According to the Securities and Exchange Commission (SEC), Jack Blount, former CEO of Intrusion Inc. made "false and misleading statements in 2020 and 2021 regarding the company's purported success in marketing a cybersecurity product, the terms of multiple contracts, and Blount's background and experience." The SEC goes on to qualify that "Blount made misleading statements about his qualifications, experience, and accomplishments." More on that is quoted at the end of this page.
During Intrusion Inc.'s operational period, additional course cases were brought against the company for violations of the Securities Exchange Act of 1934. On April 16, 2021, a securities class action, Celeste v. Intrusion, Inc. et al., Case No. 4:21-cv-00307 (E.D. Tex.), was filed for such a violation. On May 14, 2021, a second securities class action, Neely v. Intrusion, Inc. et al., was filed also alleging violations of the Exchange Act.
In one SEC court filing, they go into more detail about the misleading statements by Blount and Intrusion Inc. Summarized:
Intrusion Misrepresents the Former CEO’s Background
9. Intrusion made false and misleading statements regarding the Former CEO’s cybersecurity and public company experience. The Company issued a press release on May 27, 2020 (and a purportedly corrective press release on May 29, 2020) announcing the appointment of its new CEO (the Former CEO), which claimed that he had served as a director of five public companies. The May 29, 2020 press release also stated that the Former CEO had served as CIO (chief information officer) of the U.S. Department of Agriculture (“USDA”). Neither statement was true.
10. First, the Former CEO had served on, at most, four public company boards. One of those four companies was not a U.S. public company, a second never identified him as a director in its public filings, and his tenure on a third company’s board lasted less than four months. In addition to the Company’s May 2020 press releases, Intrusion also included the false and misleading statement regarding the Former CEO’s public company experience in: (a) its Forms S-1 and S-1/A filed with the SEC in August and October 2020, respectively; (b) the prospectus for its October 2020 securities offering; and (c) its April 5, 2021 proxy statement.
11. Second, the Former CEO was never the CIO of the USDA. He did hold the position of director of the Information Technology Services Division within the National Finance Center, a subdivision of the USDA. In that position, he reported to the chief financial officer of the National Finance Center, which primarily provides payroll processing and other financial and personnel services to the USDA and other federal agencies. The Former CEO repeated the false and misleading claim about serving as the CIO of the USDA in an October 2020 public offering roadshow presentation and a January 2021 investor conference presentation; both presentations were attached as exhibits to Forms 8-K filed by the Company with the SEC and signed by the Former CEO. Similarly, in an April 2021 radio interview, the Former CEO falsely and misleadingly stated that “… I was a CIO in the federal government a few years ago, fighting the Russians and Chinese for our entire federal government….” Although the National Finance Center provided payroll services to many federal agencies, the Former CEO was not the CIO of the USDA and did not serve the entire federal government in his USDA position. Intrusion’s false and misleading statements regarding the Former CEO’s background were material because they led investors to believe that the Company’s most senior leader was more qualified, experienced, and accomplished than he actually was.
