree v. Younger. See 598 U.S. 729, 731 (2023) (holding that “a purely legal issue re- solved at summary judgment” is reviewable after trial even if not raised in a post-trial motion). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 60 of 211

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of investors,” 15 U.S.C. § 78u(d)(5), a district court may only order disgorgement if it orders that the money be returned to harmed investors. Second, although it conceded that repaying harmed in- vestors was infeasible in this case, Island argues that the equities didn’t support ordering disgorgement to the Treasury and thus the district court abused its discretion. Third, Island asserts that “there was no proof that [its profits] were causally related to the . . . viola- tion[s] found by the jury.” And fourth, Island maintains that the SEC didn’t satisfy its burden of reasonably approximating the ill- gotten gains. We disagree. 1. Disgorgement to the Treasury We begin with Island’s argument that the Exchange Act does not authorize a district court to order disgorgement to the Treasury. We conclude that it does. “Initially, the only statutory remedy available to the SEC in an enforcement action was an injunction.” Kokesh, 581 U.S. at 458. The original Exchange Act, in 1934, did not expressly authorize dis- trict courts to award monetary remedies like civil penalties or dis- gorgement. See id.; SEC v. Hallam, 42 F.4th 316, 327–30 (5th Cir. 2022) (outlining history of available remedies under the Exchange Act, explaining that “[t]he concept of ‘disgorgement’ as a securities remedy is essentially the product of a runaway mutation”). How- ever, we and other circuits held that district courts could order dis- gorgement “as an ancillary remedy in the exercise of . . . general equity powers.” Tex. Gulf Sulphur Co., 446 F.2d at 1307 (citation omitted); see also Kokesh, 581 U.S. at 458–59 (discussing how in the USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 61 of 211

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1970s, courts began awarding disgorgement in securities actions “as an exercise of their ‘inherent equity power[s]’” (citation omit- ted)); SEC v. Blatt, 583 F.2d 1325, 1335 (5th Cir. 1978) (“The trial court acted properly within its equitable powers in ordering [the defendant] to disgorge the profits that he obtained by fraud.”). Congress later expanded the category of remedies the SEC may seek in enforcement actions. Congress amended the Ex- change Act in 1990 to authorize civil penalties by adding sec- tion 21(d)(3), titled “[m]oney penalties in civil actions.” Securities Enforcement Remedies and Penny Stock Reform Act of 1990, Pub. L. No. 101-429, § 201, 104 Stat. 931 (1990). And in 2002, Congress added section 21(d)(5), which provides that “[i]n any action” brought by the SEC, the SEC may seek, and district courts may grant, “any equitable relief that may be appropriate or necessary for the benefit of investors.” 15 U.S.C. § 78u(d)(5); see Hallam, 42 F.4th at 330. But even after these amendments, the SEC’s ability to seek certain remedies under the Exchange Act remained uncer- tain. The Exchange Act does not define “equitable relief,” and “courts have had to consider which remedies the SEC may impose as part of its [section 21(d)(5)] powers.” Liu, 591 U.S. at 75. The Supreme Court faced that question in Liu. There, the Supreme Court held that “equitable relief,” as used in sec- tion 21(d)(5), includes “a disgorgement award that does not exceed a wrongdoer’s net profits and is awarded for victims.” Id. Citing the provision’s “for the benefit of investors” language, the Court USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 62 of 211

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concluded that “[t]he equitable nature of the profits remedy gener- ally requires the SEC to return a defendant’s gains to wronged in- vestors for their benefit.” Id. at 88 (“[T]he SEC’s equitable, profits- based remedy must do more than simply benefit the public at large . . . . To hold otherwise would render meaningless the latter part of [section] 78u(d)(5).”). The Court did “not address” the “open question” of whether “the SEC’s practice of depositing dis- gorgement funds with the Treasury” is relief “for the benefit of in- vestors.” Id. at 88–89 (emphasis added). About seven months after Liu, Congress again amended sec- tion 21(d) through the NDAA. Section 21(d)(3), which Congress newly labeled “[c]ivil money penalties and authority to seek dis- gorgement,” now provides that the SEC “may bring an action in a United States district court to seek, and the court shall have juris- diction to[,] . . . require disgorgement under paragraph [(d)](7) of any unjust enrichment by the person who received such unjust en- richment as a result of such violation.” 15 U.S.C. § 78u(d)(3), (d)(3)(A)(ii). Section 21(d)(7), which Congress also added after Liu, provides that “[i]n any action or proceeding brought by the [SEC] under any provision of the securities laws, the [SEC] may seek, and any [f ]ederal court may order, disgorgement.” Id. § 78u(d)(7). Congress did not amend section 21(d)(5). Consistent with the text of the new disgorgement provision, we hold that in a civil enforcement action brought by the SEC un- der the Exchange Act, the SEC may seek, and a district court may order, that a defendant disgorge its ill-gotten gains to the Treasury USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 63 of 211

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under sections 21(d)(3)(A)(ii) and (d)(7)—even if directing the money to the Treasury wouldn’t “be appropriate or necessary for the benefit of investors” under section 21(d)(5). Here’s why. Our starting point is the statutory text itself. Korman v. HBC Fla., Inc., 182 F.3d 1291, 1295 (11th Cir. 1999) (“The first, and most important, step in statutory construction is to examine the lan- guage of the [statute] itself.”). Looking to the text here, sections 21(d)(3)(A)(ii) and (d)(7) are unconditional—both allow the SEC to seek, and a district court to order, disgorgement. Sec- tion 21(d)(3)(A)(ii) allows the SEC “to seek . . . disgorgement . . . of any unjust enrichment.” 15 U.S.C. § 78u(d)(3)(A)(ii). Sec- tion 21(d)(7) repeats that the SEC “may seek . . . disgorgement.” Id. § 78u(d)(7). In no way does either provision limit where or to whom those profits must go. We must take these provisions as Congress wrote them; we cannot rewrite sections 21(d)(3)(A)(ii) and (d)(7) to include an investor-benefit limitation where Congress did not provide for one. Korman, 182 F.3d at 1295 (“We . . . neither add words to nor subtract them from [a statute].”). The statutory context confirms that the Exchange Act doesn’t limit who can be the recipient of disgorged profits. See Black Warrior Riverkeeper, Inc. v. Black Warrior Minerals, Inc., 734 F.3d 1297, 1302–03 (11th Cir. 2013) (explaining that “statutory con- struction is a ‘holistic endeavor’” and courts must “fit, if possible, all parts into a harmonious whole” (citations omitted)). Unlike sec- tions 21(d)(3)(A)(ii) and (d)(7), section 21(d)(5) includes express lim- iting language. A district court may grant “any equitable relief” USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 64 of 211

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under the Exchange Act if the relief is “appropriate or necessary for the benefit of investors.” 15 U.S.C. § 78u(d)(5). While sec- tion 21(d)(5)’s investor-benefit limitation might foreclose ordering disgorgement to the Treasury, cf. Liu, 591 U.S. at 88 (“The equita- ble nature of the profits remedy generally requires the SEC to re- turn a defendant’s gains to wronged investors for their benefit.”), Congress omitted any investor-benefit language from sections 21(d)(3)(A)(ii) and (d)(7). We presume sections 21(d)(3)(A)(ii) and (d)(7) lack the investor-benefit requirement Congress provided for in section 21(d)(5). “When Congress includes particular language in one section of a statute but omits it in another section of the same Act, we generally take the choice to be deliberate.” Badgerow v. Walters, 596 U.S. 1, 11 (2022) (cleaned up); see also State Farm Fire & Cas. Co. v. U.S ex rel. Rigsby, 580 U.S. 26, 34 (2016) (“Congress’ use of ‘explicit language’ in one provision ‘cautions against infer- ring’ the same limitation in another provision.” (quoting Marx v. Gen. Revenue Corp., 568 U.S. 371, 384 (2013)); Jones v. Governor of Fla., 975 F.3d 1016, 1042 (11th Cir. 2020) (en banc) (“A material variation in language suggests a variation in meaning.”). Island recognizes that we must read sections 21(d)(3)(A)(ii) and (d)(7) in their proper context rather than in isolation. But it insists that because courts have historically considered disgorge- ment an equitable remedy, the only harmonious interpretation is that disgorgement ordered under section 21(d)(7) must still satisfy section 21(d)(5)’s investor-benefit requirement for “any equitable relief.” 15 U.S.C. § 78u(d)(5). Island maintains that Congress’s ad- dition of sections 21(d)(3)(A)(ii) and (d)(7) simply “ma[d]e explicit USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 65 of 211

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that which had previously only been implicit”—“that disgorge- ment is an available equitable remedy.” If we do not read the Ex- change Act to bar ordering disgorgement to the Treasury, Island contends, then we would render section 21(d)(5)’s investor-benefit requirement superfluous. Island points to one representative’s pre- Liu statement in the legislative history to support its interpretation. Contrary to Island’s suggestion, reading sec- tions 21(d)(3)(A)(ii) and (d)(7) to allow ordering disgorgement to the Treasury is harmonious with section 21(d)(5). Section 21(d)(5) is a general provision—it authorizes district courts to grant “any equitable relief” that benefits investors. 15 U.S.C. § 78u(d)(5). But sections 21(d)(3)(A)(ii) and (d)(7), which lack the investor-benefit requirement, are provisions specific to one remedy—“disgorge- ment.” Id. § 78u(d)(3)(A)(ii) (providing, in subsection labeled “[c]ivil money penalties and authority to seek disgorgement,” that the SEC may seek “disgorgement”); id. § 78u(d)(7) (providing, in subsection labeled “[d]isgorgement,” that the SEC may seek “dis- gorgement”). To read those provisions harmoniously, we simply treat the specific disgorgement authorization as an exception to the general provision governing all other equitable relief. See RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639, 644–45 (2012) (“It is a commonplace of statutory construction that the spe- cific governs the general.” (cleaned up)). Our holding that the Exchange Act allows ordering dis- gorgement into the Treasury doesn’t render section 21(d)(5)’s in- vestor-benefit requirement superfluous or ineffective. Construing USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 66 of 211

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a specific provision as an exception to a general provision “does not mean that the . . . specific provision voids the general provision.” Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts, § 28, at 184 (2012). “[A]ny equitable relief” ordered under the Exchange Act—except disgorgement—must still “be ap- propriate or necessary for the benefit of investors.” 15 U.S.C. § 78u(d)(5). Thus, there are still circumstances where the investor- benefit requirement applies. See RadLAX Gateway Hotel, LLC, 566 U.S. at 645–46 (discussing how applying the general/specific canon can avoid introducing superfluity into a text). Section 21(d)(8)—which includes the Exchange Act’s new statute-of-limitations provisions—also illustrates how the new dis- gorgement provisions operate as exceptions to general ones gov- erning other types of equitable relief. Under section 21(d)(8)(B), titled “[e]quitable remedies,” the SEC must bring “a claim for any equitable remedy . . . not later than [ten] years after” the claim ac- crues. 15 U.S.C. § 21(d)(8)(B). But section 21(d)(8)(A), titled “[d]is- gorgement,” allows the SEC to “bring a claim for disgorgement” within ten years only for four types of violations. Id. § 21(d)(8)(A)(ii). For all other types of violations, the SEC must “bring a claim for disgorgement” within five years. Id. § 21(d)(8)(A)(i). That the statute requires the SEC to enforce cer- tain disgorgement claims sooner than claims seeking other equita- ble relief does not mean sections 21(d)(8)(A) and (B) are necessarily irreconcilable. See RadLAX Gateway Hotel, LLC, 566 U.S. at 644–45. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 67 of 211

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It is Island’s interpretation that renders parts of the Exchange Act superfluous and ineffective. See Black Warrior Riverkeeper, Inc., 734 F.3d at 1303 (“[A] court should . . . avoid interpreting a provi- sion in a way that would render other provisions of the statute su- perfluous.”). We must presume that Congress “intend[ed] its [post-Liu] amendment[s] to have real and substantial effect.” Intel Corp. Inv. Pol’y Comm. v. Sulyma, 589 U.S. 178, 189 (2020) (quoting Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 258–59 (2004)). But under Island’s theory, Congress added sec- tions 21(d)(3)(A)(ii) and (d)(7) to settle an issue that Liu had already settled once and for all—whether the SEC can seek disgorgement 14 under section 21(d)(5). See Liu, 591 U.S. at 74–75 (“The Court holds today that a disgorgement award that does not exceed a wrongdoer’s net profits and is awarded for victims is equitable re- lief permissible under [section] 78u(d)(5).”); cf. Ryan v. Gonzales, 568

14 The parties have directed us to two Second Circuit cases as supplemental authorities: SEC v. Ahmed, 72 F.4th 379 (2d Cir. 2023), and SEC v. Govil, 86 F.4th 89 (2d Cir. 2023). Ahmed “conclude[d] that disgorgement under [section] 78u(d)(7) must comport with traditional equitable limitations as recognized in Liu.” 72 F.4th at 396. And Govil, applying Ahmed, held that a district court abuses its discretion if it orders disgorgement under section 78u(d)(7) without first finding “that . . . investors suffered pecuniary harm” because “disgorge- ment must be ‘awarded for victims.’” 86 F.4th at 93–94 (quoting Liu, 591 U.S. at 75). Island argues that these two cases establish that the disgorgement or- dered here was inequitable. But neither case spoke to the question Liu ex- pressly left “open”—whether ordering disgorgement to the Treasury is “for the benefit of investors” if “the wrongdoer’s profits cannot practically be dis- bursed to the victims.” Liu, 591 U.S. at 88–89 (quoting 15 U.S.C. § 78u(d)(5)). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 68 of 211

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U.S. 57, 66 (2013) (“We normally assume that, when Congress en- acts statutes, it is aware of relevant judicial precedent.” (citation omitted)). Finally, we reject Island’s reliance on a lone congressman’s pre-Liu statement to interpret sections 21(d)(3)(A)(ii) and (d)(7)’s unambiguous text. See CSX Corp. v. United States, 18 F.4th 672, 680 (11th Cir. 2021) (“To the extent that legislative history is useful at all in statutory interpretation, ‘we do not consider legislative his- tory when the text is clear.’” (citation omitted)). These provisions unambiguously allow the SEC to seek, and district courts to order, disgorgement—without any requirement that it benefit investors. 2. The balance of equities We next address whether the district court abused its equi- table discretion in ordering disgorgement to the Treasury because repaying harmed investors was infeasible. We conclude that the district court didn’t abuse its discretion. “Equity courts have routinely deprived wrongdoers of their net profits from unlawful activity[.]” Liu, 591 U.S. at 79. That prac- tice “reflect[s] a foundational principle: ‘[I]t would be inequitable that [a wrongdoer] should make a profit out of his own wrong[.]’” Id. at 79–80 (quoting Root v. Ry. Co., 105 U.S. 189, 207 (1882)); see also Restatement (Third) of Restitution & Unjust Enrichment § 51, cmt. e (Am. L. Inst. 3d ed. Oct. 2024 Update) (“The object of the disgorgement remedy—to eliminate the possibility of profit from conscious wrongdoing—is one of the cornerstones of the law of restitution and unjust enrichment.”). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 69 of 211

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Relying on that foundational principle, we have affirmed judgments directing wrongdoers to pay ill-gotten gains to the Treasury when compensating harmed parties was infeasible. We first did so in Burk Builders, Inc. v. Wirtz—a Fair Labor Standards Act case where an employer argued any unlawfully retained wages that could “not be delivered to the [entitled employees] should re- main with it and become its property.” 355 F.2d 451, 452–53 (5th Cir. 1966). We later affirmed another judgment directing disgorge- ment to the Treasury in FTC v. Gem Merch. Corp.—a case arising under the Federal Trade Commission Act. 87 F.3d 466, 470 (11th Cir. 1996), abrogated on other grounds, AMG Cap. Mgmt., LLC v. FTC, 593 U.S. 67, 75 (2021) (holding that section 13(b) of the FTC Act “does not authorize . . . court-ordered monetary relief”). In each case, we concluded that “equitable principles would not suggest that [the wrongdoer wa]s entitled to the funds,” Burk Builders, Inc., 355 F.2d at 453, and “because it is not always possible to distribute the money to the victims . . . , a court may order the funds paid to the United States Treasury.” Gem Merch. Corp., 87 F.3d at 470; ac- cord FEC v. Craig for U.S. Senate, 816 F.3d 829, 847–48 (D.C. Cir. 2016) (“[C]ourts of appeals have often affirmed the propriety of di- recting disgorged funds to the U.S. Treasury.”); Off. Comm. of Unse- cured Creditors of WorldCom, Inc. v. SEC, 467 F.3d 73, 81 (2d Cir. 2006) (“‘[I]t remains within the [district] court’s discretion to deter- mine how and to whom the money will be distributed,’ and if the district court determines that no party is entitled to receive the dis- gorged profits, they will be paid to the United States Treasury[.]” (citations omitted)). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 70 of 211

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The district court didn’t abuse its broad discretion in apply- ing the same foundational principle to the Exchange Act. Cf. Porter v. Warner Holding Co., 328 U.S. 395, 398 (1946) (explaining that a district court’s “equitable powers assume a[] . . . broad[] and more flexible character” in proceedings where “the public interest is in- volved”). The SEC and the defendants stipulated that “[a] distribu- tion to investors of the disgorgement amount requested would be infeasible.” That stipulation presented the district court with two options: either let Island keep its ill-gotten gains, or direct that the money be paid to the Treasury. The district court reasonably found that it would be more equitable to direct the money be paid to the Treasury because it “would be inequitable that [Island] should make a profit out of [its] own wrong.” See Liu, 591 U.S. at 79–80 (quoting Root, 105 U.S. at 207). Island argues the district court abused its discretion because “equity requires clean hands,” and the $114,520 in profits at issue here was paid by fraudsters—Mirman and Rose. The “clean hands” doctrine recognizes that “‘he who comes into equity must come with clean hands,’ and a party . . . ‘tainted with . . . bad faith’ ‘closes the doors of a court of equity.’” Arkin v. Pressman, Inc., 38 F.4th 1001, 1012 (11th Cir. 2022) (quoting Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945)). But Island doesn’t explain how the fraudsters’ unclean hands makes it fair to allow Is- land to profit from illegal conduct. “[E]quitable principles [do] not suggest that [Island] is entitled to the funds” merely because there are no investors that can be feasibly reimbursed. See Burk Builders, Inc., 355 F.2d at 453. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 71 of 211

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3. Causation Island’s third challenge to the disgorgement award is that the SEC never showed a “causal connection” between the fees that Mirman and Rose paid Island and its wrongdoing. Specifically, Is- land contends that the SEC didn’t show causation because the jury found that it didn’t “scheme” with Mirman and Rose to commit securities fraud. But we conclude that the SEC showed a causal link between the fees and wrongdoing. Spartan and Island, through Dilley and Eldred, worked in tandem—they were “sister companies” with common ownership, office space, equipment, and employees. The evidence shows that they marketed themselves as a one-stop shop to get shell compa- nies quoted through Spartan and then transferred through Island. Mirman even testified that Dilley and Eldred told him that “in or- der for [him] to deal with their broker-dealer [Spartan], they would want [him] to deal with their transfer agent [Island] as well.” And as we’ve already discussed, this one-stop shop’s shared employees repeatedly lied to take Mirman and Rose’s companies public and help sell them—which is what Mirman and Rose paid for. Island was ultimately each Mirman/Rose shell’s transfer agent, with the exception of Envoy Group (an issuer that the district court disre- garded when it ordered disgorgement). 4. Reasonable approximation Lastly, Island argues that the SEC’s approximation of Is- land’s ill-gotten gains was “rife with errors” because it did not ex- clude legitimate expenses. The company also argues that, because USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 72 of 211

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the SEC didn’t satisfy its burden of reasonably approximating the gains, the district court abused its discretion by shifting the burden to Island to prove the SEC’s estimate was unreasonable. We con- clude that the district court didn’t abuse its discretion. “The SEC is entitled to disgorgement upon producing a rea- sonable approximation of a defendant’s ill-gotten gains.” SEC v. Calvo, 378 F.3d 1211, 1217 (11th Cir. 2004). Ordering disgorgement of ill-gotten gains isn’t “limited to confiscation of trading profits.” SEC v. Blavin, 760 F.2d 706, 713 (6th Cir. 1985); see also SEC v. Wash. Cnty. Util. Dist., 676 F.2d 218, 227 (6th Cir. 1982) (remanding for district court to order disgorgement of defendant’s kickbacks from an underwriter’s “fiscal agent fee”); Blatt, 583 F.2d at 1335–36 (rea- soning that district court could order disgorgement of “fee[s] real- ized by each defendant for his assistance in executing the fraud,” which included “legal fees” and fees paid “for [a defendant’s] efforts in soliciting sellers”). The SEC has the initial burden of showing that its approximation of the gains is reasonable. See Calvo, 378 F.3d at 1217; SEC v. First City Fin. Corp., 890 F.2d 1215, 1232 (D.C. Cir. 1989). If the SEC reasonably approximates the ill-gotten gains, “[t]he burden then shifts to the defendant to demonstrate that the SEC’s estimate is not a reasonable approximation.” Calvo, 378 F.3d at 1217. Reasonableness doesn’t require “[e]xactitude,” id., but a dis- trict “court’s power to order disgorgement extends only to the amount with interest by which the defendant profited from his USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 73 of 211

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wrongdoing. Any further sum would constitute a penalty assess- ment.” Blatt, 583 F.2d at 1335. That means “courts must deduct legitimate business expenses” to “ensure that any disgorgement award falls within the limits of equity practice.” Liu, 591 U.S. at 92. Here the district court didn’t abuse its discretion by finding that the SEC satisfied its initial burden of reasonably approximating Island’s ill-gotten gains. The SEC initially requested that Island dis- gorge $147,508, which an SEC accountant calculated based on the “fees [Island was paid] from each of the [fourteen] Mirman/Rose companies through the date of the issuer’s bulk sale.” The SEC accountant relied on Island’s own financial statements regarding each issuer, showing the fees that the shells paid. The SEC then acknowledged $125,720 would account for line-item expenses that Island argued were legitimate—specifically, “[p]rinting; CUSIP; credit memo; courier; DTC.” The district court held the SEC to this “tacit[] agree[ment]” that $125,720 more accurately accounted for legitimate expenses. Because Island’s statements were evidence of the “fees [it] received for [its] role” in facilitating public trading of the Mir- man/Rose securities, see Blatt, 583 F.2d at 1335–36, and because the adjusted estimate excluded legitimate expenses, the district court reasonably found that the SEC satisfied its initial burden, Calvo, 378 F.3d at 1217. And the district court then did what Liu requires dis- trict courts to do—it deducted other legitimate costs. The district court excluded three $200 payments made after the bulk sale date USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 74 of 211

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of Aristocrat Group, Global Group, and On the Move. It also ex- cluded a $3,500 expense related to Kids Germ because of its “odd payment history.” Island argues that the district court abused its discretion by finding that the SEC satisfied its initial burden because the initial calculation was “rife with errors,” which “included unsubstantiated fees and payments, fees paid after the bulk transfer date, and a fail- ure to account for legitimate business expenses.” But Island’s brief doesn’t identify which fees the SEC included in its adjusted request that were “unsubstantiated.” Although the SEC’s approximation included fees paid after the bulk transfer date, those amounts to- taled—at most—$4,100 out of the SEC’s estimate. More “[e]xacti- tude” wasn’t required. Calvo, 378 F.3d at 1217. To the extent Island argues that the district court should’ve excluded other allegedly “legitimate” expenses, including Island’s fixed costs and overhead, Island hasn’t shown that the district court abused its discretion in that respect either. Island doesn’t explain how the district court could’ve allocated its fixed costs to the thirteen transactions out of the many it processed. Island also argues that the district court erroneously shifted the burden of proof, presuming that any risk of uncertainty in cal- culating the disgorgement amount fell onto Island. But the district court applied the appropriate framework: it found that the SEC satisfied its initial burden, it deducted legitimate expenses under Liu, and it determined that Island didn’t rebut the SEC’s showing as to other allegedly legitimate expenses. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 75 of 211

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So, in the end, the district court didn’t abuse its discretion when it ordered disgorgement. Civil Penalties The Exchange Act allows the SEC to seek monetary penal- ties “[f ]or each violation.” 15 U.S.C. § 78u(d)(3)(B)(i). A district court may “impose, upon a proper showing,” those penalties against the violator. Id. § 78u(d)(3)(A)(i). “The amount . . . shall be determined by the court in light of the facts and circumstances,” id. § 78u(d)(3)(B)(i), and the maxi- mum penalty allowed depends on the type of violation. “First tier” penalties, which “shall not exceed the greater of (I) $5,000 for a nat- ural person or $50,000 for any other person, or (II) the gross amount of pecuniary gain to such defendant as a result of the vio- lation,” are the general rule. Id. “Second tier” penalties, which “shall not exceed the greater of (I) $50,000 for a natural person or $250,000 for any other person[] or (II) the gross amount of pecuni- ary gain,” may be imposed if the violation “involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.” Id. § 78u(d)(3)(A)(ii). And “[t]hird tier” penalties, which “shall not exceed the greater of (I) $100,000 for a natural per- son or $500,000 for any other person[] or (II) the gross amount of pecuniary gain,” may be imposed if the violation qualifies for tier two and “directly or indirectly resulted in substantial losses or cre- ated a significant risk of substantial losses to other persons.” Id. § 78u(d)(3)(A)(iii). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 76 of 211

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The district court here ordered tier-two penalties against each defendant. It imposed a $150,000 penalty on Dilley and Eldred for violations relating to Envoy Group, Changing Technologies, First Xeris, Top to Bottom, and PurpleReal. It also ordered that Spartan and Island each pay a $250,000 penalty. The defendants appeal the penalties on two grounds. First, they argue that the district court violated the Seventh Amendment by finding the facts necessary to establish the total civil-penalty amounts instead of allowing a jury to determine those facts. Sec- ond, Dilley, Spartan, and Island argue that the district court abused its discretion by not considering their respective abilities to pay the fines. Again, we disagree with both arguments. 1. Right to jury trial The defendants’ first challenge is that the district court vio- lated their Seventh Amendment right to a jury trial. Specifically, they contend that the Seventh Amendment required a jury—not the district judge—to find (1) the facts necessary to establish tier- two penalties (that the violation “involved fraud, deceit, manipula- tion, or deliberate or reckless disregard of a regulatory require- ment,” 15 U.S.C. section 78u(d)(3)(B)(ii)), and (2) the number of vi- olations that each defendant was responsible for. We do not reach whether the Seventh Amendment required a jury to find those facts because the defendants’ arguments fail for other reasons. First, even if the district court couldn’t order tier-two penal- ties without a jury finding of the qualifying facts—fraud, deceit, manipulation, or disregard of a regulatory requirement—the jury USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 77 of 211

