Securities And Exchange Commission v. Hui Feng et al

NOTICE OF MOTION AND MOTION for Summary Judgment as to Hui Feng and Law Offices of Feng & Associates P.C.

C.D. Cal.January 17, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DONALD W. SEARLES, Cal. Bar No. 135705 Email: searlesd@sec.gov KRISTIN S. ESCALANTE, Cal. Bar No. 169635 Email: escalantek@sec.gov MEGAN M. BERGSTROM, Cal. Bar No. 228289 Email: bergstromm@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director John W. Berry, Associate Regional Director 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. HUI FENG and LAW OFFICES OF FENG & ASSOCIATES P.C., Defendants. Case No. 2:15-cv-09420-CBM-SS PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT AGAINST HUI FENG AND LAW OFFICES OF FENG & ASSOCIATES, P.C. Date: February 28, 2017 Time: 10:00 a.m. Ctrm: 8B, 8th Floor Judge: Hon. Consuelo B. Marshall Case 2:15-cv-09420-CBM-SS Document 61 Filed 01/17/17 Page 1 of 4 Page ID #:4538 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO ALL DEFENDANTS AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that Plaintiff Securities and Exchange Commission (“SEC”) will, and hereby does, move for summary judgment as to liability and remedial relief against Defendant Hui Feng and Law Offices of Feng & Associates, P.C. The SEC’s motion is based upon the accompanying Memorandum of Points and Authorities; Statement of Uncontroverted Facts and Conclusions of Law; the Declarations of Kristin S. Escalante, David Morris and W. Bradley Wendel and all exhibits thereto; the filings and records in this action; and any other evidence or argument the SEC may present in support of its motion. This motion is made following the conference of counsel pursuant to L.R. 7-3, which took place on December 9, 2016. Respectfully submitted, Dated: January 17, 2017 /s/ Kristin S. Escalante DONALD W. SEARLES KRISTIN S. ESCALANTE MEGAN M. BERGSTROM Attorneys for Plaintiff Securities and Exchange Commission Case 2:15-cv-09420-CBM-SS Document 61 Filed 01/17/17 Page 2 of 4 Page ID #:4539 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On January 17, 2017, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT AGAINST HUI FENG AND LAW OFFICES OF FENG & ASSOCIATES, P.C. on all the parties to this action addressed as stated on the attached service list: ☐ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☐ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☐ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☐ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☒ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: January 17, 2017 /s/ Kristin S. Escalante Kristin S. Escalante Case 2:15-cv-09420-CBM-SS Document 61 Filed 01/17/17 Page 3 of 4 Page ID #:4540 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SEC v. Hui Feng, et al. United States District Court—Central District of California Case No. 2:15-cv-09420-CBM-SS SERVICE LIST Andrew B. Holmes, Esq. (served by CM/ECF only) Matthew D. Taylor, Esq. (served by CM/ECF only) Holmes, Taylor & Jones LLP 617 S. Olive Street, Suite 1200 Los Angeles, CA 90014 Email: abholmes@htjlaw.com Email: matthew.taylor@htjlaw.com Attorney for Defendants Hui Feng and Feng & Associates P.C. Case 2:15-cv-09420-CBM-SS Document 61 Filed 01/17/17 Page 4 of 4 Page ID #:4541 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. HUI FENG and LAW OFFICES OF FENG & ASSOCIATES P.C., Defendants. Case No. 2:15-cv-09420-CBM-SS [PROPOSED] FINAL JUDGMENT AGAINST HUI FENG AND LAW OFFICES OF FENG & ASSOCIATES, P.C. Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 1 of 9 Page ID #:4542 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to Rule 56 of the Federal Rules of Civil Procedure, Plaintiff Securities and Exchange Commission’s (“SEC” or “Commission”) Motion for Summary Judgment (“Motion”) Against Defendant Hui Feng (“Feng”) and Law Offices of Feng & Associates, P.C., (“Feng & Assocs.”) (collectively, “Defendants”) came before the Court. The Court, having considered all of the evidence and arguments presented by the parties with regard to the SEC’s Motion for Summary Judgment, the Memorandum of Points and Authorities and the other documents filed in support of the Motion for Summary Judgment, finds that: I. IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the SEC’s Motion for Summary Judgment against Defendants is GRANTED. II. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants are 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. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Judgment by personal service or Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 2 of 9 Page ID #:4543 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 otherwise: (a) Defendants’ officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Defendants or with anyone described in (a). III. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants are permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q(a)] in the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly: A. to employ any device, scheme, or artifice to defraud; B. to obtain money or property by means of any untrue statement of a material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or C. to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Judgment by personal service or otherwise: (a) Defendants’ officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Defendants or with anyone described in (a). IV. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants are permanently restrained and enjoined from violating, directly or indirectly, Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a), which makes it unlawful for any broker or dealer which is either a person other than a natural person or a natural person, to make use of the mails or any means or instrumentality of Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 3 of 9 Page ID #:4544 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 interstate commerce to effect any transactions in, or to induce or attempt to induce the purchase or sale of, any security (other than an exempted security or commercial paper, bankers’ acceptances, or commercial bills) unless such broker or dealer is registered in accordance with Section 15(b) of the Exchange Act, 15 U.S.C. § 78o(b). IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Final Judgment by personal service or otherwise: (a) any officers, agents, servants, employees, and attorneys of Defendants; and (b) other persons in active concert or participation with Defendants or with anyone described in (a). V. IT IS HEREBY