Securities and Exchange Commission v. Bivona et al

Filing 295

STIPULATION AND ORDER re 286 CONSENT OF DEFENDANT MICHELE MAZZOLA TO ENTRY OF FINAL JUDGMENT and CONSENT OF DEFENDANT FRANK MAZZOLA TO ENTRY OF FINAL JUDGMENT and [PROPOSED] FINAL JUDGMENT OF PERMANENT INJUNCTIONS AND OTHER RELIEF AGAINST DEFEND filed by Securities and Exchange Commission. FINAL JUDGMENT AS TO MAZZOLA. Signed by Judge Edward M. Chen on 12/22/17. (bpf, COURT STAFF) (Filed on 12/22/2017)

1 JINA L. CHOI (N.Y. Bar No. 2699718)
JOHN S. YUN (Cal. Bar No. 112260)
2 [e-mail]
MARC D. KATZ (Cal. Bar No. 189534)
3 [e-mail]
JESSICA W. CHAN (Cal. Bar No. 247669)
4 [e-mail]
5 Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
6 44 Montgomery Street, Suite 2800
San Francisco, CA 94104
7 Telephone: [phone]
Facsimile: [phone]
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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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SECURITIES AND EXCHANGE COMMISSION, Case No. 3:16-cv-01386-EMC

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Plaintiff,
v.

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JOHN V. BIVONA; SADDLE RIVER
18 ADVISORS, LLC; SRA MANAGEMENT
ASSOCIATES, LLC; FRANK GREGORY
19 MAZZOLA,

[PROPOSED] FINAL JUDGMENT OF
PERMANENT INJUNCTIONS AND
OTHER RELIEF AGAINST DEFENDANT
FRANK GREGORY MAZZOLA AND
RELIEF DEFENDANT MICHELE J.
MAZZOLA

Defendants, and

20

21 SRA I LLC; SRA II LLC; SRA III LLC;
FELIX INVESTMENTS, LLC; MICHELE
22 J. MAZZOLA; ANNE BIVONA; CLEAR
SAILING GROUP IV LLC; CLEAR
23 SAILING GROUP V LLC,
Relief Defendants.

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Final Judgment

Civ. 3:16-cv-01386-EMC

1

The Securities and Exchange Commission having filed a Complaint and Defendant Frank G.

2 Mazzola and Relief Defendant Michele J. Mazzola having entered a general appearance; consented to
3 the Court’s jurisdiction over Defendant and Relief Defendant and the subject matter of this action;
4 consented to entry of this Final Judgment without admitting or denying the allegations of the
5 Complaint (except as to jurisdiction and except as otherwise provided herein in paragraph VIII);
6 waived findings of fact and conclusions of law; and waived any right to appeal from this Final
7 Judgment:
I.

8
9

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant Frank Mazzola

10 is permanently restrained and enjoined from violating Section 5 of the Securities Act of 1933 (the
11 “Securities Act”) [15 U.S.C. § 77e], by, directly or indirectly, in the absence of any applicable
12 exemption:
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(a)

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

14 instruments of transportation or communication in interstate commerce or of the mails to sell such
15 security through the use or medium of any prospectus or otherwise; or
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(b)

Making use of any means or instruments of transportation or communication in

17 interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of any
18 prospectus or otherwise any security, unless a registration statement has been filed with the
19 Commission as to such security, or while the registration statement is the subject of a refusal order or
20 stop order or (prior to the effective date of the registration statement) any public proceeding or
21 examination under Section 8 of the Securities Act [15 U.S.C. § 77h].
22

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal

23 Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive
24 actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s officers,
25 agents, servants, employees, and attorneys; and (b) other persons in active concert or participation
26 with Defendant or with anyone described in (a).
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Final Judgment

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Civ. 3:16-cv-01386-EMC

II.

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2

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is permanently

3 restrained and enjoined from directly or indirectly violating Section 203(f) of the Investment
4 Advisers Act of 1949 (“Advisers Act”) [15 U.S.C. § 80b-3(f)] by willfully becoming associated with
5 an investment adviser without the consent of the Commission while an order barring him from being
6 associated with an investment adviser is in effect.
7

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal

8 Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive
9 actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s officers,
10 agents, servants, employees, and attorneys; and (b) other persons in active concert or participation
11 with Defendant or with anyone described in (a).
III.

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13

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is permanently

14 restrained and enjoined from directly or indirectly violating Section 15(b)(6)(B)(i) of the Securities
15 Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78o(b)(6)(B)(i)] by willfully becoming
16 associated with a broker or dealer in contravention of an order by the Commission to bar him from
17 being associated with a broker or dealer.
18

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal

19 Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive
20 actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s officers,
21 agents, servants, employees, and attorneys; and (b) other persons in active concert or participation
22 with Defendant or with anyone described in (a).
IV.

