Initial Decision Release No. 1406

Administrative Proceeding

File Nos. 3-20021 and 3-20022

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

In the Matter of the Registration 

Statements of

Crest Radius, Inc., and

Loyal Source Market Services, 

Inc.

Initial Decision of Default

January 5, 2021

Appearances: Timothy J. Stockwell and Jonathan A. Epstein 

for the Division of Enforcement,

Securities and Exchange Commission

Before: James E. Grimes, Administrative Law Judge

Summary

I grant the Division of Enforcement’s motion for default and sanctions. 

I suspend the effectiveness of the Form S-1 registration statements filed by 

Crest Radius, Inc., and Loyal Source Market Services, Inc. The basis for this 

stop order is that their registration statements include material 

misstatements and omissions and that Crest Radius failed to cooperate with

examination by the staff of the Securities and Exchange Commission.

Background

On September 18, 2020, the Commission initiated separate proceedings 

against Crest Radius and Loyal Source when it issued orders instituting 

proceedings (OIPs) against each Respondent under Section 8(d) of the 
2

Securities Act of 1933.1 The OIPs allege that Respondents failed to cooperate 

with the Commission’s examinations under Securities Act Section 8(e) and that 

Respondents’ registration statements include material misstatements and

omissions.

2 The OIPs directed that the hearings for each Respondent take 

place on October 8, 2020.3 But the hearings were postponed pending service of 

the OIPs.4

On November 2, 2020, the Division served Respondents with their 

respective OIPs.5 To comply with Section 8(d)’s requirement that the hearing 

occur within fifteen days of service, I scheduled the hearing for November 16, 

2020.6 I warned Respondents that if they did not appear at the hearing, the 

Division could move for default and sanctions. 7 On the motion of the Division, 

I consolidated the two proceedings.8

At the November 16 hearing, the Division offered the testimony of two 

witnesses, and I admitted Crest Radius Exhibits 1–17 and 19–35 and Loyal 

Source Exhibits 1–22 and 24–34.9 Respondents had not answered the OIPs and 

did not appear at the hearing, so I ordered them to show cause by November 

25, 2020, why the proceeding should not be determined against them on 

 

1 15 U.S.C. § 77h(d).

2 Crest Radius OIP at 2–3; Loyal Source OIP at 2.

3 Crest Radius OIP at 3; Loyal Source OIP at 2.

4 Crest Radius, Inc., Admin. Proc. Rulings Release No. 6791, 2020 SEC 

LEXIS 4474, at *1 (ALJ Oct. 6, 2020); Loyal Source Market Servs., Inc., Admin. 

Proc. Rulings Release No. 6792, 2020 SEC LEXIS 4488, at *1 (ALJ Oct. 7, 

2020).

5 Crest Radius, Admin. Proc. Rulings Release No. 6797, 2020 SEC LEXIS 

4793, at *1–2 (ALJ Nov. 4, 2020). The Division served Respondents through 

personal service on the Nevada Secretary of State, as agent for each 

Respondent under Nevada law. Id.

6 Id. at *2; see 15 U.S.C. § 77h(d); 17 C.F.R. § 201.141(a)(2)(v).

7 Crest Radius, 2020 SEC LEXIS 4793, at *2–3.

8 Id. at *1.

9 Crest Radius, Admin. Proc. Rulings Release No. 6798, 2020 SEC LEXIS 

4901, at *1 (ALJ Nov. 16, 2020). 
3

default.10 I also gave the Division an opportunity to move for default and 

sanctions.11

The Division filed its motion for default on November 30, 2020. I admitted 

four additional exhibits, Crest Radius Exhibits 36–37 and Loyal Source 

Exhibits 35–36.12

Respondents have yet to answer their respective OIPs or respond to the 

order to show cause.

Findings of Fact

The findings and conclusions in this initial decision are based on the 

record, including matters subject to official notice.

13 Because Respondents are 

in default for failing to file an answer, appear at the hearing, or otherwise 

defend themselves in this proceeding, I deem true the allegations in the OIPs, 

unless otherwise noted.

