The case arises from an alleged fraudulent promotional scheme orchestrated by RenovaCare’s controlling shareholder and Chairman, Harmel Rayat (“Rayat”), designed to artificially inflate company’s stock price.
Between July 2017 and Jan. 2018, RenovaCare and Rayat allegedly solicited StreetAuthority, LLC (“StreetAuthority”), a publishing company, to run a promotion. Rayat allegedly worked closely with StreetAuthority on the promotion, including providing false information to StreetAuthority regarding the efficacy of RenovaCare’s experimental burn-wound healing medical device called the “SkinGun,” editing StreetAuthority’s promotional materials, advising StreetAuthority on how to distribute the promotion to enhance its effectiveness, and arranged to pay StreetAuthority for the promotion using RenovaCare’s funds that were routed through third parties.
In addition, when the OTC Markets inquired about the promotional activities in Jan. 2018, RenovaCare and Rayat issued a materially false and misleading press release claiming that no director, officer, or controlling shareholder had any involvement in the purported third party’s promotional materials.
The truth emerged on May 28, 2021, when the SEC sued RenovaCare and Rayat, alleging their active participation in the StreetAuthority promotional scheme.
This news sent the price of RenovaCare shares sharply lower.