Securities & Exchange Commission v. Uboh et al

Filing 27

MEMORANDUM AND ORDER denying 24 Motion to Dismiss re: SEC's Final Judgment with Prejudice. For the foregoing reasons, the Court respectfully denies Mr. Uboh's motion. The Securities and Exchange Commission ("SEC") shall serve Mr . Uboh with a copy of this Memorandum and Order at his current prison address and note service on the docket by June 5, 2024. The parties shall appear by phone for a conference to discuss the briefing schedule for the SEC's motion for outstanding financial remedies on July 11, 2024, at 11:00 a.m. by calling 571-353-2301 and entering access code 658231781. The SEC shall file a letter of no more than three pages setting forth the basis for its motion and serve Mr. Uboh a copy of the letter by June 17, 2024, noting service on the docket. Mr. Uboh shall file a response of no more than three pages to the SEC's letter by July 5, 2024. The SEC is ordered to provide Mr. Uboh a copy of this order and to ar range with Mr. Uboh's facility to ensure Mr. Uboh participates in the conference call on July 11, 2024. The Clerk of Court is respectfully requested to amend the caption to reflect Mr. Uboh's known aliases: Nedi Shupo, Frank Goldman, Jonathan Goldman, and Nino. Ordered by Judge Kiyo A. Matsumoto on 6/4/2024. (DR)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-----------------------------------X
SECURITIES AND EXCHANGE COMMISSION,
MEMORANDUM & ORDER

Plaintiff,
- against -

No. 21-cv-02049(KAM)(CLP)

UBONG UBOH (A/K/A NEDI SHUPO, FRANK
GOLDMAN, JONATHAN GOLDMAN, AND NINO),
Defendant.
-----------------------------------X
KIYO A. MATSUMOTO, United States District Judge:
In

this

civil

action,

commenced

on

April

15,

2021,

the

Securities and Exchange Commission (“SEC”) alleges that defendants
Ubong

Uboh

participated

(“Mr.
in

Uboh”)

and

fraudulent

Tyler
schemes

Crockett
in

(“Mr.

violation

Crockett”)
of

federal

securities laws. (ECF No. 1, Compl.) The conduct alleged in the
SEC’s complaint also formed the basis for criminal charges against
Mr. Uboh in a parallel proceeding before this Court: United States
v. Ubong Uboh, 21-CR-00146 (KAM) (E.D.N.Y.). Presently before the
Court is Mr. Uboh’s pro se “Motion to Dismiss re: SEC's Final
Judgment with Prejudice.” (ECF No. 24, Def. Mem.)
For the following reasons, Mr. Uboh’s motion is respectfully
DENIED.

1

Background
I.

Factual Background
The facts and procedural history necessary to determine the

instant motion, based on the record, the complaint, and consent is
set forth as follows:
The SEC’s complaint alleged, among other things, that Mr.
Uboh violated Sections 17(a)(1), (2), and (3) of the Securities
Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(1), (2), and
(3)];

Section

10(b)

of

the

Securities

Exchange

Act

of

1934

(“Exchange Act”) [15 U.S.C. § 78j(b)]; and Rules 10b-5(a), (b),
and (c) thereunder [17 C.F.R. §§ 240.10b-5(a), (b), and (c)]. (ECF
No. 1, Compl. ¶ 5.) The complaint alleged that Mr. Uboh and Mr.
Crockett made fraudulent representations from a Miami call room
soliciting investors—many of whom were senior citizens—to purchase
shares of microcap issuers. (Id. ¶¶ 1,3.) The complaint further
alleged that Mr. Uboh and Mr. Crockett misappropriated another
investor’s funds in connection with a private offering. (Id. ¶ 4.)
Mr. Uboh and Mr. Crockett persuaded investors to purchase
shares of microcap issuers while Garrett O’Rourke, who managed the
call room, dumped millions of dollars’ worth of the microcap
issuers’

shares.

(Id.

¶¶

1,

13.)

Mr.

Uboh

and

Mr.

Crockett

materially misrepresented the microcap issuers’ future prospects
and their relationships with well-known financial institutions.
(Id. ¶ 2.) The microcap issuers in fact had no relationships with
2

such financial institutions, and many had limited or no revenues
or profits. (Id.)
Mr.

Uboh

and

Mr.

