Appendix — Sprecher v. Securities & Exchange Commission

Al

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 94-5006 September Term, 1995

92¢v2860

Securities and Exchange Commission,

Appellee

V.

Benjamin G. Sprecher,

Appellant

United States Court of Appeals

For the District of Columbia Circui

FILED APR 09 1996/STAMP

Appeal from the United States District Court

For the District of Columbia

Before: WALD, SILBERMAN, AND SENTELLE. Circuit

Judges

JUDGMENT

This cause was considered on the record on appeal from

the United States District Court for the District of Columbia, and

was briefed by counsel. While the issues presented occasion no

need for a published opinion, they have been accorded full

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consideration by the Court. See D.C. Cir. R. 36(b) (January 1,

1994). On consideration thereof, it is

ORDERED and ADJUDGED, by this Court that the

judgment of the District Court appealed from in this cause is

hereby affirmed for the reasons set forth in the accompanying

memorandum. It is

FURTHER ORDERED, by this Court, sua sponte, that

the Clerk shall withhold issuance of the mandate herein until

seven days after disposition of any timely petition for rehearing.

See D.C. Cir. R. 41(a)(1) (January 1, 1994). This instruction to

the Clerk is without prejudice to the right of any party at any time

to move for expedited issuance of the mandate for good cause

shown.

Per Curiam

For the Court:

Mark Langer/Signature

Mark Langer, Clerk

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SEC v. Sprecher, No. 94-5006

MEMORANDUM

Appellant Benjamin Sprecher challenges the district

court's summary judgment for the Securities and Exchange

Commission determining that Sprecher violated Rule 10b-5 and

§ 5, granting disgorgement of $55,870, and enjoining him from

committing future securities violations and from serving as an

officer or director of any public company. We affirm.

Sprecher was the attorney for and had a controlling role

in World Wide Medical Technology, a shell corporation with no

assets or liabilities. Jacob Roth, a business associate of Sprecher,

owned the majority of World Wide shares and was one of the

three directors. Sprecher and two other business associates, Louis

Foti and Jay Hastings, devised a plan to acquire the World Wide

stock from Roth for $20,000, merge World Wide with another

company, and then sell the stock for a profit. The three associates

wanted to be able to sell the stock freely, however, without the

required disclosures for registered stock. The shares held by Roth

were restricted because he had acquired the shares from World

Wide in a non-public transaction. If the three associates acquired

the stock from Roth, they would be “underwriters” under § 2(1 1),

which defines “underwriter” as someone who purchases a

security from an issuer or a person who controls the issuer with

a view to reselling. 15 U.S.C. § 77(b)(11) (1994). And under §

4(1), underwriters are not exempt from § 5 registration

requirements. 15 U.S.C. § 77(d)(1). Thus, in order to free the

stock from registration requirements, Sprecher looked to Rule

144(k), which creates an exception from the definition of

“underwriter” for securities acquired from an affiliate of the user-

-someone who directly or indirectly controls the issuer--if the

affiliate has held the securities more than three years and, at the

time of the sale, has not been an affiliate for at least three months.

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17 C.F.R. 230.144 (1995). Roth clearly met the first criterion--he

had held the shares more than three years. But as the controlling

shareholder and the only active director, he was still an affiliate

of World Wide.

In order to make it appear that Roth met this second

criterion--and therefore that the shares met the 144(k) exemption-

-Sprecher and his two associates, on March 30, 1988, drafted and

backdated minutes for a fictitious December 27, 1987 board

meeting. In the false minutes, Roth was voted out of control and

replaced by new directors, making it appear that as of March 30,

1988, Roth had not been an affiliate for over three months. These

false minutes were mailed to the SEC, with an explanation for

their late arrival, and also to World Wide’s transfer agent with

instructions for him to remove the legend restricting the shares

pursuant to 144(k). The agent complied, and the newly

unrestricted shares were transferred to Sprecher, Foti, and

Hastings. Sprecher continued actively to develop the merger

plans over the next few months, yet he filed a standard quarterly

report (Form 10-Q) on May 31, 1988 with the SEC stating that

World Wide had “no prospects” of a merger. The merger took

place, and between July and December, 1988, Sprecher sold

unrestricted, unregistered shares of World Wide to the public,

making a profit of $55,870.

