SEC v. Terrance P. Berland and David Michael Scalzo — U.S. Securities and Exchange Commission Litigation Release No. 26675, dated October 20, 2026.
Named in the SEC’s action
- Terrance P. Berland and David Michael Scalzo
The SEC charged Terrance P. Berland, former CEO, and David Michael Scalzo, former director and majority owner of Violet Defense Group, Inc., for misrepresenting the company's financial performance and use of investor funds. They allegedly raised $13 million from 88 investors by providing false revenue projections and assurances, while secretly committing funds to a NASCAR sponsorship and other undisclosed expenses. Both defendants settled the charges, agreeing to permanent injunctions and civil penalties.
In Plain English
Imagine you're selling lemonade. You tell people you'll make $15, but you're actually only making $5. You also promise to use some money for new signs, but you secretly spend a lot on a big billboard for a race car team. The SEC stepped in because you weren't honest about how much money you were making or how you were spending it.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Raising Capital with Rosy Projections From April to November 2021, Terrance P. Berland and David Michael Scalzo solicited investors for Violet Defense Group, raising approximately $13 million from 88 individuals. They negligently misrepresented that the company was on track to achieve between $15 million and $18 million in revenue for 2021.
- False Assurances on Financial Health Between August and October 2021, Berland and Scalzo provided investors with securities purchase agreements. These agreements contained false assurances that no circumstances had occurred that could reasonably be expected to result in a material adverse effect on the company's financial condition.
- Concealing Declining Revenues By August 2021, Berland and Scalzo should have known that their revenue projections were inaccurate due to significant declines in sales and royalty revenues. However, they failed to disclose or correct these projections to investors.
- Misrepresenting Use of Funds From August to November 2021, the defendants negligently misrepresented how investor funds would be used. They claimed 10% would go to marketing for the largest subsidiary, but by September 2021, they knew a substantial portion was committed elsewhere.
- Secret NASCAR Sponsorship By the end of August 2021, Berland and Scalzo knew that more than 40% of investor funds had been committed to a NASCAR team sponsorship. They continued to raise over $8.3 million after this commitment was made, without disclosing it to new investors.
- Contradictory Statements The deteriorating revenues and significant, undisclosed marketing commitments, particularly the NASCAR sponsorship, directly contradicted the assurances given in the securities purchase agreements distributed between August and October 2021.
The Enforcement Action
On October 19, 2026, the SEC filed settled charges against Terrance P. Berland and David Michael Scalzo, former CEO and director/majority owner, respectively, of Violet Defense Group, Inc. The charges alleged misrepresentations concerning projected revenues and the use of investor funds. Without admitting or denying the allegations, the Defendants consented to the entry of final judgments, subject to court approval, permanently enjoining them from violating Section 17(a)(2) of the Securities Act of 1933 and ordering each to pay a $100,000 civil penalty.