Summary
holding that an award of prejudgment interest calculated in the same manner the IRS uses for tax underpayments is appropriate
Summary of this case from U.S. Sec. & Exch. Comm'n v. AhmedOpinion
3:20-cv-01353 (JAM)
04-19-2021
SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. HAIKHOA DANG et al., Defendant.
FINAL JUDGMENT
JEFFREY ALKER MEYER UNITED STATES DISTRICT JUDGE
WHEREAS, on September 10, 2020, the plaintiff Securities and Exchange Commission ("Commission") commenced this action by filing a Complaint against defendant Hai Khoa Dang; WHEREAS, a summons was issued to Dang on September 11, 2020 and a return of service was filed as to Dang on September 11, 2020;
WHEREAS, the Commission filed a motion for entry of default against Dang on October 14, 2020, for failure to answer or otherwise appear;
WHEREAS, in accordance with Fed.R.Civ.P. 55(a), a Clerk's default was entered against Dang on October 15, 2020;
WHEREAS, the Court accepts as true the factual allegations of the Complaint against Dang, who has defaulted, and finds that the Court has jurisdiction over this action pursuant to Section 209(d), 209(e), and 214 of the Investment Advisers Act of 1940 ("Adviser's Act"), 15 U.S.C. §§ 80b-9(d), 80b-9(e), 80b-14;
WHEREAS, the Commission has applied, pursuant to Fed.R.Civ.P. 55(b)(2), for the entry of this Final Judgment based on Dang's failure to answer or otherwise respond to the Commission's Complaint, and the Court having considered the prima facie case for relief shown by the Commission's Complaint, the memorandum of law in support of the Commission's motion for default judgment, and supporting declarations, which showing has not been rebutted by Dang;
NOW THEREFORE, BASED ON THE FOREGOING:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is permanently restrained and enjoined from violating, directly or indirectly, Sections 206(1) and 206(2) of the Advisers Act, 15 U.S.C. §§ 80b-6(1) and 80b-6(2), by, while acting as an investment adviser, using the mails or any means or instrumentalities of interstate commerce:
(1) to employ any device, scheme, or artifice to defraud any client or prospective client; or (2) to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client.
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) Defendant's officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Defendant or with anyone described in (a).
II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable for disgorgement of $6,526.22, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $723.23. In addition, Defendant shall pay a civil penalty in the amount of $2,200,000 pursuant to Section 209(e) of the Advisers Act, 15 U.S.C. § 80b-9(e). Defendant shall satisfy this obligation by paying these amounts to the Securities and Exchange Commission within 30 days after entry of this Final Judgment.
Defendant may transmit payment electronically to the Commission, which will provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly from a bank account via Pay.gov through the SEC website at http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by certified check, bank cashier's check, or United States postal money order payable to the Securities and Exchange Commission, which shall be delivered or mailed to
Enterprise Services Center Accounts Receivable Branch 6500 South MacArthur Boulevard Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title, civil action number, and name of this Court; Hai Khoa Dang as a defendant in this action; and specifying that payment is made pursuant to this Final Judgement.
Defendant shall simultaneously transmit photocopies of evidence of payment and case identifying information to the Commission's counsel in this action. By making this payment, Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part of the funds shall be returned to Defendant.
The Commission may enforce the Court's judgment for disgorgement and prejudgment interest by using all collection procedures authorized by law, including, but not limited to, moving for civil contempt at any time after 30 days following entry of this Final Judgment.
The Commission may enforce the Court's judgment for penalties by the use of all collection procedures authorized by law, including the Federal Debt Collection Procedures Act, 28 U.S.C. § 3001 et seq., and moving for civil contempt for the violation of any Court orders issued in this action. Defendant shall pay post judgment interest on any amounts due after 30 days of the entry of this Final Judgment pursuant to 28 U.S.C. § 1961. The Commission shall hold the funds, together with any interest and income earned thereon (collectively, the "Fund"), pending further order of the Court.
The Commission may propose a plan to distribute the Fund subject to the Court's approval. Such a plan may provide that the Fund shall be distributed pursuant to the Fair Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. The Court shall retain jurisdiction over the administration of any distribution of the Fund and the Fund may only be disbursed pursuant to an Order of the Court.
Regardless of whether any such Fair Fund distribution is made, amounts ordered to be paid as civil penalties pursuant to this Final Judgment shall be treated as penalties paid to the government for all purposes, including tax purposes. To preserve the deterrent effect of the civil penalty, Defendant shall not, after offset or reduction of any award of compensatory damages in any Related Investor Action based on Defendant's payment of disgorgement in this action, argue that he is entitled to, nor shall he further benefit by, offset or reduction of such compensatory damages award by the amount of any part of Defendant's payment of a civil penalty in this action ("Penalty Offset"). If the court in any Related Investor Action grants such a Penalty Offset, Defendant shall, within 30 days after entry of a final order granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the Penalty Offset to the United States Treasury or to a Fair Fund, as the Commission directs. Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed in this Final Judgment. For purposes of this paragraph, a "Related Investor Action" means a private damages action brought against Defendant by or on behalf of one or more investors based on substantially the same facts as alleged in the Complaint in this action.
III.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under this Final Judgment is a debt for Defendant's violations of the federal securities law or regulations or orders issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11U.S.C. §523(a)(19).
IV.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgement.
It is so ordered.