SEC Settles $13 Million Violet Defense Investor Misrepresentation Case
SEC says Violet Defense executives misled 88 investors in a $13 million 2021 share offering; each agreed to a $100,000 penalty, pending court approval.
Summary
The SEC filed a settled action on October 19, 2026, against Terrance P. Berland, former CEO and minority owner of now defunct Florida photonics company Violet Defense Group, Inc., and David Michael Scalzo, its former director and majority owner. The complaint, Securities and Exchange Commission v. Terrance P. Berland and David Michael Scalzo, No. 26-cv-02430, filed in the U.S. District Court for the Middle District of Florida, alleges they raised approximately $13 million from 88 investors through Class B shares from at least April through November 2021.
The SEC alleges Berland and Scalzo negligently projected $15 million to $18 million of 2021 revenue, said 10% of proceeds would fund marketing and branding for Violet Defense Group’s largest subsidiary, and gave false assurances in August to October 2021 purchase agreements that no event could reasonably cause a material adverse financial effect. They allegedly should have known by August 2021 that projections were inaccurate because sales and royalty revenue had declined significantly, and by month end that more than 40% of investor funds were committed to a NASCAR team sponsorship. Without admitting the allegations, each consented to a permanent injunction against violating Securities Act Section 17(a)(2) and a $100,000 civil penalty, subject to court approval. Brian Theophilus James conducted the investigation with Lina M. Fernandez and Brian Lechich, supervised by Thierry Olivier Desmet and Stephanie N. Moot of the SEC’s Miami Regional Office; Litigation Release No. 26675 followed on October 20, 2026.
Positives
- The proposed consent judgments would resolve the SEC’s claims without further contested litigation, subject to court approval.
- Each defendant agreed to pay a $100,000 civil penalty and accept a permanent Securities Act Section 17(a)(2) injunction.
- The SEC quantified the offering at approximately $13 million from 88 investors, providing specific scope for the alleged misconduct.
Risks & concerns
- More than 40% of investor funds allegedly was committed to a NASCAR team sponsorship despite representations that 10% would support subsidiary marketing and branding.
- Projected 2021 revenue of $15 million to $18 million allegedly remained in investor materials after sales and royalty revenue declined significantly.
- August to October 2021 purchase agreements allegedly falsely assured investors that no development could reasonably cause a material adverse financial effect.
- Violet Defense Group is now defunct, and the SEC charged its former CEO and former director over the 2021 Class B share offering.