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

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Securities and Exchange Commission, 

Plaintiff, 

vs.

iBIZ Technology Corp., et al.

Defendants. 

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No. 06-502-PHX-JAT

ORDER

The Plaintiff has filed a Motion to Correct Order (Doc. #98) to make two changes to

the Court’s earlier Order at docket number 97 ruling on the motion for default judgment

against Defendant Jeffrey Firestone. First, in its proposed order that accompanied the motion

for default judgment, Plaintiff identified the party who should send a letter to the SEC along

with civil penalties as “Spiga Ltd.” instead of Jeffrey Firestone. Because the Court adopted

most of Plaintiff’s proposed order, the Court’s earlier Order also contains the name “Spiga”

instead of Firestone. 

Second, the Plaintiff’s proposed order requested a specific amount of pre-judgment

interest that did not include any interest from July 2006 to the date of the Court’s Order. The

Court therefore ordered pre-judgment interest at a specific rate for the entire time period

leading up to the Court’s Order, but did not order a specific monetary amount. Plaintiff has

now performed the required calculations and provided a specific amount of requested prejudgment interest. Plaintiff would like the Court to amend its earlier Order to include this

Case 2:06-cv-00502-JAT Document 99 Filed 06/10/08 Page 1 of 5
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specific amount.

The Court will grant Plaintiff’s motion to correct the typographical error in Plaintiff’s

submission to the Court and to include a specific amount of pre-judgment interest.

Accordingly,

IT IS ORDERED GRANTING Plaintiff’s Motion to Correct Order (Doc. #98).

IT IS FURTHER ORDER vacating the Court’s earlier Order at docket number 97 and

replacing it with the following Amended Order:

The Court has considered the Plaintiff Securities and Exchange Commission's

("SEC") request 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 of suitable

age then residing there. 

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 or 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. Also, taking the allegations in the complaint as admitted, the Court finds that

there is a reasonable likelihood that Firestone may engage in future violations of the

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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 issuances

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).

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

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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 of $608,710.36 thereon from July 1, 2004 to the date of this Order,

which represents the IRS rate of interest on tax underpayments found in 26 C.F.R.

§301.6621, plus 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 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 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

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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 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 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 9th day of June, 2008.

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