Carl Arnal, the founder and chairman of Thompson Hunt and Associates, Ltd., did not use his real name when dealing with investors. He operated as “Michael J. Cohen,” an alias he adopted specifically to conceal his prior criminal indictment and guilty plea for a fraudulent insurance scam. Under that alias, Arnal co-created offering and marketing materials for Thompson Hunt with CEO Christopher Vaughan, the two working together to raise approximately $1.3 million from primarily elderly investors between May 2021 and April 2023. The materials described Thompson Hunt’s bond offering as having been highly rated by a nationally recognized credit rating agency, as having a patent pending on its supposed bond structure, and as having been founded by “Michael Cohen” rather than the convicted fraudster Carl Arnal. None of those representations were accurate. The bond offering had not been rated by any recognized agency. No patent was pending on the bond structure. The founder’s identity was deliberately obscured to prevent investors from discovering his criminal background. On August 6, 2026, the court entered a proposed final consent judgment as to Vaughan, the last defendant in the case to be resolved, ordering him to pay a civil penalty of $90,000 and permanently barring him from serving as an officer or director of any public company.
The SEC originally filed its complaint on August 8, 2024, in the Southern District of New York, Case No. 24-civ-6035, charging Thompson Hunt, Arnal, Vaughan, and four additional defendants with two overlapping fraud schemes. The first scheme was the Thompson Hunt bond offering fraud targeting elderly investors. The second was a separate long-running fraudulent microcap securities scheme involving co-defendants Damon Artis and Richard Gavzie, who had solicited investors on THA’s behalf through Artis’s company Brookdale Consultants LLC and who had separately been engaged for years in pump-and-dump manipulation of penny stocks targeting the same elderly demographic. Each of the named defendants had prior regulatory or criminal history that the SEC described as a pattern of repeat misconduct across multiple schemes and multiple years.
A Fake Identity, a Fake Bond Rating, and $1.3M Raised From Elderly Investors Who Were Told It Was a Government Bond
The offering fraud at the center of the Thompson Hunt case combined multiple layers of deception designed to appeal specifically to elderly investors seeking safe, income-producing instruments. Gavzie, at Artis’s direction, solicited investors by describing the Thompson Hunt investment as a government bond, a characterization that was entirely false. Thompson Hunt was a private company whose bond offering had no government backing, no government connection, and no government rating. The offering materials Arnal and Vaughan prepared compounded those oral misrepresentations with written ones: the claimed credit rating from a nationally recognized statistical rating organization was fabricated, and the patent pending claim on the bond structure had no basis. The use of a fake founder name as the final layer ensured that any investor who attempted to verify the company’s leadership would encounter a false identity rather than Arnal’s actual history of insurance fraud.
Of the approximately $1.3 million Brookdale raised from investors on Thompson Hunt’s behalf, Arnal and Vaughan misappropriated more than $1 million. The misappropriation took three forms: Ponzi-style payments to earlier investors designed to maintain the appearance the scheme was performing, undisclosed commission payments to individuals involved in the operation, and payments for the legal fees of a personal friend of Arnal’s. Investors who asked about the status of their investments were given false assurances about both the safety and the performance of the bond. Most lost most or all of what they put in. The demographic of the victim pool, primarily elderly individuals who invested in what they had been told was a government bond, was not accidental. The defendants targeted a population for whom the promise of safe income and government backing was both compelling and credible.
Artis, Gavzie, and a Separate Microcap Scheme Running in Parallel Across the Same Network
While Arnal and Vaughan ran the Thompson Hunt bond fraud, co-defendants Damon Artis and Richard Gavzie were simultaneously operating a separate microcap stock manipulation scheme that ran from June 2016 through September 2023. The SEC complaint describes Artis and Gavzie as having for years promoted the fraudulent sale of penny stocks at prices exponentially higher than their acquisition costs, sharing in the profits when the stocks were sold. Gavzie, who had prior criminal proceedings related to securities violations, disseminated false and misleading Thompson Hunt offering materials to investors and compounded those misrepresentations with additional oral misrepresentations of his own. Artis directed Gavzie’s solicitation activity and was himself a recidivist who had faced prior civil regulatory proceedings. The overlap between the two schemes, both targeting elderly investors through the same social network of solicitors, reflects a broader infrastructure of predatory investor targeting that the SEC identified as the common thread across all seven named defendants.
Vaughan’s $90K Penalty, a Permanent Officer and Director Bar, and the Final Resolution of the Case
Christopher Vaughan’s August 6, 2026 consent judgment is the final resolution in a case that has proceeded against seven defendants across two years of litigation. Without admitting the allegations, Vaughan agreed to a permanent injunction against future violations of the Securities Act and Exchange Act antifraud and registration provisions, a $90,000 civil penalty, and a permanent bar from serving as an officer or director of any public company. His role as CEO made him directly responsible for the offering materials that misrepresented the bond rating, the patent status, and, by incorporating Arnal’s alias, the identity of the company’s founder. Prior resolutions in the case addressed Arnal and the other defendants separately. The SEC’s August 6 press release on the Vaughan judgment does not specify the monetary relief obtained in those prior resolutions, but the complaint had sought full disgorgement of the approximately $1 million misappropriated from the $1.3 million raised, plus penalties against all defendants.
Conclusion
Carl Arnal had a criminal conviction for insurance fraud when he co-founded Thompson Hunt and Associates. He called himself Michael Cohen and hoped no investor would look closely enough to notice the difference. Christopher Vaughan, as CEO, signed off on offering materials that described a government bond rating that did not exist, a patent that was not pending, and a founder who was not who he claimed to be. Damon Artis and Richard Gavzie, both with prior regulatory or criminal histories, solicited elderly investors into the offering while simultaneously running a separate penny stock scheme targeting the same population. Together, they raised $1.3 million, misappropriated more than $1 million of it, and used Ponzi payments and false assurances to keep investors from realizing what had happened. The last defendant resolved his case on August 6, 2026. The elderly investors who were told they were buying a government bond were not.
