Case 3:20-cr-00368-AJB Document 1 Filed 01/29/20 PageID.

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8 UNITED STATES DISTRICT COURT

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9 SOUTHERN DISTRICT OF CALIFORNIA

10 January 2019 Grand Jury

11 UNITED STATES OF AMERICA, Case No. 20 CR 036 8AJB
12 Plaintiff, !!!QJ;fI~~~I
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13 v. Title 18, U.S.C., Sec. 371 -
Conspiracy to Commit Securities
14 MARK ZOUVAS, Fraud; Title 15, U.S.C.,
Secs. 78j (b), 78ff, and Title 17,
15 Defendant. C.F.R., Sec. 240.l0b-5 -
Securities Fraud; Title 18,
16 U.S.C., Sec. 981 (a) (1) (C) and
Title 28, U.S.C., Sec. 2461(c) -
17 Criminal Forfeiture

18 The Grand Jury charges, at all times material:

19 INTRODUCTORY ALLEGATIONS
20 Relevant Individuals and Entities
21 1. Defendant MARK ZOUVAS, a resident of San Diego, California,

22 provided accounting, managerial and consulting services to various small

23 businesses, and controlled Magnolia Hill Resources, LLC, a business

24 entity registered in the state of Texas.

25 2. Christian Hansen (charged elsewhere), a resident of San Diego,

26 California, worked as a stock promoter, and controlled Maximum

27 Performance Advisors Inc., a business entity registered in California

28 that provided investor relations and stock promotion services.

APA:AJGA:nlv:San Diego:1/29/20
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1 3. Alex Procopio (charged elsewhere), a resident of San Diego,

2 California, was President, Chief Executive Officer, Secretary, Director,

3 and a shareholder of Cuba Beverage Company ("Cuba Beverage").

4 4. Cuba Beverage was an entity incorporated in the State of

5 Wyoming, with its principal place of business in San Diego, California.

6 Cuba Beverage manufactured and sold all-natural juices to domestic and

7 international customers. Shares of Cuba Beverage were publicly-traded

8 on the OTC Bulletin Board under the ticker symbol "CUBV".

9 5. Shares, or "securities," that are not registered with the SEC

10 generally cannot be sold to the public. However, Rule 144 of the Rules

11 and Regulations promulgated by the SEC ("Rule 144") permits unregistered

12 offerings of securities to the public in certain circumstances. Among

13 other things, Rule 144 enables a person who is not an "affiliate" of the

14 issuer to sell securities in certain circumstances. An "affiliate" is

15 a person that directly, or indirectly through one or more intermediaries,

16 controls, or is controlled by, or is under common control with, the

17 issuer.

18 Count 1 - Conspiracy

19 (18 u.s.c. § 371)

20 6. Paragraphs 1 through 5 of the Introductory Allegations above

21 are re-alleged as if fully set forth herein.

22 a. Beginning on a date unknown to the grand jury but no

23 later than January 2017, and continuing up to at least November 2017,

24 within the Southern District of California and elsewhere, defendant MARK

25 ZOUVAS, along with Christian Hansen and Alex Procopio, both charged

26 elsewhere, and other individuals and entities known and unknown to the

27 grand jury, did knowingly and willfully conspire and· agree with each

28 other to commit the offense of securities fraud - that is, to make false

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1 statements of material facts, and omit to state material facts necessary

2 in order to make the statements made, -in the light of the circumstances

3 under which they were made, not misleading, concerning Cuba Beverage and

4 its debt and securities, and to execute a scheme to defraud shareholders

5 and others in connection with the securities of Cuba Beverage Company -

6 in violation of Title 15, United States Code, Sections 78j (b), 78ff, and

7 Title 17, Code of Federal Regulations, Section 240.l0b-5.

8 MANNER AND MEANS

9 7. It was part of the conspiracy that defendant ZOUVAS and

10 Procopio would create a debt, owed by Cuba Beverage to defendant ZOUVAS,

11 that was convertible into shares of Cuba Beverage's common stock.

12 8. It was further part of the conspiracy that defendant ZOUVAS

13 and Procopio would publish misleading statements about the origin of the

14 convertible debt in Cuba Beverage's periodic reports.