Crockett

also

falsely

represented

to

potential investors an investment opportunity to purchase private
shares of a purported technology company. (Id. ¶ 4.) After Mr.
Uboh and Mr. Crockett falsely represented this company’s industry
partnerships

and

growth

prospects,

one

individual

invested

$500,000 in the company’s private placement; Mr. Uboh and Mr.
Crockett then misappropriated these funds. (Id.)
II.

Procedural Background
On April 15, 2021, the SEC filed its complaint against Mr.

Uboh and Mr. Crockett alleging securities law violations. (ECF No.
1, Compl.) On the same day, an indictment against Mr. Uboh was
unsealed

for

conduct

arising

out

of

substantially

similar

circumstances in United States v. Ubong Uboh, 21-CR-00146 (KAM)
(E.D.N.Y.) (the “Criminal Action”). (See Criminal Action, ECF No.
1, Indictment; Criminal Action, ECF No. 3, Order to Unseal.) On
September 20, 2021, the United States moved to intervene and to
stay the civil proceeding, given the parallel criminal case. (ECF
No. 19, Mot. to Intervene and Stay.) On September 22, 2021, the
Court granted both motions.
On August 4, 2022, Mr. Uboh pleaded guilty to conspiracy to
commit securities fraud and conspiracy to commit mail and wire
fraud. (Criminal Action, ECF No. 35, Plea.) On January 27, 2023,
3

this Court entered a judgment sentencing Mr. Uboh to 60 months
incarceration

and

ordering

him

to

pay

$3,741,263.96

in

restitution; Mr. Uboh also consented to the entry of a forfeiture
judgment of $446,702. (Criminal Action, ECF No. 53, Judgment.)
On December 20, 2022, Mr. Uboh consented to a settlement which
incorporated a proposed judgment in the instant action. (ECF No.
22-1, Executed Consent at 6.) On January 6, 2023, the SEC sought
this Court’s approval of the proposed judgment and Mr. Uboh’s
executed consent. (ECF No. 22-1, Executed Consent; ECF No. 22-2,
Proposed Judgment.) On February 22, 2023, the Court so-ordered the
Judgment, which incorporated Mr. Uboh’s consent and its terms.
(ECF No. 23, together, the Consent Judgment.) The Consent Judgment
(1) permanently restrained and enjoined Mr. Uboh from violating
Section 17(a) of the Securities Act of 1933; Section 10(b) of the
Securities Exchange Act of 1934; and Rule 10b-5 thereunder; (2)
permanently barred Mr. Uboh from participating in offerings of
penny stock; and (3) ordered that, upon the SEC’s motion, the Court
would

determine

the

appropriateness

of

ordering

disgorgement

and/or civil penalties, and if so, the amounts. (Id. ¶¶ 1-4.)
Should the Court order disgorgement, Mr. Uboh consented to pay
prejudgment interest. (Id. ¶ 3.) 1

Mr. Crockett entered into a similar consent and judgment with the SEC. (ECF
No. 15.)
1

4

On September 26, 2023, the SEC wrote Mr. Uboh for his consent
to resolve the open issues of disgorgement and civil penalties.
(ECF No. 25, SEC Ltr. at 1.) The SEC sent Mr. Uboh a “proposed
Consent and Final Judgment” and asked if “he would consent to a
Proposed Final Judgment that sought to finalize the financial
remedies in this case (by deeming disgorgement satisfied by the
monetary relief ordered in the Criminal Case and not seeking a
civil penalty) and incorporate the prior injunction and penny stock
bar imposed in the Consent Judgment.” (ECF No. 26, SEC Mem. at 5;
see also ECF No. 25, SEC Ltr. at 1.) Mr. Uboh did not respond to
this communication, nor to the SEC’s follow-up request on December
19, 2023. (ECF No. 25, SEC Ltr. at 1.) The SEC’s December 19, 2023
follow-up notified Mr. Uboh that should the SEC not receive a
response by February 1, 2024, it would request this Court to enter
the “proposed Final Judgment” without his consent. (ECF No. 25,
SEC Ltr. at 1.)
On January 25, 2024, Mr. Uboh, acting pro se, filed the
instant “Motion to Dismiss re: SEC's Final Judgment with Prejudice”
arguing that the SEC’s “proposed Final Judgment and Consent Form”
violates the constitutional prohibition against Double Jeopardy.
(ECF No. 24, Def. Mot. ¶ 11.) The SEC filed its memorandum in
opposition on March 13, 2024, arguing that Mr. Uboh lacked a basis
for his motion and requesting the Court to set a schedule for the

