Securities and Exchange Commission v. David Welch et al

Filing 46

JUDGMENT AS TO DEFENDANTS JOHN CHARLES KNIGHT AND DIVERSIFIED EQUITIES INC. by Judge John F. Walter. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED, that Defendants John C. Knight and Diversified Equities Inc. are permanently restrained and enjoined from violating Section 5 of the Securities Act of 1933 (Securities Act) [15 U.S.C. § 77e] by, directly or indirectly, in the absence of any applicable exemption. See document for details. (lom)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. ED CV 17-1968 JFW (AGRx)

SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,

JUDGMENT AS TO
DEFENDANTS JOHN CHARLES
KNIGHT AND DIVERSIFIED
EQUITIES INC.

vs.
DAVID HOWARD WELCH,
MARC JAY BRYANT,
JOHN CHARLES KNIGHT,
PERRY DOUGLAS WEST,
BIO-GLOBAL RESOURCES, INC.,
DIVERSIFIED EQUITIES INC.,
DIVERSIFIED EQUITIES
DEVELOPMENT, INC.,
and NEW GLOBAL ENERGY INC.,
Defendants.

The Securities and Exchange Commission having filed a Complaint and
Defendants John C. Knight and Diversified Equities Inc. having entered a general
appearance; consented to the Court’s jurisdiction over Defendants and the subject
matter of this action; consented to entry of this Judgment without admitting or
denying the allegations of the Complaint (except as to jurisdiction and except as
otherwise provided in paragraph IV herein); waived findings of fact and conclusions
of law; and waived any right to appeal from this Judgment:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED, that Defendants
John C. Knight and Diversified Equities Inc. are permanently restrained and enjoined

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SEC v. Welch
Judgment John C Knight and DEI

from violating Section 5 of the Securities Act of 1933 (“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
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) Defendants’ officers, agents, servants, employees, and
attorneys; and (b) other persons in active concert or participation with Defendants or
with anyone described in (a).
II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED, that
Defendants John C. Knight and Diversified Equities Inc. are permanently restrained
and enjoined from violating, directly or indirectly, Section 15(a) of the Securities
Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78o(a)] by making use of
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SEC v. Welch
Judgment John C Knight and DEI

the mails or any means or instrumentality of interstate commerce to effect any
transactions in, or to induce or attempt to induce the purchase or sale of, any security,
without being registered as a broker and/or dealer pursuant to Section 15(b) of the
Exchange Act or while Defendants are not associated with an entity registered with
the Commission as a broker or dealer.
IT IS HEREBY 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 Judgment by personal service or
otherwise: (a) Defendants’ officers, agents, servants, employees, and attorneys; and
(b) other persons in active concert or participation with Defendants or with anyone
described in (a).
III.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED, that Defendant
John C. Knight is permanently restrained and enjoined from violating, directly or
indirectly, Section 20(b) of the Exchange Act [15 U.S.C. § 78t(b) )], by committing
the violations described in Part II above, through or by means of other persons.
IT IS HEREBY 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 Judgment by personal service or
otherwise: (a) Defendants’ officers, agents, servants, employees, and attorneys; and
(b) other persons in active concert or participation with Defendants or with anyone
described in (a).
IV.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendants John C. Knight and Diversified Equities Inc. are permanently barred from
participating in an offering of penny stock, including engaging in activities with a
broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to
induce the purchase or sale of any penny stock. A penny stock is any equity security
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SEC v. Welch
Judgment John C Knight and DEI

that has a price of less than five dollars, except as provided in Rule 3a51-1 under the
Exchange Act [17 C.F.R. § 240.3a51-1].
V.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendants shall pay disgorgement of ill-gotten gains and prejudgment interest
thereon; that the amounts of the disgorgement, and whether such amounts should be
imposed jointly and severally, shall be determined by the Court upon motion of the
Commission; and that prejudgment interest shall be calculated from June 7, 2013,
based on the rate of interest used by the Internal Revenue Service for the
underpayment of federal income tax as set forth in 26 U.S.C. § 6621(a)(2). Upon
motion of the Commission, the Court shall determine whether civil penalties pursuant
to Section 20(d)(2) of the Securities Act and Section 21(d)(3) of the Exchange Act
[15 U.S.C. §§ 77t(d)(2) and 78u(d)(3)] are appropriate and, if so, the amount of the
penalties. In connection with the Commission’s motion for disgorgement and/or civil
penalties, and at any hearing held on such a motion: (a) Defendants will be precluded
from arguing that they did not violate the federal securities laws as alleged in the
Complaint; (b) Defendants may not challenge the validity of the Consent or this
Judgment; (c) solely for the purposes of such motion, the allegations of the Complaint
shall be accepted as and deemed true by the Court; and (d) the Court may determine
the issues raised in the motion on the basis of affidavits, declarations, excerpts of
sworn deposition or investigative testimony, and documentary evidence, without
regard to the standards for summary judgment contained in Rule 56(c) of the Federal
Rules of Civil Procedure. In connection with the Commission’s motion for
disgorgement and/or civil penalties, the parties may take discovery, including
discovery from appropriate non-parties.

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SEC v. Welch
Judgment John C Knight and DEI

VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for
purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code,
11 U.S.C. § 523, the allegations in the complaint are true and admitted by Defendant
John C. Knight, and further, any debt for disgorgement, prejudgment interest, civil
penalty or other amounts due by Defendant John C. Knight under this Final Judgment
or any other judgment, order, consent order, decree or settlement agreement entered
in connection with this proceeding, is a debt for the violation by Defendant John C.
Knight of the federal securities laws or any regulation or order issued under such
laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §
523(a)(19).
VII.
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
Judgment.
VIII.
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 Judgment forthwith and
without further notice.

2017
Dated: ______________, _____
November 27

____________________________________
UNITED STATES DISTRICT JUDGE
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SEC v. Welch
Judgment John C Knight and DEI