Sprecher was convicted in the Southern District of New

York for perjury, obstruction of justice, making false statements,

and conspiring to sell unregistered securities unlawfully. United

States v. Sprecher, 783 F.Supp. 133 (S.D.N.Y. 1992). The trial

court determined the securities were not exempt from registration

because Roth was an affiliate of World Wide at least through

March 31, 1988, so the transfer of shares to Sprecher, also an

affiliate of the company, did not free them from registration

requirements under Rule 144. 783 F.Supp. at 158-59. The court

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also found that Sprecher made false statements by filing with the

SEC false corporate minutes and false declarations that no merger

was contemplated. /d. at 161. It imposed a fine of $50,000 based

on the costs of incarceration. See SEC App. 317 (sentencing

hearing transcript). On appeal, the Second Circuit affirmed, but

remanded for resentencing. United States v. Sprecher, 988 F.2d

318 (2d Cir. 1993). |

The SEC subsequently brought this civil action in the

District of Columbia District Court charging violations of Rule

10b-5 and § 5 and seeking injunctive relief and disgorgement.

The district court determined that Sprecher was collaterally

estopped from challenging the Rule 10b-5 and § 5 claims because

substantially the same violations and underlying facts formed the

basis for his criminal conviction, and that his affirmative defenses

were without merit. Sprecher’s counterclaim for damages and

injunctive relief, based on an alleged pattern of SEC misconduct,

was barred by § 21(g), which prohibits consolidating or

coordinating any other action with any action by the Commission

for equitable relief without SEC consent, even if the claims

“involve common questions of fact.” 15 U.S.C. § 78u(g) (1994).

The court ordered disgorgement of the $55,870 profit, concluding

disgorgement was not precluded by the criminal court’s $50,000

fine, and enjoined Sprecher from violating the securities laws in

the future and from serving as an officer or director of any public

company pursuant to the Remedies Act of 1990, 15 U.S.C.

§§ 78u(d)-(e) (1994).

Sprecher repeats on appeal his contention that he was not

collaterally estopped from litigating whether he violated Rule

10b-5 and § 5. Rule 10b-5 makes unlawful “any untrue statement

of a material fact” or any omission of a material fact “in

connection with the purchase or sale of any security.” 17 C.F.R.

240.10b-5 (1995). The New York court found that Sprecher

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intentionally made false statements in connection with the

purchase or sale of a security, but it did not determine that the

statements were material, because materiality was not an element

of the criminal offense charged. The district court here

nevertheless applied collateral estoppel, without explicitly

addressing materiality. We agree with the SEC, however, that the

statements were material as a matter of law. The statements

involved who had control over the company--and therefore

whether the shares were lawfully exempt from registration--and

merger negotiations. We think it beyond question that these

statements would be substantially likely to be considered

significant information by any reasonable investor. TSC /ndus..,

Inc. v. Northway, Inc., 426 U.S. 438, 448 (1976).

Sprecher similarly challenges the claim under § 5, which

makes it unlawful to sell unregistered securities unless the

securities qualify for an exemption. 15 U.S.C. § 77(e) (1994).

He claims that the New York court did not decide whether the

stock was exempt from registration, and that even if the stock

were not eligible for the Rule 144(k) exemption, it was otherwise

exempt under § 4(1). Despite Sprecher’s attempts to distort the

record, the New York court explicitly determined that the shares

were not legitimately exempt from registration under Rule

144(k). 783 F.Supp. at 159. And although it did not address §

4(1) directly, the court stated that no other exemption was

available, and in any event its determination that Sprecher and

Roth were both Wold Wide affiliates (controlling persons)

necessarily bars any exemption under § 4(1). Sprecher both

bought the shares from a controlling shareholder with a view to

distribution, and was a controlling person himself in the

corporation; either of these suffices to make him an underwriter

under § 4(1), and therefore not exempt from § 5 registration

requirements. See § 2(11); United States v. Sherwood, 175

F.Supp. 480, 482-83 (S.D.N.Y. 1959).

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Sprecher’s affirmative defense of equitable estoppel and

: his counterclaim for damages and for injunctive relief, which are

both based on the same allegations of a pattern of Commission

. misconduct, are similarly barred. These allegations were litigated

} fully in Sprecher’s motion to suppress and his post-conviction

motions in the criminal trial. We therefore do not have to reach

the issue of whether § 21(g) bars the counterclaim. But we think

the district court likely correct. The rationale of the rule is to

allow quick resolution of SEC actions, and even if based on the

same facts--which the statute expressly says is not controlling--

| counterclaims might raise additional issues, such as immunity or

. the appropriate relief. Sprecher claims § 21(g) is only a venue

provision that cannot bar counterclaims, which are really part of

the same suit. But § 21(g)’s language is broader than Sprecher

suggests. See, e.g, SEC v. Electronics Warehouse, Inc., 689

F.Supp. 53, 72 (D.Conn. 1988), aff'd, 891 F.2d 457 (2d Cir.

