Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-04975/USCOURTS-cand-3_07-cv-04975-9/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

---

SEC v. Trabulse et al., C 07-4975 (WHA) JOINT RESPONSE TO MONITOR’S REPORT AND 

STIPULATION AND [PROPOSED] ORDER

IMPLEMENTING RECOMMENDATIONS

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 

MARC J. FAGEL (Cal. Bar No. 154425) 

MARK P. FICKES (Cal. Bar No. 178570) 

 (fickesm@sec.gov) 

ERIN E. SCHNEIDER (Cal. Bar No. 216114) 

 (schneidere@sec.gov) 

Attorneys for Plaintiff 

SECURITIES AND EXCHANGE COMMISSION 

44 Montgomery Street, Suite 2600 

San Francisco, California 94104 

Telephone: (415) 705-2500 

Facsimile: (415) 705-2501 

SECURITIES AND EXCHANGE COMMISSION, 

 Plaintiff, 

 vs. 

ALEXANDER JAMES TRABULSE, 

 Defendant, 

 and 

FAHEY FUND, L.P., FAHEY FINANCIAL 

GROUP, INC., INTERNATIONAL TRADE & 

DATA, and ITD TRADING, 

 Relief Defendants. 

Case No. C 07-4975 (WHA) 

JOINT RESPONSE TO MONITOR’S 

REPORT AND STIPULATION AND 

[PROPOSED] ORDER IMPLEMENTING 

RECOMMENDATIONS 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

Case 3:07-cv-04975-WHA Document 73 Filed 02/13/08 Page 1 of 6
SEC v. Trabulse et al., C 07-4975 (WHA) -2- JOINT RESPONSE TO MONITOR’S REPORT AND 

STIPULATION AND [PROPOSED] ORDER

IMPLEMENTING RECOMMENDATIONS

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 

I. JOINT RESPONSE TO MONITOR’S REPORT 

 The parties have each received and reviewed the Monitor’s report. The parties have met and 

conferred and, pursuant to the Court’s order of February 6, 2008 respond as follows: 

 First, the parties wish to inform the Court that they have met and conferred and resolved the 

disagreements cited in the report about the scope of the Monitor’s duties. 

 Second, the parties wish to inform the Court that they have reduced their settlement to 

writing. Defendants have agreed to the terms set forth therein, and the Staff responsible for litigating 

this action anticipates recommending that the Securities and Exchange Commission (“Commission”) 

approve the settlement. The parties anticipate that the Commission will either accept, seek to modify, 

or reject the settlement within the next 90 days. 

 Third, the settlement contemplates the closure and liquidation of the Fahey Fund, and the 

distribution of the Fahey Fund’s assets to investors on a pro rata basis. As a result, many of the 

Monitor’s recommendations are consistent with what the parties believe is necessary to effectuate the 

terms of the settlement. A small number of the Monitor’s recommendations have been mooted by the 

settlement. For example, because the Fund’s assets will be sold and the proceeds distributed to the 

investors, it is not necessary to spend further energies obtaining estimates of the market value of the 

Fund’s assets. The parties agree, however, that the monitor should perform further work as set forth 

in the stipulation that follows. 

 The parties therefore ask to the Court to enter their stipulation to aid in the final resolution of 

this matter. 

II. STIPULATION AND PROPOSED ORDER 

 Whereas Plaintiff Securities and Exchange Commission (“Commission”), defendant 

Alexander James Trabulse (“Trabulse” or “Defendant”) and Relief Defendants Fahey Fund, L.P., 

Fahey Financial Group, Inc., International Trade & Data, and ITD Trading (collectively, the “Relief 

Defendants;” together with the Commission, the “Parties”) previously stipulated that Michael A. 

Grassmueck be appointed to serve as an independent monitor (“Monitor”) in this action ; 

 Whereas on January 31, 2008 the Monitor prepared a report with certain recommendations; 

Case 3:07-cv-04975-WHA Document 73 Filed 02/13/08 Page 2 of 6
SEC v. Trabulse et al., C 07-4975 (WHA) -3- JOINT RESPONSE TO MONITOR’S REPORT AND 

STIPULATION AND [PROPOSED] ORDER

IMPLEMENTING RECOMMENDATIONS

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 

 Whereas, the parties have reached a tentative settlement in this action, but that has not yet 

been approved by the Commission; 

 Whereas, the parties have met and conferred about those recommendations and believe that 

many of those recommendations are appropriate and will aid in the settlement of this action; 

 Therefore, the Parties stipulate and agree to the following: 

I. 

The Monitor shall prepare a full accounting as provided for by the Court’s Orders dated 

December 7, 2007, December 10, 2007 and December 17, 2007. As a clarification of the Court’s 

prior orders, the accounting report shall include, but not be limited to an analysis as to the amounts 

invested in the Fahey Funds and the amounts distributed to investors, Trabulse and third parties. The 

Monitor is authorized by this Order to obtain records from each financial institution and brokerage 

holding records for the Fahey Funds, or any of them, and Trabulse without further order of the Court. 

The Parties anticipate that all assets of Relief Defendants will be liquidated as part of the settlement 

of this action and the funds distributed to the investors. Because the value of those investments will 

be certain at the time of sale, it is not necessary to perform further analysis on the value of the Fund’s 

assets. The Parties agree, however, that it would be appropriate for the Monitor to take steps to 

ensure that all assets of the Relief Defendants have been identified. 

II. 

