Building Service 32BJ Health Fund v. Shamrock Acquisitions, Corp.

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

UNITED STATES SECURITIES AND
EXCHANGE COMMISSION,
:
:

 :
Plaintiff, :
 :
v. :
:
CIVIL ACTION NO.
1:19-CV-02565-LMM
 :
PETER BAKER, et al.,  :
:
:

 :
Defendants.  :

ORDER
This case comes before the Court on Securities and Exchange
Commission’s Motion for Default Judgment as to Defendant Prestige Global
Trading, Ltd. and for Remedies and Final Judgment as to all Defendants [37].
After due consideration, the Court enters the following Order.
I. BACKGROUND
The Securities and Exchange Commission (SEC) filed this lawsuit against
Peter Baker, Prestige Global Trading, Ltd. (“Prestige”), Elizabeth Oharriz,
Diversified Initiatives Consulting & Logistics, Inc. (“Diversified), and Sienna
Business Group, Inc. (“Sienna”) for their roles in a “prime bank” fraud scheme.
1

1
 The SEC described this type of scheme in the following way:

2

Dkt. No. [1]. The Court has extensively detailed the factual background in its
previous summary judgment order against Defendant Baker. Dkt. No. [32]. For
the purposes of this order, the Court presents the following abridged background.
Defendant Baker was the President and CEO of Defendant Prestige and the
Vice President of Defendant Sienna. Dkt. No. [24-4] at 33. Defendant Oharriz
was the President of Defendants Diversified and Sienna. Dkt. No. [1] ¶ 19. Neither
Defendant Baker nor Prestige have ever been registered with the SEC. Id. at 33–
34; Dkt. No. [24-8] ¶ 4. Defendant Baker and Defendant Oharriz each made
material misrepresentations to potential investors and together carried out these
prime bank fraud schemes against five groups of investors—Hawk’s Rest, LLC
(“Hawk’s Rest”), Capital Consulting, LLC (“Capital Consulting”), Gestion Austral
Los Pinos SA (“GALP”), ADVJ04, and Transatlantic Bdr. Ltd., LLC
(“Transatlantic”).
Defendants Elizabeth Oharriz, Diversified, and Sienna (collectively, the
Settling Defendants) each entered into a settlement agreement with the SEC. See
Dkt. No. [8-1]. As part of their settlements, they agreed to accept the Court’s

The term ‘prime bank’ fraud commonly refers to schemes in which
fraudsters purport to sell investors financial instruments from a well-
known bank that investors can then trade to generate enormous returns.
The purported instruments often have official-sounding names, including
‘bank guarantees,’ ‘bank debentures,’ and ‘stand-by letters of credit.’ In
theory, investors would pay an advance fee and, in return, obtain control of
one of these instruments. In reality, after investors pay their advance fee,
the fraudsters either disappear or string their victims along to extract more
money and delay complaints to law enforcement.
Dkt. No. [1] ¶ 20.

3

order of disgorgement of ill-gotten gains and prejudgment interest, with an
amount of disgorgement and prejudgment interest to be determined by the
Court. Id. ¶ 3. They also agreed that the Court could determine whether a civil
penalty should be imposed and that the Court could assume, for purposes of
deciding what penalties to assign, that all the allegations in the Complaint are
true. Id. Finally, they agreed to accept permanent injunctions against their future
violations of certain securities laws and participation in any issuance, offer, or
sale of any security except the purchase or sale of securities listed on a national
securities exchange. Id. ¶ 2. Because of this settlement, the Court entered
judgment against the Settling Defendants as well as permanent injunctions
against some securities-related transactions and violations of securities laws,
which were fully detailed in the consent order. Id. at 2–5.
This Court granted summary judgment [35] as to liability against
Defendant Baker for three violations of federal securities laws: (1) Securities
Exchange Act Section 10(b) and Rule 10b-5 thereunder; (2) Securities Act Section
17(a); and (3) Securities Exchange Act Section 15(a). The Court found that
Defendant Baker made material representations to investors in three distinct
transactions—the Hawk’s Rest, Capital Consulting, and Gestion Austral Los Pinos
SA (“GALP”) transactions. Dkt. No. [32] at 14. Namely, the Court found that
Defendant Baker misrepresented to investors that (1) he had capacity to obtain,
control, and deliver the prime bank instruments; (2) he could refund investors’
fees if the transactions failed; and (3) he acted with scienter. Id. 14–17.

4

Defendant Prestige did not file an answer to the Complaint, and they are in
default. As such, all factual allegations in the complaint against Prestige are taken
as true. The SEC has now moved for default judgment. In determining whether
default judgment should be entered, the Court must determine if the SEC has
filed a well-pleaded complaint and if a hearing on default judgment damages is
necessary as to this Defendant before then turning to the appropriate remedies.
As to all Defendants, the Court must also determine what remedies are
appropriate given that liability has been established. The SEC also asks the Court
to enter final judgment against all Defendants.
II. DISCUSSION
A. Default Judgment Proceedings against Prestige
Federal Rule of Civil Procedure 55 sets forth a two-step process for
securing a default judgment. First, a party seeking default must obtain a Clerk’s
entry of default pursuant to Rule 55(a) by providing evidence “by affidavit or
otherwise” that the opposing party “has failed to plead or otherwise defend.” Fed.
R. Civ. P. 55; see also Frazier v. Absolute Collection Serv., Inc., 767 F. Supp. 2d
1354, 1360 n.1 (N.D. Ga. 2011) (“First the clerk must enter a party’s default . . .
[T]he party [seeking default judgment] must then apply to the court for a default
judgment.”). Second, after the Clerk has made an entry of default, the party
seeking default judgment must file a motion for default judgment under Rule
55(b)(1) or (2). A Clerk’s entry of default under Rule 55(a) is thus a prerequisite

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for default judgment to be granted under Rule 55(b). Sun v. United States, 342 F.
Supp. 2d 1120, 1124 n.2 (N.D. Ga. 2004).
A default entered pursuant to Rule 55(a) constitutes an admission of all
well-pleaded factual allegations contained in a complaint. Nishimatsu Const. Co.,
Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). However, entry
of default does not automatically warrant the Court’s entry of default judgment.
Frazier, 767 F. Supp. 2d at 1362 (quoting Nishimatsu Constr., 515 F.2d at 1206)).
Even if a defendant is in default, it “is not held to admit facts that are not
well-pleaded or to admit conclusions of law.” Id.; see also United States v. Khan,
164 F. App’x 855, 858 (11th Cir. 2006) (“[A] default judgment may not stand on a
complaint that fails to state a claim.”). “There must be a sufficient basis in the
pleadings for the judgment entered,” and “a default is not treated as an absolute
confession by the defendant of his liability and of the plaintiff’s right to recover.”
Nishimatsu Constr., 515 F.2d at 1206. This means that the Court must “consider
whether the unchallenged facts constitute a legitimate cause of action, since a
party in default does not admit mere conclusions of law.” Frazier, 767 F. Supp. 2d
at 1362 (quoting 10A Wright, Miller & Kane, Federal Practice & Procedure § 2688
(3d ed.)). A plaintiff’s burden at the default judgment stage is “akin to that
necessary to survive a motion to dismiss for failure to state a claim.” Surtain v.
Hamlin Terrace Found., 789 F.3d 1239, 1245 (11th Cir. 2015). “Conceptually,
then, a motion for default judgment is like a reverse motion to dismiss for failure
to state a claim.” Id.

6

Since entry of default constitutes an admission of the facts in a complaint,
“[a] default judgment must not differ in kind from, or exceed in amount, what is
demanded in the pleadings.” Fed. R. Civ. P. 54(c). Moreover, a defaulted
defendant does not admit to allegations relating to the amount of damages.
Frazier, 767 F. Supp. 2d at 1365. Therefore, before entering a final order
regarding a default judgment, a court may conduct a hearing to determine the
amount of damages. Fed. R. Civ. P. 55(b)(2)(B). However, “[a]n evidentiary
hearing is not a per se requirement” for an entry of default judgment pursuant to
Rule 55(b)(2) because said Rule “speaks of evidentiary hearings in a permissive
tone.” SEC v. Smyth, 420 F.3d 1225, 1232 n.13 (11th Cir. 2005); Fed. R. Civ. P.
55(b)(2) (explaining that “[t]he court may conduct hearings or make referrals” to
determine damages (emphasis added)). “District courts in the Eleventh Circuit
have noted that an evidentiary hearing is not necessary where the moving party
has provided supporting affidavits as to the issue of damages.” Frazier, 767 F.
Supp. 2d at 1365.
Upon review of the SEC’s Complaint, Motion, and attached exhibits, the
Court finds that the Complaint is well-pleaded and states a prima facie case for
violations of the Exchange Act Section 10(b) and Rule 10b-5 as well as Securities
Act Section 17(a) sufficient to support an award of disgorgement damages and an
injunction against Prestige. Tyco Fire & Sec., LLC v. Alcocer, 218 F. App’x 860,
863 (11th Cir. 2007) (“Thus, before entering a default judgment for damages, the
district court must ensure that the well-pleaded allegations in the complaint,