1989), cert. denied, 496 U.S. 942 (1990).

Finally, Sprecher’s contentions that the court is precluded

from imposing either disgorgement or an officer and director bar

are meritless. Disgorgement is an equitable remedy, not a

punishment like a fine. SEC v. Bilzerian, 29 F.3d 689, 696 (D.C.

Cir. 1994). The New York court expressly imposed the $50,000

fine to account for prison costs, and not as restitution or

disgorgement. The D.C. district court therefore validly could

order disgorgement. And its injunction barring Sprecher from

serving as an officer or director also is valid as an exercise of its

general equitable powers, since the conduct prohibited is similar

in nature to the violations for which Sprecher was convicted. See

Franklin v. Gwinnett County Public Schools, 112 S.Ct. 1028,

1034-35 (1992); NLRB v. Express Publishing Co., 312 U.S. 426,

435-36 (1941); Bilzerian, 29 F.3d at 695. It appears that Sprecher

concedes the court could impose an officer and director bar under

its general equitable powers in an appropriate case, but argues

Pe

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that an injunction here is inappropriate because he was not an

officer or director. Sprecher’s apparent concession is correct--a

court may impose such a bar where appropriate. See SEC v.

Posner, 16 F.3d 520, 521-22 (2d Cir. 1994), cert. denied, 115

S.Ct. 724 (1995). And whether the person enjoined has held that

precise position cannot be dispositive; the critical issue is whether

the injunction restrains acts “of the same type or class” or that

“may fairly be anticipated from the defendant’s conduct in the

past.” Express Publishing, 312 U.S. at 435. The district court

appropriately exercised its discretion here since Sprecher had a

controlling, fiduciary role in World Wide equivalent to an officer

or director’s role and his security laws violations were flagrant

and deliberate, making it likely that he would commit similar

future violations if holding an officer or director position.

Although the court imposed the bar pursuant to the Remedies Act

of 1990, we can affirm on other grounds. We therefore do not

reach the issue of the retroactive application of the Remedies Act

of 1990.

AQ

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 94-5006 September Term, 1995

USDC CV 92-2860

Securities and Exchange Commission,

Appellee

V.

Benjamin G. Sprecher,

Appellant

nat te ee ett eee een re eee

BEFORE: Wald, Silberman, and Sentelle, Circuit

Judges

ORDER

Upon consideration of appellant's petition for

rehearing filed April 24, 1996, it is

ORDERED that the petition be denied.

Per Curiam

FOR THE COURT:

|

Alo

Mark J. Langer, Clerk

/Sian

Robert A. Bonner

Deputy Clerk

r

All

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE

COMMISSION,

Plaintiff,

92-2860-LFO

BENJAMIN G. SPRECHER,

)

)

)

)

)

v. ) Civil Action No.

)

)

)

Defendant. )

)

Defendant Benjamin G. Sprecher was convicted of

various counts relating to fraudulent sales of securities and is

currently incarcerated. Plaintiff, the Securities and Exchange

Commission (the “Commission”), now seeks an injunction to

prevent Sprecher from committing future securities violations, to

bar his future participation as an officer or director in any public

corporation, and to require him to disgorge profits that he

allegedly realized from his illegal acts. Sprecher has filed a

counterclaim alleging misconduct on the part of the Commission.

The parties have filed numerous motions. For the reasons set

forth below, the accompanying Order grants plaintiff's motion for

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summary judgment and the relief it seeks. The Order also

dismisses defendant § counterelaimi.

I,

After an extended bench trial in the Southern District of

New York, and based on extensive findings of fact, Judge Miriam

Cedarbaum found defendant guilty of, inter alia.

conspiring to defraud the United States and

making false statements to a government agency

in connection with two separate securities

transactions [and] perjury and obstruction of

justice in connection with an SEC investigation . .

United States v. Sprecher, 783 F. Supp. 133, 137 (S.D.N.Y.

1992), conviction aff'd, 988 F.2d 318 (2d Cir., 1993). Defendant

is currently serving a 37-month prison term.

