SEC v. ARCTURUS CORPORATION; ASCHERE ENERGY, LLC; LEON ALI PARVIZIAN; ALFREDO GONZALEZ; AMG ENERGY, LLC; ROBERT J. BALUNAS, et al., No. 3:13-cv-04861, Southern District of New York (Mar. 3, 2017) — Judgment

1

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

SECURITIES AND EXCHANGE §
COMMISSION, §
  §
 Plaintiff, §
  §
v.  § Civil Action No. 3:13-CV-4861-K
  §
ARCTURUS CORPORATION, §
ASCHERE ENERGY, LLC, §
LEON ALI PARVIZIAN, §
ALFREDO GONZALEZ,  §
AMG ENERGY, LLC, §
ROBERT J. BALUNAS, and §
R. THOMAS & CO., LLC, §
  §
 Defendants. §

ORDER AND FINAL JUDGMENT

The Court previously issued a Memorandum Opinion and Order (“Order”)
granting Plaintiff Securities and Exchange Commission’s   (“SEC”) Motion for
Summary Judgment.  Following entry of that Order, the SEC filed its Motion for
Remedies and Motion for Entry of Final Judgment (Doc. No. 79) which is currently
before the Court.  The Court conducted a one-day hearing on this motion.  After
careful consideration of the motion, the responses, the reply, the supporting
appendices, the applicable law, and the arguments and evidence presented at the
hearing, the Court GRANTS the motion with modification of certain requested
remedies.

2

 Pursuant to Federal Rule of Civil Procedure 52(a), the Court enters the
following findings of fact and conclusions of law, in addition to the findings and
conclusions regarding liability set forth in the Court’s Memorandum Opinion and
Order (Doc. No. 76).
FINDINGS OF FACT
1. Defendant Leon Ali Parvizian (“Parvizian”) is a British citizen with permanent
residence status.
2. In 2010, Defendant Parvizian consented to a five-year bar from registering as a
securities agent with the Texas State Securities Board (“TSSB”) and to a
permanent bar from association with any Financial Industry Regulatory
Authority (“FINRA”) member.
3. Defendant Arcturus Corporation (“Arcturus”) is a Texas corporation with its
principal place of business in Dallas, Texas.  Defendant Parvizian exercises
complete control and wholly owns Arcturus.
4. Defendant Aschere Energy, LLC, (“Aschere”) is a Texas limited liability
company with its principal place of business in Dallas, Texas.  Defendant
Parvizian is the sole member of and exercises complete control of Aschere.
5. Defendant Alfredo Gonzalez (“Gonzalez”) is a citizen of Chile and resides in
Dallas, Texas.

3

6. Defendant AMG Energy, LLC (“AMG”) is a Texas limited liability company.
Defendant Gonzalez is the president of AMG (collectively, “Gonzalez
Defendants”).
7. Defendant Robert J. Balunas (“Balunas”) is a citizen of Florida.
8. Defendant R. Thomas & Co., LLC (“R. Thomas”) is a Florida limited liability
company.  Defendant Balunas is the managing member of R. Thomas
(collectively “Balunas Defendants”).
9. Defendant Parvizian and his two companies, Defendants Arcturus and Aschere
(collectively “Parvizian Defendants”), committed securities fraud in violation
of Section 10(b) of the Securities and Exchange Act of 1934 (“Exchange Act”)
and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933
(“Securities Act”).
10. The Parvizian Defendants, the Gonzalez Defendants, and the Balunas
Defendants violated Section 15(a) of the Exchange Act by acting as
unregistered brokers.
11. The Parvizian Defendants, the Gonzalez Defendants, and the Balunas
Defendants violated Sections 5(a) and 5(c) of the Securities Act by offering or
selling unregistered securities.
12. The SEC introduced evidence that, between June 28, 2007 and December 30,
2011, the Parvizian Defendants’ profits from investments in the oil and gas
offerings at issue were $20,735,277.  At the hearing, the SEC introduced

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another calculation, based on newly disclosed investor returns, that the
Parvizian Defendants realized profits of $18,015,521.
13. The SEC introduced evidence that, between September 2009 and
December 2011, the Gonzalez Defendants received $1,113,839 in
profits.  The Gonzalez Defendants acted together as one economic unit
and together engaged in illegal conduct.
14. The SEC introduced evidence that, between January 2007 and
December 2011, the Balunas Defendants received $393,312 in
proceeds.  The Balunas Defendants acted together as one economic unit
and together engaged in illegal conduct.
CONCLUSIONS OF LAW
1. The Court may permanently enjoin a defendant from violating the securities
laws.  15 U.S.C. §78u(d); 15 U.S.C. §78u(e).
2. For the court to impose a permanent injunction, the SEC must demonstrate
the inferences flowing from the defendant’s prior illegal conduct, when viewed
in light of present circumstances, indicate a reasonable likelihood of future
transgressions.  SEC v. Gann, 565 F.3d 932, 940 (5th Cir. 2009).  In
evaluating the likelihood of future violations, the Court should evaluate the
totality of the circumstances.  SEC v. Zale Corp., 650 F.2d 718, 720 (5th Cir.
1981).
3. It is within the Court’s sound discretion to grant or deny injunctive relief.

