United States District Court, W.D. North Carolina, Charlotte Division
C. Mullen, United States District Judge.
MATTER is before the Court on Plaintiffs Motion for
Default Judgment (Doc. No. 10). The Court has reviewed
Plaintiffs Motion, together with the Memorandum in Support
and supporting materials submitted contemporaneously with the
Motion or previously filed with the Court. For the reasons
stated herein, the Court will grant Plaintiffs Motion.
24, 2017, Plaintiff filed a Complaint against Defendant. The
Complaint alleges that Defendant: (1) violated 15 U.S.C.
§ 77q(a), using interstate commerce for the purpose of
fraud or deceit; (2) violated 15 U.S.C. § 78j(b) and
Rule 10b-5 thereunder, using any manipulative or deceptive
device or contrivance in connection with the purchase or sale
of securities; (3) violated 15 U.S.C. § 8Ob-6(1), (2),
using interstate commerce as an investment adviser to employ
devices to defraud a client or prospective client, and
engaging in transactions which have operated as a fraud or
deceit upon clients or prospective clients; and (4) violated
15 U.S.C. § 80b-6(4) and 17 C.F.R. § 275.206(4)-8
thereunder, engaging in fraudulent practices while acting as
an investment adviser to a pooled investment vehicle.
attempted to serve Defendant at his last known address, the
addresses of two extended family members, and a scheduled
business engagement. After those attempts were unsuccessful,
service was rendered on the person in charge of
Defendant's usual mailing address at the UPS Store at 650
N. Rose Dr. #490 in Placentia, California on June 29, 2017.
(Doc. No. 3). Defendant's Answer was accordingly due July
did not make an appearance or file a responsive pleading to
the Complaint. On August 28, 2017, Plaintiff moved for an
entry of default pursuant to Rule 55(a), which the clerk
entered on September 20, 2017. Subsequently, on May 7, 2018,
Plaintiff moved for a default judgment by the Court pursuant
to Rule 55(b)(2).
defendant is in default, the well-pleaded factual allegations
of the complaint are deemed to be admitted by the defendant,
but conclusions of law and the amount of damages are not.
Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780
(4th Cir. 2001). A court must thus "determine whether
the well-pleaded allegations in [the] complaint support the
relief sought." Id. The plaintiff bears the
burden of proving that judgment should be granted by way of a
motion for default judgment. Silvers, v. Iredell Cty.
Dept. of Soc. Servs., No. 5:15-cv-00083, 2016 WL 427953,
at *6 (W.D. N.C. Feb. 3, 2016).
OF FACT AND CONCLUSIONS OF LAW
Court finds the following:
1. This Court has jurisdiction over the subject matter of
this action pursuant to Section 22(a) of the Securities Act,
15 U.S.C. § 77v(a), and Section 27 of the Exchange Act,
15 U.S.C. § 78aa.
2. This Court has personal jurisdiction over Defendant as
Defendant has transacted business in the State of North
Carolina and within this judicial District.
3. Venue is proper in this Court pursuant to Section 22(a) of
the Securities Act, 15 U.S.C. § 77v(a), and Section 27
of the Exchange Act, 15 U.S.C. § 78aa, as acts,
transactions, practices, and courses of business constituting
the violations alleged occurred within the jurisdiction of
the United States District Court for the Western District of
North Carolina and elsewhere.
4. Defendant has been properly served with the Complaint in
5. Defendant has not defended himself in this action.
6. The Court has properly entered a default against Defendant
pursuant to Fed.R.Civ.P. 55(a).
7. Entry of default judgment against Defendant is adequately
supported in fact and law by the undenied allegations of the
Complaint, the evidence and methodology set forth in the
motion, Plaintiffs memorandum in support of the motion, and
the supporting materials submitted contemporaneously with the
8. Injunctive relief is proper in this matter. Upon a
"proper showing" the SEC can obtain a permanent
injunction against any person who is engaged in any acts or
practices that violate the provisions of the securities acts
or regulations. See SEC v. Marker, 427 F.Supp.2d
583. 590 (M.D. N.C. 2006). An injunction is appropriate
"if the SEC demonstrates a reasonable and substantial
likelihood that the defendant, if not enjoined, will violate
the securities laws in the future." Id. Here,
the SEC has presented evidence showing that Defendant engaged
in repeated, serious offenses-defrauding a dozen investors
out of more than $2 million over the course of at least five
years-with a high degree of scienter. Thus, a permanent
injunction is proper relief.
9. Disgorgement is proper in this matter. "It is well
settled that a court may order the disgorgement of profits
obtained through securities fraud." Id. at 591.
Disgorgement is subject to a five-year statute of
limitations. Kokesh v. SEC, ___ U.S. ___,
137 S.Ct. 1635, 1644 (2017). The uncontested evidence shows
that Defendant retained $253, 820.82 in ill-gotten gains from
his fraudulent conduct during the five-year ...