HARRISBURG, Pa., June 15, 2012 /PRNewswire-USNewswire/ -- To halt the offer and sale of unregistered securities in Pennsylvania, the Pennsylvania Securities Commission (Commission) issued a Summary Order to Cease and Desist against SeatEat, LLC (SeatEat), an entity, and Micah Margolis (Margolis), an individual, both with an address in Boalsburg, Pennsylvania. SeatEat was purportedly in the business of marketing a smartphone application that will allow people at arenas and stadiums to order concessions for delivery to their seats or for pick-up in a V.I.P. line, and was offering for sale limited liability company membership interests (Interests) in SeatEat. Margolis was the manager and CEO of SeatEat.
In or about March 2012, at least one Pennsylvania resident (PA Resident) viewed an advertisement (Ad) entitled, "Investor wanted/inquiry (Harrisburg, PA)" posted by a representative (Representative) of SeatEat on an Internet message board. The Ad stated, "I have been working with Investors for quite a while now and…I have a couple of opportunities both for the person wanting to invest and the investor himself." Using the e-mail address provided in the Ad, the PA Resident e-mailed the Representative of SeatEat and requested additional information.
In or about March 2012, the Representative telephoned the PA Resident and stated that he believes private deals are safer than the stock market; that he had recently lost $9,000 in the stock market and has no faith in that process; and that he has a deal in a smartphone application that he planned to invest in himself.
In or about April 2012, Margolis e-mailed offering materials (Materials) to the PA Resident and offered for sale the Interests. In his e-mail, Margolis stated that the phone application would be complete by June 2012 and that SeatEat already had their first account lined up; that all of the revenue would be generated by in-application advertising; and that SeatEat has one competitor that had grown into a company worth $3 million to $6 million in two years. Margolis further stated that SeatEat has a better product and business plan than the competitor and "will surpass and outperform them in every way"; that if SeatEat achieves a $4 million value in two years, one percent equity in SeatEat would be worth $40,000 and would continue to show rapid growth in value; that SeatEat is "creating a new market with the potential for $4 billion annually"; that SeatEat has issued 5,000 Interests; and that the PA Resident's $20,000 investment would purchase 50 Interests, representing 1% of SeatEat.
The same month, Margolis telephoned the PA Resident and stated that SeatEat has received interest in the application from 19 stadiums; that SeatEat is seeking $25,000 for marketing and advertising and an additional $250,000 independent of marketing and advertising; and that a $20,000 investment would purchase 1% equity in SeatEat. He further stated that SeatEat is a manager-managed limited liability company and not a voter-managed limited liability company; and that Margolis is the manager of SeatEat.
The PA Resident was not an accredited investor under Rule 501 of Regulation D, and did not have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment. The PA Resident had no substantive, pre-existing relationship with SeatEat, Margolis or with the Representative.
The Commission ordered SeatEat, LLC and Micah Margolis to stop offering or selling the Interests in the Commonwealth of Pennsylvania, in violation of the Pennsylvania Securities Act of 1972, and in particular Section 201 thereof.
Any further solicitations or sales made by SeatEat, Margolis or their affiliates in Pennsylvania will constitute further violations of the 1972 Act. Any person who is solicited by or has information about SeatEat or Margolis is asked to immediately notify the Pennsylvania Securities Commission by calling the toll-free line 800-600-0007 (PA only); in Harrisburg (717) 787-8061; in Pittsburgh: (412) 565-5083; or, in Philadelphia: (215) 560-2088.
SOURCE Pennsylvania Securities Commission (PSC)