5

SEC v. Blatt, 583 F.2d 1325, 1334 (5th Cir. 1978).
4. Courts consider a number of factors when imposing a permanent injunction,
including: (1) the egregiousness of the defendant’s conduct; (2) the isolated or
recurrent nature of the violation; (3) the degree of scienter; (4) the sincerity of
the defendant’s recognition of his transgression; and (5) the likelihood of the
defendant’s job providing opportunities for future violations.  Gann, 565 F.3d
at 940.
5. The SEC made a sufficient showing for permanent injunction as to the
Parvizian Defendants.  The Court previously found these Defendants acted
with scienter and knowingly or recklessly violated the securities laws by
making material misrepresentations to the public concerning the Frayley-
Nelson Joint Venture, an oil and gas well drilling investment.  The Parvizian
Defendants maintain that the investment contracts they sold were not
securities at all, so they did not violate any laws.  There is a reasonable
likelihood that the Parvizian Defendants will commit future violations based
on the degree of scienter involved as well as the complete absence of any
recognition by the Parvizian Defendants of wrong-doing.  Furthermore,
Parvizian created, controlled and directed Arcturus and Aschere, both
unregistered companies and both with unregistered employees, to make oil and
gas well drilling investment offerings, including and similar to the Frayley-
Nelson Joint Venture.  Also, during that time, Parvizian was barred from

6

registering as a securities agent by the TSSB and barred from association with
any FINRA member.  Therefore, a permanent injunction against the Parvizian
Defendants is justified to prevent them from violating securities regulations
and to protect the public.
6. Having considered the applicable factors, the Court concludes there is
insufficient evidence to justify a permanent injunction against the Gonzalez
Defendants and/or the Balunas Defendants.
7. The district court has broad discretion not only in determining whether or not to
order disgorgement but also in calculating the amount to be disgorged.  SEC v.
Huffman, 996 F.2d 800, 803 (5th Cir. 1993).  Disgorgement is limited to profits
causally connected to the violation.  Allstate Inc. Co. v. Receivable Fin. Co., 501
F.3d 398, 413 (5th Cir. 2007).  Once the SEC presents evidence reasonably
approximating the amount of ill-gotten gains, the burden of proof shifts to the
defendant.  Id.
8. In determining an approximate amount of ill-gotten profits, the risk of
uncertainty should fall on the wrongdoer whose illegal conduct created the
uncertainty.  SEC v. Patel, 61 F.3d 137, 140 (2d Cir. 1995).
9. A securities law violator cannot diminish his responsibility to return illegal profits
by claiming he no longer possesses the funds due.  SEC v. United Energy Partners,
Inc., 88 Fed. Appx. 744, 746 (5th Cir. 2004).  A defendant’s claim that he is
unable to pay is irrelevant.  Id.  Securities law violators may not offset their

7

disgorgement liability with business expenses.  Id. at 746-47.
10. Any money returned to investors, whether before or after the investment scheme
ended, cannot be characterized as illegal profits.  SEC v. AmeriFirst Funding, Inc.,
3:07-CV-1188-D, 2008 WL 1959843, at *4 (N.D. Tex. May 5, 2008).
11. The Court already found that the Parvizian Defendants violated Sections 5(a),
5(c) and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the
Exchange Act, and rule 10b-5 thereunder.  Therefore, an order for
disgorgement against the Parvizian Defendants is proper to disgorge them of
ill  -gotten gains.  Although the SEC estimates the Parvizian Defendants’ profits
at $18,015,521, the Court, in its discretion and considering all relevant
evidence, determines disgorgement in the amount of $15,000,000 against the
Parvizian Defendants, jointly and severally, is appropriate.
12. The Court has already found that the Gonzalez Defendants violated Sections
5(a) and 5(c) the Securities Act and Section 15(a) of the Exchange Act.
Therefore, an order for disgorgement against the Gonzalez Defendants is
proper to disgorge them of ill-gotten gains.  Although the SEC estimates the
Gonzalez Defendants’ profits at $1,113,839, the Court, in its discretion and
considering all relevant evidence, determines disgorgement in the amount of
$100,000 against the Gonzalez Defendants, jointly and severally, is
appropriate.
13. The Court has already found that the Balunas Defendants violated Sections

8

5(a) and 5(c) the Securities Act and Section 15(a) of the Exchange Act.
Therefore, an order for disgorgement against the Balunas Defendants is proper
to disgorge them of ill-gotten gains.  Although the SEC estimates the Balunas
Defendants’ profits at $393,312, the Court, in its discretion and considering
all relevant evidence, determines disgorgement in the amount of $15,000
against the Balunas Defendants, jointly and severally, is appropriate.
14. An award of pre-judgment interest in a case involving violations of the federal
securities laws rests within the equitable discretion of the district court to be
exercised according to considerations of fairness.  United Energy Partners, 88 Fed.
Appx. at 747.
15. The Court determines, in its discretion and considering all relevant evidence,
that no award of prejudgment interest shall be imposed against any of the
Defendants.
16. A court may impose, in its discretion, civil monetary penalties for securities
violations.  15 U.S.C. § 77t(d); 15 U.S.C. § 78u(d)(3); 17 C.F.R. 201.1004
(increasing maximum statutory amounts to $150,000 for individuals and
$750,000 for any other person); AmeriFirst Funding, Inc., 2008 WL 1959843,
at *7.  Monetary penalties are punitive and intended to deter future securities
violations.  SEC v. Harris, 3:09-CV-1809-B, 2012 WL 759885, at *4 (N.D.
Tex. March 7, 2012).
17. The court can consider a number of factors in determining the appropriate

