Securities and Exchange Commission v. Thomas et al, No. 2:2019cv01515 - Document 46 (D. Nev. 2019)
Court Description: AMENDED ORDER Granting in part 6 Motion for Preliminary Injunction. Signed by Judge Andrew P. Gordon on 12/6/2019. (Copies have been distributed pursuant to the NEF - MR)
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Securities and Exchange Commission v. Thomas et al Doc. 46 1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 SECURITIES AND EXCHANGE COMMISSION, 4 Plaintiff 5 v. 6 JOHN F. THOMAS [aka JOHN RODGERS, 7 JONATHAN WEST, JOHN FRANK, and JOHN MARSHALL], THOMAS BECKER, 8 DOUGLAS MARTIN, PAUL HANSON, DAMIAN OSTERTAG, EINSTEIN SPORTS 9 ADVISORY, LLC, QSA, LLC, VEGAS BASKETBALL CLUB, LLC, VEGAS 10 FOOTBALL CLUB, LLC, WELLINGTON SPORTS CLUB, LLC, WELSCORP, INC., 11 and EXECUTIVE FINANCIAL SERVICES, INC., 12 Defendants 13 14 Case No.: 2:19-cv-01515-APG-VCF AMENDED1 PRELIMINARY INJUNCTION AND ORDER (1) FREEZING ASSETS, (2) PROHIBITING THE DESTRUCTION OF DOCUMENTS, AND (3) REQUIRING ACCOUNTINGS [ECF No. 6] Plaintiff Securities and Exchange Commission (SEC) filed a motion for preliminary 15 injunction. ECF No. 6. After briefing by the parties and a hearing on December 4, 2019, I find as 16 follows: A. 17 This court has jurisdiction over the parties to, and the subject matter of, this action. 18 B. 19 Good cause exists to believe that: (1) Defendants Douglas Martin, Executive Financial Services, Inc. (EFS), and 20 Paul Hanson, have engaged in, are engaging in, and are about to engage in 21 transactions, acts, practices and courses of business that constitute 22 23 1 This amended injunction and order deletes references to defendants Thomas and Becker from section X. They were included in the original injunction due to my clerical error. Dockets.Justia.com 1 violations of Sections 5(a) and 5(c) of the Securities Act of 1933 2 (“Securities Act”) (15 U.S.C. §§ 77e(a), 77e(c)); 3 (2) Defendants John F. Thomas, Thomas Becker, Wellington Sports Club, LLC (Wellington), Welscorp, Inc. (Welscorp), Einstein Sports Advisory, 4 Ltd. (ESA), Quantum Sports Advisory, LLC (QSA), Vegas Basketball 5 Club, LLC (VBC) and Vegas Football Club, LLC (VFC) (collectively, the 6 Six Entities) have engaged in, are engaging in, and are about to engage in 7 transactions, acts, practices and courses of business that constitute 8 violations of Section 17(a) of the Securities Act (15 U.S.C. § 77q(a)) and 9 Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) 10 (15 U.S.C. § 78j(b)) and Rule 10b-5 thereunder (17 C.F.R. § 240.10b-5); 11 and (3) 12 Defendants Martin, Hanson, and EFS have engaged in, are engaging in, and are about to engage in transactions, acts, practices and courses of 13 business that constitute violations of Section 15(a) of the Exchange Act 14 15 (15 U.S.C. §§ 78o(a)). C. The SEC has demonstrated (1) a prima facie case that one or more violations of 16 the securities laws have occurred and (2) a reasonable likelihood that the 17 violations will be repeated. I. 18 19 I HEREBY GRANT that the SEC’s Motion (ECF No. 6) in part. II. 20 I FURTHER ORDER that defendants Martin, Hanson, and EFS, and their officers, 21 agents, servants, employees, attorneys, subsidiaries and affiliates, and those persons in active 22 concert or participation with any of them who receive actual notice of this Order, by personal 23 service or otherwise, are preliminarily enjoined from, directly or indirectly, in the absence of any applicable exemption: 2 1 A. unless a registration statement is in effect as to a security, making use of any 2 means or instruments of transportation or communication in interstate commerce 3 or of the mails to sell such security through the use or medium of any prospectus 4 or otherwise; 5 B. unless a registration statement is in effect as to a security, carrying or causing to be carried through the mails or in interstate commerce, by any means or 6 instruments of transportation, any such security for the purpose of sale or for 7 8 delivery after sale; or C. 9 making use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy through the use 10 or medium of any prospectus or otherwise any security, unless a registration 11 statement has been filed with the SEC as to such security, or while the registration statement is the subject of a refusal order or stop order or (prior to the effective 12 date of the registration statement) any public proceeding or examination under 13 Section 8 of the Securities Act, 15 U.S.C. § 77h in violation of Section 5 of the 14 Securities Act, 15 U.S.C. § 77e. 15 16 III. IT IS FURTHER ORDERED that defendants Thomas, Becker, Wellington, Welscorp, 17 ESA, QSA, VBC, VFC, and their officers, agents, servants, employees, attorneys, subsidiaries 18 and affiliates, and those persons in active concert or participation