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here necessarily found deceit in this case as to each defendant. The jury held each defendant liable on count six. And count six re- quired that the SEC prove deceit through either an “untrue state- ment” or an omission “necessary . . . to make the statements . . . not misleading.” 17 C.F.R. § 240.10b-5(b). Thus, the jury’s finding allowed the district court to order tier-two penalties without any additional factfinding. See 5 U.S.C. § 78u(d)(3)(B)(ii), which is what the district court did here. Second, the defendants forfeited their assertion that the Sev- enth Amendment required a special jury finding on the number of violations. “[F]orfeiture is the failure to make the timely assertion of a right.” United States v. Campbell, 26 F.4th 860, 872 (11th Cir. 2022) (en banc) (citation omitted). No defendant timely asserted a right to have the jury determine the number of violations before the district court submitted the case to the jury. Their motion for special interrogatories only sought a special jury finding as to the penalty tier. The defendants argue that they preserved the number-of-vi- olations issue because they “never wavered in their conviction that they were not liable—that they committed [zero] violations.” But an assertion that the defendants weren’t liable cannot preserve the issue that, if the jury found them liable, it should specify the num- ber of violations on the verdict form. 2. Defendants’ ability to pay Next, Dilley, Spartan, and Island argue that the district court abused its discretion in determining the penalty amounts. They USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 78 of 211

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contend that they lack the net worth and assets to pay the penalties that the district court ordered. To that end, they argue that the district court should’ve considered their inability to pay before or- dering penalties and that its failure to do so was an abuse of discre- tion. Dilley, Spartan, and Island are mistaken for two independent reasons. First, the district court did consider Dilley’s ability to pay a $150,000 penalty, and it did consider Spartan and Island’s ability to pay a $250,000 penalty. The district court’s remedies order ex- pressly stated that it considered “all [of] the facts and circum- stances,” including “whether the penalt[ies] that would otherwise be appropriate should be reduced due to defendants’ demonstrated current and future financial condition.” The second reason is one that Dilley, Spartan, and Island concede—even if the district court didn’t consider their ability to pay the penalties, our precedent did not require it to consider that factor. A district court abuses its discretion “when a relevant factor that should have been given significant weight is not considered.” Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328, 1330 (11th Cir. 2005). But we held in Warren that a wrongdoer’s ability to pay Ex- change Act penalties “does not merit significant weight.” 534 F.3d at 1370. “At most, ability to pay is one factor to be considered in imposing a penalty.” Id. Dilley, Spartan, and Island maintain that we got it wrong in Warren. They argue that because the Eighth Amendment bars ex- cessive fines, “ability to pay [Exchange Act penalties] is a factor that USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 79 of 211

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should be given significant weight” by district courts. Under our prior panel precedent rule, though, Warren binds us “unless and until it is overruled or undermined to the point of abrogation by the Supreme Court or by this court sitting en banc.” United States v. Archer, 531 F.3d 1347, 1352 (11th Cir. 2008). The Dissenting Opinion A few words about the dissenting opinion before we con- clude. We should reverse, it says, because the district court erred in denying the defendants’ motions to dismiss the SEC’s complaint as a shotgun pleading, and that error resulted in the district court’s disqualification. For two reasons, we disagree. First, of the four- teen issues and sub-issues the defendants raised in this well litigated appeal, they never argued that we should reverse on shotgun- pleading or judicial-disqualification grounds. See Clark v. Sweeney, No. 25-52, 2025 WL 3260170, at *1 (U.S. Nov. 24, 2025) (“In our adversarial system of adjudication, we follow the principle of party presentation.” (quoting United States v. Sineneng-Smith, 590 U.S. 371, 375 (2020))). Second, even if they did, those grounds would not support reversal. See Liteky v. United States, 510 U.S. 540, 555 (1994) (“[J]udicial rulings alone almost never constitute a valid basis for a bias or partiality motion. . . . Almost invariably, they are proper grounds for appeal, not for recusal.”); Fin. Info. Techs., LLC v. iControl Sys., USA, LLC, 21 F.4th 1267, 1273 n.2 (11th Cir. 2021) (“[C]oncerns” about defectively pleaded claims “dissipate when, as USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 80 of 211

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here,” the claims “have been litigated and adjudicated in a full- 15 blown trial.”). CONCLUSION In short, the district court did not abuse its discretion when it allowed Cangiano to testify as an expert witness about a transfer agent’s role in bringing securities to market. Neither did it err when it denied the defendants’ motions for judgment as a matter of law—sufficient evidence showed that the defendants made ma- terial misrepresentations. And as to the remedies—all of which were timely under 28 U.S.C. section 2462 and section 21(d) of the Exchange Act—the district court didn’t abuse its discretion. The Exchange Act authorizes ordering disgorgement to the Treasury, the disgorgement award here was equitable, causally related to Is- land’s wrongdoing, and it accounted for Island’s legitimate ex- penses. Regarding civil penalties, the jury’s finding supported the tier-two penalties, and the district court adequately considered the defendants’ ability to pay those penalties. AFFIRMED.

15 The Dupree exception, which “extends to a purely legal issue resolved at summary judgment,” does not apply here. See Dupree v. Younger, 598 U.S. 729, 731 (2023). The shotgun pleading issue in this case was not resolved at sum- mary judgment. And dismissing a complaint as a shotgun pleading is partly a discretionary, rather than a purely legal, call. See Barmapov v. Amuial, 986 F.3d 1321, 1324 (11th Cir. 2021) (“When a district court dismisses a complaint be- cause it is a shotgun pleading, we review that decision for abuse of discre- tion.”). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 81 of 211

22-13129 TJOFLAT, J., Dissenting 1

TJOFLAT, Circuit Judge, dissenting: INTRODUCTION The Securities and Exchange Commission (“SEC”) filed a complaint that was repugnant to every Federal Rule of Civil Pro- cedure governing the filing of complaints in the United States Dis- trict Courts. It stood in blatant defiance of Eleventh Circuit and Su- preme Court precedent. Yet when the defendants directed the Dis- trict Court’s attention to the complaint’s glaring deficiencies in their motion to dismiss, the Court denied the motion and marched onward. 1 The SEC’s complaint was brought against four defendants, Spartan Securities (“Spartan”), Island Stock Transfer (“Island”), Carl Dilley, and Micah Eldred. It presented more than 300 causes of action, 260 of which alleged securities fraud taking place over the span of three to four years. Rule 9(b) of the Federal Rules of Civil Procedure required the SEC’s complaint to “state with partic- ularity the circumstances constituting” each fraud-based cause of action. Fed. R. Civ. P. 9(b). But it did no such thing. Instead, the SEC pleaded fourteen counts as conclusory statements of law paired with a sentence realleging the complaint’s first 122 paragraphs. These 122 paragraphs essentially encom- passed the SEC’s entire investigative report, detailing wide-ranging conduct by both the defendants and third parties. Antonyms for

1 The Honorable Virginia M. Hernandez Covington presided over the district

court proceedings. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 82 of 211

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“with particularity,” like “generally,” “imprecisely,” or “indefi- nitely” more aptly describe how the SEC pleaded the fraud. In the months of pretrial discovery that followed, the SEC steadfastly refused defense counsel’s request to inform the defend- ants of the fraudulent acts and statements for which they would be standing trial. It was not until the trial concluded that the District Court effectively assumed the SEC’s Rule 9(b) pleading obligation and notified the defendants of the fraud it thought the SEC had al- leged. The jury convicted the defendants on only one of the SEC’s fourteen counts. That count, Count VI, alleged that the defendants “knowingly or recklessly made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made . . . not misleading.” As indicated infra, Count VI presented fifty-two causes of action: nineteen against Spartan, four- teen against Island, fourteen against Dilley, and five against Eldred. The jury returned a verdict against each defendant on Count VI without identifying the misrepresentations or omissions on which it based its verdict. After denying the defendants’ renewed motion for judgment as a matter of law, the District Court entered a final judgment awarding the SEC the remedies it sought. The defendants appeal. Their best argument for reversal is that the District Court erred in denying their motion to dismiss. Unfortunately, when they filed their appeal, binding Eleventh Cir- cuit precedent precluded that argument because a full trial had taken place. See Fin. Info. Techs., LLC v. iControl Sys., USA, LLC, 21 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 83 of 211

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F.4th 1267, 1273 n.2 (11th Cir. 2021) (refusing to review pleading deficiencies because “those concerns dissipate when, as here, the alleged trade secrets have been litigated and adjudicated in a full- blown trial”); American Builders Ins. Co. v. Southern-Owners Ins. Co., 56 F.4th 938, 950 (11th Cir. 2023) (“Our Circuit has no such legal- issue exception to the general rule that ‘a party may not appeal an order denying summary judgment after there has been a full trial on the merits.’” (quoting Carrizosa v. Chiquita Brands Int’l, Inc., 47 F.4th 1278, 1339 (11th Cir. 2022))). After briefing closed, however, the United States Supreme Court overruled our precedent with Dupree v. Younger, 598 U.S. 729, 143 S. Ct. 1382 (2023). 2 The Courts of Appeals, Dupree explained, may review a pretrial question of law following the entry of judgment pursuant to a jury verdict without re-raising the question in a post-trial motion. Id. at 734, 143 S. Ct. at 1398. The Majority dedicates but one footnote to Dupree. Relying on our now-overruled precedent, it suggests that pleading-defi- ciency arguments cannot be vetted by this Court after trial. Maj. Op. at 79–80. This, of course, stands in contrast to the longstanding principle that “an appeal from a final judgment permits review of all rulings that led up to the judgment.” Fed. R. App. P. 3 advisory

2 Dupree specifically cited American Builders as a decision requiring a “post-trial

motion to preserve claims of pure legal error”—the exact type of decision it proceeded to overrule. 598 U.S. at 733 n.2, 143 S. Ct. at 1388 n.2. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 84 of 211

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committee’s note to 2021 amendment; Dupree, 598 U.S. at 734, 143 S. Ct. at 1389 (“[T]he general rule is that a party is entitled to a sin- gle appeal, to be deferred until final judgment has been entered, in which claims of district court error at any stage of the litigation may be ventilated.” (internal quotation marks omitted) (emphasis added) (quoting Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712, 116 S. Ct. 1712, 1718 (1996))). What’s more, the Majority contends that the “principle of party presentation” precludes us from even considering the issue. Maj. Op. at 79–80. The Majority explains we cannot look beyond the four corners of the parties’ briefing to spot plain error—in total disregard of our en banc opinion in United States v. Campbell, 26 F.4th 860, 865 (11th Cir. 2022) (en banc), cert. den. Campbell v. United States, 143 S. Ct. 95 (2002) (“[W]e may exercise our discre- tion to consider issues not raised by the parties on appeal.”). The error here was plain indeed. As explained in the discus- sion that follows, the SEC’s complaint was insufficient under Fed- eral Rules of Civil Procedure 8(a)(2), 9(b), 10(b), and 11(b). It also failed to state a claim sufficient to survive Rule 12(b)(6) and the Su- preme Court’s decision in Ashcroft v. Iqbal, because the allegations lacked “sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.’” 556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007)). This Dissent is about process. The conduct of the SEC in prosecuting the fourteen counts of its complaint and of the District USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 85 of 211

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Court in handling the litigation was so devoid of fundamental fair- ness and respect for due process that this Court’s affirmance of the District Court’s judgment constitutes a manifest miscarriage of jus- tice. I. BACKGROUND AND THE SEC’S COMPLAINT A. The “Shell Factory” Schemes Two schemes gave rise to this litigation, each involving the fraudulent public registration of “shell companies”—companies with no real assets or operations—with the ultimate goal of selling the shells to private companies that could “go public” fast. The pri- mary culprits were Alvin Mirman, Sheldon Rose, Michael Daniels, Andy Fan, and Dianne Harrison (collectively, the “Fraudsters”). The Fraudsters are not parties to this litigation; Mirman and Rose pleaded guilty to criminal charges in 2016, and Daniels, Fan, and Harrison entered into consent decrees with the SEC in 2018. In the first operation, Alvin Mirman and Sheldon Rose reg- istered the securities of fourteen shell companies (the “Mir- man/Rose Companies”) under SEC Form S-1, 3 fraudulently repre- senting that the shells were operating companies with real business plans and independent management. The second operation was es- sentially identical: Daniels, Fan, and Harrison registered five shell

3 Form S-1 is an SEC form used to publicly register securities under the Secu-

rities Act of 1933. See U.S. Sec. and Exch. Comm’n, Form S-1, Registration State- ment Under the Securities Act of 1933 (OMB 3235-0065), https://www.sec.gov/fil es/forms-1.pdf. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 86 of 211

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companies (the “Daniels Companies”) with fraudulent Form S-1 filings. Although these securities were now registered with the SEC, they were not listed on any exchange. And while they could technically be sold on “over-the-counter” markets, they would not benefit from any meaningful liquidity until at least one broker, act- ing as a market-maker, was allowed to issue “quotations” (i.e., of- fers to buy or sell the securities at a specific price). Such authority required a FINRA-registered broker-dealer to file a Form 211, cer- tifying that it had performed the obligations imposed by SEC Rule 15c2-11. See 17 C.F.R. § 240.15c2-11. Enter Spartan, a FINRA-registered broker-dealer that fre- quently filed Forms 211 as part of its business model. Between 2010 and 2014, Spartan filed Form 211 applications with FINRA for all fourteen Mirman/Rose Companies and all five Daniels Compa- nies. Dilley and Eldred, registered principals and representatives of Spartan, assisted Spartan in filing the Form 211 applications. Island served as the shell companies’ transfer agent and recorded share ownership, at the direction of the companies, to facilitate the issu- ances and transfers of securities. After FINRA approved the Forms 211 and Spartan published quotations for the shell companies’ securities, the Fraudsters had accomplished their objective. The shells were sold to real busi- nesses, which, through reverse mergers, were transformed into public companies with highly liquid securities. The Fraudsters, of course, reaped the lion’s share of the proceeds from the shell sales. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 87 of 211

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B. The SEC’s Complaint The SEC filed its 14-count complaint in this case on Febru- ary 20, 2019. Counts I, II, and XIV were “non-fraud” counts, alleg- ing that the defendants did not have a reasonable basis to file the Forms 211. Counts III through XIII were “fraud” counts, alleging that the defendants either committed fraud or aided and abetted the Fraudsters’ fraud in connection with the sale of securities. Every count asserted multiple causes of action—in some cases, dozens. And each cause of action was expressed as a pure legal con- clusion with a statement incorporating the first 122 paragraphs of the complaint. Although repetitive, I will now describe how each count was pleaded, in an effort to convey the SEC’s utter disregard for the Federal Rules of Civil Procedure. 1. The Non-fraud Counts Count I The SEC brought Count I against Spartan alone. With noth- ing but a wholesale incorporation of the first 122 paragraphs of the complaint, Count I alleged that from January 2010 through May 2014, Spartan “published quotations for securities or . . . submitted quotations for publication . . . without having a reasonable basis for believing, based on a review of the documents and information re- quired by Rule 15c2-11(a)(1)[ 4] . . . that the . . . information was

4 Rule 15c2-11 provides, in relevant part:

[I]t shall be unlawful for . . . [a] broker or dealer to publish any quotation for a security or, directly or indirectly, to submit any USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 88 of 211

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accurate in all material respects and that the sources of that infor- mation were reliable.” Count I appeared to apply to all nineteen Forms 211 Spartan filed on behalf of the Fraudsters. But each filing was a separate transaction, occurring on a separate date, and respecting a different entity. Therefore, Count I stated a minimum of nineteen causes of action. It provided no specificity as to how Spartan’s investigation was inadequate or why the documents it reviewed were unreliable. Count II

such quotation for publication, in any quotation medium, un- less . . . (A) Such broker or dealer has in its records the documents and information specified in paragraph (b) of this section; (B) Such documents and information specified in paragraph (b) of this section (excluding paragraphs (b)(5)(i)(N) through (P) of this section) are current and publicly available; and (C) Based upon a review of the documents and information specified in paragraph (b) of this section, together with any other documents and information required by paragraph (c) of this section, such broker or dealer has a reasonable basis under the circumstances for believing that: (1) The documents and information specified in para- graph (b) of this section are accurate in all material re- spects; and (2) The sources of the documents and information specified in paragraph (b) of this section are reliable[.] 17 C.F.R. § 240.15c2-11. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 89 of 211

22-13129 TJOFLAT, J., Dissenting 9

Count II alleged that Dilley and Eldred, and Spartan’s Chief Compliance Officer David Lopez, 5 “knowingly or recklessly pro- vided substantial assistance” to Spartan’s violations alleged in Count I. According to the 122 paragraphs, Dilley assisted Spartan’s publication of quotations for the fourteen Mirman/Rose Compa- nies’ securities between January 2011 and March 2014, and Eldred assisted the publication of quotations for the five Daniels Compa- nies’ securities between June 2011 and May 2014. Lopez allegedly helped Spartan approve certain deficiency letters from FINRA in connection with the Form 211 filings for six of the fourteen Mir- man/Rose Companies. Count II presented at least twenty-five causes of action. To prevail on the causes of action, the SEC would have to prove that Spartan published or submitted for publication quotations for se- curities, as alleged in Count I, on a specific date. The 122 para- graphs never identify these specific dates, nor do they indicate the specific manner in which Dilley, Eldred, and Lopez assisted Spar- tan’s unspecified Rule 15c2-11 violations. Count XIV Count XIV alleged that Spartan, Island, and Dilley “directly or indirectly . . . [sold] securities . . . when no registration statement was in effect with the Commission as to such securities” and “of- fer[ed] to sell such securities when no registration statement had

5 Lopez was charged only in Count II, for which the jury returned a verdict of

not guilty. Accordingly, Lopez is not a party to this appeal. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 90 of 211

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been filed with the Commission as to such securities,” in violation of Sections 5(a) and (c) of the Securities Act of 1933 (“Securities Act”). Like the other counts, this allegation was a mere legal con- clusion. The 122 paragraphs may have provided some predicate facts for the violations of Sections 5(a) and (c), but they did not identify the securities to which they referred. Nor did they mention when and to whom Spartan, Island, and Dilley sold and offered to sell the securities. Thus, it is not possible to determine how many causes of action Count XIV actually presented without speculation. 2. The Fraud Counts Counts III through XIII alleged fraud. Like the non-fraud counts, each fraud count contained several causes of action ex- pressed as pure legal conclusions. And, despite Rule 9(b)’s mandate that these counts be pled with particularity, the SEC only vaguely gestured toward fraud. To identify the predicate facts in support of each count, the SEC, again, pointed the defendants and the Court to the first 122 paragraphs in the complaint. I turn first to the causes of action brought under Section 17(a) and then to those brought under Section 10(b). 6 Section 17(a) states in relevant part:

6 The conduct proscribed by Section 17(a)(1)–(3) and Rule 10b-5(a)–(c) is the

same. Section 17(a) applies to the offer or sale of securities. Rule 10b-5 applies to the purchase or sale of securities. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 91 of 211

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It shall be unlawful for any person in the offer or sale of any securities . . . directly or indirectly— (1) to employ any device, scheme, or artifice to defraud, or (2) to obtain money or property by means of any untrue statement of a material fact or any omis- sion to state a material fact necessary in order to make the statements made, in light of the circum- stances under which they were made, not mis- leading; or (3) to engage in any transaction, practice, or course of business which operates or would oper- ate as a fraud or deceit upon the purchaser. 15 U.S.C. § 77q(a). Count III Count III alleged that, from December 2009 through July 2014, Spartan, Island, and Dilley violated Section 17(a)(1) by “em- ploy[ing] [a] device, scheme or artifice to defraud” in connection with the fourteen Mirman/Rose Companies. Separately, it alleged that, from May 2011 through August 2014, Spartan and Eldred vi- olated Section 17(a)(1) in the same way with respect to the five Daniels Companies. Referring to the complaint’s 122 paragraphs, Count III ap- pears to present fifty-two causes of action: nineteen against Spar- tan, fourteen against Island, fourteen against Dilley, and five against Eldred. Count III did not, with respect to each cause of ac- tion, “state with particularity the circumstances constituting fraud” USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 92 of 211

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or state predicate facts necessary to withstand a motion to dismiss under Rule 9(b). Fed. R. Civ. P. 9(b). And even if Spartan, Island, Dilley, and Eldred did partake in the “offer or sale” of securities— the details of which are left to the imagination—the paragraphs did not describe the “device, scheme, or artifice to defraud” they em- ployed or even explain whom they defrauded. Count IV Count IV alleged that, from December 2009 through July 2014, Spartan, Island, and Dilley violated Section 17(a)(3) by “neg- ligently engag[ing] in transactions, practices and courses of busi- ness which operated . . . as a fraud or deceit” in connection with the fourteen Mirman/Rose Companies. It separately alleged that, from May 2011 through August 2014, Spartan and Eldred violated Section 17(a)(3) in the same way with respect to the five Daniels Companies. Count IV also presented fifty-two causes of action: nineteen against Spartan, fourteen against Island, fourteen against Dilley, and five against Eldred. But the 122 paragraphs did not remotely “state with particularity the circumstances constituting fraud” or state predicate facts necessary to survive a motion to dismiss. Fed. R. Civ. P. 9(b). The SEC did not identify how the defendants “en- gage[d] in . . . transaction[s], practice[s], or course[s] of business which operate[d] . . . as a fraud or deceit upon the purchaser[s]” of the securities. 15 U.S.C. § 77q(a)(3). Counts VIII, IX, and X Counts VIII, IX, and X alleged that, from December 2009 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 93 of 211

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through July 2014, Spartan, Island, and Dilley, “knowingly or reck- lessly provided substantial assistance to Mirman and Rose’s” viola- tions of Section 17(a)(1), (2), and (3). 7 The counts separately alleged that Spartan and Eldred “knowingly or recklessly provided substan- tial assistance to Daniels, Fan, and Harrison’s” violations of Section 17(a)(1), (2), and (3). 8 How many aiding and abetting causes of action Counts VIII, IX, and X presented is unknowable. To prove any of these causes of action, the SEC would have to establish first that the Fraudsters violated Section 17(a) in a specific timeframe and in a specific man- ner. The SEC does not allege with particularity what the schemes, misstatements, or deceitful business practices were that formed the Section 17(a) violations. See Fed. R. Civ. P. 9(b). And even if the facts presented were sufficient to identify the Fraudsters’ Section 17(a) violations, they certainly did not reveal precisely what Spar- tan, Island, Dilley, and Eldred did to assist those violations. * * * Now for the Rule 10b-5 counts. Rule 10b-5 states in relevant part: It shall be unlawful for any person . . .

7 Count VIII alleged violations of Section 17(a)(1), Count IX alleged violations

of Section 17(a)(2), and Count X alleged violations of Section 17(a)(3). 8 Again, Count VIII alleged violations of Section 17(a)(1), Count IX alleged vi-

olations of Section 17(a)(2), and Count X alleged violations of Section 17(a)(3). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 94 of 211

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(a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any secu- rity. 17 C.F.R. § 240.10b-5. Count V Count V alleged that, from December 2009 through July 2014, Spartan, Island, and Dilley violated Rule 10b-5(a) by “know- ingly or recklessly employ[ing] devices, schemes or artifices to de- fraud in connection with the purchase or sale of securities” of the fourteen Mirman/Rose Companies. It separately alleged that, from May 2011 through May 2014, Spartan and Eldred did the same with respect to the five Daniels Companies. Count V presented fifty-two causes of action: nineteen against Spartan, fourteen against Island, fourteen against Dilley, and five against Eldred. Count V did not “state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). The 122 paragraphs incorporated therein failed to describe the “device, USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 95 of 211

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scheme, or artifice” the defendants employed or identify the per- son(s) or entity(ies) they defrauded. 17 C.F.R. § 240.10b-5(a); 15 U.S.C. § 77q(a)(1). Count VI Count VI alleged that, from December 2009 through April 2014, Spartan, Island, and Dilley violated Rule 10b-5(b) by “know- ingly or recklessly ma[king] untrue statements of material facts and omit[ting] to state material facts necessary in order to make the statements made . . . not misleading” in connection with the four- teen Mirman/Rose Companies. It separately alleged that, from May 2011 through May 2014, Spartan and Eldred violated Rule 10b- 5(b) in exactly the same way with respect to the five Daniels Com- panies. Like Count V, Count VI presented fifty-two causes of action: nineteen against Spartan, fourteen against Island, fourteen against Dilley, and five against Eldred. Count VI did not “state with partic- ularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). The 122 paragraphs incorporated therein failed to identify the de- fendants’ specific material misstatements and omissions, let alone when they were made or to whom they were made. Count VII Count VII alleged that, from December 2009 through July 2014, Spartan, Island, and Dilley violated Rule 10b-5(c) by “directly and indirectly . . . knowingly or recklessly engag[ing] in acts, prac- tices and courses of business which operated . . . as a fraud or deceit upon any person” in connection with the fourteen Mirman/Rose USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 96 of 211

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Companies. It separately alleged that, from May 2011 through May 2014, Spartan and Eldred did the same with respect to the five Dan- iels Companies. Like Counts V and VI, Count VII presented fifty-two causes of action: nineteen against Spartan, fourteen against Island, four- teen against Dilley, and five against Eldred. Count VII did not “state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). The 122 paragraphs did not identify the predicate acts required to state a Rule 10b-5(c) cause of action sufficient to withstand a motion to dismiss because they did not describe the defendants’ “engage[ment] in . . . act[s], practice[s], or course[s] of business which operate[d] . . . as a fraud or deceit” upon the pur- chasers of the securities. 17 C.F.R. § 240-10b-5(c). Nor did the par- agraphs identify the person(s) or entity(ies) who purchased or sold the securities. Counts XI, XII, and XIII Counts XI, XII, and XIII alleged that Spartan, Island, and Dil- ley “knowingly or recklessly provided substantial assistance to Mir- man and Rose’s” violations of Rule 10b-5(a), (b), and (c).9 They sep- arately alleged that Spartan and Eldred “knowingly or recklessly

9 Count XI alleged violations of Rule 10b-5(a), Count XII alleged violations of

Rule 10b-5(b), and Count XIII alleged violations of Rule 10b-5(c). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 97 of 211

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provided substantial assistance to Daniels, Fan and Harrison’s” Rule 10b-5(a), (b), and (c) violations. 10 How many aiding and abetting causes of action Counts XI, XII, and XIII presented cannot be determined from the complaint. It would require grand speculation to fix the number of Rule 10b- 5(a), (b), and (c) violations the Fraudsters committed in nearly four years. Moreover, as with Counts VIII, IX, and X, it would be well- nigh impossible to discern from the 122 paragraphs both whether the purported Rule 10b-5(a), (b), and (c) violations had the required predicate factual support and what Spartan, Island, Dilley, and El- dred may have done to assist the respective Mirman and Rose and Daniels, Fan, and Harrison violations. * * * The SEC’s complaint presented the District Court with a case that, at first blush, appeared to be unmanageable. Counts I through VII of the complaint presented 304 causes of action, 260 of which alleged fraud. The aiding and abetting counts contained even more causes of action, albeit incalculable. Most counts in- cluded multiple groupings of defendants and a myriad of different transactions. There was nary one application of fact to law. Rather, each count was written as an entirely speculative legal conclusion. We condemned these types of pleadings thirty years ago in Fikes v. City of Daphne:

10 Again, Count XI alleged violations of Rule 10b-5(a), Count XII alleged viola-

tions of Rule 10b-5(b), and Count XIII alleged violations of Rule 10b-5(c). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 98 of 211

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By combining several claims for relief in each count, [lawyers] disregard[] the rules governing the presen- tation of claims to a district court. Federal Rule of Civil Procedure 8(a)(2) requires a pleader, in setting forth a claim for relief, to present “a short plain state- ment of the claim showing that the pleader is entitled to relief.” Federal Rule of Civil Procedure 10(b) pro- vides that “[a]ll averments of claim shall be made in separate paragraphs, the contents of each of which shall be limited as far as practicable to a statement of a single set of circumstances . . . .” Moreover, “each claim founded upon a separate transaction or occur- rence . . . shall be stated in a separate count whenever a separation facilitates the clear presentation of the matters set forth.” These rules work together “to re- quire the pleader to present his claims discretely and succinctly, so that his adversary can discern what he is claiming and frame a responsive pleading, the court can determine which facts support which claims and whether the plaintiff has stated any claims upon which relief can be granted, and, at trial, the court can determine that evidence which is relevant and that which is not.” 79 F.3d 1079, 1082 (11th Cir. 1996) (alterations adopted) (quoting T.D.S. Inc. v. Shelby Mut. Ins. Co., 760 F.2d 1520, 1543 n.14 (11th Cir. 1985) (Tjoflat, J., dissenting)). The Supreme Court has also elaborated on what is required to satisfy Rule 8(a)(2). In Iqbal, it held that a cause of action must “contain sufficient factual matter . . . to ‘state a claim to relief that USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 99 of 211

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is plausible on its face.’” 556 U.S. at 678, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 570, 127 S. Ct. at 1974). “A claim has facial plausibility when the . . . plead[ed] factual content . . . allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Perhaps it should go without stat- ing, but the Supreme Court’s use of the singular nouns “cause of action” and “claim” means that the requisite factual content must exist and be traceable with respect to each cause of action. All of this background is at play before Rule 9(b) enters the picture. When a plaintiff alleges fraud, Rule 9(b) adds to the other Federal Rules of Civil Procedure, like Rules 8(a)(2) and 10(b). A plaintiff alleging fraud must not only plead factual content suffi- cient to create an inference of liability under Iqbal but also “state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). Consider the Count VI allegation that Dilley violated Sec- tion 10(b) of the Securities Act and Rule 10b-5(b) thereunder. The SEC was obligated to plead exactly how Dilley carried out the al- leged fraud. It should have alleged that, at a given point in time and place, in connection with the purchase or sale of specifically identi- fied securities, Dilley made a specific untrue statement of material fact to a specific person or entity or in a specific document and omitted to state a specific material fact necessary to make other specific statements not misleading. Anything short of this would necessarily (1) fail Rule 10(b)’s mandate to break up different causes of action; (2) fail to create an inference of fraud under Rule 8(a)(2) USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 100 of 211

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and Iqbal; or (3) fail to comply with Rule 9(b)’s particularity require- ment. Here, the SEC failed on all three fronts. II. THE DEFENDANTS’ MOTION TO DISMISS, THE SEC’S RESPONSE, AND THE DISTRICT COURT’S ORDER

On April 22, 2019, the defendants moved to dismiss the com- plaint, arguing that the SEC “fail[ed] to state a claim upon which relief can be granted.” 11 See Fed. R. Civ. P. 12(b)(6). Specifically, the defendants argued that the SEC did not comply with Rule 8(a) or Rule 9(b) and that the complaint was an impermissible “shotgun pleading.” 12 On June 5, 2019, the District Court denied the defendants’ Motion to Dismiss, rejecting each of their arguments. I now walk through the defendants’ contentions, the SEC’s response, and how the Court reached its conclusions.