9

amount of civil monetary penalty to be imposed, including:  “(1) the
egregiousness of the defendant’s conduct; (2) the degree of the defendant’s
scienter; (3) whether the defendant’s conduct created substantial losses or the
risk of substantial losses to other persons; (4) whether the defendant’s conduct
was isolated or recurrent; and (5) whether the penalty should be reduced due
to the defendant’s demonstrated current and future financial condition.”
AmeriFirst Funding, Inc., 2008 WL 1959843, at *7 (quoting SEC v. Opulentica,
LLC, 479 F.Supp.2d 319, 331 (S.D. N.Y. 2007)).  Although the court can
consider several factors, the appropriate penalty should ultimately be determined
by the specific facts and circumstances of the case at hand.  Id.
18. A court may impose a first-tier, second-tier, or third-tier civil penalty for a
securities violation.  15 U.S.C. §77t(d); 15 U.S.C. §78u(d)(3).  The statutory
tier determines the range of maximum penalties, but the court has discretion to
determine the actual amount of the penalty to be assessed.  SEC v. Life Partners
Holding, Inc., 71 F.Supp.3d 615, 623 (W.D. Texas. 2014).  A first-tier penalty,
which does not require a showing of scienter, shall not exceed the greater of
$7,500 for a natural person or $75,000 for any other person or the gross amount
of pecuniary gain to that person.  15 U.S.C. §77t(d); 15 U.S.C. §78u(d)(3); 17
C.F.R.201.1004 (increasing statutory amounts to reflect inflation).  A second-tier
penalty may be assessed if a defendant committed a securities violation which
“involved fraud, deceit, manipulation, or deliberate or reckless disregard of a

10

regulatory requirement.”  15 U.S.C. §77t(d); 15 U.S.C. §78u(d)(3).  A second-
tier penalty shall not exceed the greater of $75,000 for a natural person or
$375,000 for any other person, or the gross amount of pecuniary gain to that
person.  15 U.S.C. §77t(d); 15 U.S.C. §78u(d)(3); 17 C.F.R.201.1004
(increasing statutory amounts to reflect inflation).  A third-tier civil monetary
penalty may be assessed if a defendant committed a securities violation which
“involved fraud, deceit, manipulation, or deliberate or reckless disregard of a
regulatory requirement” and “directly or indirectly resulted in substantial losses
or created a significant risk of substantial losses to other persons.”  15 U.S.C.
§77t(d); 15 U.S.C. §78u(d)(3).  Penalties assessed under the third-tier may not
exceed the greater of $150,000 for a natural person or $750,000 for any other
person, or the gross amount of pecuniary gain to that person.  15 U.S.C. §77t(d);
15 U.S.C. §78u(d)(3); 17 C.F.R.201.1004 (increasing statutory amounts to
reflect inflation).
19. The Court previously found the Parvizian Defendants violated §17(a)(1)-(3) of
the Securities Act and §10(b) of the Exchange Act, and these violations involve
fraudulent or deceitful conduct and they directly or indirectly caused substantial
losses to other people.  Additionally, the Court concludes the Parvizian
Defendants’ securities violations were egregious, they acted with a high degree of
scienter, and Parvizian was barred, at the time of the fraudulent conduct at
issue, from registering as a securities agent by the TSSB and was barred from

11

association with any FINRA member.  A third-tier penalty is appropriate for
the Parvizian Defendants.  Considering all of the factors and the specific facts of
this case, the Court in its discretion concludes a civil penalty of $500,000 is
appropriate as to the Parvizian Defendants, jointly and severally.
20. The SEC did not present sufficient evidence to establish either the Gonzalez
Defendants or the Balunas Defendants committed a securities violation
involving “fraud, deceit, manipulation, or deliberate or reckless disregard of a
regulatory requirement”, as required for a second- or third-tier penalty.  Nor did
the SEC establish the Gonzalez Defendants or the Balunas Defendants acted
with scienter.
21. The Court already found the Gonzalez Defendants violated Sections 5(a) and
5(c) of the Securities Act and Section 15(a) of the Exchange Act.  Considering all
the factors in determining an appropriate civil penalty, the Court in its discretion
imposes a first-tier penalty of $20,000 on the Gonzalez Defendants jointly and
severally.
22. The Court already found the Balunas Defendants violated Sections 5(a) and 5(c)
of the Securities Act and Section 15(a) of the Exchange Act.  Considering all the
factors in determining an appropriate civil penalty, the Court in its discretion
imposes a first-tier penalty of $15,000 on the Balunas Defendants jointly and
severally.

