Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-00502/USCOURTS-azd-2_06-cv-00502-1/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 12:22 Securities Fraud

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WO 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

SECURITIES AND EXCHANGE 

COMMISSION, 

 Plaintiff, 

 vs. 

IBIZ TECHNOLOGY CORP., 

KENNETH W. SCHILLING, 

H. MARK PERKINS, 

JEFFREY S. FIRESTONE, 

D. SCOTT ELLIOTT, AND 

JERROLD B. MCROBERTS, 

 Defendants. 

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CV 06-502-PHX-JAT 

ORDER 

 The Court has considered Plaintiff Securities and Exchange Commission’s 

(“SEC”) motion for entry of a default judgment against defendant Jeffrey S. Firestone 

pursuant to Fed. R. Civ. P. 55 (b) (2) (Doc. #33) and makes the following findings. 

 1. This case was commenced on February 16, 2006 by the SEC filing a 

summons and complaint against Firestone and others. 

 2. The Court finds that Firestone was served with the summons and 

complaint on March 2, 2006 when the pleadings were delivered to his dwelling place or 

usual place of abode in Florida by leaving a copy with his mother, Bernice Firestone, a 

person a suitable age then residing there. 

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 3. The Court finds that Firestone has not answered the complaint or filed any 

other responsive pleading in this matter and the time for the defendant to answer has 

expired. Firestone is therefore in default. 

 4. The Court considers the well-pleaded allegations of the complaint as 

admitted for the purposes of entry of this default judgment. Based on the allegations in 

the complaint and the affidavit submitted in support of the SEC’s motion for entry of 

default judgment, the Court finds that Firestone violated the securities registration 

provisions of 5 U.S.C. § 77e by directly or indirectly offering or selling 96,791,178 

shares of iBIZ Technology Corporation when no registration statement was in effect for 

those securities and that he used the means of interstate commerce in connection with 

the offer or sale. 

 5. The Court finds that there is a reasonable likelihood that Firestone may 

engage in future violations of the securities registration provisions. Firestone’s 

occupation as a stock promoter creates the opportunity for him to engage in future 

violations of the registration provisions. His violations were recurrent over a year’s 

period and involved three separate transactions which were not registered. He did not 

cooperate in the SEC’s investigation, has not acknowledged the wrongful nature of his 

conduct, and has made no assurances against future violations. Although the SEC is not 

required for a registration violation to prove that Firestone acted with scienter, the 

amount of planning involved in these sales, the pattern of transactions which continued 

for over a year, the recurrent violations involving three separate issuance of stock, and 

the transfer of part of the sales proceeds to the company, all support a finding that he 

deliberately or recklessly violated the registration provisions. The defendant obtained 

substantial profits of $2,018,685 as a result of his conduct. 

 Accordingly, 

 IT IS ORDERED GRANTING the SEC’s Motion for Default Judgment Against 

Firestone (Doc. #33). 

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 AND, the Court finding no just reason for delay, IT IS FURTHER ORDERED 

GRANTING final judgment for the Securities and Exchange Commission and against 

Defendant Jeffrey S. Firestone pursuant to Rule 54(b) as follows: 

 A. That Defendant Jeffrey S. Firestone and his agents, servants, employees, 

attorneys-in-fact, and all persons in active concert or participation with them who 

receive actual notice of this Default Judgment by personal service or otherwise, are 

permanently restrained and enjoined from violating Section 5 of the Securities Act, 15 

U.S.C. § 77e, by, directly or indirectly, in the absence of any applicable exemption: 

1) Unless a registration statement is in effect as to a security, making use of any 

means or instruments of transportation or communication in interstate 

commerce or of the mails to sell such security through the use or medium of 

any prospectus or otherwise; 

2) Unless a registration statement is in effect as to a security, carrying or causing 

to be carried through the mails or in interstate commerce, by any means or 

instruments of transportation, any such security for the purpose of sale or for 

delivery after sale; or 

3) Making use of any means or instruments of transportation or communication 

in interstate commerce or of the mails to offer to sell or offer to buy through 

the use or medium of any prospectus or otherwise any security, unless a 

registration statement has been filed with the Commission as to such security, 

or while the registration statement is the subject of a refusal order or stop 

order or (prior to the effective date of the registration statement) any public 

proceeding of examination under Section 8 of the Securities Act, 15 U.S.C. § 

77h. 

B. That Defendant Jeffrey S. Firestone is liable for disgorgement of 

$2,018,685 representing ill-gotten gains as a result of the conduct alleged in the 

complaint, plus prejudgment interest thereon from July 1, 2004 to the date of this Order 

at the IRS rate of interest on tax underpayments found in 26 C.F.R. §301.6621, plus 

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post-judgment interest from the date of this Order until satisfaction at the rate provided 

in 28 U.S.C. §1961(a) . Defendant shall satisfy this obligation by paying the amount of 

the disgorgement and interest within ten business days to the Clerk of this Court, 

together with a cover letter identifying Jeffrey S. Firestone as a defendant in this action; 

setting forth the title and civil action number of this action and the name of this Court; 

and specifying that payment is made pursuant to this Default Judgment. Defendant 

shall simultaneously transmit photocopies of such payment and letter to the 

Commission’s counsel in this action. By making this payment, Defendant relinquishes 

all legal and equitable right, title, and interest in such funds and no part of the funds 

shall be returned to Defendant. The Clerk of the Clerk shall deposit the funds into an 

interest bearing account with the Court Registry Investment System ("CRIS") or any 

other type of interest bearing account that is utilized by the Court. These funds, 

together with any interest and income earned thereon (collectively, the “Fund”), shall be 

held in the interest bearing account until further order of the Court. In accordance with 

28 U.S.C. § 1914 and the guidelines set by the Director of the Administrative Office of 

the United States Courts, the Clerk is directed, without further order of this Court, to 

deduct from the income earned on the money in the Fund a fee equal to ten percent of 

the income earned on the Fund. Such fee shall not exceed that authorized by the 

Judicial Conference of the United States. The Commission may propose a plan to 

distribute the Fund subject to the Court’s approval. 

 C. That Defendant Jeffrey S. Firestone shall pay a civil penalty in the amount 

of $120,000 pursuant to Section 20(d) of the Securities Act, 5 U.S.C. §77t (d). 

Defendant shall make this payment within ten (10) business days after entry of this 

Final Judgment by certified check, bank cashier's check, or United States postal money 

order payable to the Securities and Exchange Commission. The payment shall be 

delivered or mailed to the Office of Financial Management, Securities and Exchange 

Commission, Operations Center, 6432 General Green Way, Mail Stop 0-3, Alexandria, 

Virginia 22312, and shall be accompanied by a letter identifying Spiga Ltd. as a 

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defendant in this action; setting forth the title and civil action number of this action and 

the name of this Court; and specifying that payment is made pursuant to this Final 

Judgment. Defendant shall pay post-judgment interest on any delinquent amounts 

pursuant to 28 U.S.C. § 1961. 

 D. That this Court shall retain jurisdiction of this matter for purposes of 

enforcing the terms of this Final Judgment. 

 Dated this 5th day of June, 2008. 

 

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