The Securities and Exchange Commission announced it filed charges and obtained an asset freeze and other emergency relief to stop an alleged offering fraud and misappropriation of investor assets orchestrated by Colorado Springs resident Tra Jay Scarlett using two entities under Scarlett’s control, Chatfield PCS Ltd. (Chatfield) and GO ECO Manufacturing, Inc. (GO ECO).
According to the SEC’s complaint, which was filed in federal court in the District of Colorado, since approximately March 2016, Scarlett, through Chatfield, has raised at least $3.2 million from investors in two securities offerings by GO ECO, which was billed as an environmentally-friendly drink bottling and manufacturing company. The complaint alleges that Scarlett and Chatfield told investors that GO ECO made or bottled “the number one protein shot beverage in the world,” that investments in GO ECO would be used to expand the company’s existing business, and that the investments were expected to generate annual returns of 20% to 25%. In fact, according to the complaint, GO ECO never manufactured or bottled any beverages, never opened a bank account, and never operated in any way at all. Instead, the complaint alleges, Scarlett misappropriated hundreds of thousands of dollars of investor funds to buy, among other things, jewelry and precious metals, and to make a down payment and mortgage payments on his home. The complaint also alleges that the defendants made other false and misleading statements to GO ECO investors about GO ECO’s business operations, management team, and relationship with its supposed key customer.
The SEC’s complaint, filed on March 3, 2021, and unsealed today, charges the defendants with violating the antifraud provisions of Section 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Scarlett and Chatfield with violating Section 17(a)(2) of the Securities Act. The SEC seeks a permanent injunction, disgorgement, prejudgment interest, and a civil penalty from each of the defendants.
The SEC’s investigation was conducted by Kenneth Stalzer, J. Lee Robinson, and Donna B. Walker, and supervised by Ian S. Karpel, Jason J. Burt, and Kurt L. Gottschall. The SEC’s litigation is being led by Zachary T. Carlyle and Kenneth Stalzer, and supervised by Gregory A. Kasper.