5

SEC to move for financial remedies as contemplated in the Consent
Judgment. (ECF No. 26, SEC Mem. at 2.)
Legal Standard
I. Motion to Vacate
Although Mr. Uboh styles his motion as a “Motion to Dismiss,”
the Court considers his motion as a Motion to Vacate the Judgment
incorporating his Consent ordered on February 22, 2023, under Fed.
R. Civ. P. 60(b). See Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir.
1994) (noting that a court must “read [the pro se litigant’s]
supporting papers liberally, and will interpret them to raise the
strongest arguments that they suggest”).
Under Rule 60(b), a court may grant relief from a final
judgment in six circumstances. Regardless of which subsection a
party invokes, Rule 60(b) requires courts to “strike[] a balance
between serving the ends of justice and preserving the finality of
judgments.” Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986)
(collecting cases). To strike this balance, Rule 60(b) motions
“should be broadly construed to do substantial justice, yet final
judgments should not be lightly reopened.” Id. (citation and
quotation removed).
Rule

60(b)

relief,

however,

“is

generally

not

favored.”

United States v. Int'l Bhd. of Teamsters, 247 F.3d 370, 391 (2d
Cir. 2001). Indeed, Rule 60(b) is “a mechanism for extraordinary
judicial relief invoked only if the moving party demonstrates
6

exceptional circumstances.” Ruotolo v. City of New York, 514 F.3d
184, 191 (2d Cir. 2008) (quotations omitted); see also Miles v.
N.Y.C. Transit Auth., 802 F. App'x 658, 659 (2d Cir. 2020) (summary
order). The decision whether to grant a Rule 60(b) motion falls to
“the sound discretion of the district court[.]” Stevens v. Miller,
676 F.3d 62, 67 (2d Cir. 2012) (quotations omitted).
Although a pro se party's 60(b) motion should be construed
liberally, see Burgos, 14 F.3d at 790, the litigant is “not
relieved of his or her obligation to demonstrate extraordinary
circumstances.” Sec. & Exch. Comm'n v. Cohen, 671 F. Supp. 3d 319,
322 (E.D.N.Y. 2023) (internal citation omitted). A pro se litigant
must still ultimately abide by the “substantive requirements of
motion practice.” Spurgeon v. Lee, No. 11-CV-600 (KAM), 2019 WL
569115, at *2 (E.D.N.Y. Feb. 11, 2019) (cleaned up). The burden of
proof “is on the party seeking relief from judgment.” Int'l Bhd.
of Teamsters, 247 F.3d at 391.
Discussion
The crux of Mr. Uboh’s argument is that the constitutional
prohibition against Double Jeopardy invalidates any sanction which
the SEC has sought or will seek, and to which he consented in the
Consent Judgment entered by this Court on February 22, 2023. (See
generally ECF No. 24, Def. Mot.; ECF No. 23, Consent Judgment.)
Because Mr. Uboh has “already been convicted of the violated
federal laws and has thus began serving his imposed sentence which
7

included

60

mos.

of

imprisonment

as

well

as

a

judgment

for

restitution and forfeiture in the amount of $446,309.68,” 2 he
argues

that

the

SEC

may

not

further

punish

him

through

the

“proposed sanctions.” (ECF No. 24, Def. Mot. ¶¶ 8, 11.) Mr. Uboh’s
motion also objects to the permanence of his consent to a penny
stock bar as improper. (ECF No. 22-1, Executed Consent, ¶ 3.)
As explained below, both arguments fail to “demonstrate[]
exceptional

circumstances”

necessary

to

warrant

vacating

the

Consent Judgment. Ruotolo, 514 F.3d at 191. Accordingly, Mr. Uboh’s
motion does not warrant relief under Rule 60(b) and is respectfully
denied. 3
I. Double Jeopardy
To the extent Mr. Uboh argues that any SEC sanction violates
the prohibition on Double Jeopardy, Mr. Uboh’s argument fails.
First, Mr. Uboh waived any Double Jeopardy claims in the Executed
Consent. (ECF No. 22-1, Executed Consent, at 3, ¶ 11.) Second,