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which are taken as true due to the default, actually state a substantive cause of
action and that there is a substantive sufficient basis in the pleadings for the
particular relief sought.”).
The SEC can show a § 10(b) violation if it shows “(1) material
misrepresentations or materially misleading omissions, (2) in connection with
the purchase or sale of securities, (3) made with scienter.” SEC v. Merch. Cap.,
LLC, 483 F.3d 747, 766 (11th Cir. 2007). Similarly, in order to prove a § 17(a)
violation, the SEC must show “(1) material misrepresentations or materially
misleading omissions, (2) in the offer or sale of securities, (3) made with
scienter.” Id. A misrepresentation or omission is material when there is “a
substantial likelihood that the disclosure of the omitted fact would have been
viewed by the reasonable investor as having significantly altered the ‘total mix’ of
information made available.” Basic Inc. v. Levinson, 485 U.S. 224, 231–32 (1988)
(quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976)).
The SEC has sufficiently pleaded and proved that Prestige met all the
preceding elements. As discussed in this Court’s summary judgment order
against Defendant Baker, the financial instruments underlying the “prime bank”
fraud schemes were in fact securities. See Dkt. No. [32] at 15. The Court also finds
that the SEC sufficiently demonstrated that Prestige made material
representations. Specifically, the SEC’s Complaint alleged that Defendants
fabricated “standby letter of credit” and “bank guarantee” documents and
misrepresented that investors could sell or lease them for profit and that their

8

fees would be fully refundable until investors received consideration. Dkt. No. [1]
¶¶ 2–6. However, the SEC alleges, and this Court has found, that these claims
were misrepresentations, with investors losing all or most money invested and
never receiving the promised instruments Id. ¶¶ 8, 24. The SEC also sufficiently
pleaded the scienter requirement, alleging that Defendants acted intentionally to
conceal their scheme by preventing investors from contacting the banks
supposedly involved, stalling complaints, and producing additional fraudulent
documents. Id. ¶¶ 8, 25, 79–81. That shows a level of intentionality and
awareness that implicates Prestige.
The next issue is damages. The Court exercises its discretion to grant the
SEC’s request for damages without a hearing against Prestige. See Frazier, 767 F.
Supp. 2d at 1365. The SEC seeks disgorgement and prejudgment interest in its
Complaint and provides a sworn declaration by forensic accountant Richard
Gregory Lill as to the exact amount. See Dkt. Nos. [1, 37-1]. The disgorgement
damages in this case are a “sum certain” because the financial accounts reflect an
exact amount that was transferred to each of the Defendants, including Prestige,
as detailed in the Lill Declaration.
2
 Cf. Smyth, 420 F.3d at 1231 (finding an
evidentiary hearing was necessary where “the disgorgement and prejudgment
interests sums are contested” and the SEC’s calculation was “only ‘a reasonable

2
 Alternatively, even if the disgorgement amount is not a sum certain, it is a sum
capable of computation through adding together the different amounts
transferred to Prestige’s bank accounts and subtracting the small amount that
was refunded to a single investor.

9

approximation’”). Because there was no return on investment or any valuable
financial instrument ever transferred to investors, all of the “fees” that investors
paid to Defendants and ultimately received by Prestige are ill-gotten gains to be
disgorged. Accordingly, this is “a case where all essential evidence was already of
record” and the Court is not required to hold a hearing to determine damages. Id.
at 1233.
B. Remedies and Final Judgment as to all Defendants
The Settling Defendants are already subject to injunctions and have agreed
that the Court shall assign disgorgement damages with prejudgment interest.
Defendant Oharriz has also agreed that the Court can determine whether to
impose civil monetary penalties. Defendant Baker opposes the imposition of a
civil penalty, particularly a third-tier penalty, but has not challenged the
propriety of disgorgement with prejudgment interest or injunctive relief banning
him from the securities industry. As to Defendant Prestige, because it is in
default, all allegations in the Complaint are admitted as to this Defendant.
The Court now must decide the exact remedies to impose against all
Defendants as well as whether to impose civil monetary penalties against the
individual Defendants, Baker and Oharriz.
1. Injunctive Relief
The SEC first asks this Court to enjoin all Defendants from engaging in
future securities laws violations.

10

The SEC is entitled to injunctive relief when it establishes (1) a prima
facie case  of  previous  violations  of  federal  securities  laws,  and  (2)  a
reasonable likelihood  that the wrong will be repeated. Indicia that a
wrong  will  be  repeated  include  the egregiousness  of  the  defendant's
actions, the isolated or recurrent nature of the infraction, the degree
of  scienter  involved,  the  sincerity  of  the  defendant's  assurances
against future violations, the defendant's recognition of the wrongful
nature   of   the   conduct,   and   the   likelihood   that   the   defendant's
occupation  will  present  opportunities  for  future  violations. While
scienter is an important factor in this analysis, it is not a prerequisite
to injunctive relief.

SEC v. Calvo, 378 F.3d 1211, 1216 (11th Cir. 2004) (internal citations and
quotations omitted).
 The Court finds that the SEC’s requested injunctions would be appropriate
against all Defendants. The Settling Defendants have already agreed to such an
injunction, and the other remaining Defendants have not challenged the
propriety of issuing an injunction against them. In addition, the facts establish
the factors supporting such an injunction.
Defendant Baker has stated that he “accepts...a permanent banning from
the industry.” Dkt. No. [39] at 2. The Court determined in its summary judgment
order against Defendant Baker that he had committed past securities law
violations and found facts sufficient to indicate that the violations would be
repeated. Under the factors listed in Calvo, the Court finds that Baker’s violations
were recurrent between the Hawk’s Rest, GALP, and Capital Consulting
transactions—all of which Baker played a major role in. The conduct was
egregious given the sum of total money collected despite the lack of any returns
given to investors. Additionally, the Court finds that Baker acted knowingly

11

throughout the scheme given that he personally had lost $300,000 in schemes
like the ones he later perpetrated and after that never invested in “bank
guarantees” with his own money. Dkt. No. [32] at 3.
As to Defendant Prestige, as previously discussed in the default judgment
portion of this order, it perpetrated securities law violations through the actions
of Baker sufficient to demonstrate a likelihood of repeated violations to support
the injunctions. The facts admitted in the Complaint establish the facts necessary
to support an injunction. The Court therefore enjoins Defendants Baker and
Prestige as reflected in the conclusion of this Order.
2. Disgorgement
The Court has authority to “require disgorgement. . .of any unjust
enrichment by the person who received such unjust enrichment as a result of
such violation.” 15 U.S.C. § 78u(d)(3). “The SEC is entitled to disgorgement upon
producing a reasonable approximation of a defendant's ill-gotten gains.” SEC v.
Calvo, 378 F.3d 1211, 1217 (11th Cir. 2004). Once the SEC produces a reasonable
approximation, the burden shifts to the defendant to demonstrate that the SEC's
estimate is unreasonable. Id. “Because disgorgement is remedial and not
punitive, the court's power to order disgorgement ‘extends only to the amount
with interest by which the defendant profited from his wrongdoing.’” SEC v.
Phoenix Telecomm., L.L.C., 231 F. Supp. 2d 1223, 1225 (N.D. Ga. 2001) (quoting
SEC v. Blatt, 583 F.2d 1325, 1335 (5th Cir. 1978)).

