SEC v. Tang, et al

Filing 241

ORDER GRANTING MOTION TO DISBURSE FUTURE PAYMENTS TO THE UNITED STATES TREASURY AND VACATING HEARING by Judge Alsup granting 237 Motion for Disbursement of Funds (whalc2, COURT STAFF) (Filed on 7/15/2009)

1 2 3 4 5 6 7 8 9 10 SECURITIES & EXCHANGE COMMISSION, Plaintiff, v. MAMIE TANG, DEBORAH MELLO and VICTORIA S. GONG, Defendants, and RICHARD TANG, AMY TANG, EMILY TANG, THE TANG CHILDREN'S TRUST AND BOARD STREET SECURITIES, Relief Defendants. / No. C 98-03739 WHA IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

United States District Court

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For the Northern District of California

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ORDER GRANTING MOTION TO DISBURSE FUTURE PAYMENTS TO THE UNITED STATES TREASURY AND VACATING HEARING

Plaintiff SEC filed a motion to amend the judgment against defendant Deborah Mellow in order to disburse future payments by defendant Mellow to the United States Treasury. Defendant has filed no opposition to the motion. Following a bench trial, judgment was entered against defendant Mellow in January 2001. Among other relief, she was ordered to pay $47,500 in disgorgement and $7,500 prejudgment interest for a total of $55,000. Defendant was ordered to pay these amounts in an initial payment of $10,000 and monthly installments thereafter of the lesser of $400 or fifteen percent of her monthly income.

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Defendant made the initial $10,000 payment and has made additional payments totaling $31,675, for a total of $41,675. She therefore owes a balance of $13,325 on the judgment. The bulk of the payments to date -- $41,075 -- were forwarded to the court-appointed distribution agent and were distributed to investors (along with $247,495.62 collected from the relief defendants). Defendant subsequently made additional payments to the Clerk of the Court of $600. The SEC moves to amend paragraph IV of the judgment against defendant Mellow to require that the $600 held by the Clerk of the Court and all future payments by defendant Mellow be forwarded to the United States Treasury rather than the Clerk of the Court. It so moves on the grounds that an additional distribution to investors would be impracticable. Defendant has been making payments at a rate of $200 to $300 per month on her remaining $13,325 balance. At that rate, the judgment will not be fully paid until Spring 2013. At that point, the list of investors used for the previous distribution would be "stale" and additional mailings would be necessary to confirm the contact information of investors. The administrative fees would cut into the relatively small remaining balance. The SEC therefore asks that the $600 currently held by the Clerk of the Court and all remaining payments be forwarded directly to the SEC, to be paid into the United States Treasury, rather than paid to the Clerk of the Court for future distribution to investors. Unlike damages, disgorgement is not primarily a means of compensating investors but rather "is designed to deprive a wrongdoer of unjust enrichment, and to deter others from violating securities laws by making violations unprofitable." Securities and Exchange Commission v. First Pacific Bancorp, 142 F.3d 1186, 1191 (9th Cir. 1998). Because good cause has been shown, and because the motion is unopposed, plaintiff's motion is GRANTED. The proposed judgment (with paragraph IV amended as proposed by the SEC) will be entered. The hearing scheduled for July 23, 2009, is hereby VACATED. IT IS SO ORDERED. Dated: July 15, 2009.

United States District Court

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For the Northern District of California

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WILLIAM ALSUP UNITED STATES DISTRICT JUDGE
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