Securities and Exchange Commission v. High Park Investment Group Inc et al, No. 8:2005cv01090 - Document 224 (C.D. Cal. 2008)
Court Description: ORDER RE MODIFIED PRELIMINARY INJUNCTION by Judge Cormac J. Carney. This matter cam before the Court upon Plaintiff Securities and Exchange Commission's Application for Limited Relief From Stay For Modifiation of Preliminary Injunction and Entr y of Final Judgment Agaisnt High Park Investment Group and Harbor Financial Investment Group 221 . IT IS ORDERED that the Commission's request for a modified preliminary injunction and orders: (1) Freezing Assets; and (2) Prohibiting the Destruction of Documents is GRANTED. (See Order for further details) (db)
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Securities and Exchange Commission v. High Park Investment Group Inc et al 1 2 3 4 5 6 7 8 Doc. 224 JOHN M. MCCOY III, Cal. Bar No. 166244 E-mail: mccoyj@sec.gov LORRAINE B. ECHAVARRIA, Cal. Bar No. 191860 E-mail: echavarrial@sec.gov WILLIAM G. BERRY, Cal. Bar No. 206348 E-mail: berryw@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Rosalind R. Tyson, Acting Regional Director Michele Wein Layne, Associate Regional Director 5670 Wilshire Boulevard, 11th Floor Los Angeles, California 90036-3648 Telephone: (323) 965-3998 Facsimile: (323) 965-3908 9 11 UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 12 SOUTHERN DIVISION 10 13 SECURITIES AND EXCHANGE COMMISSION, 14 15 16 17 18 19 vs. Plaintiff, Case No. SACV05-1090 CJC (MLGx) [PROPOSED] ORDER RE: MODIFIED PRELIMINARY INJUNCTION HIGH PARK INVESTMENT GROUP, INC., a Nevada corporation, HARBOR FINANCIAL INVESTMENT GROUP, INC., a Nevada corporation, EDWARD R. SHOWALTER, Defendants. 20 21 22 23 24 25 26 27 28 This matter came before the Court upon Plaintiff Securities and Exchange Commission’s (“Commission”) Application For Limited Relief From Stay For Modification Of Preliminary Injunction and Entry Of Final Judgment Against High Park Investment Group and Harbor Financial Investment Group (the “Application”). The Court, having considered the Commission’s Application, the supporting Memorandum of Points and Authorities, Declaration and Exhibits, and all other Dockets.Justia.com 1 2 evidence and argument presented regarding the Application, finds that: A. of, this action. 3 4 This Court has jurisdiction over the parties to, and the subject matter B. The Commission filed an Ex Parte Application For A Temporary 5 Restraining Order and Orders: (1) Freezing Assets; (2) Appointing a 6 Temporary Receiver; (3) Repatriating Assets Of High Park Investment 7 Group, Inc. And Harbor Financial Investment Group, Inc.; (4) 8 Prohibiting The Destruction Of Documents; (5) Granting Expedited 9 Discovery; And Order To Show Cause Re Preliminary Injunction and Appointment of a Permanent Receiver (the “TRO Application”). 10 11 C. On November 9, 2005, the Court granted a temporary restraining order 12 and orders freezing assets, appointing a temporary receiver, 13 repatriating assets, prohibiting the destruction of documents, and 14 granting expedited discovery (the “November 9, 2005 TRO Order”). 15 D. As part of its November 9, 2005 TRO Order, the Court found good 16 cause exists to believe that defendants High Park, Harbor Financial, 17 and Showalter and each of them have engaged in, are engaging in, and 18 are about to engage in transactions, acts, practices and courses of 19 business that constitute violations of Section 17(a) of the Securities 20 Act of 1933 (the “Securities Act”), 15 U.S.C. § 77q(a), and Section 21 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), 22 15 U.S.C. § 78j(b) and Rule 10b 5 thereunder, 17 C.F.R. 23 E. As part of its November 9, 2005 TRO Order, the Court also found, 24 among other things, that the Commission has demonstrated a 25 probability of success on the merits; that there is the possibility of 26 dissipation of assets; and that the defendants High Park, Harbor 27 Financial, and Showalter will continue to engage in such violations to 28 the immediate and irreparable loss and damage to investors and to the 1 general public unless they are restrained and enjoined. 1 2 F. The Court set a hearing for December 16, 2005, at 3:30 p.m. and 3 ordered defendants High Park, Harbor Financial, and Showalter to 4 appear to show cause, if there be any, why a preliminary injunction 5 should not be granted in accordance with the prayer for relief 6 contained in the Complaint filed by the Commission. 7 G. As part of its November 9, 2005 TRO Order, the Court also appointed 8 Robb Evans & Associates LLC as the temporary receiver over 9 Defendants High Park and Harbor Financial. 