12

The SEC argues that all the money the Defendants collected from their
investors constitutes unjust enrichment because there were no actual financial
products underlying their investments, no returns, and nothing of value provided
to investors. Dkt No. [37-2] at 25. The SEC further requests that the amount of
disgorgement owed by the entity Defendants (Prestige, Sienna, and Diversified)
be collected through joint and several liability of the entities and the individual
Defendants who controlled them—with Baker controlling Prestige and Oharriz
controlling Sienna and Diversified.
In support of its disgorgement claims, the SEC submitted a declaration by
Richard Gregory Lill, a forensic accountant. Dkt. No. [43-1] ¶ 1. Lill reviewed
financial records in the case, including deposits and transfers between different
financial accounts “to trace investor money and determine the amount each
defendant ultimately received.” Id. ¶ 5. Lill calculated the amount each Defendant
ultimately received from Hawk’s Rest, GALP, Capital Consulting, Transatlantic,
and ADVJ04 investors. Id. ¶ 6.
In their settlements, Defendants Oharriz, Sienna, and Diversified agreed to
pay disgorgement of ill-gotten gains from these fraudulent transactions as well as
prejudgment interest upon the gains. Dkt. No. [11] at 5. The Settling Defendants
have not contested the amount of disgorgement or whether it should be imposed
through joint and several liability.
Defendants Baker and Prestige have not quarreled with the SEC’s
calculations on disgorgement and said they “accept the SEC’s position on

13

restitution.” Dkt. No. [39] at 2. The Court finds that the amounts listed in the Lill
declaration and requested by the SEC are appropriate with respect to each of the
Defendants.
The Court also finds that joint and several liability is appropriate between
the entity Defendants and their respective controlling individual Defendants. In
addition, none of the Defendants oppose the imposition of joint and several
liability as the SEC has requested it.
“It is a well settled principle that joint and several liability is appropriate in
securities laws cases where two or more individuals or entities have close
relationships in engaging in illegal conduct.” Calvo, 378 F.3d at 1215. In Calvo,
the Eleventh Circuit found that an individual could be jointly and severally liable
for disgorgement with an entity where the individual’s family founded the entity,
the individual held a 50% ownership interest in the entity, and the individual was
the entity’s sole managing member. Id. at 1216. Additionally, the court found that
“both parties engaged in securities laws violations” and that the individual “was a
necessary participant and a substantial factor” in the entity’s violations. Id.
Those factors counsel for the imposition of joint and several liability for the
entity Defendants’ disgorgement here. Defendant Baker founded Defendant
Prestige and is its only stakeholder. Dkt. No. [39] at 3. Defendant Oharriz was
President of Defendants Sienna and Diversified at all relevant times, she
controlled them, and she received the benefit of any investor money that was
deposited in Sienna or Diversified’s accounts. Dkt. Nos. [1] ¶ 19; [37-2] at 27.

14

Accordingly, joint and several liability is appropriate with respect to the
disgorgement amounts attributed to Sienna, Diversified, and Prestige.
3. Prejudgment Interest
The SEC next asks this Court to order Defendants to pay prejudgment
interest on the disgorged amount. None of the Defendants have opposed the
imposition of prejudgment interest.
The decision to award prejudgment interest is within this Court’s
discretion. See SEC v. Merch. Capital, LLC, 486 F. App’x 93, 97 (11th Cir. 2012)
(affirming a district court’s imposition of prejudgment interest). “Without
prejudgment interest, the [Defendants] would have benefitted from what in effect
amounted to interest-free loans of the ill-gotten funds.” Id. The SEC has
requested prejudgment interest dating back only from the start of the most recent
violation in the series of five violations, the ADVJ04 transaction. Dkt. No. [37-2]
at 27–28. None of the Defendants have objected to the awarding of prejudgment
interest. Accordingly, the Court grants the SEC’s request for prejudgment
interest—calculated using the Internal Revenue Service underpayment rate and
as quantified in the Lill declaration—against all Defendants. See SEC v. Lauer,
478 F. App’x 550, 557–58 (11th Cir. 2012) (noting that the district court has “wide
discretion” to impose prejudgment interest and upholding use of the IRS
underpayment rate to calculate it).

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4. Civil Monetary Penalties
The SEC also asks this Court to award “third-tier” civil monetary penalties
against Defendants Baker and Oharriz in the amount of $585,141 and $390,094,
respectively. Section 20(d) of the Securities Act and Section 21(d)(3) of the
Exchange Act—with nearly identical language—allow the SEC to seek civil
penalties imposed by the Court. The Exchange Act provides,
Whenever  it  shall  appear  to  the  Commission  that  any  person  has
violated  any  provision  of  this  chapter,  [or]  the  rules  or  regulations
thereunder, . . . the  Commission  may  bring  an  action  in  a  United
States district court to seek, and the court shall have jurisdiction to (i)
impose,  upon  a  proper  showing,  a  civil  penalty  to  be  paid  by  the
person who committed such violation. . . .

15 U.S.C. § 78u(d)(3)(A).
3
 To determine the amount of the penalty, the Act
outlines three tiers based on the nature of the violation. Under the first tier, “[f]or
each violation, the amount of the penalty shall not exceed the greater of (I)
$9,753 for a natural person or $97,523 for any other person.” 15 U.S.C. §
78u(d)(3)(B)(i) (emphasis added).
4
 The second tier goes further:
“Notwithstanding clause (i), the amount of a civil penalty . . . for each such
violation shall not exceed the greater of (I) $97,523 for a natural person or
$487,616 for any other person . . . if the violation described in subparagraph (A)
involved fraud, deceit, manipulation, or deliberate or reckless disregard of a

3
 Due to the nearly identical language of the relevant statutes, only the Exchange
Act will be quoted to avoid redundancy.

4
 Each of the penalty caps have been updated for inflation per 17 C.F.R. §
201.1001.

16

regulatory requirement.” 15 U.S.C. § 78u(d)(3)(B)(ii) (emphasis added). For the
third tier, the Act states:
Notwithstanding  clauses  (i)  and  (ii),  the  amount  of a  civil penalty
imposed . . . for each violation . . . shall not exceed the greater of (I)
$195,047  for  a  natural  person  or  $975,230 for  any  other  person  .  .  .
if—

(aa) the violation described in subparagraph (A) involved fraud,
deceit,  manipulation,  or  deliberate  or  reckless  disregard  of  a
regulatory requirement; and

(bb) such violation directly or indirectly resulted in substantial
losses or created a significant risk of substantial losses to other
persons.

§ 78u(d)(3)(B)(iii) (emphasis added).
“Civil penalties are intended to punish the individual wrongdoer and to
deter him and others from future securities violations.” SEC v. Monterosso, 756
F.3d 1326, 1338 (11th Cir. 2010). The “Commission need only make ‘a proper
showing’ that a violation has occurred and a penalty is warranted.” SEC v.
Warren, 534 F.3d 1368, 1370 (11th Cir. 2008). Although the statute leaves the
amount to be imposed to the discretion of the district judge, “courts consider
numerous factors, including the egregiousness of the violation, the isolated or
repeated nature of the violations, the degree of scienter involved, whether the
defendant concealed his trading, and the deterrent effect given the defendant’s
financial worth.” Miller, 744 F. Supp. 2d at 1344 (citing SEC v. Sargent, 329 F.3d
34, 42 (1st Cir. 2003)). The Act also authorizes penalties for “each violation,” so

17

“courts are empowered to multiply the statutory penalty amount by the number
of statutes the defendant violated, and many do.” Miller, 744 F. Supp. 2d at 1345.
The SEC requests that Baker and Oharriz receive third-tier civil monetary
penalties because they engaged in a multi-year scheme that resulted in over a
million dollars lost over five distinct transactions. Dkt. No. [37-2] at 29.
Defendant Baker argues that civil penalties should not be imposed against
him. Defendant Baker argues that the SEC’s calculations attribute a greater
portion of total losses to Defendants Oharriz, Diversified, and Sienna than it does
to Defendants Baker and Prestige. Dkt. No. [39] at 13. Accordingly, Defendant
Baker argues that his penalty is disproportionately high compared to his actual
gains and the smaller penalty the SEC seeks against Defendant Oharriz, citing the
SEC’s calculations that he received $194,262 and Prestige obtained $308,672. Id.
Next, he argues that his payment of restitution and a ban from future securities
work are sufficient to penalize his involvement. He also argues that his economic
status should prevent the imposition of third-tier civil penalties because he is
unemployed, seventy-seven-years old, living on his Army pension in a house
owned by his wife. Dkt. No. [39] at 15.
First, the Court finds that Defendants’ conduct was egregious in this case.
Defendants Baker and Oharriz each made knowing misstatements of fact and
omissions and caused substantial financial harm to investors. Second, the
conduct was not isolated. Defendant Baker was primarily responsible for
misrepresentations directed at three different investors groups over the course of

18

several years. Third, the Court finds that Defendants acted with a high degree of
scienter. Before Defendant Baker became involved in the scheme underlying this
lawsuit, he fell victim to prime bank fraud and lost $300,000 in personal
“investments” from 2008–2010 for a “bank guarantee” and “standby letter of
credit” that never produced any returns. See Dkt. No. [24-5]; Dkt. No. [39] at 3–
4. This suggests, despite his claims to naivete, that he was aware of the harm that
could result from this kind of investment scheme. Additionally, Defendant Baker
delivered investors falsified documents purporting to be real financial
instruments that had no backing and that were riddled with blatant typographical
errors. As just one example of Defendant Baker’s knowing misstatements to the
Hawk’s Rest investors, Defendant Baker and Prestige “represented that they
already had control of the bank guarantee” even though the bank at issue had
never issued such an instrument. Dkt. No. [24-6] ¶ 12. Further, the money that
investors transferred to Defendant Baker that was purportedly to be used as a
“fee” for the prime bank instruments was spent on personal expenses and cash
withdrawals. No. [24-2] at 16.
Finally, the Court finds that the deterrent effect of the sanctions is
appropriate despite Defendant Baker’s diminished financial worth. Defendant
Baker argues that he has a negative net worth, as a seventy-seven-year-old Army
pensioner, living in a house owned by his wife. See Dkt. No. [39] at 15-16. But as
the purpose of civil monetary penalties is both punishment and deterrence, the
Court finds that poverty alone cannot defeat the need for penalties in this case.

