Securities and Exchange Commission v. Titanium Blockchain Infrastructure Services Inc. et al

Filing 48

PRELIMINARY INJUNCTION by Judge Dale S. Fischer (SEE ORDER FOR SPECIFICS) (bp)

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Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 1 of 16 Page ID #:1456 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 SECURITIES AND EXCHANGE COMMISSION, 12 Plaintiff, 13 14 vs. 18 TITANIUM BLOCKCHAIN INFRASTRUCTURE SERVICES, INC.; EHI INTERNETWORK AND SYSTEMS MANAGEMENT, INC. aka EHI-INSM, INC.; and MICHAEL ALAN STOLLERY aka MICHAEL STOLLAIRE, 19 Defendants. 15 16 17 20 21 22 23 24 25 26 27 28 Case No. CV18-4315-DSF (JPRx) PRELIMINARY INJUNCTION AND ORDERS (1) FREEZING ASSETS; (2) PROHIBITING THE DESTRUCTION OR ALTERATION OF DOCUMENTS; (3) GRANTING EXPEDITED DISCOVERY; (4) REQUIRING ACCOUNTINGS; AND (5) APPOINTING A PERMANENT RECEIVER Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 2 of 16 Page ID #:1457 1 This matter is before the Court on the Consent of Defendants Titanium 2 Blockchain Infrastructure Services, Inc. (“TBIS”), EHI Internetwork and Systems 3 Management, Inc. aka EHI-INSM, Inc. (“EHI”), and Michael Alan Stollery aka 4 Michael Stollaire (“Stollaire”) (collectively, “Defendants”) to the Entry of a 5 Preliminary Injunction and Orders (1) Freezing Assets; (2) Prohibiting the 6 Destruction or Alteration of Documents; (3) Granting Expedited Discovery; (4) 7 Requiring Accountings; and (5) Appointing a Permanent Receiver. 8 9 The Court, having previously entered a Temporary Restraining Order and Orders (1) Freezing Assets; (2) Prohibiting the Destruction or Alteration of 10 Documents; (3) Granting Expedited Discovery; (4) Requiring Accountings; and (5) 11 Appointing a Temporary Receiver; and Order to Show Cause Re Preliminary 12 Injunction and Appointment of a Permanent Receiver on May 23, 2018 (“TRO”), and 13 having considered the SEC’s Complaint, Application for a Temporary Restraining 14 Order, the supporting Memorandum of Points and Authorities, the supporting 15 declarations and exhibits, and the other evidence and argument presented to the 16 Court, as well as the Defendants’ Consents, finds that: 17 A. this action. 18 19 20 21 22 23 24 25 This Court has jurisdiction over the parties to, and the subject matter of, B. The Defendants have consented to the entry of a preliminary injunction on the terms below. I. Good cause exists for the entry of a preliminary injunction, appointment of a permanent receiver, and the related orders herein. II. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendants 26 TBIS, EHI, and Stollaire are preliminarily restrained and enjoined from violating, 27 directly or indirectly, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and 28 Rule 10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using any means or 1 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 3 of 16 Page ID #:1458 1 instrumentality of interstate commerce, or of the mails, or of any facility of any 2 national securities exchange, in connection with the purchase or sale of any security: 3 (a) to employ any device, scheme, or artifice to defraud; 4 (b) to make any untrue statement of a material fact or to omit to state a 5 material fact necessary in order to make the statements made, in the light 6 of the circumstances under which they were made, not misleading; or 7 (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person. 8 9 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 10 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 11 binds the following who receive actual notice of this Preliminary Injunction by 12 personal service or otherwise: (a) Defendants’ officers, agents, servants, employees, 13 and attorneys; and (b) other persons in active concert or participation with any of the 14 Defendants or with anyone described in (a). 15 16 III. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 17 defendants TBIS, EHI, and Stollaire are preliminarily restrained and enjoined from 18 violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] in the offer or sale 19 of any security by the use of any means or instruments of transportation or 20 communication in interstate commerce or by use of the mails, directly or indirectly: 21 (a) to employ any device, scheme, or artifice to defraud; 22 (b) to obtain money or property by means of any untrue statement of a 23 material fact or any omission of a material fact necessary in order to 24 make the statements made, in light of the circumstances under which 25 they were made, not misleading; or 26 27 28 (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 2 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 4 of 16 Page ID #:1459 1 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 2 binds the following who receive actual notice of this Preliminary Injunction by 3 personal service or otherwise: (a) Defendants’ officers, agents, servants, employees, 4 and attorneys; and (b) other persons in active concert or participation with any of the 5 Defendants or with anyone described in (a). 