10 H. Pursuant to a stipulation by the parties, the Court appointed Robb 11 Evans & Associates LLC as the permanent receiver on December 13, 12 2005 and issued a preliminary injunction against Showalter, High 13 Park, and Harbor Financial. 14 I. On January 11, 2007, the Court entered judgments against High Park 15 and Harbor Financial, permanently enjoining them from Sections 5(a), 16 5(c), and 17(a) of the Securities Act, 15 U.S.C. §§ 77e and 77q, and 17 Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 18 promulgated thereunder, 17 C.F.R. § 240.10b-5. 19 J. LLC of its duties as receiver. 20 21 22 23 24 On February 26, 2007, the Court discharged Robb Evans & Associates K. Defendant Showalter does not oppose the Commission’s Application for the following order: ORDER The Court, having considered the Commission’s Application, the supporting 25 memoranda of points and authorities, declaration and exhibits, and all other 26 evidence and argument presented regarding the Application, and finding that Court 27 has jurisdiction over the parties to, and the subject matter of, this action, that the 28 Commission has demonstrated a probability of success on the merits and a 2 1 possibility of dissipation of assets in this case, IT IS HEREBY ORDERED, for 2 good cause shown, as follows: I. 3 4 IT IS ORDERED that the Commission’s request for a modified preliminary 5 injunction and orders: (1) Freezing Assets; and (2) Prohibiting the Destruction of 6 Documents is hereby GRANTED. 7 II. 8 IT IS FURTHER ORDERED that defendant Showalter, and his agents, 9 trustees, servants, employees, attorneys, accountants, and affiliates, and those 10 persons in active concert or participation with him, who receive actual notice of 11 this Order, by personal service or otherwise, and each of them, be and hereby are 12 preliminarily restrained and enjoined from, directly or indirectly, making use of 13 any means or instruments of transportation or communication in interstate 14 commerce or of the mails, to sell, to offer to sell, or to offer to buy any security, or 15 carrying or causing any security to be carried through the mails or in interstate 16 commerce, by any means or instruments of transportation, for the purpose of sale 17 or delivery after sale, unless a registration statement is in effect as to such security, 18 in violation of Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 19 77e(c). 20 III. 21 IT IS FURTHER ORDERED that defendant Showalter, and his agents, 22 trustees, servants, employees, attorneys, accountants, and affiliates, and those 23 persons in active concert or participation with him, who receive actual notice of 24 this Order, by personal service or otherwise, and each of them, be and hereby are 25 preliminarily restrained and enjoined from, directly or indirectly, in the offer or 26 sale of any securities, by the use of any means or instruments of transportation or 27 communication in interstate commerce or by use of the mails: 28 A. employing any device, scheme or artifice to defraud; 3 1 B. obtaining money or property by means of any untrue statement of a 2 material fact or any omission to state a material fact necessary in order 3 to make the statements made, in light of the circumstances under 4 which they were made, not misleading; or 5 C. engaging in any transaction, practice, or course of business which 6 operates or would operate as a fraud or deceit upon the purchaser in 7 violation of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a). 8 IV. 9 IT IS FURTHER ORDERED that defendant Showalter, and his agents, 10 trustees, servants, employees, attorneys, accountants, and affiliates, and those 11 persons in active concert or participation with him, who receive actual notice of 12 this Order, by personal service or otherwise, and each of them, be and hereby are 13 preliminarily restrained and enjoined from, directly or indirectly, in connection 14 with the purchase or sale of any security, by the use of any means or 15 instrumentality of interstate commerce, or of the mails, or of any facility of any 16 national securities exchange: 17 A. employing any device, scheme or artifice to defraud; 18 B. making any untrue statement of a material fact or omitting to state a 19 material fact necessary in order to make the statements made, in the 20 light of the circumstances under which they were made, not 21 misleading; or 22 C. engaging in any practice, or course of business which operates or 23 would operate as a fraud or deceit upon any person in violation of 24 Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b 5 25 thereunder, 17 C.F.R. § 240.10b 5. 