19

See SEC v. StratoComm Corp., 89 F. Supp. 3d 357, 373 (N.D.N.Y. 2015) (“While
the court may take the defendant's current financial difficulties into account,
these circumstances alone cannot negate the need for a severe civil penalty.”).
And a party’s financial position is fluid. Should Defendants’ financial
circumstances improve, the SEC may be able to collect on these penalties in the
future. SEC v. Kane, 97 CIV. 2931 (CBM), 2003 WL 1741293, at *4 (S.D.N.Y. Apr.
1, 2003) (“[T]he court agrees with the Commission that it should not ignore the
possibility that a defendant's fortunes will improve, and that one day the SEC will
be able to collect on even a severe judgment.”). Thus, the Court will award third-
tier civil monetary penalties against Defendant Baker.
The Court also finds that Defendant Oharriz’s conduct merits the
imposition of third-tier civil monetary penalties. Per the Complaint, which
Defendant Oharriz stipulated should be used for purposes of determining
remedies, her conduct was egregious, repeated, and made with knowledge of the
harm she was inflicting. The Court finds that third-tier civil penalties are
necessary to effectively punish and deter Defendant Oharriz.
The Court accepts the SEC’s request for calculation of the monetary penalty
by multiplying the statutory maximum penalty per violation, using each of the
transactions in which the individual Defendant took a leading role as the number
of “violations.” Oharriz took a leading role in the Transatlantic and ADVJ04
transactions, while Baker took a leading role in the Hawk’s Rest, GALP, and
Capital Consulting transactions. The SEC requests that the Court use $195,047 as

20

the appropriate statutory maximum penalty.
5
 Dkt. No. [37-2] at 31 (citing 17
C.F.R. § 201.1001). Under this method, the Court finds that Oharriz is
ORDERED to pay a civil monetary penalty of $390,094 ($195,047 x 2) and
Baker is ORDERED to pay a civil monetary penalty of $585,151 ($195,047 x 3).
III. CONCLUSION
In accordance with the foregoing, Plaintiff’s Motion for Default Judgment
as to Defendant Prestige Global Trading, Ltd. and for Remedies and Final
Judgment as to all Defendants [37] is GRANTED as follows:
I.
It is hereby ORDERED that Defendants Baker and Prestige are
permanently restrained and enjoined from violating, directly or indirectly,
Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and
Rule 10(b)-5 promulgated thereunder, 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

5
 Defendant Baker has not contested that $195,047 represents the appropriate
statutory maximum penalty for a third-tier violation by a natural person.

21

(c) to engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person, by,
directly or indirectly, (i) creating a false appearance or otherwise
deceiving any person, or (ii) disseminating false or misleading
documents, materials, or information or making, either orally or in
writing, any false or misleading statement in any communication
with any investor or prospective investor, about:
(1) any investment strategy or investment in securities;
(2) the prospects for success of any product or company;
(3) the use of investor funds; or
(4) the safety or refundability of investor funds;
(5) compensation to any person;
(6) Defendant’s qualifications to advise investors; or
(7)   the   misappropriation   of   investor   funds   or   investment
proceeds.
It is further ORDERED that 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 Final 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
Defendants or with anyone described in (a).
II.

22

 It is ORDERED that Baker and Prestige are permanently restrained and
enjoined from violating Section 17(a) of the Securities Act 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
(c) to engage in any transaction, practice, or course of business which
operates or would operate as a fraud or deceit upon the purchaser by,
directly or indirectly, (i) creating a false appearance or otherwise deceiving
any person, or (ii) disseminating false or misleading documents, materials,
or information or making, either orally or in writing, any false or
misleading statement in any communication with any investor or
prospective investor, about:
(1) any investment in or offering of securities,
(2) the prospects for success of any product or company,
(3) the use of investor funds;
(4) the safety or refundability of investor funds;
(5) compensation to any person;

23

(6) Defendants’ qualifications to advise investors; or
(7) the misappropriation of investor funds or investment proceeds.
 It is further ORDERED 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) Defendants’
officers, agents, servants, employees, and attorneys; and (b) other persons in
active concert or participation with Defendants or with anyone described in (a).
III.
 It is ORDERED that Baker and Prestige are permanently restrained and
enjoined from violating Section 15(a) of the Exchange Act directly or indirectly,
by making use of any means or instrumentality of interstate commerce or of the
mails and engaging in the business of effecting transactions in securities for the
accounts of others, or inducing or effecting the purchase and sale of securities,
while not registered with the Commission in accordance with the provisions of
Section 15(b) of the Exchange Act or while not associated with a broker-dealer
that was so registered.
 It is further ORDERED 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) Baker’s
officers, agents, servants, employees, and attorneys; and (b) other persons in
active concert or participation with Baker or with anyone described in (a).
IV.

24

 It is further ORDERED that Baker and Prestige are permanently
restrained and enjoined from directly or indirectly participating in the issuance,
offer, or sale of any security, including but not limited to bank guarantees,
irrevocable bank undertaking letters, joint venture agreements, proofs of funds,
medium term notes, standby letters of credit, and similar instruments, with the
exception of the purchase or sale of securities listed on a national securities
exchange.
V.
 It is hereby ORDERED that Defendants shall pay disgorgement of ill-
gotten gains and prejudgment interest thereon, as well as civil penalties in the
following amounts:

Defendant Disgorgement
Pre-
judgment
interest
Civil
Penalty
Total
Baker $194,262 $30,308.32 $585,141
$809,711.32
Prestige and Baker,
jointly and
severally
$308,672 $48,158.31

$356,830.31
Oharriz $342,504 $53,436.68 $390,094
$786,034.68
Diversified and
Oharriz, jointly
and
severally
$323,621 $50,490.60

$374,111.60
Sienna and
Oharriz,
jointly and
severally
$132,339 $20,647.24

$152,986.24

25

 Defendants shall satisfy these obligations by paying their respective
amounts to the Securities and Exchange Commission within 30 days after entry
of this Final Judgment. Defendants may transmit payment electronically to the
Commission, which will provide detailed ACH transfer/Fedwire 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.
Defendants may also pay be 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 identify the case title, civil action number,
and name of this Court; the relevant Defendant’s name as a defendant in this
action; and specifying that payment is made pursuant to this Final 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
disgorgement and prejudgment interest by using all collection procedures
authorized by law, including, but not limited to, moving for civil contempt at any

26

time after 30 days following entry of this Final Judgment. Defendant shall pay
post judgment interest on any amounts due after 30 days of entry of this Final
Judgment pursuant to 28 U.S.C. § 1961.
 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
shall pay post judgment interest on any amounts due after 30 days of the entry of
this Final 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 purusuant to na
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, neither Baker nor Oharriz shall,
after offset or reduction of any award of compensatory damages in any Related

27
Investor Action based on Baker or Oharriz’ payment of disgorgement in this
action, argue that he or she is entitled to, nor shall he or she further benefit by,
offset or reduction of such compensatory damages award by the amount of any
part of his or her payment of a civil penalty in this action (“Penalty Offset”). If the
court in any Related Investor Action grants such a Penalty Offset, the 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 Untied 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 Baker or Oharriz by or on behalf of one or more investors
based on substantially the same facts as alleged in the Complaint in this action.
VI.
It is further ORDERED that this Court shall retain jurisdiction of this
matter for the purposes of enforcing the terms of this Judgment. The Clerk is
ORDERED to enter final judgment in favor of Plaintiff and against Defendants.
The Clerk is also instructed to CLOSE this case.
IT IS SO ORDERED this 8th

day of November, 2021.
_____________________________
Leigh Martin May
United States District Judge

IN THE UNITED STATES DISTRICT COURT 
FOR THE NORTHERN DISTRICT OF GEORGIA 

ATLANTA DIVISION 
 

UNITED STATES SECURITIES AND 
EXCHANGE COMMISSION,  

: 
: 

 

 :  
Plaintiff, :  

 :  
v. : 

: 
CIVIL ACTION NO. 
1:19-CV-02565-LMM  

 :  
PETER BAKER, et al.,  : 

: 
: 

 

 :  
Defendants.  :  

 
 

ORDER 

This case comes before the Court on Securities and Exchange 

Commission’s Motion for Default Judgment as to Defendant Prestige Global 

Trading, Ltd. and for Remedies and Final Judgment as to all Defendants [37]. 