11 Two motions to dismiss were filed: one by Eldred, and the other by Spartan,

Island, and Dilley. For convenience, I consider the motions as one. 12 The defendants also argued that the claims were time-barred by 28 U.S.C.

§ 2462 and that, under a recent Supreme Court ruling, they could not be liable for the Fraudsters’ misrepresentations because they were not the “maker[s]” of any fraudulent statements. Defs.’ Mot. to Dismiss 6–7, 27–30; see Janus Cap. Grp., Inc. v. First Derivative Traders, 564 U.S. 135, 142, 131 S. Ct. 2296, 2302 (2011). However, the pleading-deficiency arguments are the focus of this Dis- sent. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 101 of 211

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A. Rule 8(a) First, the defendants asserted that all fourteen counts vio- lated Rule 8(a)(2) because they did not state a short and plain state- ment of the claim “show[ing] that the [SEC was] entitled to relief.” Defs.’ Mot. to Dismiss 15; see Fed. R. Civ. P. 8(a)(2). They argued that the counts alleged mere conclusions of law, which are not granted an assumption of truth, and that the counts otherwise lacked the predicate facts, “accepted as true, to ‘state a claim to re- lief that is plausible on its face.’” Defs.’ Mot. to Dismiss 3 (quoting Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949). The SEC disagreed. But its argument for Rule 8(a)(2) com- pliance was as conclusory as the complaint itself: [T]o satisfy the liberal notice pleading standards of Rule 8(a), the Commission must do nothing more than set forth “a short and plain statement of the claim showing that the pleader is entailed [sic] to re- lief.” The Court’s inquiry at the motion to dismiss stage still focuses on whether the challenged plead- ings “give the defendant fair notice of what the . . . claim is and the grounds on which it rests.” The Com- mission has satisfied this pleading standard. Pl.’s Resp. to Mot. to Dismiss 6–7 (internal citations omitted). Evidently, that explanation was enough for the District Court. After quoting Iqbal, it held that “[t]he SEC’s 62-page, 191- paragraph Complaint contains more than enough detail to satisfy Rule 8(a)’s notice pleading requirements.” United States Sec. & Exch. Comm’n v. Spartan Sec. Grp., LTD, No. 8:19-CV-448-T-33CPT, 2019 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 102 of 211

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WL 2372277, at *3 (M.D. Fla. June 5, 2019). It had nothing further to say on the matter. B. Rule 9(b) Second, the defendants argued that the fraud counts should be dismissed because they did not state with particularity the cir- cumstances constituting the fraud. Defs.’ Mot. to Dismiss 3–4; Fed. R. Civ. P. 9(b). Citing FindWhat Investor Group v. FindWhat.com, 658 F.3d 1282, 1296 (11th Cir. 2011), the defendants pointed out that where a cause of action is brought under Rule 10b-5(b), as in Count VI, the complaint must: set forth (1) precisely what statements or omissions were made; (2) the time and place of each statement; (3) the manner in which they misled the investor; and (4) what the defendant obtained as a result of the fraud. Defs.’ Mot. to Dismiss 4. Instead, the defendants wrote, the SEC exhibited “no effort to state with particularity which specific factual allegations apply to which claim for relief, leaving Defendants un- able to discern the exact nature of the charges.” Id. at 5. The SEC disagreed, but its argument for Rule 9(b) compli- ance was, again, conclusory: The complaint need only provide a reasonable delin- eation of the underlying acts and transactions consti- tuting the fraud. A complaint pleads fraud with par- ticularity if it alleges the substance of the fraudulent acts, who engaged in the fraud, and when the fraud occurred. Under those standards, the Commission’s USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 103 of 211

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detailed Complaint, which includes 122 paragraphs of underlying facts of who, what, when, where, and how satisfies the requirements for pleading fraud with particularity. Pl.’s Resp. to Mot. to Dismiss 7–8 (internal citations omitted). The Court agreed with the SEC, finding that the complaint “provides specific details on [Spartan] and [Island]’s alleged roles in serving as a one-stop shop for issuers of microcap securities that were later found to have violated federal securities laws.” Spartan Sec. Grp., 2019 WL 2372277, at *3. It continued, “[the complaint] alleges the date, substance, and persons responsible for numerous statements and omissions in FINRA and Depository Trust Corpo- ration (DTC) related filings . . . . Therefore, the Court finds the Complaint’s factual allegations satisfy the particularity pleading re- quirements of Rule 9(b).” Id. C. Shotgun Pleading Third, the defendants argued that the complaint was a quin- tessential shotgun pleading. Citing Wagner v. First Horizon Pharma- ceutical, 464 F.3d 1273, 1279 (11th Cir. 2006), they correctly asserted that shotgun pleadings include “those that incorporate every ante- cedent [allegation] by reference into each subsequent claim for re- lief.” Defs.’ Mot. to Dismiss 5. Here, the defendants explained, “each of the 14 counts repeats and incorporates paragraphs one through 122, which contain all factual allegations, irrespective of to which defendant, issuer, time period, or ‘scheme’ they relate.” USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 104 of 211

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Id. at 5 (emphasis in original); see Davis v. Coca-Cola Bottling Co. Con- sol., 516 F.3d 955, 980 (11th Cir. 2008) (holding a complaint to be a shotgun pleading because it contained “untold causes of action, all bunched together in one count contrary to the requirements of” Rule 10(b)). 13 The SEC disagreed. It cited the District Court’s recent deci- sion in Terry v. Interim Healthcare Gulf Coast, Inc., No. 8:18-CV-692- T-33JSS, 2018 WL 1992276, at *2 (M.D. Fla. Apr. 27, 2018), for the proposition that a “complaint that re-alleges just the factual allega- tions and does not re-allege each count, is different from a typical shotgun pleading.” Pl.’s Resp. to Mot. to Dismiss 9. The District Court sided with the SEC. It began by correctly identifying one of our finest cases detailing this Circuit’s law on shotgun pleadings: Weiland v. Palm Beach County Sheriff’s Office, 792

13 In Davis, we explained:

Rule 8(a)(2) . . . requires a complaint to contain ‘‘a short and plain statement of the claim showing that the pleader is enti- tled to relief.’’ Rule 10(b) instructs that ‘‘[E]ach claim founded upon a separate transaction or occurrence . . . shall be stated in a separate count . . . whenever a separation facilitates the clear presentation of the matters set forth.’’ Fed. R. Civ. P. 10(b) (emphasis added.). 516 F.3d at 980 n.57. We then explained the plaintiff’s complaint “failed to conform to these instructions . . . [because it] contained in one count a host of claims based on discrete acts . . . committed by [the defendants] against different plaintiffs at different times.” Id. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 105 of 211

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F.3d 1313, 1321–23 (11th Cir. 2015). But rather than exploring the full scope of that opinion, the Court quickly turned to its decision in Terry for a narrower inquiry. It concluded that the complaint was not a shotgun pleading because “each count does not incorporate the prior count.” Spartan Sec. Grp., 2019 WL 2372277, at *3. III. PRECEDENT REQUIRED THE COMPLAINT BE DISMISSED A. The District Court Got the Law Wrong The District Court was wrong. The SEC’s complaint failed to comply with Rules 8(a), 9(b), and 10(b) and was a quintessential shotgun pleading. Because our caselaw on shotgun pleadings incor- porates the underlying policy goals of each of the three aforemen- tioned rules, I discuss the complaints’ multitude of failures as one. By way of background, in Weiland, then Chief Judge Ed Carnes identified the most common types of shotgun complaints that have been condemned in the Eleventh Circuit: [1] the most common type . . . is a complaint contain- ing multiple counts where each count adopts the alle- gations of all preceding counts, causing each succes- sive count to carry all that came before and the last count to be a combination of the entire complaint. [2] The next most common type . . . is a complaint that does not commit the mortal sin of re-alleging all preceding counts but is guilty of the venial sin of be- ing replete with conclusory, vague, and immaterial facts not obviously connected to any particular cause of action. [3] The third type of shotgun pleading is USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 106 of 211

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one that commits the sin of not separating into a dif- ferent count each cause of action or claim for relief. [4] Fourth, and finally, there is the relatively rare sin of asserting multiple claims against multiple defend- ants without specifying which of the defendants are responsible for which acts or omissions, or which of the defendants the claim is brought against. The uni- fying characteristic of all types of shotgun pleadings is that they fail to one degree or another, and in one way or another, to give the defendants adequate notice of the claims against them and the grounds upon which each claim rests. 792 F.3d at 1321–23. Now, back to Terry. In that case, decided by the District Court just thirteen months before its ruling on the defendants’ mo- tion to dismiss in the instant case, the District Court demonstrated a perfect application of Weiland. That is, it asked whether the plain- tiff’s complaint fell into any of the four categories of shotgun plead- ing that our Court refuses to tolerate. 2018 WL 1992276, at *2. And it walked through the proper analysis for each. Id. at *2–3. But when the Court revisited its Terry opinion for application to the instant case, it looked only at its discussion of Weiland’s first shot- gun pleading category. At no point in its analysis did the District Court consider the second, third, or fourth type. How it accomplished this feat is remarkable. To make Weiland’s first category appear exhaustive, the District Court took a jaw-dropping liberty in crafting an explanatory parenthetical. Re- ferring to the SEC’s complaint, the District Court wrote: USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 107 of 211

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While each count incorporates by reference all the factual allegations, each count does not incorporate the prior count. . . . Terry v. Interim Healthcare Gulf Coast, Inc., No. 8:18–cv–692–T-33JSS, 2018 WL 1992276, at *2 (M.D. Fla. Apr. 27, 2018) (explaining a complaint that re-alleges just the factual allegations and does not re-allege each count is not a shotgun plead- ing). . . . Therefore, the Complaint is not a shotgun pleading. Spartan Sec. Grp., 2019 WL 2372277, at *3 (emphasis added). Where did the District Court find support in Terry for this emphatic proposition? Its citation leads us to the following passage: A complaint that re-alleges just the factual allegations and does not re-allege each count, like the Complaint at issue, is different from a typical shotgun pleading and should be treated as such. Weiland, 792 F.3d at 1324 (holding that a complaint was not a shotgun pleading, in part because “[t]he allegations of each count are not rolled into every successive count on down the line”). Terry, 2018 WL 1992276, at *2 (emphasis added). The District Court’s parenthetical plainly misrepresented the law. Terry did not hold that “a complaint that re-alleges just the factual allegations and does not re-allege each count is not a shot- gun pleading.” 14 Nothing of the sort. If a litigant had crafted that

14 Moreover, if Terry had reached such a conclusion, it would have been in

flagrant violation of this Court’s binding precedent. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 108 of 211

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explanatory parenthetical, such litigant would be subject to sanc- tions under Rule 11 for misleading the court. See Fed. R. Civ. P. 11(b) (“By presenting to the court a pleading, written motion, or other paper . . . an attorney . . . certifies that to the best of the per- son’s knowledge . . . the claims, defenses, and other legal conten- tions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establish- ing new law[.]”). That is why the SEC—to its credit—accurately excerpted the passage in its response to the motion to dismiss. In Terry, the Court proceeded to consider the other ways a complaint may constitute a shotgun pleading. 2018 WL 1992276, at *3. Why the Court changed course in the instant case is puzzling. Had the District Court evaluated the other three types of shotgun pleadings, it would have no sensible explanation for why the SEC’s complaint did not fit all three. * * * The SEC’s complaint surely fit Weiland’s second type of shotgun pleading. It failed to include facts connected to particular causes of action, and it effectively and inappropriately forced the defendants to “sift through the factual allegations to determine which [we]re relevant to those claims against them.” Gregory v. City of Tarpon Springs, No. 8:16-CV-237-T-33AEP, 2016 WL 5816026, at *4 (M.D. Fla. Oct. 5, 2016) (Covington, J.). Our Court analyzed this type of shotgun pleading in Ander- son v. District Board of Trustees of Central Florida Community College, USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 109 of 211

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77 F.3d 364, 366–67 (11th Cir. 1996). There, we held that the plain- tiff’s complaint was “a perfect example of [a] ‘shotgun’ pleading” because it was “virtually impossible to know which allegations of fact [were] intended to support which claim(s) for relief.” Id. at 366. To avoid inappropriately saddling the defendants with the burden of sifting through the entire fact section to locate the pred- icate facts for its 304-plus causes of action, the District Court should have required the SEC to re-plead the claims in separate counts and to incorporate into each count only those factual allegations perti- nent to that count. 15 The SEC’s complaint was also the third type of shotgun complaint. Each count contained a multitude of defendants, re- ferred to a multitude of transactions, and lacked any and all clarity. Failing to split these causes of action into separate counts consti- tuted an obvious violation of Rule 10(b). The complaint was the fourth type of shotgun complaint as well. It “assert[ed] multiple claims against multiple defendants

15 In McNeil v. Alternative Home Financing, Inc., the District Court did exactly

this. No. 2:04-CV-356-FTM33DNF, 2006 WL 1151592, (M.D. Fla. May 1, 2006) (Covington, J.). It explained, “[i]t is not sufficient to incorporate all of the fac- tual allegations for each count and [d]efendants should not be made to sift through the allegations and attempt to decipher which facts [we]re supportive of a given claim.” Id. at *1. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 110 of 211

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without specifying which of the defendants are responsible for which acts or omissions.” 16 Weiland, 792 F.3d at 1323.

16 By the time it denied the defendants’ motion to dismiss the SEC’s complaint

( June 5, 2019), the District Court was well aware of this Court’s concern about shotgun pleadings and had been assiduously applying our precedent that called for district judges faced with a shotgun complaint to order the plaintiff to file a repleader in the form of a Rule 12(e) more definite statement. The Court was also well aware that for the most part, shotgun complaints stem from a violation of Rules 8(a)(2) or 10(b), or both. As former Chief Judge Carnes noted in Weiland, complaints that violate either Rule 8(a)(2) or Rule 10(b), or both, are invariably shotgun pleadings. 792. F.3d at 1320. The purpose of these rules is self-evident, to require the pleader to present his claims discretely and succinctly, so that, his adversary can discern what he is claiming and frame a re- sponsive pleading, the court can determine which facts sup- port which claims and whether the plaintiff has stated any claims upon which relief can be granted, and, at trial, the court can determine that evidence which is relevant and that which is not. ‘‘Shotgun’’ pleadings, calculated to confuse the ‘‘en- emy,’’ and the court, so that theories for relief not provided by law and which can prejudice an opponent’s case, especially be- fore the jury, can be masked, are flatly forbidden by . . . these rules. Id. (quoting T.D.S., 760 F.2d at 1544 n.14 (Tjoflat, J., dissenting)). Chief Judge Pryor repeated Judge Carnes’s point in Barmapov v. Amuial: “A shotgun pleading is a complaint that violates either Federal Rule of Civil Procedure 8(a)(2) or Rule 10(b), or both.” 986 F. 3d 1321, 1324 (11th Cir. 2021). In Mesa v. Kajaine Fund III, LLC, the District Court, drawing on our de- cision in Fikes v. City of Daphne, remarked on the importance of the two rules in drafting a complaint: USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 111 of 211

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The SEC’s complaint clearly failed to meet federal pleading standards. It was a shotgun complaint composed in violation of Rules 8(a)(2), 9(b), and 10(b). We explained in Byrne v. Nezhat what a district court must do under such circumstances: [I]f, in the face of a shotgun complaint, the defendant does not move the district court to require a more definite statement, the court, in the exercise of its in- herent power, must intervene sua sponte and order a repleader.[ 17] Implicit in such instruction is the notion

Pursuant to Rule 8(a), Fed. R. Civ. P., a pleading that states a claim must contain, among other things, “a short plain state- ment of the claim showing that the pleader is entitled to re- lief.” Additionally, Rule 10(b) provides that “[a] party must state its claims or defenses in numbered paragraphs, each lim- ited as far as practicable to a single set of circumstances.” Fed. R. Civ. P. 10(b). Taken together, these rules “require the pleader to present his claims discretely and succinctly.” Fikes, 79 F.3d at 1082 (citation omitted). No. 8:17-CV-450-T-33JSS, 2017 WL 770951 (M.D. Fla. Feb. 28, 2017) (Coving- ton, J.). 17 “Discharging this duty ensures that the issues get defined at the earliest

stages of litigation. The district court ‘should strike the complaint and instruct counsel to replead the case—if counsel could in good faith make the represen- tations required by Fed. R. Civ. P. 11(b).’” Byrne, 261 F.3d at 1133 n.113 (quot- ing Cramer v. Florida, 117 F.3d 1258, 1263 (11th Cir. 1997) (alterations adopted)); see also Ebrahimi v. City of Huntsville Bd. of Educ., 114 F.3d 162, 165 (11th Cir. 1997); Cesnik v. Edgewood Baptist Church, 88 F.3d 902, 905 (11th Cir. 1996); Anderson, 77 F.3d at 366–67; Pelletier v. Zweifel, 921 F.2d 1465, 1517–18 (11th Cir. 1991); Fullman v. Graddick, 739 F.2d 553, 557 (11th Cir. 1984). Such action is imperative as USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 112 of 211

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that if the plaintiff fails to comply with the court’s or- der—by filing a repleader with the same deficiency— the court should strike his pleading or, depending on the circumstances, dismiss his case and consider the imposition of monetary sanctions. District court intervention in this fashion accom- plishes several objectives. First, it conserves judicial and parajudicial resources and thereby benefits liti- gants standing in the queue waiting to be heard. Sec- ond, it curtails the need for satellite litigation under Rule 11, 28 U.S.C. § 1927, or the court’s inherent power. Third, it minimizes counsel’s and his client’s exposure to a criminal contempt citation. Fourth, it limits the potential for post-litigation tort actions for abuse of process or malicious prosecution. Fifth, early sua sponte intervention—coupled with the imposi-

a more definite statement, if properly drawn, will present each claim for relief in a separate count, as required by Rule 10(b), and with such clarity and precision that the defendant will be able to discern what the plaintiff is claiming and to frame a re- sponsive pleading. Moreover, with the shotgun pleading out of the way, the trial judge will be relieved of the cumbersome task of sifting through myriad claims, many of which may be foreclosed by various defenses. Experience teaches that, unless cases are pled clearly and precisely, issues are not joined, dis- covery is not controlled, the trial court’s docket becomes un- manageable, the litigants suffer, and society loses confidence in the court’s ability to administer justice. Anderson, 77 F.3d at 366–67 (internal citations and quotation marks omitted). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 113 of 211

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tion of punitive measures when the use of abusive lit- igation tactics is deliberate—operates as both a spe- cific and a general deterrent. And, finally, early sua sponte intervention will ensure public confidence in the court’s ability to administer civil justice. 261 F.3d 1075, 1133–34 (11th Cir. 2001). The SEC was familiar with Byrne. It cited that very decision in its request that the District Court grant it leave to amend its com- plaint if the Court found, as it should have, that the complaint failed to meet federal pleading standards. The District Court was familiar with the decision as well. It has stated multiple times in the past that “courts are under an independent obligation to order a re- pleader when faced with a shotgun pleading.” Gregory v. City of Tar- pon Springs, No. 8:16-CV-237-T-33AEP, 2016 WL 2961558, at *2 (M.D. Fla. May 23, 2016) (Covington, J.); Barr v. One Touch Direct, LLC, No. 8:15-CV-2391-T-33MAP, 2016 WL 1621696, at *5 (M.D. Fla. Apr. 22, 2016) (Covington, J.); Thomas v. Derryberry, No. 8:16- CV-3482-T-33AEP, 2017 WL 2267977, at *2 (M.D. Fla. May 24, 2017) (Covington, J.); see also U.S. ex rel. Westfall v. Axiom World- wide, Inc., No. 8:06-CV-571-T-33TBM, 2009 WL 764528, at *9 (M.D. Fla. Mar. 20, 2009) (Covington, J.) (“[I]f, in the face of a shot- gun complaint, the defendant does not move the district court to require a more definite statement, the court, in the exercise of its inherent power, must intervene sua sponte and order a repleader.” (internal quotation marks omitted)). And it has dismissed shotgun complaints when it determined that repleader could not render the complaint amenable to a responsive pleading. See Roman v. Grinnell, USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 114 of 211

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No. 8:16-CV-3449-T-33AEP, 2017 WL 53978, at *2 (M.D. Fla. Jan. 3, 2017) (Covington, J.) (“[T]he Complaint should be dismissed be- cause it is unclear what claims Roman is bringing against Tyco. See Byrne v. Nezhat, 261 F.3d 1075, 1129–30 (11th Cir. 2001) (noting that a complaint that fails to identify claims with sufficient clarity con- stitutes a ‘shotgun pleading,’ which must be dismissed).”). B. Errors Beget Errors Beyond misapplying the law, the District Court’s denial of the defendants’ motion to dismiss tarnished the proceedings in at least two ways. First, it created an appearance of partiality. Second, it deprived the defendants of their due process right to defend the action at hand. See Simon v. Craft, 182 U.S. 427, 436, 21 S. Ct. 836, 839 (1901) (“The essential elements of due process of law are notice and opportunity to defend.”). I consider these two points in order. The District Court went out of its way to create a plausible claim for the SEC. In Barmapov v. Amuial, I wrote separately to ex- plain the intolerable risk to the system this creates: District courts are flatly forbidden from scouring shotgun complaints to craft a potentially viable claim for a plaintiff. By digging through a complaint in search of a valid claim, the courts “would give the ap- pearance of lawyering for one side of the contro- versy.” Jackson v. Bank of Am., N.A., 898 F.3d 1348, 1355 n.6 (11th Cir. 2018). This, in turn, would cast doubt on the impartiality of the judiciary. Id. Such a result is plainly inconsistent with the oath to which each judge has sworn. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 115 of 211

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986 F.3d at 1328 (Tjoflat, J., concurring). The SEC’s complaint did not identify the “factual content” that would permit a court to “draw the reasonable inference that the defendant[s were] liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949. As a consequence, the defendants had to rummage through the 122 paragraphs in an effort to hope- fully tie the relevant facts to each of the SEC’s 304 alleged causes of action. 18 But it was the SEC’s burden to notify the defendants of the predicate facts supporting each of its causes of action. See Est. of Bass v. Regions Bank, Inc., 947 F.3d 1352, 1358 (11th Cir. 2020) (“[A shot- gun] pleading is never plain because it is impossible to comprehend which specific factual allegations the plaintiff intends to support which of his causes of action, or how they do so.”); Keith v. DeKalb Cnty., 749 F.3d 1034, 1045 n.39 (11th Cir. 2014) (“By the time a reader of the pleading gets to the final count, it is exceedingly diffi- cult, if not impossible, to know which allegations pertain to that count . . . .”). It clearly was not the District Court’s role to find those facts. By assuming that role, the Court invited more ques- tions than answers. That brings me to the second point. The causes of action of Counts III through XIII alleged parallel violations of Section

18 Suppose the defendants’ lawyers erred in identifying the factual content and

focused on facts different from what the SEC’s lawyers would be relying on in their closing argument to the jury. What then? USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 116 of 211

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17(a)(1) and (3) and Rule 10b-5(a), (b), and (c). Violations of Section 17(a)(1) and Rule 10b-5(a), as alleged in Counts III and V, respec- tively, occur when a defendant employs a “device, scheme, or arti- fice to defraud.” 15 U.S.C. § 77q(a)(1); 17 C.F.R. § 240.10b-5(a). The defendants were entitled, as a matter of fundamental due process, to notice of the circumstances constituting this fraud. The District Court’s rulings deprived them of such notice. The same is true regarding the parallel violations of Section 17(a)(3) and Rule 10b-5(c), as alleged in Counts IV and VII, respec- tively. Those violations occur when a defendant engages in “any act, practice, or course of business which operates or would oper- ate as a fraud or deceit upon any person.” 17 C.F.R. § 240.10b-5(c); 15 U.S.C. § 77q(a)(3) (providing that it is unlawful to “engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser” in the “offer or sale of any securities”). Again, the defendants were entitled, as a matter of fundamental due process, to notice of the circumstances constituting this fraud. Finally, a violation of Rule 10b-5(b), as alleged in Count VI, occurs when a defendant “make[s] any untrue statement of a ma- terial fact or . . . omit[s] to state a material fact necessary in order to make the statements made, in the light of the circumstances un- der which they were made, not misleading.” 17 C.F.R. § 240.10b- 5(b). As in the case of the previous counts, defendants were entitled as a matter of fundamental due process to notice of the circum- stance constituting that fraud and the factual content supporting USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 117 of 211

