SEC – Tra Jay Scarlett – Chatfield PCS – GO ECO Manufacturing

SEC Obtains Final Judgment Against Defendants Charged with Fraud Involving Sham Bottling Company – Tra Jay Scarlett – Chatfield PCS Ltd. – GO ECO Manufacturing, Inc

Securities and Exchange Commission v. Chatfield PCS Ltd. et al., No. 1:21-cv-00641-DDD-KMT (D. Colo. filed March 3, 2021)

Washington, DC (STL.News) On March 30, 2022, the Securities and Exchange Commission (SEC) obtained a final judgment against Tra Jay Scarlett, Chatfield PCS Ltd., and GO ECO Manufacturing, Inc., who were charged for their roles in an offering fraud involving misappropriation of investor assets.  The judgment requires the defendants to collectively pay more than $5 million in disgorgement, prejudgment interest, and civil penalties.

The SEC’s complaint, which was filed in the United States District Court for the District of Colorado on March 3, 2021, alleges that since approximately March 2016, Scarlett, through Chatfield, raised at least $3.2 million from investors in two securities offerings by GO ECO.  The complaint alleges that Scarlett and Chatfield billed GO ECO as an environmentally-friendly drink bottling and manufacturing company and 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%.  According to the complaint, however, GO ECO 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, as well as to make various payments on his home.  The complaint also alleges that the defendants made other false and misleading statements to GO ECO investors about its business operations, management team, and relationship with its supposed key customer.

The SEC’s complaint charged Scarlett, Chatfield, and GO ECO with violating various antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.  Without admitting or denying the SEC’s allegations, the defendants consented to the entry of a judgment that permanently enjoins them from violating the charged provisions, imposes conduct-based injunctions, and orders payment on a joint and several bases of $3,217,568 in disgorgement together with prejudgment interest of $407,695.  The judgment also orders Scarlett to pay a $1.5 million civil penalty.

The SEC’s litigation was conducted by Zachary T. Carlyle and Kenneth Stalzer and supervised by Gregory A. Kasper.  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.