After due consideration, the Court enters the following Order.   

I. BACKGROUND 

The Securities and Exchange Commission (SEC) filed this lawsuit against 

Peter Baker, Prestige Global Trading, Ltd. (“Prestige”), Elizabeth Oharriz, 

Diversified Initiatives Consulting & Logistics, Inc. (“Diversified), and Sienna 

Business Group, Inc. (“Sienna”) for their roles in a “prime bank” fraud scheme.1 

 
1 The SEC described this type of scheme in the following way: 

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2 

 

Dkt. No. [1]. The Court has extensively detailed the factual background in its 

previous summary judgment order against Defendant Baker. Dkt. No. [32]. For 

the purposes of this order, the Court presents the following abridged background.  

Defendant Baker was the President and CEO of Defendant Prestige and the 

Vice President of Defendant Sienna. Dkt. No. [24-4] at 33. Defendant Oharriz 

was the President of Defendants Diversified and Sienna. Dkt. No. [1] ¶ 19. Neither 

Defendant Baker nor Prestige have ever been registered with the SEC. Id. at 33–

34; Dkt. No. [24-8] ¶ 4. Defendant Baker and Defendant Oharriz each made 

material misrepresentations to potential investors and together carried out these 

prime bank fraud schemes against five groups of investors—Hawk’s Rest, LLC 

(“Hawk’s Rest”), Capital Consulting, LLC (“Capital Consulting”), Gestion Austral 

Los Pinos SA (“GALP”), ADVJ04, and Transatlantic Bdr. Ltd., LLC 

(“Transatlantic”).  

Defendants Elizabeth Oharriz, Diversified, and Sienna (collectively, the 

Settling Defendants) each entered into a settlement agreement with the SEC. See 

Dkt. No. [8-1]. As part of their settlements, they agreed to accept the Court’s 

 
The term ‘prime bank’ fraud commonly refers to schemes in which 
fraudsters purport to sell investors financial instruments from a well-
known bank that investors can then trade to generate enormous returns. 
The purported instruments often have official-sounding names, including 
‘bank guarantees,’ ‘bank debentures,’ and ‘stand-by letters of credit.’ In 
theory, investors would pay an advance fee and, in return, obtain control of 
one of these instruments. In reality, after investors pay their advance fee, 
the fraudsters either disappear or string their victims along to extract more 
money and delay complaints to law enforcement. 

Dkt. No. [1] ¶ 20.  

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3 

 

order of disgorgement of ill-gotten gains and prejudgment interest, with an 

amount of disgorgement and prejudgment interest to be determined by the 

Court. Id. ¶ 3. They also agreed that the Court could determine whether a civil 

penalty should be imposed and that the Court could assume, for purposes of 

deciding what penalties to assign, that all the allegations in the Complaint are 

true. Id. Finally, they agreed to accept permanent injunctions against their future 

violations of certain securities laws and participation in any issuance, offer, or 

sale of any security except the purchase or sale of securities listed on a national 

securities exchange. Id. ¶ 2. Because of this settlement, the Court entered 

judgment against the Settling Defendants as well as permanent injunctions 

against some securities-related transactions and violations of securities laws, 

which were fully detailed in the consent order. Id. at 2–5.  

This Court granted summary judgment [35] as to liability against 

Defendant Baker for three violations of federal securities laws: (1) Securities 

Exchange Act Section 10(b) and Rule 10b-5 thereunder; (2) Securities Act Section 

17(a); and (3) Securities Exchange Act Section 15(a). The Court found that 

Defendant Baker made material representations to investors in three distinct 

transactions—the Hawk’s Rest, Capital Consulting, and Gestion Austral Los Pinos 

SA (“GALP”) transactions. Dkt. No. [32] at 14. Namely, the Court found that 

Defendant Baker misrepresented to investors that (1) he had capacity to obtain, 

control, and deliver the prime bank instruments; (2) he could refund investors’ 

fees if the transactions failed; and (3) he acted with scienter. Id. 14–17.  

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4 

 

Defendant Prestige did not file an answer to the Complaint, and they are in 

default. As such, all factual allegations in the complaint against Prestige are taken 

as true. The SEC has now moved for default judgment. In determining whether 

default judgment should be entered, the Court must determine if the SEC has 

filed a well-pleaded complaint and if a hearing on default judgment damages is 

necessary as to this Defendant before then turning to the appropriate remedies.  

As to all Defendants, the Court must also determine what remedies are 

appropriate given that liability has been established. The SEC also asks the Court 

to enter final judgment against all Defendants.  

II. DISCUSSION 

A. Default Judgment Proceedings against Prestige 

Federal Rule of Civil Procedure 55 sets forth a two-step process for 

securing a default judgment. First, a party seeking default must obtain a Clerk’s 

entry of default pursuant to Rule 55(a) by providing evidence “by affidavit or 

otherwise” that the opposing party “has failed to plead or otherwise defend.” Fed. 

R. Civ. P. 55; see also Frazier v. Absolute Collection Serv., Inc., 767 F. Supp. 2d 

1354, 1360 n.1 (N.D. Ga. 2011) (“First the clerk must enter a party’s default . . . 

[T]he party [seeking default judgment] must then apply to the court for a default 

judgment.”). Second, after the Clerk has made an entry of default, the party 

seeking default judgment must file a motion for default judgment under Rule 

55(b)(1) or (2). A Clerk’s entry of default under Rule 55(a) is thus a prerequisite 

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5 

 

for default judgment to be granted under Rule 55(b). Sun v. United States, 342 F. 

Supp. 2d 1120, 1124 n.2 (N.D. Ga. 2004). 

A default entered pursuant to Rule 55(a) constitutes an admission of all 

well-pleaded factual allegations contained in a complaint. Nishimatsu Const. Co., 

Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). However, entry 

of default does not automatically warrant the Court’s entry of default judgment. 

Frazier, 767 F. Supp. 2d at 1362 (quoting Nishimatsu Constr., 515 F.2d at 1206)).  

Even if a defendant is in default, it “is not held to admit facts that are not 

well-pleaded or to admit conclusions of law.” Id.; see also United States v. Khan, 

164 F. App’x 855, 858 (11th Cir. 2006) (“[A] default judgment may not stand on a 

complaint that fails to state a claim.”). “There must be a sufficient basis in the 

pleadings for the judgment entered,” and “a default is not treated as an absolute 

confession by the defendant of his liability and of the plaintiff’s right to recover.” 

Nishimatsu Constr., 515 F.2d at 1206. This means that the Court must “consider 

whether the unchallenged facts constitute a legitimate cause of action, since a 

party in default does not admit mere conclusions of law.” Frazier, 767 F. Supp. 2d 

at 1362 (quoting 10A Wright, Miller & Kane, Federal Practice & Procedure § 2688 

(3d ed.)). A plaintiff’s burden at the default judgment stage is “akin to that 

necessary to survive a motion to dismiss for failure to state a claim.” Surtain v. 

Hamlin Terrace Found., 789 F.3d 1239, 1245 (11th Cir. 2015). “Conceptually, 

then, a motion for default judgment is like a reverse motion to dismiss for failure 

to state a claim.” Id. 

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6 

 

Since entry of default constitutes an admission of the facts in a complaint, 

“[a] default judgment must not differ in kind from, or exceed in amount, what is 

demanded in the pleadings.” Fed. R. Civ. P. 54(c). Moreover, a defaulted 

defendant does not admit to allegations relating to the amount of damages. 

Frazier, 767 F. Supp. 2d at 1365. Therefore, before entering a final order 

regarding a default judgment, a court may conduct a hearing to determine the 

amount of damages. Fed. R. Civ. P. 55(b)(2)(B). However, “[a]n evidentiary 

hearing is not a per se requirement” for an entry of default judgment pursuant to 

Rule 55(b)(2) because said Rule “speaks of evidentiary hearings in a permissive 

tone.” SEC v. Smyth, 420 F.3d 1225, 1232 n.13 (11th Cir. 2005); Fed. R. Civ. P. 

55(b)(2) (explaining that “[t]he court may conduct hearings or make referrals” to 

determine damages (emphasis added)). “District courts in the Eleventh Circuit 

have noted that an evidentiary hearing is not necessary where the moving party 

has provided supporting affidavits as to the issue of damages.” Frazier, 767 F. 

Supp. 2d at 1365. 

Upon review of the SEC’s Complaint, Motion, and attached exhibits, the 

Court finds that the Complaint is well-pleaded and states a prima facie case for 

violations of the Exchange Act Section 10(b) and Rule 10b-5 as well as Securities 

Act Section 17(a) sufficient to support an award of disgorgement damages and an 

injunction against Prestige. Tyco Fire & Sec., LLC v. Alcocer, 218 F. App’x 860, 

863 (11th Cir. 2007) (“Thus, before entering a default judgment for damages, the 

district court must ensure that the well-pleaded allegations in the complaint, 

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7 

 

which are taken as true due to the default, actually state a substantive cause of 

action and that there is a substantive sufficient basis in the pleadings for the 

particular relief sought.”).  

