THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF PENNSYLVANIA
|COMMODITY FUTURES TRADING COMMISSION,||)||Civil Action No. 96-CV-2640|
|and ARIZONA CORPORATION COMMISSION,||)|
|Plaintiffs,||)||Judge Herbert J. Hutton|
|AYM FINANCIAL CORPORATION,||)|
|THOMAS M. PALEY,||)|
|ADAM S. JUECHTER, and||)|
ORDER OF PERMANENT INJUNCTION AND OTHER EQUITABLE
RELIEF, BY CONSENT, AGAINST MARC KRONISH
On April 10, 1996, the Court entered a Consent Order of Preliminary Injunction Against Marc Kronish ("Original Consent Order"). To effect a settlement of all of the remaining issues and matters alleged in the Complaint without a trial or hearing on any issue of fact or law, and without admitting or denying the allegations of the Complaint filed in this action, defendant Marc Kronish consents to the entry of this Order of Permanent Injunction and other Equitable Relief, by Consent, Against Marc Kronish ("Final Consent Order").
The Court finds that there is good cause for the entry of a permanent injunction and ancillary equitable relief; and there being no just reason for delay, the Court directs the entry of a permanent injunction and ancillary equitable relief, pursuant to Sections 6c and 6d of the Act, 7 U.S.C. §§ 13a-1 and 13a-2 (1994), and accordingly:
IT IS HEREBY ORDERED THAT:
A. Defendant Kronish, along with his affiliates, agents, servants, employees, attorneys, or assigns and persons in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, are enjoined and restrained from directly or indirectly:
1. violating Section 4(a) of the Commodity Exchange Act, as amended (the "Act"), 7 U.S.C. § 6(a) (1994), by offering into, entering into, executing, confirming the execution of, or conducting any office or business anywhere in the United States, its territories or possessions, for the purpose of soliciting, accepting any order for, or otherwise dealing in any transaction in or in connection with a contract for the purchase or sale of a commodity for future delivery, including but not limited to foreign currencies, if such transaction is not conducted on or subject to the rules of a board of trade which has been designated by the Commodity Futures Trading Commission ("CFTC") as a "contract market" for such commodity, if such contract is not executed or consummated by or through a member of such contract market, or if such contract is not evidenced by a record in writing which shows the date, the parties to such contract and their addresses, the property covered and its price, and the terms of delivery;
2. violating Section 4b(a) of the Act, 7 U.S.C.§ 6 b(a) (1994), by, in or in connection with any order to make, or the making of any contract of sale of any commodity for future delivery (including but not limited to foreign currencies), 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 -
i. cheating or defrauding or attempting to cheat or defraud such other person;
ii. willfully making or causing to be made to such other person any false report or statement thereof, or willfully entering or causing to be entered for such person any false record thereof;
iii. willfully deceiving or attempting to deceive such other person by any means whatsoever in regard to any such order or contract or the disposition or execution of any such order or contract, or in regard to any act of agency performed with respect to such order or contract for such person; and
iv. bucketing such order, or filling such order by offset against the order or orders of any other person, or willfully and knowingly and without the prior consent of such person becoming the buyer in respect to any selling order of such person, or becoming the seller in respect to any buying order of such person;
3. violating Section 4d of the Act, 7 U.S.C. § 6d (1994), by engaging as a futures commission merchant in soliciting orders or accepting orders for the purchase or sale of any commodity for future delivery (including but not limited to foreign currencies), or involving any contracts of sale of any commodity for future delivery, on or subject to the rules of any contract market:
(1) without being registered, under the Act, with the CFTC as such futures commission merchant, and without such registration having been expired nor suspended nor revoked; or
(2) without treating and dealing with all money, securities, and property received to margin, guarantee, or secure the trades or contracts of any customer, or accruing to such customer as the result of such trades or contracts, as belonging to such customer, or without accounting separately for such money, securities, and property or by commingling such money, securities, and property with the funds of such commission merchant or using such money, securities, or property to margin or guarantee the trades or contracts, or to secure or extend the credit, of any customer or person other than the one for whom the same are held; or, having received any money, securities, or property as belonging to the futures commission merchant or any person other than the customers of such futures commission merchant; or
4. violating Section 9(a)(1) of the Act, 7 U.S.C. § 13(a)(1) (1994), by embezzling, stealing, purloining, or with criminal intent converting to such person's use or to the use of another, any money, securities, or property having a value in excess of $100, which was received by such person or any employee or agent thereof to margin, guarantee, or secure the trades or contracts of any customer or accruing to such customer as a result of such trades or contracts or which otherwise was received from any customer, client, or pool participant in connection with the business of such person. The word `value" as used in this paragraph means face, par, or market value, or cost price, either wholesale or retail, whichever is greater;
