SEC v. Mike K. Veldhuis, No. 1:21-cv-11276, District of Massachusetts (June 26, 2024) — Judgment
raw: On June 13, 2023, Defendant Mike K. Veldhuis (“Defendant”
On June 13, 2023, Defendant Mike K. Veldhuis (“Defendant”, No. 1:21-cv-11276 (June 26, 2024)
Mike K. Veldhuis agreed to a judgment for violating various securities laws, resulting in a civil penalty, a penny stock bar, and permanent injunctions.
The SEC secured a judgment against Mike K. Veldhuis for violating the Securities Act of 1933 and the Securities Exchange Act of 1934. The court imposed a civil penalty of $1,562,603 and held Veldhuis liable for disgorgement and prejudgment interest. The final judgment also included permanent injunctions and a penny stock bar.
The Securities and Exchange Commission obtained a judgment against defendant Mike K. Veldhuis for violating several provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Veldhuis agreed not to contest liability for charges including fraud, unregistered securities offerings, and failure to disclose beneficial ownership. The court imposed a civil penalty of $1,562,603 and held the defendant liable for disgorgement and prejudgment interest. Additionally, the court entered permanent injunctions against future violations and a permanent bar from participating in penny stock offerings. The judgment was finalized in June 2024 following a period of litigation involving multiple defendants.
Extracted insights
- $42.50M $42,503,547 $10M–$100M
- $14.85M $14,852,500 $10M–$100M
- $13.29M $13,289,897 $10M–$100M
- $1.56M $1,562,603 $1M–$10M
- person mike k. veldhuis
- Mike K. Veldhuis Agreed Not To Contest Liability for violating Sections 5(a), 5(c), 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Sections 10(b) and 13(d) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) and 13d-1 thereunder
- The Court Entered Judgment Against Veldhuis which included permanent injunctions and a penny stock bar
- The Court Imposed Civil Penalty On Veldhuis that is incorporated into this judgment
- The Court Held Issues Of disgorgement and prejudgment interest under advisement
- The Court Entered Partial Judgment As follows
- The Court Ordered, Adjudged, and Decreed Defendant is permanently restrained and enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder
- The Court Ordered, Adjudged, and Decreed The foregoing paragraph also binds the following who receive actual notice of this Judgment by personal service or otherwise
- The Court Ordered, Adjudged, and Decreed Defendant is permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 in the offer or sale of any security
1
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
SECURITIES AND EXCHANGE )
COMMISSION, )
)
Plaintiff, )
)
v. ) CIVIL ACTION
) NO. 21-11276-WGY
FREDERICK L. SHARP, )
ZHIYING YVONNE GASARCH, )
COURTNEY KELLN, )
MIKE K. VELDHUIS, )
PAUL SEXTON, )
JACKSON T. FRIESEN, )
WILLIAM T. KAITZ, )
AVTAR S. DHILLON, and )
GRAHAM R. TAYLOR, )
)
Defendants. )
)
___________________________________)
YOUNG, D.J. June 20, 2024
JUDGMENT AS TO DEFENDANT MIKE K. VELDHUIS
On June 13, 2023, Defendant Mike K. Veldhuis (“Defendant”
or “Veldhuis”) agreed not to contest his liability for violating
Sections 5(a), 5(c), 17(a)(1) and 17(a)(3) of the Securities Act
of 1933 and Sections 10(b) and 13(d) of the Securities Exchange
Act of 1934 and Rules 10b-5(a) and (c) and 13d-1 thereunder.
Dkt. No. 315. On June 21, 2023, the Court entered judgment
against Veldhuis which included permanent injunctions and a
penny stock bar. Dkt. No. 325.
The permanent injunctions and penny stock bar remain in full
2
force and effect and are incorporated herein. That judgment
also contemplated additional monetary remedies that would be
determined by the Court at a later date, and that Veldhuis would
not contest liability for purposes of that determination. Id.
