United States Securities and Exchange Commission v. Enea

Filing 7

ORDER signed by Judge Rudolph T. Randa on 10/30/2013. SEC to respond to this Decision and Order by 11/29/2013. Subsequent to e-filing, SEC to send copy of any proposed judgment to the Court's proposed order email box: [e-mail]. (cc: all counsel)(cb)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
-vs-

Case No. 13-C-1151

MICHAEL R. ENEA,
Defendant.

DECISION AND ORDER

This matter is before the Court on the motion filed by the Plaintiff Securities
and Exchange Commission (“S.E.C.”) for entry of a proposed “final” Judgment as to
Defendant Michael R. Enea (“Enea”). (ECF No. 4.) The motion, filed on the same
day as the Complaint, is based on the parties’ agreement to settle this action which
alleges that Enea violated Sections 5(a), 5(c), 17(a)(1), (a)(2), and (a)(3) of the
Securities Act of 1933 [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)(1), 77q(a)(2), and
77q(a)(3)], and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 [15
U.S.C. §§ 78j(b) and 78o(a)], and Rules 10b-5(a), (b), and (c) promulgated thereunder
[17 C.F.R. § 240.10b-5(a), (b), and (c)]. Enea has consented to the entry of judgment
against him pursuant to the terms of a consent document (Mot., Ex. A.), and has also
“agree[d] that the Commission may present the Judgment to the Court for signature
and entry without further notice” (Id., Ex. A ¶ 13.) (ECF No. 4-1).

Having considered the fairly detailed contents of the motion as well as the
allegations of the Complaint, the Court concludes that the proposed Judgment is fair,
reasonable, adequate, and in the public interest because it involves disgorgement of
$763,803 gained by Enea together with prejudgment interest in the amount of $79,317,
for a total of $843,120, according to the schedule set forth in paragraph VII of the
Judgment. Such payment will also be secured by real property owned by Enea and his
wife at W204N5925 Lannon Road, Menomonee Falls, Wisconsin 53051 (the
“Property”). The Property is to be placed for sale within 30 days from the entry of
Judgment, with good faith efforts to be made to sell the property within one year from
the entry of Judgment, with sale proceeds (minus real estate commission and payoff of
a mortgage filed on April 20, 2008) payable the S.E.C. Additionally, the Judgment
provides permanent injunctive relief barring Enea and his agents, servants, employees,
attorneys and all persons in active concert with them who receive actual notice of the
Judgment from any future violations of the statutory provisions identified in the
Complaint.
However, consistent with the Court’s directives in United States Securities and
Exchange Commission v. Koss Corporation, Case No. 11-C-991 (E. D. Wis.) (ECF
Nos. 7 & 9), the Court will require that the S.E.C. revise its proposed Judgment to
include, rather than incorporate by reference, provisions of Enea’s consent to
judgment.

See Schmidt v. Lessard, 414 U.S. 473, 476-77 (1974); International

Longshoremen’s Ass’n, Local 1291 v. Philadelphia Marine Trade Ass’n, 389 U.S. 64,
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73-76 (1967); Blue Cross & Blue Shield Ass’n v. Am. Express Co., 467 F.3d 634, 63637 (7th Cir. 2006); Marseilles Hydro Power, LLC v. Marseilles Land & Water Co.,
299 F.3d 643, 646 (7th Cir. 2002).
Furthermore, the revised Judgment should eliminate the statement that “[t]here
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.” While such a statement is required when final judgment is entered as
to “one or more, but fewer than all, claims or parties,” Fed. R. Civ. P. 54(b), the
statement is not appropriate or necessary in this instance because this action involves a
single defendant and resolves all the claims against him. See 10 Charles Alan Wright,
Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure, § 2656 (1998)
(stating the most obvious of the implicit limitations of Rule 54(b) is “when all claims
have been determined as to all parties.”)
And, again, the Court raises the question of whether the proposed Judgment is
a final judgment because it does not expressly state the disposition of the claims
against Enea; e.g., dismissal without prejudice, while including a provision for the
retention of jurisdiction over the enforcement of the terms of the settlement agreement.
With respect to the retention of the Court’s jurisdiction, the SEC’s attention is directed
to Shapo v. Engle, 463 F.3d 641, 642-46 (7th Cir. 2006) and Blue Cross & Blue Shield
Ass’n, 467 F.3d at 636-39.

-3-

NOW, THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY
ORDERED THAT:
The S.E.C. MUST RESPOND to this Decision and Order by November 29,
2013.
Subsequent to e-filing, the S.E.C. is asked to send a copy of any proposed
judgment in a non-PDF format (Word or Word Perfect) to the Court’s proposed order
e-mail box: [e-mail]
Dated at Milwaukee, Wisconsin, this 30th day of October, 2013.

BY THE COURT:

__________________________
HON. RUDOLPH T. RANDA
U.S. District Judge

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