Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 1 of 11

Transcription

1 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 1 of 11 7 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, Case No. 1:14-cv (CRC) v. LAWRENCE P. SCHMIDT, et al., Defendants. CONSENT OF RECEIVERSHIP DEFENDANTS 1. 1Vlar on Hecht ("Receiver"), as the Covert-appointed. Receiver for Defendants FutureGer~ Company djb/a FutureGen Capital; Commercial Equity Partners, Ltd.; FGC Distressed Assets Investment #l, LLC; FuiureGen Capital DDA CG Fund LLC; FGC Tax Lien Fund #2, LLC; FGC Trading Fund #1 LLC; FGC SPE No 1 LLC; FGC SPE NO 2 LLC and FGC CM Note Fund LLC (collectively, the "Receivership Defendants"), acknowledges that the Receivership Defendants have been served with the Complaint in this action, enters a general appearance, and admits the Court's jurisdiction over the Receivership Defendants and over the subject matter of this action. 2. The Receivership Defendants hereby consent to the entry of the. final Judgment in the form attached hereto (the "Final Judgment") anal incorporated by reference herein, which, among other things: 1

2 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 2 of 11 (a) permanently restrains and enjoins the Receivership Defendants from violation of Sections 5 and 17 of the Securities Act of 1933 [15 U.S,C. 77e and 77q] and Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. 78j(b)] and Rule 1Ob-5 thereunder 17 C.F.R. 24O.1Ob-5]; (b) orders that the Receivership Defendants are jointly and. severally liable far disgorgement in the amount of $T2,025,21O;i and (c) orders.: that the. obligation of the Receivership Defendants, but not -any obligation of Defendant Lawrence Schmidt, sha11 be deemed satisfied by the Court-approved distribution of assets by the Receiver and shall not extend past the Court-approved closing of the. receivership estate. 3. The Receivership Defendants waive the entry of findings of act and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure, 4, The Receivership Defendants waive the right, if any,. to a jury trial and to appeal from the entry of the Final Judgment. 5. The. Receivership Defendants enter into this: Consent voluntarily and represent that no threats; offers, promises, ar inducements of a:ny kind have been made by the Commission or any member, officer, employee, agent, or representative of the Commission to induce the Receivership Defendants to enter into this Consent. 6. The Receivership Defendants agree that this Consent shall be incorporated into the Final Judgment with the same force and effect as if fully set forth therein. ' This disgorgement amount was calculated by the SEC in accordance with the relevant legal precedents and is the same amount of disgorgement the Court ordered in granting the SEC's Motion for Default Judgment Against Defendant Lawrence Sclundt in this matter. See Docket Nos. 222, 205, 205-1, and

3 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 3 of The Receivership Defendants. will nat oppose the enforcement of the Final Judgment on the ground, if any exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure, and hereby waives any objection based thereon. 8, The Receivership Defendants waive service of the Final 3udgment and agree that entry of the Final Judgment by the Caurt and filing with the Clerk of the Court will constitute notice to the Receivership Defendants of its terms. and conditions. On behalf of the Receivership Defendants, the Receiver further agxees to provide counsel for the Commission, within thirty days after the Final Judgment is filed with the Clerk of the Court, with. an affidavit or declaration stating that the Receivership Defendants have received and read a copy of the Finai Judgment. 9. Consistent with 17 C.F.R , this Consent z~salves only the claims asserced against the Receivership Defendants in this civil proceeding. The Rece uership Defendants.acknowledge that no promise or representation has been made by the Commission or any member, :officer,. employee, agent, or representative of the Commission with regard to any criminal liability that may have arisen ar may arise froze the. facts underlying this. action or immunity from any such c~minal liability. The Receivership Defendants waive any claim of Double Jeopardy based upon the seftlement of this proceeding, including the imposition of any remedy or civil penalty herein. The Recervarship Defendants further acknowledge that the Court's entry of a permanent injunction may have collateral consequences under federal or state law and the rules and regulations. ofself-regulatory organizations, licensing boards, and otller regulatory organizations. Such collateral consequences include, but. are not limited to, a statutory disqualification wit11 respect to membership or participation in, or association with a member of, a self-regulatory organization. This statutory disqualification has consequences that are separate from any sanction imposed in an administrative paroceedng. In addition,, in any disciplinary

4 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 4 of 11 proceeding before the Cornrnission based on the entry of the injunction in this action, the Receivership Defendants understand that they shall not be permitted to contest the factual allegations of the Complaint in this action. 10. The Receivership Defendants understand and agree to cotnpl~ with the terms of 17 C.F.R (e), which provides in part that it is the. Commission's policy "not to permit a defendant or respondent to consent to a judgment or order that imposes a sanction while denying the allegations in the Complaint or order for proceedings," and "a refusal tia admit the allegations is equivalent to a denial, unless the defendant or respondent states that he neither admits n.or denies the allegations." As part of the Receivership Defendants' agreement to comply witk~ the terms of Section 202.5(e), the Receivership Defendants: (i) will not take any action or make or permit to he made any public. statement denying, directly or indirectly, any allegation in the Complaint or creating the impression that the Complaint is without factual basis; (ii) will not make or pei~rnit to be made any public statement to the effect that Defendant does not admit the allegations of the Complaint, or ~h~.t this Consent. contains. no admission of the. alle~atians, without also stating. that the Receivership Defendants do not deny the allegations and {iii) u~an the ding of this Consent, the Receivership Defendants hereby withdraw any papers filed in this action to the extent that they deny any allega#ion in the Complaint. If the Receivership Defendants breach this agreement, the Comrx~iss on may pefit on the Court to vacate the Final Judgment a11d restore this action to its active docket. Nothing in this paragraph affects the Receivership Defendants: (i) testimonial obligations; or (ii) right to take legal or factual positions in litigation or other legal proceedings in which the Conlxnission is zlot a party The Receivershzp Defendants hereby waive any rights under the Equal Access to Justice Act, the Small Business Regulatory Enforcement Fairness Act of 1996, or any other 4