with any of them, who receive 19 actual notice of this Order, by personal service or otherwise, are preliminarily enjoined from, directly or indirectly, in the offer or sale of any securities, by the use of any means or instruments 20 of transportation or communication in interstate commerce or by the use of the mails: 21 22 23 A. employing any device, scheme or artifice to defraud; B. obtaining money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements 3 1 made, in light of the circumstances under which they were made, not misleading; 2 3 or C. would operate as a fraud or deceit upon the purchaser; 4 5 engaging in any transaction, practice, or course of business which operates or in violation of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a) IV. 6 IT IS FURTHER ORDERED that defendants Thomas, Becker, Wellington, Welscorp, 7 8 ESA, QSA, VBC, VFC, and their officers, agents, servants, employees, attorneys, subsidiaries and affiliates, and those persons in active concert or participation with any of them, who receive 9 actual notice of this Order, by personal service or otherwise, are preliminarily enjoined from, 10 directly or indirectly, in connection with the purchase or sale of any security, by the use of any 11 means or instrumentality of interstate commerce, or of the mails, or of any facility of any 12 13 national securities exchange: A. employing any device, scheme or artifice to defraud; B. making any untrue statement of a material fact or omitting to state a material fact 14 necessary in order to make the statements made, in the light of the circumstances 15 16 17 under which they were made, not misleading; or C. engaging in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person; 18 in violation of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 19 thereunder, 17 C.F.R. § 240.10b-5. V. 20 IT IS FURTHER ORDERED that defendants Martin, Hanson, and EFS and their agents, 21 servants, employees, attorneys, and affiliates, and those persons in active concert or participation 22 with any of them, who receive actual notice of this Order, by personal service or otherwise, are 23 preliminarily enjoined from, directly or indirectly, effecting transactions in, or inducing or attempting to induce the purchase or sale of, securities without being registered with the SEC, or 4 1 affiliated with a broker-dealer registered with the SEC in violation of Section 15(a) of the 2 Exchange Act, 15 U.S.C. § 78o(a). 3 VI. 4 IT IS FURTHER ORDERED that defendants Thomas and Becker, and their agents, 5 6 servants, employees, attorneys, and affiliates, and those persons in active concert or participation with any of them, who receive actual notice of this Order, by personal service or otherwise, are preliminarily enjoined from, directly or indirectly, including through any entity owned or 7 8 controlled by them, participating in the issuance, purchase, offer, or sale of any security in an unregistered offering provided, however, that such injunction shall not prevent them from 9 purchasing or selling securities for their own personal accounts. 10 11 12 13 VII. IT IS FURTHER ORDERED that, except as otherwise ordered by this court, defendants Thomas, Becker, Wellington, Welscorp, ESA, QSA, VBC, and VFC, and their officers, agents, servants, employees, attorneys, subsidiaries and affiliate, and those persons in active concert with them, who receive actual notice of this Order, by personal service or otherwise, are preliminarily 14 enjoined from, directly or indirectly, transferring, assigning, selling, hypothecating, changing, 15 wasting, dissipating, converting, concealing, encumbering, or otherwise disposing of, in any 16 manner, any funds, assets, securities, claims or other real or personal property, including any 17 notes or deeds of trust or other interest in real property, wherever located, of defendants Thomas, 18 Becker, Wellington, Welscorp, ESA, QSA, VBC, and VFC, or their subsidiaries or affiliates, 19 owned by, controlled by, managed by or in the possession or custody of any of them and from transferring, encumbering, dissipating, incurring charges or cash advances on any debit or credit 20 card of defendants Thomas, Becker, Wellington, Welscorp, ESA, QSA, VBC, and VFC, or their 21 22 23 subsidiaries and affiliates. VIII. IT IS FURTHER ORDERED that, except as otherwise ordered by this court, an immediate freeze shall be placed on all monies and assets (with an allowance for necessary and 5 1 reasonable living expenses, which might include legal fees, to be granted only upon good cause 2 shown by application to the court with notice to and an opportunity for the SEC to be heard) in 3 all accounts at any bank, financial institution or brokerage firm or Internet or “e-commerce” 4 payment processor, all certificates of deposit, and