6 7 IV. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that 8 defendants TBIS and Stollaire are preliminarily restrained and enjoined from 9 violating Section 5 of the Securities Act [15 U.S.C. § 77e] by, directly or indirectly, 10 11 in the absence of any applicable exemption: (a) Unless a registration statement is in effect as to a security, making use of 12 any means or instruments of transportation or communication in 13 interstate commerce or of the mails to sell such security through the use 14 or medium of any prospectus or otherwise; 15 (b) Unless a registration statement is in effect as to a security, carrying or 16 causing to be carried through the mails or in interstate commerce, by any 17 means or instruments of transportation, any such security for the purpose 18 of sale or for delivery after sale; or 19 (c) Making use of any means or instruments of transportation or 20 communication in interstate commerce or of the mails to offer to sell or 21 offer to buy through the use or medium of any prospectus or otherwise 22 any security, unless a registration statement has been filed with the 23 Commission as to such security, or while the registration statement is the 24 subject of a refusal order or stop order or (prior to the effective date of 25 the registration statement) any public proceeding or examination under 26 Section 8 of the Securities Act [15 U.S.C. § 77h]. 27 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 28 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 3 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 5 of 16 Page ID #:1460 1 binds the following who receive actual notice of this Preliminary Injunction by 2 personal service or otherwise: (a) defendants TBIS’s and Stollaire’s officers, agents, 3 servants, employees, and attorneys; and (b) other persons in active concert or 4 participation with defendant TBIS or Stollaire or with anyone described in (a). 5 V. 6 IT IS FURTHER ORDERED that, except as otherwise ordered by this Court, 7 Defendants TBIS, EHI, and Stollaire be and hereby are preliminarily restrained and 8 enjoined from, directly or indirectly, transferring, assigning, selling, hypothecating, 9 changing, wasting, dissipating, converting, concealing, encumbering, or otherwise 10 disposing of, in any manner, any funds, securities, claims or other real or personal 11 property, including any digital assets, digital currencies, virtual currencies, digital 12 tokens, cryptocurrencies, digital wallets, or other tangible, intangible, or digital 13 assets, wherever located, of any of the Defendants, or their subsidiaries or affiliates, 14 owned by, controlled by, managed by, or in the possession or custody of any of them, 15 and from transferring, encumbering, dissipating, or incurring charges or cash 16 advances on any debit or credit card or the credit arrangement of any of the 17 Defendants, or their subsidiaries and affiliates. 18 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 19 provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 20 binds the following who receive actual notice of this Preliminary Injunction by 21 personal service or otherwise: (a) Defendants’ officers, agents, servants, employees, 22 and attorneys; and (b) other persons in active concert or participation with any of the 23 Defendants or with anyone described in (a). 24 25 VI. IT IS FURTHER ORDERED that, except as otherwise ordered by this Court, 26 the asset freeze previously ordered by the TRO shall remain in place on all monies 27 and assets, including all digital assets, digital currencies, virtual currencies, digital 28 tokens, cryptocurrencies, digital wallets, or other tangible, intangible, and digital 4 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 6 of 16 Page ID #:1461 1 funds or assets, wherever located (with an allowance for necessary and reasonable 2 living expenses to be granted only upon good cause shown by application to the 3 Court with notice to and an opportunity for the SEC to be heard) in all accounts at 4 any bank, financial institution, brokerage firm, third-payment payment processor, 5 coin exchange, or any other holder or custodian of any digital assets, digital 6 currencies, virtual currencies, digital tokens, cryptocurrencies, digital wallets, or other 7 tangible, intangible, or digital funds or assets held in the name of, for the benefit of, 8 or over which account authority is held by defendants TBIS, EHI, and/or Stollaire, 9 including but not limited to the accounts listed below: 10 11 INSTITUTION ACCOUNT NAME/OWNER ACCOUNT NO. COINBASE MICHAEL STOLLERY AKA MICHAEL ALAN STOLLAIRE TITANIUM BLOCKCHAIN INFRASTRUCTURE SERVICES INC. TITANIUM BLOCKCHAIN INFRASTRUCTURE SERVICES INC. 0x98935ab01caA7a162892FdF9c6423de2 4b078a4c  [Wallet Address] 0x1818409Ff612A6d574ca979904396bB 4B8EA6d51 [Wallet Address] 12 13 COINBASE 14 15 16 JP MORGAN CHASE 17 18 JP MORGAN CHASE EHI INTERNETWORK AND SYSTEMS MANAGEMENT, INC. JP