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the untrue statements made or omitted. But the District Court’s rulings deprived them of such notice. IV. PROCEEDINGS CONTINUE In this Part, I walk through the subsequent stages of litiga- tion, taking particular note of the pretrial conference and the craft- ing of the jury instructions. The defendants’ consistent objections to the complaint’s lack of specificity combined with the District Court’s “fill in the blank” approach to drafting the jury instructions shows that the defendants were continually deprived of the notice they needed to mount a defense. As recapped in Part I supra, the SEC presented its 260-plus fraud claims in Counts III through XIII. The following claims are pertinent here: (1) Defendants violated Section 17(a)(1) and (3) (Counts III and IV); (2) Defendants violated Rule 10b-5(a) through (c) (Counts V through VII); (3) Defendants aided and abetted the Fraudsters’ violation of Section 17(a)(1), (2), and (3) (Counts VIII through X); (4) Defendants aided and abetted the Fraudsters’ violation of Rule 10b-5(a), (b), and (c) (Counts XI through XIII). * * * Once the District Court denied the motion to dismiss, allow- ing these claims to proceed, the SEC’s strategy was set. The SEC USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 118 of 211

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would prosecute these claims without identifying—much less stat- ing with particularity—the circumstances constituting the alleged fraud as Rule 9(b) required. 19 The reality is that the SEC’s case was not built on violations of Section 17(a)(1) or (3) or Rule 10b-5(a) or (c). 20 Rather, it was built exclusively on the “untrue statements” provisions of each law: Section 17(a)(2) and Rule 10b-5(b). Whittling down the complaint to these claims and stating them in separate counts would have done wonders to isolate the relevant facts, force the SEC to plead those facts with particularity, and provide fair notice to the defend- ants. Perhaps the SEC’s inclusion of the other claims in its com- plaint helped obfuscate the fact that the only plausible claims in the complaint were plagued with systemic ambiguity? A. Proposed Jury Instructions & Charge Conference On January 13, 2021, the parties filed a Joint Pretrial State- ment with eleven exhibits attached. Among the exhibits were the parties’ Joint Proposed Jury Instructions, which included the SEC’s

19 To state the circumstances of the fraud that the fraud counts alleged, the SEC would have to amend its complaint pursuant to Rule 15(a)(2) of the Fed- eral Rules of Civil Procedure via the defendants written consent or with leave of the District Court. 20 The alleged violations of Section 17(a)(1) and Rule 10b-5(a), based on a “de-

vice, scheme, or artifice to defraud,” were window dressing. So too were the violations of Section 17(a)(3) and Rule 10b-5(c), which are based on a “practice, or course of business which operates or would operate as a fraud or deceit upon any person.” In reality, the SEC only alleged violations in the form of misstatements or material omissions. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 119 of 211

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proposed instructions and, where relevant, the defendants’ objec- tions and alternate proposals. Both sides used the Eleventh Circuit Pattern Jury Instructions for Civil Cases in presenting their pro- posed instructions. Eleventh Circuit Pattern Instruction 6.2, designed for Rule 10b-5(b), formed the basis for the instruction on Count VI. That pattern instruction reads, in part: [If the SEC brings the case, add the following: The SEC does not need to identify any particular purchase or sale of securities by a specific person, including [name of defendant]. Rather, it’s enough if the SEC proves that the misrepresentation or omission in- volved or touched any purchase or sale of a security in any way.] The SEC claims that [name of defendant] made the following misrepresentations or omissions: [Describe the specific statements or omissions claimed to have been fraudulently made.]. Pattern Civ. Jury Instr. 11th Cir. 6.2 at 5 (2025) (emphasis added). The final sentence, in conspicuously labeled brackets, called for the SEC to describe the “specific statements or omissions” it alleged were fraudulent. But the SEC was not keen to acquiesce. Indeed, it reproduced the above-excerpted paragraph almost in its entirety, with the final sentence omitted. The SEC’s proposal read: The SEC does not need to identify any particular pur- chase or sale of securities by a specific person, includ- ing Spartan, Island, Dilley, or Eldred. Rather, it’s enough if the SEC proves that the misrepresentation USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 120 of 211

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or omission involved or touched any purchase or sale of a security in any way. Joint Proposed Jury Instrs. at 69. The defendants objected to the omission. They also objected to combining in one instruction the violations of Rule 10b-5(a), (b), and (c) alleged in Counts V, VI, and VII. The same defect arose with Count IX, where the SEC alleged that the defendants aided and abetted the Fraudsters’ material mis- statements or omissions. There, Eleventh Circuit Pattern Instruc- tion 6.9, designed for Section 17(a)(2), was on point. See Pattern Civ. Jury Instr. 11th Cir. 6.9 (2025). Like their proposed Count VI in- struction, the SEC’s Count IX instruction omitted the crucial brack- eted portion of the pattern instructions: “[Describe the alleged mis- representations or omissions claimed to have been fraudulently made.]” Compare Id. at 1–3 with Joint Proposed Jury Instrs. at 62. The defendants objected again. On July 7, 2021, the parties presented the District Court with revised Joint Proposed Jury Instructions. The new instructions were, in all relevant respects, the same as the original version. The defendants once again objected to the SEC’s refusal to describe the fraudulent statements supporting their fraud counts. And once again they objected to the composite instruction for Counts V, VI, and VII—stating that the SEC “must prove its case against each de- fendant, and for each count it must prove each element.” The Final Pretrial Conference occurred on Friday, July 9, 2021, and there was no discussion of the jury instructions. The trial USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 121 of 211

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began on Monday, July 12. On Thursday, July 22, the Court in- formed the parties that it would hold a “charge conference” the next day at 2:00 p.m., and it explained that it had “some questions” about the proposed jury instructions. The conference was held on July 23 as scheduled, although the Court stated that it was not ac- tually the charge conference but rather “a preliminary meeting.” The Court provided counsel with a draft of its tentative jury in- structions, to which the defense counsel lodged objections. Defense counsel explained that the instructions on the fraud counts lacked specificity and that their failure to “describe the al- leged scheme or device” was “a major concern.” 21 They highlighted analogous securities fraud proceedings, arguing that courts ubiqui- tously require the plaintiff to provide “an itemized list,” explaining “this is the scheme, these are the allegations.”

21 Defense counsel was referring to Eleventh Circuit Civil Pattern Jury Instruc-

tion 6.1 –– Device, Scheme, or Artifice to Defraud (designed for Rule 10b-5(a) claims). The instruction applied to the Count V causes of action. It required the filling out of brackets as follows: “[Name of plaintiff/The SEC] claims that the scheme or device [name of defendant] employed was [describe the alleged scheme or device].” Pattern Civ. Jury Instr. 11th Cir. 6.1 at 3 (2025). In addi- tion, Counsel was referring to Eleventh Circuit Civil Pattern Jury Instruction 6.8 — Fraud In the Offer and Sale of a Security Through A Device, Scheme, or Artifice to Defraud –– SEC Version (designed for Section 17(a)(1) claims). The instruction applied to the Count III causes of action. It required the filling out of brackets as follows: “The SEC has alleged that the scheme or device [name of defendant] employed [describe the alleged scheme or device].” Pat- tern Civ. Jury Instr. 11th Cir. 6.8 at 3 (2025). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 122 of 211

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As the meeting wore on, defense counsel explained that it was “really impossible” for his clients to defend against the fraud counts. After an extended discussion on the issue, counsel summa- rized his position: When the SEC is asserting that the defendants aided and abetted the following misrepresentations of fact or misrepresentations of fact by Mirman, Rose, Daniels, et cetera. If they never tell us what those are, then there’s no possible way to defend against them. I mean, this is just sort of a basic issue of fairness. (emphasis added) 22 Purporting to understand these concerns, the District Court instructed the SEC to, “over the weekend . . . take some time to come up with these statements that [it thought] would be appro- priate or . . . a short analysis . . . of the specific statements or omis- sions that have been made.” 23 On Tuesday, July 27, the Court checked in with the parties

22 Defense counsel was referring to the pattern instructions for the causes of

action alleged in Counts IX and XII alleging the Fraudsters’ violations of Section 17(a)(2) Rule 10b-5(b), respectively. 23 The Court was referring to Eleventh Circuit Civil Pattern Jury Instruction

6.9 –– Misrepresentation or Omission in the Offer or Sale of a Security –– SEC Version (designed for Section 17(a)(2) claims). The instruction applied to the Count IX aiding and abetting causes of action based on the Fraudsters’ misrep- resentations and omissions. It required the filling out of the following brackets: “[Describe the alleged misrepresentations or omissions claimed to have been fraudulently made.].” Pattern Civ. Jury Instr. 11th Cir. 6.9 at 3 (2025); see also Pattern Civ. Jury Instr. 11th Cir. 6.2 at 5 (2025). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 123 of 211

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to see what remained pending. The following exchange took place: DEFENSE COUNSEL: The only thing that’s out- standing at this point that I’m aware of is the list of misrepresentations or alleged schemes to defraud. We had asked for that on Friday. I have not received that from the SEC.

THE COURT: You did. You did. Right. I had forgot- ten about that. So what’s going on with that?

SEC COUNSEL: Your Honor, we actually have -- we’ve been working on revisions to the instructions. So for the -- the ones that we do have redlines that we were taking into account things that we discussed the other day, should I file them and send them via e-mail tonight? ...

THE COURT: -- I would send it to chamber’s e-mail. On Wednesday, July 28, the Court convened the charge con- ference at 4:56 p.m. At this point, the defendants had still not been presented with the fraudulent statements they had long requested. The Court explained that it would get them soon: I mean, we have these jury instructions to go through . . . [but] I have to be at another part of downtown at 5:30, but I think that I at least have some time to get started on this, about 10 to 15 minutes. So we can make a dent in this, but it’s not going to be finished. All right? So we’ll have to come up with an alternate USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 124 of 211

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time. ...

THE COURT: . . . So what I’ve got, it’s basically the Eleventh Circuit Pattern Instruction 6.2 altered to combine Rule 10b-5(a) through (c) with some other changes as well. I mean, I pretty much think I can live with this. Let’s see. . . . If you have anything for me to consider, let me know. ...

THE COURT: . . . All right. So we will copy these tonight so that you have -- or early in the morning so that, when you come in at 9:00, you will have [the jury instructions]. . . . I give a package to each juror so they read through as I do. I think it’s going to take me at least an hour to read this. B. Final Jury Instructions After receiving the parties’ Joint Proposed Jury Instructions, just three days before the trial was to begin, the Court realized they were unacceptable. The SEC could not present a plausible case to the jury if the bracketed portions of the pattern instructions were omitted or left blank. Of course, this problem was not new. It arose when the SEC, in obvious disregard of Rule 9(b), failed to state with particularity the fraud forming the basis of the case in its com- plaint. But the Court had allowed the SEC’s case to go forward—at USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 125 of 211

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an enormous cost to the parties, the Middle District of Florida docket, and the litigants standing in line waiting to be heard. At this point, the Court had two options. It could unwind the litigation, revisit its ruling on the motion to dismiss, and order repleader. Or it could fill in the blanks. The Court chose the second option, scouring the complaint’s 122 paragraphs to craft jury in- structions that would identify the fraudulent conduct needed for Counts III through XIII. As it turned out, the Court was able to describe the fraudulent conduct alleged in only four Counts: III, V, IX, and XII. Counts III and V alleged that the defendants violated Section 17(a)(1) and Rule 10b-5(a) by employing a “device, scheme, or arti- fice to defraud” in relation to the sale of the Fraudsters’ shell-com- pany securities (the “Defendants’ Scheme”). The Court drafted the following description for the jury on those counts: The SEC has alleged that Spartan, Island, Dilley, or El- dred violated Section 17(a)[1] of the Securities Act when Dilley schemed with Mirman and Rose, and El- dred schemed with Daniels, Fan and Harrison, to de- fraud the public that the Mirman/Rose Companies and Daniels/Harrison/Fan Companies were operat- ing businesses with independent management and shareholders, rather than undisclosed “blank check” or “shell” companies for sale. The SEC contends that in furtherance of the Mirman/Rose scheme, Spartan and Dilley signed and submitted false Form 211 appli- cations to FINRA; Spartan, Island and Dilley contrib- uted to false DTC applications; Dilley found potential USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 126 of 211

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shell buyers; Dilley and Island signed an escrow agree- ment and false attestation letters for shell buyers; and Dilley and Island effectuated the bulk transfer of the entire deceptive public float of Mirman/Rose Com- panies to shell buyers. The SEC alleges that Spartan and Eldred similarly schemed with Daniels, Harrison, and Fan by filing false Forms 211 with FINRA, all in support of the manufacture of undisclosed blank check companies – one of which Eldred expressly proposed to acquire himself while its Form 211 was pending. The SEC claims that Spartan Securities and Island Stock Transfer provided various services which were critical to the Mirman/Rose and Daniels/Harri- son/Fan shell factories, including filing a Form 211 application with FINRA to demonstrate compliance with Rule 15c2-11. Finally, the SEC contends that Spartan, Dilley and Eldred Securities also had infor- mation that undermined any reasonable basis that the information required by Rule 15c2-11 was materially accurate and from a reliable source. Jury Instr. No. 16. Then, the District Court used this same language from the Defendants’ Scheme to describe the fraudulent conduct of Counts VIII 24 and XI, which alleged that the Fraudsters employed a “device,

24 Without attempting to describe the SEC’s specific allegations, the Court’s

instruction on Count VIII simply stated, “To determine whether Mirman, USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 127 of 211

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scheme, or artifice to defraud,” and that the defendants “provided substantial assistance” thereto. In doing so, the Court misinformed the jury regarding who orchestrated the scheme. The Court’s in- structions, contrary to the SEC’s complaint, implied that the de- fendants were the primary violators. Similarly, Counts X and XIII alleged that the Fraudsters vio- lated Section 17(a)(3) and Rule 10b-5(c) by engaging in an “act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,” and that the defendants were aiders and abettors. But in its instructions, the Court simply pointed the jury to the Defendants’ Scheme. 25 In doing so, the Court again misinformed the jury that the defendants were the pri- mary violators. The instructions on Count VI, IX, and XII were also flawed. Those counts alleged “untrue statements [or omissions] of mate- rial fact” in violation of Rule 10b-5(b) and Section 17(a)(2). Count

Rose, Daniels, Fan, or Harrison violated Section 17(a)(1), you should use the elements and definitions I gave you regarding Count III.” Jury Instr. No. 18. 25 The Court combined the instructions for Counts VIII, IX, and X in Jury In-

struction 18. It stated: “To determine whether Mirman, Rose, Daniels, Fan, or Harrison violated Section 17(a)(3), you should use the elements I gave you regarding Count IV.” Jury Instr. No. 18. The Court combined the instructions for Counts XI, XII and XIII in Instruction 20. It stated, “To determine whether Mirman, Rose, Daniels, Fan, or Harrison violated Section 10(b) and Rule 10b- 5, you should use the elements and definitions I gave you for Counts V, VI, and VII.” Jury Instr. No. 20. The Court’s only factual content in Instruction 20 relates Count XII and is a copy of its Count IX instruction on 17(a)(2). I will discuss these instructions in turn. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 128 of 211

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VI alleged that the defendants were the statement-makers at issue, while Counts IX and XII alleged that the Fraudsters were the state- ment-makers. Recall that at the July 23 “preliminary meeting,” the Court directed the SEC to “come up with . . . the specific statements or omissions that have been made.” The SEC drafted a description of alleged statements made only by the defendants, but not the Fraud- sters: The SEC contends that Spartan, Island, Dilley, and El- dred made misrepresentations and omissions to, among others, FINRA, DTC participants, and securi- ties purchasers. The SEC claims that Spartan, Dilley, and/or Eldred made misrepresentations and omis- sions in the filing of 15c2-11 applications and submis- sions, including, but not limited to: • Alvin Mirman and Sheldon Rose’s involvement and/or role in the issuers; • Mirman and Rose’s control of the issuers; • Whether the issuers were shells or blank check companies; • That the issuers had no consultants; • The true business purpose of the issuers; • Communications with CEOs/Presidents of the is- suers; • The relationships and affiliations among share- holders and Mirman and Rose; • The solicitations of the shareholders; USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 129 of 211

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• The issuers’ plans for potential mergers or acqui- sitions; • That the issuers’ shareholders have control of their shares; • That Spartan conducted due diligence on the issu- ers; • Spartan and Island’s relationship with Sheldon Rose and Alvin Mirman, Diane Harrison, Michael Daniels and Andy Fan; • Michael Daniels, Diane Harrison, and Andy Fan’s involvement in the issuers; • Circumstances surrounding the Form 211 submis- sions, including the identity of the person for whom the quotation is being submitted; • That there are no other issuers that the current of- ficers or directors of the issuers have requested a listing quotation on; • That there was no material information, including adverse information regarding the issuer that the firm is aware of or has in its possession. • Spartan, Island, and Dilley initiated and provided false information for applications filed with the DTC, including misrepresenting the shell status of issuers. • Island and Dilley made misrepresentations and omissions regarding the designation of the securi- ties as free trading. • Island and Dilley made misrepresentation [sic] and omissions when effectuating the bulk issuance and USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 130 of 211

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transfer of securities, including stock certificates without restrictive legends. Jury Instr. No. 19. 26 This description did not, in any sense, comply with Rule 9(b). None of its bullet points constituted a statement a defendant made in a document or to a person or entity on a date in connec- tion with the purchase or sale of securities. The bullet points surely alluded to statements being made. But they did nothing to identify such statements for the jury, nor did they provide sufficient context for the jury to go find them. The same was true of the “omissions.” Who omitted what, and when? What statements could have been cured without the omissions? Not to be deterred, the District Court inserted this description into the instruction for Count VI and sent it to the jury. What about Counts IX and XII, which alleged statements made by the Fraudsters? With no help from the SEC, the Court, on its own initiative, drafted the following instruction for those counts: [T]he SEC must prove that someone made a misrep- resentation of material fact or an omission of mate- rial fact. The SEC claims that Mirman, Rose, Daniels, Fan, or Harrison are responsible for the following misrepresenta- tions of fact or omissions. The SEC allege that Rose and

26 The record does not clearly reveal whether the Court or the SEC drafted

Instruction 19 on Count VI. However, following the Court’s directive, it ap- pears that it was most likely drafted by the SEC. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 131 of 211

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Mirman recruited persons to act as straw CEOs, to fraudulently obtain the effective registration of shell companies with the SEC, through the use of false and fraudulent statements and documents that were sub- mitted to the SEC for this purpose. The SEC contends that a further purpose of the [Rose and Mirman] scheme was to issue unrestricted stock for these com- panies that could be secretly controlled by them. This was allegedly done so that Rose and Mirman would be in a position to control all or nearly all of the pub- licly traded shares of the companies, so that when they later sold a shell company, part of the sale would include the undisclosed transfer of the unrestricted free trading shares to the purchaser. In this way, the purchaser of the shell company would be in a position to engage in fraudulent schemes, such as “pump and dump” stock swindles. The SEC further alleges that Daniels, Fan, and Harri- son manufactured undisclosed blank check compa- nies based on a deceptive public float of purportedly unrestricted shares. Harrison and her husband, Dan- iels, allegedly manufactured at least five public com- panies. The Form 211s, including the responses to FINRA’s deficiency letters, contained misrepresenta- tions with respect to the management, business pur- pose, and shareholders to give the false appearance of an operating company with a specific business plan (i.e. no plans to seek a merger or acquisition), inde- pendent management and an independent share- holder base. The SEC contends that Daniels and Har- USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 132 of 211

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rison sold their first company to Fan as part of his en- deavor to amass a roster of public companies for later reverse mergers with Chinese companies. Daniels and Fan then allegedly agreed to create three more public vehicles from scratch. Jury Instr. No. 18 (emphasis added). 27 Like the description in Jury Instruction 19, this description failed to specifically ascertain any actionable statements or omis- sions. Further, it did not identify how, if at all, the defendants “knowingly or recklessly provided substantial assistance” to the Fraudsters in the making of these statements. Setting the voluminous issues with the jury instructions aside, the extraordinary measures the District Court took in their crafting reveal that it was, in effect, prosecuting the SEC’s case. The Court could have aborted the proceedings on numerous occasions, all in acknowledging defendants’ rights to due process and fair treatment, but it chose to go forward instead.

27 This instruction is reproduced in Jury Instruction 20 on Count XIII, except

for this language: “[T]he SEC must prove that someone made a misrepresen- tation of material fact or an omission of material fact. The SEC claims that Mirman, Rose, Daniels, Fan, or Harrison are responsible for the following mis- representations of fact or omissions.” USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 133 of 211

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V. GROUNDS FOR REVERSAL In this Part, I explain why district court proceedings, like those in the instant case, that lack any meaningful notion of funda- mental fairness cannot be allowed to stand. I identify two inde- pendent grounds for reversal. A. Erroneous Denial of the Motion to Dismiss This Dissent has explained, at length, why the SEC’s com- plaint was abominable. It was a prototypical shotgun pleading that failed to even approach the level of requisite specificity to satisfy the Federal Rules of Civil Procedure. But we are, admittedly, well past the motion to dismiss stage. Here, I explain why I believe—at least in this extraordinary circumstance—that an erroneous ruling on a motion to dismiss may constitute grounds for setting aside a judgment after trial. To begin, it is important to understand why our review is taking place now, rather than when the motion to dismiss was de- nied. This Court is vested with limited jurisdiction, generally lim- ited to “jurisdiction of appeals from all final decisions of the district courts.” 28 U.S.C. § 1291. “A ‘final decision’ is typically one by which a district court disassociates itself from a case.’” Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100, 106, 130 S. Ct. 599, 604–05 (2009) (quoting Swint v. Chambers Cnty. Comm’n, 514 U.S. 35, 42, 115 S. Ct. 1203, 1208 (1995)) (alteration adopted) (internal quotation marks omitted). “From the very foundation of our judicial system,” Congress has expressed a policy to “save the expense and delays of repeated ap- peals in the same suit, and to have the whole case and every matter USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 134 of 211

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in controversy in it decided in a single appeal.” McLish v. Roff, 141 U.S. 661, 666–67, 12 S. Ct. 118, 120 (1891). There are two caveats that may permit an appeal before the district court reaches a final disposition. First, the Supreme Court has long held that there are “a small category of decisions that, alt- hough they do not end the litigation, must nonetheless be consid- ered ‘final.’” Swint, 514 U.S. at 42, 115 S. Ct. at 1208 (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S. Ct. 1221, 1225– 26 (1949)). But “[t]hat small category includes only decisions that are conclusive, that resolve important questions separate from the merits, and that are effectively unreviewable on appeal from the final judgment in the underlying action.”28 Id. Second, 28 U.S.C. § 1292 creates a narrow class of appealable interlocutory or- ders—orders that do not constitute final judgments but are none- theless appealable. This class includes, among other things, orders so certified by a district judge to include “a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal . . . may materially advance the ulti- mate termination of the litigation.” 28 U.S.C. § 1292(b). Here, the District Court’s denial of the defendants’ Rule 12(b)(6) motion to dismiss the SEC’s complaint was neither a final order that disposed of the litigation nor did it otherwise qualify for

28 Famously, when a district court denies a defendant’s claim of qualified im-

munity, it constitutes an appealable final decision “notwithstanding the ab- sence of a final judgment.” Mitchell v. Forsyth, 472 U.S. 511, 530, 105 S. Ct. 2806, 2817 (1985). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 135 of 211

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immediate review. The same is true of the District Court’s denial of the defendants’ Rule 56 motion for summary judgment and Rule 50(a) motion for judgment as a matter of law. In short, this is the first opportunity for our Court to review all pre- and post-trial de- cisions made by the lower court. When the District Court denied the motion to dismiss, the train departed from the tracks, and it would have been nearly im- possible to correct course. Is there some legal principle that says this Court cannot, due to the passage of time and advancement through discovery and trial, go back in time to review that critical decision? I argue there is not. The Supreme Court endorsed this common-sense notion in Dupree v. Younger, 598 U.S. 729, 143 S. Ct. 1382 (2023). There, Kevin Younger sued Maryland correctional officer Neil Dupree for alleg- edly using excessive force in violation of Younger’s Fourteenth Amendment due process rights. Id. at 734, 143 S. Ct. at 1387. Dupree moved for summary judgment, arguing that Younger “failed to exhaust his administrative remedies as required by the Prison Litigation Reform Act.” Id. The district court denied the mo- tion on the grounds that the state prison system had internally in- vestigated the incident, which satisfied Younger’s exhaustion obli- gation. Id. At trial, the jury found Dupree liable and awarded Younger $700,000. Id. Dupree did not re-assert the exhaustion argument in either a Rule 50(a) motion for judgment as a matter of law or a renewed motion under Rule 50(b). Id. But he did seek to have the Fourth USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 136 of 211

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Circuit review that issue on appeal. Id. at 733, 143 S. Ct. at 1388. The Fourth Circuit declined, relying on its own binding precedent that required all issues to be renewed in a post-trial motion in order for them to be preserved for appellate review. Id. The Supreme Court granted certiorari to resolve a circuit split. Id. The Court explained that, because interlocutory orders “are typically not immediately appealable,” the “general rule is that a party is entitled to a single appeal, to be deferred until final judg- ment has been entered, in which claims of district court error at any stage of the litigation may be ventilated.” Id. at 734, 143 S. Ct. at 1388 (internal quotation marks omitted) (quoting Quackenbush, 517 U.S. at 712, 116 S. Ct. at 1718). It acknowledged that some rul- ings are “unreviewable after final judgment because they are over- come by later developments in the litigation.” Id. at 734, S. Ct. at 1389. For example, “[f ]act-dependent rulings must be appraised in light of the complete trial record,” therefore “a party must raise a sufficiency-of-the-evidence claim in a post-trial motion to preserve it for review on appeal.” Id. The Court, though, refused to extend this renewal preservation requirement to purely legal issues: From the reviewing court’s perspective, there is no benefit to having a district court reexamine a purely legal issue after trial, because nothing at trial will have given the district court any reason to question its prior analysis. We therefore hold that a post-trial mo- tion under Rule 50 is not required to preserve for ap- pellate review a purely legal issue resolved at sum- mary judgment. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 137 of 211

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Id. at 736, 143 S. Ct. at 1389. Returning to the case at hand, the question of whether the SEC’s complaint satisfied federal pleading standards is plainly a question of law. That analysis would not morph throughout the proceedings or be “overcome by later developments,” and there would be no benefit for the defendants to re-raise the issue on sub- sequent motions below. See Luke Meier, The Reviewability of Denied Twombly Motions, 84 U. Cin. L. Rev. 1145, 1199 (2016) (“[The] Twombly analysis is a unique analysis that is not replicated at later stages of the trial court proceedings.”). Therefore, Dupree tells us that the defendants adequately preserved their right to appeal the District Court’s erroneous legal conclusions in ruling on the motion to dismiss. Logic dictates this same outcome; if the defendants could not appeal the denial of their motion to dismiss now, they would never have the oppor- tunity to do so. 29 This would give district courts carte blanche to flout binding precedent when denying motions to dismiss. The Majority Opinion points out that the defendants did not appeal the District Court’s denial of the motion to dismiss in its initial brief. Thus, they argue, the defendants abandoned the issue. But when briefs were submitted, the defendants could not have known they were allowed to appeal on motion-to-dismiss grounds.