other funds or assets, held in the name of, for 5 6 the benefit of, or over which account authority is held by Defendants Thomas, Becker, Wellington, Welscorp, ESA, QSA, VBC, and VFC, including but not limited to, the accounts listed below: 7 8 Account Holder Bank Account 9 10 11 John F. Thomas III Aloha Pacific Federal Credit Union xxxx0030 Vegas Basketball Club LLC American First National Bank xxxx1504 No-More-Bad-Hires Inc Bank of America xxxx9049 Vegas Football Club LLC Bank of America xxxx3801 Vegas Football Club LLC Bank of America xxxx7210 Vegas Basketball Club LLC Bank of America xxxx8189 Vegas Basketball Club LLC Bank of America xxxx8192 Welscorp Inc Bank of America xxxx6257 Sports Biometrics LLC Bank of America xxxx0188 ESAP LTD Bank of George xxxx2366 12 13 14 15 16 17 18 19 20 21 22 23 6 1 Account Holder Bank Account 2 ESA LTD Bank of Nevada xxxx3753 Wellington Sports Club LLC Bank of the West xxxx9228 QSA LLC Bank of the West xxxx4937 Thomas Joseph Becker Bank of the West xxxx5082 Thomas J Becker Citibank xxxx7862 Boston Biometrics LLC Citibank xxxx0183 No-More-Bad-Hires Inc Citibank xxxx6907 QSA LLC Citibank xxxx3671 Sports Psychometrics LLC Citibank xxxx0894 Thomas J Becker Citizens Bank xxxx8294 ESA LTD JPMorgan Chase Bank xxxx9386 ESA LTD Meadows Bank xxxx4424 John Thomas Midcountry Bank 22 John F Thomas/Einstein Sports Nevada State Bank 23 Advisory LTD 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 7 xxxx7518 1 Account Holder Bank Account 2 3 4 ESA LTD Nevada State Bank xxxx4947 Thomas J Becker dba ESA LTD US Bank xxxx0008 Thomas J Becker US Bank xxxx0504 Thomas J Becker dba QSA LLC US Bank xxxx8128 Thomas Becker USAA xxxx6969 Welscorp Inc Wells Fargo xxxx6502 Thomas J Becker Wells Fargo xxxx2620 Welscorp Inc Wells Fargo xxxx6666 Vegas Football Club LLC Wells Fargo xxxx2628 John F Thomas Wells Fargo xxxx7399 QSA LLC Wells Fargo xxxx6482 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 IX. IT IS FURTHER ORDERED that, except as otherwise ordered by this court, defendants Thomas, Becker, Wellington, Welscorp, ESA, QSA, VBC, and VFC, and their officers, agents, servants, employees, attorneys, subsidiaries and affiliates, and those persons in active concert or 23 participation with any of them, who receive actual notice of this Order, by personal service or 8 1 otherwise, are preliminarily enjoined from, directly or indirectly: destroying, mutilating, 2 concealing, transferring, altering, or otherwise disposing of, in any manner, any documents, 3 which includes all books, records, computer programs, computer files, computer printouts, 4 contracts, emails, correspondence, memoranda, brochures, or any other documents of any kind in 5 6 their possession, custody or control, however created, produced, or stored (manually, mechanically, electronically, or otherwise), pertaining in any manner to Thomas, Becker, Wellington, Welscorp, ESA, QSA, VBC, VFC, Martin, Hanson, and EFS. 7 8 X. IT IS FURTHER ORDERED that defendants Wellington, Welscorp, ESA, QSA, VBC, 9 and VFC, within 30 days of the issuance of this Order, shall prepare and deliver to the SEC a 10 detailed and complete schedule of all of their personal assets, including all real and personal 11 property exceeding $5,000 in value, and all bank, securities, and other accounts identified by 12 13 institution, branch address and account number. The accounting shall include a description of the sources of all such assets. Such accounting shall be filed with the court under seal and a copy shall be delivered to the SEC’s Los Angeles Regional Office to the attention of Lynn M. Dean, 14 Senior Trial Counsel. The SEC and counsel shall maintain the information and documents as 15 confidential, as befitting a document filed under seal. After completion of the accounting, each 16 of these defendants shall produce to the SEC’s Los Angeles Regional Office, at a time agreeable 17 to the SEC, all books, records and other documents supporting or underlying their accounting as 18 approved by the Magistrate Judge. 19 XI. IT IS FURTHER ORDERED that any person who receives actual notice of this Order by 20 personal service or otherwise, and who holds, possesses or controls assets exceeding $5,000 for 21 the account or benefit of any of defendants Thomas, Becker, Wellington, Welscorp, ESA, QSA, 22 VBC, and VFC, shall within 14 days of receiving actual notice of this Order provide counsel for 23 9 1 the SEC with a written statement identifying all such assets, the value of such assets, or best 2 approximation thereof, and any account numbers or account names in which the assets are held. 3 DATED this 6th day of December, 2019. 4 ANDREW P. GORDON UNITED STATES DISTRICT JUDGE 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 10
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