On May 8, 2024, the Court, at a hearing, imposed a civil penalty
on Veldhuis that is incorporated into this judgment. The Court
held the issues of disgorgement and prejudgment interest under
advisement. Accordingly, the Court enters partial Judgment as
follows:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is
permanently restrained and enjoined from violating, directly or
indirectly, Section 10(b) of the Securities Exchange Act of 1934
(the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5
promulgated thereunder [17 C.F.R. § 240.10b-5], by using any
means or instrumentality of interstate commerce, or of the
mails, or of any facility of any national securities exchange,
in connection with the purchase or sale of any security:
(a) to employ any device, scheme, or artifice to defraud;
(b) to make any untrue statement of a material fact or to
omit to state a material fact necessary in order to
make the statements made, in the light of the
circumstances under which they were made, not
misleading; or
3
(c) to engage in any act, practice, or course of
business which operates or would operate as a fraud
or deceit upon any person.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the
foregoing paragraph also binds the following who receive actual
notice of this Judgment by personal service or otherwise: (a)
Defendant’s officers, agents, servants, employees, and attorneys;
and (b) other persons in active concert or participation with
Defendant or with anyone described in (a).
II.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from violating Section
17(a) of the Securities Act of 1933 (the “Securities Act”) [15
U.S.C. § 77q(a)] in the offer or sale of any security by the use
of any means or instruments of transportation or communication in
interstate commerce or by use of the mails, directly or
indirectly:
(a) to employ any device, scheme, or artifice to defraud;
(b) to obtain money or property by means of any untrue
statement of a material fact or any omission of a
material fact necessary in order to make the
statements made, in light of the circumstances under
which they were made, not misleading; or
4
(c) to engage in any transaction, practice, or course of
business which operates or would operate as a fraud
or deceit upon the purchaser.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the
foregoing paragraph also binds the following who receive actual
notice of this Judgment by personal service or otherwise: (a)
Defendant’s officers, agents, servants, employees, and attorneys;
and (b) other persons in active concert or participation with
Defendant or with anyone described in (a).
III.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from violating Section 5 of
the Securities Act [15 U.S.C. § 77e] by, directly or indirectly,
in the absence of any applicable exemption:
(a) Unless a registration statement is in effect as to a
security, making use of any means or instruments of
transportation or communication in interstate commerce
or of the mails to sell such security through the use
or medium of any prospectus or otherwise;
(b) Unless a registration statement is in effect as to a
security, carrying or causing to be carried through
the mails or in interstate commerce, by any means or
5
instruments of transportation, any such security for
the purpose of sale or for delivery after sale; or
(c) Making use of any means or instruments of
transportation or communication in interstate commerce
or of the mails to offer to sell or offer to buy
through the use or medium of any prospectus or
otherwise any security, unless a registration
statement has been filed with the Commission as to
such security, or while the registration statement is
the subject of a refusal order or stop order or (prior
to the effective date of the registration statement)
any public proceeding or examination under Section 8
of the Securities Act [15 U.S.C. § 77h].
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the
foregoing paragraph also binds the following who receive actual
notice of this Judgment by personal service or otherwise: (a)
Defendant’s officers, agents, servants, employees, and attorneys;
and (b) other persons in active concert or participation with
Defendant or with anyone described in (a).
IV.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from violating, directly or
indirectly, Section 13(d) of the Exchange Act [15 U.S.C. § 78j(b)]
6
and Rule 13d-1 promulgated thereunder [17 C.F.R. § 240.13d- 1], by
failing to file with the Commission a statement containing the
information required by Schedule 13D (as provided in 17 C.F.R. §
240.13d-101), within ten days after acquiring directly or
indirectly beneficial ownership of more than five percent of any
equity security of a class which is specified in Exchange Act Rule
13d-1(I) [17 C.F.R. § 240.13d-1(i)].
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the
foregoing paragraph also binds the following who receive actual
notice of this Judgment by personal service or otherwise: (a)
Defendant’s officers, agents, servants, employees, and attorneys;
and (b) other persons in active concert or participation with
Defendant or with anyone described in (a).