14 In addition, I have considered the Division’s 

supporting Epstein declarations, the admitted exhibits, and the testimony of 

the witnesses, applying preponderance of the evidence as the standard of 

proof.15

 

10 Id.; see 17 C.F.R. §§ 201.155(a)(1)–(2), .220(f), .310.

11 Crest Radius, 2020 SEC LEXIS 4901, at *1.

12 Crest Radius, Admin Proc. Rulings Release No. 6802, 2020 SEC LEXIS

5077, at *1 (ALJ Dec. 7, 2020).

13 See 17 C.F.R. § 201.323.

14 See 17 C.F.R. §§ 201.155(a)(1)–(2), .220(f), .310; Crest Radius OIP at 3; 

Loyal Source OIP at 3.

15 See Rita J. McConville, Securities Exchange Act of 1934 Release 

No. 51950, 2005 WL 1560276, at *14 (June 30, 2005), pet. denied, 465 F.3d 780 

(7th Cir. 2006).
4

Crest Radius

Crest Radius filed a registration statement containing multiple 

misstatements and omissions.

Crest Radius is a Nevada corporation purportedly headquartered in 

Tsolgo, Estonia; it purportedly engages in the distribution of laundry washing 

machines.16

Crest Radius filed a Form S-1 registration statement on January 17, 2018, 

and amended it three times.

17 The registration statement and amendments 

accurately identify the company’s state of incorporation (Nevada) and its 

attorney at the time, but little else.18

The registration statement lists the phone number and street address of 

the company’s principal executive office in Tsolgo, Estonia.19 But the phone 

number does not work.20 And there does not appear to be a structure at the 

address that could serve as the company’s office.21

In addition, the registration statement includes, as an exhibit, the 

company’s articles of incorporation, which identifies Nevada Formation 

 

16 Crest Radius OIP at 1.

17 Id.; Crest Radius Exs. 1–4.

18 Crest Radius OIP at 1; Crest Radius Ex. 1 at 1; Crest Radius Ex. 6; Crest 

Radius Ex. 37, ¶ 12 & n.1.

19 Crest Radius Ex. 4 at 1.

20 Crest Radius OIP at 3; Crest Radius Ex. 37, ¶ 17. 

21 Crest Radius OIP at 1, 3; Crest Radius Ex. 16; Crest Radius Ex. 37, ¶ 16. 

The Division relies on a satellite image of the address from Google Maps, a 

publicly available, commercial internet application. See United States v. PereaRey, 680 F.3d 1179, 1182 n.1 (9th Cir. 2012) (taking judicial notice of Google 

Maps for, at least, some purposes). It is not clear whether Google Maps shows

Crest Radius’s purported address or, because it does not have a record of the 

street name and number, defaults to a central point in the area. The latter 

possibility might indicate that the address does not exist. See Crest Radius 

Ex. 16 (listing only the town name in the Google Maps screenshot). By 

defaulting, however, Crest Radius has admitted the allegation in the OIP and 

not challenged the Division’s evidence. 
5

Services LLC as Crest Radius’s registered agent.22 But Nevada Formation 

Services does not exist.23 An individual who lives at Nevada Formation 

Services’s supposed address represented that no one living at that address was 

affiliated with Nevada Formation Services or Crest Radius.24

Crest Radius’s registration statement lists Kardo Valbe as the company’s 

“sole officer and director.”25 But Valbe was paid by Anisiy Evrasov to play that 

role; Evrasov, not Valbe, controlled Crest Radius’s communications, business 

connections, and office, and ultimately fired Valbe and barred him from the

office.26 Valbe also did not open or control Crest Radius’s bank account.

27

Instead, it was opened at the direction of Andrey Troshin.28

Crest Radius reported total income of $30,033 in the fourth quarter of 

2017 and $30,027 in the first quarter of 2018.29 This income was entirely 

derived from two roundtrip transactions.30

First, in December 2017, The Millenium Group International, Inc., sent 

$30,371.19 to Songbird Development Inc., which then sent $30,032.74 to Crest 

Radius, which then sent $29,021.88 to Foshan Mingdeng Kitchen Cabinet Co., 

which sent $28,927.36 back to Millenium.31 Notably, Troshin, who had directed 

 

22 Crest Radius Ex. 1 at 53 (PDF); see also Crest Radius Ex. 6.

23 Crest Radius OIP at 3; Crest Radius Ex. 7.

24 Crest Radius OIP at 2; Crest Radius Ex. 9; Crest Radius Ex. 37, ¶¶ 10–

11.

