Securities and Exchange Commission v. Edward Chen et al, No. 2:2017cv06929 - Document 182 (C.D. Cal. 2018)
Court Description: FINAL JUDGMENT AS TO DEFENDANTS GH INVESTMENT LP AND GH DESIGN GROUP, LLC by Judge Percy Anderson, in favor of Securities and Exchange Commission against GH Design Group, LLC, GH Investment LP in the principal amount of $24,655,000, interest in the amount of $1,173,098, attorneys fees of $0.00, costs of $0.00 for a total judgment of $25,828,098. Related to: Stipulation for Judgment 179 , and shall be jointly and severally liable with codefendants Edward Chen, Jean Chen, Golden Galaxy LP, Mega Home, LLC, and Home Paradise Investment Center LLC, for the payment of those sums. (See document for details) (mrgo)
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Securities and Exchange Commission v. Edward Chen et al Doc. 182 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 10 11 SECURITIES AND EXCHANGE COMMISSION, Plaintiff, 12 13 14 15 16 vs. Case No. 2:17-cv-06929-PA-JEM FINAL JUDGMENT AS TO DEFENDANTS GH INVESTMENT LP AND GH DESIGN GROUP, LLC EDWARD CHEN, JEAN CHEN, HOME PARADISE INVESTMENT CENTER LLC, GH INVESTMENT LP, GH DESIGN GROUP, LLC, GOLDEN GALAXY LP, AND MEGA HOME, LLC, 17 18 Defendants. 19 20 21 22 23 24 25 26 27 28 Dockets.Justia.com The Securities and Exchange Commission having filed a Complaint and 1 2 Defendants GH Investment LP and GH Design Group LLC (“Defendants”) having 3 entered a general appearance; consented to the Court’s jurisdiction over them and the 4 subject matter of this action; consented to a judgment in this action permanently 5 enjoining them from certain violations of the federal securities laws (see Dkt. Nos. 6 112, 146), consented to entry of this Final Judgment, without admitting or denying 7 the allegations of the Complaint (except as to jurisdiction); waived findings of fact 8 and conclusions of law; and waived any right to appeal from this Final Judgment: 9 I. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED, that Defendants 10 11 are permanently restrained and enjoined from, directly or indirectly, in the offer or 12 sale of any securities, by the use of any means or instruments of transportation or 13 communication in interstate commerce or by the use of the mails: 14 A. employing any device, scheme or artifice to defraud; 15 B. obtaining money or property by means of any untrue statement of a 16 material fact or any omission to state a material fact necessary in order to 17 make the statements made, in light of the circumstances under which 18 they were made, not misleading; or C. 19 operates or would operate as a fraud or deceit upon the purchaser; 20 21 engaging in any transaction, practice, or course of business which in violation of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a). 22 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 23 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 24 binds the following who receive actual notice of this Final Judgment by personal 25 service or otherwise: (a) Defendants’ officers, agents, servants, employees, and 26 attorneys; and (b) other persons in active concert or participation with Defendants or 27 with anyone described in (a). 28 /// 1 1 2 II. IT IS FURTHER ORDERED that Defendant GH Investment LP is 3 permanently restrained and enjoined from, directly or indirectly, in connection with 4 the purchase or sale of any security, by the use of any means or instrumentality of 5 interstate commerce, or of the mails, or of any facility of any national securities 6 exchange: 7 A. employing any device, scheme or artifice to defraud; 8 B. making any untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in light of 9 the circumstances under which they were made, not misleading; or 10 11 B. engaging in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person; 12 13 in violation of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b- 14 5() thereunder, 17 C.F.R. §§ 240.10b-5. 15 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 16 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 17 binds the following who receive actual notice of this Final Judgment by personal 18 service or otherwise: (a) Defendants’ officers, agents, servants, employees, and 19 attorneys; and (b) other persons in active concert or participation with Defendants or 20 with anyone described in (a). 21 22 III. IT IS FURTHER ORDERED that Defendant Design Group LLC is 23 permanently restrained and enjoined from, directly or indirectly, in connection with 24 the purchase or sale of any security, by the use of any means or instrumentality of 25 interstate commerce, or of the mails, or of any facility of any national securities 26 exchange: 27 A. employing any device, scheme or artifice to defraud; or 28 B. engaging in any act, practice, or course of business which operates or 2 1 would operate as a fraud or deceit upon any person; 2 in violation of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b- 3 5(a) & (c) thereunder, 17 C.F.R. §§ 240.10b-5(a) & (c). 4 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 5 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 6 binds the following who receive actual notice of this Final Judgment by personal 7 service or otherwise: (a) Defendants’ officers, agents, servants, employees, and 8 attorneys; and (b) other persons in active concert or participation with Defendants or 9 with anyone described in (a). 10 11 IV. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 12 Defendants pay disgorgement in the amount of $24,655,000, representing amounts 13 paid by EB-5 investors as a result of the conduct alleged in the Complaint, together 14 with prejudgment interest thereon in the amount of $1,173,098, for a total of 15 $25,828,098, and shall be jointly and severally liable with codefendants Edward 16 Chen, Jean Chen, Golden Galaxy LP, Mega Home, LLC, and Home Paradise 17 Investment Center LLC, for the payment of those sums. Defendants shall satisfy this 18 obligation by paying those amounts to Robert P. Mosier, in his capacity as the 19 Distribution Agent of the disgorgement fund, one year from the date of the entry of 20 this Final Judgment. If timely payment is not made on the ordered disgorgement and 21 prejudgment interest thereon on or before the due date, additional interest shall accrue 22 pursuant to 28 U.S.C. § 1961. 23 24 Defendants may pay by certified check, bank cashier’s check, or United States postal money order payable to Robert Mosier, which shall be delivered or mailed to 25 Robert P. Mosier 26 Mosier & Company, Inc. 27 3151 Airway Ave., Suite A1 28 Costa Mesa, CA 92626 3 1 and shall be accompanied by a letter identifying the case title, civil action number, 2 and name of this Court; GH Investment LP and GH Design Group LLC as named 3 defendants in this action; and specifying that payment is made pursuant to this Final 4 Judgment. 5 Defendants shall simultaneously transmit photocopies of evidence of payment 6 and case identifying information to the Commission’s counsel in this action. By 7 making this payment, Defendants relinquish all legal and equitable right, title, and 8 interest in such funds and no part of the funds shall be returned to Defendants. 9 Defendants shall receive a credit towards payment of the disgorgement 10 amount, on a per investor basis, if, upon the express written consent of the EB-5 11 investor, such investor is willing to accept reimbursement in a form other than cash, 12 and that satisfactory proof is submitted to both Mr. Mosier and to the SEC that such 13 investor has, in fact, received assets that are equivalent in value to what such investor 14 is otherwise owed to be made whole. 15 16 V. Robert Mosier, in his capacity as the Distribution Agent, shall hold the funds 17 received from Defendants (collectively, the “Fund”) and may propose a plan, after 18 soliciting input from the EB-5 investors as to their preferences, to distribute the Fund, 19 or portions thereof, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as 20 amended, 15 U.S.C. § 1246(a), subject to the Court’s approval, to, or for the benefit 21 of, the EB-5 investors (which shall be in a form requested by the EB-5 investors 22 which may include a continued investment in their pending EB-project or a rollover 23 of their investment in an alternative EB-5 investment). The Court shall retain 24 jurisdiction over the administration of any distribution of the Fund. If the 25 Distribution Agent determines that there are monies in the Fund in excess of what is 26 required to make investors whole, or there are funds remaining after distribution has 27 taken place which cannot be distributed, the Distribution Agent shall send the funds 28 paid pursuant to this Final Judgment to the Commission, which shall send the funds 4 1 to the United States Treasury. The Commission may enforce the Court’s judgment for disgorgement and 2 3 prejudgment interest by moving for civil contempt (and/or through other collection 4 procedures authorized by law) at any time after one year following entry of this Final 5 Judgment. 6 VI. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for 7 8 purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 9 11 U.S.C. §523, the allegations in the complaint are true and admitted by Defendants, 10 and further, any debt for disgorgement, prejudgment interest, civil penalty or other 11 amounts due by Defendants under this Final Judgment or any other judgment, order, 12 consent order, decree or settlement agreement entered in connection with this 13 proceeding, is a debt for the violation by Defendants of the federal securities laws or 14 any regulation or order issued under such laws, as set forth in Section 523(a)(19) of 15 the Bankruptcy Code, 11 U.S.C. §523(a)(19). 16 VII. 17 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the 18 Consent is incorporated herein with the same force and effect as if fully set forth 19 herein, and that Defendant shall comply with all of the agreements set forth therein. 20 VIII. 21 IT IS FURTHER ORDERED that this Court shall retain jurisdiction over this 22 action for the purpose of enforcing the terms of this Judgment and implementing and 23 carrying out the terms of all orders and decrees which may be entered herein and to 24 entertain any suitable application or motion for additional relief within the 25 jurisdiction of this Court. 26 /// 27 /// 28 /// 5 1 IX. 2 There being no just reason for delay, pursuant to Rule 54(b) of the Federal 3 Rules of Civil Procedure, the Clerk is ordered to enter this Judgment forthwith and 4 without further notice. 5 6 IT IS SO ORDERED. 7 8 Dated: November 19, 2018 9 ____________________________________ Percy Anderson UNITED STATES DISTRICT JUDGE 10 11 12 Presented by: 13 14 15 16 /s/ Donald W. Searles Donald W. Searles Attorney for Plaintiff Securities and Exchange Commission 17 18 19 20 21 22 23 24 25 26 27 28 6
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