MORGAN CHASE MICHAEL STOLLERY AKA MICHAEL ALAN STOLLAIRE TITANIUM BLOCKCHAIN INFRASTRUCTURE SERVICES INC. EHI INTERNETWORK AND SYSTEMS MANAGEMENT, INC. MICHAEL STOLLAIRE 19 20 21 22 23 24 PayPal 25 26 27 28 PayPal VENMO 5 227992796 262292722 4246315238001125 3628670755 4401887471 260113680 810313531 3391855136 3650970172 451956321001 4246315227389994 00000010000003706740 1570927099492929120 1761210592052010070 2129508332071253031 2262219318584224114 1567182756491297714 29607949 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 7 of 16 Page ID #:1462 1 2 INSTITUTION ACCOUNT NAME/OWNER ACCOUNT NO. VENMO TITANIUM BLOCKCHAIN INFRASTRUCTURE SERVICES INC. TITANIUM BLOCKCHAIN INFRASTRUCTURE SERVICES INC. MICHAEL STOLLERY AND/OR OXANA STOLLERY 29964336 3 4 5 U.S. BANK 6 7 8 WELLS FARGO BANK 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 153669396688 8323100492 8378226636 6370721463 2723755399 3418745141 68213035891998 Any bank, financial institution, brokerage firm, third-party payment processor, or coin exchange, or any other holder or custodian of any digital assets, digital currencies, virtual currencies, digital tokens, cryptocurrencies, or such monies or assets described above shall hold and retain within their control and prohibit the withdrawal, removal, transfer or other disposal of any such funds or other assets except as otherwise ordered by this Court. VII. IT IS FURTHER ORDERED that, except as otherwise ordered by this Court, each of defendants TBIS, EHI, and Stollaire be and hereby are preliminarily restrained and enjoined from, directly or indirectly: destroying, mutilating, concealing, transferring, altering, or otherwise disposing of, in any manner, any documents, which includes all books, records, computer programs, computer files, data objects existing in any state, computer printouts, contracts, emails, correspondence, memoranda, brochures, or any other documents of any kind in their possession, custody or control, however created, produced, or stored (manually, mechanically, electronically, or otherwise), and any accounts, account passwords, computer passwords, device PINs and passwords, cryptographic keys, or digital wallets, pertaining in any manner to defendants TBIS, EHI, or Stollaire. 6 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 8 of 16 Page ID #:1463 1 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided 2 in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the 3 following who receive actual notice of this Preliminary Injunction by personal service 4 or otherwise: (a) Defendants’ officers, agents, servants, employees, and attorneys; and 5 (b) other persons in active concert or participation with any of the Defendants or with 6 anyone described in (a). 7 8 VIII. IT IS FURTHER ORDERED that the obligations of defendants TBIS, EHI, 9 and Stollaire each to prepare and deliver to the SEC a detailed and complete schedule 10 of all of their assets shall remain in effect. The accountings shall include all real and 11 personal property exceeding $5,000 in value, and all bank, securities, and other 12 accounts identified by institution, branch address, and account number, and all digital 13 assets, digital currencies, virtual currencies, digital tokens, cryptocurrencies, digital 14 wallets, or other tangible, intangible, or digital funds or assets, wherever located. The 15 accountings shall include a description of the sources of all such assets. Such 16 accountings shall be filed with the Court and copies shall be delivered to the SEC to 17 the attention of David J. Van Havermaat, Trial Counsel no later than May 29, 2018. 18 After completion of the accountings, each of the Defendants shall produce to the SEC 19 at a time agreeable to the SEC, all books, records and other documents supporting or 20 underlying their accounting. 21 IX. 22 IT IS FURTHER ORDERED that any person who receives actual notice of this 23 Preliminary Injunction by personal service or otherwise, and who holds, possesses, or 24 controls assets exceeding $5,000 for the account or benefit of any of the Defendants, 25 including any digital assets, digital currencies, virtual currencies, digital tokens, 26 cryptocurrencies, digital wallets, or other tangible, intangible, or digital assets, 27 wherever located, including any such assets held in any safe deposit box, shall within 28 5 days of receiving actual notice of this Preliminary Injunction provide counsel for 7 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 9 of 16 Page ID #:1464 1 the SEC with a written statement identifying all such assets, the value of such assets, 2 or best approximation thereof, and any account numbers or account names in which 3 the assets are held. 4 X. 5 IT IS FURTHER ORDERED that the SEC may continue to conduct expedited 6 discovery concerning Defendants, their assets and activities, as previously granted in 7 the TRO, in lieu of the time periods, notice provisions, and other requirements of 8 Rules 26, 30, 33, 34, 36, and 45 of the Federal Rules of Civil