29 And, of course, requiring defendants to inundate district courts with argu-

ments about the pleadings after a motion to dismiss is denied would make no practical sense. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 138 of 211

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Our Court (pre-Dupree) has refused to look at motions to dismiss after trial. In a 2021 decision, we declined to entertain the appel- lant’s argument that the appellees’ allegations lacked “reasonable particularity” because, we explained, “those concerns dissipate when, as here, the alleged [causes of action] have been litigated and adjudicated in a full-blown trial.” iControl Sys., USA, 21 F.4th at 1273 n.2. This iControl holding finds itself squarely at odds with Dupree’s instruction that “a party is entitled to a single appeal, to be deferred until final judgment has been entered, in which claims of district court error at any stage of the litigation may be ventilated.” Dupree, 598 U.S. at 734, 143 S. Ct. at 1388 (internal quotation marks omitted) (emphasis added) (quoting Quackenbush, 517 U.S. at 712, 116 S. Ct. at 1718). However, Dupree was not decided until the win- dow for briefing had closed in the instant case. Under such circum- stances, should we fault the litigants for not predicting this devel- opment and look the other way in the face of manifest injustice in an effort to rigidly adhere to “the principle of party presentation?” We should not. The party-presentation principle represents the general no- tion that the litigants “frame the issues for decision” and the court acts as the “neutral arbiter of matters the parties present.” Clark v. Sweeney, No. 25-52, 2025 WL 3260170, at *1 (U.S. Nov. 24, 2025) (internal quotation marks omitted) (quoting United States v. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 139 of 211

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Sineneng-Smith, 590 U.S. 371, 375, 140 S. Ct. 1575, 1579 (2020)). 30 Is- sues that are not briefed before the court, then, are generally con- sidered to be forfeited. 31 But this judge-made principle is “supple, not ironclad.” Sineneng-Smith, 590 U.S. at 376. 140 S. Ct. at 1579. “The degree to which we adhere to the prudential practice of for- feiture and the conditions under which we will excuse it are up to us as an appellate court.” Campbell, 26 F.4th at 873. In our en banc Campbell opinion, we explained the five situ- ations where “we may exercise our discretion to consider a for- feited issue:” (1) the issue involves a pure question of law and re- fusal to consider it would result in a miscarriage of

30 The majority overstates the holdings of Clark and Sineneng-Smith. Neither

opinion stands for the idea that a court of appeals can never decide an appeal based on a legal theory not raised by either party. Rather, in Clark, the Su- preme Court held that “[t]he Fourth Circuit’s ‘radical transformation’ of Sweeney’s simple ineffective-assistance claim ‘departed so drastically from the principle of party presentation as to constitute an abuse of discretion.’” 2025 WL 3260170, at *2 (quoting Sineneng-Smith, 590 U.S. at 375, 140 S. Ct. at 1578). In other words, it is sometimes within the court of appeals’ discretion to decide an issue on grounds not raised by the parties. Furthermore, in both Clark and Sineneng-Smith, the issue raised by the court of appeals was not litigated at the district court—meaning that the record was not properly developed. Here, all pertinent issues were fully litigated at the District Court. 31 Forfeited issues stand in contrast to issues that are “waived.” “Although ju-

rists often use the words interchangeably, forfeiture is the failure to make the timely assertion of a right; waiver is the intentional relinquishment or aban- donment of a known right.” Campbell, 26 F.4th at 872 (quoting Kontrick v. Ryan, 540 U.S. 443, 458 n.13, 124 S. Ct. 906, 917 n.13 (2004)). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 140 of 211

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justice; (2) the party lacked an opportunity to raise the issue at the district court level; (3) the interest of substantial justice is at stake; (4) the proper resolution is beyond any doubt; or (5) the issue presents signifi- cant questions of general impact or of great public concern. Id. at 873 (citing Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1332 (11th Cir. 2004)). We emphasized that the party-presentation rule is “pruden- tial, not jurisdictional” and that “we ought to be able to excuse a violation of the rule ‘when prudence dictates.’” Id. at 873–74 (quot- ing Davis v. United States, 512 U.S. 452, 464, 114 S. Ct. 2350, 2358 (1994) (Scalia, J., concurring)). Though “a party loses the right to demand consideration of an abandoned issue,” this Court retains the discretion to consider it sua sponte if we find the “issue is ex- traordinary enough . . . [to] excuse the forfeiture.” Id. at 874–75. In 1941, Justice Black spoke broadly of the imperative to not let pru- dential rules stand in the way of justice: Rules of practice and procedure are devised to pro- mote the ends of justice, not to defeat them. A rigid and undeviating judicially declared practice under which courts of review would invariably and under all circumstances decline to consider all questions which had not previously been specifically urged would be out of harmony with this policy. Orderly rules of procedure do not require sacrifice of the rules of fundamental justice. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 141 of 211

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Hormel v. Helvering, 312 U.S. 552, 557, 61 S. Ct. 719, 721 (1941); see also Unites States v. Atkinson, 297 U.S. 157, 160, 56 S. Ct. 391, 392 (1936) (“In exceptional circumstances . . . appellate courts, in the public interest, may, of their own motion, notice errors to which no exception has been taken, if the errors are obvious, or if they otherwise seriously affect the fairness, integrity, or public reputa- tion of judicial proceedings.”). Here, the defendants had no notice of their ability to appeal the District Court’s denial of the motion to dismiss after trial. But the lower court’s error was obvious and precipitated a manifest miscarriage of justice. Refusing to consider the issue, as the Major- ity does, to cling to a prudential doctrine makes little sense. I would reverse the judgment on the grounds that the SEC’s complaint was inadequate, tainted the subsequent proceedings, and debilitated the defendant’s ability to mount a proper defense. As this Court has explained, shotgun complaints “undermine[] the public’s respect for the courts,” drain the “time and resources the court[s have] available to reach and dispose of the cases and liti- gants waiting to be heard,” and “wreak havoc on appellate court dockets.” Davis, 516 F.3d at 982. This is more important, not less, when a shotgun complaint is allowed to form the basis of a litiga- tion that proceeds to trial. B. Judicial Impartiality The SEC filed a complaint no district judge would readily accept. The SEC’s lawyers surely anticipated it would be rough sledding. They were aware of this Court’s decision in Byrne v. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 142 of 211

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Nezhat, and relied on it in requesting the District Court grant them leave to amend the complaint if the Court concluded it was legally insufficient. Here is what Byrne told the lawyers: Shotgun pleadings, if tolerated, harm the court by impeding its ability to administer justice. The time a court spends managing litigation framed by shotgun pleadings should be devoted to other cases waiting to be heard. ‘‘[W]ast[ing] scarce judicial and parajudicial resources . . . impedes the due administration of jus- tice’’ and, in a very real sense, amounts to obstruction of justice. United States v. Silverman, 745 F.2d 1386, 1395 (11th Cir. 1984). See also United States v. Essex, 407 F.2d 214, 218 (6th Cir. 1969). Although obstruction of justice is typically discussed in the context of criminal contempt, the concept informs the rules of law— both substantive and procedural—that have been de- vised to protect the courts and litigants (and therefore the public) from abusive litigation tactics, like shot- gun pleadings. If use of an abusive tactic is deliberate and actually impedes the orderly litigation of the case, to-wit: obstructs justice, the perpetrator could be cited for criminal contempt. 261 F.3d at 1031–32 (alterations in original). The SEC’s lawyers risked being sanctioned under Rule 11(b) for filing a complaint woefully insufficient under the Federal Rules of Civil Procedure. The risk failed to materialize, though, because the District Court looked the other way. Why? The record contains USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 143 of 211

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no reason. What it reveals is a Court that attempted to make a silk purse out of a sow’s ear. The Court could not have sustained the complaint using Eleventh Circuit precedent. The Court’s solution, and perhaps its most surprising move, was to misrepresent its holding in Terry, as noted supra, to strip down Eleventh Circuit precedent on shotgun pleadings. By ignoring Rule 8(a)(2), Rule 9(b), Rule 10(b), Supreme Court precedent, and Eleventh Circuit precedent, the District Court called its impartiality into question. The structure of a trial by jury resembles a three-legged stool. One leg consists of a jury whose members adhere to an oath. Another consists or lawyers who adhere to a high ethical and pro- fessional standard as members of the bar and as officers of the court. And the third leg consists of an impartial judge. If one leg collapses, justice is denied. Section 455(a) of Title 28 of the United States Code focuses on the judicial leg of this stool. It states: “Any justice, judge, or mag- istrate judge of the United States shall disqualify himself in any pro- ceeding in which his impartiality might reasonably be questioned.” 28 U.S.C. § 455(a). Would a member of the organized bar engaged in civil litigation, a judge of a trial or appellate court handling civil litigation, or a citizen familiar with the administration of civil jus- tice in the Nation’s courts reasonably question the impartiality of the district judge who presided over this case? Given the judge’s ap- proval of a thoughtless complaint and ultimate repleading of the case for the jury, I argue the answer is yes. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 144 of 211

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In Liljeberg v. Health Services Acquisition Corp., the Supreme Court held that § 455 can be used as grounds to set aside a final judgment under Rule 60(b)(6) of the Federal Rules of Civil Proce- dure. 32 486 U.S. 847, 868, 108 S. Ct. 2194, 2206 (1988). It noted that “[a]lthough § 455 defines the circumstances that mandate disquali- fication of federal judges, it neither prescribes nor prohibits any particular remedy for a violation of that duty. Congress has wisely delegated to the judiciary the task of fashioning the remedies that will best serve the purpose of the legislation.” Id. at 862, 108 S. Ct. at 2204. The Supreme Court provided three factors to weigh when determining whether to grant relief: “the risk of injustice to the parties in the particular case, the risk that the denial of relief will produce injustice in other cases, and the risk of undermining the public’s confidence in the judicial process.” Id. at 864, 108 S. Ct. at 2205. Although Liljeberg was decided on a Rule 60(b) posture, this Court has previously contemplated whether § 455(a) could be used to reverse a final judgment on direct appeal, and we found that it could. See United States v. Kelly, 888 F.2d 732, 747 (11th Cir. 1989). We further explained that because Rule 60(b)(6) is typically limited to “extraordinary circumstances,” “the standard for reversal on ap- peal in cases involving § 455(a) violations may not be as stringent

32 Rule 60(b) of the Federal Rules of Civil Procedure allows a court to set aside

a final judgment upon the movant’s showing of certain enumerated grounds, such as fraud, mistake, or newly discovered evidence. Fed. R. Civ. P. 60(b). Subpart (6) of the rule includes a catch-all for “any other reason that justifies relief.” Fed. R. Civ. P. 60(b)(6). USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 145 of 211

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as the three-part test enunciated in Liljeberg.” Id. at 747 n.27. Here, the risk of injustice and the deleterious effect on public confidence in the courts could not be more profound. In my view, the most appropriate remedy in light of the unobscured record would be to vacate the judgment on direct appeal. VI. POST-APPEAL PROCEEDINGS The Majority has affirmed the District Court’s judgment, but it has likely not brought the litigation to a conclusion. Once our mandate issues, the defendants may pursue two courses of action. The first is to move the District Court pursuant to Rule 60(b)(6) for the vacatur of the Count VI judgment on the grounds of demon- strated impartiality and bias. The second course of action is to move the District Court for sanctions against the SEC.33 In Pelletier v. Zweifel, we explained that: [T]hree types of conduct warrant the imposition of Rule 11 sanctions: (1) when a party files a pleading that has no reasonable factual basis; (2) when the party files a pleading that is based on a legal theory

33 In Cooter & Gell v. Hartmarx Corp., the Supreme Court held that a district

court could allot Rule 11 sanctions after the plaintiff voluntarily dismissed the action. 496 U.S. 384, 395, 110 S. Ct. 2447, 2455 (1990). The Court explained that “a federal court may consider collateral issues after an action is no longer pending” and that Rule 11 “requires the determination of a collateral issue: whether the attorney has abused the judicial process . . . . Such a determination may be made after the principal suit has been terminated.” Id. at 395–96, 110 S. Ct. at 2455–56. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 146 of 211

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that has no reasonable chance of success and that can- not be advanced as a reasonable argument to change existing law; and (3) when the party files a pleading in bad faith for an improper purpose. 921 F.2d at 1514. Of interest here is the third type of conduct, which is sourced in Federal Rule of Civil Procedure 11(b)(1). When the SEC filed its complaint, it certified that the complaint was “not being presented for any improper purpose, such as to harass, cause unnecessary de- lay, or needlessly increase the cost of litigation.” Fed. R. Civ. P. 11(b)(1). This rule effectively codifies the common law tort of abuse of process, which occurs when “[o]ne . . . uses a legal process, whether criminal or civil, against another primarily to accomplish a purpose for which it is not designed.” Restatement (Second) of Torts § 682 (A.L.I. 1977). “The gravamen of the misconduct” the tort concerns itself with “is not the wrongful procurement of legal process or the wrongful initiation of criminal or civil proceedings” but rather “the misuse of process, no matter how properly ob- tained.” Id. § 682 cmt. a. The record in this case contains prima facie evidence that the SEC’s lawyers brought the instant lawsuit be- cause the SEC wanted to harass the defendants and put them out of business. The SEC knew that its 300-plus causes of action were both unmanageable and unsupported by the facts. Evidently, the jury, too, was skeptical, finding the defendants not liable on thirteen of the fourteen counts. Further evidence that the SEC’s goal was to harass the defendants can be found in its complaint. There, the SEC USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 147 of 211

22-13129 TJOFLAT, J., Dissenting 67

sought as its principal remedy a “[p]ermanent [i]njunction restrain- ing and enjoining Defendants, their officers, agents, servants, em- ployees, attorneys, and all persons in active concert or participation with them, and each of them, from violating the federal securities laws alleged in this [c]omplaint.” 34 In other words, the SEC sought an injunction ordering the defendants (and the others) to obey the law. An “obey-the-law” injunction is noxious yet refreshingly self-descriptive—it is an injunction that orders a defendant to obey the law, rather than to abide by or refrain from a precise and ascer- tainable mode of conduct. They have long been disallowed in the Eleventh Circuit. In fact, over twenty-five years ago, we wrote: “This Circuit has held repeatedly that ‘obey the law’ injunctions are unenforceable.” Fla. Ass’n of Rehab. Facilities, Inc. v. State of Fla. Dep’t of Health & Rehab. Servs., 225 F.3d 1208, 1222 (11th Cir. 2000). The SEC knew this when it requested relief because we have, on several occasions, repudiated injunctions granted to the SEC specifically. In SEC v. Goble, we vacated the SEC’s injunction and chided the SEC for its “[g]laringly absent” discussion of why the injunction com- plied with federal law. 682 F.3d 934, 950–951 (11th Cir. 2012). And

34 Enjoining the defendants’ “officers, agents, servants, employees, attorneys,

and all persons in active concert or participation with them” would be to en- join non-parties. As non-parties they would not be subject to the District Court’s civil contempt power. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 148 of 211

22-13129 TJOFLAT, J., Dissenting 68

in SEC v. Smyth, we explained that the SEC’s injunction was unen- forceable because it was a “quintessential ‘obey-the-law’ injunc- tion.”420 F.3d 1225, 1233 n.14 (11th Cir. 2005). Obey-the-law injunctions present numerous issues, includ- ing vagueness, due process concerns, and a lack of enforceability. Moreover, because injunctions are enforced through civil and criminal contempt proceedings, obey-the-law injunctions run the risk of circumventing a defendant’s Sixth and Seventh Amendment rights to a trial by jury. To illustrate, imagine that the District Court granted the SEC’s requested relief, and that the SEC subsequently found that Dilley “violat[ed] the federal securities laws.” On the SEC’s initia- tive, the Court could order Dilley to show cause that he did not violate the injunction. If he could not prove this to the satisfaction of the Court, Dilley would be found in civil contempt and delivered to the custody of the Attorney General. Ordinarily, a civil contem- nor has a key to the jail; he can get out when he performs the act enjoined. But here, Dilley was not enjoined to perform or not per- form a specific act. He was simply ordered not to violate the law; something he cannot undo. The Court has issued an injunction it is powerless to enforce via its civil contempt power because the contemnor, Dilley, would have no means of purging his contempt. In sum, the SEC filed a complaint replete with ambiguity in violation of the Federal Rules of Civil Procedure and binding prec- edent. It knowingly requested an illegal form of relief and con- ducted the litigation with no regard for the defendants’ due process USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 149 of 211

22-13129 TJOFLAT, J., Dissenting 69

rights. It presented fourteen convoluted counts to the jury, secured a verdict on Count VI, and successfully obtained sweeping reme- dies. In fewer words, the SEC abused the process. CONCLUSION For the foregoing reasons, I dissent. USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 150 of 211

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA

CASE NO. ____________________

SECURITIES AND EXCHANGE COMMISSION, ) ) Plaintiff, ) ) v. ) ) SPARTAN SECURITIES GROUP, LTD., ) ISLAND CAPITAL MANAGEMENT LLC, ) CARL E. DILLEY, ) MICAH J. ELDRED, and ) DAVID D. LOPEZ, ) ) Defendants. ) _______________________________________________ )

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF

Plaintiff Securities and Exchange Commission (“Plaintiff” or the “Commission”)

alleges:

I. INTRODUCTION

1. The Commission brings this action to enjoin Defendants Spartan Securities

Group, Ltd. (“Spartan Securities”), Island Capital Management LLC, d/b/a Island Stock

Transfer (“Island Stock Transfer”), Carl E. Dilley (“Dilley”), Micah J. Eldred (“Eldred”), and

David D. Lopez (“Lopez”) (collectively, “Defendants”) from violating the provisions of the

federal securities laws described herein.

2. Spartan Securities, a registered broker-dealer, and Island Stock Transfer, a

registered transfer agent, are commonly owned and tout their “one-stop shop” services provided USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 151 of 211

in tandem to issuers of microcap securities. At material times to this Complaint, Dilley, Eldred,

and Lopez were common owners of the parent of both Spartan Securities and Island Stock

Transfer, and principals of both Spartan Securities and Island Stock Transfer.

3. This action involves Defendants’ roles in one or two separate fraudulent

schemes from approximately December 2009 through August 2014 to manufacture at least 19

public companies for sale fundamentally premised on a deceptive public float of purportedly

“free-trading” securities: 14 by Alvin Mirman and Sheldon Rose (the “Mirman/Rose

Companies,” identified in paragraph 30 below) and five by Michael Daniels, Andy Fan, and

Diane Harrison (the “Daniels Companies,” identified in paragraph 102 below).

4. The fraudulent schemes depended on misrepresentations and omissions to,

among others, the Commission, the Financial Industry Regulatory Authority (“FINRA”), and

the Depository Trust Company (“DTC”) that the Mirman/Rose and Daniels Companies were

legitimate small businesses with independent management and shareholders. In reality, both

the management and shareholders were nothing more than nominees for control persons who

always intended merely to sell all the securities of the companies privately in bulk for their

own benefit. The essential value of these securities (each bulk sale realized proceeds of

hundreds of thousands of dollars) was their false designation as “free-trading” with the ability

to be sold immediately on the public market. If the truth had been known to the public, the

securities would have been restricted from such sales and would have had little value.

5. Dilley and Eldred knew or were reckless in not knowing from the onset that the

Mirman/Rose Companies and Daniels Companies, respectively, were pursuing their stated

plans under false pretenses and instead being packaged for sale as public vehicles, and that the

2 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 152 of 211

shareholders were mere nominees for the control persons. Nonetheless, Defendants took

critical steps to advance the frauds.

6. Dilley schemed with Mirman and Rose, and Eldred schemed with Daniels, Fan

and Harrison, to defraud the public that the Mirman/Rose Companies and Daniels Companies

were operating businesses with independent management and shareholders, rather than

undisclosed “blank check” companies (sometimes referred to as “shells” or “vehicles”) for

sale. In furtherance of the Mirman/Rose scheme, Dilley signed false Form 211 applications

submitted to FINRA, contributed to false DTC applications, found potential shell buyers,

signed an escrow agreement and false attestation letters for shell buyers, and effectuated the

bulk transfer of the entire deceptive public float of Mirman/Rose Companies to shell buyers.

Eldred similarly schemed with Daniels, Fan and Harrison by filing false Forms 211 with

FINRA, signing false securities deposit forms and executing trades in Spartan Securities’

proprietary account, all in support of the manufacture of undisclosed public vehicles – one of

which Eldred expressly proposed to acquire himself while its Form 211 was pending.

7. A necessary step in both fraudulent schemes was for the issuer’s stock to be

eligible for public quotation, which requires a broker-dealer to file a Form 211 application with

FINRA to demonstrate compliance with Rule 15c2-11 under the Securities Exchange Act of

1934 (“Exchange Act”). FINRA typically raises specific concerns or seeks further information

from the broker-dealer in one or more deficiency letters before clearing the application.

Meanwhile, transfer agents perform a number of roles for issuers pertaining to their securities

and shareholders, including recording changes of ownership, maintaining the issuer's security

3 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 153 of 211

holder records, canceling and issuing certificates, and resolving problems arising from lost,

destroyed or stolen certificates.

8. Spartan Securities and Island Stock Transfer acted in tandem to provide these

various services which were critical to the Mirman/Rose and Daniels/Fan/Harrison shell

factories. For example, Spartan Securities filed the Form 211 application with FINRA in order

for the securities of these 19 issuers to be publicly quoted. Spartan Securities, Dilley, and

Eldred made materially false statements and omissions to FINRA regarding the purpose,

management and shareholders of the Mirman/Rose Companies and Daniels Companies.

Spartan Securities and its principals also had information that undermined any reasonable basis

that the information required by Rule 15c2-11 was materially accurate and from a reliable

source. Spartan Securities then initiated unpriced quotations for all the Mirman/Rose

Companies and Daniels Companies (except PurpleReal) upon FINRA’s clearance of the Form

211.

9. Lopez was a Spartan Securities principal who, with Dilley and Eldred’s

knowledge, personally undertook responsibility for much of the Form 211 process on at least

four Mirman/Rose Companies. In addition, Lopez was Spartan Securities’ Chief Compliance

Officer and the principal responsible for effectuating its extensive written policies and

procedures applicable to Form 211 applications. Nonetheless, Lopez knowingly or recklessly

ignored those procedures and the other requirements inherent in Rule 15c2-11, including

failing to conduct any investigation or inquiry into red flags raised by FINRA in the deficiency

letters and other adverse information in Spartan Securities’ possession, or even to familiarize

himself with the issuers. As a result, Lopez was a substantial factor in Spartan Securities’

4 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 154 of 211

failure to have a reasonable basis for believing that required information about those four

Mirman/Rose Companies was accurate and from a reliable source.

10. After obtaining Form 211 clearance for the Mirman/Rose Companies, Spartan

Securities and Island Stock Transfer then initiated and provided false information for

applications filed with DTC through which the securities became eligible for electronic

clearance. Island Stock Transfer also effectuated both the bulk issuance and transfer of the

Mirman/Rose Company securities without restriction despite Dilley’s knowing (or recklessly

not knowing) and numerous red flags that the securities were in the hands of affiliates and

therefore restricted, while Spartan Securities effectuated the unlawful deposit and open-market

sales of some Daniels Company shares by signing false deposit requests and entering pre-

arranged trades through a proprietary account.

11. As a result of the conduct alleged in this Complaint:

(a) Defendant Spartan Securities violated Sections 5(a), 5(c), 17(a)(1) and

17(a)(3) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 77e(a), 77e(c),

77q(a)(1), 77q(a)(3), and Sections 10(b) and 15(c)(2) and Rules 10b-5 and 15c2-11 of the

Exchange Act, 15 U.S.C. §§ 78j(b), 78o(c)(2) and 17 C.F.R. §§ 240.10b-5, 240.15c2-11; and

aided and abetted violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77e(a), and

Section 10(b) and Rule 10b-5 of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R.

§ 240.10b-5;

(b) Defendant Island Stock Transfer violated Sections 5(a), 5(c), 17(a)(1)

and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), 77q(a)(1), 77q(a)(3), and

Section 10(b) and Rule 10b-5 of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R.

5 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 155 of 211

§ 240.10b-5; and aided and abetted violations of Section 17(a) of the Securities Act, 15 U.S.C.

§ 77e(a), and Section 10(b) and Rule 10b-5 of the Exchange Act, 15 U.S.C. § 78j(b) and

17 C.F.R. § 240.10b-5;

(c) Defendant Dilley violated Sections 5(a), 5(c), 17(a)(1) and 17(a)(3) of

the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), 77q(a)(1), 77q(a)(3), and Section 10(b) and

Rule 10b-5 of the Exchange Act, 15 U.S.C. § 78j(b), and 17 C.F.R. § 240.10b-5; and aided and

abetted violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77e(a), and Sections 10(b)

and 15(c)(2) and Rules 10b-5 and 15c2-11 of the Exchange Act, 15 U.S.C. §§ 78j(b), 78o(c)(2),

and 17 C.F.R. §§ 240.10b-5, 240.15c2-11;

(d) Defendant Eldred violated Sections 17(a)(1) and 17(a)(3) of the

Securities Act, 15 U.S.C. §§ 77q(a)(1), 77q(a)(3), and Section 10(b) and Rule 10b-5 of the

Exchange Act, 15 U.S.C. § 78j(b), and 17 C.F.R. § 240.10b-5; and aided and abetted violations

of Section 17(a) of the Securities Act, 15 U.S.C. § 77e(a), and Sections 10(b) and 15(c)(2) and

Rules 10b-5 and 15c2-11 of the Exchange Act, 15 U.S.C. §§ 78j(b), 78o(c)(2), and 17 C.F.R.

§§ 240.10b-5, 240.15c2-11;

(e) Defendant Lopez aided and abetted violations of Section 15(c)(2) and

Rule 15c2-11 of the Exchange Act, 15 U.S.C. § 78o(c)(2) and 17 C.F.R. § 240.15c2-11; and

(f) Unless enjoined, Defendants are reasonably likely to continue to violate

the federal securities laws.

12. The Commission therefore respectfully requests the Court enter an order:

(i) permanently enjoining Defendants from violating the federal securities laws; (ii) directing

Island Stock Transfer to pay disgorgement with prejudgment interest; (iii) directing Defendants

6 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 156 of 211

to pay civil money penalties; and (iv) imposing penny stock bars against Spartan Securities,

Dilley, Eldred and Lopez.

II. DEFENDANTS AND OTHER RELEVANT PERSONS

A. DEFENDANTS

13. Spartan Securities has been registered with the Commission as a broker-dealer

since 2001, with its principal place of business in Clearwater, Florida. Spartan Securities is a

Florida limited partnership wholly owned by Connect X Capital Markets LLC (“Connect X”),

whose managing member is Eldred and shareholders have included Dilley, Eldred and Lopez.

