SEC Charges Myriad Defendants With Alleged Multi-Million Dollar Fraud

The U.S. Securities and Exchange Commission announced fraud charges against Texas resident Sumit Rai and three companies Rai formed and controlled – SVN Med LLC, NVS Med Inc., and Onco Filtration Inc. – for allegedly making misrepresentations to investors and misappropriating at least $10.6 million in investor funds from July 2020 to April 2023.

Also, Massachusetts resident Kim deMora was charged with aiding and abetting the alleged fraud and Cancer Check Labs LLC, another company controlled by Rai, was charged as a relief defendant.

SVN Med, NVS Med and Onco issued securities to investors at various times between November 2019 and approximately September 2023. Rai facilitated all of these offerings and deMora facilitated the offerings by at least SVN Med. In total, according to the SEC, through these private securities offerings, defendants raised more than $26 million from over 180 investors. Many of these investors were individuals.

According to the SEC’s complaint, Rai and his companies told investors their primary business was developing a method and device to filter “circulating tumor cells” out of a patient’s bloodstream. At various times, the defendants claimed that their method and device were: 1) a way to treat or prevent the spread of cancer; 2) a way to diagnose cancer; or 3) a way to screen for the presence of cancer.

Some investment materials provided to investors summarized the technology as a form of “cancer dialysis.”

Rai allegedly made numerous statements about how investors’ funds would be used for research and development as well as the clinical trials necessary to obtain approval to make and sell a medical device in the United States and Europe.

The complaint alleges that, in reality, Rai misappropriated at least $10.6 million of investor funds for his personal use, including to pay about $2.3 million he owed on his personal credit cards, to pay at least $1 million in unrelated debts incurred by one of his business associates, to purchase $850,000 worth of luxury vehicles for an “elite social club” he attempted to start in Manhattan, and to fund $5.1 million in cash withdrawals.

The complaint further alleges that deMora substantially assisted in misappropriating investor funds by signing a document she knew contained false representations in connection with Rai obtaining a personal loan with investor funds pledged as collateral, and agreeing to use of investor funds to repay Rai’s personal loan. Finally, Cancer Check is alleged to have received ill-gotten gains in connection with the fraudulent scheme.

The SEC’s complaint, filed in the United States District Court for the District of Massachusetts, charges Rai, SVN, NVS and Onco with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, charges de Mora with aiding and abetting Rai’s and SVN’s fraudulent conduct and charges Cancer Check as a relief defendant.

The SEC seeks permanent injunctions against the defendants; disgorgement with prejudgment interest from Rai, deMora, SVN, NVS and relief defendant Cancer Check; civil penalties and officer and director bars against Rai and deMora; and a bar against Rai from participating in the issuance, purchase, offer, or sale of any security except for certain transactions in his personal accounts.

Click here to visit the AltsWire directory page.