Procedure and the 9 corresponding Local Rules of this Court, and that discovery shall proceed as follows: 10 (A) Pursuant to Rule 30(a) of the Federal Rules of Civil Procedure, the SEC 11 may take depositions upon oral examination on five days’ notice of any such 12 deposition. Depositions may be taken Monday through Friday. As to the 13 Defendants, and their agents, servants, promoters, employees, brokers, and associates, 14 and any person who transferred money to or received money from any account(s) at 15 any of the bank, financial institution, brokerage firm, third-payment payment 16 processor, or coin exchange identified above, or any other holder or custodian of any 17 digital assets, digital currencies, virtual currencies, digital tokens, or cryptocurrencies 18 identified above, the SEC may depose such witnesses after serving a deposition 19 notice by facsimile, hand, or overnight courier upon such individuals, and without 20 serving a subpoena on such witness. 21 (B) Pursuant to Rule 33(a) of the Federal Rules of Civil Procedure, each 22 Defendant shall answer the SEC’s interrogatories within fourteen days of service of 23 such interrogatories upon Defendant. 24 (C) Pursuant to Rule 34(b) of the Federal Rules of Civil Procedure, each 25 Defendant shall produce all documents requested by the SEC within fourteen days of 26 service of such request, with production of the documents made to David J. Van 27 Havermaat, U.S. Securities and Exchange Commission, Los Angeles Regional 28 Office, 444 S. Flower St., Suite 900, Los Angeles, California 90071, or such person 8 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 10 of 16 Page ID #:1465 1 2 or place as counsel for the SEC may direct in writing. (D) Pursuant to Rule 36(a) of the Federal Rules of Civil Procedure, each 3 Defendant shall respond to the SEC’s requests for admissions within fourteen days of 4 such requests; 5 (E) All written responses to the SEC’s requests for discovery under the 6 Federal Rules of Civil Procedure shall be delivered by hand or overnight courier to 7 the SEC to the attention of David J. Van Havermaat, U.S. Securities and Exchange 8 Commission, Los Angeles Regional Office, 444 S. Flower St., Suite 900, Los 9 Angeles, California 90071, or such other place and person as counsel for the SEC 10 11 12 may direct in writing; and (G) All discovery requests and responses may be served via email, facsimile, or by hand on counsel for the parties. 13 XI. 14 IT IS FURTHER ORDERED that Josias N. Dewey is appointed as permanent 15 receiver of defendant TBIS and its subsidiaries and affiliates, with full powers of an 16 equity receiver, including, but not limited to, full power over all funds, assets, 17 collateral, premises (whether owned, leased, occupied, or otherwise controlled), 18 choses in action, books, records, papers and other property belonging to, being 19 managed by or in the possession of or control of defendant TBIS and its subsidiaries 20 and affiliates, and that such receiver is immediately authorized, empowered and 21 directed: 22 A. to have access to and to collect and take custody, control, possession, 23 and charge of all funds, assets (including any digital assets, digital 24 currencies, virtual currencies, digital tokens of any kind, 25 cryptocurrencies, digital wallets, or private keys associated with any of 26 the foregoing, whether encrypted or not, or other tangible, intangible, or 27 digital assets, wherever located), collateral, premises (whether owned, 28 leased, pledged as collateral, occupied, or otherwise controlled), choses 9 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 11 of 16 Page ID #:1466 1 in action, books, records, papers, and other real or personal property, 2 wherever located, of or managed by defendants TBIS and its subsidiaries 3 and affiliates (collectively, the “Assets”), with full power to sue, 4 foreclose, marshal, collect, receive, and take into possession all such 5 Assets (including access to and taking custody, control, and possession 6 of all such Assets); 7 B. to assume full control of defendant TBIS by removing, as the receiver 8 deems necessary or advisable, any director, officer, attorney, 9 independent contractor, employee, or agent of any of defendant TBIS 10 and its subsidiaries and affiliates, including any named defendant, from 11 control of, management of, or participation in, the affairs of defendant 12 TBIS; 13 C. to have control of, and to be added as the sole authorized signatory for, 14 all accounts of the entities in receivership, including all accounts at any 15 bank, title company, escrow agent, financial institution, brokerage firm 16 (including any futures commission merchant), or coin exchange, which 17 has possession, custody or control of any Assets, or which maintains 18 accounts over which defendant TBIS, and its subsidiaries and affiliates, 19 and/or any of their employees or agents have signatory authority; 20 D. to conduct such investigation and discovery as may be necessary to 21 locate