25 Crest Radius Ex. 1 at 10, 28; see id. at 24, 30.

26 Crest Radius OIP at 3; Crest Radius Ex. 13 at 12–14 (PDF); Crest Radius 

Ex. 37, ¶ 13.

27 Crest Radius OIP at 2; Crest Radius Ex. 13 at 2–3; Crest Radius Ex. 26 at 

1; Tr. 14–19.

28 Tr. 14–19.

29 Crest Radius OIP at 2; Crest Radius Ex. 3 at F-3; Crest Radius Ex. 4 at F3.

30 Crest Radius OIP at 2.

31 Crest Radius Exs. 23–30; Crest Radius Ex. 37, ¶¶ 24–27. In some 

documents, Foshan Mingdeng is referred to as Foshan Mingden. See, e.g., Crest 

Radius Ex. 28.
6

the opening of Crest Radius’s account, also directed the opening of Millenium’s 

accounts.32 The $30,032.74 that Crest Radius received from Songbird matches 

the total fourth quarter 2017 profit of $30,033 in its registration statement. 

Second, in February and March 2018, Millenium sent $30,433.50 to Asset 

Solutions Inc., which then sent $30,027.18 to Crest Radius, which then sent 

Foshan Mingdeng $29,871.33, which then returned $32,091.34 to Millenium.

33

The $30,027.18 that Crest Radius received from Asset Solutions matches the 

total first quarter 2018 profit of $30,027 in its registration statement. The 

fictitious nature of Crest Radius’s income for both quarters calls into question 

all of Crest Radius’s other representations about its business operations.34

Crest Radius failed to cooperate with the Commission’s examination.

By providing incomplete responses to investigative subpoenas, Crest 

Radius failed to cooperate with the Commission’s Section 8(e) examination.35

Commission staff attempted to serve a document subpoena on Crest Radius’s

purported registered agent on May 23, 2018, but learned two days later that 

the resident of the mailing address had no affiliation with Nevada Formation 

Services or Crest Radius.

36 On June 5, 2018, Commission staff served a 

subpoena with the same document requests on the attorney listed as Crest 

Radius’s agent on its registration statement; staff served a second set of 

requests on the attorney on September 18, 2018.

37 Valbe responded on behalf 

of the company to the June 5 and September 18 subpoenas, but he produced a 

handful of documents only in response to the June 5 subpoena.38 Crest Radius 

 

32 Crest Radius Ex. 22.

33 Crest Radius Exs. 31–35; Crest Radius Ex. 37, ¶¶ 29–35.

34 See, e.g., Crest Radius Ex. 4 at 17 (making representations about contracts 

with Chinese washing machine manufacturers).

35 Crest Radius OIP at 2.

36 Id. at 2; Crest Radius Ex. 8; Crest Radius Ex. 37, ¶¶ 9–10.

37 Crest Radius OIP at 2; Crest Radius Exs. 10, 12; Crest Radius Ex. 37,

¶¶ 12–13.

38 Crest Radius OIP at 2; Crest Radius Exs. 11 (limited production by Valbe 

of about twenty documents), 13 (response by Valbe with no additional 

documents); Crest Radius Ex. 37, ¶¶ 9, 12–13.
7

failed to produce entire categories of responsive documents, including books 

and records, sales forecasts, financial projections, and business plans.39

Loyal Source

Loyal Source filed a registration statement containing multiple 

misstatements and omissions.

Loyal Source is a Nevada corporation purportedly headquartered in 

Zilina, Slovakia; it purportedly engages in the distribution of home air 

purifiers.40

Loyal Source’s story is similar to Crest Radius’s. The company filed a Form 

S-1 registration statement on May 9, 2017, and amended it five times in 2017 

and five times in 2018.

41 Loyal Source’s registration statement contains

multiple misstatements and omissions that will sound familiar.

The registration statement lists a phone number and the street address of 

the company’s principal executive office in Zilina, Slovakia.42 But the phone 

number does not work and it is unlikely the address could serve as the 

company’s office.43

The registration statement identifies Corporate Filing Agents as Loyal 

Source’s registered agent.44 But Corporate Filing Agents does not exist.45 An 

individual who lives at its purported address does not run a business from his 

home and has no connection with Corporate Filing Agents or Loyal Source.

