SEC Secures Consent Judgment Against GP Solutions Founder Over Alleged Fraudulent Securities Offering

USA: SEC Secures Consent Judgment Against GP Solutions Founder Over Alleged Fraudulent Securities Offering

A federal court in the Central District of California entered a final consent judgment on January 16, 2026 involving Shannon Illingworth and GP Solutions, Inc., concluding a Securities and Exchange Commission enforcement action that alleged fraudulent conduct and the unregistered offer and sale of securities.

Allegations of Concealed Control and Misleading Financial Reporting

The SEC’s complaint, filed on January 8, 2026, asserted that Illingworth concealed his control of GP Solutions, a publicly traded company, and failed to disclose that related‑party transactions accounted for between 65% and 89% of the company’s revenue from 2019 to 2021. The complaint further claimed that the company issued materially false financial reports that omitted these significant related‑party sales of shipping containers, or “pods,” to entities secretly controlled by Illingworth.

Unregistered Sale‑Leaseback Securities Offering

According to the complaint, Illingworth’s private firm, GP Capital Group, Inc., raised approximately $11 million between January 2020 and November 2022 through an unregistered securities offering. Investors were sold sale‑leaseback agreements for cannabis‑cultivation pods in Skiatook, Oklahoma, with promised quarterly “rent” payments equal to 20% of the purchase price and marketing language suggesting high‑yield growth of invested capital.

Terms of the Final Judgment

Without admitting or denying the allegations, Illingworth and GP Solutions consented to a judgment that permanently enjoins both parties from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b‑5, and permanently enjoins Illingworth from violating Section 5 of the Securities Act of 1933. The judgment also imposes a $100,000 civil penalty, a five‑year officer‑director bar, and a five‑year prohibition on participating in penny‑stock offerings.

SEC Investigation Leadership

The investigation was led by Thomas Peirce and supervised by Sheldon L. Pollock of the SEC’s New York Regional Office. Litigation was handled by Christopher Dunnigan under the supervision of Daniel Loss.

Implications for Investors and Market Oversight

Regulators highlighted that the case underscores the importance of transparent disclosure of related‑party transactions and compliance with securities registration requirements. The judgment serves as a reminder that misleading financial statements and unregistered offerings can result in significant civil penalties and professional bans.

This report is based on information from SEC, licensed under Public Domain (U.S. Government Work). Source: Official U.S. Government release.