and account for all of the assets (including any digital assets, 22 digital currencies, virtual currencies, digital tokens, cryptocurrencies, 23 digital wallets, or other tangible, intangible, or digital assets, wherever 24 located) of or managed by defendant TBIS and its subsidiaries and 25 affiliates, and to engage and employ attorneys, accountants and other 26 persons to assist in such investigation and discovery; 27 28 E. to take such action as is necessary and appropriate to preserve and take control of and to prevent the dissipation, concealment, or disposition of 10 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 12 of 16 Page ID #:1467 any Assets; 1 2 F. to choose, engage, and employ attorneys, accountants, appraisers, and 3 other independent contractors and technical specialists, as the receiver 4 deems advisable or necessary in the performance of duties and 5 responsibilities under the authority granted by this Preliminary 6 Injunction, including but not limited to, the law firm in which the 7 receiver is a partner; 8 G. to make accountings, as soon as practicable, to this Court and the SEC of 9 the assets and financial conditions of defendant TBIS and to file the 10 accountings with the Court and deliver copies thereof to all parties; 11 H. to make such payments and disbursements from the Assets taken into 12 custody, control, and possession or thereafter received by him, and to 13 incur, or authorize the making of, such agreements as may be necessary 14 and advisable in discharging his duties as permanent receiver; 15 I. to investigate and, where appropriate, to institute, pursue, and prosecute 16 all claims and causes of action of whatever kind and nature that may 17 now or hereafter exist as a result of the activities of present or past 18 employees or agents of defendant TBIS, and its subsidiaries and 19 affiliates; 20 J. to institute, compromise, adjust, appear in, intervene in, or become party 21 to such actions or proceedings in state, federal, or foreign courts, that (i) 22 the receiver deems necessary and advisable to preserve or recover any 23 Assets, or (ii) the receiver deems necessary and advisable to carry out 24 the receiver’s mandate under this Preliminary Injunction; and 25 K. to have access to and monitor all mail, electronic mail, SMS, text, or 26 other messaging applications, and video phones of the entities in 27 receivership in order to review such mail, electronic mail, SMS, text, or 28 other messaging applications, and video phones which he deems relates 11 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 13 of 16 Page ID #:1468 1 to his business and the discharging of his duties as permanent receiver. 2 XII. 3 IT IS FURTHER ORDERED that defendant TBIS and its subsidiaries and 4 affiliates, including all of the other entities in receivership, and their officers, agents, 5 servants, employees and attorneys, and any other persons who are in custody, 6 possession or control of any assets (including any digital assets, digital currencies, 7 virtual currencies, digital tokens, cryptocurrencies, digital wallets, or any private keys 8 associated with any of the foregoing, whether encrypted or not, or other tangible, 9 intangible, or digital assets of any of the Defendants, wherever located), collateral, 10 books, records, papers or other property of or managed by any of the entities in 11 receivership, shall forthwith give access to and control of such property to the 12 permanent receiver. 13 14 XIII. IT IS FURTHER ORDERED that any person who receives actual notice of this 15 Preliminary Injunction by personal service or otherwise who holds, possesses, or 16 controls any account passwords, computer passwords, device PINs or passwords, or 17 cryptographic keys, including any such passwords or cryptographic keys held in any 18 manner in any safe deposit box or pursuant to any other bailee relationship, pertaining 19 in any manner to any assets of any of the Defendants (including any digital assets, 20 digital currencies, virtual currencies, digital tokens, cryptocurrencies, digital wallets, 21 or other tangible, intangible, or digital assets of any of the Defendants, wherever 22 located), shall within 5 days of receiving actual notice of this Order provide counsel 23 for the SEC and the permanent receiver with continuing access to all such account 24 passwords, computer passwords, device PINs or passwords, and cryptographic keys, 25 which, if stored in an encrypted state, shall be provided in an unencrypted state. 26 XIV. 27 IT IS FURTHER ORDERED that no officer, agent, servant, employee, or 28 attorney of defendant TBIS shall take any action or purport to take any action, in the 12 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 14 of 16 Page ID #:1469 1 name of or on behalf of defendant TBIS without the written consent of the permanent 2 receiver or order of this Court. 