46

 

39 Crest Radius OIP at 2; see Crest Radius Ex. 11; Crest Radius Ex. 37, ¶ 12.

40 Loyal Source OIP at 1.

41 Id.; Loyal Source Exs. 1–11. 

42 Loyal Source Ex. 11 at 1.

43 Loyal Source OIP at 2; Loyal Source Ex. 20 (Google Maps screenshot); 

Loyal Source Ex. 36, ¶¶ 14–15. But see Loyal Source Ex. 13 (letter from Loyal 

Source claiming to have received mail at its listed street address). Like Crest 

Radius, Loyal Source has forfeited any argument that the Division’s evidence 

is less than conclusive; I deem true the allegation of falsity in the OIP. 

44 Loyal Source Ex. 1 at 67 (PDF); see also Loyal Source Ex. 16.

45 Loyal Source OIP at 2; Loyal Source Ex. 17.

46 Loyal Source OIP at 2; Loyal Source Ex. 19; Tr. 24–26.
8

Finally, at least some of Loyal Source’s reported income of $127,571 for 

the year ended January 31, 2017, resulted from a roundtrip transaction.47 In 

July 2016, Cascade Networks Inc. sent $11,161.69 to Emerald Data, Inc., 

which then sent $11,005.17 to Loyal Source, which then sent $10,617.18 back 

to Cascade.48 As with the Crest Radius roundtrip transactions, Troshin was 

involved in setting up more than one of the involved bank accounts—in this 

case, all three. Troshin directed the opening of Cascade’s account and opened 

Loyal Source’s and Emerald Data’s accounts.49

Loyal Source never received the Commission’s subpoena.

As part of the Commission’s Section 8(e) examination, Commission staff 

attempted to serve a document subpoena on Loyal Source’s purported 

registered agent on May 22, 2018.50 Twelve days earlier, staff had sent an 

email to Loyal Source, informing Loyal Source that the Commission was 

starting a Section 8(e) examination and that the Commission would “contact 

[it] shortly regarding the examination.”51 The Division represents that it did 

not receive a response to this email.52 No further email correspondence to or 

from Loyal Source appears in the record.

The Commission never received a response to the subpoena from Loyal 

Source.53 Commission staff learned, however, that the resident of the service 

address did not run a business from his home and had never heard of Loyal 

Source.

54 Unlike with the Crest Radius May 23 subpoena, there is no evidence 

in the record that Commission staff attempted other methods of service.

 

47 Loyal Source OIP at 2; Loyal Source Ex. 11 at F-5.

48 Loyal Source Exs. 27–28, 31–32, 34; Loyal Source Ex. 36, ¶¶ 22–26.

49 Loyal Source Exs. 29–30, 33; Tr. 14–19.

50 Loyal Source OIP at 2; Loyal Source Ex. 18; Loyal Source Ex. 36, ¶ 12.

51 Loyal Source Ex. 15.

52 Loyal Source Ex. 36, ¶ 9.

53 Loyal Source OIP at 2; Loyal Source Ex. 36, ¶ 12.

54 Loyal Source OIP at 2; Loyal Source Ex. 19. Based on the OIP’s 

allegations, Commission staff knew of the problem regarding the purported 

agent’s address before the OIP issued.
9

Conclusions of Law

The Division argues that I should issue stop orders against Crest Radius 

and Loyal Source for two independent reasons: (1) Respondents made material 

misstatements and omissions in their registration statements and (2) 

Respondents failed to cooperate with the Section 8(e) examinations.55 Although 

I find that the Division has not established that Loyal Source failed to 

cooperate with the Commission’s examination, I conclude that stop orders are 

nevertheless appropriate to suspend the effectiveness of Respondents’ 

registration statements.

Stop orders are warranted under Section 8(d) because Respondents 

made material misstatements and omissions in their registration 

statements.

