U.S. Securities and Exchange Commission v. Patrick S. Carter et al, No. 8:2016cv02070 - Document 93 (C.D. Cal. 2019)
Court Description: FINAL JUDGMENT AS TO DEFENDANTS MARTIN J. KINCHLOE AND WEST COAST COMMODITIES, LLC 90 by Judge James V. Selna. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants are liable, jointly and severally, for disgorgement of $1,10 6,937, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $120,007, for a total of $1,226,944. Defendants shall satisfy this joint and several obl igation by paying $1,226,944 to the Securities and Exchange Commission within 14 days after entry of this Final Judgment. Defendants may transmit payment electronically to the SEC, which will provide detailed ACH transfer/Fedwire instructions upon request. (SEE JUDGMENT FOR FURTHER DETAILS.0 (es)
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U.S. Securities and Exchange Commission v. Patrick S. Carter et al Doc. 93 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 CENTRAL DISTRICT OF CALIFORNIA 8 Southern Division 9 10 11 SECURITIES AND EXCHANGE COMMISSION, 12 Plaintiff, 13 14 15 16 17 18 19 vs. Case No. 8:16-CV-02070-JVS-DFM FINAL JUDGMENT AS TO DEFENDANTS MARTIN J. KINCHLOE AND WEST COAST COMMODITIES, LLC PATRICK S. CARTER, 808 RENEWABLE ENERGY CORPORATION, 808 INVESTMENTS, LLC, MARTIN J. KINCHLOE, PETER J. KIRKBRIDE, WEST COAST COMMODITIES, LLC, THOMAS A. FLOWERS, and T.A. FLOWERS LLC, Defendants. 20 21 22 23 24 25 26 27 28 Dockets.Justia.com 1 The Securities and Exchange Commission having filed a Complaint and 2 defendant Martin J. Kinchloe (“Kinchloe”) having entered a general appearance, and 3 defendant West Coast Commodities, LLC (“WCC”) (together with Kinchloe, 4 “Defendants”) having had its default entered; and both Defendants having consented 5 to the Court’s jurisdiction over Defendants and the subject matter of this action, 6 consented to entry of this Final Judgment without admitting or denying the 7 allegations of the Complaint (except as to jurisdiction and except as otherwise 8 provided herein in paragraph X), waived findings of fact and conclusions of law; and 9 waived any right to appeal from this Final Judgment: I. 10 11 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants 12 are permanently restrained and enjoined from violating, directly or indirectly, Section 13 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 14 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using 15 any means or instrumentality of interstate commerce, or of the mails, or of any 16 facility of any national securities exchange, in connection with the purchase or sale of 17 any security: 18 (a) to employ any device, scheme, or artifice to defraud; 19 (b) to make any untrue statement of a material fact or to omit to state a 20 material fact necessary in order to make the statements made, in the light 21 of the circumstances under which they were made, not misleading; or 22 23 (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person. 24 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 25 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 26 binds the following who receive actual notice of this Final Judgment by personal 27 service or otherwise: (a) Defendants’ officers, agents, servants, employees, and 28 attorneys; and (b) other persons in active concert or participation with Defendants or 1 1 with anyone described in (a). II. 2 3 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 4 Defendants are permanently restrained and enjoined from violating Section 17(a) of 5 the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q(a)] in the offer or 6 sale of any security by the use of any means or instruments of transportation or 7 communication in interstate commerce or by use of the mails, directly or indirectly: 8 (a) to employ any device, scheme, or artifice to defraud; 9 (b) to obtain money or property by means of any untrue statement of a 10 material fact or any omission of a material fact necessary in order to 11 make the statements made, in light of the circumstances under which 12 they were made, not misleading; or 13 (c) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. 