- The SEC charged Aron Govil with misappropriating over $7 million in investor funds in his company, Cemtrex.
- The SEC also said Govil lied to investors that his company, Telidyne, had created an app that could transact with crypto and was working on a COVID-19 detection app.
- Govil agreed to pay $1.2 million to settle the SEC's claims but did not amid or deny the regulator's allegations, according to Bloomberg.
- See more stories on Insider's business page.
The US Securities and Exchange Commission has charged a Florida man with defrauding investors in two companies where he was a controlling shareholder and officer, the regulator said Tuesday.
According to SEC allegations, Aron Govil of Jacksonville, Florida misappropriated more than $7 million of investor funds in Cemtrex between April 2016 and January 2018. He used funds to finance his personal business ventures and to pay his personal expenses, the US regulator said. The SEC also claims Govil also paid stock promoters to recommend retail investors buy Cemtrex stock while he secretly sold the stock.
Govil founded technology company Cemtrex in 1998, according to the SEC's complaint. At various times, he served as the chairman, CEO, CFO, and executive director of Cemtrex. In October 2020, Saagar Govil, Cemtrex's current CEO, said that Aron Govil would be leaving his role as company CFO "due to life changes and health reasons." It's unclear whether the two men are related. The company could not be reached for comment.
Meanwhile, Govil also made "material misrepresentations" to investors of Telidyne, a company he founded in 2019, the SEC claims. Govin told Telidyne investors the company had developed an app which allowed users to transact using cryptocurrencies, the agency alleges. It also says Govil told investors Telidyne had started work on an app that could detect the coronavirus.
The SEC said these statements allegedly were false because the app did not have crypto functionality and Telidyne had not worked on a COVID-19 app.
Govil was charged with violations of antifraud provisions of the federal securities law as well as violations of sections of the Securities Exchange Act which requires major shareholders to disclose their transactions in a company's stock.
Govil agreed to pay $1.2 million to settle the SEC's claims but did not amid or deny the regulator's allegations, according to Bloomberg.