SEC Sues Sports-Centric Digital Platform Over 'Multimillion-Dollar Offering Fraud'
A sports-focused digital platform that raised $22 million from 38 outside investors through private offerings “falsely promised investors exponential growth” in revenue and stock value, alleged an SEC complaint Wednesday (docket 1:24-cv-02896) in U.S. District Court for Southern New York in Manhattan.
Paul Feller, CEO of Icaro Media Group, and the company itself “engaged in a multimillion-dollar offering fraud” by making false misrepresentations about Icaro's business partnerships with two “multinational telecommunications companies” identified in the complaint as Telco 1 and Telco 2, the complaint said. Icaro went through several name changes since 2016; previous names associated with the company include Sport 195, SKYY Digital Media Group and VOS Digital Media Group, it said.
From at least 2017 to 2021, Feller solicited investments, falsely and repeatedly telling investors that Icaro was about to launch, or had already launched, digital platforms and smartphone apps with the two telcos featuring sports content tailored to the telcos’ regional interests, the complaint said. But the defendants hadn't launched such platforms “and were not poised to launch any such products with either Telco,” it said.
Telco 1 launched trial projects with Icaro before 2017, but the telco terminated all of them by mid-2016, instead developing the products it needed internally or with other partners, the complaint alleged. From 2017 to 2021, Icaro continued to pitch other products to Telco 1, but the telco didn’t engage with Icaro about launching another product, it said.
Icaro “never launched any product with Telco 2,” the complaint said. Though Telco 2 engaged with Icaro in efforts to launch a product, the parties were stymied by various issues, “including Icaro’s failure to obtain the appropriate licenses for its content,” it said. Yet, Feller “repeatedly claimed that launches were imminent” and at least once said that the launch had occurred, it said.
Feller made other misrepresentations to investors, including claims that “high-profile business leaders” -- the founder and former CEO of a sportswear company and the founder of a personal finance app -- were coming in as strategic investors, the complaint said.
The SEC alleges the defendants violated the Securities Exchange Act and seeks a judgment permanently enjoining Feller and Icaro from future violations. It seeks an order requiring the defendants to disgorge all “ill-gotten gains” they received as a result of the alleged violations, plus prejudgment interest and civil money penalties. It also requests a ruling permanently prohibiting Feller from serving as an officer or director of any company with securities registered under the Exchange Act.