 Within 20 days of the entry of this stipulation and order, Trabulse agrees to produce to the 

Monitor all personal financial records, including check registers for his personal accounts bank and 

brokerage accounts for the period 2001 through 2007 to the extent that they have not already been 

produced. Trabulse further agrees to provide to the Monitor all documents in his possession, custody 

or control, that concern his real and personal property assets (to the extent those documents have not 

already been produced to the SEC or to the Monitor). Trabulse further agrees to provide to the 

Monitor a list of all his real and personal property assets worth more than $3,000 and identify the 

location of such assets. In addition, Trabulse shall provide a list of all assets purchased for his exwife, relatives and friends for the period 2001-2007, where the purchase price was more than $1,000. 

 

Case 3:07-cv-04975-WHA Document 73 Filed 02/13/08 Page 3 of 6
SEC v. Trabulse et al., C 07-4975 (WHA) -4- JOINT RESPONSE TO MONITOR’S REPORT AND 

STIPULATION AND [PROPOSED] ORDER

IMPLEMENTING RECOMMENDATIONS

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 

III. 

 The Parties further agree that the Defendant and Relief Defendants will use their best efforts 

to obtain the maximum value in connection with the sale of any assets. At least ten (10) days in 

advance of the sale of any asset, the Defendant will provide the Monitor with all information that the 

Monitor deems necessary to confirm that the maximum value has been obtained for any assets sold, 

including but not limited to, sales procedures, the identity of the buyer or prospective buyers and 

information that is reasonably designed to confirm that each sale is an arms length bona fide sale for 

value. The Parties therefore stipulate that the Monitor should gather and analyze whatever 

information is necessary to effectuate the provisions of this paragraph. 

IV. 

The parties further stipulate that it would be appropriate for the Monitor to determine which 

of the Fahey Funds’ assets should be insured and obtain insurance for such assets. In addition, to 

preserve the value of certain assets, the Monitor will identify which assets should be moved to secure 

locations and arrange to store such assets at a facility that meets with the Monitor’s approval. The 

cost associated with the work will be paid from the accounts of the Fahey Funds. 

V. 

The parties further stipulate that the Monitor should investigate the real estate transactions 

listed on page 16, lines 25-27 of the Monitor’s report. 

VI. 

The parties further stipulate that Trabulse and the Relief Defendants will not encumber any 

real or personal property assets owned by the Relief Defendants. The Monitor may file and record 

this Court’s orders in counties where real and personal property assets of Trabulse and the Relief 

Defendants may be located pursuant to 11 U.S.C. § 754 or take other steps to provide notice of the 

terms of this stipulation and order. To the extent that properties are located overseas, the Monitor 

may take any steps he deems appropriate to secure those properties from further encumbrance or loss 

as well. 

Case 3:07-cv-04975-WHA Document 73 Filed 02/13/08 Page 4 of 6
SEC v. Trabulse et al., C 07-4975 (WHA) -5- JOINT RESPONSE TO MONITOR’S REPORT AND 

STIPULATION AND [PROPOSED] ORDER

IMPLEMENTING RECOMMENDATIONS

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 

VII. 

The parties further stipulate that the Monitor should establish and conduct a claims review 

process whereby investors are notified and requested to provide verifiable information as to the 

amounts invested and distributions that they received. 

VIII. 

 The parties stipulate and agree that any statements, documents or other information provided 

by Trabulse or the Relief Defendants in compliance with this stipulation and proposed order will 

constitute, and neither the Commission nor the Monitor will not argue to the contrary, a waiver, in 

whole or in part, of Trabulse’s rights and privileges under the Fifth Amendment of the U.S. 

Constitution. Notwithstanding the foregoing, this stipulation is without prejudice to the United States 

Attorney arguing a waiver of the privileges under the Fifth Amendment, as Commission cannot bind 

the United States Attorney or any other governmental agency. 

IX. 

The Stipulation and Order Appointing Monitor filed December 17, 2007, the Order 

Concerning Injunctive Relief dated October 29, 2007, and the Preliminary Injunction and Other 

Ancillary Relief Order dated December 12, 2007 are incorporated herein by this reference. 

IT IS SO STIPULATED: 

Dated: February 13, 2008 /s/ Mark P. Fickes

 Mark P. Fickes 

 Erin E. Schneider 

 Attorneys for Plaintiff 

 SECURITIES AND EXCHANGE COMMISSION 

Dated: February 13, 2008 /s/ Michael D. Celio

 Michael D. Celio 

 Clement S. Roberts 

Attorneys for Defendant ALEXANDER JAMES 

TRABULSE, and Relief Defendants FAHEY FUND, 

L.P., FAHEY FINANCIAL GROUP, INC., 

INTERNATIONAL TRADE & DATA, AND ITD 

TRADING 

 

Case 3:07-cv-04975-WHA Document 73 Filed 02/13/08 Page 5 of 6
SEC v. Trabulse et al., C 07-4975 (WHA) -6- JOINT RESPONSE TO MONITOR’S REPORT AND 

STIPULATION AND [PROPOSED] ORDER

IMPLEMENTING RECOMMENDATIONS

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 

 The Court, having considered this proposed stipulation and order, adopts as its order the 

provisions of paragraphs I through IX, above. 

 IT IS SO ORDERED 

Dated: _______________, 2008 

 

 William H. Alsup 

 UNITED STATES DISTRICT JUDGE 

February 13

U

NITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IT IS SO ORDERED

Judge William Alsup

U

NITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IT IS SO ORDERED

Judge William Alsup

Case 3:07-cv-04975-WHA Document 73 Filed 02/13/08 Page 6 of 6