Securities and Exchange Commission v. Gregory Lamont Drake et al, No. 2:2020cv00405 - Document 89 (C.D. Cal. 2021)

Court Description: FINAL JUDGMENT AS TO DEFENDANT DAVID ALAN WOLFSON by Judge Mark C. Scarsi: Defendant David Alan Wolfson and his agents etc are permanently restrained and enjoined from violating, directly or indirectly, Section 15(a)(1) of the Exchange Act [15 U. S.C. 78o(a)(1)]. Defendant is ordered to pay disgorgement of $ 2,490,555.07, representing net profits gained and net losses avoided as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $ 426,602.09. The Court further imposes a civil penalty in the amount of $195,047.00 pursuant to Section 21(d)(3) of the Exchange Act, 15 U.S.C. 78u(d)(3). Defendant shall satisfy these obligations by paying the amount of disgorgement, pre- judgment interest, and civil penalty, totaling $3,112,204.16, to the Securities and Exchange Commission within 30 days after entry of this Final Judgment. (SEE DOCUMENT FOR OTHER SPECIFICS AND COMPLIANCE REQUIREMENTS AND DEADLINES). (MD JS-6. Case Terminated.). (lc) Modified on 10/7/2021 (lc).

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Securities and Exchange Commission v. Gregory Lamont Drake et al Doc. 89 1 JS-6 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 10 11 12 SECURITIES AND EXCHANGE COMMISSION, 13 14 15 Plaintiff, 19 20 Defendants. 17 18 FINAL JUDGMENT AS TO DEFENDANT DAVID ALAN WOLFSON vs. GREGORY LAMONT DRAKE, an individual; STEPHEN KENNETH GROSSMAN, an individual; STEPHEN SCOTT MOLESKI, an individual; JASON DAVID ST. AMOUR, an individual; and DAVID ALAN WOLFSON, an individual, 16 Case No.: 2:20-cv-00405-MCS-PLA 21 22 23 24 25 26 27 28 Dockets.Justia.com 1 This matter came before the Court on plaintiff United States Securities and 2 Exchange Commission’s (“Commission’s”) Motion for Monetary Remedies as to 3 Defendant David Alan Wolfson. The Court, having considered all the evidence 4 and arguments presented by the parties with regard to the Motion, Plaintiff’s 5 Memorandum of Points and Authorities in support of the Motion, all other 6 documents filed in support of the Motion, and the record in this action, finds that: 7 I. 8 IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the 9 Commission’s Motion for Monetary Remedies as to Defendant David Alan 10 Wolfson is GRANTED. 11 II. 12 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED 13 that Defendant is permanently restrained and enjoined from violating, directly or 14 indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange 15 Act”) [15 U.S.C. § 78j(b)] and Rule 10b 5 promulgated thereunder [17 C.F.R. § 16 240.10b 5], by using any means or instrumentality of interstate commerce, or of 17 the mails, or of any facility of any national securities exchange, in connection with 18 the purchase or sale of any security: 19 (a) to employ any device, scheme, or artifice to defraud; 20 (b) to make any untrue statement of a material fact or to omit to state a 21 material fact necessary in order to make the statements made, in the light of the 22 circumstances under which they were made, not misleading; or 23 24 (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person 25 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 26 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 27 binds the following who receive actual notice of this Judgment by personal service 28 or otherwise: (a) Defendant’s officers, agents, servants, employees, and attorneys; 1 1 and (b) other persons in active concert or participation with Defendant or with 2 anyone described in (a). 3 4 III. IT IS HEREBY FURTHER ORDERED, ADJUDGED AND DECREED 5 that Defendant is permanently restrained and enjoined from violating Section 17(a) 6 of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q(a)] in the 7 offer or sale of any security by the use of any means or instruments of 8 transportation or communication in interstate commerce or by use of the mails, 9 directly or indirectly: 10 (a) to employ any device, scheme, or artifice to defraud; 11 (b) to obtain money or property by means of any untrue statement of a 12 material fact or any omission of a material fact necessary in order to make the 13 statements made, in light of the circumstances under which they were made, not 14 misleading; or 15 (c) 16 to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. 17 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 18 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 19 binds the following who receive actual notice of this Judgment by personal service 20 or otherwise: (a) Defendant’s officers, agents, servants, employees, and attorneys; 21 and (b) other persons in active concert or participation with Defendant or with 22 anyone described in (a). 23 IV. 24 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED 25 that Defendant is permanently restrained and enjoined from violating, directly or 26 indirectly, Section 15(a)(1) of the Exchange Act [15 U.S.C. § 78o(a)(1)] by using 27 any means or instrumentality of interstate commerce, or of the mails, or of any 28 facility of any national securities exchange, to effect transactions in, or induce or 2 1 attempt to induce the purchase or sale of, securities while not registered with the 2 Commission as a broker or dealer or while not associated with an entity registered 3 with the Commission as a broker or dealer. 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 Judgment by personal service 7 or otherwise: (a) Defendant’s officers, agents, servants, employees, and attorneys; 8 and (b) other persons in active concert or participation with Defendant or with 9 anyone described in (a). 10 11 V. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED 12 that Defendant is permanently restrained and enjoined from, directly or indirectly, 13 including, but not limited to, through any entity owned or controlled by Defendant, 14 soliciting any person or entity to purchase or sell any security. 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 Judgment by personal service 18 or otherwise: (a) Defendant’s officers, agents, servants, employees, and attorneys; 19 and (b) other persons in active concert or participation with Defendant or with 20 anyone described in (a). 