SEC Alleges 10 Securities Violations in Suit vs. Internet Mortgage Matchmaker
BorrowMoney.com’s reported revenue for three quarters in FY 2019 was a “figment” of sole officer and majority shareholder Aldo Piscitello’s “imagination and invention,” alleged the SEC's lawsuit Wednesday (docket 0:24-cv-61118) in U.S. District Court for Southern Florida.
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The defendant, whose registration of common stock became effective June 11, 2020, purports to provide "an internet-based platform to match mortgage and loan providers with prospective borrowers, earning revenue by supplying leads of prospective customers to those lenders," said the complaint.
Though the company reported revenue in FY 2019, quarterly reports, signed by Piscitello, for the periods ended Nov. 30, 2018, Feb. 28, 2019, and May 31, 2019, were mostly “fictitious,” alleged the complaint. For the remainder, BorrowMoney didn’t have contracts or events that met the criteria for revenue recognition required by generally accepted U.S. accepted accounting principles, it said.
BorrowMoney further misled the investing public when it “purportedly 'came clean’ that its revenue was entirely overstated” in a Nov. 15, 2019, Form 8-K filing with the SEC, the complaint said. That report announced the resignation of BorrowMoney’s auditor and indicated that the auditors believed the company’s quarterly reports “were materially misstated by revenue being overstated and loans from related parties being understated,” it said.
In disclosing the auditor’s resignation, BorrowMoney, “acknowledging that it was Piscitello himself who contributed to BorrowMoney’s purported revenue, failed to disclose its improper revenue recognition was not due to misclassifications” as it stated in the November 2019 8-K, “but rather that it should not have disclosed revenue at all” for any FY 2019 quarterly reports, the complaint alleged. The company hasn’t made any “corrective disclosures” to clarify that revenue figures in those three quarters weren’t “simply misclassified” but “instead, were fictitious or did not meet the criteria for revenue recognition.”
Piscitello's other failings included not filing a required Form 3 with the SEC indicating his beneficial ownership of 20 million shares of BorrowMoney common stock when the registration of common stock became effective in June 2020 and not making required disclosures related to changes in his beneficial ownership of stock as a result of 99 transactions made in brokerage accounts he owned solely or jointly between August 2020 and February 2023, said the complaint. Piscitello netted about $37,900 from sales of BorrowMoney’s common stock August 2020-June 2022, alleged the complaint. He also failed to disclose he bought 3.3 million shares in March 2023, it said.
Over five years, BorrowMoney “had four independent audit firms resign, and though a publicly traded company, it does not currently have an independent audit firm in its employ,” alleged the complaint.
The SEC claims 10 violations of the Securities Exchange Act. It seeks a permanent injunction against BorrowMoney barring it from violating the act and orders directing BorrowMoney and Piscitello to disgorge all “ill-gotten gains”; pay penalties; bar Piscitello from serving as an officer or director of any company with securities registered with the SEC; and permanently restrain Piscitello from participating in the offering of any penny stock.