Securities and Exchange Commission v. Galleon Management, LP et al

Filing 231

JUDGMENT #11,1875 in favor of Securities and Exchange Commission against Steven Fortuna in the amount of $ 301,344.00. (Signed by Judge Jed S. Rakoff on 9/29/11) (Attachments: # 1 NOTICE OF RIGHT TO APPEAL)(ml)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
-againstGALLEON MANAGEMENT, LP,
RAJ RAJARATNAM,
RAJIVGOEL,
ANILKUMAR,
DANIELLE CHIESI,
MARK KURLAND,
ROBERT MOFFAT,
NEW CASTLE FUNDS LLC,
ROOMY KHAN,
DEEP SHAH,
ALIHARIRI,
ZVIGOFFER,
DAVID PLATE,
GAUmAM SHANKAR,
SCHOTTENFELD GROUP LLC,
STEVEN FORTUNA,
and
Sl CAPITAL MANAGEMENT, LP,

09 Civ. 8811 (JSR)
ECFCASE

Defendants.

FINAL JUDGMENT AS TO DEFENDANT STEVEN FORTUNA

The Securities and Exchange Commission having tiled a Second Amended Complaint
("Complaint") and Defendant Steven Fortuna ("Defendant") having entered a geneml
appearance; agreed that the Court has jurisdiction over Defendant and the subject matter of this
action; consented to entry of this Final Judgment; waived findings of fact and conclusions of law;
and waived any right to appeal from this Final Judgment:

I.
IT IS HEREBY 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 violating, directly or indirectly, Section
IO(b) of the Securities Exchange Act of 1934 (the "Exchange Act") [IS U.S.C. § 78j(b)] and
Rule 1Ob-5 promulgated thereunder [ 17 C.F.R. § 240.1 Ob-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 ofbusiness which operates or would
operate as a fraud or deceit upon any person.
II.

IT IS HEREBY FURTHER ORDERED, J\I)JUDGED, 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 violating Section 17(a) ofthe Securities
Act of 1933 (the "Securities Act") [IS 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
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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 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.
III.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is
liable for disgorgement in the amount of$193,536, representing profits gained as a result of the
conduct alleged in the Complaint, plus prejudgment interest thereon in the amount of $11,040,
and a civil penalty in the amount of$96,768, under Section 21(d)(3) of the Exchange Act [15
U.S.C. § 78u(d)(3)], Section 21A of the Exchange Act [15 U.S.C. § 78u-l], and/or Section 20(d)
of the Securities Act. [15 U.S.C. § 77t(d)]. In the event that an order offorfeiture is entered
against Defendant in the criminal case before the United States District Court for the Southern
District ofNew York, titled United States v. Steven Fortuna, 10-CR-01003 (SDNY), then
Defendant's disgorgement obligations, including all outstanding pre and post judgment interest,
will be credited dollar for dollar by the amount of the forfeiture order. The monetary obligations
ordered by this Final Judgment shall become due three (3) years from the date of the entry of this
Final Judgment. Defendant shall pay the monetary obligations ordered by this Final Judgment
(minus any amount ordered in forfeiture) by certified check, bank cashier's check, or United
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States postal money order payable to the Securities and Exchange Commission. The payment
shall be delivered or mailed to the Office of Financial Management, Accounts Receivable,
Securities and Exchange Commission, 100 F Street NE, Mail Stop 6042, Washington, DC
20549, and shall be accompanied by a letter identifying Defendant's name as defendant in this
action; setting forth the title and civil action numberofthis action anq the name ofthis Court;
~

.

and specifying that payment is made pursuant to this Final Judgment.; A eopx of the letter shall
•

.

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be sent to counsel of record for the Commission in this action. Defen~t sh~ll pay post-

judgment interest on any delinquent amounts pursu8Jlt to 28-USC.§.J.9Cl .•.

Thb Commission shall

remit the funds paid pursuant to this paragraph to the United States Treasury. Defendant shall
provide counsel of record for the Commission with a copy ofthe Judgment of Conviction in the
criminal action within five (5) days of its entry.

IV.
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.

v.
IT IS FURTHER ORDERED, ADJUDGEQ, AND DECREED that this Court shall retain
jurisdiction of this matter for the purposes of enforcing the tenns of this Final Judgment.

Dated:~J.L

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THIS

DOCUMENT WAS ENTERED

ONTHE~ON

_______

UNITED STATES DISTRICf COURT
SOUTIIERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
-againstGALLEON MANAGEMENT, LP,
RAJ RAJARATNAM,
RAJIVGOEL,
ANILKUMAR,
DANIELLE CHIESI,
MARK KURLAND,
ROBERT MOFFAT,
NEW CASTLE FUNDS LLC,
ROOMY KHAN,
DEEP SHAH,
ALIHARIRI,
ZVIGOFFER,
DAVID PLATE,
GAUTHAM SHANKAR,
SCHOTTENFELD GROUP LLC,
STEVEN FORTUNA,
and
Sl CAPITAL MANAGEMENT, LP,

09 Civ. 8811 (JSR)
ECFCASE

Defendants.

CONSENT OF DEFENDANT STEVEN FORTUNA
1.

Defendant Steven Fortuna ("Defendant") acknowledges having been served with

the Second Amended Complaint (''Complaint") in this action and having entered a general
appearance.
2.

Defendant agrees the Court has jurisdiction over Defendant and over the subject

matter of this action.

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3.