The SEC can show a § 10(b) violation if it shows “(1) material 

misrepresentations or materially misleading omissions, (2) in connection with 

the purchase or sale of securities, (3) made with scienter.” SEC v. Merch. Cap., 

LLC, 483 F.3d 747, 766 (11th Cir. 2007). Similarly, in order to prove a § 17(a) 

violation, the SEC must show “(1) material misrepresentations or materially 

misleading omissions, (2) in the offer or sale of securities, (3) made with 

scienter.” Id. A misrepresentation or omission is material when there is “a 

substantial likelihood that the disclosure of the omitted fact would have been 

viewed by the reasonable investor as having significantly altered the ‘total mix’ of 

information made available.” Basic Inc. v. Levinson, 485 U.S. 224, 231–32 (1988) 

(quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976)).  

The SEC has sufficiently pleaded and proved that Prestige met all the 

preceding elements. As discussed in this Court’s summary judgment order 

against Defendant Baker, the financial instruments underlying the “prime bank” 

fraud schemes were in fact securities. See Dkt. No. [32] at 15. The Court also finds 

that the SEC sufficiently demonstrated that Prestige made material 

representations. Specifically, the SEC’s Complaint alleged that Defendants 

fabricated “standby letter of credit” and “bank guarantee” documents and 

misrepresented that investors could sell or lease them for profit and that their 

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8 

 

fees would be fully refundable until investors received consideration. Dkt. No. [1] 

¶¶ 2–6. However, the SEC alleges, and this Court has found, that these claims 

were misrepresentations, with investors losing all or most money invested and 

never receiving the promised instruments Id. ¶¶ 8, 24. The SEC also sufficiently 

pleaded the scienter requirement, alleging that Defendants acted intentionally to 

conceal their scheme by preventing investors from contacting the banks 

supposedly involved, stalling complaints, and producing additional fraudulent 

documents. Id. ¶¶ 8, 25, 79–81. That shows a level of intentionality and 

awareness that implicates Prestige.  

The next issue is damages. The Court exercises its discretion to grant the 

SEC’s request for damages without a hearing against Prestige. See Frazier, 767 F. 

Supp. 2d at 1365. The SEC seeks disgorgement and prejudgment interest in its 

Complaint and provides a sworn declaration by forensic accountant Richard 

Gregory Lill as to the exact amount. See Dkt. Nos. [1, 37-1]. The disgorgement 

damages in this case are a “sum certain” because the financial accounts reflect an 

exact amount that was transferred to each of the Defendants, including Prestige, 

as detailed in the Lill Declaration.2 Cf. Smyth, 420 F.3d at 1231 (finding an 

evidentiary hearing was necessary where “the disgorgement and prejudgment 

interests sums are contested” and the SEC’s calculation was “only ‘a reasonable 

 
2 Alternatively, even if the disgorgement amount is not a sum certain, it is a sum 
capable of computation through adding together the different amounts 
transferred to Prestige’s bank accounts and subtracting the small amount that 
was refunded to a single investor.  

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9 

 

approximation’”). Because there was no return on investment or any valuable 

financial instrument ever transferred to investors, all of the “fees” that investors 

paid to Defendants and ultimately received by Prestige are ill-gotten gains to be 

disgorged. Accordingly, this is “a case where all essential evidence was already of 

record” and the Court is not required to hold a hearing to determine damages. Id. 

at 1233.  

B. Remedies and Final Judgment as to all Defendants 

The Settling Defendants are already subject to injunctions and have agreed 

that the Court shall assign disgorgement damages with prejudgment interest. 

Defendant Oharriz has also agreed that the Court can determine whether to 

impose civil monetary penalties. Defendant Baker opposes the imposition of a 

civil penalty, particularly a third-tier penalty, but has not challenged the 

propriety of disgorgement with prejudgment interest or injunctive relief banning 

him from the securities industry. As to Defendant Prestige, because it is in 

default, all allegations in the Complaint are admitted as to this Defendant.  

The Court now must decide the exact remedies to impose against all 

Defendants as well as whether to impose civil monetary penalties against the 

individual Defendants, Baker and Oharriz.  

1. Injunctive Relief 

The SEC first asks this Court to enjoin all Defendants from engaging in 

future securities laws violations. 

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10 

 

The SEC is entitled to injunctive relief when it establishes (1) a prima 
facie case of previous violations of federal securities laws, and (2) a 
reasonable likelihood that the wrong will be repeated. Indicia that a 
wrong will be repeated include the egregiousness of the defendant's 
actions, the isolated or recurrent nature of the infraction, the degree 
of scienter involved, the sincerity of the defendant's assurances 
against future violations, the defendant's recognition of the wrongful 
nature of the conduct, and the likelihood that the defendant's 
occupation will present opportunities for future violations. While 
scienter is an important factor in this analysis, it is not a prerequisite 
to injunctive relief.  
 

SEC v. Calvo, 378 F.3d 1211, 1216 (11th Cir. 2004) (internal citations and 

quotations omitted).  

 The Court finds that the SEC’s requested injunctions would be appropriate 

against all Defendants. The Settling Defendants have already agreed to such an 

injunction, and the other remaining Defendants have not challenged the 

propriety of issuing an injunction against them. In addition, the facts establish 

the factors supporting such an injunction.  

Defendant Baker has stated that he “accepts…a permanent banning from 

the industry.” Dkt. No. [39] at 2. The Court determined in its summary judgment 

order against Defendant Baker that he had committed past securities law 

violations and found facts sufficient to indicate that the violations would be 

repeated. Under the factors listed in Calvo, the Court finds that Baker’s violations 

were recurrent between the Hawk’s Rest, GALP, and Capital Consulting 

transactions—all of which Baker played a major role in. The conduct was 

egregious given the sum of total money collected despite the lack of any returns 

given to investors. Additionally, the Court finds that Baker acted knowingly 

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11 

 

throughout the scheme given that he personally had lost $300,000 in schemes 

like the ones he later perpetrated and after that never invested in “bank 

guarantees” with his own money. Dkt. No. [32] at 3.  

As to Defendant Prestige, as previously discussed in the default judgment 

portion of this order, it perpetrated securities law violations through the actions 

of Baker sufficient to demonstrate a likelihood of repeated violations to support 

the injunctions. The facts admitted in the Complaint establish the facts necessary 

to support an injunction. The Court therefore enjoins Defendants Baker and 

Prestige as reflected in the conclusion of this Order.  

2. Disgorgement  

The Court has authority to “require disgorgement. . .of any unjust 

enrichment by the person who received such unjust enrichment as a result of 

such violation.” 15 U.S.C. § 78u(d)(3). “The SEC is entitled to disgorgement upon 

producing a reasonable approximation of a defendant's ill-gotten gains.” SEC v. 

Calvo, 378 F.3d 1211, 1217 (11th Cir. 2004). Once the SEC produces a reasonable 

approximation, the burden shifts to the defendant to demonstrate that the SEC's 

estimate is unreasonable. Id. “Because disgorgement is remedial and not 

punitive, the court's power to order disgorgement ‘extends only to the amount 

with interest by which the defendant profited from his wrongdoing.’” SEC v. 

Phoenix Telecomm., L.L.C., 231 F. Supp. 2d 1223, 1225 (N.D. Ga. 2001) (quoting 

SEC v. Blatt, 583 F.2d 1325, 1335 (5th Cir. 1978)).  

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12 

 

The SEC argues that all the money the Defendants collected from their 

investors constitutes unjust enrichment because there were no actual financial 

products underlying their investments, no returns, and nothing of value provided 

to investors. Dkt No. [37-2] at 25. The SEC further requests that the amount of 

disgorgement owed by the entity Defendants (Prestige, Sienna, and Diversified) 

be collected through joint and several liability of the entities and the individual 

Defendants who controlled them—with Baker controlling Prestige and Oharriz 

controlling Sienna and Diversified.  

In support of its disgorgement claims, the SEC submitted a declaration by 

Richard Gregory Lill, a forensic accountant. Dkt. No. [43-1] ¶ 1. Lill reviewed 

financial records in the case, including deposits and transfers between different 

financial accounts “to trace investor money and determine the amount each 

defendant ultimately received.” Id. ¶ 5. Lill calculated the amount each Defendant 

ultimately received from Hawk’s Rest, GALP, Capital Consulting, Transatlantic, 

and ADVJ04 investors. Id. ¶ 6.  

