UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

_______________________________________________

SECURITIES AND EXCHANGE COMMISSION, :

:

:

Plaintiff, :

:

v. :

:

:

JACKIE GROSS, : C. A. No. 3-05CV1251-N

MORGAN SPAULDING, INC., :

TELVEST COMMUNICATIONS, LLC, and :

JOHN FLANDERS, :

:

:

Defendants. :

________________________________________________

 JUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF 

AS TO DEFENDANT MORGAN SPAULDING, INC.

Plaintiff Securities and Exchange Commission, having filed a Complaint, and Defendant

Morgan Spaulding, Inc., (“Morgan Spaulding”) having entered a general appearance; consented

to the Court’s jurisdiction over it and the subject matter of this action; consented to entry of this

Judgment of Permanent Injunction and Other Relief as to Defendant Morgan Spaulding without

admitting or denying the allegations of the Complaint (except as to jurisdiction); waived findings

of fact and conclusions of law; and waived any right to appeal from this Final Judgment;

 

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I.

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Morgan Spaulding, Morgan

Spaulding’s agents, servants, employees, attorneys, and all persons in active concert or

participation with them who receive actual notice of this Final Judgment by personal service or

otherwise are permanently restrained and enjoined from violating Section 17(a) of the Securities

Act [15 U.S.C. § 77q(a)] in the offer or sale of any security by the use of any means or

instruments of transportation or communication in interstate commerce or by use of the mails,

directly or indirectly:

(a) to employ any device, scheme, or artifice to defraud;

(b) to obtain money or property by means of any untrue statement of a material fact or

any omission of a material fact necessary in order to make the statements made, in light

of the circumstances under which they were made, not misleading; or

(c) to engage in any transaction, practice, or course of business which operates or

would operate as a fraud or deceit upon the purchaser.

II.

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Morgan Spaulding, Morgan

Spaulding’s agents, servants, employees, attorneys, assigns, and all persons in active concert or

participation with them who receive actual notice of this Judgment by personal service or

otherwise are permanently restrained and enjoined from violating, directly or indirectly, Section

10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule

10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using any means or instrumentality of

 

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interstate commerce, or of the mails, or of any facility of any national securities exchange, in

connection with the purchase or sale of any security:

(a) to employ any device, scheme, or artifice to defraud;

(b) to make any untrue statement of a material fact or to omit to state a material fact

necessary in order to make the statements made, in the light of the circumstances 

under which they were made, not misleading; or

(c) to engage in any act, practice, or course of business which operates or would

operate as a fraud or deceit upon any person.

III.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Morgan Spaulding

shall pay disgorgement of $389,000.00, representing profits gained as a result of the conduct

alleged in the Commission’s Complaint, together with prejudgment interest of $44,579.11, for a

total of $ 433,579.11. The Commission may enforce the Court’s judgment for disgorgement and

prejudgment interest by moving for civil contempt (and/or through other collection procedures

authorized by law) at any time after ten days following entry of this Final Judgment. In response

to any civil contempt motion by the Commission, the defendant may assert any legally

permissible defense, including a demonstration that compliance with the Court’s order is

impossible as a consequence of the defendant’s financial condition and that such condition was

not self-created as a means of avoiding compliance with the Court’s order. The Commission

may take discovery, limited to the issue of defendant’s financial condition, at any time if the

defendant fails to make all payments required by this Final Judgment, including post-judgment

interest.

 

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 Morgan Spaulding shall satisfy this obligation by paying $433,579.11 within ten days

following entry of this Final Judgment to the Clerk of this Court, together with a cover letter

identifying Morgan Spaulding 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. Morgan Spaulding shall simultaneously transmit photocopies of such

payment and letter to Charles D. Stodghill, the Commission’s counsel in this action, at U.S.

Securities and Exchange Commission, Division of Enforcement, 100 F Street, NE, Washington,

DC 20459-4010. By making this payment, Morgan Spaulding relinquishes all legal and

equitable right, title, and interest in such funds, and no part of the funds shall be returned to

Morgan Spaulding. The Clerk shall deposit the funds in 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 thereon (collectively,

the “Fund”) shall be held by the Court’s interest bearing account or CRIS until further order of

the Court. In accordance with 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. 

 

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IV.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that any Order to pay

disgorgement, prejudgment interest, or civil penalties is given preclusive effect in any bankruptcy

case filed by or against Morgan Spaulding. Solely for the purpose of such bankruptcy

proceedings, such Order establishes all the factual elements necessary to enable a court to make a

finding that it is nondischargeable pursuant to 11 U.S.C. § 523(a)(4).

V.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is incorporated

herein with the same force and effect as if fully set forth herein, and that Morgan Spaulding shall

comply with all of the undertakings and agreements set forth therein.

VI.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain

jurisdiction of this matter for all purposes, including the implementation and enforcement of this

Judgment.

 

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VII.

There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil

Procedure, the Clerk is ordered to enter this Judgment forthwith and without further notice.

Signed January 26, 2007.

____________________________________

DAVID C. GODBEY

UNITED STATES DISTRICT JUDGE

 

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