United States Securities and Exchange Commission v. Benger et al

Filing 462

MOTION by Plaintiff United States Securities and Exchange Commission for judgment Against Defendants Frank I. Reinschreiber and Global Financial Management, LLC (Polish, Jonathan)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
__________________________________________
:
UNITED STATES SECURITIES
:
AND EXCHANGE COMMISSION,
:
:
Plaintiff,
: Civil Case No. 09-676
:
v.
: Judge Jeffrey Cole
:
PHILIP T. POWERS, FRANK I.
:
REINSCHREIBER AND GLOBAL
:
FINANCIAL MANAGEMENT, LLC
:
:
Defendants,
:
__________________________________________
:
PLAINTIFF’S AGREED MOTION FOR ENTRY OF FINAL JUDGMENT
AGAINST DEFENDANTS FRANK I. REINSCHREIBER
AND GLOBAL FINANCIAL MANAGEMENT, LLC
Plaintiff Securities and Exchange Commission moves, on an agreed basis, for the entry of a
final judgment against defendants Frank I. Reinschreiber and Global Financial Management, LLC
(together “Defendants”). In support of its motion, the SEC has attached Defendants’ consent to the
entry of the final judgment as Exhibit 1 to this motion, and has attached the proposed final judgment
referenced in that consent as Exhibit 2 to this motion. The SEC respectfully requests that the Court
enter the final judgment, and grant such other and further relief as the Court deems just and proper.
Dated: January 29, 2014

Respectfully submitted,
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
/s/ Jonathan S. Polish
By: One of its Attorneys

Jonathan S. Polish (Illinois Bar No. 6237890)
SECURITIES AND EXCHANGE COMMISSION
175 W. Jackson Blvd., Suite 900
Chicago, Illinois 60604
[phone]

EXHIBIT 1

EXHIBIT 2

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITED STATES SECURITIES AND
EXCHANGE COMMISSION,
Plaintiff,
v.
JASON B. MEYERS, INTERNATIONAL
CAPITAL FINANCIAL RESOURCES, LLC,
PHILIP T. POWERS, FRANK I.
REINSCHREIBER , GLOBAL FINANCIAL
MANAGEMENT, LLC, STEPHAN VON
HASE, and CTA WORLDWIDE SERVICES,
SA.

Case No. 09-CV-676
Magistrate Judge Cole

Defendants.
FINAL JUDGMENT AS TO DEFENDANTS FRANK I. REINSCHREIBER
AND GLOBAL FINANCIAL MANAGEMENT, LLC
Plaintiff United States Securities and Exchange Commission having filed a
Third Amended Complaint (“Complaint”) and Defendants Frank I. Reinschreiber
and Global Financial Management, LLC (collectively “Defendants”) having entered
general appearances; consented to the Court’s jurisdiction over them and the
subject matter of this action; consented to entry of this Final Judgment without
admitting or denying the allegations of Count I of the Complaint (except as to
jurisdiction); waived findings of fact and conclusions of law; and waived any right to
appeal from this Final Judgment:

I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants
and their respective agents, servants, employees, attorneys, and all persons in
active concert or participation with them who receive actual notice of this Final
Judgment by personal service or otherwise are permanently restrained and
enjoined from violating, directly or indirectly, Section 15(a) of the Exchange Act [15
U.S.C. § 78o(a)], by, while engaging in business as a broker or dealer, making use of
the mails or any instrumentality of interstate commerce to effect any transactions
in, or to induce the purchase or sale of, any security (other than an exempted
security or commercial paper, bankers’ acceptances, or commercial bills) unless
registered as a broker dealer in accordance with Section 15(b) of the Exchange Act
[15 U.S.C. § 78o(b)] or associated with a broker or dealer that is registered with the
Commission in accordance with Section 15(b) of the Exchange Act [15 U.S.C. §
78o(b)].
II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendants 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 that has a price of less than five

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dollars, except as provided in Rule 3a51-1 under the Exchange Act [17 C.F.R.
240.3a51-1].
III.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendants are jointly and severally liable for disgorgement of $78,348,
representing profits gained as a result of the conduct alleged in the Complaint,
together with prejudgment interest thereon in the amount of $1,623, and a civil
penalty in the amount of $25,000.00 pursuant to Section 21(d)(3) of the Exchange
Act [15 U.S.C. § 78u(d)(3)].
IV.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendants shall cooperate with the Plaintiff in order to cause the transfer into the
Registry of the Court for distribution to the Plaintiff, of the funds in the accounts
identified in the Defendants’ consent in the name of Global Financial Management,
LLC at the time of the asset freeze in this action (plus any additions thereto), which
are funds to which Defendants claim no entitlement. Rather, according to
Defendants, this sum represents investor funds that had been transferred to them
in their capacity as escrow agent at the time of the asset freeze entered in this
matter.

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V.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendants shall satisfy this obligation by paying the sums set forth in Section III
and Section IV to the Registry of the Court within 28 days after entry of this Final
Judgment. Defendants shall simultaneously transmit photocopies of evidence of
payment to the Commission’s counsel in this action. By making this payment,
Defendants relinquish all legal and equitable right, title, and interest in such funds
and no part of the funds shall be returned to Defendants.
The Commission may propose a plan to distribute the Fund subject to the
Court’s approval. Such a plan may provide that the Fund shall be distributed
pursuant to the Fair Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of
2002. The Court shall retain jurisdiction over the administration of any distribution
of the Fund. If the Commission staff determines that the Fund will not be
distributed, the Commission shall send the funds paid pursuant to this Final
Judgment to the United States Treasury.
Regardless of whether any such Fair Fund distribution is made, amounts
ordered to be paid as civil penalties pursuant to this Judgment shall be treated as
penalties paid to the government for all purposes, including all tax purposes. To
preserve the deterrent effect of the civil penalty, Defendants shall not, after offset or
reduction of any award of compensatory damages in any Related Investor Action
based on Defendants’ payment of disgorgement in this action, argue that they are
entitled to, nor shall they further benefit by, offset or reduction of such
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compensatory damages award by the amount of any part of Defendants’ payment of
a civil penalty in this action (“Penalty Offset”). If the court in any Related Investor
Action grants such a Penalty Offset, Defendants shall, within 30 days after entry of
a final order granting the Penalty Offset, notify the Commission’s counsel in this
action and pay the amount of the Penalty Offset to the United States Treasury or to
a Fair Fund, as the Commission directs. Such a payment shall not be deemed an
additional civil penalty and shall not be deemed to change the amount of the civil
penalty imposed in this Judgment. For purposes of this paragraph, a “Related
Investor Action” means a private damages action brought against Defendants, or
either of them, by or on behalf of one or more investors based on substantially the
same facts as alleged in the Complaint in this action.
VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the
Consent is incorporated herein with the same force and effect as if fully set forth
herein, and that Defendants shall comply with all of the undertakings and
agreements set forth therein.

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VII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court
shall retain jurisdiction of this matter for the purpose of enforcing the terms of this
Final 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 Final Judgment
forthwith and without further notice.
Dated: ______________, 2014
____________________________________
HONORABLE JEFFREY COLE
UNITED STATES MAGISTRATE JUDGE

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