Securities and Exchange Commission v. Malom Group AG et al

Filing 97

ORDER granting 74 Motion for Summary Judgment. Signed by Chief Judge Gloria M. Navarro on 2/29/2017. (Copies have been distributed pursuant to the NEF - JM)

Case 2:13-cv-02280-GMN-PAL Document 74-20 Filed 06/01/17 Page 1 of 7

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEVADA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
MALOM GROUP AG, et al,
Defendants.

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2:13-CV-2280-GMN-(PAL)

FINAL JUDGMENT AS TO DEFENDANT MARTIN U. SCHLÄPFER
This matter coming before the Court on the motion of the Plaintiff, Securities and
Exchange Commission (“SEC” or “the Commission”), for summary judgment as to Defendant
Martin U. Schläpfer pursuant to Federal Rule of Civil Procedure 56(a), and the Court having
reviewed that motion, the SEC’s Statement of Uncontested Material Facts, the SEC’s supporting
documentation, any responses and replies, and the record herein, the Court finds that there is no
genuine issue of material fact, that the SEC is entitled to judgment as a matter of law, and
therefore, the SEC’s motion should be, and is hereby, GRANTED.
I.
PLAINTIFF’S MOTION IS HEREBY GRANTED, and Defendant is found to have
violated Section 10(b) of the Securities and Exchange Act of 1934 (“Exchange Act”) [15 U.S.C.
§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], Sections 5(a) and (c) of the
Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77e(a) and (c)], and Securities Act
Section 17(a) [15 U.S.C. § 77q(a)].

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

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’s
officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
participation with Defendant or with anyone described in (a).
V.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
and Defendant’s 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 directly or indirectly participating in the
issuance, offer, or sale of any security, including but not limited to joint venture agreements,
proofs of funds, bank guarantees, medium term notes, standby letters of credit, structured notes,
and similar instruments, with the exception of the purchase or sale of securities listed on a
national securities exchange.
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VI.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is jointly and severally liable with Malom Group AG, Hans-Jurg Lips, Joseph N. Micelli, M.Y.
Consultants, Sean P. Finn, and M. Dwyer for disgorgement of $10,595,000, representing profits
gained as a result of the conduct alleged in the Complaint, together with prejudgment interest
thereon in the amount of $2,058,084, and a civil penalty in the amount of $5,464,850, pursuant to
Section 21(d)(3)(B) of the Securities Exchange Act of 1934 [15 U.S.C. § 78u(d)(3)(B)] and
Section 20(d) of the Securities Act of 1933 [15 U.S.C. § 77t(d)]. Defendant shall satisfy this
obligation by paying $18,117,934 to the Securities and Exchange Commission within 14 days
after entry of this Final Judgment.
Defendant 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 Securities and Exchange
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; Martin U. Schläpfer as a 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
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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 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. The Commission
shall hold the funds, together with any interest and income earned thereon (collectively, the
“Fund”), pending further order of the Court.
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, Defendant shall not, after offset or reduction of any award of compensatory
damages in any Related Investor Action based on Defendant’s payment of disgorgement in this
action, argue that he is entitled to, nor shall he further benefit by, offset or reduction of such
compensatory damages award by the amount of any part of Defendant’s payment of a civil
penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such
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a Penalty Offset, Defendant 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 Defendant by or on behalf of one or
more investors based on substantially the same facts as alleged in the Complaint in this action.
VII.
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.
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.
Accordingly,
CONCLUSION
IT IS HEREBY ORDERED that Plaintiff's Motion for Summary Judgment (ECF No. 74) is
GRANTED as to Defendant Schläpfer, pursuant to the foregoing.

The Clerk of Court shall enter judgment accordingly.
29
DATED this ____ day of September, 2017

___________________________
Gloria M. Navarro, Chief Judge
United States District Court
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