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 Based on the foregoing Findings of Fact and Conclusions of Law, Final Judgment
should be entered as follows:
I.
 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants
Arcturus Corporation, Aschere Energy, LLC, and Leon Ali Parvizian a/k/a Alex
Parvizian are 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
(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 Final Judgment by personal
service or otherwise:  (a) Defendants’ officers, agents, servants, employees, and

13

attorneys; and (b) other persons in active concert or participation with Defendants or
with anyone described in (a).
II.
 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendants Arcturus Corporation, Aschere Energy, LLC, and Leon Ali Parvizian a/k/a
Alex Parvizian are 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
 (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 Final Judgment by personal
service or otherwise:  (a) Defendants’ officers, agents, servants, employees, and

14

attorneys; and (b) other persons in active concert or participation with Defendants or
with anyone described in (a).
III.
 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Arcturus Corporation, Aschere Energy, LLC, and Leon Ali Parvizian a/k/a Alex
Parvizian are permanently restrained and enjoined from violating Section 5 of the
Securities Act [15 U.S.C. § 77e and 77e(c)] 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 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 SEC
as to such security, or while the registration statement is the subject of a

15

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 Final 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).
IV.

 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Leon Ali Parvizian a/k/a Alex Parvizian is restrained and enjoined from violating,
directly or indirectly, Section 15(a) of the Exchange Act [15 U.S.C. §78o(a)], by using
any means or instrumentality of interstate commerce, or of the mails, or of any
facility of any national securities exchange to effect any transactions in, or to induce
or attempt to induce the purchase or sale of, any security (other than an exempted
security or commercial paper, bankers’ acceptances, or commercial bills) unless such
person is registered with the SEC as a broker or dealer in accordance with Section
15(b) of the Exchange Act.
 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also

16

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 Defendant or
with anyone described in (a).
V.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that:
(1)  Defendants Arcturus Corporation, Aschere Energy, LLC, and Leon Ali
Parvizian a/k/a Alex Parvizian are jointly and severally liable for disgorgement in the
amount of $15,000,000.00, representing profits gained as a result of the securities
violations found by the Court, together with third-tier civil penalties in the amount of
$500,000 pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and
Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] for a total of
$15,500,000.00;
(2)  Defendants Alfredo Gonzalez and AMG Energy, LLC, are jointly and
severally liable for disgorgement in the amount of $100,000, representing profits
gained as a result of the securities violations found by the Court, together with first-
tier civil penalties in the amount of $20,000 pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [15 U.S.C.
§ 78u(d)] for a total of $120,000;
(3)  Defendants Robert J. Balunas, and R. Thomas & Co., LLC, are jointly and
severally liable for disgorgement in the amount of $15,000, representing profits

17

gained as a result of the securities violations found by the Court, together with first-
tier civil penalties in the amount of $15,000 pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [15 U.S.C.
§ 78u(d)] for a total of $30,000;
(4) The Court does not award prejudgment interest against any Defendant.
Defendants shall make these payments within fourteen (14) days after entry of
this Final Judgment.
Defendants may transmit payment electronically to the SEC, 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 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; Defendants’ name in this action; and specifying that
payment is made pursuant to this Final Judgment.
Defendants shall simultaneously transmit photocopies of evidence of payment
and case identifying information to the SEC’s counsel in this action.  By making this

18

payment, Defendants relinquish all legal and equitable right, title, and interest in
such funds and no part of the funds shall be returned to any Defendant.
The SEC shall hold the funds (collectively, the “Fund”) and may propose a
plan to distribute the Fund subject to the Court’s approval.  The Court shall retain
jurisdiction over the administration of any distribution of the Fund.  If the SEC staff
determines that the Fund will not be distributed, the SEC shall send the funds paid
pursuant to this Final Judgment to the United States Treasury.
The SEC may enforce the Court’s judgment for disgorgement by moving for
civil contempt (and/or through other collection procedures authorized by law) at any
time after fourteen (14) days following entry of this Final Judgment.  Defendants
shall pay post-judgment interest on any delinquent amounts pursuant to 28 U.S.C. §
1961.
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, Defendants shall not,
after offset or reduction of any award of compensatory damages in any Related
Investor Action based on Defendants’ payment of disgorgement in this action, argue
that Defendants are entitled to, nor shall Defendants further benefit by, offset or
reduction of such compensatory damages award by the amount of any part of
Defendants’ payment of a civil penalty in this action (“Penalty Offset”).  If the Court
in any Related Investor Action grants such a Penalty Offset, Defendants shall, within

19

thirty (30) days after entry of a final order granting the Penalty Offset, notify the
SEC’s counsel in this action and pay the amount of the Penalty Offset to the United
States Treasury, as the SEC 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 Defendants 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, ADJUDGED, AND DECREED that this Court
shall retain jurisdiction of this matter for the purposes of enforcing the terms of this
Final Judgment.
SO ORDERED.
 Signed March 2
nd
, 2017.
     ______________________________________
     ED KINKEADE
     UNITED STATES DISTRICT JUDGE

1 
 

IN THE UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 
 
SECURITIES AND EXCHANGE § 
COMMISSION, § 
  § 
 Plaintiff, § 
  § 
v.  § Civil Action No. 3:13-CV-4861-K 
  § 
ARCTURUS CORPORATION, § 
ASCHERE ENERGY, LLC, § 
LEON ALI PARVIZIAN, § 
ALFREDO GONZALEZ,  § 
AMG ENERGY, LLC, § 
ROBERT J. BALUNAS, and § 
R. THOMAS & CO., LLC, § 
  § 
 Defendants. § 