V.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently barred from participating in an offering of penny
stock, including engaging in activities with a broker, dealer, or
issuer for purposes of issuing, trading, or inducing or attempting
to induce the purchase or sale of any penny stock. A penny stock
is any equity security that has a price of less than five dollars,
except as provided in Rule 3a51-1 under the Exchange Act [17
C.F.R. § 240.3a51-1].
VI.
7
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to
Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)],
Defendant is permanently restrained and enjoined from directly or
indirectly, including, but not limited to, through an entity owned
or controlled by him, participating in the issuance, purchase,
offer, or sale of any security; provided, however, that such
injunction shall not prevent Defendant from purchasing or selling
securities listed on a national securities exchange for his own
personal account.
VII.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that (i)
Defendant is jointly and severally liable with co-Defendants
Frederick L. Sharp, Jackson T. Friesen, and Paul Sexton for
disgorgement of $42,503,547.00, with the amount to be disgorged
from Defendant to not exceed $13,289,897.00, representing profits
gained as a result of the conduct on which he was found liable,
and (ii) Defendant is liable for a civil penalty in the amount of
$1,562,603.00 pursuant to Section 21(d) of the Exchange Act [15
U.S.C. § 78u]. The Court does not award prejudgment interest.
Defendant shall satisfy this obligation by paying $14,852,500.00
to the Securities and Exchange Commission within 30 days after
entry of this Judgment.
Defendant may transmit payment electronically to the
Commission, which will provide detailed ACH transfer/Fedwire
8
instructions upon request. Payment may also be made directly
from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm. Defendant may also
pay by certified check, bank cashier’s check, or United States
postal money order payable to the Securities and Exchange
Commission, which shall be delivered or mailed to
Enterprise Services
Center Accounts
Receivable Branch 6500
South MacArthur
Boulevard Oklahoma
City, OK 73169
and shall be accompanied by a letter identifying the case title,
civil action number, and name of this Court; Mike Veldhuis as a
defendant in this action; and specifying that payment is made
pursuant to this Judgment.
Defendant shall simultaneously transmit photocopies of
evidence of payment and case identifying information to the
Commission’s counsel in this action. By making this payment,
Defendant relinquishes all legal and equitable right, title, and
interest in such funds and no part of the funds shall be
returned to Defendant.
The Commission may enforce the Court’s judgment for
penalties by the use of all collection procedures authorized by
law, including the Federal Debt Collection Procedures Act, 28
U.S.C. § 3001 et seq., and moving for civil contempt for the
violation of any Court orders issued in this action. Defendant
9
shall pay post judgment interest on any amounts due after 30
days of the entry of this Judgment pursuant to 28 U.S.C. § 1961.
The Commission shall hold the funds, together with any interest
and income earned thereon (collectively, the “Fund”), pending
further order of the Court.
The Commission may propose a plan to distribute the Fund
subject to the Court’s approval. Such a plan may provide that
the Fund shall be distributed pursuant to the Fair Fund
provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002.
The Court shall retain jurisdiction over the administration of
any distribution of the Fund and the Fund may only be disbursed
pursuant to an Order of the Court.
Regardless of whether any such Fair Fund distribution is
made, amounts ordered to be paid as civil penalties pursuant to
this Judgment shall be treated as penalties paid to the
government for all purposes, including all tax purposes. To
preserve the deterrent effect of the civil penalty, Defendant
shall not, after offset or reduction of any award of
compensatory damages in any Related Investor Action based on
Defendant’s payment of disgorgement in this action, argue that
he is entitled to, nor shall he further benefit by, offset or
reduction of such compensatory damages award by the amount of
any part of Defendant’s payment of a civil penalty in this
action (“Penalty Offset”). If the court in any Related
10
Investor Action grants such a Penalty Offset, Defendant shall,
within 30 days after entry of a final order granting the Penalty
Offset, notify the Commission’s counsel in this action and pay
the amount of the Penalty Offset to the United States Treasury
or to a Fair Fund, as the Commission directs. Such a payment
shall not be deemed an additional civil penalty and shall not be
deemed to change the amount of the civil penalty imposed in this
Judgment. For purposes of this paragraph, a “Related Investor
Action” means a private damages action brought against Defendant
by or on behalf of one or more investors based on substantially
the same facts as alleged in the Complaint in this action.