Between 2009 and 2018, Spartan Securities has been the subject of at least 10 disciplinary

actions by FINRA or the NASDAQ Stock Market.

14. Island Stock Transfer has been registered with the Commission as a transfer

agent since 2003, with its principal place of business in Clearwater, Florida. Island Stock

Transfer is a Florida limited liability company wholly owned by Connect X that shares office

space, computer systems, officers and employees with Spartan Securities.

15. Dilley, a resident of Seminole, Florida, was a registered principal and

representative of Spartan Securities from 2004 to 2015. Dilley was also the President of Island

Stock Transfer from 2004 until January 2018. Dilley is presently the Vice President of another

registered transfer agent owned by Connect X and of which Eldred and Lopez are also officers.

16. Eldred, a resident of Seminole, Florida, has been a registered principal and

representative of Spartan Securities and the Chief Executive Officer of Island Stock Transfer

from 2001 to the present.

7 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 157 of 211

17. Lopez, a resident of St. Petersburg, Florida, has been a registered principal and

Chief Compliance Officer of Spartan Securities from March 2001 to the present and the Chief

Compliance Officer of Island Stock Transfer from August 2006 to the present.

B. OTHER RELEVANT PERSONS

18. Alvin Mirman, of Sarasota, Florida, was the undisclosed control person of

Changing Technologies, Inc. (“Changing Technologies”) and an undisclosed control person,

along with Rose, of On the Move Systems Corp. (“On the Move”), Rainbow Coral Corp.

(“Rainbow Coral”), First Titan Corp. (“First Titan”), Neutra Corp. (“Neutra”), Aristocrat

Group Corp. (“Aristocrat”), First Social Networx Corp. (“First Social”), Global Group

Enterprises Corp. (“Global Group”), E-Waste Corp. (“E-Waste”) and First Independence Corp.

(“First Independence”). Mirman was a defendant in SEC v. McKelvey et al., Case No. 15-cv-

80496 (S.D. Fla. 2015), in which the Court entered, by consent, a judgment of permanent

injunction, officer and director bar and penny stock bar against Mirman. On August 19, 2016,

Mirman pled guilty to a one-count Information charging him with conspiracy to commit

securities fraud. U.S. v. Mirman et al., Case No. 16-cr-20572 (S.D. Fla.). Both the

Commission and criminal actions included his misconduct in connection with the

Mirman/Rose Companies. In 2007, without admitting or denying wrongdoing, Mirman

consented to being barred by FINRA from association with any FINRA member.

19. Sheldon Rose, of Sarasota, Florida, was the undisclosed control person of Kids

Germ Defense Corp. (“Kids Germ”), Obscene Jeans Corp. (“Obscene Jeans”), Envoy Group

Corp. (“Envoy”) and First Xeris Corp. (“First Xeris”) and an undisclosed control person, along

with Mirman, of On the Move, Rainbow Coral, First Titan, Neutra, Aristocrat, First Social,

8 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 158 of 211

Global Group, E-Waste and First Independence. The Commission entered, by consent, a

cease-and-desist order, officer and director bar and penny stock bar against Rose. In re Sheldon

Rose et al., Exch. Act Rel. No. 78894 (Sept. 21, 2016). The Commission later ordered Rose

to pay disgorgement and prejudgment interest in the amount of $2,973,916.18. In re Sheldon

Rose, Exch. Act Rel. No. 80301 (Mar. 23, 2017). On November 9, 2016, Rose pled guilty to

a one-count Information charging him with conspiracy to commit securities fraud. U.S. v.

Kass et al., Case No. 16-cr-20706 (S.D. Fla.). Both the Commission and criminal actions

included his misconduct in connection with the Mirman/Rose Companies.

20. Michael Daniels, of Palmetto, Florida, was the undisclosed control person of

Dinello Restaurant Ventures, Inc., n/k/a AF Ocean Investment Management Co. (“Dinello/AF

Ocean”), President, Chief Executive Officer, Chief Financial Officer, Treasurer and Chairman

of the Board of Court Document Services, Inc., n/k/a ChinAmerica Andy Movie Entertainment

Media Co. (“Court/ChinAmerica”), Principal Executive Officer, Secretary, Treasurer,

Chairman of the Board and Chief Financial Officer of Quality Wallbeds, Inc., n/k/a Sichuan

Leaders Petrochemical Co. (“Wallbeds/Sichuan”), Secretary, Chief Financial Officer,

Treasurer, Director, and Chairman of the Board of Top to Bottom Pressure Washing, Inc., n/k/a

Ibex Advanced Mortgage Technology Co. (“TTB/Ibex”), and undisclosed control person of

PurpleReal.com Corp. (“PurpleReal”). On April 25, 2018, the Commission filed a Complaint

against Daniels related to his conduct in connection with the Daniels Companies. SEC v.

Harrison, et al., No. 8:18-cv-01003 (M.D. Fla.).

21. Diane Harrison, of Palmetto, Florida, was the Chief Financial Officer,

Secretary, Treasurer and Director of Dinello/AF Ocean, Treasurer, Principal Accounting

9 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 159 of 211

Officer and Director of Wallbeds/Sichuan, Director and Secretary of TTB/Ibex, and President,

Director, and Chairman of the Board of PurpleReal. Harrison, an attorney, is the owner of the

law firm Harrison Law, PA, which is based in Florida. Harrison, who is Daniels’ wife, is a

defendant in the SEC v. Harrison case based on her conduct with respect to the Mirman/Rose

Companies and the Daniels Companies.

22. Andy Fan, of Las Vegas, Nevada, was the President, Treasurer, Chief

Executive Officer, Chief Financial Officer and Director of Dinello/AF Ocean and

Court/ChinAmerica, and was the President and Director of Wallbeds/Sichuan and TTB/Ibex.

The Commission entered, by consent, a cease-and-desist order, officer and director bar and

penny stock bar against Fan, and ordered him to pay a civil money penalty of $140,000. In re

Andy Z. Fan, Securities Act Rel. No. 10487 (Apr. 25, 2018). The Commission’s action related

to Fan’s conduct with respect to certain of the Daniels Companies.

III. JURISDICTION AND VENUE

23. The Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1)

and 22(a) of the Securities Act, 15 U.S.C. §§ 77t(b), 77t(d)(1) and 77v(a); and Sections 21(d),

21(e) and 27(a) of the Exchange Act, 15 U.S.C. §§ 78u(d), 78u(e) and 78aa(a).

24. The Court has personal jurisdiction over Defendants and venue is proper in this

District because, among other things, some or all of the Defendants reside or transact business

in this District and/or participated in the offer, purchase, or sale of securities in this District,

and many of the acts and transactions constituting the violations alleged in this Complaint

occurred in this District. In addition, venue is proper in this District under 28 U.S.C. § 1391

because a substantial part of the events giving rise to the Commission’s claims occurred here.

10 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 160 of 211

25. In connection with the conduct alleged in this Complaint, Defendants, directly

and indirectly, singly or in concert with others, have made use of the means or instrumentalities

of interstate commerce, the means or instruments of transportation or communication in

interstate commerce, and of the mails.

IV. FACTUAL ALLEGATIONS

A. The Mirman/Rose Shell Factory

26. Mirman and Rose, alone or together, manufactured at least 14 undisclosed

“blank check” companies in assembly-line fashion in order to sell in bulk the entire deceptive

float of purportedly unrestricted securities.

27. Mirman and Rose manufactured each Mirman/Rose Company in a similar

fashion. Mirman and Rose recruited a sole officer, director, employee, and majority

shareholder (the “sole officer”) to act in name only. Mirman and Rose prepared and filed false

and misleading registration statements with the Commission (the “Forms S-1”)

misrepresenting that the sole officer was pursuing a specific business plan (versus Mirman and

Rose controlling mere shells to sell all the securities in bulk) and would be solely responsible

to solicit investors for the company (versus Mirman and Rose using similar rosters of friends

and family to “invest” in name only).

28. After the Form S-1 became effective, Mirman and Rose solicited the same or

virtually the same number of friends and family as shareholders while maintaining complete

control through stock certificates with blank stock powers, which are signed by the named

shareholder and entitle whoever holds the stock certificate to sell or transfer it.

11 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 161 of 211

29. Mirman and Rose directed Spartan Securities and Island Stock Transfer to

prepare applications with FINRA and DTC that contained materially false and inaccurate

information in order to make the Mirman/Rose Companies marketable as public vehicles.

Specifically, Mirman and Rose needed the purportedly public float of securities available for

immediate public quotation and sale through DTC electronic clearance. Mirman and Rose

then effectuated the bulk sale of the shares of the issuer for a single cash price by delivering

all the stock certificates with blank stock powers to a single buyer group. Mirman and Rose

split the net proceeds after paying a nominal amount to their straw sole officer and

shareholders.

30. Mirman and Rose, alone or together, created and developed the following

Mirman/Rose Companies:

Mirman/Rose Control Effective Date of Time Between Form S-1 Company Person(s) Date of Form Change of and Change of Control S-1 Control Kids Germ Rose 12/2009 2/2010 3 months

Obscene Jeans Rose 8/2010 12/2010 4 months

On the Move Mirman/Rose 12/2010 6/2011 6 months

Rainbow Coral Mirman/Rose 1/2011 10/2011 9 months

First Titan Mirman/Rose 2/2011 9/2011 7 months

Neutra Mirman/Rose 4/2011 11/2011 7 months

Aristocrat Mirman/Rose 11/2011 7/2012 8 months

First Social Mirman/Rose 3/2012 2/2013 11 months

Global Group Mirman/Rose 3/2012 4/2013 13 months

E-Waste Corp. Mirman/Rose 6/2012 4/2013 10 months

12 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 162 of 211

Mirman/Rose Control Effective Date of Time Between Form S-1 Company Person(s) Date of Form Change of and Change of Control S-1 Control First Mirman/Rose 8/2012 5/2013 9 months Independence

Envoy Group Rose 9/2013 4/2014 7 months

Changing Mirman 10/2013 6/2014 8 months Technologies

First Xeris Rose 1/2014 N/A N/A

31. Mirman and Rose never intended to take any step to advance the purported

business plan stated in the Form S-1. Rather, as evidenced in part by the short amount of time

between Form S-1 effectiveness and the change of control, Mirman and Rose solely sought to

manufacture a public vehicle in assembly-line fashion, and sell all its securities in bulk once

obtaining the necessary clearances from the Commission, FINRA, and DTC.

32. Mirman and Rose retained Spartan Securities and Island Stock Transfer for a

number of critical steps to develop the Mirman/Rose Companies in quick succession from

Form S-1 effectiveness to public vehicles with securities eligible for public quotation and

electronic clearance.

33. Mirman and Rose routinely contacted Dilley to simultaneously start broker

services through Spartan Securities and transfer agent services through Island Stock Transfer.

Mirman or Rose emailed Dilley stating that the issuer’s Form S-1 recently had gone effective

and “[w]e want to start a 15c211” and have Island Stock Transfer act as transfer agent. Dilley

instructed Spartan Securities and Island Stock Transfer employees to send the materials for,

respectively, the Form 211 application and transfer agent services to Mirman or Rose.

13 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 163 of 211

34. Spartan Securities and Island Stock Transfer, which share office space,

computer systems, officers and employees, acted in tandem for the Mirman/Rose Companies.

For example, Island Stock Transfer prepared certified shareholder lists at the request and upon

the approval of Mirman and Rose. Spartan Securities then submitted those shareholder lists to

FINRA as part of the Form 211 applications.

35. Spartan Securities and Island Stock Transfer’s actions allowed Mirman and

Rose to sell the Mirman/Rose Companies via the bulk sale of all the issued securities to a small

buyer group generating combined proceeds totaling at least $3.7 million:

Mirman/Rose Spartan Island Stock FINRA DTC Island Stock Transfer Company Securities Transfer Form 211 Filing Bulk Transfer To Form 211 Original Clearance Buyer Group Signatory Issuance Kids Germ Dilley 12/2009 1/2010 1/2010 2/2010 Obscene Dilley 8/2010 9/2010 10/2010 12/2010 Jeans On The Move Dilley 1/2011 2/2011 4/2011 6/2011 Rainbow Dilley 2/2011 3/2011 7/2011 10/2011 Coral First Titan Dilley 4/2011 5/2011 7/2011 9/2011 Neutra Dilley 6/2011 7/2011 8/2011 11/2011 Aristocrat Dilley 12/2011 12/2011 2/2012 7/2012 Group First Social Dilley 3/2012 4/2012 7/2012 2/2013 Networx Global Group Dilley 4/2012 5/2012 8/2012 4/2013 E-Waste Dilley 7/2012 8/2012 9/2012 4/2013 First Dilley 2/2013 3/2013 4/2013 5/2013 Independence Envoy Group Dilley N/A 12/2013 N/A N/A Changing Dilley 11/2013 1/2014 4/2014 6/2014 Technologies First Xeris Dilley 1/2014 3/2014 4/2014 N/A (SEC stop order)

14 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 164 of 211

Dilley’s Knowledge of/Participation in the Mirman/Rose Fraud

36. Dilley, a registered principal of Spartan Securities and Island Stock Transfer,

knew or was reckless in not knowing that Mirman and Rose were manufacturing the

Mirman/Rose Companies to control and sell a deceptive float of purportedly unrestricted

securities (versus the material misrepresentations in the Forms 211 and Commission filings

that the issuers were legitimate startups controlled by the nominee sole officer with an

independent shareholder base).

37. Dilley knew or was reckless in not knowing of Mirman and Rose’s undisclosed

control of and intent for the Mirman/Rose Companies with the earliest issuer, Kids Germ. Rose

solicited Dilley to have Spartan Securities file the Kids Germ Form 211. On January 4, 2010

– the same day FINRA cleared the Form 211 – Rose emailed Dilley: “What do you recommend

[Kids Germ] do with the DTC, know[ing] the route it is taking? Do you want to speak to the

attorney interested in the company, or do you want me to call him? If you want me to call him,

please forward telephone number.” By email that same day, Dilley responded: “We should

apply for DTC eligibility. Let me call you on this once I talk to [the attorney].”

38. On January 13, 2010, Island Stock Transfer initiated the DTC application for

Kids Germ misrepresenting “the company is not a shell” despite Dilley knowing or recklessly

not knowing it was a shell because of, among other things, its lack of assets or revenues and

knowing “the route it is taking.” One month later, Island Stock Transfer transferred the Kids

Germ shares from Rose’s friends and family in bulk without a restrictive legend stamped on

the certificate to indicate that the shares are restricted from transfer or sale. Dilley knew or

was reckless in not knowing that these shareholders were affiliates of Kids Germ because of

15 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 165 of 211

Rose’s control over all their shares to effectuate a bulk sale of Kids Germ and therefore, the

shares should have been restricted from transfer or sale.

39. For the second Mirman/Rose Company, Obscene Jeans, Dilley signed the Form

211. On September 3, 2010 (the day FINRA cleared the Form 211), at Rose’s request, Dilley

contacted a DTC participant firm to file a DTC application for Obscene Jeans. By email dated

October 4, 2010, Dilley’s assistant forwarded to Rose (copying Dilley) the DTC participant

firm’s refusal to file the application because it was “looking to sponsor operating companies.

We understand that having a shell DTC eligible raises its price but we are just not interested in

the risk that the company falls into the wrong people’s hands.” The following week, despite

this admonition, Dilley’s assistant asked the firm to reconsider filing the application. The firm

agreed, and Spartan Securities re-initiated the DTC application at the behest of Dilley.

40. In the meantime, by email dated October 5, 2010, Rose sent Dilley a term sheet

for the sale of Obscene Jeans making no mention of the sole officer or purported business plan

and focusing largely on the share structure and tradeability status (for example, the shares were

quoted with one market maker, which was Spartan Securities). The term sheet also listed that

Obscene Jeans had no liabilities and only $20,000 in assets (all cash).

41. On October 22, 2010, a buyer emailed Dilley (copying Rose) that “we are

closing on [Obscene Jeans] – can you post a bid-ask today?” The following day, Dilley

emailed Rose: “I have to have someone open an account and deposit shares and offer some for

sale. . . . I have never seen this to be a requirement from anyone wanting a shell.”

42. On October 25, 2010, Rose emailed Dilley: “I told our mutual friend ???? today

to F off, respectfully. Thanks for your effort.”

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43. These various documents and events involving Dilley in September and

October 2010 were clear signs that Obscene Jeans was a blank check company and Rose

controlled all shares of Obscene Jeans for sale in bulk.

44. One month later, Rose asked Dilley for Island Stock Transfer to act as escrow

agent for the sale of Obscene Jeans. At Rose’s request, Dilley signed an escrow agreement on

behalf of Island Stock Transfer by which all of the shares of Obscene Jeans (both the control

block and all purportedly unrestricted shares in the names of the 24 nominee shareholders)

were being sold pursuant to one stock purchase agreement for $440,000. All of these

documents and communications received by Dilley were clear signs that Obscene Jeans was a

blank check company and Rose controlled all shares of Obscene Jeans for sale in bulk.

45. Dilley communicated exclusively with Mirman and Rose, and was aware that

they directed the finances across the Mirman/Rose Companies. For example, by email dated

September 19, 2011, Mirman told an Island Stock Transfer employee: “We spoke to Carl

[Dilley] and told him we will pay [the Rainbow Coral invoice] through the Neutra account,”

despite Rainbow Coral and Neutra purportedly being unrelated companies with separate

management. Dilley told that same employee (copying Mirman): “We went through what was

supposed to happen with this.” The following month (and on the same day) Dilley signed the

stock certificates by which all the shares of both Rainbow Coral and Neutra were sold to the

same buyers represented by the same counsel, demonstrating Dilley knew or was reckless in

not knowing that Mirman and Rose controlled all shares of both issuers.

46. Dilley knew or was reckless in not knowing that Mirman and Rose similarly

manufactured E-Waste and Global Group for sale. By email dated December 4, 2012, Mirman

17 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 167 of 211

wrote Dilley: “We [Mirman and Rose] are in the process of selling E-Waste and the attorney

wants,” among other things, “[c]onfirmation from the T[ransfer] A[gent] that it has not put

restrictions on any free trading shares.” Dilley responded “will do,” and instructed Island

Stock Transfer’s Director of Operations to prepare the letter. Dilley signed the requested letter,

and was copied on the transmittal of the letter exclusively to Mirman. The Director of

Operations soon thereafter signed the stock certificates transferring all of E-Waste’s issued

shares per the buyer’s counsel’s instructions.

47. By email dated January 1, 2013, Rose wrote Dilley: “Please send [the] same

letter [as E-Waste] but for Global [Group] and e-mail to me ASAP.” Dilley signed that

requested letter as well at Rose’s request.

48. On January 16, 2013, the buyer’s counsel for E-Waste sent an instruction letter

to Island Stock Transfer enclosing a stock purchase agreement expressly stating that “all of the

free trading shares of the Company consisting of an aggregate of 3,000,000 shares” were

simultaneously being purchased pursuant to stock purchase agreements “of like tenor” with

Rose as “Seller’s Representative,” evidencing that Rose, from whom Island Stock Transfer

had exclusively taken instructions to date, controlled the bulk sale of all the “free-trading”

shares.

49. By email dated February 27, 2013, Mirman asked Dilley how to handle a lost

certificate of one of the “free-trading” shareholders because “Sheldon [Rose] is in New York

today closing Global.” Dilley instructed Island Stock Transfer’s Director of Operations to

respond to Mirman’s request. Island Stock Transfer effectuated the bulk transfer of virtually

18 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 168 of 211

all shares of Global Group to the same exact small group of buyers as E-Waste represented by

the same counsel.

50. Dilley also assisted Rose’s efforts to sell the last Mirman/Rose Company, First

Xeris. Soon after FINRA’s clearance of Spartan Securities’ Form 211 for First Xeris in March

2014, a shell finder emailed Dilley: “I understand Sheldon Rose is trying to contact you

regarding his new company [First Xeris] being dropped to Pink[] [Sheet] from QB based on

the new bid/ask rules. I have a buyer for it, but not as a pink.” Dilley then placed daily bids

in the open market at Rose’s request. Accordingly, Dilley knew or was reckless in not knowing

that First Xeris was a company that Rose controlled and was looking to sell.

Spartan Securities’ Involvement in the Mirman/Rose Fraud

51. With Dilley’s knowing or reckless involvement, Spartan Securities made

crucial contributions to the Mirman/Rose fraud.

52. Dilley’s assistant as of 2012 prepared the Form 211 and all related documents

based on templates. The assistant was instructed that a Spartan Securities’ principal would

review the assistant’s draft and revise it to match the facts particular to each issuer. Dilley’s

assistant submitted the Form 211 only upon Dilley’s approval. The assistant would similarly

draft responses to FINRA deficiency letters for review by a Spartan Securities principal (Lopez

from early 2013 onward), and only sent the responses to FINRA upon that principal’s (usually

Lopez) express approval.

53. Dilley signed the Forms 211 for the Mirman/Rose Companies but was largely

uninvolved in responding to FINRA’s deficiency letters or investigating any red flags

identified by FINRA.

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54. By letter dated February 8, 2013, the Commission’s examination staff identified

deficiencies and weaknesses in Spartan Securities’ compliance with certain federal securities

laws, including (1) Spartan Securities’ possible violation of Rule 15c2-11 by failing to

adequately address numerous red flags and provide material information to FINRA in

connection with an unrelated Form 211 application, and (2) Lopez’s failure to adequately

implement Spartan Securities’ written procedures regarding Forms 211 which required Lopez

to review the information outlined in Rule 15c2-11 together with any supplemental information

obtained and to be alert to red flags.

55. As of 2013, Dilley and Eldred instructed the assistant to send draft responses to

the FINRA deficiency letters to Lopez for review and approval. For example, by email dated

October 18, 2013, the assistant wrote Eldred: “I know that Dave [Lopez] looks at these [draft

deficiency responses] now, but he’s been slammed . . . . Any chance you can make an exception

and review this one?” Dilley tasked Lopez with that responsibility, for example, when Dilley

was unavailable or because Lopez “has got a lot more experience.”

56. Mirman and Rose were Spartan Securities’ primary source of information

throughout the Form 211 process. Mirman and Rose would provide Spartan Securities with

documents in the name of the sole officer and many documents they prepared themselves,

including spreadsheets detailing who solicited the shareholders and the relationship between

the solicitor and shareholder. There were substantial similarities in these shareholders lists,

including the sole officer of First Social appearing as a shareholder of 10 other Mirman/Rose

Companies.

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57. The assistant sent FINRA deficiency letters to Mirman and Rose without

confirming or inquiring into the authority of Mirman and Rose to act for the Mirman/Rose

Companies (i.e. if they were a reliable source of information), despite the fact that Mirman and

Rose were not officers, directors or even named shareholders of any of the Mirman/Rose

58. Sometimes within one week of Mirman and Rose’s solicitation, Spartan

Securities submitted the Form 211 and a cover letter (with exhibits) to FINRA. However,

Spartan Securities consistently misrepresented that: (1) the sole officer – not Mirman or Rose

– called Dilley based on a referral (often from an attorney); (2) Spartan Securities agreed to

file the Form 211 after “months” of due diligence; and (3) Spartan Securities had no prior

relationship with the issuer or any of its “representatives” (despite repeatedly filing Forms 211

at Mirman and Rose’s request).

59. For example, by email dated November 6, 2013, Rose solicited Dilley to file a

Form 211 for Envoy Group and told Dilley: “We know the process, included is some due

dil[igence] per our conversation” including a chart listing the Form S-1 shareholders and their

purported relationships with each other. Spartan Securities filed the Envoy Group Form 211

five days later, misrepresenting that Envoy Group’s sole officer contacted Dilley (with no

mention of Rose), Spartan Securities had conducted due diligence over the past month, and

Spartan Securities had no other relationship with Envoy Group’s “representatives.”

60. Each Form 211 cover letter also misrepresented that the issuer was “not

working with any consultants” despite Dilley knowing or being reckless in not knowing that

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Mirman and Rose had no publicly disclosed association with the Mirman/Rose Companies yet

took various critical actions on their behalf.

61. Each Form 211 cover letter also misleadingly stated that “there are no other

companies that the current officers or directors have requested a listing quotation on,” despite

Dilley knowing or being reckless in not knowing that Mirman or Rose, who acted as de facto

officers and directors, had requested all Forms 211 for the Mirman/Rose Companies.

62. Each Form 211 cover letter also misrepresented that the issuer was not in

negotiations for any actual or potential merger or acquisition, despite Dilley knowing or being

reckless in not knowing that the first Mirman/Rose Company had been available for sale upon

Form 211 clearance by FINRA and his involvement in numerous other sales by Mirman and

Rose shortly after Form 211 clearance.

63. Each cover letter also attached a shareholder chart stating that the sole officer

had solicited each shareholder as a “friend” and that no other people had been solicited to

invest, when in fact Mirman and Rose had solicited the shareholders and reused many of the

same shareholders across up to 12 Mirman/Rose Companies. Dilley knew or was reckless in

not knowing that Mirman and Rose controlled all the shares given, among other things, the

substantial similarities across the shareholder lists.

64. Each Form 211 cover letter also misrepresented that the Mirman/Rose

Company was following a specific business plan, despite Dilley knowing or being reckless in

not knowing that the issuer was merely a public vehicle being packaged for sale and controlled

by Mirman and Rose.

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65. Each Form 211 also misrepresented that Spartan Securities was not aware or in

possession of any material information, including adverse information, regarding the

Mirman/Rose Company, despite Dilley knowing or being reckless in not knowing that Mirman

and Rose were undisclosed control persons developing the Mirman/Rose Company as a mere

public vehicle to be sold as a shell.

66. No one at Spartan Securities questioned the accuracy of the Rule 15c2-11(a)

information for any of the Mirman/Rose Companies. The Forms S-1 described start-up

companies run exclusively by the sole officer with no mention of Mirman or Rose. Dilley did

not even review (but “just kept on file”) the Forms S-1 which were strikingly similar across

the Mirman/Rose Companies, including: (1) the same number of issued shares; (2) similar

annual budgets (purportedly for effectuation of vastly different business plans); (3) the same

small offering size (dwarfed by the annual budgets); and (4) similar assets (all cash and

substantially the same amount):

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MIRMAN/ROSE COMPANY FORM S-1 DISCLOSURES

Total Form S-1 # Of Shares Operating Sole Officer Mirman/Rose Form S-1 Assets Offering In Name Of Budget # of Hours Company Shares (All Size Sole Officer (Duration) Work Week Cash) $400,000 Kids Germ 3,000,000 $30,000 9,000,000 $5,351 (18 months) 10-25 hours

Obscene $500,000 3,000,000 $52,500 9,000,000 $9,000 (18 months) 10-25 hours Jeans $477,500 On The Move 3,500,000 $52,500 9,000,000 $9,000 (12 months) 10-25 hours

Rainbow $500,000 2,500,000 $31,250 9,000,000 $8,912 (18 months) 10-25 hours Coral $587,500 First Titan 3,000,000 $37,500 9,000,000 $8,922 (18 months) 10-25 hours

$425,000 Neutra 3,000,000 $42,000 9,000,000 $8,900 (12 months) 10-25 hours

$500,000 Aristocrat 3,900,000 $39,000 9,000,000 $8,900 (18 months) 10-25 hours

$475,000 First Social 3,000,000 $45,000 9,000,000 $8,900 (18 months) 10-25 hours

Global $500,000 3,000,000 $34,500 9,000,000 $8,900 (18 months) 10-25 hours Group

$600,000 E-Waste 3,000,000 $36,000 9,000,000 $8,301 (18 months) 10-25 hours

First $500,000 3,000,000 $34,500 9,000,000 $8,900 (18 months) 10-25 hours Independence $612,500 Envoy Group 3,000,000 $37,500 9,000,000 $8,908 (18 months) 10-25 hours

Changing $339,000 3,000,000 $30,000 9,000,000 $8,900 (18 months) 10-25 hours Technologies $650,000 First Xeris 3,000,000 $39,000 9,000,000 $8,976 (18 months) 10-25 hours

24 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 174 of 211

67. Moreover, many Mirman/Rose Companies publicly filed periodic reports with

the Commission prior to Form 211 clearance which reported no assets, revenues, or expenses

other than professional fees.

