This case was last updated from U.S. District Courts on 11/27/2021 at 08:11:23 (UTC).

U.S. Securities and Exchange Commission v. C3 International, Inc. et al

Case Summary

On September 28, 2021, the U.S. Securities and Exchange Commission (the “Commission” or “Plaintiff”), represented by Derek S. Bentsen, attorney at SEC’s LA regional office, filed a civil enforcement action against C3 International, Inc. (“C3”), Steele Clarke Smith III (“Steele Smith”) and Theresa Smith (collectively, “Defendants”), seeking injunctive relief, payment of civil penalties and disgorgement of all ill-gotten gains along with pre-and post-judgement interest for the alleged securities offering fraud carried out by Defendants. This case was filed in the U.S. District Court in the Central District of California.

In the complaint Plaintiff alleged that, “This case concerns a securities offering fraud carried out by Defendants. From approximately October 2011 through November 2019, Defendants raised approximately $2 million from more than 40 investors by selling stock in C3 through Steele Smith’s material misrepresentations and omissions regarding the company’s business and its cannabis pill called Idrasil. On C3’s and Idrasil’s websites, in offering materials, on social media and in investor communications, C3 through Steele Smith misrepresented, among other things, that Idrasil was patented or patent-pending or trademarked, that most insurance companies reimbursed for Idrasil, and that investor funds would be used for business purposes.”

Plaintiff further alleged that, “In addition to these false and misleading statements and omissions, the Smiths misappropriated over $1 million of investor funds to pay for their own living expenses. In one instance where an investor sent $100,000 to purchase C3 shares in August 2018, Steele Smith sent $40,000 of it that same day to a Jeep dealership, as a down payment on an expensive SUV for himself.”

Plaintiff also alleged that, “Theresa Smith aided and abetted Steele Smith’s and C3’s securities fraud violations by overseeing C3’s business expenses and managing bank accounts through which investor funds were received and misappropriated. In addition, the Defendants offered and sold C3 stock without filing a registration statement with the Commission or otherwise satisfying an exemption. The Smiths and C3 continue to offer C3 securities to investors on the company’s websites and over social media.”

There are five claims for relief laid down by Plaintiff. The first claim is for the alleged fraud in connection with the purchase or sale of securities in violation of Section 10(b) of the Exchange Act and Rule 10b-5. The second claim is for the alleged fraud in the offer or sale of securities in  violation of Sections 17(a)(1), (2), and (3) of the Securities Act. The third claim is for the alleged aiding and abetting in violation of Section 17(a) of the Securities Act. The fourth claim is for the alleged aiding and abetting in violation of Section 10(b) of the Exchange Act and Rule 10b-5. The fifth claim is for the alleged unregistered offer and sale of securities in violation of Sections 5(a) and 5(c) of the Securities Act.

In its prayer for relief, Plaintiff has requested the court to permanently enjoin Defendants from violating Sections 5 and 17(a) of the Securities Act  and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, order that each Defendant disgorge any and all ill-gotten gains along with pre- and post-judgement interest, and order Defendants to pay civil penalties.

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Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    8:21-CV-01586

  • Filing Date:

    09/28/2021

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Finance - Security/Commodity/Exchange

Judge Details

Presiding Judge

Christina A. Snyder

Referral Judge

Patricia Donahue

 

Party Details

Plaintiff

U.S. Securities and Exchange Commission

Defendants

C3 International, Inc.

Steele Clarke Smith, III

Theresa Smith

Attorney/Law Firm Details

Plaintiff Attorneys

Stephen T. Kaiser

Daniel Oren Blau

Derek S. Bentsen

Timothy Nicholas England

Elizabeth A. Marshall

 

Court Documents

#13

(#13) ORDER by Judge Christina A. Snyder: GRANTING #12 Non-Resident Attorney Elizabeth A. Marshall APPLICATION to Appear Pro Hac Vice on behalf of Plaintiff U.S. Securities and Exchange Commission, designating Daniel O. Blau as local counsel. (shb) (Entered: 10/21/2021)

