07/19/2021 | Press release | Archived content
The Securities and Exchange Commission today announced charges against Aron Govil of Jacksonville, Florida, for defrauding investors in two companies he controlled, Cemtrex Inc. and Telidyne Inc.
According to the SEC's complaint, filed today in U.S. District Court for the Southern District of New York, Govil, the controlling shareholder and executive director of Cemtrex, misappropriated over $7 million of Cemtrex investor funds between April 2016 and January 2018 to finance his personal business ventures and to pay his personal expenses. The complaint also alleges that Govil engaged in scalping - secretly selling Cemtrex stock while paying stock promoters to recommend that retail investors buy the company's stock - and insider trading. The complaint alleges that Govil did not file with the SEC any of the required disclosures in connection with his Cemtrex trading.
The SEC's complaint also alleges that Govil, while serving as Telidyne's chief executive officer, made material misrepresentations to investors regarding the company's products. According to the complaint, between at least April 2019 and May 2020, Govil falsely told investors that Telidyne, which purports to be a developer of mobile phone applications or 'apps,' had developed the 'Teli App,' which allowed users to transact in cryptocurrencies from their mobile phones, and also had started work on an app to detect COVID-19. These statements allegedly were false because the Teli App did not have the stated cryptocurrency functionality and Telidyne had not started work on the COVID-19 detection app.
'Govil allegedly flooded the market with paid-for buy recommendations for Cemtrex stock and made false claims about Telidyne's development of mobile apps that would facilitate cryptocurrency transactions and help combat the coronavirus,' said Richard R. Best, Director of the SEC's New York Regional Office. 'Investors should be wary of online recommendations from unverified sources that appear to capitalize on the latest market trends and seem too good to be true.'
The SEC's complaint charges Govil with violations of antifraud provisions of the federal securities laws, as well as violations of Section 16(a) of the Securities Exchange Act of 1934, which requires corporate officers, directors, and major shareholders to disclose their transactions in their company's stock. The action seeks injunctive relief, an officer and director bar, a penny stock bar, disgorgement plus prejudgment interest, and civil penalties. Without admitting or denying the complaint's allegations, Govil has consented to the entry of a final judgment that enjoins him from violating the charged provisions; imposes officer and director and penny stock bars; imposes, in connection with certain violations, disgorgement in the amount of $626,782, plus prejudgment interest thereon in the amount of $76,693.95; and imposes a civil penalty in the amount of $620,000. The judgment also provides for the court to order, upon motion of the Commission, additional disgorgement with prejudgment interest and/or penalty against Govil, if deemed appropriate. The proposed settlement is subject to court approval.
The SEC's continuing investigation is being conducted by Philip A. Fortino, Rebecca Reilly, Melissa Coppola, and Sandeep Satwalekar. The case is being supervised by Lara Shalov Mehraban. The litigation will be handled by Mr. Fortino and Ms. Reilly. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA).