--- title: "Netcapital Faces Shareholder Class Action Following SEC Revenue-Fraud Allegations" url: https://altstreet.investments/news/netcapital-class-action-chance-v-netcapital-sec-sham-revenue-2026-10-08 kind: news-article updated: 2026-10-14 description: "Chance v. Netcapital (D. Mass., filed Oct. 8, 2026) brings Exchange Act claims for stock purchasers after the SEC's $13.9 million revenue-fraud complaint. Netcapital has since withdrawn reliance on fiscal 2022 to 2025 financial statements and lost its auditor and two directors." publisher: AltStreet (https://altstreet.investments) license: Public factual pages may be read, quoted and cited with attribution and a link. Bulk redistribution is not permitted. --- # Netcapital Faces Shareholder Class Action Following SEC Revenue-Fraud Allegations A proposed class of Netcapital Inc. stock purchasers has sued the company and four current or former officers and directors in Massachusetts federal court, drawing on the SEC's August complaint over consulting revenue the agency calls sham. The same month, the company told investors not to rely on four years of audited financial statements. By Michael E., Head of Research, AltStreet Research (https://altstreet.investments/authors/michael-e). Published October 14, 2026. Platform: Netcapital (https://altstreet.investments/platforms/reviews/netcapital). Entity: Chance v. Netcapital Inc.. A putative shareholder class action was filed October 8, 2026 in the U.S. District Court for the District of Massachusetts against Netcapital Inc., the Nasdaq-listed parent of the Netcapital crowdfunding portal, and four current or former officers and directors: Coreen Kraysler, Cecilia Lenk, John Fanning and Martin Kay. The case, Chance v. Netcapital Inc. (1:26-cv-14584), is brought by Caleb Chance on behalf of purchasers of Netcapital common stock between December 15, 2021 and September 3, 2026, under Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5 (Entry 1). It was assigned to Judge Myong J. Joun on October 9, and summonses issued the same day. The complaint draws substantially on the SEC's civil action filed two months earlier. Its core allegation, in its own words, is that Netcapital's reported revenue growth reflected "sham consulting revenue that Defendants knew or should have known about." It also pleads what the SEC's complaint did not need to: declines in the share price after each later company disclosure, including a 28.6 percent fall to $0.228 on August 18 after the auditor's resignation was reported. ## The alleged accounting scheme The SEC filed its complaint on August 10, 2026 in the same court (SEC v. Fanning et al., 1:26-cv-13665), naming six defendants: Netcapital Inc. and five individuals, Fanning, Kraysler, Kay, Paul Riss and Lenk. It alleges that over ten quarters from October 2021 through January 2024, Netcapital recognized about $13.9 million of consulting revenue under backdated, and in some cases forged, agreements between its subsidiary Netcapital Advisors and at least eleven "Portfolio Companies" that Fanning controlled through intermediary entities. That was about 77 percent of the $17.95 million Netcapital reported for the period, an overstatement the SEC puts at 345 percent. The alleged scheme ran through the crowdfunding business rather than beside it. The SEC says the agreements covered basic services, such as logos, pitch decks and websites, for the Portfolio Companies' planned Regulation Crowdfunding offerings, and that those companies then raised money on the Netcapital funding portal. It alleges the offerings were sized at $124,000 or below so the issuers could self-certify their financials, that their equity valuations were set at levels that would purportedly support the consulting revenue, and that some documents filed with the SEC for those offerings were forged. Riss, the SEC alleges, prepared Netcapital's financial statements while serving as the portal's chief compliance officer. One example in the complaint: CountSharp's manager signed the documents for its offering but did not decide whether to conduct one, because Fanning already had. ## What Netcapital has disclosed since On August 12, Fruci & Associates II, PLLC resigned as Netcapital's auditor, effective immediately, citing the SEC's litigation release. Netcapital reported the resignation in an 8-K signed August 17 and filed August 18. The same filing carried a disclosure that may matter more to investors: under Item 4.02, the company said investors should no longer rely on its audited financial statements for the fiscal years ended April 30, 2022 through 2025, on its unaudited statements for eight quarters from October 2021 through January 2024, or on three fiscal 2025 quarters to the extent they carried comparative prior-year figures. That is a non-reliance notice, not a completed restatement: the company said it had not finished evaluating what corrections would be required and was examining whether later periods carry the effects forward. Fruci had not audited the year ended April 30, 2026. On August 19, after the court approved her settlement with the SEC, Lenk resigned from Netcapital's board and as chief executive of Netcapital Advisors; the 8-K reporting it is signed August 25. Without admitting the allegations, she consented to a final judgment providing permanent injunctions, a conduct-based injunction and a $50,000 civil penalty, the company said. On August 27, director Avi Liss resigned from the board and its audit committee, writing that he did not wish to remain associated with the company given the allegations and had no involvement in the alleged conduct, per an 8-K filed September 3. Nasdaq sent delinquency notices on August 24 and September 21 for the unfiled annual report for the year ended April 30, 2026 and the quarterly report for July 31, 2026. ## In AltStreet's record AltStreet's Netcapital review carries the SEC complaint, the auditor's resignation and the portal's filing record; this is the second federal docket naming the company. ## Who the case covers and where it stands The proposed class covers purchasers of Netcapital Inc. common stock, not investors in companies that raised money through the Netcapital portal. Those issuers file their own Form C reports, and the complaint makes no claim on their behalf. The connection between the two businesses is nonetheless the substance of both complaints: the revenue at issue was allegedly earned by consulting for companies that then ran offerings on the portal. The SEC action remains pending against Netcapital, Fanning, Kraysler, Kay and Riss; Lenk has settled it. The private case names Lenk and not Riss. The class is proposed and has not been certified. In the docket copy reviewed on October 14, 2026, whose latest entry is dated October 9, no defendant has answered or moved, no lead plaintiff has been appointed, and there is no ruling on the merits and no settlement. A public docket copy may lag the court's own record. The allegations in both complaints are unproven, except that Lenk's consent judgment was entered without an admission. ## Key facts - Chance v. Netcapital Inc., filed October 8, 2026 in the U.S. District Court for the District of Massachusetts (1:26-cv-14584); defendants Netcapital Inc., Coreen Kraysler, Cecilia Lenk, John Fanning and Martin Kay; plaintiff Caleb Chance - Proposed class: purchasers of Netcapital common stock from December 15, 2021 through September 3, 2026; claims under Exchange Act Sections 10(b) and 20(a) and Rule 10b-5 - Assigned to Judge Myong J. Joun on October 9, 2026; summonses issued the same day; the docket copy reviewed on October 14 shows no answer, motion, lead-plaintiff appointment or ruling - The SEC's complaint (SEC v. Fanning et al., 1:26-cv-13665, filed August 10, 2026) names Netcapital Inc. and five individuals, Fanning, Kraysler, Kay, Paul Riss and Lenk, and alleges about $13.9 million of consulting revenue improperly recognized over ten quarters from October 2021 through January 2024, 77 percent of the $17.95 million reported, a 345 percent overstatement - The SEC alleges the consulting agreements were with companies controlled by Fanning that then ran Regulation Crowdfunding offerings on the Netcapital portal, sized at $124,000 or below, with valuations set to support the consulting revenue - 8-K signed August 17, filed August 18: auditor Fruci & Associates II resigned August 12; Item 4.02 non-reliance on audited statements for fiscal years ended April 30, 2022 through 2025 and eight quarters from October 2021 through January 2024; evaluation of corrections not complete - Lenk resigned from the board August 19 after her SEC settlement was approved (8-K signed August 25; $50,000 penalty, no admission); director Avi Liss resigned August 27 (8-K filed September 3); Nasdaq delinquency notices August 24 and September 21 ## Sources - Chance v. Netcapital Inc., Docket No. 1:26-cv-14584 (D. Mass.): https://www.courtlistener.com/docket/74940294/chance-v-netcapital-inc/ - Complaint, Chance v. Netcapital Inc. (Entry 1): https://storage.courtlistener.com/recap/gov.uscourts.mad.307418/gov.uscourts.mad.307418.1.0.pdf - SEC Litigation Release No. 26607 (August 10, 2026): https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26607 - Complaint, SEC v. John Fanning, et al. (1:26-cv-13665): https://www.sec.gov/files/litigation/complaints/2026/comp26607.pdf - Netcapital Inc. Form 8-K, event August 12, 2026 (auditor resignation; Item 4.02 non-reliance): https://www.sec.gov/Archives/edgar/data/1414767/000149315226038853/form8-k.htm - Netcapital Inc. Form 8-K, event August 19, 2026 (Lenk settlement and resignation): https://www.sec.gov/Archives/edgar/data/1414767/000149315226040042/form8-k.htm - Netcapital Inc. Form 8-K, event August 27, 2026 (Liss resignation): https://www.sec.gov/Archives/edgar/data/1414767/000149315226041397/form8-k.htm - Netcapital Inc. Form 8-K, event August 24, 2026 (Nasdaq delinquency notice): https://www.sec.gov/Archives/edgar/data/1414767/000149315226040478/form8-k.htm --- Source page: https://altstreet.investments/news/netcapital-class-action-chance-v-netcapital-sec-sham-revenue-2026-10-08 Machine index: https://altstreet.investments/llms.txt AltStreet reads what platforms, funds and issuers file with the SEC and what they tell investors, and publishes the difference. Figures are as filed or as captured on the date stated; nothing here is investment advice.