Securities and Exchange Commission v. Craig Rumbaugh et al, No. 5:2019cv01517 - Document 34 (C.D. Cal. 2020)
Court Description: FINAL JUDGMENT by Judge Philip S. Gutierrez 31 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable, jointly and severally with Defendants Craig Rumbaugh and Desert Strategic Equity, LLC, for disgorgement of $676,000, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $137,808.31, for a total of $813,808.31. Defendant shall satisfy this obligation by paying $813,808.31 to the Securities and Exchange Commission within 14 days after entry of final judgment. (See document for further details) (yl)
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Securities and Exchange Commission v. Craig Rumbaugh et al Doc. 34 Case 5:19-cv-01517-PSG-SP Document 31-1 Filed 11/18/20 Page 1 of 9 Page ID #:230 1 2 3 4 5 6 7 DONALD W. SEARLES (Cal. Bar No. 135705) Email: searlesd@sec.gov M. LANCE JASPER (Cal. Bar No. 244516) Email: jasperml@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director Alka N. Patel, Associate Regional Director Amy J. Longo, Regional Trial Counsel 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 11/19/2020 LINK #31 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 13 SECURITIES AND EXCHANGE COMMISSION, Plaintiff, 14 15 16 17 18 19 vs. Case No. CV 5:19-CV-01517 -PSG [PROPOSED] FINAL JUDGMENT AS TO DEFENDANT RUMBAUGH FINANCIAL, INC. CRAIG RUMBAUGH, RUMBAUGH FINANCIAL, INC, AND DESERT STRATEGIC EQUITY, LLC, Defendants. 20 21 22 23 24 25 26 27 28 Dockets.Justia.com Case 5:19-cv-01517-PSG-SP Document 31-1 Filed 11/18/20 Page 2 of 9 Page ID #:231 1 The Securities and Exchange Commission having filed a Complaint and 2 Defendant Rumbaugh Financial, Inc. having entered a general appearance; consented 3 to the Court’s jurisdiction over Defendant and the subject matter of this action; 4 consented to entry of this Final Judgment without admitting or denying the 5 allegations of the Complaint (except as to jurisdiction and except as otherwise 6 provided herein in paragraph VIII); waived findings of fact and conclusions of law; 7 and waived any right to appeal from this Final Judgment: 8 9 I. IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Defendant is 10 permanently restrained and enjoined from violating Sections 206(1) and (2) of the 11 Advisers Act [15 U.S.C. §§ 80b-6(1) & 80b-6(2)], by directly or indirectly: 12 13 14 1. employing any device, scheme or artifice to defraud any client or prospective client; and 2. engaging in any transaction, practice, or course of business which 15 operates or would operate as a fraud or deceit upon any client or prospective client; 16 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 17 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 18 binds the following who receive actual notice of this l Judgment by personal service 19 or otherwise: (a) Defendant’s officers, agents, servants, employees, and attorneys; 20 and (b) other persons in active concert or participation with Defendant or with anyone 21 described in (a). 22 II. 23 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 24 Defendant is permanently restrained and enjoined from violating Section 17(a) of the 25 Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q(a)] in the offer or sale 26 of any security by the use of any means or instruments of transportation or 27 communication in interstate commerce or by use of the mails, directly or indirectly: 28 (a) to employ any device, scheme, or artifice to defraud; 1 Case 5:19-cv-01517-PSG-SP Document 31-1 Filed 11/18/20 Page 3 of 9 Page ID #:232 1 (b) to obtain money or property by means of any untrue statement of a 2 material fact or any omission of a material fact necessary in order to 3 make the statements made, in light of the circumstances under which 4 they were made, not misleading; or 5 (c) 6 to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. 7 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 8 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 9 binds the following who receive actual notice of this Final Judgment by personal 10 service or otherwise: (a) Defendant’s officers, agents, servants, employees, and 11 attorneys; and (b) other persons in active concert or participation with Defendant or 12 with anyone described in (a). 13 14 III. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is 15 permanently restrained and enjoined from violating, directly or indirectly, Section 16 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 17 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using 18 any means or instrumentality of interstate commerce, or of the mails, or of any 19 facility of any national securities exchange, in connection with the purchase or sale of 20 any security: 21 (a) to employ any device, scheme, or artifice to defraud; 22 (b) to make any untrue statement of a material fact or to omit to state a 23 material fact necessary in order to make the statements made, in the light 24 of the circumstances under which they were made, not misleading; or 25 26 (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person. 27 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 28 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 2 Case 5:19-cv-01517-PSG-SP Document 31-1 Filed 11/18/20 Page 4 of 9 Page ID #:233 1 binds the following who receive actual notice of this Final Judgment by personal 2 service or otherwise: (a) Defendant’s officers, agents, servants, employees, and 3 attorneys; and (b) other persons in active concert or participation with Defendant or 4 with anyone described in (a). 5 IV. 6 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 7 Defendant is permanently restrained and enjoined from violating Section 5(a) and (c) 8 of the Securities Act [15 U.S.C. § 77e(a) & (c)] by, directly or indirectly, in the 9 absence of any applicable exemption: 10 (a) Unless a registration statement is in effect as to a security, making use of 11 any means or instruments of transportation or communication in 12 interstate commerce or of the mails to sell such security through the use 13 or medium of any prospectus or otherwise; or 14 (c) Making use of any means or instruments of transportation or 15 communication in interstate commerce or of the mails to offer to sell or 16 offer to buy through the use or medium of any prospectus or otherwise 17 any security, unless a registration statement has been filed with the 18 Commission as to such security, or while the registration statement is 19 the subject of a refusal order or stop order or (prior to the effective date 20 of the registration statement) any public proceeding or examination 21 under Section 8 of the Securities Act [15 U.S.C. § 77h]. 