In their settlements, Defendants Oharriz, Sienna, and Diversified agreed to 

pay disgorgement of ill-gotten gains from these fraudulent transactions as well as 

prejudgment interest upon the gains. Dkt. No. [11] at 5. The Settling Defendants 

have not contested the amount of disgorgement or whether it should be imposed 

through joint and several liability.  

Defendants Baker and Prestige have not quarreled with the SEC’s 

calculations on disgorgement and said they “accept the SEC’s position on 

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13 

 

restitution.” Dkt. No. [39] at 2. The Court finds that the amounts listed in the Lill 

declaration and requested by the SEC are appropriate with respect to each of the 

Defendants.  

The Court also finds that joint and several liability is appropriate between 

the entity Defendants and their respective controlling individual Defendants. In 

addition, none of the Defendants oppose the imposition of joint and several 

liability as the SEC has requested it. 

“It is a well settled principle that joint and several liability is appropriate in 

securities laws cases where two or more individuals or entities have close 

relationships in engaging in illegal conduct.” Calvo, 378 F.3d at 1215. In Calvo, 

the Eleventh Circuit found that an individual could be jointly and severally liable 

for disgorgement with an entity where the individual’s family founded the entity, 

the individual held a 50% ownership interest in the entity, and the individual was 

the entity’s sole managing member. Id. at 1216. Additionally, the court found that 

“both parties engaged in securities laws violations” and that the individual “was a 

necessary participant and a substantial factor” in the entity’s violations. Id.  

Those factors counsel for the imposition of joint and several liability for the 

entity Defendants’ disgorgement here. Defendant Baker founded Defendant 

Prestige and is its only stakeholder. Dkt. No. [39] at 3. Defendant Oharriz was 

President of Defendants Sienna and Diversified at all relevant times, she 

controlled them, and she received the benefit of any investor money that was 

deposited in Sienna or Diversified’s accounts. Dkt. Nos. [1] ¶ 19; [37-2] at 27. 

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Accordingly, joint and several liability is appropriate with respect to the 

disgorgement amounts attributed to Sienna, Diversified, and Prestige. 

3. Prejudgment Interest 

The SEC next asks this Court to order Defendants to pay prejudgment 

interest on the disgorged amount. None of the Defendants have opposed the 

imposition of prejudgment interest.   

The decision to award prejudgment interest is within this Court’s 

discretion. See SEC v. Merch. Capital, LLC, 486 F. App’x 93, 97 (11th Cir. 2012) 

(affirming a district court’s imposition of prejudgment interest). “Without 

prejudgment interest, the [Defendants] would have benefitted from what in effect 

amounted to interest-free loans of the ill-gotten funds.” Id. The SEC has 

requested prejudgment interest dating back only from the start of the most recent 

violation in the series of five violations, the ADVJ04 transaction. Dkt. No. [37-2] 

at 27–28. None of the Defendants have objected to the awarding of prejudgment 

interest. Accordingly, the Court grants the SEC’s request for prejudgment 

interest—calculated using the Internal Revenue Service underpayment rate and 

as quantified in the Lill declaration—against all Defendants. See SEC v. Lauer, 

478 F. App’x 550, 557–58 (11th Cir. 2012) (noting that the district court has “wide 

discretion” to impose prejudgment interest and upholding use of the IRS 

underpayment rate to calculate it).  

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4. Civil Monetary Penalties 

The SEC also asks this Court to award “third-tier” civil monetary penalties 

against Defendants Baker and Oharriz in the amount of $585,141 and $390,094, 

respectively. Section 20(d) of the Securities Act and Section 21(d)(3) of the 

Exchange Act—with nearly identical language—allow the SEC to seek civil 

penalties imposed by the Court. The Exchange Act provides, 

Whenever it shall appear to the Commission that any person has 
violated any provision of this chapter, [or] the rules or regulations 
thereunder, . . . the Commission may bring an action in a United 
States district court to seek, and the court shall have jurisdiction to (i) 
impose, upon a proper showing, a civil penalty to be paid by the 
person who committed such violation. . . . 
 

15 U.S.C. § 78u(d)(3)(A).3 To determine the amount of the penalty, the Act 

outlines three tiers based on the nature of the violation. Under the first tier, “[f]or 

each violation, the amount of the penalty shall not exceed the greater of (I) 

$9,753 for a natural person or $97,523 for any other person.” 15 U.S.C. § 

78u(d)(3)(B)(i) (emphasis added).4 The second tier goes further: 

“Notwithstanding clause (i), the amount of a civil penalty . . . for each such 

violation shall not exceed the greater of (I) $97,523 for a natural person or 

$487,616 for any other person . . . if the violation described in subparagraph (A) 

involved fraud, deceit, manipulation, or deliberate or reckless disregard of a 

 
3 Due to the nearly identical language of the relevant statutes, only the Exchange 
Act will be quoted to avoid redundancy. 
 
4 Each of the penalty caps have been updated for inflation per 17 C.F.R. § 
201.1001.  

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regulatory requirement.” 15 U.S.C. § 78u(d)(3)(B)(ii) (emphasis added). For the 

third tier, the Act states: 

Notwithstanding clauses (i) and (ii), the amount of a civil penalty 
imposed . . . for each violation . . . shall not exceed the greater of (I) 
$195,047 for a natural person or $975,230 for any other person . . . 
if— 
 

(aa) the violation described in subparagraph (A) involved fraud, 
deceit, manipulation, or deliberate or reckless disregard of a 
regulatory requirement; and  
 
(bb) such violation directly or indirectly resulted in substantial 
losses or created a significant risk of substantial losses to other 
persons. 

 
§ 78u(d)(3)(B)(iii) (emphasis added).  

“Civil penalties are intended to punish the individual wrongdoer and to 

deter him and others from future securities violations.” SEC v. Monterosso, 756 

F.3d 1326, 1338 (11th Cir. 2010). The “Commission need only make ‘a proper 

showing’ that a violation has occurred and a penalty is warranted.” SEC v. 

Warren, 534 F.3d 1368, 1370 (11th Cir. 2008). Although the statute leaves the 

amount to be imposed to the discretion of the district judge, “courts consider 

numerous factors, including the egregiousness of the violation, the isolated or 

repeated nature of the violations, the degree of scienter involved, whether the 

defendant concealed his trading, and the deterrent effect given the defendant’s 

financial worth.” Miller, 744 F. Supp. 2d at 1344 (citing SEC v. Sargent, 329 F.3d 

34, 42 (1st Cir. 2003)). The Act also authorizes penalties for “each violation,” so 

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“courts are empowered to multiply the statutory penalty amount by the number 

of statutes the defendant violated, and many do.” Miller, 744 F. Supp. 2d at 1345. 

The SEC requests that Baker and Oharriz receive third-tier civil monetary 

penalties because they engaged in a multi-year scheme that resulted in over a 

million dollars lost over five distinct transactions. Dkt. No. [37-2] at 29. 

Defendant Baker argues that civil penalties should not be imposed against 

him. Defendant Baker argues that the SEC’s calculations attribute a greater 

portion of total losses to Defendants Oharriz, Diversified, and Sienna than it does 

to Defendants Baker and Prestige. Dkt. No. [39] at 13. Accordingly, Defendant 

Baker argues that his penalty is disproportionately high compared to his actual 

gains and the smaller penalty the SEC seeks against Defendant Oharriz, citing the 

SEC’s calculations that he received $194,262 and Prestige obtained $308,672. Id. 

Next, he argues that his payment of restitution and a ban from future securities 

work are sufficient to penalize his involvement. He also argues that his economic 

status should prevent the imposition of third-tier civil penalties because he is 

unemployed, seventy-seven-years old, living on his Army pension in a house 

owned by his wife. Dkt. No. [39] at 15. 

First, the Court finds that Defendants’ conduct was egregious in this case. 

Defendants Baker and Oharriz each made knowing misstatements of fact and 

omissions and caused substantial financial harm to investors. Second, the 

conduct was not isolated. Defendant Baker was primarily responsible for 

misrepresentations directed at three different investors groups over the course of 

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several years. Third, the Court finds that Defendants acted with a high degree of 

scienter. Before Defendant Baker became involved in the scheme underlying this 

lawsuit, he fell victim to prime bank fraud and lost $300,000 in personal 

“investments” from 2008–2010 for a “bank guarantee” and “standby letter of 

credit” that never produced any returns. See Dkt. No. [24-5]; Dkt. No. [39] at 3–

4. This suggests, despite his claims to naivete, that he was aware of the harm that 

could result from this kind of investment scheme. Additionally, Defendant Baker 

delivered investors falsified documents purporting to be real financial 

instruments that had no backing and that were riddled with blatant typographical 

errors. As just one example of Defendant Baker’s knowing misstatements to the 

Hawk’s Rest investors, Defendant Baker and Prestige “represented that they 

already had control of the bank guarantee” even though the bank at issue had 

never issued such an instrument. Dkt. No. [24-6] ¶ 12. Further, the money that 

investors transferred to Defendant Baker that was purportedly to be used as a 

“fee” for the prime bank instruments was spent on personal expenses and cash 

withdrawals. No. [24-2] at 16. 