15 9. It was further part of the conspiracy that defendant ZOUVAS

16 would sell portions of the convertible debt to Hansen and others.

17 10. It was further part of the conspiracy that Hansen would convert

18 all or portions of the debt into shares of Cuba Beverage common stock.

19 11. It was further part of the conspiracy that Hansen would deposit

20 the Cuba Beverage shares he had converted into a brokerage account.

21 12. It was further part of the conspiracy that defendant ZOUVAS,

22 along with Hansen, Procopio and others, would make false statements of

23 material facts, and omit to state material facts necessary in order to

24 make the statements made, in the light of the circumstances under which

25 they were made, not misleading, concerning the shares of Cuba Beverage

26 stock. The false statements and omissions were made in order to, among

27 other things, convince Hansen's brokerage firm to allow Hansen to sell

28 the shares to the public through his brokerage account, and included:

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1 a. Attorney opinion letters.

2 b. Security deposit agreements.

3 c. Letters, emails, and other correspondence directed to the

4 brokerage firm.

5 d. Purported records of the consideration exchanged by

6 defendant ZOUVAS and Hansen in connection with the

7 convertible debt.
8 13. It was further part of the conspiracy that Hansen would sell

9 the shares of Cuba Beverage stock he had obtained through the debt

10 conversion to the public.

11 14. It was further part of the conspiracy that Hansen would

12 distribute to defendant ZOUVAS and Procopio a portion of the proceeds

13 from his sale of shares of Cuba Beverage stock.

14 OVERT ACTS
15 15. In furtherance of the conspiracy and to effect and accomplish

16 the objects thereof, the following overt acts, among others, were

17 committed within the Southern District of California and elsewhere:

18 a. On or about December 31, 2014, Cuba Beverage issued a

19 Convertible Promissory Note payable to defendant ZOUVAS in the amount

20 of $38,000.

21 b. In or about February 2015, defendant ZOUVAS prepared Cuba

22 Beverage's annual financial statements for public disclosure, and

23 included the material misrepresentation that "[o] ur Chief Financial

24 Officer has not taken any salaries or fees from the Company since

25 March 31, 2014. As a result, the Company has recorded a related party

26 payable to Mr. Zouvas in the amount of $38,000, which represents the

27 amount owed for the non-payment ·of his compensation."

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1 c. On or about January 9, 2017, defendant ZOUVAS and Hansen

2 entered into an Assignment and Assumption Agreement, pursuant to which

3 Hansen would pay defendant ZOUVAS $1,800 in exchange for a portion of

4 defendant ZOUVAS' rights under the Convertible Promissory Note.

5 d. On or about January 9, 2017, Hansen wrote a check, payable

6 to defendant ZOUVAS, in the amount of $1,800.

7 e. On or about January 9, 2017, Hansen and Cuba Beverage

8 Company, at the direction of Procopio, entered into a written agreement

g to convert Hansen's portion of the Convertible Promissory Note to

10 180 million shares of Cuba Beverage stock.

11 f. On or about January 9, 2017, Hansen signed a Shareholder

12 Representation Letter to Scottsdale Capital Advisors concerning the

13 180 million shares of Cuba Beverage stock, in which he falsely

14 represented that:

15 i. "I acquired and fully paid for the securities on the 9th

16 day of January, 2017."

17 ii. "I am not and will not be acting in concert with any

18 other person for the purpose of selling securities of the

19 Company."

20 g. On or about January 18, 2017, Cuba Beverage created and

21 delivered to Hansen a stock certificate for 180 million shares of Cuba

22 Beverage stock.

23 h. On or about February 9, 2017, Procopio signed a letter

24 to Scottsdale Capital Advisors, in which he falsely represented that:

25 i. "There is no agreement or other arrangement between [Cuba

26 Beverage] Company and the Parties [defendant ZOUVAS and

27-- Hansen] to remit any portion of the proceeds from the

28 resale of the Security to the Company."