Subsequent to defendant’s criminal conviction, the

Commission brought this suit to seek appropriate civil penalties

against defendant. Several motions now are ripe. Initially,

plaintiff moved to dismiss defendant's counterclaim and for

summary judgment as to several of defendant's affirmative

defenses. Defendant responded with a motion to dismiss or for

summary judgment on the complaint and for summary judgment

on his counterclaim. Defendant also has requested a discovery

conference. Finally, plaintiff has moved for summary judgment.

II.

A party is entitled to summary judgment when the record

establishes “that there is no genuine issue as to any material fact

and that the moving party is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(c); see Greenberg v. FDA, 803 F.2d

on

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1213, 1215-16 (D.C. Cir. 1986). The undisputed facts in this

record indicate that plaintiff's motion for summary judgment

should be granted.

A.

Plaintiff alleges that defendant violated Sections 5 and

17(a) of the Securities Act of 1933, 15 U.S.C. §§ 77e, 77q(a), and

Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.

§ 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5; in

addition, plaintiff claims that defendant aided and abetted

violations of Section 13(a) of the Securities Exchange Act, 15

U.S.C. § 78m(a), and several rules thereunder. Substantially, the

same violations and underlying facts formed the basis for

defendant's criminal conviction. Generally, a criminal conviction

collaterally estops relitigation in a subsequent civil action of the

factual issues essential to the disposition of the criminal case.

See, ¢.g., Local 167, Int'l Brotherhood of Teamsters v. United

States, 291 U.S. 293, 298 (1934).

Defendant's pleadings repeatedly assert without support

that plaintiff engaged in misconduct in connection with

defendant's criminal prosecution and that his conviction was in

error. Defendant's criminal trial extended over thirteen days;

seventeen witnesses testified. A United States District Judge

found defendant guilty beyond a reasonable doubt, and the Court

of Appeals affirmed. Defendant has offered no reason for

revisiting those courts’ determinations here.

B.

Defendant attempts to raise several affirmative defenses

against this action. All of the defenses are unavailing, none

defeats plaintiff's motion for summary judgment. For example,

defendant charges prosecutorial misconduct in the course of the

investigation that led to his criminal conviction. Such an unclean

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hands defense does not lie in a civil enforcement action brought

by a federal agency, as distinguished from a private plainuff. See

Pan American Petroleum & Transport Co. v. United States, 273

U.S. 456, 506 (1927); United States v. Second Nat'l Bank, 502

F.2d 535, 548 (Sth Cir. 1974), cert. denied, 421 U.S. 912 (1975).

In addition, defendant invokes a state statute of

limitations. State limitations statutes generally do not bar federal

civil enforcement actions. See United States v. Summerlin, 310

U.S. 414, 416 (1940). Time limitations on private securities

actions do not apply to this federal enforcement proceeding. Cf.

Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 111 S.

Ct. 2773, 2776 (1991). Similarly, the government is not subject

to the defense of laches when acting in a nonproprietary capacity.

Summerlin, 310 U.S. at 416. Federal courts have applied this bar

to laches in the securities context. See, e.g., SEC v. Gulf &

Western Industries, 502 F. Supp. 343, 348 (D.D.C. 1980).

None of the other affirmative defenses that defendant

asserts, including res judicata, collateral estoppel, and nonjoinder

of necessary parties, bears on this action.

ind

Each of the remedies that plaintiff seeks provides

appropriate relief in light of defendant’s several proven violations

of the securities laws. Sections 21(d) and (e) of the Exchange

Act, 15 U.S.C. §§ 78u(d) and (e), authorize injunctive relief

against persons engaged in violations of the Exchange Act or

rules thereunder. Once a violation of law is established, future

violations can be enjoined if the defendant’s past conduct

indicates a reasonable likelihood of further, future violations.

SEC vy. First City Financial Corp., 890 F.2d 1215, 1228 (D.C.

Cir. 1989). In this case, defendant was convicted of knowingly

and repeatedly viclating the securities laws. He remains capable

Aas. tn dew Cae

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of violating the securities !aws, and his convictions for making

false statements and perjury cast serious doubt on his

trustworthiness in the future.