12 #3

Proposed Order Granting Marshall, Elizabeth PHV Application

12 #2

Certificate of Good Standing - VA

12 #1

Certificate of Good Standing - DC

12 #12

Main Document

#11

(#11) NOTICE TO COUNSEL upon filing of the complaint by Judge Christina A. Snyder. (rba) (Entered: 10/12/2021)

#10

(#10) ORDER by Judge Christina A. Snyder: granting #9 Non-Resident Attorney Stephen T. Kaiser APPLICATION to Appear Pro Hac Vice on behalf of Plaintiff U.S. Securities and Exchange Commission, designating Daniel O. Blau as local counsel. (et) (Entered: 10/07/2021)

9 #1

Proposed Order

9 #9

Main Document

#8

(#8) NOTICE OF PRO HAC VICE APPLICATION DUE for Non-Resident Attorney Elizabeth Marhall Anderson. A document recently filed in this case lists you as an out-of-state attorney of record. However, the Court has not been able to locate any record that you are admitted to the Bar of this Court, and you have not filed an application to appear Pro Hac Vice in this case. Accordingly, within 5 business days of the date of this notice, you must either (1) have your local counsel file an application to appear Pro Hac Vice (Form G-64) and pay the applicable fee, or (2) complete the next section of this form and return it to the court at cacd_attyadm@cacd.uscourts.gov. You have been removed as counsel of record from the docket in this case, and you will not be added back to the docket until your Pro Hac Vice status has been resolved. (car) (Entered: 09/30/2021)

#7

(#7) NOTICE OF PRO HAC VICE APPLICATION DUE for Non-Resident Attorney Stephen T Kaiser. A document recently filed in this case lists you as an out-of-state attorney of record. However, the Court has not been able to locate any record that you are admitted to the Bar of this Court, and you have not filed an application to appear Pro Hac Vice in this case. Accordingly, within 5 business days of the date of this notice, you must either (1) have your local counsel file an application to appear Pro Hac Vice (Form G-64) and pay the applicable fee, or (2) complete the next section of this form and return it to the court at cacd_attyadm@cacd.uscourts.gov. You have been removed as counsel of record from the docket in this case, and you will not be added back to the docket until your Pro Hac Vice status has been resolved. (car) (Entered: 09/30/2021)

#6

(#6) 21 DAY Summons Issued re Complaint (Attorney Civil Case Opening) #1 as to Defendant C3 International, Inc., Steele Clarke Smith, III, Theresa Smith. (car) (Entered: 09/29/2021)

#5

(#5) Notice to Counsel Re Consent to Proceed Before a United States Magistrate Judge. (car) (Entered: 09/29/2021)

#4

(#4) NOTICE TO PARTIES OF COURT-DIRECTED ADR PROGRAM filed. (car) (Entered: 09/29/2021)

#3

(#3) NOTICE OF ASSIGNMENT to District Judge Christina A. Snyder and Magistrate Judge Patricia Donahue. (car) (Entered: 09/29/2021)

#2

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Docket Entries

  • 10/20/2021
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  • Docket(#13) ORDER by Judge Christina A. Snyder: GRANTING #12 Non-Resident Attorney Elizabeth A. Marshall APPLICATION to Appear Pro Hac Vice on behalf of Plaintiff U.S. Securities and Exchange Commission, designating Daniel O. Blau as local counsel. (shb) (Entered: 10/21/2021)

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  • 10/19/2021
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  • Docket(#12) APPLICATION of Non-Resident Attorney Elizabeth A. Marshall to Appear Pro Hac Vice on behalf of Plaintiff U.S. Securities and Exchange Commission (Pro Hac Vice Fee - Not Required for US Government Attorney) filed by Plaintiff U.S. Securities and Exchange Commission. (Attachments: #1 Certificate of Good Standing - DC, #2 Certificate of Good Standing - VA, #3 Proposed Order Granting Marshall, Elizabeth PHV Application) (Blau, Daniel) (Entered: 10/19/2021)

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  • 10/12/2021
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  • Docket(#11) NOTICE TO COUNSEL upon filing of the complaint by Judge Christina A. Snyder. (rba) (Entered: 10/12/2021)

