Securities and Exchange Commission v. Costello et al, No. 2:2022cv01388 - Document 10 (W.D. Wash. 2022)
Court Description: FINAL JUDGMENT as to Defendant David Ferraro. Signed by Judge Ricardo S. Martinez. (SB)
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Securities and Exchange Commission v. Costello et al Doc. 10 Case 2:22-cv-01388-RSM Document 10 Filed 10/31/22 Page 1 of 5 1 2 3 4 5 The Honorable Ricardo S. Martinez 6 7 8 UNITED STATES DISTRICT COURT 9 WESTERN DISTRICT OF WASHINGTON 10 SEATTLE DIVISION 11 12 13 SECURITIES AND EXCHANGE COMMISSION, Plaintiff, 14 15 v. CASE NO. 22-cv-01388-RSM FINAL JUDGMENT AS TO DEFENDANT DAVID FERRARO JUSTIN COSTELLO and DAVID FERRARO 16 Defendants. 17 18 The Securities and Exchange Commission having filed a Complaint and Defendant David 19 Ferraro having entered a general appearance; consented to the Court’s jurisdiction over 20 Defendant and the subject matter of this action; consented to entry of this Judgment without 21 admitting or denying the allegations of the Complaint (except as to jurisdiction and except as 22 otherwise provided herein in paragraph VI; waived findings of fact and conclusions of law; and 23 waived any right to appeal from this Judgment: 24 [PROPOSED] FINAL JUDGMENT SEC v. Costello et al. (2:22-cv-01388-RSM) Securities and Exchange Commission 100 Pearl Street, Suite 20-100 New York, NY 10004-2616 (212) 336-1100 Dockets.Justia.com Case 2:22-cv-01388-RSM Document 10 Filed 10/31/22 Page 2 of 5 1 I. 2 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is 3 permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the 4 Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using any means or instrumentality of 6 interstate commerce, or of the mails, or of any facility of any national securities exchange, in 7 connection with the purchase or sale of any security: 8 (a) to employ any device, scheme, or artifice to defraud; 9 (b) to make any untrue statement of a material fact or to omit to state a material fact 10 necessary in order to make the statements made, in the light of the circumstances 11 under which they were made, not misleading; or 12 13 14 (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 15 Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who 16 receive actual notice of this Judgment by personal service or otherwise: (a) Defendant’s officers, 17 agents, servants, employees, and attorneys; and (b) other persons in active concert or 18 participation with Defendant or with anyone described in (a). 19 II. 20 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 21 is permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 22 (the “Securities Act”) [15 U.S.C. § 77q(a)] in the offer or sale of any security by the use of any 23 24 2 FINAL JUDGMENT SEC v. Costello et al. (2:22-cv-01388-RSM) Securities and Exchange Commission 100 Pearl Street, Suite 20-100 New York, NY 10004-2616 (212) 336-1100 Case 2:22-cv-01388-RSM Document 10 Filed 10/31/22 Page 3 of 5 1 means or instruments of transportation or communication in interstate commerce or by use of the 2 mails, directly or indirectly: 3 (a) to employ any device, scheme, or artifice to defraud; 4 (b) to obtain money or property by means of any untrue statement of a material fact 5 or any omission of a material fact necessary in order to make the statements 6 made, in light of the circumstances under which they were made, not misleading; 7 or 8 9 10 (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 11 Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who 12 receive actual notice of this Judgment by personal service or otherwise: (a) Defendant’s officers, 13 agents, servants, employees, and attorneys; and (b) other persons in active concert or 14 participation with Defendant or with anyone described in (a). 15 16 III. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 17 is permanently barred from participating in an offering of penny stock, including engaging in 18 activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or 19 attempting to induce the purchase or sale of any penny stock, pursuant to Section 20(g) of the 20 Securities Act [15 U.S.C. § 77t(g)] and Section 21(d)(6) of the Exchange Act [15 U.S.C. § 21 78u(d)(6)]. A penny stock is any equity security that has a price of less than five dollars, except 22 as provided in Rule 3a51-1 under the Exchange Act [17 C.F.R. § 240.3a51-1]. 23 24 3 FINAL JUDGMENT SEC v. Costello et al. (2:22-cv-01388-RSM) Securities and Exchange Commission 100 Pearl Street, Suite 20-100 New York, NY 10004-2616 (212) 336-1100 Case 2:22-cv-01388-RSM Document 10 Filed 10/31/22 Page 4 of 5 1 2 IV. Upon motion of the Commission, the Court shall determine whether it is appropriate to 3 order disgorgement of ill-gotten gains pursuant to Sections 21(d)(3), 21(d)(5) and 21(d)(7) of the 4 Exchange Act [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), 78u(d)(7)], and/or a civil penalty pursuant to 5 Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange 6 Act [15 U.S.C. § 78u(d)(3)] and, if so, the amount(s) of the disgorgement and/or civil penalty. If 7 disgorgement is ordered, Defendant shall pay prejudgment interest thereon, calculated from May 8 22, 2020, based on the rate of interest used by the Internal Revenue Service for the 9 underpayment of federal income tax as set forth in 26 U.S.C. § 6621(a)(2). In connection with 10 the Commission’s motion for disgorgement and/or civil penalties, and at any hearing held on 11 such a motion: (a) Defendant will be precluded from arguing that he did not violate the federal 12 securities laws as alleged in the Complaint; (b) Defendant may not challenge the validity of the 13 Consent or this Judgment; (c) solely for the purposes of such motion, the allegations of the 14 Complaint shall be accepted as and deemed true by the Court; and (d) the Court may determine 15 the issues raised in the motion on the basis of affidavits, declarations, excerpts of sworn 16 deposition or investigative testimony, and documentary evidence, without regard to the standards 17 for summary judgment contained in Rule 56(c) of the Federal Rules of Civil Procedure. In 18 connection with the Commission’s motion for disgorgement and/or civil penalties, the parties 19 may take discovery, including discovery from appropriate non-parties. 20 V. 21 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is 22 incorporated herein with the same force and effect as if fully set forth herein, and that Defendant 23 shall comply with all of the undertakings and agreements set forth therein. 24 4 FINAL JUDGMENT SEC v. Costello et al. (2:22-cv-01388-RSM) Securities and Exchange Commission 100 Pearl Street, Suite 20-100 New York, NY 10004-2616 (212) 336-1100 Case 2:22-cv-01388-RSM Document 10 Filed 10/31/22 Page 5 of 5 1 VI. 2 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for purposes of 3 exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the 4 allegations in the complaint are true and admitted by Defendant, and further, any debt for 5 disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under this 6 Judgment or any other judgment, order, consent order, decree or settlement agreement entered in 7 connection with this proceeding, is a debt for the violation by Defendant of the federal securities 8 laws or any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the 9 Bankruptcy Code, 11 U.S.C. § 523(a)(19). 10 VII. 11 12 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Judgment. 13 VIII. 14 15 16 There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, the Clerk is ordered to enter this Judgment forthwith and without further notice. 'DWHG: 2FWREHU , 17 5,&$5'2 6 0$57,1(= UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 5 FINAL JUDGMENT SEC v. Costello et al. (2:22-cv-01388-RSM) Securities and Exchange Commission 100 Pearl Street, Suite 20-100 New York, NY 10004-2616 (212) 336-1100
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