A Tennessee businessman pocketed $730,000 from an investor by lying about the cost and returns of medical devices that would never generate the promised income.

Clayton Thomas, founder of Root Wellness, pitched the investment in 2019 through his company Personalized Healthcare Solution LLC. He told the investor that medical devices called TM-Flow Systems would be placed in doctors' offices and generate steady cash flow from patient use. He claimed each device cost $50,000 and would deliver guaranteed minimum monthly payments of $1,100.

The numbers were fiction. Documents obtained by the SEC show Thomas actually paid $12,500 per device. He pocketed the difference—$37,500 per unit—while telling the investor the full purchase price was going toward legitimate equipment costs.

By late 2019, Thomas stopped making payments altogether. The investor received only $116,000 in total payments before the money dried up, leaving a loss of $614,000. The company itself vanished. Tennessee administratively dissolved Personalized Healthcare in August 2022, and all its bank accounts were closed.

The SEC filed suit on May 9, alleging Thomas knowingly made material misrepresentations about the investment returns and device costs. Investigators found Thomas had previous experience with similar medical device investments that produced little to no actual return—meaning he likely knew exactly what he was doing when he promised a guaranteed $1,100 monthly payment to this investor.

Rather than fight the charges, Thomas agreed to settle. The court approved his consent judgment on May 10, just one day after the lawsuit was filed.

The SEC pursued three counts of violations under the Securities and Exchange Act and sought a permanent injunction against Thomas, plus disgorgement of ill-gotten gains and civil penalties. The specifics of the settlement terms were not immediately disclosed, but Thomas avoided a trial and the public testimony that would have followed.

This case reflects a familiar fraud pattern: a smooth pitch built on inflated numbers, a quick exit once money stops flowing, and a defendant who cuts a deal rather than let a jury hear the full story in open court.

🤖 Quick Answer

Who is Clayton Thomas and what company did he found?
Clayton Thomas is a Tennessee businessman who founded Root Wellness and operated through Personalized Healthcare Solution LLC. He is the subject of SEC litigation for securities fraud involving the misrepresentation of medical device investments to potential investors.

What investment scheme did Thomas present to investors?
Thomas pitched investments in TM-Flow Systems, medical devices allegedly destined for doctors' offices to generate patient revenue. He claimed each device cost $50,000 and would provide guaranteed minimum monthly payments of $1,100 to investors.

How much did Clayton Thomas actually defraud investors of?
Thomas defrauded an investor of $730,000 through systematic misrepresentation of device costs and projected returns. SEC documents revealed devices actually cost $12,500, allowing Thomas to pocket $37,500 per unit in fraudulent gains.

**What was the actual cost of the

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