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  • 10/07/2021
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  • Docket(#10) ORDER by Judge Christina A. Snyder: granting #9 Non-Resident Attorney Stephen T. Kaiser APPLICATION to Appear Pro Hac Vice on behalf of Plaintiff U.S. Securities and Exchange Commission, designating Daniel O. Blau as local counsel. (et) (Entered: 10/07/2021)

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  • 10/04/2021
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  • Docket(#9) APPLICATION of Non-Resident Attorney Stephen T. Kaiser to Appear Pro Hac Vice on behalf of Plaintiff U.S. Securities and Exchange Commission (Pro Hac Vice Fee - Not Required for US Government Attorney) filed by Plaintiff U.S. Securities and Exchange Commission. (Attachments: #1 Proposed Order) (Blau, Daniel) (Entered: 10/04/2021)

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  • 09/30/2021
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  • Docket(#8) NOTICE OF PRO HAC VICE APPLICATION DUE for Non-Resident Attorney Elizabeth Marhall Anderson. A document recently filed in this case lists you as an out-of-state attorney of record. However, the Court has not been able to locate any record that you are admitted to the Bar of this Court, and you have not filed an application to appear Pro Hac Vice in this case. Accordingly, within 5 business days of the date of this notice, you must either (1) have your local counsel file an application to appear Pro Hac Vice (Form G-64) and pay the applicable fee, or (2) complete the next section of this form and return it to the court at cacd_attyadm@cacd.uscourts.gov. You have been removed as counsel of record from the docket in this case, and you will not be added back to the docket until your Pro Hac Vice status has been resolved. (car) (Entered: 09/30/2021)

    [+] Read More [-] Read Less
  • 09/30/2021
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  • Docket(#7) NOTICE OF PRO HAC VICE APPLICATION DUE for Non-Resident Attorney Stephen T Kaiser. A document recently filed in this case lists you as an out-of-state attorney of record. However, the Court has not been able to locate any record that you are admitted to the Bar of this Court, and you have not filed an application to appear Pro Hac Vice in this case. Accordingly, within 5 business days of the date of this notice, you must either (1) have your local counsel file an application to appear Pro Hac Vice (Form G-64) and pay the applicable fee, or (2) complete the next section of this form and return it to the court at cacd_attyadm@cacd.uscourts.gov. You have been removed as counsel of record from the docket in this case, and you will not be added back to the docket until your Pro Hac Vice status has been resolved. (car) (Entered: 09/30/2021)

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  • 09/29/2021
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  • Docket(#6) 21 DAY Summons Issued re Complaint (Attorney Civil Case Opening) #1 as to Defendant C3 International, Inc., Steele Clarke Smith, III, Theresa Smith. (car) (Entered: 09/29/2021)

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  • 09/29/2021
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  • Docket(#5) Notice to Counsel Re Consent to Proceed Before a United States Magistrate Judge. (car) (Entered: 09/29/2021)

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  • 09/29/2021
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  • Docket(#4) NOTICE TO PARTIES OF COURT-DIRECTED ADR PROGRAM filed. (car) (Entered: 09/29/2021)

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  • 09/29/2021
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  • Docket(#3) NOTICE OF ASSIGNMENT to District Judge Christina A. Snyder and Magistrate Judge Patricia Donahue. (car) (Entered: 09/29/2021)

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  • 09/28/2021
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  • Docket(#2) Request for Clerk to Issue Summons on Complaint (Attorney Civil Case Opening) #1 filed by Plaintiff U.S. Securities and Exchange Commission. (Bentsen, Derek) (Entered: 09/28/2021)

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  • 09/28/2021
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  • Docket(#1) COMPLAINT No Fee Required - US Government, filed by Plaintiff U.S. Securities and Exchange Commission. (Attachments: #1 Civil Cover Sheet) (Attorney Derek S Bentsen added to party U.S. Securities and Exchange Commission(pty:pla))(Bentsen, Derek) (Entered: 09/28/2021)

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