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) Defendant’s officers, agents, servants, employees, and 26 attorneys; and (b) other persons in active concert or participation with Defendant or 27 with anyone described in (a). 28 3 Case 5:19-cv-01517-PSG-SP Document 31-1 Filed 11/18/20 Page 5 of 9 Page ID #:234 V. 1 2 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 3 and his agents, servants, employees, attorneys, and all persons in active concert or 4 participation with them who receive actual notice of this Judgment by personal 5 service or otherwise are permanently restrained and enjoined from violating, directly 6 or indirectly, Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a), which makes it 7 unlawful for any broker or dealer which is either a person other than a natural person 8 or a natural person, to make use of the mails or any means or instrumentality of 9 interstate commerce to effect any transactions in, or to induce or attempt to induce the 10 purchase or sale of, any security (other than an exempted security or commercial 11 paper, bankers' acceptances, or commercial bills) unless such broker or dealer is 12 registered in accordance with Section 15(b) of the Exchange Act, 15 U.S.C. § 78o(b). 13 VI. 14 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 15 Defendant is liable, jointly and severally with Defendants Craig Rumbaugh and 16 Desert Strategic Equity, LLC, for disgorgement of $676,000, representing profits 17 gained as a result of the conduct alleged in the Complaint, together with prejudgment 18 interest thereon in the amount of $137,808.31, for a total of $813,808.31. 19 Defendant shall satisfy this obligation by paying $813,808.31 to the Securities and 20 Exchange Commission within 14 days after entry of final judgment. 21 Defendant may transmit payment electronically to the Commission, which will 22 provide detailed ACH transfer/Fedwire instructions upon request. Payment may also 23 be made directly from a bank account via Pay.gov through the SEC website at 24 http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by certified 25 check, bank cashier’s check, or United States postal money order payable to the 26 Securities and Exchange Commission, which shall be delivered or mailed to 27 28 Enterprise Services Center Accounts Receivable Branch 6500 South MacArthur Boulevard 4 Case 5:19-cv-01517-PSG-SP Document 31-1 Filed 11/18/20 Page 6 of 9 Page ID #:235 1 Oklahoma City, OK 73169 2 and shall be accompanied by a letter identifying the case title, civil action number, 3 and name of this Court; [Defendant’s name] as a defendant in this action; and 4 specifying that payment is made pursuant to this Final Judgment. 5 Defendant 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, Defendant relinquishes all legal and equitable right, title, and 8 interest in such funds and no part of the funds shall be returned to Defendant. 9 The Commission shall hold the funds (collectively, the “Fund”) and may 10 propose a plan to distribute the Fund subject to the Court’s approval. The Court shall 11 retain jurisdiction over the administration of any distribution of the Fund. If the 12 Commission staff determines that the Fund will not be distributed, the Commission 13 shall send the funds paid pursuant to this Final Judgment to the United States 14 Treasury. 15 The Commission may enforce the Court’s judgment for disgorgement and 16 prejudgment interest by moving for civil contempt (and/or through other collection 17 procedures authorized by law) at any time after 14 days following entry of this Final 18 Judgment]. Defendant shall pay post judgment interest on any delinquent amounts 19 pursuant to 28 U.S.C. § 1961. 20 VII. 21 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the 22 Consent is incorporated herein with the same force and effect as if fully set forth 23 herein, and that Defendant shall comply with all of the undertakings and agreements 24 set forth therein. 25 26 VIII. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for 27 purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 28 11 U.S.C. §523, the allegations in the complaint are true and admitted by Defendant, 5 Case 5:19-cv-01517-PSG-SP Document 31-1 Filed 11/18/20 Page 7 of 9 Page ID #:236 1 and further, any debt for disgorgement, prejudgment interest, civil penalty or other 2 amounts due by Defendant under this Final Judgment or any other judgment, order, 3 consent order, decree or settlement agreement entered in connection with this 4 proceeding, is a debt for the violation by Defendant of the federal securities laws or 5 any regulation or order issued under such laws, as set forth in Section 523(a)(19) of 6 the Bankruptcy Code, 11 U.S.C. §523(a)(19). 7 8 9 10 IX. 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 Final Judgment. 11 12 X. There being no just reason for delay, pursuant to Rule 54(b) of the Federal 13 Rules of Civil Procedure, the Clerk is ordered to enter this Final Judgment forthwith 14 and without further notice. 15 16 11/19/2020 Dated: ________________ 17 ________________________________ 18 UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 6 Case 5:19-cv-01517-PSG-SP Document 31-1 Filed 11/18/20 Page 8 of 9 Page ID #:237 PROOF OF SERVICE 1 2 I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. 3 4 6 On November 18, 2020, I caused to be served the document entitled [PROPOSED] FINAL JUDGMENT AS TO DEFENDANT RUMBAUGH FINANCIAL, INC. on all the parties to this action addressed as stated on the attached service list: 7 5 8 9 10 11 12 13 14 OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. 15 16 17 18 UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. 19 ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. 20 21 E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. 22 23 24 25 26 FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: November 18, 2020 /s/ Sarah Mitchell Sarah Mitchell 27 28 1 Case 5:19-cv-01517-PSG-SP Document 31-1 Filed 11/18/20 Page 9 of 9 Page ID #:238 2 SEC v. Rumbaugh, et al. United States District Court—Central District of California Case No. 5:19-cv-01517-PSG-SP 3 SERVICE LIST 1 4 5 6 7 Julie E. Kamps, Esq. (via ECF) 1600 Dove Street, Suite 250 Newport Beach, CA 92660 kamps@wpcfs.com Counsel for Defendants Craig Rumbaugh, Rumbaugh Financial, Inc., and Desert Strategic Equity, LLC 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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