Securities and Exchange Commission v. Heart Tronics Inc et al, No. 8:2011cv01962 - Document 58 (C.D. Cal. 2012)
Court Description: FINAL JUDGMENT as to Martin Carter by Judge James V. Selna, Related to: Notice (Other) 57 . (twdb)
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Securities and Exchange Commission v. Heart Tronics Inc et al 1 2 3 4 5 6 7 8 9 Doc. 58 MARK LANPHER E-mail: lanpherm@sec.gov Securities Exchange Commission 100 F Street, N.E. Washington, DC 20549 Telephone: (202) 551-4879 Facsimile: (202) 772-9282 Local Counsel David J. Van Havermaat, Cal. Bar No. 175761 vanhavermaatd@sec.gov Securities and Exchange Commission 5670 Wilshire Boulevard, 11th Floor Los Angeles, CA 90036 Telephone: (323) 965-3840 Facsimile: (323) 965-3908 Attorneys for Plaintiff 10 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 11 12 13 SECURITIES AND EXCHANGE COMMISSION, 14 15 16 17 18 19 20 21 22 23 24 Case No. SACV11-1962-JVS(ANX) Plaintiff, vs. HEART TRONICS, INC., MITCHELL JAY STEIN, WILLIE JAMES GAULT, J. ROWLAND PERKINS, II, MARTIN BERT CARTER, MARK CROSBY NEVDAHL, and RYAN ALLAN RAUCH, Defendants, FINAL JUDGMENT AS TO MARTIN CARTER TRACEY HAMPTON-STEIN, ARC FINANCE GROUP, LLC, ARC BLIND TRUST, THS BLIND TRUST, JAYMI BLIND TRUST, OAK TREE INVESTMENTS BLIND TRUST, WBT INVESTMENTS BLIND TRUST, CATCH 83 GENERAL PARTNERSHIP, and FIVE INVESTMENTS PARTNERSHIP, Relief Defendants. 25 26 27 28 Dockets.Justia 1 2 FINAL JUDGMENT AS TO DEFENDANT MARTIN B. CARTER 3 The Securities and Exchange Commission having filed a Complaint and 4 Defendant Martin B. Carter having entered a general appearance; consented to the 5 6 Court’s jurisdiction over Defendant and the subject matter of this action; consented 7 to entry of this Final Judgment; waived findings of fact and conclusions of law; 8 and waived any right to appeal from this Final Judgment: 9 I. 10 11 12 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant and Defendant’s agents, servants, employees, attorneys, and all persons in active 13 14 concert or participation with them who receive actual notice of this Final Judgment 15 by personal service or otherwise are permanently restrained and enjoined from 16 17 violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 18 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5(a) and (c) 19 promulgated thereunder [17 C.F.R. § 240.10b-5], by using any means or 20 21 instrumentality of interstate commerce, or of the mails, or of any facility of any 22 national securities exchange, in connection with the purchase or sale of any 23 security: 24 (a) to employ any device, scheme, or artifice to defraud; or 26 (b) to engage in any act, practice, or course of business which operates or 27 would operate as a fraud or deceit upon any person. 25 28 2 II. 1 2 3 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant and Defendant’s agents, servants, employees, attorneys, and all 4 5 persons in active concert or participation with them who receive actual notice of 6 this Final Judgment by personal service or otherwise are permanently restrained 7 and enjoined from violating Section 17(a) of the Securities Act of 1933 (the 8 9 “Securities Act”) [15 U.S.C. § 77q(a)] in the offer or sale of any security by the use 10 of any means or instruments of transportation or communication in interstate 11 commerce or by use of the mails, directly or indirectly: 12 13 (a) to employ any device, scheme, or artifice to defraud; or 14 (b) to engage in any transaction, practice, or course of business which 15 16 17 18 19 20 operates or would operate as a fraud or deceit upon the purchaser. III. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant and Defendant's agents, servants, employees, attorneys, and all 21 persons in active concert or participation with them who receive actual notice of 22 this Final Judgment by personal service or otherwise are permanently restrained 23 24 25 and enjoined from violating Section 5 of the Securities Act [15 U.S.C. § 77e] by, directly or indirectly, in the absence of any applicable exemption: 26 27 28 3 1 (a) 2 Unless a registration statement is in effect as to a security, making use of any means or instruments of transportation or communication in 3 interstate commerce or of the mails to sell such security through the 4 use or medium of any prospectus or otherwise; or 5 6 7 (b) Making use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell 8 9 or offer to buy through the use or medium of any prospectus or 10 otherwise any security, unless a registration statement has been filed 11 with the Commission as to such security, or while the registration 12 13 statement is the subject of a refusal order or stop order or (prior to the 14 effective date of the registration statement) any public proceeding or 15 16 17 18 19 20 examination under Section 8 of the Securities Act [15 U.S.C. § 77h]. IV. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant and Defendant’s agents, servants, employees, attorneys, 21 and all persons in active concert or participation with them who receive actual 22 notice of this Final Judgment by personal service or otherwise are permanently 23 24 restrained and enjoined from violating, directly or indirectly, Section 13(b)(5) of 25 the Exchange Act [15 U.S.C. § 78m(b)(5)] by knowingly circumventing or 26 knowingly failing to implement a system of internal accounting controls or 27 28 4 1 knowingly falsifying any book, record, or account described in Sections 2 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 3 78(m)(b)(B)]. 4 V. 5 6 7 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant and Defendants’ agents, servants, employees, attorneys, and all 8 9 persons in active concert or participation with them who receive actual notice of 10 this Final Judgment by personal service or otherwise are permanently restrained 11 and enjoined from violating, directly or indirectly, Rule 13b2-1 of the Exchange 12 13 Act [17 C.F.R. § 240.13b2-1] by falsifying, or causing to be falsified, any book, 14 record, or account described in Section 13(b)(2)(A) of the Exchange Act [15 U.S.C 15 16 17 18 19 20 § 78m(b)(2)(A)]. VI. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant and Defendant’s agents, servants, employees, attorneys, and all 21 persons in active concert or participation with them who receive actual notice of 22 this Final Judgment by personal service or otherwise are permanently restrained 23 24 and enjoined from aiding and abetting any violation of Sections 10(b), 13(a), and 25 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 10b-5, 12b-20, 26 13a-1, 13a-11 and 13a-13 of the Exchange Act [17 C.F.R. §§ 240.12b-20, 240.13a- 27 28 5 1 1, 240.13a-11 and 240.13a-13], including by knowingly providing substantial 2 assistance to an issuer who files or causes to be filed with the Commission any 3 periodic or current report pursuant to Section 13(a) and the rules and regulations 4 5 promulgated thereunder, which contains any untrue statement of a material fact, or 6 which omits to state a material fact necessary in order to make statements made, in 7 light of the circumstances under which they were made, not misleading, or which 8 9 10 11 fails to comply in any material respect with the requirements of Section 13(a) of the Exchange Act and the rules and regulations thereunder. VII. 12 13 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, 14 pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] and 15 16 Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)], Defendant is permanently 17 prohibited, following the date of entry of this Final Judgment, from acting as an 18 officer or director of any issuer that has a class of securities registered pursuant to 19 20 21 22 Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]. VIII. 23 24 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED 25 that, pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and 26 Section 21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)], Defendant is 27 28 6 1 permanently barred from participating in an offering of penny stock, including 2 engaging in activities with a broker, dealer, or issuer for purposes of issuing, 3 trading, or inducing or attempting to induce the purchase or sale of any penny 4 5 stock. A penny stock is any equity security that has a price of less than five 6 dollars, except as provided in Rule 3a51-1 under the Exchange Act [17 C.F.R. 7 240.3a51-1]. 8 9 IX. 10 11 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED 12 that Defendant is liable for disgorgement of $2,078,000, representing profits 13 gained as a result of the conduct alleged in the Complaint, together with 14 15 prejudgment interest thereon in the amount of $333,947.18, for a total of 16 $2,411,947.18. Based on Defendant’s sworn representations in his Statement of 17 18 Financial Condition dated March 5, 2012, and other documents and information 19 submitted to the Commission, however, the Court is not ordering Defendant to pay 20 a civil penalty and payment of the disgorgement and pre-judgment interest thereon 21 22 is waived. The determination not to impose a civil penalty and to waive payment 23 of the disgorgement and pre-judgment interest is contingent upon the accuracy and 24 completeness of Defendant's Statement of Financial Condition. If at any time 25 26 27 following the entry of this Final Judgment the Commission obtains information indicating that Defendant’s representations to the Commission concerning his 28 7 1 assets, income, liabilities, or net worth were fraudulent, misleading, inaccurate, or 2 incomplete in any material respect as of the time such representations were made, 3 the Commission may, at its sole discretion and without prior notice to Defendant, 4 5 petition the Court for an order requiring Defendant to pay the unpaid portion of the 6 disgorgement, pre-judgment and post-judgment interest thereon, and the maximum 7 civil penalty allowable under the law. In connection with any such petition, the 8 9 only issue shall be whether the financial information provided by Defendant was 10 fraudulent, misleading, inaccurate, or incomplete in any material respect as of the 11 time such representations were made. In its petition, the Commission may move 12 13 this Court to consider all available remedies, including, but not limited to, ordering 14 Defendant to pay funds or assets, directing the forfeiture of any assets, or sanctions 15 16 for contempt of this Final Judgment. The Commission may also request additional 17 discovery. Defendant may not, by way of defense to such petition: (1) challenge 18 the validity of the Consent or this Final Judgment; (2) contest the allegations in the 19 20 Complaint filed by the Commission; (3) assert that payment of disgorgement, pre- 21 judgment and post-judgment interest or a civil penalty should not be ordered; (4) 22 contest the amount of disgorgement and pre-judgment and post-judgment interest; 23 24 (5) contest the imposition of the maximum civil penalty allowable under the law; 25 or (6) assert any defense to liability or remedy, including, but not limited to, any 26 statute of limitations defense. 27 28 8 1 X. 2 3 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the 4 Consent is incorporated herein with the same force and effect as if fully set forth 5 herein, and that Defendant shall comply with all of the undertakings and 6 7 agreements set forth therein. 8 XI. 9 10 11 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms 12 13 of this Final Judgment. 14 XII. 15 16 17 There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, the Clerk is ordered to enter this Final Judgment 18 19 forthwith and without further notice. 20 21 Dated: August 09, 2012 22 23 ____________________________________ 24 UNITED STATES DISTRICT JUDGE 25 26 27 28 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2
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