 
ORDER AND FINAL JUDGMENT 

 
 The Court previously issued a Memorandum Opinion and Order (“Order”) 

granting Plaintiff Securities and Exchange Commission’s (“SEC”) Motion for 

Summary Judgment.  Following entry of that Order, the SEC filed its Motion for 

Remedies and Motion for Entry of Final Judgment (Doc. No. 79) which is currently 

before the Court.  The Court conducted a one-day hearing on this motion.  After 

careful consideration of the motion, the responses, the reply, the supporting 

appendices, the applicable law, and the arguments and evidence presented at the 

hearing, the Court GRANTS the motion with modification of certain requested 

remedies.   

                                                                                         
 Case 3:13-cv-04861-K   Document 115   Filed 03/02/17    Page 1 of 19   PageID 4103



2 
 

 Pursuant to Federal Rule of Civil Procedure 52(a), the Court enters the 

following findings of fact and conclusions of law, in addition to the findings and 

conclusions regarding liability set forth in the Court’s Memorandum Opinion and 

Order (Doc. No. 76). 

FINDINGS OF FACT 

1. Defendant Leon Ali Parvizian (“Parvizian”) is a British citizen with permanent 

residence status. 

2. In 2010, Defendant Parvizian consented to a five-year bar from registering as a 

securities agent with the Texas State Securities Board (“TSSB”) and to a 

permanent bar from association with any Financial Industry Regulatory 

Authority (“FINRA”) member. 

3. Defendant Arcturus Corporation (“Arcturus”) is a Texas corporation with its 

principal place of business in Dallas, Texas.  Defendant Parvizian exercises 

complete control and wholly owns Arcturus. 

4. Defendant Aschere Energy, LLC, (“Aschere”) is a Texas limited liability 

company with its principal place of business in Dallas, Texas.  Defendant 

Parvizian is the sole member of and exercises complete control of Aschere. 

5. Defendant Alfredo Gonzalez (“Gonzalez”) is a citizen of Chile and resides in 

Dallas, Texas. 

                                                                                         
 Case 3:13-cv-04861-K   Document 115   Filed 03/02/17    Page 2 of 19   PageID 4104



3 
 

6. Defendant AMG Energy, LLC (“AMG”) is a Texas limited liability company. 

Defendant Gonzalez is the president of AMG (collectively, “Gonzalez 

Defendants”). 

7. Defendant Robert J. Balunas (“Balunas”) is a citizen of Florida. 

8. Defendant R. Thomas & Co., LLC (“R. Thomas”) is a Florida limited liability 

company.  Defendant Balunas is the managing member of R. Thomas 

(collectively “Balunas Defendants”).  

9. Defendant Parvizian and his two companies, Defendants Arcturus and Aschere 

(collectively “Parvizian Defendants”), committed securities fraud in violation 

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

and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933 

(“Securities Act”).   

10. The Parvizian Defendants, the Gonzalez Defendants, and the Balunas 

Defendants violated Section 15(a) of the Exchange Act by acting as 

unregistered brokers. 

11. The Parvizian Defendants, the Gonzalez Defendants, and the Balunas 

Defendants violated Sections 5(a) and 5(c) of the Securities Act by offering or 

selling unregistered securities. 

12. The SEC introduced evidence that, between June 28, 2007 and December 30, 

2011, the Parvizian Defendants’ profits from investments in the oil and gas 

offerings at issue were $20,735,277.  At the hearing, the SEC introduced 

                                                                                         
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another calculation, based on newly disclosed investor returns, that the 

Parvizian Defendants realized profits of $18,015,521. 

13. The SEC introduced evidence that, between September 2009 and 

December 2011, the Gonzalez Defendants received $1,113,839 in 

profits.  The Gonzalez Defendants acted together as one economic unit 

and together engaged in illegal conduct. 

14. The SEC introduced evidence that, between January 2007 and 

December 2011, the Balunas Defendants received $393,312 in 

proceeds.  The Balunas Defendants acted together as one economic unit 

and together engaged in illegal conduct.    

CONCLUSIONS OF LAW 

1. The Court may permanently enjoin a defendant from violating the securities 

laws.  15 U.S.C. §78u(d); 15 U.S.C. §78u(e). 

2. For the court to impose a permanent injunction, the SEC must demonstrate 

the inferences flowing from the defendant’s prior illegal conduct, when viewed 

in light of present circumstances, indicate a reasonable likelihood of future 

transgressions.  SEC v. Gann, 565 F.3d 932, 940 (5th Cir. 2009).  In 

evaluating the likelihood of future violations, the Court should evaluate the 

totality of the circumstances.  SEC v. Zale Corp., 650 F.2d 718, 720 (5th Cir. 

1981). 

3. It is within the Court’s sound discretion to grant or deny injunctive relief.  

                                                                                         
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SEC v. Blatt, 583 F.2d 1325, 1334 (5th Cir. 1978). 

