Opinion
Civil Action No. 01-4936.
July 6, 2004
MEMORANDUM/ORDER
This civil suit brought by the Securities and Exchange Commission ("SEC") against six defendants is based on an alleged scheme to defraud investors through the fraudulent offer and sale of unregistered securities, in violation of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77a et seq., and the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78a et seq. On May 21, 2003, I ordered the entry of default judgment in favor of plaintiff SEC and against five of the six defendants: Gilbert Merrell Wynne, Orthodox Church of Jesus Christ, Inc. ("Orthodox Church"), Kingdom Growth Fund, Ltd. ("Kingdom Growth"), Kingdom Financial Services ("Kingdom Financial"), and Richard V. Dear (collectively, "defaulting defendants"). In that order, I reserved the issues of damages and injunctive relief until such time as a hearing could be scheduled.
Today I conducted a hearing at which counsel for the SEC appeared. Although notice was sent to the last known addresses of all of the defaulting defendants, none of the defaulting defendants appeared. Having considered the SEC's submissions to date and its presentation at today's hearing:
It is hereby ORDERED that defendants Wynne, Orthodox Church, Kingdom Growth, Kingdom Financial, and Dear, and their agents, officers, servants, employees, attorneys, and those persons in active concert or participation with them, directly or indirectly, singly or in concert, shall be permanently restrained and enjoined from directly or indirectly making use of any means or instruments of transportation or communication in interstate commerce, or any means or instrumentality of interstate commerce, or the mails, or any facility of any national securities exchange, in connection with the offer, purchase, or sale of any security:
(1) to employ any devices, schemes or artifices to defraud;
(2) to obtain money or property by means of, or make any untrue statement of a material fact or 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
(3) to engage in any act, transaction, practice or course of business which operates or would operate as a fraud or deceit upon any person in violation of Sections 5(a), 5(c), and 17(a) of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c) and 77q(a); and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder.
It is further ORDERED that defendants Wynne and Dear, and their agents, officers, servants, employees, attorneys, and those persons in active concert or participation with them, directly or indirectly, singly or in concert, shall be permanently restrained and enjoined from directly or indirectly engaging in acts, transactions, practices, and courses of business which violate Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a).
It is further ORDERED that defendants Wynne, Orthodox Church, Kingdom Growth, Kingdom Financial, and Dear shall jointly and severally disgorge the sum of $1,824,050, plus prejudgment interest thereon in the amount of $635,932, into the Registry of the Court within thirty (30) days of the entry of this order.
It is further ORDERED that the issue of civil penalties against the defaulting defendants is hereby reserved.