5. engaging within or from Arizona in any of the acts and practices described herein which would constitute violations of the Arizona Securities Act ("ASA") or the Arizona Investment Management Act ("AIMA"), codified as Arizona Revised Statues ("A.R.S.") §§ 44-1841, 44-1842, 44-1991, 44-3151 and 44-3241 (1995), including but not limited to:
i. offering or selling unregistered securities, as that term is defined in A.R.S. § 44-1801(6)-(7) and (22) (1995), in the form of commodity investment contracts, commodity options and investment contracts, when such securities are not exempt from registration by any applicable statute, rule or order;
ii. acting as dealers and/or salesmen, although not registered pursuant to the provisions of Article 9 of the ASA, nor exempt therefrom, in connection with offers to sell or the sale of securities, as defined in A.R.S. § 44- 1801(6)-(7) and (22) (1995);
iii. directly or indirectly making untrue statements or misleading omissions of material fact and/or engaging in transactions, practices or courses of business which operate or would operate as a fraud or deceit upon offerees and investors within the meaning of A.R.S. § 44-1991, in connection with offers to sell or the sale of securities, as defined in A.R.S. § 44-1801(6)- (7) and (22) (1995);
iv. acting as investment advisers and investment adviser representatives, within the meaning of the AIMA, although not registered pursuant to the provisions of Article 4 of the AIMA nor exempt therefrom, in connection with offers to sell or the sale of securities, as defined in A.R.S. § 44- 1801(6)-(7) and (22) (1995);
v. directly or indirectly making untrue statements or misleading omissions of material fact, and/or engaging in transactions, practices or courses of business which operate or would operate as a fraud or deceit upon offerees and investors within the meaning of A.R.S. § 44-3241, in connection with transactions involving the provision of investment advisory services related to offers to sell or the sale of securities, as defined in A.R.S. § 44- 1801(6)-(7) and (22) (1995);
B. Judgment for disgorgement and restitution is entered in favor of the CFTC and the Arizona Corporation Commission ("ACC") and against defendant Kronish, jointly and severally with any other defendant who may be so ordered in this matter, in the sum of $3 million. Based upon defendant Kronish's financial inability to pay as demonstrated by his sworn representation in his Financial Disclosure Statement, dated October 29, 1998, the Court has determined that all payment of such disgorgement, restitution and prejudgment interest is waived. This determination shall have no collateral effect on any other claims or orders regarding defendant's duties to pay restitution or disgorgement in any other proceeding. This determination is also conditioned upon the accuracy and completeness of Kronish's Financial Disclosure Statement. If at any time following the entry of this Final Consent Order, the CFTC or ACC obtains information indicating that Kronish's representations concerning his financial condition were fraudulent, misleading, inaccurate or incomplete in any material respect as of the time such representations were made, the CFTC or ACC may, in its sole discretion and without prior notice to Kronish, petition this Court for an order requiring him to pay the full Restitution Amount, plus interest thereon and a civil penalty. In connection with any such petition, the only issues shall be whether the financial information provided by Kronish 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 CFTC or ACC may move this Court to consider all available remedies, including, but not limited to, entering an order requiring Kronish to pay funds or assets, directing the forfeiture of any assets, or sanctions for contempt of this Order, and the CFTC or ACC may also request additional discovery. Kronish may not, by way of defense to such petition, challenge the validity of this Final Consent Order or the Original Consent Order of April 10, 1996 (collectively referred to as "Consent Orders") or contest the allegations in the original Complaint filed by the Plaintiffs.
C. Kronish shall comply with his undertaking that neither he nor any of his agents or employees acting under his authority or control shall take any action or make any public statement denying, directly or indirectly, any allegation in this Order or creating, or tending to create, the impression that this Order is without a factual basis. Kronish will undertake all steps necessary to assure that those persons who were in active concert or participation with them with respect to the conduct described in this Order understand and comply with this agreement.
D. If any provision of the Consent Orders or the application of any provision or circumstance is held invalid, the remainder of the Consent Orders, and the application of the provision to any other person or circumstance, shall not be affected by the holding.
E. The annexed Consent of Kronish to the entry of this Order is incorporated herein.
F. This Court shall retain jurisdiction of this action in order to implement and carry out the terms of all orders and decrees which have been or may be entered herein, to entertain any suitable application or motion for additional relief within the jurisdiction of this Court, and to assure compliance with the Consent orders.
Done and ordered this 4th day of October, 1999, at Philadelphia, Pennsylvania.
UNITED STATES DISTRICT JUDGE