3 4 XV. IT IS FURTHER ORDERED that, except by leave of this Court, during the 5 pendency of this receivership, all clients, investors, trust beneficiaries, note holders, 6 creditors, claimants, lessors, and all other persons or entities seeking relief of any 7 kind, in law or in equity, from defendant TBIS, or its subsidiaries or affiliates, and all 8 persons acting on behalf of any such investor, trust beneficiary, note holder, creditor, 9 claimant, lessor, consultant group, or other person, including sheriffs, marshals, 10 servants, agents, employees, and attorneys, are hereby restrained and enjoined from, 11 directly or indirectly, with respect to these persons and entities: 12 A. commencing, prosecuting, continuing or enforcing any suit or 13 proceeding (other than the present action by the SEC or any other action 14 by the government) against any of them; 15 B. using self-help or executing or issuing or causing the execution or 16 issuance of any court attachment, subpoena, replevin, execution or other 17 process for the purpose of impounding or taking possession of or 18 interfering with or creating or enforcing a lien upon any property or 19 property interests owned by or in the possession of defendant TBIS; and 20 C. doing any act or thing whatsoever to interfere with taking control, 21 possession or management by the permanent receiver appointed 22 hereunder of the property and assets owned, controlled or managed by or 23 in the possession of defendant TBIS, or in any way to interfere with or 24 harass the permanent receiver or his attorneys, accountants, employees, 25 or agents or to interfere in any manner with the discharge of the 26 permanent receiver’s duties and responsibilities hereunder. 27 28 XVI. IT IS FURTHER ORDERED that defendant TBIS and its subsidiaries, 13 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 15 of 16 Page ID #:1470 1 affiliates, officers, agents, servants, employees, and attorneys, shall cooperate with 2 and assist the permanent receiver and shall take no action, directly or indirectly, to 3 hinder, obstruct, or otherwise interfere with the permanent receiver or his attorneys, 4 accountants, employees, or agents, in the conduct of the permanent receiver’s duties 5 or to interfere in any manner, directly or indirectly, with the custody, possession, 6 management, or control by the permanent receiver of the funds, assets, collateral, 7 premises, and choses in action described above. 8 9 XVII. IT IS FURTHER ORDERED that defendant TBIS, and its subsidiaries and 10 affiliates, shall pay the costs, fees and expenses of the permanent receiver incurred in 11 connection with the performance of his duties described in this Preliminary 12 Injunction, including the costs and expenses of those persons who may be engaged or 13 employed by the permanent receiver to assist him in carrying out his duties and 14 obligations. The permanent receiver’s fees, including all fees and costs for the 15 permanent receiver and all others retained to assist in the administration and 16 liquidation of the receivership estate, shall not exceed $125,000 during the initial 30 17 days of the receivership. Further fee limitations, if any, will be set by the Court. All 18 applications for costs, fees, and expenses for services rendered in connection with the 19 receivership other than routine and necessary business expenses in conducting the 20 receivership, such as salaries, rent, and any and all other reasonable operating 21 expenses, shall be made by application setting forth in reasonable detail the nature of 22 the services and shall be heard by the Court. 23 XVIII. 24 IT IS FURTHER ORDERED that no bond shall be required in connection with 25 the appointment of the permanent receiver. Except for an act of gross negligence, the 26 permanent receiver shall not be liable for any loss or damage incurred by any of the 27 defendants, their officers, agents, servants, employees, and attorneys or any other 28 person, by reason of any act performed or omitted to be performed by the permanent 14 Case 2:18-cv-04315-DSF-JPR Document 48 Filed 05/30/18 Page 16 of 16 Page ID #:1471 1 receiver in connection with the discharge of his duties and responsibilities. 2 3 XIX. IT IS FURTHER ORDERED that representatives of the SEC and any other 4 government agency are authorized to have continuing access to inspect or copy any 5 or all of the corporate books and records and other documents of defendant TBIS, and 6 the other entities in receivership, and continuing access to inspect their funds, 7 property, assets, and collateral, wherever located. 8 9 XX. IT IS FURTHER ORDERED that this Court shall retain jurisdiction over this 10 action for the purpose of implementing and carrying out the terms of all orders and 11 decrees that may be entered herein and to entertain any suitable application or motion 12 for additional relief within the jurisdiction of this Court. 13 14 IT IS SO ORDERED. 15 16 Dated: 5/30/18 17 ________________________________ 18 HONORABLE DALE S. FISCHER UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 15

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