Securities and Exchange Commission v. Marcus A. Luna et al

Filing 23

JUDGMENT AS TO DEFENDANT DUSTIN S. SMITH by Judge Beverly Reid O'Connell. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is permanently restrained and enjoined. (SEE ATTACHMENT FOR FURTHER DETAILS). (jp)

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DAVID J. VAN HAVERMAAT, Cal. Bar No. 175761
Email: [e-mail]
LUCEE S. KIRKA, Cal. Bar No. 121685
Email: [e-mail]
Attorneys for Plaintiff
Securities and Exchange Commission
Michele Wein Layne, Regional Director
John W. Berry, Associate Regional Director
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: [phone]
Facsimile: [phone]

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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WESTERN DIVISION

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SECURITIES AND EXCHANGE
COMMISSION,

Case No.: CV-16-07333 BRO (SKx)

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Plaintiff,

JUDGMENT AS TO DEFENDANT
DUSTIN S. SMITH

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vs.

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MARCUS A. LUNA, NORRELL L.
WALKER, PAUL L. GOMEZ, and
DUSTIN S. SMITH,

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Defendants.

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The Securities and Exchange Commission (“SEC” or “Commission”) having

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filed a Complaint and Defendant Dustin S. Smith (“Defendant”) having entered a

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general appearance; consented to the Court’s jurisdiction over Defendant and the

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subject matter of this action; consented to entry of this Judgment without admitting or

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denying the allegations of the Complaint (except as to jurisdiction and except as

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otherwise provided herein in paragraph VI); waived findings of fact and conclusions

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of law; and waived any right to appeal from this Judgment:

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I.

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is

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permanently restrained and enjoined from violating Section 5 of the Securities Act of

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1933 (“Securities Act”) [15 U.S.C. § 77e] by, directly or indirectly, in the absence of

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any applicable exemption:

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(a)

Unless a registration statement is in effect as to a security, making use of

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any means or instruments of transportation or communication in

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interstate commerce or of the mails to sell such security through the use

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or medium of any prospectus or otherwise;

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(b)

Unless a registration statement is in effect as to a security, carrying or

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causing to be carried through the mails or in interstate commerce, by any

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means or instruments of transportation, any such security for the purpose

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of sale or for delivery after sale; or

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(c)

Making use of any means or instruments of transportation or

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communication in interstate commerce or of the mails to offer to sell or

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offer to buy through the use or medium of any prospectus or otherwise

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any security, unless a registration statement has been filed with the

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Commission as to such security, or while the registration statement is the

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subject of a refusal order or stop order or (prior to the effective date of

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the registration statement) any public proceeding or examination under

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Section 8 of the Securities Act [15 U.S.C. § 77h].

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II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that

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Defendant is permanently restrained and enjoined from violating, directly or

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indirectly, Section 15(a) of the Securities Exchange Act of 1934 (“Exchange Act”),

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15 U.S.C. § 78o(a), which makes it unlawful for any broker or dealer which is either

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a person other than a natural person or a natural person, to make use of the mails or

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any means or instrumentality of interstate commerce to effect any transactions in, or

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to induce or attempt to induce the purchase or sale of, any security (other than an

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exempted security or commercial paper, bankers’ acceptances, or commercial bills)

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unless such broker or dealer is registered in accordance with Section 15(b) of the

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Exchange Act, 15 U.S.C. § 78o(b).

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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as

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provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also

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binds the following who receive actual notice of this Judgment by personal service or

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otherwise: (a) Defendant’s officers, agents, servants, employees, and attorneys; and

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(b) other persons in active concert or participation with Defendant or with anyone

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described in (a).

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III.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that

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Defendant is permanently barred from participating in an offering of penny stock,

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including engaging in activities with a broker, dealer, or issuer for purposes of

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issuing, trading, or inducing or attempting to induce the purchase or sale of any penny

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stock. A penny stock is any equity security that has a price of less than five dollars,

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except as provided in Rule 3a51-1 under the Exchange Act [17 C.F.R. 240.3a51-1].

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IV.

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Upon motion of the SEC, the Court shall determine whether it is appropriate to

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order disgorgement of ill-gotten gains and/or a civil penalty pursuant to Section 20(d)

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of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act

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[15 U.S.C. § 78u(d)(3)] and, if so, the amount(s) of the disgorgement and/or civil

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penalty. If disgorgement is ordered, Defendant shall pay prejudgment interest

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thereon, calculated from April 1, 2013, based on the rate of interest used by the

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Internal Revenue Service for the underpayment of federal income tax as set forth in

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26 U.S.C. § 6621(a)(2). In connection with the SEC’s motion for disgorgement

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and/or civil penalties, and at any hearing held on such a motion: (a) Defendant will be

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precluded from arguing that he did not violate the federal securities laws as alleged in

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the Complaint; (b) Defendant may not challenge the validity of the Consent or this

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Judgment; (c) solely for the purposes of such motion, the allegations of the Complaint

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shall be accepted as and deemed true by the Court; and (d) the Court may determine

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the issues raised in the motion on the basis of affidavits, declarations, excerpts of

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sworn deposition or investigative testimony, and documentary evidence, without

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regard to the standards for summary judgment contained in Rule 56(c) of the Federal

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Rules of Civil Procedure. In connection with the Commission’s motion for

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disgorgement and/or civil penalties, the parties may take discovery, including

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discovery from appropriate non-parties.

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V.

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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the

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Consent of Defendant Dustin S. Smith to Entry of Judgment is incorporated herein

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with the same force and effect as if fully set forth herein, and that Defendant shall

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comply with all of the undertakings and agreements set forth therein.

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VI.

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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, for

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purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code,

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11 U.S.C. § 523, the allegations in the complaint are true and admitted by Defendant,

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and further, any debt for disgorgement, prejudgment interest, civil penalty or other

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amounts due by Defendant under this Judgment or any other judgment, order, consent

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order, decree or settlement agreement entered in connection with this proceeding, is a

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debt for the violation by Defendant of the federal securities laws or any regulation or

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order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy

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Code, 11 U.S.C. §523(a)(19).

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VII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court

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shall retain jurisdiction of this matter for the purposes of enforcing the terms of this

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Judgment.

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VIII.

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There being no just reason for delay, pursuant to Rule 54(b) of the Federal

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Rules of Civil Procedure, the Clerk is ordered to enter this Judgment forthwith and

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without further notice.

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IT IS SO ORDERED.

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DATED: February 16, 2017

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By:
Honorable Beverly R. O’Connell
United States District Court Judge

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