68. In at least 7 deficiency letters (including those for First Independence, Changing

Technologies and First Xeris), FINRA requested detailed information with respect to the

circumstances surrounding the registered offering per the Form S-1, including how many

persons were solicited and ultimately invested. Spartan Securities submitted shareholder

charts stating that the sole officer had solicited each shareholder as a “friend,” and reported the

same solicitation success rate (24 solicited, 24 invested). The lists had remarkably similar

features, including the same number of shares and shareholders, and overlapping rosters (some

shareholders were the sole officer of other Mirman/Rose Companies and appeared on up to 12

lists).

69. In at least 12 deficiency letters (including those for First Independence, Envoy

Group and First Xeris), FINRA specifically inquired whether anyone other than the named

shareholders had control over any aspect of the shares, including “any past, present, or future

arrangements.” Spartan Securities conducted no inquiry despite, among other things, the

striking similarities across rosters that contained the same shareholder names, Dilley’s

involvement in bulk sales of all shares by Mirman and Rose, and Island Stock Transfer’s bulk

issuance and transfer of all shares of Mirman/Rose Companies.

70. Spartan Securities also failed to inquire regarding numerous red flags as

required by Rule 15c2-11, which requires a broker-dealer to evaluate any “adverse

information” in its possession when determining whether it has a reasonable basis for the

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accuracy of information and reliability of its source. For Spartan Securities, such red flags

included the substantial similarities in the Forms S-1, the substantially similar shareholder

rosters, the use of sole officers who were related to each other and appeared as shareholders

on other Mirman/Rose Companies, and Mirman and Rose as the same solicitors and sources

of information across the Mirman/Rose Companies.

71. FINRA also posed several other issuer-specific questions or concerns in its

deficiency letters. In responding to FINRA’s deficiency letters, Spartan Securities did not

follow its own written policies and procedures which required that the assistant “together with

the CCO or other designated officer gather information from the issuer to respond to the

FINRA comments” in deficiency letters and investigate red flags. Spartan Securities’

procedures further required the designated officer to initial each page of correspondence to

FINRA evidencing that review and investigation. None of Spartan Securities’ correspondence

to FINRA in connection with the Mirman/Rose Companies contained any such initials.

72. Lopez cursorily reviewed and approved Spartan Securities’ responses to at least

the following deficiency letters for the Forms 211 of First Independence, Envoy Group,

Changing Technologies and First Xeris:

Mirman/Rose Date of FINRA Date of Spartan Number of Questions Company Deficiency Letter Response from FINRA First Independence 2/27/2013 3/12/2013 7 Envoy Group 11/21/2013 11/25/2013 6 Envoy Group 12/5/2013 12/9/2013 1 Envoy Group 12/17/2013 12/18/2013 1 Changing 12/3/2013 12/17/2013 4 Technologies First Xeris 2/7/2014 2/13/2014 5

26 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 176 of 211

73. Lopez approved each response within an hour of the assistant’s request, making

no inquiry into FINRA’s questions (or the issuer more generally) despite FINRA raising at

least 24 questions about these four issuers.

74. For example, FINRA questioned whether First Independence was a “shell

company” despite its non-shell designation in periodic reports. Despite understanding that any

shell issue should be investigated by asking the issuer basic questions about its business

operations to see whether it is a “blank check company, that there’s an ongoing effort to further

the business plan,” Lopez made no such investigation or inquiry with respect to First

Independence’s business operations or purpose.

75. Spartan Securities (including Lopez) failed to review Rule 15c2-11 information

or inquire further regarding red flags that were expressly raised by FINRA on the subsequently

filed Forms 211. On the Envoy Group Form 211, in its deficiency letter dated November 21,

2013, FINRA asked Spartan Securities for detailed descriptions of the relationships between:

(1) Envoy Group, Jocelyn Nicholas (Envoy Group’s sole officer) and Mark Nicholas (Kids

Germ’s sole officer); (2) Envoy Group, Jocelyn Nicholas, Mark Nicholas, and Kids Germ; and

(3) Mark Nicholas and Spartan Securities. By email dated November 22, 2013, Dilley’s

assistant forwarded this letter to Dilley and Lopez, and alerted them to the facts that “Shelly

[Rose] sent us this one” and that Spartan Securities had filed the Form 211 for Kids Germ.

Dilley and Lopez conducted no investigation into the two issuers (including whether Rose was

a reliable source for Envoy Group) or Spartan Securities’ relationship with either of them.

Specifically, Lopez merely told the assistant that “I am not familiar with any of those people

or that company,” and Dilley instructed the assistant simply to rely on Envoy Group’s

27 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 177 of 211

response. Lopez then approved the deficiency response, which misrepresented that the only

relationship among all the identified parties was the spousal relationship between Jocelyn and

Mark Nicholas, Envoy Group’s sole officer had “no participation in any way with Kids Germ,”

and Spartan Securities had no relationship with Kids Germ “and/or any of its representatives.”

76. In its deficiency letter dated November 25, 2013, FINRA inquired a second time

for details of any relationship between Envoy Group’s sole officer and Kids Germ. Lopez

approved the deficiency response, which misrepresented that Envoy Group’s sole officer’s

only relationship with Kids Germ was as a 0.42% shareholder despite the fact that she was also

an officer of Kids Germ.

77. Dilley and Lopez had numerous facts readily in their possession contradicting

these representations and the Rule 15c2-11 information, including: (1) Spartan Securities

through Dilley filed both the Envoy Group and Kids Germ Form 211, and Kids Germ’s DTC

application, at Rose’s request; (2) Spartan Securities possessed numerous documents showing

that Envoy Group’s sole officer had become a Kids Germ officer per Spartan Securities’ advice

to Rose to obtain DTC eligibility; (3) Lopez acted on Rose’s authorization to speak with an

auditor for Kids Germ despite Rose not being an officer, director, or authorized person on Kids

Germ’s Corporate Authorization Form; (4) Envoy Group and Kids Germ had 11 shareholders

in common (including the sole officers of two other Mirman/Rose Companies) and the same

capitalization structure (9,000,000 share control block, 3,000,000 Form S-1 shares among 24

shareholders); and (5) Dilley attempted to arrange a sale of Kids Germ for Rose.

78. On November 6, 2013, Mirman told Dilley “I need to file a 211 through your

firm” for Changing Technologies. That same day, Rose had solicited Dilley to file the Form

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211 for Envoy Group. Dilley told Mirman: “Funny you guys called me within a few minutes

of each other.” Dilley then put Spartan Securities and Island Stock Transfer employees in

contact with Mirman, who in turn approved the certified shareholder list for Changing

Technologies which Spartan Securities submitted to FINRA with the Form 211.

79. Dilley drafted the portion of the Form 211 representing that Mirman had

referred Changing Technologies to Spartan Securities, but that Spartan Securities “does not

have any other relationship with Al Mirman.” Dilley knew or was reckless in not knowing

that this statement was false given the fact that Spartan Securities filed this and other Forms

211 at Mirman’s request.

80. By deficiency letter dated December 3, 2013, FINRA asked Spartan Securities

for a “detailed explanation of the Issuer’s relationship with Al Mirman.” Spartan Securities

sent FINRA’s deficiency letter only to Mirman to address this and other questions. Spartan

Securities misrepresented to FINRA that the sole officer approached Mirman, a social

acquaintance, for a broker-dealer recommendation and “Mirman has no relationship with

Changing Technologies.” Lopez authorized this response despite Mirman having solicited

Spartan Securities, sent Spartan Securities a series of documents for the Form 211, and

approved the certified shareholder list which Spartan Securities submitted to FINRA with the

Form 211. Moreover, no one at Spartan Securities (including Lopez) conducted any

investigation into Mirman’s disciplinary history, including his being barred by FINRA in 2007

from association with any FINRA member.

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Island Stock Transfer’s Involvement in the Mirman/Rose Fraud

81. Mirman and Rose retained Island Stock Transfer as the transfer agent for at

least 12 of the Mirman/Rose Companies at or around the same time as retaining Spartan

Securities to file the Form 211. For example, by email dated June 29, 2012, Dilley instructed

an employee from each of Spartan Securities and Island Stock Transfer to “send [Rose] 211

docs. [Transfer agent] agreement same terms as last deal they sent us.”

82. Dilley, Island Stock Transfer’s president, originated each relationship and

personally took a number of steps on behalf of Island Stock Transfer for Mirman and Rose.

Island Stock Transfer’s employees also ignored a host of red flags indicating that Mirman and

Rose controlled the issuers as blank check companies and sold all the securities of those issuers

owned by affiliates.

83. Island Stock Transfer has extensive written policies and procedures, which it

largely ignored in its various transfer agent functions for the Mirman/Rose Companies. Island

Stock Transfer’s policies and procedures contained many provisions intended to ensure that

Island Stock Transfer employees communicated only with authorized persons as identified in

writing by the issuer clients. As part of the initial “client” package (sent to Mirman or Rose),

Island Stock Transfer requested the issuer to complete a “Corporate Authorization Form” to

identify those persons with whom Island Stock Transfer could communicate about the issuer.

Mirman or Rose was named as an authorized person for only two of the 12 Mirman/Rose

Companies for which Island Stock Transfer acted as transfer agent, yet for all 12 companies

Island Stock Transfer took directions exclusively from Mirman and Rose.

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84. Island Stock Transfer’s policies and procedures also required the issuer to

provide a “list of insiders/control persons” at the onset of the relationship. Island Stock

Transfer’s employees requested such lists from Mirman and Rose (not the sole officer), but

never received one for any of the Mirman/Rose Companies.

85. According to Island Stock Transfer’s policies and procedures, all transfer

records and shareholder lists are the “highly confidential” property of the issuer, and “shall not

be given to unauthorized parties under any circumstances.” Moreover, Island Stock Transfer’s

policies and procedures stated that “[s]hareholders may inquire about shares they own

personally, but may not be provided with information concerning any other shareholder.”

Nonetheless, Island Stock Transfer employees consistently provided both issuer and

shareholder information to Mirman and Rose without inquiry.

86. At Dilley’s instruction, Island Stock Transfer employees exclusively

communicated with and took direction from Mirman and Rose – and not the sole officer or

shareholders – regarding both the issuers and the shares in the names of the friends and family.

Island Stock Transfer first prepared a certified shareholder list with personal information

provided by Mirman and Rose. Island Stock Transfer employees (some of whom were also

employees of Spartan Securities, which used the lists for the pending Forms 211) requested

and acted on Mirman and Rose’s approval of the list. Also, by email dated February 8, 2013,

Rose instructed Dilley to make changes to the certified shareholder list of a Mirman/Rose

Company.

87. Mirman and Rose then requested Island Stock Transfer to prepare stock

certificates without a restrictive legend (stamped on the certificate to indicate that the shares

31 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 181 of 211

are restricted from transfer or sale) in the names of the same number of friends-and-family

shareholders (24). Island Stock Transfer’s policies and procedures provided that shares

without restrictive legend “can NOT be issued in the name of an insider” (emphasis in original).

Island Stock Transfer training materials reiterated that “Insiders ALWAYS have restricted

stock” (emphasis in original). Island Stock Transfer’s Director of Operations, who trained the

lower-level employees, knew that “insider” included “affiliates” as defined in Rule 144 of the

Securities Act. Despite the “affiliate” definition including those controlled by or together with

an issuer, the Director of Operations only looked to see if the shareholder was a named officer

or 15%+ shareholder (or spouse of either one) to determine the “insider” or “affiliate” status.

Even so, Island Stock Transfer issued unlegended certificates in the name of the spouse of the

sole officer for at least 4 Mirman/Rose Companies.

88. Island Stock Transfer delivered all 24 certificates to Mirman and Rose (who

were not named shareholders), despite Island Stock Transfer’s policies and procedures that

shareholder information could only be provided to the shareholders themselves. For example,

on February 14, 2013, Island Stock Transfer asked Rose for delivery instructions for “each

certificate” of First Independence stock. Rose directed Island Stock Transfer to “mail all of

the certificates to me as always in the past.”

89. Shortly after the clearance of Spartan Securities’ Form 211, Mirman and Rose

requested Island Stock Transfer’s assistance with DTC applications premised on the securities

being unrestricted. Island Stock Transfer submitted at least 12 DTC transfer agent attestation

forms (6 signed by Dilley) attesting that it would comply with DTC’s operational requirements,

including exercising diligence in the related securities transactions and providing DTC with

32 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 182 of 211

complete and accurate information about the securities. Island Stock Transfer also received

$7,500 from Envoy Group in connection with a DTC “services agreement.”

90. Island Stock Transfer, at the direction of Mirman or Rose, routinely transferred

an unlegended certificate in the name of one friend-and-family shareholder to Cede & Co. in

order to secure DTC eligibility. Dilley and other Island Stock Transfer employees also fielded

Rose’s frequent urgent requests for updates on the DTC applications.

91. Island Stock Transfer then effectuated the bulk transfer of all or virtually all the

securities (both the control block in the name of the sole officer and the friends-and-family

shares) of at least 12 Mirman/Rose Companies through the preparation and delivery of

unlegended stock certificates to a small buyer group. The same or substantially similar groups

(represented by the same counsel) purchased multiple Mirman/Rose Companies.

92. Island Stock Transfer received instruction letters from buyer’s counsel who

presented Island Stock Transfer with blank stock powers (sometimes dated months earlier) for

the entire set of certificates that Island Stock Transfer had originally delivered to Mirman or

Rose. The instruction letters detailed how all the shares would be transferred. For some

issuers, there was a single instruction letter indicating that all shares were simultaneously being

purchased pursuant to attached stock purchase agreements “of like tenor” with Rose identified

as “Seller’s Representative.” For other issuers, Island Stock Transfer received 5-6 instruction

letters from the same counsel in a short period of time with a series of stock purchase

agreements with the same effective date and purchase price.

93. Island Stock Transfer received a legal opinion letter for only two of the 12 bulk

transfers (First Independence and First Social). Those two letters were from the same lawyer

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(Harrison) on the same day with obvious misstatements that First Independence was not a

“shell” company and First Social’s sole officer’s spouse was not an “affiliate” of First Social.

94. Shortly after the bulk transfers, Island Stock Transfer continued to support the

small buyer groups in transferring their certificates into Cede & Co. and broker positions by

which the buyer groups publicly traded shares of the Mirman/Rose Companies. For example,

First Independence became the subject of a fraudulent pump-and-dump in public trading

shortly after FINRA’s clearance of Spartan Securities’ Form 211 and Island Stock Transfer’s

bulk transfer of First Independence securities.

95. Island Stock Transfer routinely processed the bulk transfers without restrictive

legend solely on the basis of the instruction letters and blank stock powers, and despite

knowing or recklessly not knowing – and ignoring red flags – that the bulk transfers involved

affiliates. The bulk nature of the sale itself was indicative of the affiliate status of the sellers –

i.e. the fact that all shares were being sold at the same time to a small group of buyers indicated

common control over all such shares.

96. For example, in October 2011, Island Stock Transfer transferred all the

securities of two Mirman/Rose Companies (Rainbow Coral and Neutra) to the same buyers’

counsel. Dilley had recently signed the Forms 211 for both issuers upon Mirman and Rose’s

request. Dilley was also aware that in September 2011 Mirman had ordered Island Stock

Transfer to pay a Rainbow Coral invoice out of funds attributed to Neutra. Also in September

2011, Rose requested that Island Stock Transfer transfer the certificate of one Neutra

shareholder to a buyer who, two weeks later, was part of the bulk transfer of all other Neutra

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securities. Dilley signed unlegended certificates for both the Neutra and Rainbow Coral bulk

transfers on the same day.

97. Similarly, in December 2012 and January 2013, Dilley signed letters on behalf

of Island Stock Transfer at Mirman and Rose’s request expressly in furtherance of Mirman and

Rose’s selling E-Waste and Global Group. In January and February 2013, Island Stock

Transfer received instructions from the same buyers’ counsel for the transfer of virtually all

the securities of E-Waste and Global Group to the same group of five buyers (including an

entity in the counsel’s name). Island Stock Transfer also received a stock purchase agreement

providing that “all of the free trading shares” of E-Waste were being purchased pursuant to

stock purchase agreements “of like tenor” with Rose as “Seller’s Representative.”

98. Later in 2013, Island Stock Transfer similarly delivered all the shares of two

other Mirman/Rose Companies (First Independence and First Social) to the same buyer’s

counsel based on instructions to transfer all the “free-trading” securities at the same time as

the control block.

99. In June and July 2014, Island Stock Transfer effectuated the bulk transfer of all

the securities of Changing Technologies per instruction letters and blank stock powers on

behalf of the same or substantially similar buyer group represented by the same counsel as at

least four other Mirman/Rose Companies. Island Stock Transfer’s “batch” (the set of

documents reviewed for the transfer requests) included an email exchange dated June 3, 2014,

between Mirman and the buyer’s counsel with respect to the stock certificate of one of the

friends-and-family shareholders for whom Island Stock Transfer had already issued a new

certificate in the name of Cede & Co. The buyer’s counsel told Mirman that it was missing

35 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 185 of 211

that shareholder’s certificate. Mirman responded: “His stock was deposited with [a broker] for

DTC purposes. You have to have someone open an account with [the broker] and purchase

the stock at a nominal amount.” Despite these indications of Mirman’s control over the bulk

transfer of all the “free-trading” shares of Changing Technologies to one buyer group, Island

Stock Transfer delivered unlegended certificates for all of the other outstanding shares to the

buyer’s counsel.

B. The Daniels/Fan/Harrison Shell Factory

100. Daniels, Fan and Harrison manufactured undisclosed blank check companies

based on a deceptive public float of purportedly unrestricted shares. Other than PurpleReal,

Daniels acquired a small local business and filed a Form S-1 secondary offering for shares he

had gifted to approximately 30 friends and family. Daniels and Harrison then orchestrated

Form 211 and DTC applications for the float to be eligible for open-market trading and

clearing.

101. Daniels and Harrison sold their first company, Dinello/AF Ocean, to Fan for

approximately $500,000 in Fan’s endeavor to amass a roster of public companies for later

reverse mergers with Chinese companies. Daniels and Fan then agreed to create three more

public vehicles from scratch: Court/ChinAmerica, Wallbeds/Sichuan, and TTB/Ibex.

102. Daniels and Harrison retained Spartan Securities to file the following Forms

211:

Daniels Company Form 211 Filing Form 211 Clearance Form 211 Date Date Signatory Dinello/AF Ocean 5/20/2011 06/14/2011 Dilley Court/ChinAmerica 7/24/2012 8/30/2012 Eldred Wallbeds/Sichuan 10/25/2012 11/30/2012 Eldred TTB/Ibex 9/6/2013 10/29/2013 Eldred 36 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 186 of 211

PurpleReal 7/31/2014 N/A (stop order) Eldred

Eldred’s Knowledge of/Participation in the Daniels/Fan/Harrison Fraud

103. Daniels and Harrison have been friends with Eldred for at least 10 years.

Harrison and Eldred’s wife had each been the sole officer of an issuer which had been acquired

by reverse merger or other change-in-control transaction. Harrison and Daniels had assisted

with the registration and sale of the issuer associated with Eldred’s wife. Eldred had offered

that issuer to a prospective buyer performing a “shell search” in October 2009, and Daniels

referred to that issuer as a “vehicle” in March 2010.

104. By email dated November 30, 2010, Eldred asked Harrison if regulators would

have concern if his wife “creates another public company.” Harrison responded that she and

Daniels “are filing [Dinello/AF Ocean] under my name and it has been two years since

[Harrison’s other public company’s] acquisition.”

105. Eldred otherwise understood Daniels to be a principal (albeit undisclosed) of

Dinello/AF Ocean. In April 2011, Daniels requested that Eldred prepare an Island Stock

Transfer transfer agent agreement for Dinello/AF Ocean. In return for waiving Island Stock

Transfer’s normal $7,500 setup fee, Eldred asked Harrison to modify Island Stock Transfer’s

form contract by “put[ting] a paragraph in the contract that if the company does a reverse

merger or there is a change of control then . . . there is a $5,000 termination fee,” a red flag

that the issuer was intended to be sold from the onset.

106. Spartan Securities then filed Dinello/AF Ocean’s Form 211 in May 2011

misrepresenting that the current and future business plan was the operation of a pizzeria, there

was no present or future arrangement with respect to the transfer of any shares, and Spartan

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Securities was not aware or in possession of any material or adverse information about

Dinello/AF Ocean. Spartan Securities also misrepresented that Eldred was contacted by the

named officer (other than Harrison) of Dinello/AF Ocean, whose identity Daniels and Harrison

used to create the façade of independent management and who never communicated with and

had not even heard of Spartan Securities or Eldred.

107. Soon after Form 211 clearance, by email dated July 20, 2011, Daniels asked

Eldred if he knew whether a law firm was “doing any [reverse mergers] that they may need a

shell for?” Two days later, Eldred referred that law firm to Daniels for “an OTCBB vehicle

that [Daniels] would like to do something with.” On August 18, 2011, Daniels again asked

Eldred about “available vehicles for a [reverse merger]” with Dinello/AF Ocean.

108. Eldred also assisted Daniels with DTC eligibility for Dinello/AF Ocean. In

June 2011, Spartan Securities initiated the DTC application misrepresenting that Dinello/AF

Ocean was “not a shell” and otherwise eligible for electronic clearance. The application was

granted in July 2011, but revoked because there was no subsequent deposit of shares into the

DTC system. By email dated October 10, 2011, Eldred told Daniels “I’m working on getting

it fixed for you” and discussed internally that an “x-clear transaction needs to take place” for

DTC eligibility to be reinstated.

109. That same day, Eldred signed securities deposit forms misrepresenting that

Daniels was never an “affiliate” of Dinello/AF Ocean. Specifically, in signing the forms,

Eldred misrepresented to Spartan Securities’ clearing firm that he had “carefully reviewed” the

request and supporting documents, and to his “best knowledge the information is true and

38 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 188 of 211

correct and is made in compliance with all applicable federal and state securities laws” –

despite knowing or being reckless in not knowing that Daniels controlled Dinello/AF Ocean.

110. On October 12, 2011, Eldred was copied on an email confirming that Spartan

Securities was putting in an order to sell Dinello/AF Ocean shares on Daniels’ behalf. In fact,

a Spartan Securities proprietary account purchased Daniels’ shares. Eldred confirmed with

Daniels that this trade “has your problem worked out as long as DTC cooperates with our

plan.”

111. As early as October 2011, Eldred knew or was reckless in not knowing that

Daniels and Harrison had sold Dinello/AF Ocean to Fan. In or about June 2012, Eldred first

negotiated with Fan to use Dinello/AF Ocean as a “public shell” for a potential reverse merger

with Spartan Securities and Island Stock Transfer’s parent company. By email dated July 11,

2012, Eldred wrote Fan (copying Daniels and Harrison): “The net result is that you and your

investors get an equity interest in our business, and you end up with the same basic public

OTCBB shell that you have now.”

112. Eldred also became aware that Daniels and Fan were manufacturing

Court/ChinAmerica, Wallbeds/Sichuan, and TTB/Ibex for Fan as public vehicles. On July 24,

2012, Spartan Securities filed the Form 211 for Court/ChinAmerica with Eldred signing as the

principal responsible for all related submissions to FINRA. On July 30, 2012, Daniels told

Eldred “Don’t forget that Andy [Fan] has three companies that he is doing registrations on

including the 211 we filed on Court. So there should be plenty of room for you to have a

meeting of the minds with [Fan]. Court is a super clean company that is a non-shell and the

assets are fully depreciated so there can be a disposal of assets for a real clean deal.” By email

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dated July 30, 2012, Eldred responded “I would be happy to use Court as a vehicle” while its

Form 211 was pending.

113. Eldred took further actions for Court/ChinAmerica, Wallbeds/Sichuan, and

TTB/Ibex knowing or being reckless in not knowing that both Fan’s involvement in and the

purpose of the issuers were undisclosed. On September 5, 2012, Eldred received an email

(with the subject “AF Ocean Investment”) from an Island Stock Transfer employee to sign up

Wallbeds/Sichuan as “yet another company with [Island Stock Transfer].” Eldred forwarded

the message to Daniels and asked him to “call me.”

114. In October 2012, Eldred approved Spartan Securities’ submission of a price

quote to FINRA for Court/ChinAmerica per the request of an employee of Dinello/AF Ocean,

which Eldred himself had referred to as a “public OTCBB shell that [Fan has] now.” In January

2013, Eldred was forwarded a request from an AF Ocean employee for a transfer agent

agreement for TTB/Ibex. Eldred then sent Daniels the TTB/Ibex agreement with the same

terms as Dinello/AF Ocean, including the waiver of all upfront fees in favor of a fee in the

event of a reverse merger.

115. Despite knowing or recklessly not knowing that these issuers were being

developed as public vehicles for Fan, Eldred signed the three Forms 211 misrepresenting that

each issuer was pursuing local business operations with no plans for mergers or changes of

control despite, for example, Eldred himself proposing to “use [Court/ChinAmerica] as a

vehicle” while its Form 211 was pending. The three Forms S-1 (part of the Rule 15c2-11(a)

information) made these same misrepresentations, and also omitted any reference to Fan. The

40 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 190 of 211

three Forms 211 also misrepresented that Spartan Securities had no other material or adverse

information in its possession.

116. In these three Forms 211, Spartan Securities also misrepresented that it had no

relationship with any officer or representative, despite (1) Daniels assisting the Eldreds with

the sale of the prior public company in the name of Eldred’s wife; (2) Daniels being a customer

with whom Spartan Securities entered open-market trades, (3) Eldred assisting Daniels with a

shell buyer for Dinello/AF Ocean, and (4) Daniels assisting Spartan Securities in finding a

potential reverse merger candidate (including all three Fan issuers).

117. Spartan Securities also misrepresented the manner in which it was solicited to

file the Form 211. On Wallbeds/Sichuan and TTB/Ibex, Spartan Securities misrepresented

that Eldred had been telephonically contacted by a “friend” (a Dinello/AF Ocean employee),

and had no relationship with any of their representatives (e.g. Daniels). FINRA then asked for

more detail on the manner of solicitation in its first Wallbeds/Sichuan deficiency letter. The

assistant sent Eldred the portion of the Form 211 on the manner of solicitation: “Am I missing

something here, or did I do something wrong?” Eldred told the preparer just to “remove the

friend part,” which remained in the later Form 211 for TTB/Ibex.