21 22 VI. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED 23 that Defendant is ordered to pay disgorgement of $2,490,555.07, representing net 24 profits gained as a result of the conduct alleged in the Complaint, together with 25 prejudgment interest thereon in the amount of $426,602.09. The Court further 26 imposes a civil penalty in the amount of $195,047 pursuant to Section 21(d)(3) of 27 the Exchange Act, 15 U.S.C. § 78u(d)(3). Defendant shall satisfy these obligations 28 by paying the amount of disgorgement, pre-judgment interest, and civil penalty, 3 1 totaling $ 3,112,204.16 to the Securities and Exchange Commission within 30 days 2 after entry of this Final Judgment. 3 Defendant may transmit payment electronically to the Commission, which 4 will provide detailed ACH transfer/Fedwire instructions upon request. Payment 5 may also be made directly from a bank account via Pay.gov through the SEC 6 website at http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by 7 certified check, bank cashier’s check, or United States postal money order payable 8 to the Securities and Exchange Commission, which shall be delivered or mailed to 9 Enterprise Services Center 10 Accounts Receivable Branch 11 6500 South MacArthur Boulevard 12 Oklahoma City, OK 73169 13 and shall be accompanied by a letter identifying the case title, civil action number, 14 and name of this Court; David Alan Wolfson as a defendant in this action; and 15 specifying that payment is made pursuant to this Final Judgment. 16 Defendant shall simultaneously transmit photocopies of evidence of 17 payment and case identifying information to the Commission’s counsel in this 18 action. By making this payment, Defendant relinquishes all legal and equitable 19 right, title, and interest in such funds and no part of the funds shall be returned to 20 Defendant. 21 The Commission shall hold the funds (collectively, the “Fund”) until further 22 order of this Court. The SEC may propose a plan to distribute the Fund subject to 23 the Court’s approval, and the Court shall retain jurisdiction over the administration 24 of any distribution of the Fund. 25 The Commission may enforce the Court’s judgment for disgorgement and 26 prejudgment interest by using all collection procedures authorized by law, 27 including, but not limited to, moving for civil contempt at any time after 30 days 28 following entry of this Final Judgment. 4 1 The Commission may enforce the Court’s judgment for penalties by the use 2 of all collection procedures authorized by law, including the Federal Debt 3 Collection Procedures Act, 28 U.S.C. § 3001 et seq., and moving for civil 4 contempt for the violation of any Court orders issued in this action. Defendant 5 shall pay post judgment interest on any amounts due after 30 days of the entry of 6 this Final Judgment pursuant to 28 U.S.C. § 1961. The Commission shall hold the 7 funds, together with any interest and income earned thereon (collectively, the 8 “Fund”), pending further order of the Court. 9 The Commission may propose a plan to distribute the Fund subject to the 10 Court’s approval. Such a plan may provide that the Fund shall be distributed 11 pursuant to the Fair Fund provisions of Section 308(a) of the Sarbanes-Oxley Act 12 of 2002. The Court shall retain jurisdiction over the administration of any 13 distribution of the Fund and the Fund may only be disbursed pursuant to an Order 14 of the Court. 15 Regardless of whether any such Fair Fund distribution is made, amounts 16 ordered to be paid as civil penalties pursuant to this Judgment shall be treated as 17 penalties paid to the government for all purposes, including all tax purposes. To 18 preserve the deterrent effect of the civil penalty, Defendant shall not, after offset or 19 reduction of any award of compensatory damages in any Related Investor Action 20 based on Defendant’s payment of disgorgement in this action, argue that he is 21 entitled to, nor shall he further benefit by, offset or reduction of such compensatory 22 damages award by the amount of any part of Defendant’s payment of a civil 23 penalty in this action (“Penalty Offset”). If the court in any Related Investor 24 Action grants such a Penalty Offset, Defendant shall, within 30 days after entry of 25 a final order granting the Penalty Offset, notify the Commission’s counsel in this 26 action and pay the amount of the Penalty Offset to the United States Treasury or to 27 a Fair Fund, as the Commission directs. Such a payment shall not be deemed an 28 additional civil penalty and shall not be deemed to change the amount of the civil 5 1 penalty imposed in this Judgment. For purposes of this paragraph, a “Related 2 Investor Action” means a private damages action brought against Defendant by or 3 on behalf of one or more investors based on substantially the same facts as alleged 4 in the Complaint in this action. 5 6 VII. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED 7 that, solely for purposes of exceptions to discharge set forth in Section 523 of the 8 Bankruptcy Code, 11 U.S.C. §523, the allegations in the complaint are true and 9 admitted by Defendant, and further, any debt for disgorgement, prejudgment 10 interest, civil penalty or other amounts due by Defendant under this Final 11 Judgment or any other judgment, order, consent order, decree or settlement 12 agreement entered in connection with this proceeding, is a debt for the violation by 13 Defendant of the federal securities laws or any regulation or order issued under 14 such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. 15 §523(a)(19). 16 17 VIII. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED 18 that this Court shall retain jurisdiction of this matter for the purposes of enforcing 19 the terms of this Final Judgment. 20 21 IX. There being no just reason for delay, pursuant to Rule 54(b) of the Federal 22 Rules of Civil Procedure, the Clerk is ordered to enter this Final Judgment 23 forthwith and without further notice. 24 Dated: October 7, 2021 25 MARK C. SCARSI UNITED STATES DISTRICT JUDGE 26 27 28 6

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