Opinion
C 02 4105 (WHA)
March 1, 2004
Joaquin M. Sena, Washington, DC, for Plaintiff Securities and Exchange Commission
James A. Howell, San Francisco, CA, for Plaintiff Securities and Exchange Commission
FINAL JUDGMENT AS TO JONATHAN A. BECK
The Securities and Exchange Commission (Commission) having filed a Complaint and Defendant Jonathan A. Beck (BECK) having entered a general appearance; consented to the Court's jurisdiction over BECK and the subject matter of this action; consented to entry of this Final 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 Final Judgment:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that BECK, his agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of this Final Judgment by personal service or otherwise are permanently restrained and enjoined from, directly or indirectly, through the use of any means or instrumentality of interstate commerce or of the mails, or of the facilities of a national securities exchange:
(1) employing any device, scheme, or artifice to defraud,
(2) making any untrue statement of a 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 are made, not misleading, or
(3) engaging in any transaction, act, practice, or course of business which operates or would operate as a fraud or deceit on any person,
in connection with the purchase or sale of any security, in violation of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) [ 15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [ 17 C.F.R. § 240.10b-5].
II.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that BECK, his agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of this Final Judgment by personal service or otherwise are permanently restrained and enjoined from, directly or indirectly, knowingly circumventing or knowingly failing to implement a system of internal accounting controls or knowingly falsifying or causing to be falsified, any book, record, or account described in Section 13(b)(2) of the Exchange Act [ 15 U.S.C. § 78m(b)(2)], in violation of Section 13(b)(5) of the Exchange Act [ 15 U.S.C. § 78m(b)(5)] and Exchange Act Rule 13b2-1 [ 17 C.F.R. § 240.13b2-1].
III.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that BECK, his agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of this Final Judgment by personal service or otherwise are permanently restrained and enjoined from, directly or indirectly, aiding and abetting any violation of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act [ 15 U.S.C. § 78m(b)(2)(A) and 78m(b)(2)(B)] by any issuer of a security registered pursuant to Section 12 of the Exchange Act [ 15 U.S.C. § 781] or any issuer which is required to file reports pursuant to Section 15(d) of the Exchange Act [ 15 U.S.C. § 78o(d)], by:
(A) failing to make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer;
(B) failing to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary (I) to permit preparation of financial statements in conformity with generally accepted accounting principles (GAAP) or any other criteria applicable to such statements and (II) to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
IV.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that BECK pay disgorgement in the amount of $586,368, representing losses he avoided from transactions in the securities of Critical Path, Inc., as alleged in the Commission's Complaint, together with pre-judgment interest in the amount of $112,952. Based upon Defendant's sworn representations in his Statement of Financial Condition dated December 11, 2003, and other documents submitted to the Commission, payment of all but $26,500 of the disgorgement and pre-judgment interest thereon is waived, contingent upon the accuracy and completeness of his Statement of Financial Condition. The determination not to impose a civil penalty and to waive payment of all but $26,500 of the disgorgement and pre-judgment interest is contingent upon the accuracy and completeness of BECK's Statement of Financial Condition. If at any time following the entry of this Final Judgment the Commission obtains information indicating that BECK's representations to the Commission concerning his assets, income, liabilities, or net worth were fraudulent, misleading, inaccurate, or incomplete in any material respect as of the time such representations were made, the Commission may, at its sole discretion and without prior notice to BECK, petition the Court for an order requiring BECK to pay the unpaid portion of the disgorgement, pre-judgment and post-judgment interest thereon, and the maximum civil penalty allowable under the law. In connection with any such petition, the only issue shall be whether the financial information provided by BECK was fraudulent, misleading, inaccurate, or incomplete in any material respect as of the time such representations were made. In its petition, the Commission may move this Court to consider all available remedies, including, but not limited to, ordering BECK to pay funds or assets, directing the forfeiture of any assets, or sanctions for contempt of this Final Judgment. The Commission may also request additional discovery. Beck may not, by way of defense to such petition: (1) challenge the validity of this Final Judgment or the Consent; (2) contest the allegations in the Complaint filed by the Commission; (3) assert that payment of disgorgement, pre-judgment and post-judgment interest or a civil penalty should not be ordered; (4) contest the amount of disgorgement and pre-judgment and post-judgment interest; (5) contest the imposition of the maximum civil penalty allowable under the law; or (6) assert any defense to liability or remedy, including, but not limited to, any statute of limitations defense.V.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that BECK shall pay disgorgement of $26,500 to the Registry of the Court within ten days of entry of the Final Judgment. Such payment shall be made by cashier's check, certified check, or United States postal money order drawn to the order of "Clerk, United States District Court, Northern District of California," and shall be accompanied by a cover letter identifying BECK as a defendant in this action; setting forth the title and civil action number of this action and the name of this Court; and specifying that payment is made pursuant to this Final Judgment. BECK shall simultaneously transmit photocopies of such payment and letter to the Commission's counsel in this action. By making this payment, BECK relinquishes all legal and equitable right, title, and interest in such funds, and no part of the funds shall be returned to BECK. The Clerk shall deposit the funds into an interest bearing account with the Court Registry Investment System (CRIS). These funds, together with any interest and income earned thereon (collectively, the Fund), shall be held by the CRIS until further order of the Court. In accordance with the guidelines set by the Director of the Administrative Office of the United States Courts, the Clerk is directed, without further order of this Court, to deduct from the income earned on the money in the Fund a fee equal to ten percent of the income earned on the Fund. Such fee shall not exceed that authorized by the Judicial Conference of the United States. The Commission may propose a plan to distribute the Fund subject to the Court's approval.
VI.
IT IS 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 BECK shall comply with all of the undertakings and agreements set forth therein.
VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.