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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is permanently

25 restrained and enjoined from directly or indirectly violating the Commission’s Order Instituting
26 Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and
27 Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial
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Final Judgment

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Civ. 3:16-cv-01386-EMC

1 Sanctions, instituted on March 20, 2014, in In the Matter of Frank Mazzola and Felix Investments,
2 LLC, Administrative Proceeding File No. 3-15807.
3

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal

4 Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive
5 actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s officers,
6 agents, servants, employees, and attorneys; and (b) other persons in active concert or participation
7 with Defendant or with anyone described in (a).
V.

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9

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Relief Defendant Michele

10 Mazzola shall pay, jointly and severally with Defendant Frank Mazzola and Defendant John Bivona,
11 disgorgement in the amount of $1,800,000.00, representing profits gained as a result of the conduct
12 alleged in the Complaint. Relief Defendant shall satisfy this obligation by paying $1,800,000, within
13 thirty calendar days from the entry of this Final Judgment, by check, United States Postal money
14 order, or electronic payment, to the Receiver, Sherwood Partners, Inc. The Receiver shall hold the
15 disgorgement amounts in a separately identified account, pending further orders by the Court.
16

Relief Defendant shall simultaneously transmit photocopies of evidence of payment and case

17 identifying information to the Commission’s counsel in this action. By making this payment, Relief
18 Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part of the
19 funds shall be returned to Relief Defendant.
20

The Commission may enforce the Court’s judgment for disgorgement and prejudgment

21 interest by moving for civil contempt (and/or through other collection procedures authorized by law)
22 at any time after thirty days following entry of this Final Judgment. Relief Defendant shall pay post
23 judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 1961.
VI.

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

26 Frank Mazzola is liable for disgorgement of $4,655,000, representing profits gained as a result of the
27 conduct alleged in the Complaint, which is joint and several with Defendant John Bivona, and
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Final Judgment

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Civ. 3:16-cv-01386-EMC

1 $1,800,000 of which is joint and several with Relief Defendant Michele Mazzola. Defendant shall
2 satisfy this obligation by paying $$4,655,000, within thirty calendar days from the entry of this Final
3 Judgment, by check, United States Postal money order, or electronic payment, to the Receiver,
4 Sherwood Partners, Inc. The Receiver shall hold the disgorgement amounts in a separately identified
5 account, pending further orders by the Court.
6

Defendant shall simultaneously transmit photocopies of evidence of payment and case

7 identifying information to the Commission’s counsel in this action. By making this payment,
8 Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part of the
9 funds shall be returned to Defendant.
10

The Commission may enforce the Court’s judgment for disgorgement and prejudgment

11 interest by moving for civil contempt (and/or through other collection procedures authorized by law)
12 at any time after thirty days following entry of this Final Judgment. Defendant shall pay post
13 judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 1961.
VII.

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

16 Frank Mazzola is liable for a civil penalty in the amount of $200,000 pursuant to Section 20(d) of the
17 Securities Act [15 U.S.C. §77t(d)], Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)], and
18 Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)]. Defendant shall satisfy this obligation by
19 paying $200,000 to the Securities and Exchange Commission within thirty calendar days after entry
20 of this Final Judgment.
21

Defendant may transmit payment electronically to the Commission, which will provide

22 detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly from a
23 bank account via Pay.gov through the SEC website at http://www.sec.gov/about/offices/ofm.htm.
24 Defendant may also pay by certified check, bank cashier’s check, or United States postal money
25 order payable to the Securities and Exchange Commission, which shall be delivered or mailed to
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Enterprise Services Center

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Accounts Receivable Branch

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Final Judgment

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Civ. 3:16-cv-01386-EMC

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6500 South MacArthur Boulevard

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Oklahoma City, OK 73169

3 and shall be accompanied by a letter identifying the case title, civil action number, and name of this
4 Court; Frank G. Mazzola as a defendant in this action; and specifying that payment is made pursuant
5 to this Final Judgment.
6

Defendant shall simultaneously transmit photocopies of evidence of payment and case

7 identifying information to the Commission’s counsel in this action. By making this payment,
8 Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part of the
9 funds shall be returned to Defendant.
10

The Commission may enforce the Court’s judgment for disgorgement and prejudgment

11 interest by moving for civil contempt (and/or through other collection procedures authorized by law)
12 at any time after thirty days following entry of this Final Judgment. Defendant shall pay post
13 judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 1961. The Commission shall
14 hold the funds, together with any interest and income earned thereon (collectively, the “Fund”),
15 pending further order of the Court.
16

The Commission may propose a plan to distribute the Fund subject to the Court’s approval.