14 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). III. 21 22 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 23 Defendants are permanently restrained and enjoined from violating Section 5 of the 24 Securities Act [15 U.S.C. § 77e] by, directly or indirectly, in the absence of any 25 applicable exemption: 26 (a) Unless a registration statement is in effect as to a security, making use of 27 any means or instruments of transportation or communication in 28 interstate commerce or of the mails to sell such security through the use 2 or medium of any prospectus or otherwise; 1 2 (b) Unless a registration statement is in effect as to a security, carrying or 3 causing to be carried through the mails or in interstate commerce, by any 4 means or instruments of transportation, any such security for the purpose 5 of sale or for delivery after sale; or 6 (c) Making use of any means or instruments of transportation or 7 communication in interstate commerce or of the mails to offer to sell or 8 offer to buy through the use or medium of any prospectus or otherwise 9 any security, unless a registration statement has been filed with the 10 Commission as to such security, or while the registration statement is the 11 subject of a refusal order or stop order or (prior to the effective date of 12 the registration statement) any public proceeding or examination under 13 Section 8 of the Securities Act [15 U.S.C. § 77h]. 14 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 15 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 16 binds the following who receive actual notice of this Final Judgment by personal 17 service or otherwise: (a) Defendants’ officers, agents, servants, employees, and 18 attorneys; and (b) other persons in active concert or participation with Defendants or 19 with anyone described in (a). 20 IV. 21 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 22 Defendants are permanently restrained and enjoined from violating Section 15(a) of 23 the Exchange Act [15 U.S.C. § 78o(a)] by, directly or indirectly, in the absence of 24 any applicable exemption, making use of the mails or any means or instrumentality of 25 interstate commerce to effect any transactions in, or to induce or attempt to induce the 26 purchase or sale of, any security (other than an exempted security or commercial 27 paper, bankers’ acceptances, or commercial bills) unless registered in accordance 28 with Section 15(b) of the Exchange Act [15 U.S.C. § 78o(b)]. 3 1 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 2 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 3 binds the following who receive actual notice of this Final Judgment by personal 4 service or otherwise: (a) Defendants’ officers, agents, servants, employees, and 5 attorneys; and (b) other persons in active concert or participation with Defendants or 6 with anyone described in (a). V. 7 8 9 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants are permanently restrained and enjoined from soliciting, accepting, or depositing any 10 monies from actual or prospective investors in connection with any offering of 11 securities, provided, however, that such injunction shall not prevent Defendants from 12 purchasing or selling securities listed on a national securities exchange for 13 Defendants’ own personal accounts. 14 VI. 15 IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 16 Defendants are permanently barred from participating in an offering of penny stock, 17 including engaging in activities with a broker, dealer, or issuer for purposes of 18 issuing, trading, or inducing or attempting to induce the purchase or sale of any penny 19 stock. A penny stock is any equity security that has a price of less than five dollars, 20 except as provided in Rule 3a51-1 under the Exchange Act [17 C.F.R. 240.3a51-1]. 21 22 VII. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 23 Defendants are liable, jointly and severally, for disgorgement of $1,106,937, 24 representing profits gained as a result of the conduct alleged in the Complaint, 25 together with prejudgment interest thereon in the amount of $120,007, for a total of 26 $1,226,944. Defendants shall satisfy this joint and several obligation by paying 27 $1,226,944 to the Securities and Exchange Commission within 14 days after entry of 28 this Final Judgment. Defendants may transmit payment electronically to the SEC, 4 1 which will provide detailed ACH transfer/Fedwire instructions upon request. 2 Payment may also be made directly from a bank account via Pay.gov through the 3 SEC website at http://www.sec.gov/about/offices/ofm.htm. Defendants may also pay 4 by certified check, bank cashier’s check, or United States postal money order payable 5 to the Securities and Exchange Commission, which shall be delivered or mailed to 6 Enterprise Services Center 7 Accounts Receivable Branch 8 6500 South MacArthur Boulevard 9 Oklahoma City, OK 73169 10 and shall be accompanied by a letter identifying the case title, civil action number, 11 and name of this Court; Kinchloe or WCC as a defendant in this action; and 12 specifying that payment is made pursuant to this Final Judgment. 