Defendant hereby consents to the entry of the Final Judgment in the form attached

hereto (the "Final Judgment") and incorporated by reference herein, which, among other things:
(a)

permanently restrains and enjoins Defendant from violations of Section
17(a) of the Securities Act of 1933 (the "Securities Act") [15 U.S.C. §
77q(a)], Section 1O(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. § 240.10b-5];

(b)

orders Defendant to pay disgorgement in the amount of$193,536, plus
prejudgment interest thereon in the amount of $11,040, for a total of
$204,576, but provides that in the event that an order of forfeiture is
entered against Defendant in the criminal case before the United States
District Court for the Southern District of New York, titled United States
v. Steven Fortuna, 09-CR-01003 (SONY), then Defendant's disgorgement
obligations, including all outstanding pre and post judgment interest, will
be credited dollar fo~ dollar by the amount of the forfeiture ordered; and

(c)

orders Defendant to pay a civil penalty in the amount of $96,768, under
Section 2l(d)(3) ofthe Exchange Act [15 U.S.C. § 78u(d)(3)J, Section
21A ofthe Exchange Act [15 U.S.C. § 78u-1], and/or Section 20(d) of the
Securities Act. [15 U.S.C. § 77t(d)].

4.

Defendant agrees that he shall not seek or accept, directly or indirectly,

reimbursement or indemnification from any source, including but not limited to payment made
pursuant to any insurance policy, with regard to any civil penalty amounts that Defendant pays
pursuant to a judgment, regardless of whether such penalty amounts or any part thereof are added

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to a distribution fund or otheiWise used for the benefit of investors. Defendant further agrees
that he shall not claim, assert, or apply for a tax deduction or tax credit with regard to any
federal, state, or local tax for any penalty amounts that Defendant pays pursuant to a judgment,
regardless of whether such penalty amounts or any part thereof are added to a distribution fund
or otheiWise used for the benefit of investors.
5.

Defendant waives the entry of findings offact and conclusions oflaw pursuant to

Rule 52 of the Federal Rules of Civil Procedure.
6.

Defendant waives the right, if any, to a jury trial and to appeal from the entry of

the Final Judgment.
7.

Defendant enters into this Consent voluntarily and represent that no threats,

offers, promises, or inducements of any kind have been made by the Commission or any
member, officer, employee, agent, or representative of the Commission to induce Defendant to
enter into this Consent.
8.

Defendant agrees that this Consent shall be incorporated into the Final Judgment

with the same force and effect as iffully set forth therein.
9.

Defendant will not oppose the enforcement of the Final Judgment on the ground,

if any exists, that it fails to comply with Rule 65(d) ofthe Federal Rules of Civil Procedure, and
hereby waives any objection based thereon.
10.

Defendant waives service of the Final Judgment and agrees that entry ofthe Final

Judgment by the Court and tiling with the Clerk of the Court will constitute notice to Defendant
of its terms and conditions. Defendant further agrees to provide counsel for the Commission,
within thirty days after the Final Judgment is tiled with the Clerk of the Court, with an affidavit
or declaration stating that Defendant has received and read a copy of the Final Judgment.

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II.

Consistent with 17 C.F.R. 202.5(f), this Consent resolves only the claims asserted

against Defendant in this civil proceeding. Defendant acknowledges that no promise or
representation has been made by the Commission or any member, officer, employee, agent, or
representative of the Commission with regard to any criminal liability that may have arisen or
may arise from the facts underlying this action or immunity from any such criminal liability.
Defendant waives any claim of Double Jeopardy based upon the settlement of this proceeding,
including the imposition of any remedy or civil penalty herein. Defendant further acknowledges
that the Court's entry of a permanent injunction may have collateral consequences under federal
or state law and the rules and regulations of self-regulatory organizations, licensing boards, and
other regulatory organizations. Such collateral consequences include, but are not limited to, a
statutory disqualification with respect to membership or participation in, or association with a
member of, a self-regulatory organization. This statutory disqualification has consequences that
are separate from any sanction imposed in an administrative proceeding. In addition, in any
disciplinary proceeding before the Commission based on the entry of the injunction in this
action, Defendant understands that he shall not be permitted to contest the factual allegations of
the complaint in this action.
12.

Defendant understands and agrees to comply with 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 allegation in the complaint or order for proceedings." 17 C.F.R. § 202.5. In
compliance with this policy, Defendant agrees: (i) not to take any action or to make or permit to
be made any public statement denying, directly or indirectly, any allegation in the complaint or
creating the impression that the complaint is without factual basis; and (ii) that upon the filing of
this Consent, Defendant hereby withdraw any papers filed in this action to the extent that they

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personal jurisdiction over Defendant in any United States District Court for purposes of
enforcing any such subpoena.
15.

Defendant agrees that the Commission may present the Final Judgment to the

Court for signature and entry without further notice.
16.

Defendant agrees that this Court shall retain jurisdiction over this matter for the

purpose of enforcing the terms of the Final Judgment.
Dated:

08

d3;?DII

~:+Ott:""'-'
Steven Fortuna

On 8 · <:9..3
, 201 I, Sn VcN Fi;.<TU. IVA , a person known to me,
personally appeared before me and acknowledged executing the foregoing Consent.

Approved as to form:

~~~~:L!L\:::t=:
Francis J. DiM to, Esq.
DiMento & Su ivan
7 Fanueil Hall Market Place, 3d Floor
Boston, MA 02 J09

'

Ph: 617.523.5253
Attorney for Defendant Steven Fortuna

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