Securities and Exchange Commission v. Ahmed et al

Filing 44

PRELIMINARY INJUNCTION: IT IS HEREBY ORDERED that the SEC's Motion for Preliminary Injunction is GRANTED 36 . (Written Opinion) Signed by The Hon. Paul A. Magnuson on 05/18/2017. (LLM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
United States Securities and
Exchange Commission,

Civil No. 17-1478 (PAM/KMM)

Plaintiff,
v.

PRELIMINARY INJUNCTION

Mohamud Abdi Ahmed, and
2waytrading, LLC,
Defendants.

This matter is before the Court on Plaintiff Securities and Exchange Commission’s
(“SEC”) Motion for a Preliminary Injunction, Asset Freeze, and Other Ancillary Relief.
On Friday, May 5, 2017, the Honorable Donovan W. Frank of this Court entered a
limited temporary restraining order (“TRO”) (Docket No. 25), and on May 9, 2017, this
Court expanded and extended that TRO and set the matter for a hearing on the request for
preliminary injunctive relief. (Docket No. 28.) The Court held that hearing today, at
which Plaintiff appeared through counsel but Defendants made no appearance.
Defendant 2waytrading, LLC, has indicated its intent not to oppose the SEC’s request.
(Docket No. 34.)
Based on the arguments of counsel, and all of the papers filed in support of the
Motion, the Court makes the following factual findings:
A.

This Court has jurisdiction over the subject matter of this case and there is

good cause to believe it will have jurisdiction over all parties hereto.

B.

The SEC has made a prima facie showing that Defendants have engaged in

acts, practices, and transactions that constitute violations of Sections 17(a) of the
Securities Act of 1933 (“Securities Act”), 15 U.S.C. § 77q(a); Section 10(b) of the
Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78j(b), and Rule 10b-5
thereunder, 17 C.F.R. § 240.10b-5; and Sections 206(1) and (2) of the Investment
Advisers Act of 1940 (the “Advisers Act”), 15 U.S.C. §§ 80b-6(1) and (2), by using any
means or instrumentality of interstate commerce, or of the mails, or of any facility of any
national securities exchange.
C.

There is good cause to believe that investor funds will be dissipated,

concealed, or transferred from the jurisdiction of this Court, assets which could be subject
to an order of disgorgement.
D.

There is good cause to believe that, unless restrained or enjoined by order

of this Court, Defendants may alter or destroy documents relevant to this action.
Based on these findings, IT IS HEREBY ORDERED that:
1.

The SEC’s Motion for Preliminary Injunction (Docket No. 36) is

GRANTED.
2.

Defendants, and their officers, agents, servants, employees, attorneys,

subsidiaries, and affiliates, and those persons in active concert or participation with any
of them, who receive actual notice of this Order, by personal service or otherwise, are
PRELIMINARILY RESTRAINED and ENJOINED from, directly or indirectly, in the
offer or sale of any securities, by the use of any means or instruments of transportation or
communication in interstate commerce or by the use of the mails:
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A.

employing any device, scheme or artifice to defraud;

B.

obtaining 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.

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

in violation of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).
3.

Defendants, and their officers, agents, servants, employees, attorneys,

subsidiaries, and affiliates, and those persons in active concert or participation with any
of them, who receive actual notice of this Order, by personal service or otherwise, are
PRELIMINARILY RESTRAINED and ENJOINED from, directly or indirectly, in
connection with the purchase or sale of any security, by the use of any means or
instrumentality of interstate commerce, or of the mails, or of any facility of any national
securities exchange:
A.

employing any device, scheme or artifice to defraud;

B.

making any untrue statement of a material fact or omitting 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.

engaging in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon any person;

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in violation of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5
thereunder, 17 C.F.R. § 240.10b-5.
4.

Defendants, and their officers, agents, servants, employees, attorneys,

subsidiaries, and affiliates, and those persons in active concert or participation with any
of them, who receive actual notice of this Order, by personal service or otherwise, are
PRELIMINARILY RESTRAINED and ENJOINED from, directly or indirectly, by
the use of mails or means or instrumentalities of interstate commerce:
A.

employing devices, schemes and artifices to defraud clients or prospective
clients; or

B.

engaging in transactions, practices, and courses of business which operate
as a fraud or deceit upon clients or prospective clients;

in violation of Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-6(1) and
(2).
5.

Until otherwise ordered by this Court, all investors, creditors, and other

persons, and all others acting on behalf of any such investor, creditor, or other persons,
including sheriffs, marshals, other officers, deputies, servants, agents, employees, and
attorneys, are STAYED from:
A.

commencing, prosecuting, continuing, or enforcing any suit or proceeding
against or affecting any assets frozen pursuant to this Order;

B.

using self-help or executing or issuing or causing the execution or issuance
of any court attachment, subpoena, replevin, execution, or other process for
the purpose of impounding or taking possession of or interfering with or
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creating or enforcing a lien upon any assets frozen by this Order, wherever
situated; and
C.

attempting to modify, cancel, terminate, call, extinguish, revoke, or
accelerate (the due date), of any lease, loan, mortgage, indebtedness,
security agreement, or other agreement affecting any assets frozen by this
Order.
6.