5 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 5 of 11 provision of law to seek from the United States, or any agency, or any o~fieial of the Uxuted States acting in his or her official capacity, directly or indirectly, reimblusement of attorney's fees oz other fees, expenses, or costs expended by the Receivership Defendants to defend against this action. For these purposes, the Receivership Defendants agree that the Receivership Defendants are not the prevailing parties in this action since the parties have reached a good faith settlement. 12. The Receivership Defendants agree that the Cornrnission may present the Final Judgment to the Court for signature and entry without further notice. 13. The Receivership Defendants agree that this Couxt shall retain jurisdiction over this matter for the purpose of enforcing the terms. of the Final Judgment. Dated: /0 /S "2U/~ FutureGen Company d/b/a FutureGen Capital; Commercial Equity Partners, Ltd., FGC Distressed Assets Investment #1, LLG; FutureGen Capital DDA CG Fund LLC; FGC T~ Lien Fund #2, LLC; FGC Trading Fund #1 LLB; FGC SPE No 1 LLC; FGC SPE NO 2 LLC; and FGC CM Note Fund LLC gy; ~~ai~t,glii ~. Marion Hecht Receiver for the Receivership Defendants Cliftonl,arsonAllen LLP 901 North Glebe Road, Suite Z00 Arlington, VA

6 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 6 of 11 On ~~-t I ~, 2018,, a person known to me, personally appeared before me and acknowledged executing the foregoing Consent with full authority to do so on behalf of the Receivership Defendants as the Court-appointed Receiver for those entities. c~.-,,-r ---_.. Notary Public Commission expires: APr, ~ 3~ + ~Q~ ~ Approved as to form: EIV{ANNE MUNOZ NOTARY PUBLIC R EGISTRATION # C OMMONWEALTH OF VIRGINIA MYC APRIL30, 020P ~ RES Pavia lianeman, r,sq. Whiteford Taylor Preston LLP 7 Saint Paul Street Baltimore, MD (410) Attorney fox Receivership Defendants D

7 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 7 of 11 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, Case No. 1:14-cv (CRC) v. LAWRENCE P. SCHMIDT, et al., Defendants. FINAL JUDGMENT AS TO RECEIVERSHIP DEFENDANTS The Securities and Exchange Commission having filed a Complaint and Defendants FutureGen Company d/b/a FutureGen Capital; Commercial Equity Partners, Ltd.; FGC Distressed Assets Investment #l, LLC; FutureGen Capital DDA CG Fund LLC; FGC Tax Lien Fund #2, LLC; FGC Trading Fund #1 LLC; FGC SPE No 1 LLC; FGC SPE NO 2 LLC; and FGC CM Note Fund LLC (collectively, the "Receivership Defendants"), by and through the Court-appointed Receiver, Marion Hecht, having appeared; consented to the Court's jurisdiction over the Receivership Defendants and the subject matter of this action; consented to entry of this Final Judgment; waived findings of fact and conclusions of law; and waived any right to appeal from this Final Judgment: I. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the Receivership Defendants are permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the"exchange Act") [15 U.S.C. 78j(b)]

8 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 8 of 11 and Rule lob-5 promulgated thereunder [17 C.F.R Ob-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security: (a) (b) to employ any device, scheme, or artifice to defraud; to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Final Judgment by personal service or otherwise: (a) the Receivership Defendants' officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with the Receivership Defendants or with anyone described in (a). II. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that the Receivership Defendants are permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 (the "Securities Act") [15 U.S.C. 77q(a)] in the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly: (a) to employ any device, scheme, or artifice to defraud;

9 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 9 of 11 (b) to obtain money or property by means of any untrue statement of a material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or (c) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Final Judgment by personal service or otherwise: (a) the Receivership Defendants' officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with the Receivership Defendants or with anyone described in (a). III. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that the Receivership Defendants are permanently restrained and enjoined from violating Section 5 of the Securities Act [15 U.S.C. 77e] by, directly or indirectly, in the absence of any applicable exemption: (a) Unless a registration statement is in effect as to a security, making use of any means or instruments of transportation or communication in interstate commerce or of the mails to sell such security through the use or medium of any prospectus or otherwise; (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

10 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 10 of 11 instruments of transportation, any such security for the purpose of sale or for delivery after sale; or (c) 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 or medium of any prospectus or otherwise any security, unless a registration statement has been filed with the Commission as to such security, or while the registration statement is the subject of a refusal order or stop order or (prior to the effective date of the registration statement) any public proceeding or examination under Section 8 of the Securities Act [15 U.S.C. 77h]. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Final Judgment by personal service or otherwise: (a) the Receivership Defendants' officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with the Receivership Defendants or with anyone described in (a). IV. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that the Receivership Defendants' are jointly and severally liable for disgorgement of $12,025,210, representing profits gained as a result of the conduct alleged in the Complaint. The obligation of the Receivership Defendants, but not any obligation of Defendant Lawrence Schmidt, shall be deemed satisfied by the Court-approved distribution of assets by the Receiver and shall not extend past the Court-approved closing of the receivership estate.

11 Case 1:14-cv CRC Document 238 Filed 03/08/19 Page 11 of 11 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is incorporated herein with the same force and effect as if fully set forth herein, and that the Receivership Defendants shall comply with all of the undertakings and agreements set forth therein. VI. 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. VII. There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, the Clerk is ordered to enter this Final Judgment forthwith and without further notice. Dated: Hon. Christopher R. Cooper, U.S.D.J.