A federal court may bar a person from future service as an

officer or director of a public corporation if that person has

violated section 10(b) of the Exchange Act and committed acts

that demonstrate “substantial unfitness to serve a8 an officer oF

director.” 15 U.S.C. § 78u(d)(2). The Senate Nanking

Committee's report on this provision stated that a permanent bar

“is especially appropriate in cases in which a defendant has

engaged in fraudulent conduct while sefViNg In a corporate oF

other fiduciary capacity.” S. Rep. No. 337, !Olst Cong,, 2d Sess,

22 (1990). Defendant's knowingly fals¢ filings of material

documents with the Commission and other fraudulent acts found

by Judge Cedarbaum, such as his fradulent preparation of

corporate board meeting minutes, see 783 F. Supp. at 144-45,

plainly violated section 10(b). Barring defendant from serving as

an officer or director, like enjoining hi™ from serving as an

officer or director, like enjoining him fro™ future violations of

the securities laws, is an appropriate sanction in light of the

conduct proved against him and the risk Of its repetition.

Finally, in the circumstances here, disgorgement of illegal

profits is an appropriate equitable remedy “to deprive a

wrongdoer of his unjust enrichment an“ to deter others trom

violating the securities laws.” First City.'inaneial, 890 I 2d at

1230. While a court’s equitable power eXtends only lo property

causally related to the wrongdoing, |i, at !241, here the

uncontroverted evidence establishes thal defendant realived

$55,869.75 from stock sales that Judge Cedarbaum found to have

been tainted with fraud. Accordingly, diagorgement of this

amount is appropriate. Plaintiff further seeks an award of

prejudgment interest earned to date. Prejudgiment interest on the

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determinable amount of illegal profits (i.e., $55,869.75) is an

appropriate element of disgorgement. See, cg. SEC vy Tone,

833 F.2d 1086, 1087 (2d Cir, 1987),

Il,

Defendant's counterclaim charges plaintiff with fraud,

obstructing justice, and various other alleged acts of misconduct

in the course of its criminal case against defendant, The

counterclaim seeks injunctive relief, money damages, and other

penalties, Seetion 21(g) of the Securities Exchange Act of 1934,

1S U.S.C, § 78u(g), bars any counterclaim in this proceeding.

That statute prohibits any other action from being “consolidated

or coordinated” with any “action for equitable relief instituted by

the Commission,” even if the claims “involve common issues of

fact.” Id, This provision bars defendant's counterclaim, See,

eg. SEC v, Profit Enterprises, Inc., No, 90-2020 (9,D.C,

December 8, 1992). Plaintiffs motion to dismiss the

counterclaim must be granted.

Defendant’s request for a discovery conference is without

merit and, in any event, is moot. Defendant has not identified

any particular discovery disputes or moved to compel any

discovery. He has asserted that plaintiff's claims of privilege

with regard to certain documents are improper, but he has failed

to demonstrate that any of plaintiffs claims of privilege is

defective, Plaintiff, for its part, has provided cogent and credible

explanations for all of its claims of privilege, Defendant has also

expressed a desire to depose various Commission officials, but he

failed to notice any such depositions within the period set for

diseovery,

Date: December tS. 190) Louis I Oberdortin Signature

UNITED STATES DISTRICT JUDGE

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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE

COMMISSION,

)

)

)

Plaintiff, )

) Civil Aetion No

Vy ) 92-2860eL PFO

)

BENJAMIN G, SPRECHER, )

)

)

)

Defendant,

DEC 16 1993

CLERK, U.S. DISTRICT COURT

DISTRICT OF COLUMBIA/STAMP

ORDER

For the reasons stated in the accompanying Memorandum,

it is this |Sth day of December, 1993, hereby

ORDERED: that plaintiffs motion for summary

judgment should be, and are hereby, GRANTED, and it is further

ORDERED; that plaintiffs motion to dismiss

defendant's counterclaim should be, and is hereby, GRANTED,

and that the counterelaim is DISMISSED) and it ia further

ORDERED; — that defendant's motion to diamias or in the

alternative for summary judgment to diamias the complaint

should be, and ia hereby, DENTED) and it is further

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ORDERED: that defendant’s motion for summary

judgment on his counterclaim should be, and is hereby, DENIED;

and’ that it is further

ORDERED; — that defendant's request for a discovery

conference should be, and is hereby, DENIED, and it is further

ORDERED; — that defendant should be, and is hereby,

permanently ENJOINED pursuant to 15 U.S.C, §§ 78ucd) and (e)

from Violating any federal statute that regulates securities; and it

in further

ORDERED; that defendant should be, and is hereby,

permanently ENJOINED pursuant to 15 U.S.C, § 78u(d)(2) trom

serving as an officer or director of any corporation whose

securities are publicly traded; and it is further

ORDERED: that judgment should be, and is hereby

entered against defendant for disgorgement of illegal profits in

the amount of $55,869.75 and for prejudgment interest earned on

those profits to date; and it is further

ORDERED: | that, on or before January 7, 1994, plainuff

shall serve and file a calculation of prejudgment interest due and

owing as of the date of this Order; and it is further

ORDERED: that on or before February 7, 1994,

defendant may file an opposition to plaintiff's caleulation,

ure

UNITED STATES DISTRICT JUDGE

Alg

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE

)

