US Securities and Exchange Commission v. Hanson et al

Filing 5

CONSENT JUDGMENT. Signed by Chief Judge Robert J. Conrad, Jr on 8/27/2009. (tmg)

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION No. 3:09-CV-336 SECURITIES AND EXCHANGE COMMISSION, ) ) Plaintiff ) ) v. ) ) SIDNEY S. HANSON, CHARLOTTE M. HANSON ) QUEEN SHOALS, LLC, QUEEN SHOALS II, LLC, ) QUEEN SHOALS CAPITAL, LLC, QUEEN SHOALS ) FUND, LLC, QUEEN SHOALS GROUP, LLC, ) QUEEN SHOALS HOLDINGS, LLC, DOMINION ) GROWTH FUND, LLC, DYNASTY GROWTH FUND, ) LLC, HERITAGE GROWTH FUND, LLC, SECURE ) WEALTH FUND, LLC, SELECT FUND, LLC and ) TWO OAKS FUND, LLC, ) ) Defendants. ) ________________________________________________) JUDGMENT AS TO DEFENDANTS SIDNEY S. HANSON, CHARLOTTE M. HANSON, QUEEN SHOALS, LLC, ET AL. Plaintiff Securities and Exchange Commission having filed a Complaint and Defendants Sidney S. Hanson; Charlotte M. Hanson; Queen Shoals, LLC; Queen Shoals II, LLC; Queen Shoals Capital, LLC; Queen Shoals Fund, LLC; Queen Shoals Group LLC; Queen Shoals Holdings, LLC; Dominion Growth Fund, LLC; Dynasty Growth Fund, LLC; Heritage Growth Fund, LLC; Secure Wealth Fund, LLC; Select Fund, LLC; and Two Oaks Fund, LLC ("Defendants") having entered a general appearance; consented to the Court's jurisdiction over them and the subject matter of this action; and consented to entry of this Judgment without admitting or denying the allegations of the Complaint (except as to jurisdiction); waived findings of fact and conclusions of law; and waived any right to appeal from this Judgment:

I. IT IS HEREBY ORDERED, ADJUDGED, and DECREED that Defendants and Defendants' agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of this Judgment by personal service or otherwise are 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) (b) to employ any device, scheme, or artifice to defraud; 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. II. IT IS HEREBY FURTHER ORDERED, ADJUDGED, and DECREED that Defendants and Defendants' agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of this Judgment by personal service or otherwise are permanently restrained and enjoined from violating Section 17(a) of 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 mails, directly or indirectly:

(a) (b) or

to employ any device, scheme, or artifice to defraud; to obtain money or property by means of any untrue statement of a material fact 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 HEREBY FURTHER ORDERED, ADJUDGED, and DECREED that Defendants and Defendants' agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of this Judgment by personal service or otherwise are 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 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]. IV. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants 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 1, 2008, based on the 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 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 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) Defendants will be precluded from arguing that they did not violate the federal securities laws as alleged in the Complaint; (b) Defendants 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 HEREBY 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 Defendants shall comply with all of the undertakings and agreements set forth therein. VI. IT IS HEREBY FURTHER ORDERED, ADJUDGED, and DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Judgment.

Signed: August 27, 2009