Mr. Uboh incorrectly cites the forfeiture amount, which is $446,702.
(Criminal Action, ECF No. 53, Judgment at 5.)
3 The Court would similarly deny Mr. Uboh’s motion were the Court to treat it
as a Motion to Dismiss under F.R.C.P. 12(b). Mr. Uboh has waived the relevant
defenses under F.R.C.P. 12(b) in the Consent Judgment. (See ECF No. 23, Consent
Judgment at 1; ECF No. 22-1, Executed Consent.) Specifically, Mr. Uboh admitted
the Court’s jurisdiction over him and over the subject matter of this action
(ECF No. 22-1, Executed Consent ¶ 1); Mr. Uboh waived service of the Judgment
(Id. ¶ 10); and Mr. Uboh “agree[d] to comply with the terms of 17 C.F.R. §
202.5(e),” which provide in part that “it is the Commission's policy ‘not to
permit a defendant or respondent to consent to a judgment or order that imposes
a sanction while denying the allegations in the complaint or order for
proceedings.’” (Id. ¶ 12.)
2

8

even absent Mr. Uboh’s explicit waiver, case law fails to support
Mr. Uboh’s argument.
A. Waiver
“A defendant in a civil enforcement action is not obliged to
enter

into

a

consent

decree;

consent

decrees

are

‘normally

compromises in which the parties give up something they might have
won in litigation and waive their rights to litigation.’” Sec. &
Exch. Comm'n v. Romeril, 15 F.4th 166, 172 (2d Cir. 2021) (quoting
SEC v. Citigroup Glob. Mkts., Inc., 752 F.3d 285, 295 (2d Cir.
2014)). In Romeril, the Second Circuit affirmed the district
court’s rejection of the defendant’s claim of legal error voiding
his SEC consent decree under Rule 60(b)(4), in part because it
found the district court did not err in accepting a decree to which
the defendant consented.
On December 20, 2022, Mr. Uboh consented to the SEC’s proposed
judgment

that

permanently

restrained

and

enjoined

him

from

violating certain sections of securities laws; barred him from
participating in any offering of penny stock; and ordered him to
pay disgorgement and civil penalties determined by the Court upon
the SEC’s motion. (ECF No. 22-1, Executed Consent at 6; ECF No.
23, Consent Judgment ¶¶ 1-4.) This Court entered the Consent
Judgment and its terms. (ECF No. 23, Consent Judgment.)
In consenting, Mr. Uboh waived certain rights, including
explicitly “waiv[ing] any claim of Double Jeopardy based upon the
9

settlement of this proceeding, including the imposition of any
remedy or civil penalty herein.” (ECF No. 22-1, Executed Consent
¶ 11.) Mr. Uboh does not argue that he consented involuntarily,
see Romeril, 15 F.4th at 172, nor does he offer any other reason
why his consent would be invalid, see Int'l Bhd. of Teamsters, 247
F.3d at 391. Indeed, Mr. Uboh’s consent explicitly acknowledged
that he knowingly and voluntarily agreed to the terms of the
Consent and the Judgment incorporating the Consent. (ECF No. 221, at 3, ¶ 7.) Mr. Uboh’s claim of Double Jeopardy is thus without
merit because he explicitly consented to waive such claims.
B. Double Jeopardy Case Law
Even assuming Mr. Uboh has not waived Double Jeopardy claims,
prevailing case law does not support his argument. “In protecting
an already-punished person against further punishments, the Double
Jeopardy Clause does not prohibit the imposition of all additional
sanctions

‘that

could,

in

common

parlance,

be

described

as

punishment’….[R]ather it ‘protects only against the imposition of
multiple criminal punishments for the same offense’ in successive
proceedings[.]”

S.E.C. v. Palmisano, 135 F.3d 860, 864 (2d Cir.

