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Securities and Exchange Commission v. Enterprise Trust Co.

March 5, 2007

SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF,
v.
ENTERPRISE TRUST COMPANY, JOHN H. LOHMEIER, AND REBECCA A. TOWNSEND, DEFENDANTS.



The opinion of the court was delivered by: Judge: James B. Zagel

ORDER APPOINTING RECEIVER OVER ENTERPRISE TRUST COMPANY

This cause coming to be heard on the emergency motion filed by Plaintiff Securities and Exchange Commission ("SEC" or "Commission") filed on March 3, 2008 seeking, among other things, the appointment of a Receiver, and renewed motion for the appointment of a Receiver on March 5, 2008, over defendant Enterprise Trust Company ("Enterprise"), the memorandum of law submitted in support of the emergency motion, the supporting declarations of John Haworth and Benjamin Morof and the exhibits filed in connection therewith;

This Court having previously entered a Temporary Restraining Order and Order for Emergency Relief against all defendants, and an Asset Freeze Order and First Amended Asset Freeze Order against defendants Enterprise Trust Company and John H. Lohmeier ("Lohmeier"), by agreement of the parties;

This Court having conducted hearings on both March 3 and March 4, 2008, at which both parties submitted evidence and made arguments;

The Commission having submitted the credentials of a candidate to be appointed Receiver of all of the assets, properties, books and records, and other items of Enterprise, including any properties, assets and other items held for the benefit of Enterprise by other entities or individuals, and all assets held in the custody of Enterprise for the benefit of any clients of Enterprise (whether custodial or managed) and the Commission has advised the Court that this candidate is prepared to assume this responsibility if so ordered by the Court; and

The Court being fully advised in the premises, the Court finds that a proper showing has been made for the relief granted herein, for the following reasons:

1. Plaintiff has established a prima facie case that Enterprise and Lohmeier have engaged in conduct in violation of Section 10(b) of the Securities Exchange Act of 1934.

2. It appears that Enterprise and Lohmeier have improperly used and dissipated assets that belong to Enterprise clients; and made misleading and incomplete statements to its clients and to broker-dealers concerning the use of those assets.

3. Due in part to Enterprise and Lohmeier's conduct prohibited by statute and regulation, it appears that Enterprise is in a precarious financial condition and some or all of its clients have suffered and may suffer additional financial losses.

4. The appointment of a receiver is necessary to: (a) preserve the status quo; (b) ascertain the rightful ownership interests in certain assets currently within the possession, custody and control of Enterprise, and the disposition of client funds; (c) prevent the further misappropriation or improper use of the property and assets held by Enterprise on behalf of its clients; and (d) prevent the encumbrance or disposal of property or assets rightfully belonging to Enterprise clients.

I. [Appointment]

NOW, THEREFORE, IT IS ORDERED, ADJUDGED, AND DECREED that Phillip L. Stern is hereby appointed the Receiver for Enterprise, its subsidiaries, successors and assigns, for a period of at least 28 days, subject to such extensions as the Court may grant either by motion or on its own initiative. The Receiver is empowered and instructed to perform the following general tasks, as set forth in greater detail herein:

A. administer and manage the business affairs, funds, assets, choses in action and any other property of Enterprise;

B. engage in an independent inquiry concerning Enterprise's finances and operations, including the identification and location of all assets under management;

C. prepare an independent accounting of Enterprise, including the accounting and identification of assets required, as to Enterprise, in Sections II and ...


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