Securities and Exchange Commission v. Robert S. Davis Jr. et al, No. 2:2018cv10481 - Document 198 (C.D. Cal. 2021)

Court Description: FINAL JUDGMENT AS TO DEFENDANT RICHARD FRITTS 187 by Judge Fernando M. Olguin. IT IS ORDERED, ADJUDGED, AND DECREED that Fritts is liable for a civil penalty in the amount of $100,000 pursuant to Section 20(d) of the Securities Act of 1933 and Section 21(d)(3) of the Securities Exchange Act of 1934. Defendant shall satisfy this obligation by paying $100,000 to the Securities and Exchange Commission within 30 days after entry of this Final Judgment. (iv)

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Securities and Exchange Commission v. Robert S. Davis Jr. et al 1 2 3 4 5 6 7 8 Doc. 198 CHRISTINE NESTOR, Fla. Bar No. 597211 Email: nestorc@sec.gov STEPHANIE N. MOOT, Fla. Bar No. 30377 Email: moots@sec.gov ANDREW O. SCHIFF, Pa. Bar No. 43641 Email: schiffa@sec.gov Attorneys for Plaintiff Securities and Exchange Commission 801 Brickell Avenue, Suite 1950 Miami, FL 33131 Telephone: (305) 982-6300 Facsimile: (305) 516-4154 9 10 11 12 13 14 LOCAL COUNSEL DONALD W. SEARLES, Cal. Bar No. 135705 Email: searlesd@sec.gov Securities and Exchange Commission 444 S. Flower Street, Suite 900 Los Angeles, CA 90071 Telephone: (323) 965-3398 Facsimile: (213) 443-1904 15 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 16 17 18 19 CV 18-10481 FMO (JCx) SECURITIES AND EXCHANGE COMMISSION, Plaintiff, 20 21 22 23 FINAL JUDGMENT AS TO DEFENDANT RICHARD FRITTS vs. ROBERT DAVIS, JR., et al. 24 25 Defendants. 26 This cause comes before the Court upon the Unopposed Motion by Plaintiff 27 Securities and Exchange Commission for Entry of Final Judgments against Certain 28 Page 1 of 5 Dockets.Justia.com 1 Defendants (“Motion”). By the Consent attached hereto, and without admitting or denying 2 the allegations of the Amended Complaint (except as to subject matter and personal 3 jurisdiction, which are admitted, and except as provided in paragraph III herein), Richard 4 Fritts (“Fritts” or “Defendant”) has: entered a general appearance; consented to entry of 5 this Final Judgment; waived findings of fact and conclusions of law; and waived any right 6 to appeal from this Final Judgment. The Court finds that good cause exists for entry of the 7 Final Judgment. Accordingly, the Commission’s Motion is GRANTED. The Court 8 further orders as follows: 9 I. 10 CIVIL PENALTY 11 IT IS ORDERED, ADJUDGED, AND DECREED that Fritts is liable for a civil 12 penalty in the amount of $100,000 pursuant to Section 20(d) of the Securities Act of 1933 13 (“Securities Act”) and Section 21(d)(3) of the Securities Exchange Act of 1934 (“Exchange 14 Act”). Defendant shall satisfy this obligation by paying $100,000 to the Securities and 15 Exchange Commission within 30 days after entry of this Final Judgment. 16 Defendant may transmit payment electronically to the Commission, which will 17 provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be 18 made directly from a bank account via Pay.gov through the SEC website at 19 http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by certified check, 20 bank cashier’s check, or United States postal money order payable to the Securities and 21 Exchange Commission, which shall be delivered or mailed to 22 Enterprise Services Center 23 Accounts Receivable Branch 24 6500 South MacArthur Boulevard 25 Oklahoma City, OK 73169 26 and shall be accompanied by a letter identifying the case title, civil action number, and 27 name of this Court; Fritts as a defendant in this action; and specifying that payment is made 28 pursuant to this Final Judgment. Page 2 of 5 1 Defendant shall simultaneously transmit photocopies of evidence of payment and 2 case identifying information to the Commission’s counsel in this action. By making this 3 payment, Defendant relinquishes all legal and equitable right, title, and interest in such 4 funds and no part of the funds shall be returned to Defendant. 5 The Commission may enforce the Court’s judgment for penalties by the use of all 6 collection procedures authorized by law, including the Federal Debt Collection Procedures 7 Act, 28 U.S.C. § 3001 et seq., and moving for civil contempt for the violation of any Court 8 orders issued in this action. Defendant shall pay post judgment interest on any amounts 9 due after 30 days of the entry of this Final Judgment pursuant to 28 U.S.C. § 1961. The 10 Commission shall hold the funds, together with any interest and income earned thereon 11 (collectively, the “Fund”), pending further order of the Court. 12 The Commission may propose a plan to distribute the Fund subject to the Court’s 13 approval. Such a plan may provide that the Fund shall be distributed pursuant to the Fair 14 Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. The Court shall 15 retain jurisdiction over the administration of any distribution of the Fund and the Fund may 16 only be disbursed pursuant to an Order of the Court. 17 Regardless of whether any such Fair Fund distribution is made, amounts ordered to 18 be paid as civil penalties pursuant to this Judgment shall be treated as penalties paid to the 19 government for all purposes, including all tax purposes. To preserve the deterrent effect 20 of the civil penalty, Defendant shall not, after offset or reduction of any award of 21 compensatory damages in any Related Investor Action based on Defendant’s payment of 22 disgorgement in this action, argue that he is entitled to, nor shall he further benefit by, 23 offset or reduction of such compensatory damages award by the amount of any part of 24 Defendant’s payment of a civil penalty in this action (“Penalty Offset”). If the court in any 25 Related Investor Action grants such a Penalty Offset, Defendant shall, within 30 days after 26 entry of a final order granting the Penalty Offset, notify the Commission’s counsel in this 27 action and pay the amount of the Penalty Offset to the United States Treasury or to a Fair 28 Fund, as the Commission directs. Such a payment shall not be deemed an additional civil Page 3 of 5 1 penalty and shall not be deemed to change the amount of the civil penalty imposed in this 2 Judgment. For purposes of this paragraph, a “Related Investor Action” means a private 3 damages action brought against Defendant by or on behalf of one or more investors based 4 on substantially the same facts as alleged in the Complaint in this action. 5 II. 6 INCORPORATION OF CONSENT 7 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent 8 is incorporated herein with the same force and effect as if fully set forth herein, and that 9 Fritts shall comply with all of the undertakings and agreements set forth therein. 10 III. 11 BANKRUPTCY NONDISCHARGEABILITY 12 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for 13 purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 14 U.S.C. §523, the allegations in the complaint are true and admitted by Defendant, and 15 further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts 16 due by Defendant under this Final Judgment or any other judgment, order, consent order, 17 decree or settlement agreement entered in connection with this proceeding, is a debt for the 18 violation by Defendant of the federal securities laws or any regulation or order issued under 19 such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. 20 §523(a)(19). 21 22 IV. 23 RETENTION OF JURISDICTION 24 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court 25 shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final 26 Judgment. 27 28 Page 4 of 5

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