Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—D. Mass.: Founder of cancer testing company and affiliated entities charged with misappropriation, (Jan 20, 2026)

By Rebecca E. Hoffman, J.D.

The founder obtained loans using an account with investor funds as collateral, paid the loans using the funds in the account, and used the loan proceeds for purposes other than those disclosed to investors.

The SEC’s January 15 complaint against Sumit Rai, his companies, and the CEO of one of those companies, describes a fraudulent scheme through which the defendants amassed millions in investor funds with promises of devices that screen for cancer cells in a patient’s blood (SEC v. Rai, No. 1:26-cv-10159 (D. Mass. Jan. 15, 2026)).

‘Cancer dialysis.’ Rai is an officer of SVN Med LLC, NVS Med Inc., and Onco Filtration, Inc., and the CEO of Cancer Check Labs, LLC. Investment pitch materials described SVN Med as a “cancer dialysis” company. From 2019 to 2021, the investments were promissory notes, convertible to shares of SVN. The defendants urged investors to change the form of the investments to notes payable by NVS, and then later by Onco, and then to non-convertible promissory notes with higher value. The new notes contained a provision allowing Rai or Onco to postpone payments. “In total, Rai raised money for these three companies from approximately 180 unique note-holding investors, who collectively invested about $26.7 million.”

The defendants told investors that the money would be used to develop and bring to market devices that filter cancer cells from the blood, but it was actually used in large part as collateral for a loan that Rai then used for other purposes. Kim de Mora, the CEO of SVN, signed an authorization for the loan application, even though it falsely stated that Rai was the sole owner of SVN.

Misappropriation and misrepresentation. Rai used investor funds to pay interest on the loan and transferred loan funds to his personal bank account, the complaint asserted. He used the money to pay his debts and those of an associate, but he told the bank it was being used for his personal needs. Later, he said that he was using the funds for business development, but, according to the complaint, this was also false. De Mora approved withdrawals without documentation of the intended use, the SEC said.

On April 11, 2023, Rai used $10.6 million in investor funds to pay the loan. De Mora “substantially assisted” in this misappropriation by approving it, the SEC asserted. Brokerage account statements were altered to remove indications that the account was being used as collateral for the loan. An institutional investor required SVN to submit compliance certificates, but the defendants falsified these as well, to hide the funds’ true purpose, the SEC explained.

The companies also “loaned” funds to de Mora. The loans were not documented or disclosed to investors. Relief defendant Cancer Check also benefited financially given that Onco sold its supplies to Cancer Check, rather than to the public, without documenting Cancer Check’s payment obligation, or revealing this plan to investors. The proceeds of sales to the public, then, constituted a benefit to Cancer Check to which it was not entitled.

According to the complaint, defendants Rai, SVN, NVS, and Onco violated Exchange Act Section 10(b) and Rule 10b-5, and Securities Act Section 17(a). De Mora aided and abetted these violations, and Cancer Check is liable for unjust enrichment and constructive trust, it said. The SEC seeks a permanent injunction, an officer and director bar against Rai and de Mora, a bar preventing Rai from offering securities, and disgorgement, prejudgment interest, and civil penalties.

The case is No. 1:26-cv-10159.

Attorneys: Kathleen Burdette Shields for the SEC.

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