Finally, the Court finds that the deterrent effect of the sanctions is 

appropriate despite Defendant Baker’s diminished financial worth. Defendant 

Baker argues that he has a negative net worth, as a seventy-seven-year-old Army 

pensioner, living in a house owned by his wife. See Dkt. No. [39] at 15-16. But as 

the purpose of civil monetary penalties is both punishment and deterrence, the 

Court finds that poverty alone cannot defeat the need for penalties in this case. 

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See SEC v. StratoComm Corp., 89 F. Supp. 3d 357, 373 (N.D.N.Y. 2015) (“While 

the court may take the defendant's current financial difficulties into account, 

these circumstances alone cannot negate the need for a severe civil penalty.”). 

And a party’s financial position is fluid. Should Defendants’ financial 

circumstances improve, the SEC may be able to collect on these penalties in the 

future. SEC v. Kane, 97 CIV. 2931 (CBM), 2003 WL 1741293, at *4 (S.D.N.Y. Apr. 

1, 2003) (“[T]he court agrees with the Commission that it should not ignore the 

possibility that a defendant's fortunes will improve, and that one day the SEC will 

be able to collect on even a severe judgment.”). Thus, the Court will award third-

tier civil monetary penalties against Defendant Baker.  

The Court also finds that Defendant Oharriz’s conduct merits the 

imposition of third-tier civil monetary penalties. Per the Complaint, which 

Defendant Oharriz stipulated should be used for purposes of determining 

remedies, her conduct was egregious, repeated, and made with knowledge of the 

harm she was inflicting. The Court finds that third-tier civil penalties are 

necessary to effectively punish and deter Defendant Oharriz.  

The Court accepts the SEC’s request for calculation of the monetary penalty 

by multiplying the statutory maximum penalty per violation, using each of the 

transactions in which the individual Defendant took a leading role as the number 

of “violations.” Oharriz took a leading role in the Transatlantic and ADVJ04 

transactions, while Baker took a leading role in the Hawk’s Rest, GALP, and 

Capital Consulting transactions. The SEC requests that the Court use $195,047 as 

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20 

 

the appropriate statutory maximum penalty.5 Dkt. No. [37-2] at 31 (citing 17 

C.F.R. § 201.1001). Under this method, the Court finds that Oharriz is 

ORDERED to pay a civil monetary penalty of $390,094 ($195,047 x 2) and 

Baker is ORDERED to pay a civil monetary penalty of $585,151 ($195,047 x 3).  

III. CONCLUSION 

In accordance with the foregoing, Plaintiff’s Motion for Default Judgment 

as to Defendant Prestige Global Trading, Ltd. and for Remedies and Final 

Judgment as to all Defendants [37] is GRANTED as follows:  

I. 

It is hereby ORDERED that Defendants Baker and Prestige are 

permanently restrained and enjoined from violating, directly or indirectly, 

Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 

Rule 10(b)-5 promulgated thereunder, 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 

 
5 Defendant Baker has not contested that $195,047 represents the appropriate 
statutory maximum penalty for a third-tier violation by a natural person.  

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(c) to engage in any act, practice, or course of business which 

operates or would operate as a fraud or deceit upon any person, by, 

directly or indirectly, (i) creating a false appearance or otherwise 

deceiving any person, or (ii) disseminating false or misleading 

documents, materials, or information or making, either orally or in 

writing, any false or misleading statement in any communication 

with any investor or prospective investor, about:   

(1) any investment strategy or investment in securities;  

(2) the prospects for success of any product or company; 

(3) the use of investor funds; or 

(4) the safety or refundability of investor funds; 

(5) compensation to any person; 

(6) Defendant’s qualifications to advise investors; or 

(7) the misappropriation of investor funds or investment 

proceeds. 

It is further ORDERED that 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 Final 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 

Defendants or with anyone described in (a). 

II. 

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 It is ORDERED that Baker and Prestige are permanently restrained and 

enjoined from violating Section 17(a) of the Securities Act 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 

(c) to engage in any transaction, practice, or course of business which 

operates or would operate as a fraud or deceit upon the purchaser by, 

directly or indirectly, (i) creating a false appearance or otherwise deceiving 

any person, or (ii) disseminating false or misleading documents, materials, 

or information or making, either orally or in writing, any false or 

misleading statement in any communication with any investor or 

prospective investor, about:   

(1) any investment in or offering of securities,  

(2) the prospects for success of any product or company, 

(3) the use of investor funds;  

(4) the safety or refundability of investor funds; 

(5) compensation to any person; 

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(6) Defendants’ qualifications to advise investors; or 

(7) the misappropriation of investor funds or investment proceeds. 

 It is further ORDERED 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) Defendants’ 

officers, agents, servants, employees, and attorneys; and (b) other persons in 

active concert or participation with Defendants or with anyone described in (a). 

III. 

 It is ORDERED that Baker and Prestige are permanently restrained and 

enjoined from violating Section 15(a) of the Exchange Act directly or indirectly, 

by making use of any means or instrumentality of interstate commerce or of the 

mails and engaging in the business of effecting transactions in securities for the 

accounts of others, or inducing or effecting the purchase and sale of securities, 

while not registered with the Commission in accordance with the provisions of 

Section 15(b) of the Exchange Act or while not associated with a broker-dealer 

that was so registered.  

 It is further ORDERED 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) Baker’s 

officers, agents, servants, employees, and attorneys; and (b) other persons in 

active concert or participation with Baker or with anyone described in (a).  

IV. 

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 It is further ORDERED that Baker and Prestige are permanently 

restrained and enjoined from directly or indirectly participating in the issuance, 

offer, or sale of any security, including but not limited to bank guarantees, 

irrevocable bank undertaking letters, joint venture agreements, proofs of funds, 

medium term notes, standby letters of credit, and similar instruments, with the 

exception of the purchase or sale of securities listed on a national securities 

exchange.  

V. 

 It is hereby ORDERED that Defendants shall pay disgorgement of ill-

gotten gains and prejudgment interest thereon, as well as civil penalties in the 

following amounts:  

 

Defendant Disgorgement Pre- 

judgment 

interest 

Civil 
Penalty 

Total 

Baker $194,262 $30,308.32 $585,141 $809,711.32 

Prestige and Baker, 
jointly and 
severally 

$308,672 $48,158.31  $356,830.31 

Oharriz $342,504 $53,436.68 $390,094 $786,034.68 

Diversified and 
Oharriz, jointly 
and 
severally 

$323,621 $50,490.60  $374,111.60 

Sienna and 
Oharriz, 
jointly and 
severally 

$132,339 $20,647.24  $152,986.24 

 

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 Defendants shall satisfy these obligations by paying their respective 

amounts to the Securities and Exchange Commission within 30 days after entry 

of this Final Judgment. Defendants may transmit payment electronically to the 

Commission, which will provide detailed ACH transfer/Fedwire 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. 

Defendants may also pay be 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 identify the case title, civil action number, 

and name of this Court; the relevant Defendant’s name as a defendant in this 

action; and specifying that payment is made pursuant to this Final 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 

disgorgement and prejudgment interest by using all collection procedures 

authorized by law, including, but not limited to, moving for civil contempt at any 

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time after 30 days following entry of this Final Judgment. Defendant shall pay 

post judgment interest on any amounts due after 30 days of entry of this Final 

Judgment pursuant to 28 U.S.C. § 1961.  

 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 

shall pay post judgment interest on any amounts due after 30 days of the entry of 

this Final 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 purusuant to na 

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, neither Baker nor Oharriz shall, 

after offset or reduction of any award of compensatory damages in any Related 

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27 

Investor Action based on Baker or Oharriz’ payment of disgorgement in this 

action, argue that he or she is entitled to, nor shall he or she further benefit by, 

offset or reduction of such compensatory damages award by the amount of any 

part of his or her payment of a civil penalty in this action (“Penalty Offset”). If the 

court in any Related Investor Action grants such a Penalty Offset, the 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 Untied 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 Baker or Oharriz by or on behalf of one or more investors 

based on substantially the same facts as alleged in the Complaint in this action.  

VI. 

It is further ORDERED that this Court shall retain jurisdiction of this 

matter for the purposes of enforcing the terms of this Judgment. The Clerk is 

ORDERED to enter final judgment in favor of Plaintiff and against Defendants. 

The Clerk is also instructed to CLOSE this case. 

IT IS SO ORDERED this 8th day of November, 2021.

_____________________________ 
Leigh Martin May  
United States District Judge 

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