26 V. 27 IT IS FURTHER ORDERED that, except as otherwise ordered by this 28 Court, defendants High Park, Harbor Financial, and Showalter, and their officers, 4 1 agents, servants, employees, attorneys, subsidiaries, and affiliates, and those 2 persons in active concert or participation with any of them, who receive actual 3 notice of this Order, by personal service or otherwise, and each of them, be and 4 hereby are preliminarily restrained and enjoined from, directly or indirectly, 5 transferring, assigning, selling, hypothecating, changing, wasting, dissipating, 6 converting, concealing, encumbering, or otherwise disposing of, in any manner, 7 any funds, assets, securities, claims, negotiable instruments, or other real or 8 personal property, including any notes or deeds of trust or other interests in real 9 property, wherever located, of defendants High Park, Harbor Financial, and 10 Showalter, and their subsidiaries and affiliates, whether owned by, controlled by, 11 managed by or in the possession or custody of any of them, and from transferring, 12 encumbering, dissipating, incurring charges or cash advances on any debit or credit 13 card or credit arrangement, of defendants High Park, Harbor Financial, and 14 Showalter. VI. 15 IT IS FURTHER ORDERED that except as otherwise ordered by this Court, 16 17 an immediate freeze shall be placed on all monies and assets (with an allowance 18 for necessary and reasonable living expenses to be granted only upon good cause 19 shown by application to the Court with notice to and an opportunity for the 20 Commission to be heard) in all accounts at any bank, financial institution, or 21 brokerage firm, all certificates of deposit, and other funds or assets, held in the 22 name of, for the benefit of, or over which signatory authority is held by High Park, 23 Harbor Financial, Showalter, or any trust, partnership, joint venture, person or 24 entity affiliated with any of the defendants, including, but not limited to, the 25 accounts set forth below: 26 // 27 // 28 // 5 1 Bank Name Account Name Account No(s). 2 Washington Mutual Bank High Park Investment 098 104768 4 Group, Inc. 098 104767 5 3 4 098 104767 6 5 098 104769 2 6 7 Washington Mutual Bank 8 9 Harbor Financial Investment 098 499206 3 Group, Inc. Wells Fargo Bank Edward R. Showalter 874 3112297 Wells Fargo Bank International Financial 201 8218651 12 Group, Inc., dba IFG 201 8218404 13 Goldstar Cement Co. 10 11 14 15 VII. IT IS FURTHER ORDERED that no officer, agent, servant, employee, or 16 attorney of High Park or Harbor Financial, or their subsidiaries or affiliates, shall 17 take any action or purport to take any action, in the name of or on behalf of High 18 Park or Harbor Financial, or any of their subsidiaries and affiliates, without the 19 written consent of the permanent receiver or order of this Court. 20 21 VIII. IT IS FURTHER ORDERED that representatives of the Commission are 22 authorized to have continuing access to inspect or copy any or all of the corporate 23 books and records and other documents of High Park, Harbor Financial, and their 24 subsidiaries and affiliates, and continuing access to inspect their funds, property, 25 assets, negotiable instruments, and collateral, wherever located. 26 IX. 27 IT IS FURTHER ORDERED that, except as otherwise ordered by this 28 Court, defendants High Park, Harbor Financial, and Showalter, and their officers, 6 1 agents, servants, employees, attorneys, subsidiaries, and affiliates, and those 2 persons in active concert or participation with any of them, who receive actual 3 notice of this Order, by personal service or otherwise, and each of them, be and 4 hereby are preliminarily restrained and enjoined from, directly or indirectly: 5 destroying, mutilating, concealing, transferring, altering, or otherwise disposing of, 6 in any manner, any documents, which includes all books, records, computer 7 programs, computer files, computer printouts, correspondence, memoranda, 8 brochures, or any other documents of any kind in their possession, custody, or 9 control, however created, produced, or stored (manually, mechanically, 10 electronically, or otherwise), pertaining in any manner to defendants High Park, 11 Harbor Financial, and Showalter. 12 13 X. IT IS FURTHER ORDERED that this Court shall retain jurisdiction over 14 this action for the purpose of implementing and carrying out the terms of all orders 15 and decrees which may be entered herein and to entertain any suitable application 16 or motion for additional relief within the jurisdiction of this Court. 17 IT IS SO ORDERED. 18 19 20 DATED: October 20, 2008 _____________________________ UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 7
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