Opinion
Case No: 06 C 3282.
March 22, 2007
FINAL JUDGMENT AND ORDER AS TO DEFENDANTS JUAN CARLOS PERALTA, RICARDO CAVALLERO AND ELENA H. DE CAVALLERO
A. DEFENDANT JUAN CARLOS PERALTA
The Securities and Exchange Commission having filed a Complaint and Defendant Juan Carlos Peralta ("Defendant") having entered a general appearance; consented to the Court's jurisdiction over Defendant 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 Defendant is permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") [ 15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereunder [ 17 C.F.R. § 240.10b-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security:
(a) to employ any device, scheme, or artifice to defraud;
(b) to make any untrue statement of a material fact or to omit 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) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable for disgorgement of $687,541.81, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $23,101.41 and a civil penalty in the amount of $368,698.78 pursuant to Section 21A of the Exchange Act. Defendant shall satisfy this obligation by paying $1,079,342.00 within twenty business days to the Clerk of this Court, together with a cover letter identifying Defendant's name 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. Defendant shall simultaneously transmit photocopies of such payment and letter to the Commission's counsel in this action. By making this payment, Defendant relinquishes all legal and equitable right, title, and interest in such funds, and no part of the funds shall be returned to Defendant. Defendant shall pay post-judgment interest on any delinquent amounts pursuant to 28 USC § 1961.The Clerk shall deposit the funds into an interest bearing account with the Court Registry Investment System ("CRIS") or any other type of interest bearing account that is utilized by the Court. These funds, together with any interest and income earned thereon (collectively, the "Fund"), shall be held in the interest bearing account until further order of the Court. In accordance with 28 U.S.C. § 1914 and 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 by motion propose a plan to distribute the Fund subject to the Court's approval. Such a plan may provide that Fund shall 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, amounts ordered to be paid as civil penalties pursuant to this Final Judgment shall be treated as penalties paid to the government for all purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, Defendant 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 shall, within 30 days after entry of a final order granting 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 Final Judgment. 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.
III.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that Merrill Lynch, Pierce, Fenner and Smith, Inc. ("Merrill Lynch"), upon actual receipt of this Final Judgment by any means, including but not limited to electronic mail transmission, is hereby ordered immediately to surrender, turn over and pay to the Clerk of the Court, from the funds that are currently frozen in Defendant's Merrill Lynch account (account number 168-37376) pursuant to prior orders of this Court, the amount of $1,079,342.00 within ten business days of actual receipt of this Final Judgment, together with a cover letter identifying Defendant Juan Carlos Peralta 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. Such payment from Defendant's account in accordance with the terms of this section shall constitute full satisfaction of Defendant's obligation to remit $1,079,342.00 to the Clerk of the Court under Section II of this Final Judgment.
Merrill Lynch shall simultaneously transmit photocopies of such payment and letter to the Commission's and Defendant's counsel in this action. To the extent that the cash or cash equivalent amounts in account number 168-37376 are insufficient to satisfy the entire judgment amount, Merrill Lynch is authorized to liquidate any and all securities in the account in order to satisfy the judgment amount. Upon the payment of these funds to the Clerk of the Court, the asset freeze on this account ordered by this Court on June 15, 2006, and continued by orders of this Court on June 22, 2006, July 6, 2006, and September 8, 2006 shall be terminated.
To the extent that after liquidating all securities, the balance of the account is insufficient to pay the entire judgment amount, Merrill Lynch shall transfer the entirety of the balance of the account to the Clerk of the Court and indicate in the cover letter the amount of the deficiency.
IV.
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 Defendant shall comply with all of the undertakings and agreements set forth therein.
V.
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
VI.
There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, the Clerk is ordered to enter this Final Judgment forthwith and without further notice.
B. DEFENDANTS RICARDO CAVALLERO AND ELENA H. DE CAVALLERO
IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Defendants Ricardo Cavallero and Elena H. De Cavallero are hereby dismissed as defendants in this action with prejudice.