13 Defendants shall simultaneously transmit photocopies of evidence of payment 14 and case identifying information to the SEC’s counsel in this action. By making 15 these payments, Defendants relinquish all legal and equitable right, title, and interest 16 in such funds and no part of the funds shall be returned to Defendants. 17 The SEC shall hold the funds (collectively, the “Fund”) and may propose a 18 plan to distribute the Fund subject to the Court’s approval. The Court shall retain 19 jurisdiction over the administration of any distribution of the Fund. If the SEC staff 20 determines that the Fund will not be distributed, the SEC shall send the funds paid 21 pursuant to this Final Judgment to the United States Treasury. 22 The SEC may enforce the Court’s judgment for disgorgement and prejudgment 23 interest by moving for civil contempt (and/or through other collection procedures 24 authorized by law) at any time after 14 days following entry of this Final Judgment. 25 Defendants shall pay post-judgment interest on any delinquent amounts pursuant to 26 28 U.S.C. § 1961. 27 28 5 VIII. 1 2 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that: 3 (i) Kinchloe shall pay a civil penalty in the amount of $160,000 to the 4 Securities and Exchange Commission pursuant to Section 20(d) of the Securities Act 5 [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 6 78u(d)(3)]. Kinchloe shall make this payment within 14 days after entry of this Final 7 Judgment; and 8 (ii) 9 WCC shall pay a civil penalty in the amount of $775,000 to the Securities and Exchange Commission pursuant to Section 20(d) of the Securities Act 10 [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 11 78u(d)(3)]. WCC shall make this payment within 14 days after entry of this Final 12 Judgment 13 Defendants may transmit payment electronically to the SEC, which will 14 provide detailed ACH transfer/Fedwire instructions upon request. Payment may also 15 be made directly from a bank account via Pay.gov through the SEC website at 16 http://www.sec.gov/about/offices/ofm.htm. Defendants may also pay by certified 17 check, bank cashier’s check, or United States postal money order payable to the 18 Securities and Exchange Commission, which shall be delivered or mailed to 19 Enterprise Services Center 20 Accounts Receivable Branch 21 6500 South MacArthur Boulevard 22 Oklahoma City, OK 73169 23 and shall be accompanied by a letter identifying the case title, civil action number, 24 and name of this Court; Kinchloe or WCC as a defendant in this action; and 25 specifying that payment is made pursuant to this Final Judgment. 26 Defendants shall simultaneously transmit photocopies of evidence of payment 27 and case identifying information to the SEC’s counsel in this action. By making 28 these payments, Defendants relinquish all legal and equitable right, title, and interest 6 1 in such funds and no part of the funds shall be returned to Defendants. The SEC shall 2 send the funds paid pursuant to this Final Judgment to the United States Treasury. 3 Defendants shall pay post-judgment interest on any delinquent amounts pursuant to 4 28 U.S.C. § 1961. IX. 5 6 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the 7 Consent of Defendants Martin J. Kinchloe and West Coast Commodities, LLC to 8 Entry of Final Judgment is incorporated herein with the same force and effect as if 9 fully set forth herein, and that Defendants shall comply with all of the undertakings 10 and agreements set forth therein. X. 11 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, 14 11 U.S.C. §523, the allegations in the complaint are true and admitted by Defendants, 15 and further, any debt for disgorgement, prejudgment interest, civil penalty or other 16 amounts due by Defendants under this Final Judgment or any other judgment, order, 17 consent order, decree or settlement agreement entered in connection with this 18 proceeding, is a debt for the violation by Defendants of the federal securities laws or 19 any regulation or order issued under such laws, as set forth in Section 523(a)(19) of 20 the Bankruptcy Code, 11 U.S.C. §523(a)(19). XI. 21 22 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court 23 shall retain jurisdiction of this matter for the purposes of enforcing the terms of this 24 Final Judgment. 25 26 27 28 7 1 XII. 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 Final Judgment forthwith 4 and without further notice. 5 6 7 8 Dated: December 11, 2019 ________________________________ HON. JAMES V. SELNA UNITED STATES DISTRICT JUDGE 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8
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