4. Courts consider a number of factors when imposing a permanent injunction, 

including: (1) the egregiousness of the defendant’s conduct; (2) the isolated or 

recurrent nature of the violation; (3) the degree of scienter; (4) the sincerity of 

the defendant’s recognition of his transgression; and (5) the likelihood of the 

defendant’s job providing opportunities for future violations.  Gann, 565 F.3d 

at 940.  

5. The SEC made a sufficient showing for permanent injunction as to the 

Parvizian Defendants.  The Court previously found these Defendants acted 

with scienter and knowingly or recklessly violated the securities laws by 

making material misrepresentations to the public concerning the Frayley-

Nelson Joint Venture, an oil and gas well drilling investment.  The Parvizian 

Defendants maintain that the investment contracts they sold were not 

securities at all, so they did not violate any laws.  There is a reasonable 

likelihood that the Parvizian Defendants will commit future violations based 

on the degree of scienter involved as well as the complete absence of any 

recognition by the Parvizian Defendants of wrong-doing.  Furthermore, 

Parvizian created, controlled and directed Arcturus and Aschere, both 

unregistered companies and both with unregistered employees, to make oil and 

gas well drilling investment offerings, including and similar to the Frayley-

Nelson Joint Venture.  Also, during that time, Parvizian was barred from 

                                                                                         
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registering as a securities agent by the TSSB and barred from association with 

any FINRA member.  Therefore, a permanent injunction against the Parvizian 

Defendants is justified to prevent them from violating securities regulations 

and to protect the public. 

6. Having considered the applicable factors, the Court concludes there is 

insufficient evidence to justify a permanent injunction against the Gonzalez 

Defendants and/or the Balunas Defendants. 

7. The district court has broad discretion not only in determining whether or not to 

order disgorgement but also in calculating the amount to be disgorged.  SEC v. 

Huffman, 996 F.2d 800, 803 (5th Cir. 1993).  Disgorgement is limited to profits 

causally connected to the violation.  Allstate Inc. Co. v. Receivable Fin. Co., 501 

F.3d 398, 413 (5th Cir. 2007).  Once the SEC presents evidence reasonably 

approximating the amount of ill-gotten gains, the burden of proof shifts to the 

defendant.  Id. 

8. In determining an approximate amount of ill-gotten profits, the risk of 

uncertainty should fall on the wrongdoer whose illegal conduct created the 

uncertainty.  SEC v. Patel, 61 F.3d 137, 140 (2d Cir. 1995). 

9. A securities law violator cannot diminish his responsibility to return illegal profits 

by claiming he no longer possesses the funds due.  SEC v. United Energy Partners, 

Inc., 88 Fed. Appx. 744, 746 (5th Cir. 2004).  A defendant’s claim that he is 

unable to pay is irrelevant.  Id.  Securities law violators may not offset their 

                                                                                         
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disgorgement liability with business expenses.  Id. at 746-47. 

10. Any money returned to investors, whether before or after the investment scheme 

ended, cannot be characterized as illegal profits.  SEC v. AmeriFirst Funding, Inc., 

3:07-CV-1188-D, 2008 WL 1959843, at *4 (N.D. Tex. May 5, 2008). 

11. The Court already found that the Parvizian Defendants violated Sections 5(a), 

5(c) and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the 

Exchange Act, and rule 10b-5 thereunder.  Therefore, an order for 

disgorgement against the Parvizian Defendants is proper to disgorge them of 

ill-gotten gains.  Although the SEC estimates the Parvizian Defendants’ profits 

at $18,015,521, the Court, in its discretion and considering all relevant 

evidence, determines disgorgement in the amount of $15,000,000 against the 

Parvizian Defendants, jointly and severally, is appropriate.     

12. The Court has already found that the Gonzalez Defendants violated Sections 

5(a) and 5(c) the Securities Act and Section 15(a) of the Exchange Act.  

Therefore, an order for disgorgement against the Gonzalez Defendants is 

proper to disgorge them of ill-gotten gains.  Although the SEC estimates the 

Gonzalez Defendants’ profits at $1,113,839, the Court, in its discretion and 

considering all relevant evidence, determines disgorgement in the amount of 

$100,000 against the Gonzalez Defendants, jointly and severally, is 

appropriate.     

13. The Court has already found that the Balunas Defendants violated Sections 

                                                                                         
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5(a) and 5(c) the Securities Act and Section 15(a) of the Exchange Act.  

Therefore, an order for disgorgement against the Balunas Defendants is proper 

to disgorge them of ill-gotten gains.  Although the SEC estimates the Balunas 

Defendants’ profits at $393,312, the Court, in its discretion and considering 

all relevant evidence, determines disgorgement in the amount of $15,000 

against the Balunas Defendants, jointly and severally, is appropriate. 

14. An award of pre-judgment interest in a case involving violations of the federal 

securities laws rests within the equitable discretion of the district court to be 

exercised according to considerations of fairness.  United Energy Partners, 88 Fed. 

Appx. at 747. 

15. The Court determines, in its discretion and considering all relevant evidence, 

that no award of prejudgment interest shall be imposed against any of the 

Defendants. 

