SEC Accuses Alki David, Hologram USA Of Violating Anti-Fraud Provisions

Billionaire Alkiviades “Alki” David is catching heat from the Securities and Exchanges Commission, which claims he violated the Securities Act of 1933 and Securities Exchange Act of 1934 during Hologram USA Networks Inc.’s IPO approximately a year ago. 

The Commission is seeking restraint and injunction, disgorging of “ill-gotten gains” with interest, civil penalties and, perhaps most significantly, to debar David from serving as an officer or director of any publicly traded company. 

David, who is the CEO of Hologram USA and owns multiple other companies including Coca-Cola bottling partner Coca-Cola Hellenic, has responded with public statements claiming he is being unfairly targeted.

“I spent $80 million of my own money to build my company and take it public,” David said in a statement. “I hired the best people and did everything by the book, working closely with NASDAQ. Twice, the SEC has targeted me and blocked my efforts to create 100s of jobs as I advance the hologram industry. And now this. They’ve picked the wrong guy to fish for some settlement with. I’m not going to take it.”

The complaint, filed by the SEC Sept. 27, claims that David and Hologram USA began selling unregistered offerings of stock and convertible notes to unaccredited buyers before even formally applying for a Regulation A public offering with the SEC’s Division of Corporation Finance. 

The complaint also says Hologram USA, under David’s watch, engaged in deceptive practices, falsely purporting to have exclusive rights to the holographic likeness and performances of Whitney Houston, Roy Orbison, and Tupac Shakur and misrepresented relationships with several theaters. (The Roy Orbison hologram tour already ran through North America and overseas last year, courtesy of BASE Hologram, a competitor to Hologram USA. The Whitney Houston Hologram is also being produced by BASE.) 

The bulk of the complaint centers around Hologram USA’s securing of funds from mostly unaccredited investors before the company was permitted to begin selling stock to the public. The complaint highlights television commercials, a “slide deck” on the website that promoted or solicited unlawful investment, and a function on the website to allow for immediate submission of payment information as. 

The SEC claims Hologram USA formally applied for a Regulation A IPO on Dec. 1, 2017, but began advertising and offering common stock from Nov. 26 to Dec. 11, 2017 and then began offering convertible notes from December 2017 until March 2018. The complaint alleges it was only after the company had secured $100,000 from mostly unaccredited investors and it became clear the SEC was going to begin an investigation that it stopped making these notes available. 

Hologram USA claims to have refunded all but $26,000 of funds received from sale of promissory notes, according to the filing. 

The complaint also alleges that Hologram USA circulated materials that misrepresented the company as the exclusive rights-holder for holographic performances from Whitney Houston, Roy Orbison and Tupac Shakur. 

The SEC also alleges that the company had no connection to the famous Tupac Hologram performance at Coachella in 2014, but the company has publicly responded that founding partner Uwe Mass was a key part of that performance. Hologram USA still lists Tupac Shakur’s performance at Coachella as one of the company’s “historic” shows on its website, but references to Whitney Houston and Roy Orbison appear to have been removed. A rep for Hologram USA told Pollstar the company never used any language indicating that the company held exclusive rights to Tupac’s hologram.

Finally, the complaint accuses Hologram USA of misrepresenting its “Theater Network” in an effort to lure investors, claiming to include Landmark Theater in Indianapolis; Civic Theater in New Orleans; Saratoga Casino in Saratoga Springs; and Twin River Casino in Rhode Island in its network of theaters integrating its technology, when those venues did not have any agreement or partnership with the company. A news release from Hologram USA addresses these claims, explaining that the company was “on track to install” its tech into many theaters, but “no investor materials claimed that the entire network was already activated.” 

The company’s flagship theater, Hologram USA Theater in Los Angeles, has been open for more than a year and has hosted shows like “Billie Holiday, Alive,” and “Higher & Higher, The Jackie Wilson Story.”

The SEC’s litigation is led by Richard Primoff and is being supervised by Sanjay Wadhwa.