U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25847 / September 25, 2023
Securities and Exchange Commission v. Michael Caridi, No. 1:23-cv-1243 (D. Conn. filed September 20, 2023)
SEC Charges Connecticut Resident with Fraudulent Statements in Press Releases
The Securities and Exchange Commission today filed charges against Michael Caridi, a resident of Greenwich, Connecticut, and a former director and officer of Tree of Knowledge International Corp. ("TOKI"), in connection with fraudulent press releases issued by the company that touted its ability to respond to the COVID-19 pandemic.
According to the SEC's complaint, filed in the United States District Court for the District of Connecticut, Caridi acting as Chairman of TOKI's board of directors, assisted TOKI, which had not previously been in the business of supplying Personal Protective Equipment ("PPE"), in issuing two press releases touting TOKI's successful pivot into being a PPE provider. However, the SEC's complaint alleges, the press releases did not inform the public that Caridi and TOKI had previously failed to deliver 3 million medical grade NIOSH certified N-95 masks to a Canadian hospital pursuant to a contract with that hospital. In addition, as alleged in the complaint, TOKI had an $11 million liability to the hospital, and Caridi had misappropriated over $1 million from the unperformed contract, which included amounts taken after he had already promised the hospital a refund that TOKI did not have the resources to pay. Within months after the press releases, the hospital sued TOKI and put the company's U.S. subsidiary into a receivership in Canada.
The SEC's complaint charges Caridi with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and, in the alternative, with aiding and abetting violations of Exchange Action Section 10(b) and Rule 10b-5(b) thereunder. The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest thereon, civil penalties, an officer and director bar, and a penny stock bar.
The SEC's investigation was conducted by Rhonda L. Jung, Brian Kudon, Kenneth Gottlieb, Melissa Coppola, and Adam S. Grace, and the litigation will be led by Christopher M. Colorado and Ms. Jung, all of the New York Regional Office. The case is being supervised by Thomas P. Smith, Jr.