VIII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court
shall retain jurisdiction of this matter for the purposes of
enforcing the terms of this Judgment. Further, the asset freeze
order imposed by Paragraph V of this Court’s Order dated August
20, 2021, shall continue in full force and effect until the
monetary obligation imposed by this Judgment is paid in full.
IX.
There being no just reason for delay, pursuant to Rule 54(b)
of the Federal Rules of Civil Procedure, the Clerk is ordered to
enter this Judgment forthwith and without further notice.
SO ORDERED.
11
_/s/ William G. Young
WILLIAM G. YOUNG
DISTRICT JUDGE1
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
SECURITIES AND EXCHANGE )
COMMISSION, )
)
Plaintiff, )
)
v. ) CIVIL ACTION
) NO. 21-11276-WGY
FREDERICK L. SHARP, )
ZHIYING YVONNE GASARCH, )
COURTNEY KELLN, )
MIKE K. VELDHUIS, )
PAUL SEXTON, )
JACKSON T. FRIESEN, )
WILLIAM T. KAITZ, )
AVTAR S. DHILLON, and )
GRAHAM R. TAYLOR, )
)
Defendants. )
)
___________________________________)
YOUNG, D.J. June 20, 2024
JUDGMENT AS TO DEFENDANT MIKE K. VELDHUIS
On June 13, 2023, Defendant Mike K. Veldhuis (“Defendant”
or “Veldhuis”) agreed not to contest his liability for violating
Sections 5(a), 5(c), 17(a)(1) and 17(a)(3) of the Securities Act
of 1933 and Sections 10(b) and 13(d) of the Securities Exchange
Act of 1934 and Rules 10b-5(a) and (c) and 13d-1 thereunder.
Dkt. No. 315. On June 21, 2023, the Court entered judgment
against Veldhuis which included permanent injunctions and a
penny stock bar. Dkt. No. 325.
The permanent injunctions and penny stock bar remain in full
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 1 of 11
2
force and effect and are incorporated herein. That judgment
also contemplated additional monetary remedies that would be
determined by the Court at a later date, and that Veldhuis would
not contest liability for purposes of that determination. Id.
On May 8, 2024, the Court, at a hearing, imposed a civil penalty
on Veldhuis that is incorporated into this judgment. The Court
held the issues of disgorgement and prejudgment interest under
advisement. Accordingly, the Court enters partial Judgment as
follows:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is
permanently restrained and enjoined from violating, directly or
indirectly, Section 10(b) of the Securities Exchange Act of 1934
(the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5
promulgated thereunder [17 C.F.R. § 240.10b-5], by using any
means or instrumentality of interstate commerce, or of the
mails, or of any facility of any national securities exchange,
in connection with the purchase or sale of any security:
(a) to employ any device, scheme, or artifice to defraud;
(b) to make any untrue statement of a material fact or to
omit to state a material fact necessary in order to
make the statements made, in the light of the
circumstances under which they were made, not
misleading; or
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 2 of 11
3
(c) to engage in any act, practice, or course of
business which operates or would operate as a fraud
or deceit upon any person.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the
foregoing paragraph also binds the following who receive actual
notice of this Judgment by personal service or otherwise: (a)
Defendant’s officers, agents, servants, employees, and attorneys;
and (b) other persons in active concert or participation with
Defendant or with anyone described in (a).
