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United States Securities and Exchange Commission v. Powers

United States District Court, Seventh Circuit

January 29, 2014

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
PHILIP T. POWERS, FRANK I. REINSCHREIBER AND GLOBAL FINANCIAL MANAGEMENT, LLC Defendants,

UNITED STATES SECURITIES AND EXCHANGE COMNIESSION, Jonathan S. Polish (Illinois Bar No. 6237890), Chicago, Illinois,

PLAINTIFF'S AGREED MOTION FOR ENTRY OF FINAL JUDGMENT AGAINST DEFENDANT PHILIP T. POWERS

JEFFREY COLE, Magistrate Judge.

Plaintiff Securities and Exchange Commission moves, on an agreed basis, for the entry of a final judgment against defendant Philip T. Powers. In support of its motion, the SEC has attached Mr. Powers' consent to the entry of the final judgment as Exhibit 1 to this motion, and has attached the proposed final judgment referenced in that consent as Exhibit 2 to this motion. The SEC respect fully requests that the Court enter the final judgment, and grant such other and further relief as the Court deems just and proper.

Respectfully submitted,

EXHIBIT 1

CONSENT OF DEFENDANT PHILIP T. POWERS

1. Defendant Philip T. Powers ("Defendant") waives service of a summons, acknowledges having been served with the Third Amended Complaint ("Complaint") in this action, enters a general appearance, and admits the Court's jurisdiction over him and over the subject matter of this action.

2. Without admitting or denying the allegations of Count I of the Complaint (except as to personal and subject matter jurisdiction, which Defendant admits), 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 othor things:

(a) permanently restraint; and enjoins Defendant from violations of Section 15(a) of the Exchange Act [15 U.S.C. § 77o(a));
(h) orders Defendant to pay disgorgement in the amount of $77, 560.18, plus prejudgment interest thereon in the amount of $4, 698.52; and
(c) orders Defendant to pay a civil penalty in the amount of $25, 000 under Section 21(d)(3) of the Exchange Act 115 U.S.C. § 78u(d)(3)).

3. Defendant acknowledges that the civil penalty paid pursuant to the Final Judgment may be distributed pursuant to the Fair Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. Regardless of whether any such Fair Fund distribution is made, the civil penalty shall be treated as a penalty paid to the government for all purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, Defendant agrees that he shall not, after offset or reduction of any award of compensatory damages in any Related Investor Action based on Defendant's payment of disgorgement in this action, argue that he is entitled to, nor shall he further benefit by, offset or reduction of such compensatory damages award by the amount of any part of Defendant's payment of a civil penalty in this action (Penalty Offset"). If the court in any Related Investor Action grants such a Penalty Offset, Defendant agrees that he shall, within 30 days after entry of a final order ranting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the Penalty Offset to the United States Treasury or to a Fair Fund, as the Commission directs. Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed in this action. For purposes of this paragraph, a "Related Investor Action" means a private damages action brought against Defendant, by or on behalf of one or more investors based on substantially the same facts as alleged in the Complaint in this action.

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 pay pursuant to the Final Judgment, regardless of whether such penalty amounts or any part thereof are added to a distribution fund or otherwise 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 the Final Judgment, regardless of whether such penalty amounts or any part thereof are added to a distribution fund or otherwise used for the benefit of investors.

5. Defendant agrees that the Court shall determine, upon motion of the Commission ("Motion") whether Defendant shall be permanently barred from participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock. A penny stock is any equity security that has a price of less than five dollars, except as provided in Rule 3a51-1 under the Exchange Act [17 C.F.R. 240.3a51-1]. Defendant: further agrees that in connection with the Motion, 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 Count I of the Complaint; (h) Defendant may not challenge the validity of this Consent or the Final Judgment; (c) solely for the. purposes of such Motion, the allegations of Count I of the Complaint shall be accepted as and deemed true by the Court; and (d) the Court may determine the issues ...


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