FURTHER ORDERED, ADJUGED, AND DECREED that: (1) Defendants are also liable, jointly and severally with each other, for disgorgement of $4,718, 000 representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $468,012, for a total of $5,186,012. Defendants shall satisfy this obligation by paying $7,131,796 to the Securities and Exchange Commission within 14 days after entry of this Final Judgment. (2) Defendants may transmit payment electronically to the SEC, which will provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly from a bank account via Pay.gov through the SEC website at http://www.sec.gov/about/offices/ofm.htm. Defendants may also pay by certified check, bank cashier’s check, or United States postal money order payable to the Securities and Exchange Commission, which shall be delivered or mailed to Enterprise Services Center Accounts Receivable Branch 6500 South MacArthur Boulevard Oklahoma City, OK 73169 Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 4 of 9 Page ID #:4545 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and shall be accompanied by a letter identifying the case title, civil action number, and name of this Court; the defendant as a defendant in this action; and specifying that payment is made pursuant to this Final Judgment. Defendants shall simultaneously transmit photocopies of evidence of payment and case identifying information to the SEC’s counsel in this action. By making this payment, Defendants relinquish all legal and equitable right, title, and interest in such funds and no part of the funds shall be returned to any of the defendants. The SEC shall hold the funds (collectively, the “Fund”) and may propose a plan to distribute the Fund subject to the Court’s approval. The Court shall retain jurisdiction over the administration of any distribution of the Fund. If the SEC staff determines that the Fund will not be distributed, the SEC shall send the funds paid pursuant to this Final Judgment to the United States Treasury. The SEC may enforce the Court’s judgment for disgorgement and prejudgment interest by moving for civil contempt (and/or through other collection procedures authorized by law) at any time after 14 days following entry of this Final Judgment. The defendants shall pay post judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 1961. VI. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, in addition to their obligations to pay disgorgement and prejudgment interest: (1) Feng shall pay a civil penalty in the amount of $__________; and (2) Law Offices of Feng & Assocs. shall pay a civil penalty in the amount of $__________. Defendants’ civil penalties are ordered pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3). Defendants may transmit payment electronically to the SEC, which will provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly from a bank account via Pay.gov through the SEC website at http://www.sec.gov/about/offices/ofm.htm. Defendants may also pay by certified Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 5 of 9 Page ID #:4546 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 check, bank cashier’s check, or United States postal money order payable to the Securities and Exchange Commission, which shall be delivered or mailed to Enterprise Services Center Accounts Receivable Branch 6500 South MacArthur Boulevard Oklahoma City, OK 73169 and shall be accompanied by a letter identifying the case title, civil action number, and name of this Court; the defendant as a defendant in this action; and specifying that payment is made pursuant to this Final Judgment. Defendants shall simultaneously transmit photocopies of evidence of payment and case identifying information to the SEC’s counsel in this action. By making this payment, Defendants relinquish all legal and equitable right, title, and interest in such funds and no part of the funds shall be returned to any of the defendants. The SEC shall hold the funds and may propose a plan to distribute the Fund subject to the Court’s approval. The Court shall retain jurisdiction over the administration of any distribution of the Fund. If the SEC staff determines that the Fund will not be distributed, the SEC shall send the funds paid pursuant to this Final Judgment to the United States Treasury. VII. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. §523, the allegations in the complaint are true and admitted by Defendants, and further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by any of the Defendants under this Final Judgment or any other judgment, order, consent order, decree or settlement agreement entered in connection with this proceeding, is a debt for the violation by Defendants of the federal securities laws or any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19). Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 6 of 9 Page ID #:4547 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VIII. 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. IT IS SO ORDERED. Dated: ______________, 2017 ________________________________ HON. CONSUELO B. MARSHALL UNITED STATES DISTRICT JUDGE Presented by: Donald W. Searles Kristin S. Escalante Megan M. Bergstrom Attorney for Plaintiff Securities and Exchange Commission Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 7 of 9 Page ID #:4548 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On January 17, 2017, I caused to be served the document entitled [PROPOSED] FINAL JUDGMENT AGAINST HUI FENG AND LAW OFFICES OF FENG & ASSOCIATES, P.C. on all the parties to this action addressed as stated on the attached service list: ☐ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☐ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☐ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☐ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☒ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: January 17, 2017 /s/ Kristin S. Escalante Kristin S. Escalante Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 8 of 9 Page ID #:4549 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SEC v. Hui Feng, et al. United States District Court—Central District of California Case No. 2:15-cv-09420-CBM-SS SERVICE LIST Andrew B. Holmes, Esq. (served by CM/ECF only) Matthew D. Taylor, Esq. (served by CM/ECF only) Holmes, Taylor & Jones LLP 617 S. Olive Street, Suite 1200 Los Angeles, CA 90014 Email: abholmes@htjlaw.com Email: matthew.taylor@htjlaw.com Attorney for Defendants Hui Feng and Feng & Associates P.C. Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 9 of 9 Page ID #:4550