U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25925 / January 16, 2024
Securities and Exchange Commission v. Medsis International, Inc. et al., Civil Action No. 1:21-cv-11356 (D. Mass. filed Aug. 19, 2021)
SEC Obtains Default Judgment Against Technology Company in Multi-Million Dollar Securities Offering Fraud
On January 3, 2024, the United States District Court for the District of Massachusetts entered a final judgment against start-up technology company Medsis International, Inc., ordering it to pay approximately $15,871,200 in disgorgement, prejudgment interest, and a civil penalty in a securities offering fraud action previously filed by the SEC in August 2021.
The SEC's complaint alleged that Medsis, through co-defendants Joshua Dax Cabrera and Paul Hess, fraudulently raised more than $12.9 million from more than 150 U.S. and foreign investors by offering unregistered securities in Medsis International, Inc. from 2015 through 2020. The complaint alleged that while offering Medsis securities, Cabrera and Hess made multiple material misrepresentations and misleading statements about Medsis to investors concerning the existence and value of contracts with customers, existing and expected revenue, and business operations. The complaint also alleged that Cabrera and Hess misrepresented to investors their personal use of investor funds.
The District Court entered final judgment after Medsis International defaulted in the action. In addition to ordering the financial remedies, the final judgment permanently enjoins Medsis from violating the antifraud provisions of 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, and the securities offering registration requirements of Sections 5(a) and 5(c) of the Securities Act. Medsis has been ordered to pay disgorgement of $11,842,015, prejudgment interest of $2,913,045, and a civil penalty of $1,116,140.
The District Court entered final judgment against Cabrera on March 9, 2023, as part of a settlement in which Cabrera agreed to pay disgorgement of $536,895, prejudgment interest of $52,816, and a civil penalty of $536,895, and to be enjoined from future violations of the securities laws and from offering and selling securities to others. The court entered final judgment against Paul Hess, on December 19, 2022, as part of a settlement in which Hess agreed to pay disgorgement of $527,000, prejudgment interest of $109,205, and a civil penalty of $207,183, and to be enjoined from future violations of the securities laws and from offering and selling securities to others.
The SEC's case was handled by Peter Bryan Moores, Marc Jones, and Kevin Currid of the Boston Regional Office.