Opinion
Civil No. 2:03 CV0914K
December 19, 2003
Thomas M. Melton, Karen L. Martinez, for Plaintiff
FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING PRELIMINARY INJUNCTION AGAINST LEEWARD CONSULTING GROUP, LLC
Plaintiff Securities and Exchange Commission (the "Commission"), by and through its counsel of record, hereby submits Proposed Findings of Facts and Conclusions of Law.
INTRODUCTION
On October 16, 2003, the Commission filed a civil action against Leeward Consulting Group, LLC ("Leeward") and others for Preliminary Injunction and Other Relief for violations of federal securities laws. Although duly served, Leeward has not responded to the Commission's Motion for Preliminary Injunction. The Commission has submitted evidence supporting the allegations that Leeward violated Section 17(a) of the Securities Act of 1933 ("Securities Act") [ 15 U.S.C. § 77q(a)], Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [ 15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereunder [17C.RF.R. § 240.10b-5]. This matter came on for hearing on December 22, 2003. Appearing on behalf of the Commission was Thomas M. Melton. No appearance was made by Leeward.
FINDINGS OF FACT
1. Leeward Consulting Group, LLC is a Utah limited liability company based in Salt Lake City, Utah and is controlled by David Wolfson. He is its' sole member.
2. In January 2003, Wolfson, through Momentous Group, LLC and Leeward Consulting Group, LLC, helped Valesc orchestrate an offering of up to 10 million shares of its common stock to overseas investors through First Chartered, an alias of Sukumo. Declaration of Scott Frost ("Frost Dec."), ¶¶ 35, 38.
3. On January 10, 2003, Valesc entered into a Finder's Fee Agreement with Momentous and Leeward whereby Valesc agreed to give Momentous and Leeward each 33% of the funds it raised pursuant to the Offshore Agreement; thus, two-thirds of the funds which came to Valesc from the offering were immediately transferred to entities controlled by Wolfson, leaving Valesc with only 10% of the sales proceeds. Frost Dec., ¶ 36, Exhibit 4 to Memorandum in Support of Motion for Preliminary Injunction.
CONCLUSIONS OF TAW
1. The Commission has made a prima facie case that Leeward violated Section 17(a) of the Securities Act;
2. The Commission has made a prima facie showing that Leeward violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and
3. The evidence shows that unless preliminarily restrained, there is a reasonable likelihood that Leeward will, in the future, violate Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.