Federal regulators have accused two individuals of orchestrating a multimillion-dollar securities fraud by secretly controlling management decisions at two publicly traded penny stock companies, resulting in significant financial harm to investors. The Securities and Exchange Commission (SEC) filed the complaint on March 31, 2026, in the United States District Court for the District of New Jersey against Jon G. Fullenkamp and Scott R. Sand.
According to the SEC’s filing, Fullenkamp and Sand allegedly misappropriated millions of dollars from two public companies—referred to as Company 1 and Company 2—by causing them to issue stock to a third entity secretly controlled by Fullenkamp. The SEC claims that between October 2020 and 2023, both men acted as undisclosed senior managers for these companies while enriching themselves through fraudulent transactions.
The complaint outlines that Fullenkamp and Sand created sham agreements between the companies and an entity called Vendor 1, which was formed in California in 2020 under Individual 3’s name but was actually controlled by Fullenkamp. These agreements led to the issuance of hundreds of thousands of preferred shares to Vendor 1. The SEC alleges that the defendants sold some of these shares to third parties for approximately $2.6 million, funneling proceeds through accounts they controlled.
The SEC reports that neither Fullenkamp nor Sand disclosed their roles or interests in these transactions to shareholders or other company officials. Instead, they allegedly used technology to impersonate corporate officers, forge signatures on official documents, draft misleading public filings, and communicate false information with investors, auditors, transfer agents, and media outlets.
For example, the complaint describes how Sand prepared a sham intellectual property purchase agreement between Company 1 and Vendor 1 in February 2021. This agreement promised services such as licensing technology and launching advertising campaigns—services which were never performed according to the SEC’s allegations. To facilitate quicker sale of shares obtained via this agreement, Sand is accused of backdating documents so that mandatory holding periods could be circumvented.
The filing further states that proceeds from share sales were split between Fullenkamp and Sand after being moved through various bank accounts linked to entities under their control. The SEC also alleges that both men concealed their activities from company management by coaching individuals involved in the scheme on how to appear knowledgeable during meetings or impersonating them in communications.
The alleged scheme did not stop with Company 1; it was repeated with Company 2 following similar steps: installing compliant officers lacking corporate experience, drafting new sham agreements with Vendor 1 for additional preferred shares, forging signatures again, making misleading statements in regulatory filings such as Form 10-Ks, and attempting further sales of preferred shares.
As described in court documents, Company 1 ceased most operations by 2023 due to lack of funds—a failure attributed at least partly to the defendants’ actions—while Company 2 deregistered its securities with federal regulators in September 2024 but continues operating a brewery.
The SEC alleges violations of multiple sections of federal securities laws including Section 17(a)(1) and (3) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 along with associated rules prohibiting fraudulent schemes or deceptive practices connected with securities offerings or sales.
In its prayer for relief, the SEC seeks permanent injunctions restraining both defendants from future violations; disgorgement of all ill-gotten gains plus prejudgment interest; civil penalties; bars preventing Fullenkamp from serving as an officer or director at any public company or participating in penny stock offerings; cancellation of all related stock rights; an injunction restricting Sand from involvement in security issuances except for his personal account; plus any additional relief deemed appropriate by the court.
Attorneys John V. Donnelly II and Gregory Bockin represent the plaintiff Securities and Exchange Commission in this matter under case number 1:26-cv-3407.
Source: 126cv03407_Securities_and_Exchange_Commission_v_Fullenkamp_Complaint_District_New_Jersey.pdf
