Securities and Exchange Commission v. Bio Defense Corporation et al

Filing 158

Judge Douglas P. Woodlock: FINAL - DEFAULT - JUDGMENT AS TO DEFENDANT MICHAEL LU. (McDonagh, Christina)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

SECURITIES AND EXCHANGE
COMMISSION,

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Plaintiff,

v.

MICHAEL LU,
Defendant.

CIVIL ACTION NO.
12-11669-DPW

FINAL-DEFAULT-JUDGMENT AS TO DEFENDANT MICHAEL LU
September 6, 2019
The Securities and Exchange Commission (“Commission”)
having filed a Complaint, and defendant Michael Lu (“Lu”) having
failed to answer, plead or otherwise defend in this action; a
default having been entered against him on December 4, 2014; and
the Court having determined that Lu is not an infant,
incompetent person or in the military service of the United
States:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant
Lu is permanently restrained and enjoined from violating,
directly or indirectly, Section 10(b) of the Securities Exchange
Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule
10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using

any means or instrumentality of interstate commerce, or of the
mails, or of any facility of any national securities exchange,
in connection with the purchase or sale of any security:
(a)

to employ any device, scheme, or artifice to defraud;

(b)

to make any untrue statement of a material fact or to
omit to state a material fact necessary in order to
make the statements made, in the light of the
circumstances under which they were made, not
misleading; or

(c)

to engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit
upon any person.

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) Defendant Lu’s officers, agents, servants, employees, and
attorneys; and (b) other persons in active concert or
participation with Defendant Lu or with anyone described in (a).
II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendant Lu is permanently restrained and enjoined from
violating Section 17(a) of the Securities Act of 1933 (the
“Securities Act”) [15 U.S.C. § 77q(a)] in the offer or sale of
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any security by the use of any means or instruments of
transportation or communication in interstate commerce or by use
of the mails, directly or indirectly:
(a)

to employ any device, scheme, or artifice to defraud;

(b)

to obtain money or property by means of any untrue
statement of a material fact or any omission to state
a material fact necessary in order to make the
statements made, in light of the circumstances under
which they were made, not misleading; or

(c)

to engage in any transaction, practice, or course of
business which operates or would operate as a fraud or
deceit upon the purchaser.

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) Defendant Lu’s officers, agents, servants, employees, and
attorneys; and (b) other persons in active concert or
participation with Defendant Lu or with anyone described in (a).
III.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendant Lu is permanently restrained and enjoined from
violating Section 5 of the Securities Act [15 U.S.C. § 77e] by,

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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].

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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) Defendant Lu’s officers, agents, servants, employees, and
attorneys; and (b) other persons in active concert or
participation with Defendant Lu or with anyone described in (a).
IV.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendant Lu is permanently restrained and enjoined from
violating Section 15(a) of the Securities Exchange Act [15
U.S.C. § 78o(a)], by using mails, or any means or
instrumentality of interstate commerce, to effect transactions
in, or to induce or attempt to induce the purchase or sale of,
securities without being registered as a broker or dealer or
associated with a registered broker or dealer in accordance with
Section 15(b) of the Exchange Act, [15 U.S.C. § 78o(b)].
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) Defendant Lu’s officers, agents, servants, employees, and
attorneys; and (b) other persons in active concert or
participation with Defendant Lu or with anyone described in (a).
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V.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendant Lu is liable for disgorgement of $608,013.10,
representing profits gained from his unlawful conduct, together
with prejudgment interest thereon in the amount of $183,129.90,
for a total of $791,143.

Defendant shall satisfy this

obligation by paying $791,143 to the Commission within 14 days
after entry of this Final Judgment.

This obligation is joint

and several with that imposed this day as to the Defendant May’s
International.
Defendant Lu may transmit payment electronically to the
Commission, which will provide detailed ACH transfer/Fedwire
instructions upon request.

Payment may also be made directly

from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay
by certified check, bank cashier’s check, or United States
postal money order payable to the Commission, which shall be
delivered or mailed to
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title,
civil action number, and name of this Court; Michael Lu as a

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defendant in this action; and specifying that payment is made
pursuant to this Final Judgment.
Defendant shall simultaneously transmit photocopies of
evidence of payment and case identifying information to the
Commission’s counsel in this action.

By making this payment,

Defendant relinquishes all legal and equitable right, title, and
interest in such funds and no part of the funds shall be
returned to Defendant.
The Commission shall hold the funds (collectively, the
“Fund”) and may propose a plan to distribute the Fund subject to
the Court’s approval.

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.
The Commission may enforce the Court’s judgment for
disgorgement and prejudgment interest by moving for civil
contempt (and/or through other collection procedures authorized
by law) at any time after 14 days following entry of this Final
Judgment.

Defendant shall pay post judgment interest on any

delinquent amounts pursuant to 28 U.S.C. § 1961.
VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
Lu shall pay a civil penalty in the amount of $608,013.10 to the
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Commission pursuant to Section 20(d) of the Securities Act [15
U.S.C. § 77t(d)] and Section 21(d)(3) of the Securities Exchange
Act [15 U.S.C. § 78u(d)(3)].

Defendant Lu shall make this

payment within 14 days after entry of this Final Judgment.
Defendant Lu may transmit payment electronically to the
Commission, which will provide detailed ACH transfer/Fedwire
instructions upon request.

Payment may also be made directly

from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm.

Defendant Lu may also

pay by certified check, bank cashier’s check, or United States
postal money order payable to the Commission, which shall be
delivered or mailed to
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title,
civil action number, and name of this Court; Michael Lu as a
defendant in this action; and specifying that payment is made
pursuant to this Final Judgment.
Defendant Lu shall simultaneously transmit photocopies of
evidence of payment and case identifying information to the
Commission’s counsel in this action.

By making this payment,

Defendant Lu relinquishes all legal and equitable right, title,
and interest in such funds and no part of the funds shall be

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returned to Defendant.

The Commission shall send the funds paid

pursuant to this Final Judgment to the United States Treasury.
Defendant Lu shall pay post-judgment interest on any delinquent
amounts pursuant to 28 USC § 1961.
VII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant
to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]
and Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)],
Defendant Lu is prohibited from acting as an officer or director
of any issuer that has a class of securities registered pursuant
to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is
required to file reports pursuant to Section 15(d) of the
Exchange Act [15 U.S.C.
§ 78o(d)].
VIII.
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 Final Judgment.

/s/ Douglas P. Woodlock_________
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE

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