Securities And Exchange Commission v. Hernandez et al

Filing 20

JUDGMENT as to Eduardo Hernandez: IT IS HEREBY ORDERED, ADruDGED, AND DECREED that Defendant is permanently restrained and enjoined from violating, directly or indirectly, Section IO(b) of the Securities Exchange Act of 1934 (the "Exchange Act&q uot;) [15 U.S.C. § 78j(b)] and Rule IOb-5 promulgated thereunder [17 C.F.R. § 240.1 0b-5], by using any means or instrumentality of interstate commerce, or of the mails or any facility of any nation securities exchange, in connection with t he 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. SEE ATTACHED ORDER FOR FURTHER DETAILS. 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 Judgment forthwith and without further notice. So Ordered by Judge Gary R. Brown on 9/24/2024. (JC)

FILED
CLERK

UNITED STATES DISTRJCT COURT
EASTERN DISTRJCT OF NEW YORK

1:56 pm, Sep 24, 2024
U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LONG ISLAND OFFICE

SECURJTIES AND EXCHANGE COMMISSION,
Plaintiff,

No. 23 Civ. 8110 (GRB)
v.
EDUARDO HERNANDEZ, CHRJSTOPHER
FLAGG, DAQUAN LLOYD, and COREY ORTIZ,
Defendants.

JUDGMENT AS TO DEFENDANT EDUARDO HERNANDEZ
The Securities and Exchange Commission having filed a Complaint and Defendant
Eduardo Hernandez having entered a general appearance; consented to the Court's jurisdiction
over Defendant and the subject matter of this action; consented to entry of this Judgment; waived
findings of fact and conclusions oflaw; and waived any right to appeal from this Judgment:
I.
IT IS HEREBY ORDERED, ADruDGED, AND DECREED that Defendant is
permanently restrained and enjoined from violating, directly or indirectly, Section IO(b) of the
Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. § 78j(b)] and Rule IOb-5
promulgated thereunder [ 17 C.F.R. § 240.1 0b-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;

1

(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 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).

II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to
Sections 2l(d)(l) and (5) of the Exchange Act [15 U.S.C. § 78u(d)(l) and)(5)], Defendant be
restrained and enjoined from directly or indirectly, trading securities in any brokerage account he
owns, controls, or has access to that does not have settled cash equal to or greater than the
amount of the securities trade(s).
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 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).

2

III.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to Sections
21(d)(l) and (5) of the Exchange Act [15 U.S.C. § 78u(d)(l) and)(5)], Defendant be restrained
and enjoined from opening a brokerage account without first providing to the relevant brokerage
firm(s) a copy of the Commission's filed Complaint in this matter and any judgment that the
Commission may obtain against him in this matter, for a period of time that, upon motion of the
Commission, the Court determines is appropriate. In connection with the Commission's motion
for the Court to determine the appropriate period of time for this injunction, and at any hearing
held on such a motion: (a) Defendant will be precluded from arguing that he did not violate the
federal securities laws as alleged in the Complaint; (b) Defendant may not challenge the validity
of the Consent or this Judgment; (c) solely for the purposes of such motion, the allegations of the
Complaint shall be accepted as and deemed true by the Court; and (d) the Court may determine
the issues raised in the motion on the basis of affidavits, declarations, excerpts of sworn
deposition or investigative testimony, and documentary evidence, without regard to the standards
for summary judgment contained in Rule 56(c) of the Federal Rules of Civil Procedure. In
connection with the Commission's motion for a determination of the appropriate period of time
for this injunction, the parties may take discovery, including discovery from appropriate nonparties.
IV.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
shall pay disgorgement of ill-gotten gains and prejudgment interest thereon; that the amounts of
the disgorgement and civil penalty shall be determined by the Court upon motion of the
Commission; and that prejudgment interest shall be calculated from January 2022, based on the

3

rate of interest used by the Internal Revenue Service for the underpayment of federal income tax
as set forth in 26 U.S.C. § 6621(a)(2). Upon motion of the Commission, the Court shall
determine whether a civil penalty pursuant to Section 21(d)(3) of the Exchange Act [IS U.S.C.
§ 78u(d)(3)] is appropriate and, if so, the amount of the penalty. In connection with the
Commission's motion for disgorgement and/or civil penalties, and at any hearing held on such a
motion: (a) Defendant will be precluded from arguing that he did not violate the federal
securities laws as alleged in the Complaint; (b) Defendant may not challenge the validity of the
Consent or this Judgment; (c) solely for the purposes of such motion, the allegations of the
Complaint shall be accepted as and deemed true by the Court; and (d) the Court may determine
the issues raised in the motion on the basis of affidavits, declarations, excerpts of sworn
deposition or investigative testimony, and documentary evidence, without regard to the standards
for summary judgment contained in Rule 56(c) of the Federal Rules of Civil Procedure. In
connection with the Commission's motion for disgorgement and/or civil penalties, the parties
may take discovery, including discovery from appropriate non-parties.

v.
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 Defendant
shall comply with all of the undertakings and agreements set forth therein.
VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, for purposes of
exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the
allegations in the Complaint are true and admitted by Defendant, and further, any debt for
disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under this

4

Judgment or any other judgment, order, consent order, decree or settlement agreement entered in
connection with this proceeding, is a debt for the violation by Defendant of the federal securities
laws or any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the
Bankruptcy Code, 11 U.S.C. § 523(a)(19).

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 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 Judgment forthwith and without further notice.
Dated: September 24, 2024
Isl Gary R. Brown
UNITED STATES DISTRICT JUDGE

5