II.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from violating Section
17(a) of the Securities Act of 1933 (the “Securities Act”) [15
U.S.C. § 77q(a)] in the offer or sale of any security by the use
of any means or instruments of transportation or communication in
interstate commerce or by use of the mails, directly or
indirectly:
(a) to employ any device, scheme, or artifice to defraud;
(b) to obtain money or property by means of any untrue
statement of a material fact or any omission of a
material fact necessary in order to make the
statements made, in light of the circumstances under
which they were made, not misleading; or
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 3 of 11
4
(c) to engage in any transaction, practice, or course of
business which operates or would operate as a fraud
or deceit upon the purchaser.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the
foregoing paragraph also binds the following who receive actual
notice of this Judgment by personal service or otherwise: (a)
Defendant’s officers, agents, servants, employees, and attorneys;
and (b) other persons in active concert or participation with
Defendant or with anyone described in (a).
III.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from violating Section 5 of
the Securities Act [15 U.S.C. § 77e] by, directly or indirectly,
in the absence of any applicable exemption:
(a) Unless a registration statement is in effect as to a
security, making use of any means or instruments of
transportation or communication in interstate commerce
or of the mails to sell such security through the use
or medium of any prospectus or otherwise;
(b) Unless a registration statement is in effect as to a
security, carrying or causing to be carried through
the mails or in interstate commerce, by any means or
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 4 of 11
5
instruments of transportation, any such security for
the purpose of sale or for delivery after sale; or
(c) Making use of any means or instruments of
transportation or communication in interstate commerce
or of the mails to offer to sell or offer to buy
through the use or medium of any prospectus or
otherwise any security, unless a registration
statement has been filed with the Commission as to
such security, or while the registration statement is
the subject of a refusal order or stop order or (prior
to the effective date of the registration statement)
any public proceeding or examination under Section 8
of the Securities Act [15 U.S.C. § 77h].
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the
foregoing paragraph also binds the following who receive actual
notice of this Judgment by personal service or otherwise: (a)
Defendant’s officers, agents, servants, employees, and attorneys;
and (b) other persons in active concert or participation with
Defendant or with anyone described in (a).
IV.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from violating, directly or
indirectly, Section 13(d) of the Exchange Act [15 U.S.C. § 78j(b)]
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 5 of 11
6
and Rule 13d-1 promulgated thereunder [17 C.F.R. § 240.13d- 1], by
failing to file with the Commission a statement containing the
information required by Schedule 13D (as provided in 17 C.F.R. §
240.13d-101), within ten days after acquiring directly or
indirectly beneficial ownership of more than five percent of any
equity security of a class which is specified in Exchange Act Rule
13d-1(I) [17 C.F.R. § 240.13d-1(i)].
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the
foregoing paragraph also binds the following who receive actual
notice of this Judgment by personal service or otherwise: (a)
Defendant’s officers, agents, servants, employees, and attorneys;
and (b) other persons in active concert or participation with
Defendant or with anyone described in (a).
V.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently barred from participating in an offering of penny
stock, including engaging in activities with a broker, dealer, or
issuer for purposes of issuing, trading, or inducing or attempting
to induce the purchase or sale of any penny stock. A penny stock
is any equity security that has a price of less than five dollars,
except as provided in Rule 3a51-1 under the Exchange Act [17
C.F.R. § 240.3a51-1].
VI.
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 6 of 11
7
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to
Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)],
Defendant is permanently restrained and enjoined from directly or
indirectly, including, but not limited to, through an entity owned
or controlled by him, participating in the issuance, purchase,
offer, or sale of any security; provided, however, that such
injunction shall not prevent Defendant from purchasing or selling
securities listed on a national securities exchange for his own
personal account.
VII.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that (i)
Defendant is jointly and severally liable with co-Defendants
Frederick L. Sharp, Jackson T. Friesen, and Paul Sexton for
disgorgement of $42,503,547.00, with the amount to be disgorged
from Defendant to not exceed $13,289,897.00, representing profits
gained as a result of the conduct on which he was found liable,
and (ii) Defendant is liable for a civil penalty in the amount of
$1,562,603.00 pursuant to Section 21(d) of the Exchange Act [15
U.S.C. § 78u]. The Court does not award prejudgment interest.