Securities Act Section 8(d) authorizes the Commission to issue a stop order 

suspending the effectiveness of a registration statement if the registration 

statement includes any untrue statement of material fact or omits to state any 

material fact required to be stated therein or necessary to make the statements 

therein not misleading.56 The purpose of registration statements is to “protect 

investors by promoting full disclosure of information thought necessary to

informed investment decisions.”

57 “Information in a registration statement is 

material when there is a substantial likelihood that a reasonable investor 

would attach importance to it in determining whether to purchase the security 

in question.”58

 

55 The Division also argues that stop orders are appropriate because 

Respondents defaulted, but that is not an independent basis for suspending 

the effectiveness of Respondents’ registration statements absent “some 

meaningful explanation” for the requested relief against the defaulted party.

Rapoport v. SEC, 682 F.3d 98, 108 (D.C. Cir. 2012).

56 15 U.S.C. § 77h(d).

57 mPhase Techs., Inc., Exchange Act Release No. 74187, 2015 WL 412910, 

at *5 (Feb. 2, 2015) (quoting World Trade Fin. Corp., Exchange Act Release 

No. 66114, 2012 WL 32121, at *7 (Jan. 6, 2012)).

58 Petrofab Int’l, Inc., Securities Act Release No. 6769, 1988 SEC LEXIS 782, 

at *16 (Apr. 20, 1988) (citing TSC Indus., Inc. v. Norway, Inc., 426 U.S. 438, 

449 (1976)); see 17 C.F.R. § 230.405 (defining a material fact as one to which 

“there is a substantial likelihood that a reasonable investor would attach 

importance in determining whether to purchase the security”).
10

In their registration statements, and accompanying amendments, Crest 

Radius and Loyal Source made material misrepresentations and omissions 

about their finances. Crest Radius also made material misrepresentations and 

omissions concerning its promoters and control persons. Finally, both 

companies made material misrepresentations and omissions about their 

company information. 

Crest Radius and Loyal Source materially misrepresented their finances.

Item 11(e) of Form S-1 requires a registrant to furnish financial 

information meeting the requirements of Regulation S-X, including 

consolidated statements of income and cash flow.59 “False claims of substantial 

unearned revenue, or the substantial overstatement of revenue, are ‘material’ 

to reasonable investors.”60 The materiality of this type of information “relating 

to financial condition, solvency and profitability is not subject to serious 

challenge.”61

Crest Radius and Loyal Source both included deliberately fabricated 

profits in their financial statements. They created the false appearance of 

revenue through roundtrip transactions that appear to have been coordinated 

by a single individual, Troshin, who was involved with opening most, if not all, 

of the involved bank accounts. And these fabricated profits accounted for all of 

Crest Radius’s profits during a six-month period and almost ten percent of 

Loyal Source’s profits in less than a year. These misstatements alone are 

enough to justify a stop order against both Respondents.

Crest Radius made material misrepresentations and omissions concerning 

its promoters and control persons.

Item 11(n) of Form S-1 requires a registrant to furnish the information 

required by Item 404 of Regulation S-K, including the identity of any promoter 

or control person that the registrant had within the last five fiscal years.62 A 

promoter is defined to include “[a]ny person who, acting alone or in conjunction 

with one or more other persons, directly or indirectly takes initiative in 

 

59 Form S-1, Item 11(e), available at https://www.sec.gov/files/forms-1.pdf; 

17 C.F.R. § 210.3-02.

60 SEC v. USA Real Estate Fund 1, Inc., 30 F. Supp. 3d 1026, 1034 (E.D. 

Wash. 2014).

61 SEC v. Murphy, 626 F.2d 633, 653 (9th Cir. 1980).

62 Form S-1, Item 11(n); 17 C.F.R. § 229.404(c).
11

founding and organizing the business or enterprise of an issuer.”63 Control is 

defined to mean “the possession, direct or indirect, of the power to direct or 

cause the direction of the management and policies of a person.”64

Misrepresenting who is a promoter or control person or, as here, failing to 

disclose a promoter or control person, is material.65 “Other than a corporation’s 

financials, its leadership, the nature of its operations, and its plan for the 

future would seem to be the most important pieces of information available to 

an investor.”66

Crest Radius misrepresented in its registration statement that a single 

individual, Valbe, was its sole control person. But Valbe was little more than 

a nominee for the real promoter and control person, Evrasov, who controlled 

Crest Radius’s communications, business connections, and office. Evrasov 

controlled Crest Radius’s personnel; he fired Valbe and denied him access to 

the office. Even Troshin—who directed the opening of Crest Radius’s bank 

account and appears to have orchestrated the roundtrip transactions that 

account for all of Crest Radius’s income over six months—had more control 

than Valbe. Crest Radius’s failure to disclose the involvement of Evrasov and 

Troshin also warrants the issuance of a stop order against Crest Radius.