1998) (denying double jeopardy challenge and quoting Hudson v.
United States, 522 U.S. 93, 99 (1997)) (emphasis in original)
(internal citation removed).
“Whether a particular punishment is criminal or civil is, at
least initially, a matter of statutory interpretation.” Id. at
10

864. The Supreme Court in Hudson v. United States noted “guidelines
to assist courts in determining if a purported civil penalty
functions as a criminal penalty.” S.E.C. v. Credit Bancorp, Ltd.,
738 F. Supp. 2d 376, 389 (S.D.N.Y. 2010). In particular, courts
consider: “(1) ‘[w]hether the sanction involves an affirmative
disability or restraint’; (2) ‘whether it has historically been
regarded as a punishment’; (3) ‘whether it comes into play only on
a finding of scienter’; (4) ‘whether its operation will promote
the traditional aims of punishment-retribution and deterrence’;
(5) ‘whether the behavior to which it applies is already a crime’;
(6) ‘whether an alternative purpose to which it may rationally be
connected is assignable for it’; and (7) ‘whether it appears
excessive

in

relation

to

the

alternative

purpose

assigned.’”

Hudson, 522 U.S. at 99–100 (quoting Kennedy v. Mendoza–Martinez,
372 U.S. 144, 168–169 (1963)).
Here, although the SEC has not yet moved for any additional
penalty, including disgorgement, it seeks an order for a motion
schedule. “A line of cases” in this Circuit and in others “have
applied these guidelines and found that disgorgement, Commission
penalties, and injunctions are civil penalties, and thus do not
violate the Double Jeopardy Clause.” Credit Bancorp, Ltd., 738 F.
Supp. 2d at 389. This has held true for disgorgement following the
Supreme

Court’s

recent

decision

in

Kokesh

v.

Securities

and

Exchange Commission holding that “[d]isgorgement, as it is applied
11

in SEC enforcement proceedings, operates as a penalty under” 28
U.S.C. § 2462, which provides a five-year statute of limitations
for “any ‘action, suit or proceeding for the enforcement of any
civil fine, penalty, or forfeiture, pecuniary or otherwise.’” 581
U.S. 455, 457, 467 (2017); see, e.g., United States v. Jumper, 74
F.4th 107, 112 (3d Cir.), cert. denied, 144 S. Ct. 406 (2023)
(collecting cases) (explicitly considering Kokesh but holding that
“[e]ight circuits have preceded us in holding that disgorgement is
not a criminal punishment and thus does not implicate the Double
Jeopardy Clause”); United States v. Bank, 965 F.3d 287, 291 (4th
Cir. 2020) (explicitly considering Kokesh and still “join[ing]
with every other circuit to have decided the issue in holding that
disgorgement

in

an

SEC

proceeding

is

not

a

criminal

penalty

pursuant to the Double Jeopardy Clause”); United States v. Dyer,
908 F.3d 995, 1003 (6th Cir. 2018) (explicitly considering Kokesh
but adopting the “Second Circuit's analysis of the Hudson factors
and conclusion that disgorgement is not a criminal penalty”); see
also Sec. & Exch. Comm'n v. Sharp, 626 F. Supp. 3d 345, 380 (D.
Mass. 2022) (noting that “several sister circuits agree that
disgorgement has not ‘historically been viewed as punishment,’”
quoting Palmisano and citing Bank and Dyer).
In S.E.C. v. Palmisano, the pro se defendant argued that the
judgment ordering him to pay disgorgement and civil penalties
violated the Double Jeopardy Clause by punishing him for the same
12

conduct from a parallel criminal proceeding. See 135 F.3d at 862.
The Second Circuit, applying Hudson, denied the Double Jeopardy
claim and affirmed the judgment, with the only modification being
that

“to

the

extent

that

[the

defendant]

makes

payment

of

restitution as ordered in the judgment entered in the criminal
case, those payments shall offset his disgorgement obligation in
the present case[.]” Id. at 866–67.
District

courts

in

this

Circuit

have

similarly

entered

judgments with the same remedies at issue here in SEC actions that
related to criminal actions; here, the civil and criminal actions
were brought or unsealed the same day. See, e.g., S.E.C. v.
Baldassare,

No.

11-CV-5970

ARR

VVP,

2014

WL

2465622,

at

*1

(E.D.N.Y. May 29, 2014) (adopting a report and recommendation
granting the SEC’s motion for a default judgment that “enjoined
[the defendant] from committing further violations of the federal
securities laws and from engaging in future offerings of penny
stock” and finding the defendant liable for disgorgement and
prejudgment interest, “deemed fully satisfied by the forfeiture
order entered against [defendant] and his co-defendants in the
parallel criminal proceeding”); Sec. & Exch. Comm'n v. Curshen,
No. 08 CIV. 7893 (PGG), 2014 WL 12791876, at *9-12 (S.D.N.Y. Mar.
21, 2014) (granting the SEC’s motion for summary judgment under
collateral estoppel based on the defendant’s criminal conviction
and ordering the SEC to submit a proposed judgment that included,
13

inter alia, a penny stock bar, disgorgement, and prejudgment
interest); Credit Bancorp, Ltd., 738 F. Supp. 2d at 379 (granting
the SEC’s motion for summary judgment for securities law violations
where the defendant had already been sentenced to imprisonment and
restitution in a parallel criminal case, where the motion included
a

“permanent

injunction

against

future

violations

of

these

statutes; disgorgement; and a civil monetary penalty”).

