IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH--CENTRAL DIVISION
|COMMODITY FUTURES TRADING||)||No. 2: 98 CV 00216J|
|Plaintiff,||)||Hon. Bruce Jenkins|
|JOHN LARRY SCHENK, et al.,||)|
CONSENT ORDER OF PERMANENT INJUNCTION AND
OTHER EQUITABLE RELIEF AGAINST BRIAN TOBLER
Plaintiff, Commodity Futures Trading Commission ("Commission"), on March 27, 1998, filed a complaint against Brian Tobler among others, seeking injunctive and other equitable relief for violations of the Commodity Exchange Act, as amended, 7 U.S.C. §§ 1 et seq. (1994) ("Act"), and the Regulations promulgated thereunder, 17 C.F.R. §§ 1 et seq. (1998). On June 2, 1998, this Court entered a Consent Order of Preliminary Injunction against defendant Tobler, in which he acknowledged service of the Summons and Complaint, admitted jurisdiction of this Court over him and the subject matter of this action and admitted that venue lies properly with this Court.
To effect settlement of the matters alleged in the complaint in this action without a trial on the merits or any further judicial proceedings, defendant Tobler consents to the entry of this Consent Order of Permanent Injunction ("Order"). Tobler also waives the entry of findings of fact and conclusions of law as provided by Rule 52 of the Federal Rules of Civil Procedure except as stated below and waives all rights of appeal from this Order. In addition, Tobler waives all claims which he may possess under the Equal Access to Justice Act, 5 U.S.C. § 504 (1994) and 28 U.S.C. § 2412 (1994), as amended by Pub. L. No. 104-121, §§ 231-32, 110 Stat. 862-63, and Part 148 of the Commission Regulations, 17 C.F.R. §§ 148.1, et. seq., to seek costs, fees and other expenses relating to or arising from, this action. Further, Tobler waives any claim of Double Jeopardy based upon institution of this proceeding or the entry in this proceeding of any order imposing a civil monetary penalty or any other relief.
Tobler also consents to the continued jurisdiction of the Court for the purpose of enforcing the terms and conditions of this Order and for any other purposes relevant to the case. Tobler agrees to cooperate fully with the Commission in its prosecution of the Complaint in this proceeding, in any on-going investigation that leads to the filing of an Amended Complaint; and in all other proceedings brought by the Commission arising from such investigations by, among other things: (1) responding promptly, completely, and truthfully to any inquiries or requests for information and otherwise cooperating fully with respect to discovery; (2) providing authentication of documents; and (3) testifying completely and truthfully.
Tobler acknowledges that the Court is not imposing a civil monetary penalty, pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1, (see infra Paragraph F) based upon the accuracy and completeness of Tobler's sworn representations to the Commission concerning his financial condition as described in his sworn Financial Disclosure Statement and other evidence provided by Tobler regarding his financial condition. Tobler further consents that if at any time following the entry of this Order, the Commission obtains information indicating that Tobler's representations to the Commission concerning his financial condition were fraudulent, misleading, inaccurate or incomplete in any material respect at the time such representations were made, the Commission may, at its sole discretion and without prior notice to Tobler, petition the Court for an order requiring Tobler to pay a civil monetary penalty. In connection with any such petition, the only issues shall be whether the financial information provided by Tobler was fraudulent, misleading, inaccurate or incomplete in any material respect at the time such representations were made, and the amount of the civil monetary penalty to be imposed. In any such petition, the Commission may move the Court to consider all available remedies, including, but not limited to, ordering Tobler to pay funds or assets, directing the forfeiture of any assets, or sanctions for contempt of this Order, and the Commission may also request additional discovery. Tobler may not, by way of defense to such petition, challenge the validity of this Order, contest the allegations in the Complaint filed by the Commission, or assert that payment of a civil monetary penalty should not be ordered.
Tobler further affirms that he has agreed to this Order voluntarily, and that no promise or threat has been made by the Commission or any member, officer, agent or representative thereof, or by any other person, to induce consent to this Order, other than as set forth specifically herein. By consenting to this Order, Tobler neither admits nor denies any of the allegations of the Complaint except as to jurisdiction and venue. Tobler undertakes that neither he nor any of his agents acting under his control or authority shall take any action or make any public statement denying, directly or indirectly, any allegation in the complaint or the Order or creating, or tending to create, the impression that the complaint or the Order is without a factual basis; provided, however, that nothing in this provision affects Tobler's (i) testimonial obligations, or (ii) right to take legal positions in other proceedings to which the Commission is not a party. Tobler will undertake all steps necessary to assure that all of his agents understand and comply with this agreement.