17 Such a plan may provide that the Fund shall be distributed pursuant to the Fair Fund provisions of
18 Section 308(a) of the Sarbanes-Oxley Act of 2002. The Court shall retain jurisdiction over the
19 administration of any distribution of the Fund. If the Commission staff determines that the Fund will
20 not be distributed, the Commission shall send the funds paid pursuant to this Final Judgment to the
21 United States Treasury.
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Regardless of whether any such Fair Fund distribution is made, amounts ordered to be paid as

23 civil penalties pursuant to this Judgment shall be treated as penalties paid to the government for all
24 purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, Defendant
25 shall not, after offset or reduction of any award of compensatory damages in any Related Investor
26 Action based on Defendant’s payment of disgorgement in this action, argue that he is entitled to, nor
27 shall he further benefit by, offset or reduction of such compensatory damages award by the amount of
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Final Judgment

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Civ. 3:16-cv-01386-EMC

1 any part of Defendant’s payment of a civil penalty in this action (“Penalty Offset”). If the court in
2 any Related Investor Action grants such a Penalty Offset, Defendant shall, within 30 days after entry
3 of a final order granting the Penalty Offset, notify the Commission’s counsel in this action and pay
4 the amount of the Penalty Offset to the United States Treasury or to a Fair Fund, as the Commission
5 directs. Such a payment shall not be deemed an additional civil penalty and shall not be deemed to
6 change the amount of the civil penalty imposed in this Judgment. For purposes of this paragraph, a
7 “Related Investor Action” means a private damages action brought against Defendant by or on behalf
8 of one or more investors based on substantially the same facts as alleged in the Complaint in this
9 action.
VIII.

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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for purposes of

12 exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the
13 allegations in the complaint are true and admitted by Defendant and Relief Defendant, and further,
14 any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant
15 and Relief Defendant under this Final Judgment or any other judgment, order, consent order, decree
16 or settlement agreement entered in this proceeding, is a debt for the violation by Defendant of the
17 federal securities laws or any regulation or order issued under such laws, as set forth in Section
18 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19).
IX.

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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain

21 jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.
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UNIT
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23 IT IS SO ORDERED.

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R NIA

D
RDERE
S SO OCHEN
IT I
JUDGE EDWARD M.

25 Dated: ____________, 2017
12/22

United States District Court

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Civ. 3:16-cv-01386-EMC
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D IS T IC T O
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CERTIFICATE OF SERVICE

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I, Eric Pease, am a citizen of the United States, over 18 years of age, and am not a party in this

3 action. I hereby certify that on December 15, 2017, I caused the following documents:
4 CONSENT OF DEFENDANT ANNE BIVONA TO ENTRY OF FINAL JUDGMENT
5 CONSENT OF DEFENDANT JOHN V. BIVONA TO ENTRY OF FINAL JUDGMENT
6 [PROPOSED] FINAL JUDGMENT OF PERMANENT INJUNCTIONS AND OTHER
RELIEF AGAINST DEFENDANT JOHN V. BIVONA AND RELIEF DEFENDANT ANNE
7 BIVONA
8 CONSENT OF DEFENDANT MICHELE MAZZOLA TO ENTRY OF FINAL JUDGMENT
9 CONSENT OF DEFENDANT FRANK MAZZOLA TO ENTRY OF FINAL JUDGMENT
10 [PROPOSED] FINAL JUDGMENT OF PERMANENT INJUNCTIONS AND OTHER
RELIEF AGAINST DEFENDANT FRANK GREGORY MAZZOLA AND RELIEF
11 DEFENDANT MICHELE J. MAZZOLA
12 CONSENT OF DEFENDANT SADDLE RIVER ADVISORS, LLC TO ENTRY OF FINAL
JUDGMENT
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[PROPOSED] FINAL JUDGMENT OF PERMANENT INJUNCTIONS AND OTHER
14 EQUITABLE RELIEF AGAINST DEFENDANT SADDLE RIVER ADVISORS, LLC
15 to be served via UPS marked for next day delivery on the following:
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17 Frank Gregory Mazzola
27 Dogwood Hill Drive
18 Upper Saddle River, NJ 07458
19 Michele J. Mazzola
27 Dogwood Hill Drive
20 Upper Saddle River, NJ 07458
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__/s/ Eric Pease_______________
Eric Pease
Paralegal Specialist
Division of Enforcement

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Certificate of Service

Civ. 3:16-cv-01386-EMC