118. Spartan Securities also failed to inquire further regarding the presence of other

red flags. For example, on both Court/ChinAmerica and Wallbeds/Sichuan, by letters dated

July 27, 2012 and November 5, 2012, respectively, FINRA noted that numerous shareholders

purportedly purchased shares with sequentially numbered cashier’s checks (a potential sign of

someone other than the shareholder paying for the shares). Spartan Securities’ own policies

and procedures (and SEC guidance) identify the “transfer of shares by control persons, as gifts,

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to third persons in order to help create a public market” as a red flag. Without any further

inquiry into the information containing red flags, Spartan Securities simply cut-and-pasted

responses received on behalf of the issuers (from Harrison and a Dinello/AF Ocean employee)

that one shareholder obtained the checks with cash gathered from the others, when in fact it

was Daniels who provided all of the cash for the purchase of the cashier’s checks.

119. Spartan Securities ignored other red flags, including the fact that the same

officers and shareholders were involved (up to 26 of the 29 shareholders overlapped on

substantially similar “regression diagrams” of the history of share transfers) and each Form S-

1 was for a secondary offering by which a small company was not raising any money yet

incurring all the expenses related to the offering. Eldred did not review the Forms S-1 in

connection with the Forms 211 as required by Rule 15c2-11.

120. Eldred later signed the Form 211 and received draft deficiency letter responses

for TTB/Ibex. FINRA’s deficiency letter raised eight detailed questions, including inquiries

into: (1) all relationships among the shareholders and officers; (2) present or future

arrangements by which any person other than the named shareholder had control over the Form

S-1 shares; (3) confirmation of the Form 211’s representation that TTB/Ibex had no intent

either to effect a sale of shares or engage in change-of-control transaction; and (4) TTB/Ibex’s

shell company status. Spartan Securities cut-and-pasted a response letter drafted by a

Dinello/AF Ocean employee which listed Fan merely as an officer of TTB/Ibex as of

September 2013 and the shareholders (the vast majority of which were shareholders of

Dinello/AF Ocean, Court/ChinAmerica, and Wallbeds/Sichuan) as friends of Daniels.

However, Spartan Securities failed to disclose any aspect of the Daniels/Fan/Spartan Securities

42 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 192 of 211

relationship. Specifically, Spartan Securities stated that TTB/Ibex had no intent to engage in

a change-of-control transaction and that the purported business objective (local pressure

washing services) would be followed for at least one year, despite Eldred knowing or being

reckless in not knowing of Daniels and Fan’s manufacture of public shells for Fan without

regard to the purported local business operations.

121. Beyond the initial Forms 211 (and Spartan Securities’ initiation of unpriced

quotations), Eldred approved submissions of priced quotations to FINRA pursuant to Rule

15c2-11 for Court/ChinAmerica, TTB/Ibex, and Wallbeds/Sichuan in December 2013, January

2014 and May 2014, respectively – just prior to the public trading in those stocks initiated by

Daniels and the Dinello/AF Ocean employee. FINRA rejected the initial $0.10 quote on

TTB/Ibex given the Form S-1 offering price of $0.01. By email dated January 6, 2014, Eldred

acted upon the authorization of Daniels, who was no longer an officer of TTB/Ibex, to lower

the quote to that price.

122. In July 2014, Harrison contacted Eldred to file a Form 211 for PurpleReal.

FINRA requested proof of payment by the shareholders (many of whom were shareholders of

the other Daniels Companies). Eldred learned that Daniels and Harrison had paid for all the

shares, but by email approved Spartan Securities’ response to FINRA misrepresenting that the

shareholders had purchased their shares.

43 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 193 of 211

COUNT I

Violations of Section 15(c)(2) and Rule 15c2-11 of the Exchange Act

(Against Spartan Securities)

123. The Commission repeats and realleges Paragraphs 1 through 122 of its

Complaint.

124. From at least as early as January 2010 through at least May 2014, Spartan

Securities published quotations for securities or, directly or indirectly, submitted quotations

for publication, in any quotation medium without having a reasonable basis for believing,

based on a review of the documents and information required by Rule 15c2-11(a)(1) through

(a)(5) (“paragraph (a) information”) together with other documents and information required

by Rule 15c2-11(b), that the paragraph (a) information was accurate in all material respects

and that the sources of that information were reliable.

125. By reason of the foregoing, Spartan Securities violated, and, unless enjoined, is

reasonably likely to continue to violate, Section 15(c)(2) of the Exchange Act, 15 U.S.C.

78o(c)(2), and Rule 15c2-11, 17 C.F.R. § 240.15c2-11.

COUNT II

Aiding and Abetting Violations of Section 15(c)(2) and Rule 15c2-11 of the Exchange Act

(Against Dilley, Eldred, and Lopez)

126. The Commission repeats and realleges Paragraphs 1 through 122 of its

44 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 194 of 211

127. From at least as early as January 2010 through at least May 2014, Spartan

Securities published quotations for securities or, directly or indirectly, submitted quotations

for publication, in any quotation medium without having a reasonable basis for believing,

based on a review of the paragraph (a) information together with other documents and

information required by Rule 15c2-11(b), that the paragraph (a) information was accurate in

all material respects and that the sources of that information were reliable, and by reason of

the foregoing, violated Section 15(c)(2) and Rule 15c2-11 of the Exchange Act, 15 U.S.C. §

78o(c)(2), and 17 C.F.R. § 240.15c2-11.

128. From at least as early as January 2010 through at least March 2014, Dilley

knowingly or recklessly provided substantial assistance to Spartan Securities’ violations of

Section 15(c)(2) and Rule 15c2-11 of the Exchange Act, 15 U.S.C. § 78o(c)(2), and 17 C.F.R.

§ 240.15c2-11, and is deemed to be in violation of this provision to the same extent as Spartan

Securities.

129. From at least as early as June 2011 through at least May 2014, Eldred

knowingly or recklessly provided substantial assistance to Spartan Securities’ violations of

Section 15(c)(2) and Rule 15c2-11 of the Exchange Act, 15 U.S.C. § 78o(c)(2), and 17 C.F.R.

§ 240.15c2-11, and is deemed to be in violation of this provision to the same extent as Spartan

130. From at least as early as March 2013 through at least March 2014, Lopez

knowingly or recklessly provided substantial assistance to Spartan Securities’ violations of

Section 15(c)(2) and Rule 15c2-11 of the Exchange Act, 15 U.S.C. § 78o(c)(2), and 17 C.F.R.

45 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 195 of 211

§ 240.15c2-11, and is deemed to be in violation of this provision to the same extent as Spartan

131. By reason of the foregoing, Dilley, Eldred, and Lopez aided and abetted and,

unless enjoined, are reasonably likely to continue to aid and abet, violations of Section 15(c)(2)

and Rule 15c2-11 of the Exchange Act, 15 U.S.C. § 78o(c)(2), and 17 C.F.R. § 240.15c2-11.

COUNT III

Violations of Section 17(a)(1) of the Securities Act

132. The Commission repeats and realleges Paragraphs 1 through 122 of its

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

133. From at least as early as December 2009 through at least July 2014, Spartan

Securities, Island Stock Transfer, and Dilley, in the offer or sale of any securities by the use of

any means or instruments of transportation or communication in interstate commerce or by use

of the mails, directly or indirectly knowingly or recklessly employed any device, scheme or

artifice to defraud.

(Against Spartan Securities and Eldred – Daniels Companies)

134. From at least as early as May 2011 through at least August 2014, Spartan

Securities and Eldred, in the offer or sale of any securities by the use of any means or

instruments of transportation or communication in interstate commerce or by use of the mails,

directly or indirectly, knowingly or recklessly employed any device, scheme or artifice to

defraud.

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135. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred violated, and, unless enjoined, are reasonably likely to continue to violate, Section

17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a)(1).

COUNT IV

Violations of Section 17(a)(3) of the Securities Act

136. The Commission repeats and realleges Paragraphs 1 through 122 of its

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

137. From at least as early as December 2009 through at least July 2014, Spartan

Securities, Island Stock Transfer and Dilley, in the offer or sale of securities by the use of any

means or instruments of transportation or communication in interstate commerce or by use of

the mails, directly or indirectly, negligently engaged in transactions, practices and courses of

business which operated or would have operated as a fraud or deceit upon the purchasers and

prospective purchasers of such securities.

138. From at least as early as May 2011 through at least August 2014, Spartan

Securities and Eldred, in the offer or sale of securities by the use of any means or instruments

of transportation or communication in interstate commerce or by use of the mails, directly or

indirectly, negligently engaged in transactions, practices and courses of business which

operated or would have operated as a fraud or deceit upon the purchasers and prospective

purchasers of such securities.

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139. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred violated, and, unless enjoined, are reasonably likely to continue to violate, Section

17(a)(3) of the Securities Act, 15 U.S.C. § 77q(a)(3).

COUNT V

Violations of Section 10(b) and Rule 10b-5(a) of the Exchange Act

140. The Commission repeats and realleges Paragraphs 1 through 122 of its

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

141. From at least as early as December 2009 through at least July 2014, Spartan

Securities, Island Stock Transfer, and Dilley, directly and indirectly, by use of any means or

instrumentality of interstate commerce, or of the mails, knowingly or recklessly employed

devices, schemes or artifices to defraud in connection with the purchase or sale of securities.

142. From at least as early as May 2011 through at least May 2014, Spartan

Securities and Eldred, directly and indirectly, by use of any means or instrumentality of

interstate commerce, or of the mails, knowingly or recklessly employed devices, schemes or

artifices to defraud in connection with the purchase or sale of securities.

143. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred violated, and, unless enjoined, are reasonably likely to continue to violate, Section

10(b) and Rule 10b-5(a) of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-

5(a).

48 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 198 of 211

COUNT VI

Violations of Section 10(b) and Rule 10b-5(b) of the Exchange Act

144. The Commission repeats and realleges Paragraphs 1 through 122 of its

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

145. From at least as early as December 2009 through at least April 2014, Spartan

Securities, Island Stock Transfer, and Dilley, directly and indirectly, by use of any means or

instrumentality of interstate commerce, or of the mails, knowingly or recklessly made untrue

statements of material facts and omitted to state material facts necessary in order to make the

statements made, in light of the circumstances under which they were made, not misleading in

connection with the purchase or sale of securities.

146. From at least as early as May 2011 through at least May 2014, Spartan

Securities and Eldred, directly and indirectly, by use of any means or instrumentality of

interstate commerce, or of the mails, knowingly or recklessly made untrue statements of

material facts and omitted to state material facts necessary in order to make the statements

made, in light of the circumstances under which they were made, not misleading in connection

with the purchase or sale of securities.

147. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred violated, and, unless enjoined, are reasonably likely to continue to violate, Section

10(b) and Rule 10b-5(b) of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-

5(b). 49 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 199 of 211

COUNT VII

Violations of Section 10(b) and Rule 10b-5(c) of the Exchange Act

148. The Commission repeats and realleges Paragraphs 1 through 122 of its

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

149. From at least as early as December 2009 through at least July 2014, Spartan

Securities, Island Stock Transfer, and Dilley, directly and indirectly, by use of any means or

instrumentality of interstate commerce, or of the mails, knowingly or recklessly engaged in

acts, practices and courses of business which operated or would have operated as a fraud or

deceit upon any person in connection with the purchase or sale of securities.

150. From at least as early as May 2011 through at least May 2014, Spartan

Securities and Eldred, directly and indirectly, by use of any means or instrumentality of

interstate commerce, or of the mails, knowingly or recklessly engaged in acts, practices and

courses of business which operated or would have operated as a fraud or deceit upon any person

in connection with the purchase or sale of securities.

151. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred violated, and, unless enjoined, are reasonably likely to continue to violate, Section

10(b) and Rule 10b-5(c) of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-

5(c).

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COUNT VIII

Aiding and Abetting Violations of Section 17(a)(1) of the Securities Act

152. The Commission repeats and realleges Paragraphs 1 through 122 of its

153. From at least as early as July 2010 through at least August 2014, Daniels, Fan

and Harrison, in the offer or sale of securities by the use of any means or instruments of

transportation or communication in interstate commerce or by use of the mails, directly or

indirectly, knowingly or recklessly employed devices, schemes or artifices to defraud, and by

reason of the foregoing, violated Section 17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a)(1).

154. From at least as early as May 2011 through at least August 2014, Spartan

Securities and Eldred knowingly or recklessly provided substantial assistance to Daniels, Fan,

and Harrison’s violations of Section 17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a)(1), and

are deemed to be in violation of this provision to the same extent as Daniels, Fan, and Harrison.

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

155. From at least as early as January 2009 through at least July 2014, Mirman and

Rose, in the offer or sale of any securities by the use of any means or instruments of

transportation or communication in interstate commerce or by use of the mails, directly or

indirectly, knowingly or recklessly employed devices, schemes or artifices to defraud, and by

reason of the foregoing, violated Section 17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a)(1).

156. From at least as early as December 2009 through at least July 2014, Spartan

Securities, Island Stock Transfer, and Dilley knowingly or recklessly provided substantial 51 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 201 of 211

assistance to Mirman and Rose’s violations of Section 17(a)(1) of the Securities Act, 15 U.S.C.

§ 77q(a)(1), and are deemed to be in violation of this provision to the same extent as Mirman

and Rose.

157. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred aided and abetted and, unless enjoined, are reasonably likely to continue to aid and

abet, violations of Section 17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a)(1).

COUNT IX

Aiding and Abetting Violations of Section 17(a)(2) of the Securities Act

158. The Commission repeats and realleges Paragraphs 1 through 122 of its

159. From at least as early as July 2010 through at least May 2014, Daniels, Fan, and

Harrison, in the offer or sale of securities by the use of any means or instruments of

transportation or communication in interstate commerce or by use of the mails, directly or

indirectly, negligently obtained money or property by means of untrue statements of material

facts or omissions to state material facts necessary to make the statements made, in light of the

circumstances under which they were made, not misleading, and by reason of the foregoing,

violated Section 17(a)(2) of the Securities Act, 15 U.S.C. § 77q(a)(2).

160. From at least as early as May 2011 through at least May 2014, Spartan

Securities and Eldred knowingly or recklessly provided substantial assistance to Daniels, Fan,

and Harrison’s violations of Section 17(a)(2) of the Securities Act, 15 U.S.C. § 77q(a)(2), and

are deemed to be in violation of this provision to the same extent as Daniels, Fan, and Harrison.

52 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 202 of 211

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

161. From at least as early as January 2009 through at least July 2014, Mirman and

Rose, in the offer or sale of securities by the use of any means or instruments of transportation

or communication in interstate commerce or by use of the mails, directly or indirectly,

negligently obtained money or property by means of untrue statements of material facts or

omissions to state material facts necessary to make the statements made, in light of the

circumstances under which they were made, not misleading, and by reason of the foregoing,

violated Section 17(a)(2) of the Securities Act, 15 U.S.C. § 77q(a)(2).

162. From at least as early as December 2009 through at least July 2014, Spartan

Securities, Island Stock Transfer, and Dilley knowingly or recklessly provided substantial

assistance to Mirman and Rose’s violations of Section 17(a)(2) of the Securities Act, 15 U.S.C.

§ 77q(a)(2), and are deemed to be in violation of this provision to the same extent as Mirman

163. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred aided and abetted and, unless enjoined, are reasonably likely to continue to aid and

abet, violations of Section 17(a)(2) of the Securities Act, 15 U.S.C. § 77q(a)(2).

COUNT X

Aiding and Abetting Violations of Section 17(a)(3) of the Securities Act

164. The Commission repeats and realleges Paragraphs 1 through 122 of its

53 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 203 of 211

165. From at least as early as July 2010 through at least August 2014, Daniels, Fan

and Harrison, in the offer or sale of securities by the use of any means or instruments of

transportation or communication in interstate commerce or by use of the mails, directly or

indirectly, negligently engaged in transactions, practices and courses of business which

operated or would have operated as a fraud or deceit upon the purchasers and prospective

purchasers of such securities, and by reason of the foregoing, violated Section 17(a)(3) of the

Securities Act, 15 U.S.C. § 77q(a)(3).

166. From at least as early as May 2011 through at least August 2014, Spartan

Securities and Eldred knowingly or recklessly provided substantial assistance to Daniels, Fan

and Harrison’s violations of Section 17(a)(3) of the Securities Act, 15 U.S.C. § 77q(a)(3), and

are deemed to be in violation of this provision to the same extent as Daniels, Fan, and

Harrison.

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

167. From at least as early as January 2009 through at least July 2014, Mirman and

Rose, in the offer or sale of any securities by the use of any means or instruments of

transportation or communication in interstate commerce or by use of the mails, directly or

indirectly, negligently engaged in transactions, practices and courses of business which

operated or would have operated as a fraud or deceit upon the purchasers and prospective

purchasers of such securities, and by reason of the foregoing, violated Section 17(a)(3) of the

54 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 204 of 211

168. From at least as early as December 2009 through at least July 2014, Spartan

Securities, Island Stock Transfer, and Dilley knowingly or recklessly provided substantial

assistance to Mirman and Rose’s violations of Section 17(a)(3) of the Securities Act, 15

U.S.C. § 77q(a)(3), and are deemed to be in violation of this provision to the same extent as

Mirman and Rose.

169. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred aided and abetted and, unless enjoined, are reasonably likely to continue to aid

and abet, violations of Section 17(a)(3) of the Securities Act, 15 U.S.C. § 77q(a)(3).

COUNT XI

Aiding and Abetting Violations of Section 10(b) and Rule 10b-5(a) of the Exchange Act

170. The Commission repeats and realleges Paragraphs 1 through 122 of its

171. From at least as early as July 2010 through at least May 2014, Daniels, Fan and

Harrison, directly and indirectly, by use of any means or instrumentality of interstate

commerce, or of the mails, knowingly or recklessly employed devices, schemes or artifices

to defraud in connection with the purchase or sale of securities, and by reason of the foregoing,

violated Section 10(b) and Rule 10b-5(a) of the Exchange Act, 15 U.S.C. § 78j(b) and 17

C.F.R. § 240.10b-5(a).

172. From at least as early as May 2011 through at least May 2014, Spartan

Securities and Eldred knowingly or recklessly provided substantial assistance to Daniels, Fan

and Harrison’s violations of Section 10(b) and Rule 10b-5(a) of the Exchange Act, 15 U.S.C. 55 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 205 of 211

§ 78j(b) and 17 C.F.R. § 240.10b-5(a), and are deemed to be in violation of these provisions

to the same extent as Daniels, Fan and Harrison.

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

173. From at least as early as January 2009 through at least July 2014, Mirman and

Rose, directly and indirectly, by use of any means or instrumentality of interstate commerce,

or of the mails, knowingly or recklessly employed devices, schemes or artifices to defraud in

connection with the purchase or sale of securities, and by reason of the foregoing, violated

Section 10(b) and Rule 10b-5(a) of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. §

240.10b-5(a).

174. From at least as early as December 2009 through at least July 2014, Spartan

Securities, Island Stock Transfer, and Dilley knowingly or recklessly provided substantial

assistance to Mirman and Rose’s violations of Section 10(b) and Rule 10b-5(a) of the

Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5(a), and are deemed to be in

violation of these provisions to the same extent as Mirman and Rose.

175. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred aided and abetted and, unless enjoined, are reasonably likely to continue to aid

and abet, violations of Section 10(b) and Rule 10b-5(a) of the Exchange Act, 15 U.S.C. §

78j(b) and 17 C.F.R. § 240.10b-5(a).

56 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 206 of 211

COUNT XII

Aiding and Abetting Violations of Section 10(b) and Rule 10b-5(b) of the Exchange Act

176. The Commission repeats and realleges Paragraphs 1 through 122 of its

177. From at least as early as July 2010 through at least May 2014, Daniels, Fan and

Harrison, directly and indirectly, by use of any means or instrumentality of interstate

commerce, or of the mails, knowingly or recklessly made untrue statements of material facts

and omitted to state material facts necessary in order to make the statements made, in light of

the circumstances under which they were made, not misleading in connection with the

purchase or sale of securities, and by reason of the foregoing, violated Section 10(b) and Rule

10b-5(b) of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5(b).

178. From at least as early as May 2011 through at least May 2014, Spartan

Securities and Eldred knowingly or recklessly provided substantial assistance to Daniels, Fan

and Harrison’s violations of Section 10(b) and Rule 10b-5(b) of the Exchange Act, 15 U.S.C.

§ 78j(b), and 17 C.F.R. § 240.10b-5(b), and are deemed to be in violation of these provisions

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

179. From at least as early as January 2009 through at least July 2014, Mirman and

Rose directly and indirectly, by use of any means or instrumentality of interstate commerce,

or of the mails, knowingly or recklessly made untrue statements of material facts and omitted

57 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 207 of 211

to state material facts necessary in order to make the statements made, in light of the

circumstances under which they were made, not misleading in connection with the purchase

or sale of securities, and by reason of the foregoing, violated Section 10(b) and Rule 10b-5(b)

of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5(b).

180. From at least as early as December 2009 through at least July 2014, Spartan

Securities, Island Stock Transfer, and Dilley knowingly or recklessly provided substantial

assistance to Mirman and Rose’s violations of Section 10(b) and Rule 10b-5(b) of the

Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5(b), and are deemed to be in

violation of these provisions to the same extent as Mirman and Rose.

181. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred aided and abetted and, unless enjoined, are reasonably likely to continue to aid

and abet, violations of Section 10(b) and Rule 10b-5(b) of the Exchange Act, 15 U.S.C. §

78j(b) and 17 C.F.R. § 240.10b-5(b).

COUNT XIII

Aiding and Abetting Violations of Section 10(b) and Rule 10b-5(c) of the Exchange Act

182. The Commission repeats and realleges Paragraphs 1 through 122 of its

183. From at least as early as July 2010 through at least May 2014, Daniels, Fan and

Harrison, directly and indirectly, by use of any means or instrumentality of interstate

commerce, or of the mails, knowingly or recklessly engaged in acts, practices and courses of

business which operated or would have operated as a fraud or deceit upon any person in 58 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 208 of 211

connection with the purchase or sale of securities, and by reason of the foregoing, violated

Section 10(b) and Rule 10b-5(c) of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. §

240.10b-5(c).

184. From at least as early as May 2011 through at least May 2014], Spartan

Securities and Eldred knowingly or recklessly provided substantial assistance to Daniels, Fan

and Harrison’s violations of Section 10(b) and Rule 10b-5(c) of the Exchange Act, 15 U.S.C.

§ 78j(b) and 17 C.F.R. § 240.10b-5(c), and are deemed to be in violation of these provisions

(Against Spartan Securities, Island Stock Transfer, and Dilley – Mirman/Rose Companies)

185. From at least as early as January 2009 through at least July 2014, Mirman and

Rose, directly and indirectly, by use of any means or instrumentality of interstate commerce,

or of the mails, knowingly or recklessly engaged in acts, practices and courses of business

which operated or would have operated as a fraud or deceit upon any person in connection

with the purchase or sale of securities, and by reason of the foregoing, violated Section 10(b)

and Rule 10b-5(c) of the Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5(c).

186. From at least as early as December 2009 through at least July 2014], Spartan

Securities, Island Stock Transfer, and Dilley knowingly or recklessly provided substantial

assistance to Mirman and Rose’s violations of Section 10(b) and Rule 10b-5(c) of the

Exchange Act, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5(c), and are deemed to be in

violation of these provisions to the same extent as Mirman and Rose.

187. By reason of the foregoing, Spartan Securities, Island Stock Transfer, Dilley

and Eldred aided and abetted and, unless enjoined, are reasonably likely to continue to aid and 59 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 209 of 211

abet, violations of Section 10(b) and Rule 10b-5(c) of the Exchange Act, 15 U.S.C. § 78j(b)

and 17 C.F.R. § 240.10b-5(c).

COUNT XIV

Violations of Sections 5(a) and 5(c) of the Securities Act

(Against Spartan Securities, Island Stock Transfer, and Dilley)

188. The Commission repeats and realleges Paragraphs 1 through 122 of its

189. From at least as early as December 2009 until at least July 2014, Spartan

Securities, Island Stock Transfer and Dilley, directly or indirectly, have made use of the means

or instruments of transportation or communication in interstate commerce or of the mails to

sell securities, when no registration statement was in effect with the Commission as to such

securities, and have made use of the means or instruments of transportation or communication

in interstate commerce or of the mails to offer to sell such securities when no registration

statement had been filed with the Commission as to such securities.

190. There were no applicable exemptions from registration.

191. By reason of the foregoing, Spartan Securities, Island Stock Transfer and Dilley

violated, and unless enjoined, are reasonably likely to continue to violate Sections 5(a) and

5(c) of the Securities Act, 15 U.S.C. § 77e(a), (c).

RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests the Court find the Defendants

committed the violations alleged, and:

60 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 210 of 211

I.

Permanent Injunction

Issue a Permanent Injunction restraining and enjoining Defendants, their officers,

agents, servants, employees, attorneys, and all persons in active concert or participation with

them, and each of them, from violating the federal securities laws alleged in this Complaint.

II.

Disgorgement

Issue an Order directing Island Stock Transfer to disgorge ill-gotten gains received

within the applicable statute of limitations (including the time during which the statute of

limitations was tolled by agreement with Island Stock Transfer), including prejudgment

interest, resulting from the acts or courses of conduct alleged in this Complaint.

III.

Penalties

Issue an Order directing Defendants to pay civil money penalties pursuant to Section

20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d) of the Exchange Act, 15

U.S.C. § 78u(d).

IV.

Penny Stock Bar

Issue an Order, pursuant to Section 20(g) of the Securities Act, 15 U.S.C. § 77t(g), and

Section 21(d)(6) of the Exchange Act, 15 U.S.C. § 78u(d)(6), barring Spartan Securities,

Dilley, Eldred and Lopez from participating in any future offering of a penny stock.

61 USCA11 Case: 22-13129 Document: 88-1 Date Filed: 01/16/2026 Page: 211 of 211

V.

Further Relief

Grant such other and further relief as may be necessary and appropriate.

VI.

Retention of Jurisdiction

Further, the Commission respectfully requests that the Court retain jurisdiction over

this action and over Defendants in order to implement and carry out the terms of all orders and

decrees that may hereby be entered, or to entertain any suitable application or motion by the

Commission for additional relief within the jurisdiction of this Court.

Dated: February 20, 2019 By:s/Wilfredo Fernandez Wilfredo Fernandez Senior Trial Counsel Fla. Bar No. 142859 Telephone: (305) 982-6376 Facsimile: (305) 536-4154 E-mail: fernandezw@sec.gov

Christine Nestor Senior Trial Counsel Fla. Bar No. 597211 Telephone: (305) 982-6367 Facsimile: (305) 536-4154 E-mail: nestorc@sec.gov

ATTORNEYS FOR PLAINTIFF SECURITIES AND EXCHANGE COMMISSION 801 Brickell Avenue, Suite 1800 Miami, Florida 33131 Telephone: (305) 982-6300