This case was last updated from U.S. District Courts on 11/09/2021 at 08:28:02 (UTC).

Securities and Exchange Commission v. ProSky, Inc. et al

Case Summary

On September 10, 2021, Securities and Exchange Commission (the “Commission”), represented by David Misler, attorney at SEC’s DC Regional Office, and Stephen James Binhak of Law Office of Stephen James Binhak, PLLC, filed a civil enforcement action against ProSky, Inc. (“ProSky” or “Company”), Crystal A. Huang (“Huang” and with ProSky, “Defendants”) and T and C Partnership, LLC ( “Relief Defendant”). The Commission filed suit seeking injunctive relief, disgorgement of all illicit gains with pre-judgment interest, and civil penalties for allegedly making materially false and misleading misrepresentations about the Company’s financial condition and its customer base to induce investments from investors and then misappropriating the money. This case was filed in the U.S. District Court in the Southern District of New York.

In its complaint, the Commission alleged that, “Between at least February 2015 and February 2020, Defendant ProSky and its co-founder and Chief Executive Officer, Huang, made materially false and misleading misrepresentations about the Company’s financial condition and its customer base to induce investments from at least sixteen prospective and pre-existing investors and then misappropriated some investor money. Defendants provided investors, many of whom focused on investing in minority- and women-owned businesses such as ProSky, with falsified bank statements and balance sheets that overstated ProSky’s cash reserves and revenues by millions of dollars. Defendants also provided investors with falsified customer lists that contained companies which were not actual ProSky customers and which were used to support inflated revenue figures. Thirteen of these investors ultimately invested $5.025 million in ProSky based on Defendants’ material misrepresentations.”

The Commission further alleged that, “ProSky and Huang diverted hundreds of thousands of dollars in investor money to Huang and her family members for their personal benefit. This included transferring at least $371,000 to the Relief Defendant—T and C Partnership, LLC—a private company controlled by Huang and her husband, which then purportedly loaned $235,000 of that money to Huang and her husband to purchase a residential property.” 

The Commission lists out six claims for relief. The first claim is for the violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The second claim is for the violations of Section 17(a) of the Securities Act. The third claim is against Huang for Control Person Liability under Exchange Act Section 20(a) for violations of Exchange Act Section 10(b) and Rule 10b-5 thereunder. The fourth and fifth claims are also against Huang for aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 17(a) of the Securities Act. The sixth claim is against the Relief Defendant for unjust enrichment liability.

In its prayer for relief, the Commission requested the court to permanently restrain and enjoin Defendants from, directly or indirectly, violating the Securities and Exchange Act. The Commissions further requested the court order all Defendants to disgorge all illicit gains, with prejudgment interest and order Defendant Huang to pay appropriate civil penalties and permanently enjoin from directly or indirectly, participating in the issuance, purchase, offer, or sale of any security except for her own personal account. Further, the Commission requested the court permanently bar Defendant Huang from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, and grant such other and further relief as the court may deem just and appropriate for the protection of investors.

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Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    1:21-CV-07568

  • Filing Date:

    09/10/2021

  • Case Status:

    Disposed - Other Disposed

  • Case Type:

    Finance - Security/Commodity/Exchange

Judge Details

Presiding Judge

Vernon S. Broderick

 

Party Details

Plaintiff

Securities and Exchange Commission

Defendants

ProSky, Inc.

Crystal A. Huang

T and C Partnership, LLC

Attorney/Law Firm Details

Plaintiff Attorney

David Misler

Attorney at Securities and Exchange Commission (DC)

100 F Street, N.E.

Washington, DC 20549

Defendant Attorney

Stephen James Binhak

Attorney at Law Office of Stephen James Binhak, PLLC

1 Se 3Rd Avenue, Suite 2600

Miami, FL 33131

 

Court Documents

#1

#2

3 #3

Main Document

3 #1

Affidavit

3 #2

Text of Proposed Order

3 #3

Exhibit Certificate of Good Standing (DC)

3 #4

Exhibit Certificate of Good Standing (MD)

#4

6 #6

Main Document

6 #1

Exhibit 1 - ProSky, Inc. Consent

6 #2

Exhibit 2 - Crystal A. Huang Consent

6 #3

Exhibit 3 - T and C Partnership, LLC Consent

6 #4

Exhibit 4 - Proposed Final Judgment

#7

(#7) FINAL JUDGMENT AS TO DEFENDANTS PROSKY, INC. AND CRYSTAL A. HUANG AND RELIEF DEFENDANT T AND C PARTNERSHIP, LLC. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants ProSky and Crystal Huang are each permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act) [15 U.S.C. 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. 240.10b-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security as further set forth in this Judgment. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants ProSky and Crystal Huang are each permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 (the Securities Act) [15 U.S.C. 77q(a)] in the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly as further set forth in this Judgment. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. 78u(d)(5)], Defendant Crystal Huang is permanently restrained and enjoined from directly or indirectly, including, but not limited to, through any entity owned or controlled by her, participating in the issuance, purchase, offer, or sale of any security, provided, however, that such injunctions shall not prevent her from purchasing or selling securities listed on a national securities exchange for her own personal account. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant to Section 20(e) of the Securities Act [15 U.S.C. 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. 78u(d)(2)], Defendant Crystal Huang is prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. 78o(d)]. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants ProSky and Crystal Huang are jointly and severally liable for disgorgement of $3,196,949.82, representing net profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $809,799.07. Of these amounts, Relief Defendant T and C Partnership is jointly and severally liable with Defendants ProSky and Crystal Huang for disgorgement of $136,030, together with prejudgment interest thereon in the amount of $2,031.21. Defendant Crystal Huang is also liable for a civil penalty in the amount of $700,000 pursuant to Section 20(d) of the Securities Act [15 U.S.C. 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 78u(d)(3)]. Each Defendant or Relief Defendant shall satisfy her or its obligations as described in this paragraph by paying the total amount for which she or it is liable to the Securities and Exchange Commission within 30 days after entry of this Final Judgment. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment and as further set forth in this Judgment. (Signed by Judge Vernon S. Broderick on 9/28/21) (yv) (Entered: 09/29/2021)

