Securities and Exchange Commission v. Clement et al

Filing 38

ORDER granting 35 Joint Motion for Final Judgment. This Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. 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 Final Judgment forthwith and without further notice. Signed by Judge Larry Alan Burns on 4/13/17. (kas)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 SECURITIES AND EXCHANGE COMMISSION, CASE NO. 11cv1034-LAB (WVG) 11 Plaintiff, 12 13 14 ORDER GRANTING JOINT MOTION FOR FINAL JUDGMENT vs. JOHN CLEMENT and EDGEFUND CAPITAL, LLC, Defendants. 15 16 About six years ago, John Clement pled guilty to wire fraud and was ordered to pay 17 around $5 million to compensate eleven victims. The Court granted a permanent injunction 18 freezing the funds in 12 of his accounts, entered judgment against Clement, but retained 19 jurisdiction to enforce the judgment and to determine any additional relief.1 20 Last fall, the Court ordered all frozen money in the bank accounts of Clement, Cherly 21 Kilmer, and Scott Clement turned over to the Clerk and added to the restitution fund. The 22 parties filed a joint motion for entry of final judgment. The motion is granted.2 23 In short, the Court permanently restrains Clement, as well as his agents and all 24 persons acting in concert with him, from violating 15 U.S.C. §§ 77q(a), 78j(b), 25 80b-6(1),(2),(4) and 17 C.F.R. §§ 240.10b-5, 275.206(4)-8. But since the parties have 26 agreed to specific language in a joint proposed order, the Court adopts the parties’ more 27 capacious order below. 28 1 2 Dkt. 29. Dkt. 34. This order resolves the ex parte motion for clarification (Dkt. 37) since the Court previously retained jurisdiction to enforce this judgment, and, the motion’s unopposed. Standing Order § 8. *** 1 2 Plaintiff Securities and Exchange Commission (“SEC”) having filed a Complaint and 3 Defendant John Clement (“Clement”) having entered a general appearance; consented to 4 the Court’s jurisdiction over Defendant Clement and the subject matter of this action; 5 consented to entry of a Judgment imposing a permanent injunction without admitting or 6 denying the allegations of the Complaint (except as to jurisdiction); waived findings of fact 7 and conclusions of law; and waived any right to appeal from that Judgment; the Court having 8 entered the Judgment on September 16, 2011 (Dkt. No. 29); Defendant Clement having pled 9 guilty in the criminal action United States of America v. John Clement, CR-04198 (S.D. Cal.), 10 arising from the same conduct, and been sentenced by Amended Order on May 30, 2012, 11 to pay restitution of $4,941,550.00, among other relief; and Plaintiff SEC having determined 12 not to seek further monetary relief in this action, in light of the restitution order in the criminal 13 action and the turnover of funds frozen in this action to the restitution fund in the criminal 14 action: I. 15 16 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant Clement 17 and Defendant’s agents, servants, employees, attorneys, and all persons in active concert 18 or participation with them who receive actual notice of this Final Judgment by personal 19 service or otherwise are permanently restrained and enjoined from violating Section 17(a) 20 of the Securities Act of 1933, 15 U.S.C. § 77q(a), in the offer or sale of any security by the 21 use of any means or instruments of transportation or communication in interstate commerce 22 or by use of the mails, directly or indirectly: (a) to employ any device, scheme, or artifice to 23 defraud; (b) to obtain money or property by means of any untrue statement of a material fact 24 or any omission of a material fact necessary in order to make the statements made, in light 25 of the circumstances under which they were made, not misleading; or (c) to engage in any 26 transaction, practice, or course of business which operates or would operate as a fraud or 27 deceit upon the purchaser. 28 II. 1 2 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant Clement 3 and Defendant’s agents, servants, employees, attorneys, and all persons in active concert 4 or participation with them who receive actual notice of this Final Judgment by personal 5 service or otherwise are permanently restrained and enjoined from violating, directly or 6 indirectly, Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 7 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, by using any means or 8 instrumentality of interstate commerce, or of the mails, or of any facility of any national 9 securities exchange, in connection with the purchase or sale of any security: (a) to employ 10 any device, scheme, or artifice to defraud; (b) to make any untrue statement of a material 11 fact or to omit to state a material fact necessary in order to make the statements made, in 12 the light of the circumstances under which they were made, not misleading; or (c) to engage 13 in any act, practice, or course of business which operates or would operate as a fraud or 14 deceit upon any person. 15 III. 16 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant Clement 17 and Defendant’s agents, servants, employees, attorneys, and all persons in active concert 18 or participation with them who receive actual notice of this Final Judgment by personal 19 service or otherwise are permanently restrained and enjoined from violating, directly or 20 indirectly, while acting as an investment adviser, Sections 206(1), 206(2) and 206(4) of the 21 Investment Advisers Act of 1940, 15 U.S.C. §§ 80b-6(1), 80b-6(2) & 80b-6(4), and Rule 22 206(4)-8 thereunder, 17 C.F.R. § 275.206(4)-8, by using the mails or any means or 23 instrumentality of interstate commerce: (a) to employ any device, scheme, or artifice to 24 defraud any client or prospective client; (b) to engage in any transaction, practice, or course 25 of business which operates as a fraud or deceit upon any client or prospective client; or (c) 26 while acting as an investment adviser to a pooled investment vehicle: (1) to engage in any 27 act, practice or course of business which is fraudulent, deceptive, or manipulative by making 28 any untrue statement of a material fact or omitting to state a material fact necessary to make 1 the statements made, in the light of the circumstances under which they are made, not 2 misleading, to any investor or prospective investor in the pooled investment vehicle; or (2) 3 to otherwise engage in any act, practice, or course of business that is fraudulent, deceptive, 4 or manipulative with respect to any investor or prospective investor in the pooled investment 5 vehicle. 6 IV. 7 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain 8 jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. 9 V. 10 There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil 11 Procedure, the Clerk is ordered to enter this Final Judgment forthwith and without further 12 notice. *** 13 14 The parties’ joint motion to enter final judgment is GRANTED. (Dkt. 35.) 15 IT IS SO ORDERED. 16 17 DATED: April 13, 2017 18 19 20 21 22 23 24 25 26 27 28 HONORABLE LARRY ALAN Burns United States District Judge

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