COMMISSION, )

)

Plaintiff, )

)

V. ) Civil Action No.

) 92-2860 (LFO)

BENJAMIN G. SPRECHER, )

)

Defendant. )

)

FILED

FEB 11994

CLERK, U.S. DISTRICT COURT

DISTRICT OF COLUMBIA/STAMP

ORDER

Upon consideration of the Motion of Plaintiff Securities

and Exchange Commission for Correction of Form of Order, and

any opposition of the defendant thereto, it is hereby

ORDERED that the Motion for Correction of Form of

Order is granted; and it is further

ORDERED that the Court’s order entered December 16,

1993 is revised to omit the paragraph stating “ORDERED: that

defendant should be, and is hereby, permanently ENJOINED

pursuant to 15 U.S.C. §§ 78u(d) and (e) from violating any

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federal statute that regulates securities; and it is further,” and to

include in its place the following language:

“ORDERED: that defendant, his agents, servants,

employees and attorneys and those persons in active concert or

participation with them who receive actual notice of this order by

personal service or otherwise, and each of them, should be, and

are hereby, permanently ENJOINED pursuant to 15 U.S.C.

§§78u(d) and (e):

I.) from violating Section 5(a) and (c) of the Securities Act of

1933 [15 U.S.C. §7e(a) & (c)] by, directly or indirectly, making

use of any means or instruments of transportation or

communication in interstate commerce or of the mails to:

(A) _ sell securities through the use or medium of any

prospectus or otherwise, absent the availability of

an exemption from registration, unless a

registration statement is in effect as to such

securities; and

(B) offer to sell or offer to buy through the use or

medium of any prospectus or otherwise any

securities, absent the availability of an exemption

from registration, unless a registration statement

has been filed as to such securities, 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].

II.) from violating Section 17(a) of the Securities Act of 1933 [15

U.S.C. §77q(a)] by, directly or indirectly, in the offer or sale of

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any securities by the use of any means or instruments of

transportation or communication in interstate commerce or by the

use of the mails:

(A) employing any device, scheme or artifice to

defraud;

(B) obtaining money or property by means of any

untrue statement of any material fact or omitting

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) engaging in any transaction, practice, or course of

business which operates or would operate as a

fraud or deceit upon the purchaser.

III.) from violating Section 10(b) of the Securities Exchange Act

of 1934 [15 U.S.C. §78}(b)] and Rule 10b-5 [17 C.F.R. §240.10b-

5] promulgated thereunder by, directly or indirectly, in

connection with the purchase or sale of the securities of any

issuer, by the use of any means or instrumentality of interstate

commerce or of the mails, or of any facility of any national

securities exchange:

(A) employing any device, scheme or artifice to

defraud;

(B) making any untrue statement of any material fact

or omitting 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

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(C) engaging in acts, practices, or courses of business

which operate or would operate as a fraud or a

deceit upon any person.

VI.) from violating Section 13(a) of the Exchange Act [15 U.S.C.

§78m(a)] and Rules 13a-11, 13a-13, and 12b-20 [17 C.F.R.

§§240.13a-11, 240.13a-13, and 240.12b-20] promulgated

thereunder by directly or indirectly, or by aiding and abetting the

filing or causing to be filed with the Commission any periodic or

current report, on behalf of any issuer, required to be filed with

the Commission pursuant to Section 13(a) of the Exchange Act

{15 U.S.C. §78m(a)] and the rules and regulations promulgated

thereunder, which contains any untrue statement of material fact,

which omits to state any material fact necessary in order to make

the statements made, in the light of the circumstances under

which they were made, not misleading, or which fails to contain

information required to be contained therein, or which fails to

comply in any material respect with the requirements of such

section and the rules and regulations promulgated thereunder, and

V.) from acting as an officer or director of any issuer that has a

class of securities registered pursuant to section 12 of the

Securities Exchange of 1934 [15 U.S.C. §781] or that is required

to file reports pursuant to section 15(d) of the Exchange Act [15

U.S.C. §780(d)], and it is further:”

UNITED STATES DISTRICT JUDGE

Dated: January 31, 1994