Defendants, and their officers, agents, servants, employees, attorneys,

subsidiaries, and affiliates, and those persons in active concert or participation with any
of them, including but not limited to Habsa Abdi and Abdirahman Abdi, who receive
actual notice of this Order, by personal service or otherwise, are PRELIMINARILY
RESTRAINED and ENJOINED from, directly or indirectly, taking any action with
respect to any securities brokerage or similar account in which Defendants are not the
named owner, including but not limited to, directly or indirectly: (a) requesting access to
or accessing any such accounts, (b) exercising any investment discretion, as defined by
Sections 3(a)(35)(A) and 3(a)(35)(B) of the Exchange Act, 15 U.S.C. §§ 78c(a)(35)(A) &
(B), with respect to any such accounts, (c) requesting to exercise such investment
discretion over any such accounts, (d) withdrawing, removing, transferring, or otherwise
disposing of any funds, securities or other assets from any such accounts, or (e)
requesting or instructing the withdrawal, removal, transfer, or other disposition of any
funds, securities or other assets from any such accounts.
7.

Any person who receives actual notice of this Order by personal service or

otherwise, and who holds, possesses, or controls assets exceeding $5,000 for the account
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or benefit of either of Defendants, shall within three days of receiving actual notice of
this Order provide counsel for the SEC with a written statement identifying all such
assets, the value of such assets, or best approximation thereof, and any account numbers
or account names in which the assets are held. Such a statement shall be delivered to the
SEC to the attention of Lynn M. Dean, counsel for the SEC.
8.

Except as otherwise ordered by this Court, Defendants and their officers,

agents, servants, employees, attorneys, subsidiaries, and affiliates, and those persons in
active concert with them, including but not limited to Habsa Abdi and Abdirahman Abdi,
who receive actual notice of this Order, by personal service or otherwise, are
PRELIMINARILY RESTRAINED and ENJOINED from, directly or indirectly,
transferring, assigning, selling, hypothecating, changing, wasting, dissipating, converting,
concealing, encumbering, or otherwise disposing of, in any manner, any funds, assets,
securities, claims, or other real or personal property, including any notes or deeds of trust
or other interest in real property, wherever located, of either of Defendants, or their
subsidiaries or affiliates, owned by, controlled by, managed by or in the possession or
custody of any of them, and from transferring, encumbering dissipating, incurring
charges or cash advances on any debit or credit card of the credit arrangement of either of
Defendants, or their subsidiaries and affiliates.
9.

Except as otherwise ordered by this Court, an asset freeze shall continue in

place on all monies and assets (with an allowance for necessary and reasonable living
expenses to be granted only upon good cause shown by application to the Court with
notice to and an opportunity for the SEC to be heard) in all accounts at any bank,
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financial institution or brokerage firm, or third-payment payment processor, all
certificates of deposit, and other funds or assets, held in the name of, for the benefit of, or
over which account authority is held by either of Defendants, including but not limited to
the accounts listed below:
INSTITUTION

ACCOUNT NO.

2waytrading LLC (or “2-way trading
LLC”)

PayPal

ACCOUNT NAME/OWNER

xxxxxxxxxxxxxxx38539
xxxxxx2363
xxxxxx2355
xxxxxx5634
xxxxxx3719
xxxxxx6927

Wells Fargo Bank NA
(Minnesota)

2-way trading
LLC

Wells Fargo Bank NA
TD Ameritrade
TD Ameritrade

Habsa M. Abdi
2WAYTRADING
2WAYTRADING, LLC

xxxxxx9528
xxxxx6866
xxx-xx6622

Any bank, financial institution or brokerage firm, or third-party payment processor
holding such monies and assets described above shall hold and retain within their control
and prohibit the withdrawal, removal, transfer, or other disposal of any such funds or
other assets except as otherwise ordered by this Court.
10. Except as otherwise ordered by this Court, each of Defendants, and their
officers, agents, servants, employees, attorneys, subsidiaries, and affiliates, and those
persons in active concert or participation with any of them, including but not limited to
Habsa Abdi and Abdirahman Abdi, who receive actual notice of this Order, by personal
service or otherwise, are PRELIMINARILY RESTRAINED and ENJOINED from,
directly or indirectly: destroying, mutilating, concealing, transferring, altering, or
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otherwise disposing of, in any manner, any documents, which includes all books, records,
computer programs, computer files, computer printouts, contracts, emails, electronic
messages, correspondence, memoranda, brochures, or any other documents of any kind in
their possession, custody or control, however created, produced, or stored (manually,
mechanically, electronically, or otherwise), pertaining in any manner to Defendants.

Dated: May 18, 2017

s/ Paul A. Magnuson
Paul A. Magnuson
United States District Court Judge

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