For Mr. Uboh’s Consent Judgment to violate Double Jeopardy,
its penalties must be criminal. See Palmisano, 135 F.3d at 864. To
the extent Mr. Uboh contends the injunctions against violating
relevant
offerings

securities
violate

laws

Double

and

participating

Jeopardy,

his

in

arguments

penny

stock

fail.

These

penalties are civil. See Credit Bancorp, Ltd., 738 F. Supp. 2d at
389 (noting that, among others, “injunctions are civil penalties,
and thus do not violate the Double Jeopardy Clause”); see also
U.S. v. Tommassello, 178 F. App'x 139, **1 (3d Cir. 2006) (per
curiam)

(citing

Palmisano,

noting

that

“[t]he

permanent

injunction…in the SEC action is not a criminal punishment and did
not trigger the protections of the Double Jeopardy Clause”).
District courts in this Circuit have imposed injunctions and penny
stock bars following the resolution of criminal proceedings for
the same underlying conduct. See, e.g., Baldassare, No. 11-CV-5970

14

ARR VVP, 2014 WL 2465622, at *1; Curshen, No. 08 CIV. 7893 (PGG),
2014 WL 12791876, at *9-12.
The Consent Judgment also provides that Mr. Uboh may be
ordered to pay disgorgement and civil penalties determined by the
Court upon the SEC’s motion. (ECF No. 23, Consent Judgment ¶ 3.)
In Liu v. Securities and Exchange Commission, the Supreme Court
recently upheld the SEC’s authority to obtain disgorgement awards
from wrongdoers under 15 U.S.C. § 78u(d)(5), part of the Exchange
Act, so long as “‘a disgorgement award [] does not exceed a
wrongdoer's net profits and is awarded for victims,’” and where
net profits consider a court’s deduction of legitimate expenses
before ordering disgorgement. Sec. & Exch. Comm'n v. Penn, No. 14CV-581 (VEC), 2021 WL 1226978, at *10 (S.D.N.Y. Mar. 31, 2021),
aff'd sub nom. United States Sec. & Exch. Comm'n v. Penn, No. 211348-CV, 2022 WL 2517218 (2d Cir. July 7, 2022) (quoting Liu v.
Sec. & Exch. Comm'n, 591 U.S. 71, 74, 91-92 (2020)).
As noted, the SEC has not yet moved before this Court to
resolve the open issues of financial remedies, though it has
requested a schedule to move to do so. (See ECF No. 26, SEC Mem.
at 2.) Although the SEC responded to Mr. Uboh’s motion that it
would

deem

his

payment

obligations

for

“disgorgement

and

prejudgment interest…satisfied by the restitution and Final Order
of Forfeiture ordered in the Criminal Case,” ECF No. 26, SEC Mem.
at 3, and that it does “not seek[]” civil penalties, id. at 5, the
15

Court cannot prematurely review and determine what the SEC only
anticipates it will seek by motion. See Baldassare, No. 11-CV-5970
ARR VVP, 2014 WL 2465622, at *12 (granting the SEC’s motion for
default

judgment

but

recommending

that

only

“upon

the

SEC’s

submission of a proper evidentiary basis for its allegations
concerning

the

defendant's

profits”

would

the

defendant

be

disgorged of ill-gotten profits plus prejudgment interest).
However,

were

the

SEC

to

move

for

this

Court

to

order

disgorgement and prejudgment interest in the manner indicated, Mr.
Uboh’s Double Jeopardy arguments would fail. First, Mr. Uboh agreed
that “in connection with the Commission's motion for disgorgement
and/or

civil

penalties,

and

at

any

hearing

held

on

such

a

motion…Defendant may not challenge the validity of this Consent or
the Judgment[.]” (ECF No. 22-1, Executed Consent ¶ 4.) Second, as
established above, the imposition of disgorgement and prejudgment
interest would not violate Double Jeopardy.