16. A court may impose, in its discretion, civil monetary penalties for securities 

violations.  15 U.S.C. § 77t(d); 15 U.S.C. § 78u(d)(3); 17 C.F.R. 201.1004 

(increasing maximum statutory amounts to $150,000 for individuals and 

$750,000 for any other person); AmeriFirst Funding, Inc., 2008 WL 1959843, 

at *7.  Monetary penalties are punitive and intended to deter future securities 

violations.  SEC v. Harris, 3:09-CV-1809-B, 2012 WL 759885, at *4 (N.D. 

Tex. March 7, 2012). 

17. The court can consider a number of factors in determining the appropriate 

                                                                                         
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amount of civil monetary penalty to be imposed, including:  “(1) the 

egregiousness of the defendant’s conduct; (2) the degree of the defendant’s 

scienter; (3) whether the defendant’s conduct created substantial losses or the 

risk of substantial losses to other persons; (4) whether the defendant’s conduct 

was isolated or recurrent; and (5) whether the penalty should be reduced due 

to the defendant’s demonstrated current and future financial condition.”  

AmeriFirst Funding, Inc., 2008 WL 1959843, at *7 (quoting SEC v. Opulentica, 

LLC, 479 F.Supp.2d 319, 331 (S.D. N.Y. 2007)).  Although the court can 

consider several factors, the appropriate penalty should ultimately be determined 

by the specific facts and circumstances of the case at hand.  Id. 

18. A court may impose a first-tier, second-tier, or third-tier civil penalty for a 

securities violation.  15 U.S.C. §77t(d); 15 U.S.C. §78u(d)(3).  The statutory 

tier determines the range of maximum penalties, but the court has discretion to 

determine the actual amount of the penalty to be assessed.  SEC v. Life Partners 

Holding, Inc., 71 F.Supp.3d 615, 623 (W.D. Texas. 2014).  A first-tier penalty, 

which does not require a showing of scienter, shall not exceed the greater of 

$7,500 for a natural person or $75,000 for any other person or the gross amount 

of pecuniary gain to that person.  15 U.S.C. §77t(d); 15 U.S.C. §78u(d)(3); 17 

C.F.R.201.1004 (increasing statutory amounts to reflect inflation).  A second-tier 

penalty may be assessed if a defendant committed a securities violation which 

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

                                                                                         
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regulatory requirement.”  15 U.S.C. §77t(d); 15 U.S.C. §78u(d)(3).  A second-

tier penalty shall not exceed the greater of $75,000 for a natural person or 

$375,000 for any other person, or the gross amount of pecuniary gain to that 

person.  15 U.S.C. §77t(d); 15 U.S.C. §78u(d)(3); 17 C.F.R.201.1004 

(increasing statutory amounts to reflect inflation).  A third-tier civil monetary 

penalty may be assessed if a defendant committed a securities violation which 

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

regulatory requirement” and “directly or indirectly resulted in substantial losses 

or created a significant risk of substantial losses to other persons.”  15 U.S.C. 

§77t(d); 15 U.S.C. §78u(d)(3).  Penalties assessed under the third-tier may not 

exceed the greater of $150,000 for a natural person or $750,000 for any other 

person, or the gross amount of pecuniary gain to that person.  15 U.S.C. §77t(d); 

15 U.S.C. §78u(d)(3); 17 C.F.R.201.1004 (increasing statutory amounts to 

reflect inflation). 

19. The Court previously found the Parvizian Defendants violated §17(a)(1)-(3) of 

the Securities Act and §10(b) of the Exchange Act, and these violations involve 

fraudulent or deceitful conduct and they directly or indirectly caused substantial 

losses to other people.  Additionally, the Court concludes the Parvizian 

Defendants’ securities violations were egregious, they acted with a high degree of 

scienter, and Parvizian was barred, at the time of the fraudulent conduct at 

issue, from registering as a securities agent by the TSSB and was barred from 

                                                                                         
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association with any FINRA member.  A third-tier penalty is appropriate for 

the Parvizian Defendants.  Considering all of the factors and the specific facts of 

this case, the Court in its discretion concludes a civil penalty of $500,000 is 

appropriate as to the Parvizian Defendants, jointly and severally. 

20. The SEC did not present sufficient evidence to establish either the Gonzalez 

Defendants or the Balunas Defendants committed a securities violation 

involving “fraud, deceit, manipulation, or deliberate or reckless disregard of a 

regulatory requirement”, as required for a second- or third-tier penalty.  Nor did 

the SEC establish the Gonzalez Defendants or the Balunas Defendants acted 

with scienter. 

21. The Court already found the Gonzalez Defendants violated Sections 5(a) and 

5(c) of the Securities Act and Section 15(a) of the Exchange Act.  Considering all 

the factors in determining an appropriate civil penalty, the Court in its discretion 

imposes a first-tier penalty of $20,000 on the Gonzalez Defendants jointly and 

severally. 

22. The Court already found the Balunas Defendants violated Sections 5(a) and 5(c) 

of the Securities Act and Section 15(a) of the Exchange Act.  Considering all the 

factors in determining an appropriate civil penalty, the Court in its discretion 

imposes a first-tier penalty of $15,000 on the Balunas Defendants jointly and 

severally.   

 

                                                                                         
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 Based on the foregoing Findings of Fact and Conclusions of Law, Final Judgment 

should be entered as follows: 

I.  

