SEC v. American Patriot Brands, Inc.; Urban Pharms, LLC; TSL Distribution, LLC; DJ&S Property #1, LLC; Robert Y. Lee; Brian L. Pallas — U.S. Securities and Exchange Commission Litigation Release No. 26587, dated July 17, 2026.
The SEC charged American Patriot Brands (APB), its subsidiaries, CEO, and COO with fraud related to a fraudulent offering. A final judgment was entered, enjoining the defendants from further violations, barring the CEO and COO from participating in securities issuance, and ordering substantial disgorgement, interest, and civil penalties. The claims against one relief defendant were dismissed.
Imagine a company selling shares in a new venture. They told investors it was a great opportunity, but they were lying about how good it was. The company and its leaders took the investors' money and used it improperly. Now, a judge has ordered them to pay back the money and imposed penalties.
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.
On July 10, 2026, the U.S. District Court for the Central District of California entered a final judgment as to American Patriot Brands, Inc. (APB), its subsidiaries Urban Pharms, LLC, TSL Distribution, LLC, and DJ & S Property #1, LLC, and its CEO Robert Y. Lee and COO Brian L. Pallas, in connection with fraud charges. The judgment permanently enjoins the defendants from further violations of antifraud provisions, bars Lee and Pallas from participating in the issuance, purchase, offer, or sale of securities (except for personal accounts), and prohibits them from acting as an officer or director of a public company. The judgment orders APB, Urban Pharms, TSL, and DJ&S jointly and severally to pay disgorgement of $17,786,703, plus prejudgment interest of $6,202,777. It also orders APB and Urban Pharms each to pay a civil penalty of $4,729,004; TSL to pay a civil penalty of $2,364,502; and DJ&S to pay a civil penalty of $1,182,251. Lee is ordered to pay a total of $6,399,792 (disgorgement, interest, and civil penalty), and Pallas is ordered to pay a civil penalty of $472,902. The Court ruled in favor of Relief Defendant Castro Business Enterprises, LLC on the claim of unjust enrichment. The judgment follows a partial summary judgment granted on June 16, 2025. A prior final judgment by consent was entered as to former CFO J. Bernard Rice on March 13, 2026. The SEC's claims of unjust enrichment against Relief Defendants Puerto Rico One Corporation and Legion Accounting Services, Inc. were dismissed.
Named in this action: American Patriot Brands, Inc., Urban Pharms, LLC, TSL Distribution, LLC, DJ & S Property #1, LLC, Robert Y. Lee, Brian L. Pallas.