See Palmisano, 135

F.3d at 865; see also Jumper, 74 F.4th at 112; Bank, 965 F.3d at
291; Dyer, 908 F.3d at 1003. Further, the SEC’s indication that it
would deem Mr. Uboh’s payment obligations for “disgorgement and
prejudgment interest…satisfied by the restitution and Final Order
of Forfeiture ordered in the Criminal Case,” ECF No. 26, SEC Mem.
at 3, would likely be consistent with Liu. See Liu, 591 U.S. at 92
(“It is true that when the ‘entire profit of a business or
undertaking’ results from the wrongdoing, a defendant may be denied
16

‘inequitable deductions[.]’”); Penn, No. 14-CV-581 (VEC), 2021 WL
1226978, at *10 (finding that where there was no evidence that the
fraudulent scheme at issue “provided any legitimate services,” the
full

amount

misappropriated

“constitute[d]

ill-gotten

gains”

appropriate for disgorgement).
Finally, Mr. Uboh’s reliance on United States v. Halper, 490
U.S. 435 (1989) and United States v. Park, 947 F. 2d 130 (5th Cir.
1991) is misplaced. The Halper Court viewed “the imposition of
‘punishment’ of any kind” as subject to double jeopardy, and
“whether a sanction constituted ‘punishment’ depended primarily on
whether it served the traditional ‘goals of punishment,’ namely,
‘retribution and deterrence’”; thereafter, the Hudson Court, in
turn, specifically “disavow[ed]” Halper’s method of analysis as
“unworkable”

and

“ill

considered”

for

“deviat[ing]

from

our

traditional double jeopardy doctrine[.]” Hudson, 522 U.S. at 96,
101-102 (discussing the Halper analysis). Mr. Uboh’s argument
mirrors that “unworkable” approach: he argues that “the proposed
sanctions (though civil) are reflective of detrrence [sic] and
retribution involving the same offense(s),” and therefore “are to
be viewed and considered as qualifying as double jeopardy.” (ECF
No. 24, Def. Mem. ¶ 11.) Mr. Uboh’s argument contradicts the
Supreme Court’s holding in Hudson. See 522 U.S. at 102 (“We have
since recognized that all civil penalties have some deterrent
effect….If a sanction must be ‘solely’ remedial (i.e., entirely
17

nondeterrent) to avoid implicating the Double Jeopardy Clause,
then no civil penalties are beyond the scope of the Clause.”). In
turn, Park—in which the defendant raised a Double Jeopardy argument
to challenge a subsequent criminal conviction—is also inapposite:
first, Park relied on Halper for his Double Jeopardy argument,
which Hudson abrogated; second, the Fifth Circuit ultimately found
that Double Jeopardy did not even attach.
II. Scope of Mr. Uboh’s Penny Stock Bar
To the extent Mr. Uboh argues that the scope of the penny
stock bar is improper, this argument is also without merit. Mr.
Uboh fails to show any extraordinary circumstances—or frankly any
circumstances at all—that warrant vacating the Consent Judgment
because it permanently bars Mr. Uboh from participating in penny
stock offerings.
The standard for imposing a penny stock bar “essentially
mirrors that for imposing an officer-or-director bar.” U.S. S.E.C.
v. Universal Exp., Inc., 475 F. Supp. 2d 412, 429 (S.D.N.Y. 2007),
aff'd sub nom. U.S. S.E.C. v. Altomare, 300 F. App'x 70 (2d Cir.
2008).

That

standard

requires

courts

to

assess

“(1)

the

egregiousness of the underlying securities law violation; (2) the
defendant's repeat offender status; (3) the defendant's role or
position when he engaged in the fraud; (4) the defendant's degree
of scienter; (5) the defendant's economic stake in the violation;
and (6) the likelihood that misconduct will recur.” Sec. & Exch.
18