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1 ii. "The Parties are not, or were not 90 days prior to the

2 sale, a director, officer or an 'Affiliate' of the [Cuba

3 Beverage] Company as that term is used in paragraph (a)

II
4 of Rule 144

5 l • On or about February 14, 2017, defendant ZOUVAS deposited

6 into his bank account the $1,800 check Hansen wrote on or about

7 January 9, 2017.

8 j . On or about February 15, 2017, defendant ZOUVAS sent an

9 email to Hansen attaching proof that he had received payment from Hansen,

10 purportedly in exchange for a portion of the Convertible Promissory

11 Note.

12 k. On or about February 15, 2017, Hansen forwarded defendant

13 ZOUVAS' email and attachments concerning the alleged payment for a

14 portion of the Convertible Promissory Notes to Scottsdale Capital

15 Advisors.

16 1. On or about February 23, 2017, Hansen signed a Security

17 Depositor Agreement with the clearing firm for Scottsdale Capital

18 Advisors concerning the 180 million shares of Cuba Beverage stock, in

19 which Hansen falsely represented that he:

20 i. "is not paying or sharing, directly or indirectly, any

21 of the proceeds from the sale of the Securities with the

22 issuer [Cuba Beverage] or the person from whom the

23 Security Depositor [Hansen} acquired the Securities"; and

24 ii. "will not receive or rely on order execution suggestions,

25 instructions, or similar advice from any other person in

26 connection with the sale of the Securities."

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1 m. On or about February 28, 2017, Hansen sent an email to

2 Scottsdale Capital Advisors, in which he falsely represented that "I

3 have not been involved in any promotional activities for CUBV [Cuba

4 Beverage] or any other company."

5 n. Between on or about March 7, 2017, and on or about

6 July 12, 2017, Hansen sold 180 million shares of Cuba Beverage stock

7 from his Scottsdale Capital Advisors account to the investing public,

8 for illicit proceeds of approximately $77,000.

9 o. On or about May 17, 2017, Hansen and Procopio spoke by

10 phone about Hansen's recent sales of Cuba Beverage stock, and how much

11 of the proceeds from these sales Hansen intended to remit to defendant

12 ZOUVAS and Procopio.

13 p. On or about July 10, 2017, defendant ZOUVAS and Procopio

14 spoke by phone about Hansen's recent sales of Cuba Beverage stock, and

15 how much of the proceeds from these sales Hansen intended to remit to

16 defendant ZOUVAS and Procopio.

17 q. On or about the following dates, Hansen delivered checks

18 to Procopio which represented a portion of the proceeds from Hansen's

19 fraudulent sales of Cuba Beverage stock:

20
Date Payee Ainount
21

22 April 17, 2017 Magnolia Hill Resources LLC $10,000

23 April 17, 2017 Cuba Beverage Company $10,000

24 July 13, 2017 Magnolia Hill Resources $3,000

25 July 13, 2017 Cuba Beverage Company $3,000

26 July 19, 2017 Alex Procopio $7,100

July 19, 2017 Magnolia Hill Resources, LLC .. · $4, 100· - •·

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1 r. On or about July 7, 2017, Hansen and Procopio spoke by

2 phone, and Hansen proposed that he ·obtain 180 million additional shares

3 of Cuba Beverage stock from defendant ZOUVAS or Procopio, fraudulently

4 sell the stock to the public, and distribute a portion of the illicit

5 proceeds to defendant ZOUVAS and Procopio.

6 s. On or about July 10, 2017, defendant ZOUVAS and Procopio

7 spoke by phone, and Procopio told defendant ZOUVAS about Hansen' s

8 proposal regarding 180 million additional shares of Cuba Beverage stock.

9 Defendant ZOUVAS stated that he was in favor of the proposal.

10 t. On or about July 27, 2017, Hansen wrote a check, payable

11 to defendant ZOUVAS, in the amount of $1,800.

12 u. On or about July 29, 2017, defendant ZOUVAS deposited

13 into his bank account the $1,800 check he received from Hansen.

14 v. On or about July 29, 2017, Hansen signed a Shareholder

15 Representation Letter concerning the 180 million additional shares of

16 Cuba Beverage stock, in which he falsely represented that:

17 i. "I am not an 'affiliate' and acquired these shares for

18 valid consideration in accordance with the requirements

19 of Rule 144 _ and Section 4(1) of the Securities Act of

20 1933 ... "

21 ii. "I acquired and fully paid for the securities on the 27ili

22 day of July 2017."