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Docket Entries

  • 09/28/2021
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  • Docket(#7) FINAL JUDGMENT AS TO DEFENDANTS PROSKY, INC. AND CRYSTAL A. HUANG AND RELIEF DEFENDANT T AND C PARTNERSHIP, LLC. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants ProSky and Crystal Huang are each permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act) [15 U.S.C. 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. 240.10b-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security as further set forth in this Judgment. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants ProSky and Crystal Huang are each permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 (the Securities Act) [15 U.S.C. 77q(a)] in the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly as further set forth in this Judgment. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. 78u(d)(5)], Defendant Crystal Huang is permanently restrained and enjoined from directly or indirectly, including, but not limited to, through any entity owned or controlled by her, participating in the issuance, purchase, offer, or sale of any security, provided, however, that such injunctions shall not prevent her from purchasing or selling securities listed on a national securities exchange for her own personal account. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant to Section 20(e) of the Securities Act [15 U.S.C. 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. 78u(d)(2)], Defendant Crystal Huang is prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. 78o(d)]. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants ProSky and Crystal Huang are jointly and severally liable for disgorgement of $3,196,949.82, representing net profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $809,799.07. Of these amounts, Relief Defendant T and C Partnership is jointly and severally liable with Defendants ProSky and Crystal Huang for disgorgement of $136,030, together with prejudgment interest thereon in the amount of $2,031.21. Defendant Crystal Huang is also liable for a civil penalty in the amount of $700,000 pursuant to Section 20(d) of the Securities Act [15 U.S.C. 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 78u(d)(3)]. Each Defendant or Relief Defendant shall satisfy her or its obligations as described in this paragraph by paying the total amount for which she or it is liable to the Securities and Exchange Commission within 30 days after entry of this Final Judgment. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment and as further set forth in this Judgment. (Signed by Judge Vernon S. Broderick on 9/28/21) (yv) (Entered: 09/29/2021)

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  • 09/14/2021
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  • Docket(#6) CONSENT MOTION for Judgment against Defendants ProSky, Inc., Crystal A. Huang, and T and C Partnership, LLC. Document filed by Securities and Exchange Commission. (Attachments: #1 Exhibit 1 - ProSky, Inc. Consent, #2 Exhibit 2 - Crystal A. Huang Consent, #3 Exhibit 3 - T and C Partnership, LLC Consent, #4 Exhibit 4 - Proposed Final Judgment).(Misler, David) (Entered: 09/14/2021)

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  • 09/14/2021
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  • Docket(#5) ORDER granting #3 Motion for David Misler to Appear Pro Hac Vice (HEREBY ORDERED by Judge Vernon S. Broderick)(Text Only Order) (msa) (Entered: 09/14/2021)

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  • 09/13/2021
  • DocketCase Designated ECF. (sj) (Entered: 09/13/2021)

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  • 09/13/2021
  • DocketMagistrate Judge Kevin Nathaniel Fox is so designated. Pursuant to 28 U.S.C. Section 636(c) and Fed. R. Civ. P. 73(b)(1) parties are notified that they may consent to proceed before a United States Magistrate Judge. Parties who wish to consent may access the necessary form at the following link: #https://nysd.uscourts.gov/sites/default/files/2018-06/AO-3.pdf. (sj) (Entered: 09/13/2021)

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  • 09/13/2021
  • DocketCASE OPENING INITIAL ASSIGNMENT NOTICE: The above-entitled action is assigned to Judge Vernon S. Broderick. Please download and review the Individual Practices of the assigned District Judge, located at #https://nysd.uscourts.gov/judges/district-judges. Attorneys are responsible for providing courtesy copies to judges where their Individual Practices require such. Please download and review the ECF Rules and Instructions, located at #https://nysd.uscourts.gov/rules/ecf-related-instructions..(sj) (Entered: 09/13/2021)

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  • 09/13/2021
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  • Docket>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. #3 MOTION for David Misler to Appear Pro Hac Vice . Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (wb) (Entered: 09/13/2021)

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  • 09/10/2021
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  • Docket(#4) NOTICE OF APPEARANCE by Stephen James Binhak on behalf of ProSky, Inc...(Binhak, Stephen) (Entered: 09/10/2021)

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  • 09/10/2021
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  • Docket(#3) MOTION for David Misler to Appear Pro Hac Vice . Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Securities and Exchange Commission. (Attachments: #1 Affidavit, #2 Text of Proposed Order, #3 Exhibit Certificate of Good Standing (DC), #4 Exhibit Certificate of Good Standing (MD)).(Misler, David) (Entered: 09/10/2021)

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  • 09/10/2021
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  • Docket(#2) CIVIL COVER SHEET filed..(Misler, David) (Entered: 09/10/2021)

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  • 09/10/2021
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  • Docket(#1) COMPLAINT against Crystal A. Huang, ProSky, Inc., T and C Partnership, LLC. Document filed by Securities and Exchange Commission..(Misler, David) (Entered: 09/10/2021)

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