Crest Radius and Loyal Source materially misrepresented identifying 

company information.

Form S-1 requires a registrant to furnish basic contact information, 

including the address and phone number of its principal executive offices, and 

Item 16(a) of the form requires a registrant to furnish exhibits required by Item 

601 of Regulation S-X, including articles of incorporation, which also include 

contact information.

67 Although misstating any one piece of contact 

information may not be material depending on the circumstances, failing to 

 

63 17 C.F.R. § 230.405.

64 Id.

65 See SEC v. Fehn, 97 F.3d 1276, 1290 (9th Cir 1996); Am. Fin. Co., 

Securities Act Release No. 4465, 1962 WL 68468, at *2 (Mar. 19, 1962).

66 SEC v. Husain, No. 2:16-cv-3250, 2017 WL 810269, at *8 (C.D. Cal. Mar. 

1, 2017); see also Franchard Corp., Securities Act Release No. 4710, 1964 WL 

67454, at *6 (July 31, 1964) (“Evaluation of the quality of management—to 

whatever extent it is possible—is an essential ingredient of informed 

investment decision.”).

67 Form S-1 at 1; id., Item 16(a); 17 C.F.R. § 229.601(b)(3)(i).
12

provide almost any correct contact information “significantly alter[s] the ‘total 

mix’ of information made available.”68 And substituting fabricated information 

for accurate information indicates a deliberate intention to deceive that 

impugns management’s integrity, which is material to a reasonable investor.69

In their registration statements, Crest Radius and Loyal Source provided 

incorrect phone numbers, addresses, and registered agents. The information is 

not just wrong, but wrong in a way that suggests that it was wholly invented 

by Respondents. For example, Respondents listed companies that never 

existed as their registered agents. When considered collectively, the falsified 

contact information provides another reason to issue a stop order against both 

Respondents.

A stop order against Crest Radius is warranted under Section 8(e) 

because it failed to cooperate with the Commission examination.

Securities Act Section 8(e) authorizes the Commission to issue a stop order 

if an issuer fails to cooperate with or obstructs the Commission’s examination 

into whether a stop order should issue under Section 8(d).

70 Refusal to respond 

to subpoenas constitutes a failure to cooperate.71

Crest Radius wholly failed to provide documents in response to one of two 

subpoenas served on its attorney. And it provided a mere handful of documents

in response to the second subpoena, omitting the most important requested 

documents, including its books and records. This behavior is an independent 

ground for a stop order against Crest Radius.

In addition, the Division argues that Loyal Source failed to cooperate 

because it never responded to the subpoena that Commission staff attempted 

to serve on Loyal Source’s purported registered agent. Although service of 

investigative subpoenas is normally complete upon mailing,72 Commission 

staff knew that its subpoena in this case did not reach its intended recipient.

 

68 TSC Indus., 426 U.S. at 449.

69 See United States v. Hatfield, 724 F. Supp. 2d 321, 328 (E.D.N.Y. 2010); 

SEC v. Joseph Schlitz Brewing Co., 452 F. Supp. 824, 830 (E.D. Wis. 1978).

70 15 U.S.C. § 77h(e).

71 See Blimpie Corp. of Am., Securities Act Release No. 5146, 1971 WL 

120491, at *1 (May 6, 1971) (refusal to testify in response to subpoenas, “on 

grounds of privilege,” establishes a failure to cooperate).

72 See 17 C.F.R. §§ 201.150(c)(2), (d), .232(c), 203.8.
13

In the context of notice of a tax sale to the owner of real property, the Supreme 

Court has held that, although due process does not require actual notice in all 

circumstances, when “the government learns its attempt at notice has failed,” 

the government must “do something more” by taking “further reasonable steps

if any were available.”73 The Court refused to draw a distinction between 

knowing that notice would not reach the intended recipient before calculating 

how best to provide notice and learning that notice did not reach the intended 

recipient after notice was sent but before the government taking occurred.