23 iii. "I acquired the Shares in the following manner: 180 M

24 shares, from CUBV, for debt of $1,800."

25 iv. "I am not and will not be acting in concert with any

26 other person for the purpose of selling securities of the

·21 Company·."

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1 w. On or about November 4, 2017, defendant ZOUVAS sent an

2 email to Procopio claiming that he had received payment from Hansen,

3 purportedly in exchange for a portion of the Convertible Promissory

4 Note. Defendant ZOUVAS intended for Procopio to submit this

5 documentation to a brokerage firm to support the conclusion that Hansen's

6 180 million additional shares of Cuba Beverage stock could be sold to

7 the public.
8 All in violation of Title 18, United States Code, Section 371 .

.9 Count 2 - Securities Fraud

10 {Title 15, u.s.c., Secs. 78j (b), 78ff, and

11 Title 17, C.F.R., Sec. 240.l0b-5)

12 16. The allegations set forth in paragraphs 1 through 5 are re-

13 alleged as if fully set forth herein.

14 17. Beginning on a date unknown to the grand jury, but no later

15 than January 2017, and through at least November 2017, within the

16 Southern District of California and elsewhere, defendant MARK ZOUVAS did

17 knowingly and willfully, directly and indirectly, by the use of the

18 means and instrumentalities of interstate commerce and of the mails, use

19 and employ manipulative and deceptive devices and contrivances in

20 connection with the purchase and sale of securities issued by Cuba

21 Beverage, in violation of Title 17, Code of Federal Regulations,

22 Section 240.l0b-5, by (a) employing devices, schemes and artifices to

23 defraud, (b) making and causing to be made untrue statements of material

24 fact, and omitting to state material facts necessary in order to make

25 the statements made, in light of the circumstances under which they were

26 made, not misleading, and (c) engaging in acts, practices, and courses

27 of business which operated and· would operate as- a fraud and deceit upon

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1 any persons, including members of the investing public and sellers and

2 purchasers of Cuba Beverage's securities.

3 18. The allegations set forth in paragraphs 7 through 15 of Count 1

4 are re-alleged as more fully describing the manipulative and deceptive

5 devices and contrivances alleged above.

6 All in violation of Title 15, United States Code, Sections 78j (b) and

7 78ff, and Title 17, Code of Federal Regulations, Section 240.l0b-5.

8 FORFEITURE ALLEGATIONS

9 19. The allegations contained in paragraphs 1 through 5 of the

10 Introductory Allegations, and Counts 1 and 2 of this Indictment, are re-

11 alleged and incorporated by reference for the purpose of alleging

12 forfeiture to the United States pursuant to Title 18, United States

13 Code, Section 981(a) (1) (C) and Title 28, United States Code,

14 Section 2461 (c).

15 20. Upon conviction of one or more of the offenses set forth in

16 Counts 1 and 2, defendant MARK ZOUVAS shall forfeit to the United States

17 any property, real and personal, constituting or derived from proceeds

18 traceable to such offenses. The property to be forfeited shall include

19 but is not limited to, a money judgment in favor of the United States

20 in an amount equal to the total amount of proceeds obtained directly or

21 indirectly as a result of the offenses.

22 21. Pursuant to Title 28, United States Code, Section 2461(c)

23 which incorporates the provisions of Title 21, United States Code,

24 Section 853(p), defendant ZOUVAS shall forfeit substitute property, up

25 to the value of the amounts described above, if, as a result of any act

26 or omission of the defendant, the property described above, or any

27 portion· thereof,-, cannot be located upon the exercise of due diligence;

28 has been transferred, sold to, or deposited with a third party; has been

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1 placed beyond the jurisdiction of this court; has been substantially

2 diminished in value; or has been commingled with other property which

3 cannot be divided without difficulty.

4 All pursuant to Title 18, United States Code, Section 981 (a) (1) (C) and

5 Title 28, United States Code, Section 2461(c).

6 DATED: January 29, 2020.

7 A TRUE BILL:

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10 ROBERT S. BREWER, JR.
United States Attorney
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Assistant U.S. Attorney

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