It further appearing to this Court that there is no just reason for delay, and the Court being fully advised in the premises,
THE PARTIES AGREE AND THE COURT FINDS THAT:
1. This Court has jurisdiction over this action and all parties hereto pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1, which authorizes the Commission to seek injunctive relief against any person whenever it shall appear that such person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision of the Act or any rule, regulation or order thereunder.
2. Venue properly lies with this Court pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1, in that the defendants are found in, inhabit, or transact business in this district, and the acts and practices in violation of the Act have occurred within this district, among other places.
IT IS THEREFORE ORDERED THAT:
A. Defendant Tobler is permanently restrained, enjoined and prohibited from directly or indirectly:
1. Cheating or defrauding or attempting to cheat or defraud other persons in or in connection with any order to make, or the making of any contract of sale of any commodity for future delivery, made, or to be made, for or on behalf of any other person if such contract for future delivery is or may be used for (a) hedging any transaction in interstate commerce in such commodity or the products or byproducts thereof, or (b) determining the price basis of any transaction in interstate commerce in such commodity, or (c) delivering any such commodity sold, shipped, or received in interstate commerce for the fulfillment thereof, in violation of Section 4b(a)(i), 7 U.S.C. §§ 6b(a)(i) (1994);
2. Willfully making or causing to be made to other persons any false report or statement thereof, or willfully entering or causing to be entered for such persons any false record thereof, in violation of Section 4b(a)(ii), 7 U.S.C. §§ 6b(a)(ii) (1994);
3. While acting as a commodity pool operator ("CPO") or as an associated person of a CPO, employing any device, scheme or artifice to defraud any client or prospective client and any pool participant or prospective participant, or engaging in any transaction, practice or course of business which operates as a fraud or deceit upon any client or prospective client or any participant or prospective participant, by use of the mails or any means or instrumentality of interstate commerce, in violation of Section 4o(1) of the Act, 7 U.S.C. §6o(1) (1994);
4. Soliciting, accepting and receiving funds, securities or other property from investors for the purpose of trading in commodity interests without being registered with the Commission as a commodity pool operator, as required, and by making use of the mails or other means or instrumentalities of interstate commerce in connection with this business, in violation of Section 4m(1) of the Act, 7 U.S.C. § 6m(1) (1994);
5. Accepting funds from actual and prospective commodity pool participants, for the purchase of an interest in a commodity pool that he operates or intends to operate, in the name of an entity other than the pool's name, in violation of Regulation 4.20(b), 17 C.F.R. § 4.20(b) (1998);
6. Commingling the property of a commodity pool that he operates or intends to operate with the property of any other person, in violation of Regulation 4.20(c), 17 C.F.R. § 4.20(c)(1998); and
7. While acting as a CPO registered or required to be registered under the Act, directly or indirectly soliciting, accepting or receiving funds, securities or other property from a prospective participant in a commodity pool that he operates or intends to operate, without delivering, on or before the date he engages in such activity, a Disclosure Document conforming to the requirements of Regulation 4.24(a), 17 C.F.R. § 4.24(a) in violation of Regulation 4.21(a), 17 C.F.R. § 4.21(a)(1998).
B. Defendant Tobler is permanently restrained, enjoined and prohibited from directly or indirectly:
1. Acting as a futures commission merchant, commodity pool operator, commodity trading advisor, introducing broker, floor broker, floor trader or as an associated person or other agent of any registrant as defined under the Act;
2. Seeking registration or exemption from registration with the Commission in any capacity for which registration with the Commission is required under the Act;
3. Soliciting, receiving or accepting any money, securities or property from others in connection with the purchase or sale of commodity interests;
4. Soliciting, accepting or placing orders from others for the purchase or sale of commodity interests, giving advice or other information in connection with the purchase or sale of commodity interest contracts, introducing customers to any other person engaged in the business of commodity interest trading, issuing statements or reports to others concerning commodity interest trading, or otherwise engaging in any business activities related to commodity interest trading; and
5. Controlling or directing the trading for any commodity interest account for or on behalf of any other person or entity, directly or indirectly, whether by power of attorney or otherwise.