74 It 

further noted that even if a person has a legal obligation to maintain an 

address on file with the government, the government is not necessarily relieved

of having to take further reasonable steps upon learning that the party cannot 

be reached at its address of record.75

Service of an investigative subpoena might not usually implicate the same 

due process concerns that notice of a tax sale does, but finding service of the 

subpoena in this proceeding—where Loyal Source’s purported failure to 

respond to the subpoena is alleged as an independent basis for a stop order—

raises concerns similar to those in Jones.

76 Commission staff learned that the 

address to which the staff mailed the subpoena did not belong to Loyal Source’s

purported registered agent, yet—in contrast to its actions with respect to Crest 

Radius—the record contains no evidence that the staff made other attempts to 

serve the subpoena. The Division has not shown that further reasonable steps 

were unavailable or impractical.

The Division has not made other arguments demonstrating that Loyal 

Source failed to cooperate. Because it would not affect the disposition of this 

proceeding, I decline to raise or address alternative theories. I thus conclude 

on this record that the Division has not shown that Loyal Source failed to 

cooperate with the Commission’s examination.

 

73 Jones v. Flowers, 547 U.S. 220, 227, 230 (2006) (emphasis added).

74 Id. at 230.

75 Id. at 232.

76 In a different but somewhat analogous context of subpoena enforcement

in federal court, service is a key requirement and implicates due process. See, 

e.g., Fed. R. Civ. Pro. 45(b); 9 Moore’s Federal Practice § 45.21 (Matthew 

Bender 3d ed. 2020) (“The apparent purpose of the service requirement is to 

ensure receipt, so that notice will be provided to the recipient, and enforcement 

of the subpoena will be consistent with the requirements of due process.”).
14

Record Certification

I certify that the record includes the items set forth in the record index

issued by the Secretary of the Commission on December 18, 2020.77

Order

The Division of Enforcement’s motion for default and sanctions is 

GRANTED. 

Under Section 8(d) of the Securities Act of 1933, the effectiveness of the 

Form S-1 registration statement filed by Crest Radius, Inc., on January 17, 

2018, and amended on March 1 and 20 and May 9, 2018, is SUSPENDED. 

Under Section 8(d) of the Securities Act of 1933, the effectiveness of the 

Form S-1 registration statement filed by Loyal Source Market Services, Inc., 

on May 9, 2017, and amended on June 19, July 5, August 16, October 20, and

November 30, 2017, and January 5, February 2 and 13, March 13, and April 

24, 2018, is SUSPENDED.

This initial decision will become effective in accordance with and subject 

to the provisions of Rule 360.78 Under that rule, a party may petition for review 

of this initial decision within 21 days after service of the initial decision. Under 

Rule of Practice 111, a party may also move to correct a manifest error of fact 

within ten days of the initial decision.79 If a party moves to correct a manifest 

error of fact, then a party will have 21 days from the date of the order resolving 

that motion to petition for review. 

The initial decision will not become final until the Commission enters an 

order of finality. The Commission will enter an order of finality unless a party 

petitions for review or moves to correct a manifest error of fact or the 

Commission determines on its own initiative to review the initial decision as 

to a party. If any of these events occur, the initial decision will not become final 

as to that party. 

Respondents may move the Commission to set aside the default under 

Rule of Practice 155(b), which permits the Commission, at any time, to set 

aside a default for good cause, in order to prevent injustice and on such 

 

77 See 17 C.F.R. § 201.351(b).

78 See 17 C.F.R. § 201.360.

79 See 17 C.F.R. § 201.111.
15

conditions as may be appropriate.80 A motion to set aside a default must be 

made within a reasonable time, state the reasons for the failure to appear or 

defend, and specify the nature of the proposed defense in the proceeding.81

Such motion, if filed, should be directed to the Commission, as the hearing 

officer may set aside a default only “prior to the filing of the initial decision.”82

_______________________________

James E. Grimes

Administrative Law Judge

Served by email on the Division of Enforcement.

 

80 17 C.F.R. § 201.155(b).

81 Id.

82 Id.