Despite Government Shutdown, SEC Files Securities Fraud Complaint Against Startup’s Founder and CEO
On October 20, 2025, the SEC filed a complaint in the U.S. District Court for the Central District of California against Shiloh Luckey, the founder and CEO of ComplYant App Inc., a startup that provided tax software. According to the SEC, Luckey allegedly misled investors by making inflated and deceptive claims about ComplYant’s commercial success, as well as her qualifications as a licensed Certified Public Accountant. Then, after raising over $13 million from multiple venture capital (“VC”) investors, Luckey allegedly misused the funds for extravagant personal expenses.[1] The SEC’s complaint is noteworthy for several reasons outlined below.
The SEC Filed this Complaint (and Others) During the Government Shutdown
The government shutdown certainly has reduced the SEC’s resources and operations.[2] Yet the timing of this complaint sends a clear message that the SEC has not paused all enforcement actions. Indeed, this is not the only SEC complaint filed during the shutdown. Including this case, the SEC has filed no fewer than five complaints since the shutdown began on October 1.[3]
Startups Are Not Immune from SEC Enforcement Actions for Securities Violations
This complaint also underscores that the SEC’s enforcement priorities extend beyond large publicly traded corporations. ComplYant was a small startup company.[4] It was not listed or publicly traded on a stock exchange. But, as we’ve seen time and again, that does not make companies, their founders, or their employees beyond the reach of the SEC. Small startups and their employees can break securities laws, too.
Here, the investments in ComplYant allegedly came from a number of VC investors in the form of stock purchase agreements, convertible equity agreements, and simple agreements for future equity (“SAFEs”).[5] In the complaint, the SEC clearly alleges that each of these investment forms are securities within the ambit of securities laws and the SEC.[6]
Startups drive innovation and create new job opportunities, but when ambition leads to investor fraud, the consequences remind us that employees of private companies are not immune from liability. According to 91pornpartner Dan Vitelli, “Privately owned companies, including startups, and their employees raising capital through stock purchase agreements, convertible instruments, or other similar means should be prepared for scrutiny just like any large company. They should ensure that their statements to investors, financials, and pitch decks do not contain misrepresentations or omissions that would mislead investors.” For more on the intersection of startups and securities law, read our posts here and here.
Sources of Alleged Misrepresentations
Whistleblowers who believe they have information on potential securities fraud and who seek representation in connection with the SEC’s Whistleblower Program often ask what types of documents or communications may demonstrate evidence of fraud on investors. The SEC’s complaint against Luckey points to some common sources of alleged misrepresentations or omissions to investors that can form the basis of an SEC securities fraud claim: “pitch decks,” “financial statements and projections,” “investor update emails,” “board meeting presentations,” “a presentation to a start-up accelerator program,” and “an investment memorandum.”[7] While not an exhaustive list, these are textbook examples of the types of documents that may support a securities fraud action.
The SEC’s complaint also includes powerful charts and graphics depicting the alleged fraud. For example, Luckey allegedly told investors that from November 2020 to September 2022, ComplYant’s monthly revenue from subscribers had grown from about $2,500 to about $250,000.[8] However, the SEC alleges that, in reality, the company struggled to retain customers and never made more than $510 in a single month during that time.[9] The SEC’s complaint includes the following chart laying out its allegations:[10]
In addition, the SEC alleges that Luckey told a prospective investor that ComplYant had “4K+ customers.”[11] The complaint includes the following chart concerning customers that Luckey allegedly presented at a board meeting with investors:[12]
However, the SEC alleges that, in reality, from December 2019 to October 2023, “ComplYant never had more than 131 unique subscribers total.”[13]
Luckey’s Claimed Qualifications and Her Social Media Posts
The SEC also alleges that Luckey told investors and prospective investors that she was a licensed CPA, which the SEC alleges was important to investors’ decisions whether to invest in ComplYant, which offered tax software.[14] The SEC further alleges that Luckey posted tax advice videos on social media, including videos where she referred to herself as a licensed CPA.[15] Yet the SEC alleges that, in reality, “Luckey was never licensed as a CPA in California or in any other state.”[16]
Misuse of Funds
On top of all of this, the SEC’s allegations also extend to misuse of corporate funds. The SEC claims that Luckey used ComplYant’s business accounts to pay roughly $2.2 million in personal expenses, including payments for travel to Aspen, Miami Beach, Turks and Caicos, and Lisbon; a destination wedding in the Caribbean; Super Bowl tickets; student loan repayment; and a personal car and a home.[17]
Our Firm Helps Whistleblowers Under the SEC’s Whistleblower Program
Although we do not know whether a whistleblower was involved in this case, anyone with knowledge of potential securities law violations is encouraged to speak up and may be eligible for the SEC Whistleblower Reward Program. Eligible whistleblowers can report anonymously through legal counsel and can receive up to 30% of any monetary recovery. We recently reported on SEC awards and updates. To learn more, read our posts here and here.
For questions about the SEC whistleblower process or to discuss a potential submission, please contact Constantine Cannon’s Whistleblower Team for a free and confidential consultation.
Speak Confidentially With Our Whistleblower Attorneys
Sources:
[1] SEC v. Luckey, 2:25-cv-10026 (C.D. Cal), ECF No. 1 (filed Oct. 20, 2025).
[2] See, e.g., SEC Operational Status, available at (last accessed Oct. 29, 2025) (“Due to a lapse in appropriations, the SEC is currently operating in accordance with the agency’s plan for operating during a shutdown. Effective Wednesday, October 1, 2025 and until further notice, the agency will have a very limited number of staff members available. The SEC has staff available to respond to emergency situations with a focus on the market integrity and investor protection components of our mission.”).
[3] SEC v. Linh Thuy Le, 8:25-cv-2324 (C.D. Cal.) (complaint filed Oct. 15, 2025); SEC v. Wander, 1:25-cv-8565 (S.D.N.Y.) (complaint filed Oct. 16, 2025); SEC v. Santarelli, 8:25-cv-2375 (C.D. Cal.) (complaint filed Oct. 20, 2025); SEC v. Luckey, 2:25-cv-10026 (C.D. Cal.) (complaint filed Oct. 20, 2025); SEC v. Lichtenstein, 7:25-cv-8742 (S.D.N.Y.) (complaint filed Oct. 22, 2025).
[4] See SEC v. Luckey, 2:25-cv-10026 (C.D. Cal), ECF No. 1 (filed Oct. 20, 2025), at ⁋⁋ (“ComplYant was a technology startup run by its founder and CEO, Lucky. At its peak, in or around June 2023, ComplYant had over 50 employees.”).
[5] Id. ⁋ 76.
[6] Id. ⁋⁋ 76-80.
[7] Id. ⁋⁋ 36, 50, 52.
[8] Id. ⁋ 5.
[9] Id.
[10] Id. ⁋ 44.
[11] Id. ⁋ 51.
[12] Id. ⁋ 54.
[13] Id. ⁋ 56.
[14] Id. ⁋⁋ 59-60.
[15] Id. ⁋⁋ 71-72.
[16] Id. ⁋ 64.
[17] Id. ⁋⁋ 7, 67.
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