Comm'n v. Cattlin, No. 21-CV-5294-ARR-JRC, 2024 WL 1259101, at
*11–12 (E.D.N.Y. Mar. 8, 2024), report and recommendation adopted,
No. 21CV5294ARRJRC, 2024 WL 1259387 (E.D.N.Y. Mar. 25, 2024)
(quoting S.E.C. v. Patel, 61 F.3d 137, 141 (2d Cir. 1995) (internal
quotations omitted)) (applying the standard to assess a bar on
participating in penny stock offerings).
Each factor is satisfied here. As set forth in the SEC’s
memorandum of law in opposition to Mr. Uboh’s motion, Mr. Uboh was
convicted of conspiracy to commit securities fraud, wire fraud,
and mail fraud in the sale of penny stocks, in a related criminal
case, United States v. Ubong Uboh, 21-CR-00146. 4 (ECF No. 26, SEC
Mem. at 1.) Further, Mr. Uboh has repeatedly violated the law with
fraudulent schemes: Mr. Uboh had previously pleaded guilty to wire
fraud and conspiracy to commit wire fraud in connection with a
timeshare scheme; in September 2013, he was sentenced to three
years of imprisonment and three years of supervised release,
“during which time he engaged in all of the conduct” in the
complaint. (ECF No. 1, Compl. ¶ 11.) In the instant case, over a
4

For its analysis, the Court relies on the allegations in the SEC’s complaint.
In the Consent Judgment, Mr. Uboh consented that he “underst[oo]d and agree[d]
to comply with the terms of 17 C.F.R. § 202.5(e), which provide in part that it
is the Commission's policy ‘not to permit a defendant or respondent to consent
to a judgment or order that imposes a sanction while denying the allegations in
the complaint or order for proceedings.’” (ECF No. 22-1, Executed Consent ¶
12.) As part of Mr. Uboh’s agreement to comply with § 202.5(e), he
“acknowledge[d] the guilty plea for related conduct” and, among other things,
consented that “upon the filing of this Consent, Defendant hereby withdraws any
papers filed in this action to the extent that they deny any allegation in the
complaint[.]” (Id.)

19

two-year period, Mr. Uboh himself worked in the call room and
specifically solicited retail investors making numerous fraudulent
representations with the requisite scienter, according to the SEC.
(Id. ¶¶ 18, 21.) The SEC alleges Mr. Uboh received $341,898 from
bank accounts that the call room manager controlled. (Id. ¶ 22.)
Finally, there is a likelihood that the conduct will recur, as Mr.
Uboh explicitly states that his “sole means of employment upon
release” is trading stock. (ECF No. 24, Def. Mem. ¶ 5.)
Mr. Uboh fails to offer any valid reason—let alone demonstrate
exceptional circumstances—that the Consent Judgment to which he
agreed permanently barring him from participating in penny stock
offerings is improper under this standard. Mr. Uboh mainly takes
issue that the “judgment is requesting that Defendant consent to
being permanently prohibited from engaging and/or participating in
any means of 'trading' for the purposes of the stock market and/or
exchange market(s),” but that this is Mr. Uboh’s sole means of
employment upon release, and that “[i]n other much higher profile
cases of this type and involving much larger amounts of money;
those defendants were only temporarily barred from participating
in the acts of 'trading,' if they were sanctioned at all in that
manner.” (ECF No. 24, Def. Mem. ¶ 5.) The implication that “being
permanently prohibited from engaging and/or participating in any
means

of

‘trading’”

will

inappropriately

limit

his

means

of

employment is neither compelling nor an exceptional circumstance
20

warranting

relief.

Indeed,

the

prohibition

bars

him

from

participation in penny stock offerings. (Id. (emphasis added).)
Further, the Court agrees with the SEC that the “penny stock bar
and an injunction are needed particularly because Uboh plans to
again seek to work in the securities industry when he is released
from prison.” (ECF No. 26, SEC Mem. at 2.)
Conclusion
Accordingly, the Court DENIES Mr. Uboh’s motion. The Court
shall schedule a telephone status conference with the parties to
discuss the briefing schedule for the SEC’s motion for outstanding
financial remedies. The SEC shall serve Mr. Uboh with a copy of
this Memorandum and Order at his current prison address and note
service on the docket by June 5, 2024. The Clerk of Court is
respectfully requested to amend the caption to reflect Mr. Uboh’s
known aliases: “Nedi Shupo,” “Frank Goldman,” “Jonathan Goldman,”
and “Nino.”
SO ORDERED.
Dated:

June 4, 2024
Brooklyn, New York

_______________________________
KIYO A. MATSUMOTO
United States District Judge
Eastern District of New York

21