Defendant shall satisfy this obligation by paying $14,852,500.00
to the Securities and Exchange Commission within 30 days after
entry of this Judgment.
Defendant may transmit payment electronically to the
Commission, which will provide detailed ACH transfer/Fedwire
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 7 of 11
8
instructions upon request. Payment may also be made directly
from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm. Defendant may also
pay by certified check, bank cashier’s check, or United States
postal money order payable to the Securities and Exchange
Commission, which shall be delivered or mailed to
Enterprise Services
Center Accounts
Receivable Branch 6500
South MacArthur
Boulevard Oklahoma
City, OK 73169
and shall be accompanied by a letter identifying the case title,
civil action number, and name of this Court; Mike Veldhuis as a
defendant in this action; and specifying that payment is made
pursuant to this Judgment.
Defendant shall simultaneously transmit photocopies of
evidence of payment and case identifying information to the
Commission’s counsel in this action. By making this payment,
Defendant relinquishes all legal and equitable right, title, and
interest in such funds and no part of the funds shall be
returned to Defendant.
The Commission may enforce the Court’s judgment for
penalties by the use of all collection procedures authorized by
law, including the Federal Debt Collection Procedures Act, 28
U.S.C. § 3001 et seq., and moving for civil contempt for the
violation of any Court orders issued in this action. Defendant
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 8 of 11
9
shall pay post judgment interest on any amounts due after 30
days of the entry of this Judgment pursuant to 28 U.S.C. § 1961.
The Commission shall hold the funds, together with any interest
and income earned thereon (collectively, the “Fund”), pending
further order of the Court.
The Commission may propose a plan to distribute the Fund
subject to the Court’s approval. Such a plan may provide that
the Fund shall be distributed pursuant to the Fair Fund
provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002.
The Court shall retain jurisdiction over the administration of
any distribution of the Fund and the Fund may only be disbursed
pursuant to an Order of the Court.
Regardless of whether any such Fair Fund distribution is
made, amounts ordered to be paid as civil penalties pursuant to
this Judgment shall be treated as penalties paid to the
government for all purposes, including all tax purposes. To
preserve the deterrent effect of the civil penalty, Defendant
shall not, after offset or reduction of any award of
compensatory damages in any Related Investor Action based on
Defendant’s payment of disgorgement in this action, argue that
he is entitled to, nor shall he further benefit by, offset or
reduction of such compensatory damages award by the amount of
any part of Defendant’s payment of a civil penalty in this
action (“Penalty Offset”). If the court in any Related
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 9 of 11
10
Investor Action grants such a Penalty Offset, Defendant shall,
within 30 days after entry of a final order granting the Penalty
Offset, notify the Commission’s counsel in this action and pay
the amount of the Penalty Offset to the United States Treasury
or to a Fair Fund, as the Commission directs. Such a payment
shall not be deemed an additional civil penalty and shall not be
deemed to change the amount of the civil penalty imposed in this
Judgment. For purposes of this paragraph, a “Related Investor
Action” means a private damages action brought against Defendant
by or on behalf of one or more investors based on substantially
the same facts as alleged in the Complaint in this action.
VIII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court
shall retain jurisdiction of this matter for the purposes of
enforcing the terms of this Judgment. Further, the asset freeze
order imposed by Paragraph V of this Court’s Order dated August
20, 2021, shall continue in full force and effect until the
monetary obligation imposed by this Judgment is paid in full.
IX.
There being no just reason for delay, pursuant to Rule 54(b)
of the Federal Rules of Civil Procedure, the Clerk is ordered to
enter this Judgment forthwith and without further notice.
SO ORDERED.
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 10 of 11
11
_/s/ William G. Young
WILLIAM G. YOUNG
DISTRICT JUDGE
Case 1:21-cv-11276-WGY Document 496 Filed 06/20/24 Page 11 of 11