The Securities and Exchange Commission (SEC) has charged a Houston man, Glenn Hardaway with fraudulently raising $4.7 million from fellow members of a nationwide “Success club”.
The defendant had a company, Hardaway Net-Works (HNW) that purportedly provided network services to a few hotels in the Houston area. Between 2010 and 2016, the company had total revenues of $24,812, yet Hardaway kept selling securities issued by HNW by using baseless projections about HNW’s business operations.
The SEC claimed that Hardaway paid himself $924,000 in salary during the life of the fraud and spent about $1 million in other expenses supporting his lifestyle.
The “Success Club” was an organization called Global Information Network (GIN). GIN was founded in 2009 by Kevin Trudeau, a con-man who was first convicted of fraud in 1991 and settled with the Federal Trade Commission (FTC) in 2004 over dubious weight loss programs that he advertised on late-night infomercials. In 2007 he was fined $37.6 million for breaching the 2004 agreement and in 2013 was jailed for 10 years for contempt of court and failure to pay the fine. The FTC allege GIN is a Ponzi scheme (meaning investors who gave to Hardaway have probably lost money twice over).
In addition the SEC also allege that, in April 2015, Hardaway used $40,000 of investor funds to acquire Vortronnix, a public reporting “shell” company. Hardaway became Vortronnix’s President, CEO, CFO, Treasurer and Chairman. After it was acquired, Vortronnix filed a 10-Q and Hardaway signed the filings and management certifications, despite knowing there had been no review of the company’s financial statements by the auditors. He ignored the request from the auditors to withdraw the 10-Q filing.
Vortronnix remains delinquent in its public reports with the SEC and has never traded publicly.