 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants 

Arcturus Corporation, Aschere Energy, LLC, and Leon Ali Parvizian a/k/a Alex 

Parvizian are 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 

(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 Final Judgment by personal 

service or otherwise:  (a) Defendants’ officers, agents, servants, employees, and 

                                                                                         
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attorneys; and (b) other persons in active concert or participation with Defendants or 

with anyone described in (a). 

II.  

 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 

Defendants Arcturus Corporation, Aschere Energy, LLC, and Leon Ali Parvizian a/k/a 

Alex Parvizian are 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 

 (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 Final Judgment by personal 

service or otherwise:  (a) Defendants’ officers, agents, servants, employees, and 

                                                                                         
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attorneys; and (b) other persons in active concert or participation with Defendants or 

with anyone described in (a). 

III.  

 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 

Arcturus Corporation, Aschere Energy, LLC, and Leon Ali Parvizian a/k/a Alex 

Parvizian are permanently restrained and enjoined from violating Section 5 of the 

Securities Act [15 U.S.C. § 77e and 77e(c)] 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 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 SEC 

as to such security, or while the registration statement is the subject of a 

                                                                                         
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15 
 

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 Final 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). 

IV.    

 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 

Leon Ali Parvizian a/k/a Alex Parvizian is restrained and enjoined from violating, 

directly or indirectly, Section 15(a) of the Exchange Act [15 U.S.C. §78o(a)], by using 

any means or instrumentality of interstate commerce, or of the mails, or of any 

facility of any national securities exchange to effect any transactions in, or to induce 

or attempt to induce the purchase or sale of, any security (other than an exempted 

security or commercial paper, bankers’ acceptances, or commercial bills) unless such 

person is registered with the SEC as a broker or dealer in accordance with Section 

15(b) of the Exchange Act. 

 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 

provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 

                                                                                         
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16 
 

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 Defendant or 

with anyone described in (a). 

V.  

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that:  

(1)  Defendants Arcturus Corporation, Aschere Energy, LLC, and Leon Ali 

Parvizian a/k/a Alex Parvizian are jointly and severally liable for disgorgement in the 

amount of $15,000,000.00, representing profits gained as a result of the securities 

violations found by the Court, together with third-tier civil penalties in the amount of 

$500,000 pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and 

Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] for a total of 

$15,500,000.00;  

(2)  Defendants Alfredo Gonzalez and AMG Energy, LLC, are jointly and 

severally liable for disgorgement in the amount of $100,000, representing profits 

gained as a result of the securities violations found by the Court, together with first-

tier civil penalties in the amount of $20,000 pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [15 U.S.C. 

§ 78u(d)] for a total of $120,000;  

(3)  Defendants Robert J. Balunas, and R. Thomas & Co., LLC, are jointly and 

severally liable for disgorgement in the amount of $15,000, representing profits 

                                                                                         
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17 
 

gained as a result of the securities violations found by the Court, together with first-

tier civil penalties in the amount of $15,000 pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [15 U.S.C. 

§ 78u(d)] for a total of $30,000;  

(4) The Court does not award prejudgment interest against any Defendant. 

Defendants shall make these payments within fourteen (14) days after entry of 

this Final Judgment. 

Defendants may transmit payment electronically to the SEC, 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 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; Defendants’ name in this action; and specifying that 

payment is made pursuant to this Final Judgment.   

Defendants shall simultaneously transmit photocopies of evidence of payment 

and case identifying information to the SEC’s counsel in this action.  By making this 

                                                                                         
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http://www.sec.gov/about/offices/ofm.htm


18 
 

payment, Defendants relinquish all legal and equitable right, title, and interest in 

such funds and no part of the funds shall be returned to any Defendant.   

The SEC shall hold the funds (collectively, the “Fund”) and may propose a 

plan to distribute the Fund subject to the Court’s approval.  The Court shall retain 

jurisdiction over the administration of any distribution of the Fund.  If the SEC staff 

determines that the Fund will not be distributed, the SEC shall send the funds paid 

pursuant to this Final Judgment to the United States Treasury. 

The SEC may enforce the Court’s judgment for disgorgement by moving for 

civil contempt (and/or through other collection procedures authorized by law) at any 

time after fourteen (14) days following entry of this Final Judgment.  Defendants 

shall pay post-judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 

1961. 

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, Defendants shall not, 

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

Investor Action based on Defendants’ payment of disgorgement in this action, argue 

that Defendants are entitled to, nor shall Defendants further benefit by, offset or 

reduction of such compensatory damages award by the amount of any part of 

Defendants’ payment of a civil penalty in this action (“Penalty Offset”).  If the Court 

in any Related Investor Action grants such a Penalty Offset, Defendants shall, within 

                                                                                         
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19 
 

thirty (30) days after entry of a final order granting the Penalty Offset, notify the 

SEC’s counsel in this action and pay the amount of the Penalty Offset to the United 

States Treasury, as the SEC 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 Defendants 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, ADJUDGED, AND DECREED that this Court 

shall retain jurisdiction of this matter for the purposes of enforcing the terms of this 

Final Judgment. 

SO ORDERED. 

 Signed March 2nd, 2017. 

     ______________________________________ 
     ED KINKEADE 
     UNITED STATES DISTRICT JUDGE 
 

                                                                                         
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