C. Defendant Tobler is further restrained, enjoined and prohibited from directly or indirectly trading commodity futures contracts or options on commodity futures contracts ("commodity interests") for his own personal account or having any commodity interest traded on his behalf for a period of ten years from the date of this Order.
D. The injunctive provisions of this Order shall be binding upon Tobler, upon any person insofar as he or she is acting in the capacity of officer, servant, agent, employee or attorney of him, and upon any person who receives actual notice of this Order by personal service or otherwise, insofar as he or she is acting in active concert or participation with Tobler.
E. Defendant Tobler is ordered to disgorge $5,850, representing Tobler's gross profits from the conduct alleged in the Commission's Complaint. Disgorgement shall be made within 5 business days after the entry of this Consent Order and shall be directed to the Commodity Futures Trading Commission, Division of Trading and Markets, 1155 21st St., N.W., Washington, D.C. 20581 to the attention of Dennese Posey under a cover letter that identifies Brian Tobler and the name and docket number of this proceeding. A copy of the cover letter and the form of payment shall be simultaneously transmitted to Phyllis Cela, Acting Director, Division of Enforcement, Commodity Futures Trading Commission, 1155 21st St., N.W., Washington, D.C. 20581.
F. Based upon Tobler's sworn representations in his Statement of Financial Condition dated May 14, 1998, and other evidence provided by Tobler regarding his financial condition, the Court is not ordering him to pay a civil penalty pursuant to Section 9 of the Act, 7 U.S.C. § 13a-1. The determination not to impose a civil penalty is contingent upon the accuracy and completeness of his Statement of Financial Condition and other evidence provided by Tobler regarding his financial condition. If at any time following the entry of this Final Judgment the Commission obtains information indicating that Tobler's representations to the Commission concerning his financial condition were fraudulent, misleading, inaccurate or incomplete in any material respect as of the time such representations were made, the Commission may, at its sole discretion and without prior notice to Tobler, petition this Court for an order requiring Tobler to pay a civil penalty. In connection with any such petition, the only issues shall be whether the financial information provided by Tobler was fraudulent, misleading, inaccurate or incomplete in any material respect as of the time such representations were made, and the amount of civil penalty to be imposed. In its petition, the Commission may move this Court to consider all available remedies, including, but not limited to, ordering Tobler to pay funds or assets, directing the forfeiture of any assets, or sanctions for contempt of this Final Judgment, and the Commission may also request additional discovery. Tobler may not, by way of defense to such petition, challenge the validity of his Consent or the Final Judgment, contest the allegations in the Complaint filed by the Commission, or assert that the civil penalty should not be ordered.
G. If any provision of this Order or the application of any provision or circumstance is held invalid, the remainder of this Order, and the application of the provision to any other person or circumstance, shall not be affected by the holding.
H. This Court shall retain jurisdiction of this action in accordance with the principles of equity and the Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that may be entered or to entertain any suitable application or motion for additional relief within the jurisdiction of this Court.
I. There being no just reason for delay, the Clerk of the Court is hereby directed to enter this Order of Permanent Injunction.
DONE AND ORDERED this 11th day of April, 1999.
|HONORABLE BRUCE S. JENKINS|
|UNITED STATES DISTRICT COURT JUDGE|
|DISTRICT OF UTAH|
|Approved for Entry:|
|E. Gregg Tobler||Rosemary Hollinger|
|1839 North 1120 West||Senior Trial Attorney|
|Provo, Utah 84604||___________________________|
|Attorney for Brian Tobler||Susan A. Berkowitz|
|Consented and Approved for entry:|
|___________________________||Attorneys for Plaintiff|
|Brian Tobler||Commodity Futures Trading Commission|
|Attorneys for: Commodity Futures Trading Commission|
|300 S. Riverside Plaza|
|Chicago, IL 60606|
|R. Paul Allred|
|(Bar # 4785)|
|Assistant Attorney General|
|Attorney General's Office of Consumer Rights|
|160 East 300 South|
|Salt Lake City, Utah 84114-6760|