The U.S. Securities and Exchange Commission has filed suit against a disgraced former CEO of Washington state-based Tree of Knowledge (OTC: TOKI) (CSE: TOKIF), who led his company into millions of dollars of debt over a fraudulent “pivot” in 2020 to the personal protective equipment supply chain at the outset of the COVID pandemic.
On Friday, the SEC filed a case against Michael Caridi in U.S. District Court in the District of Connecticut, asserting that Caridi’s former company already reached a settlement with a Canadian hospital that was defrauded out of roughly $13 million in a deal for N95 protective medical masks that he never delivered.
“Caridi and the TOK Entities ultimately procured zero N95 masks for the hospital,” the lawsuit states. “Instead, Caridi paid a substantial portion of the more than $13 million received from the hospital to himself, his family, and his business associates.”
“When no N95 masks were delivered and the hospital demanded repayment, Caridi promised the TOK Entities would repay the hospital in full. They did not. As a result, the TOK Entities were left with a massive liability owed to the hospital, and insufficient assets or revenues to make repayment,” the SEC lawsuit states.
Caridi complicated his situation by lying in two separate press releases issued in 2020 about TOK’s pivot to the PPE industry, the lawsuit states. Both press releases resulted in a price and trading spike in TOK shares, and Caridi at the time held 10 million shares of TOK.
Caridi also tried for months – but was ultimately unsuccessful – to hide the $13 million deal from TOK board members. They eventually found out by autumn 2020 and disclosed the situation to investors.
Caridi resigned in 2021 as CEO and from the TOK board due to the situation. The SEC lawsuit requests that he additionally be banned from dealing in penny stocks, prohibited from serving as an officer of a public company, issued civil fines by the court, and forced to repay all “ill-gotten gains” from the hospital deal.
Tree of Knowledge under Caridi traded under the ticker symbols TOKI and TOKIF on both the over-the-counter markets and on the Canadian Securities Exchange, but the company’s name was changed to Optima Medical Innovations Corp. after Caridi’s “fraudulent scheme” was discovered.