action, Defendant understands that it shall not be permitted to contest the factual allegations of
the complaint in this action.

11. Defendant understands and agrees to comply with the Commission's policy “not
to permit a defendant or respondent to consent to a judgment or order that imposes a sanction
while denying the allegation in the complaint or order for proceedings.” 17 C.F.R. § 202.5. In
compliance with this policy, Defendant agrees: (i) not to take any action or to make or permit to
be made any public statement denying, directly or indirectly, any allegation in the complaint or
creating the impression that the complaint is without factual basis; and (ii) that upon the filing of
this Consent, Defendant hereby withdraws any papers filed in this action to the extent that they
deny any allegation in the complaint. If Defendant breaches this agreement, the Commission
may petition the Court to vacate the Final Judgment and restore this action to its active docket.
Nothing in this paragraph affects Defendant’s: (i) testimonial obligations; or (ii) right to take
legal or factual positions in litigation or other legal proceedings in which the Commission is not
a party.

12. Defendant hereby waives any rights under the Equal Access to Justice Act, the
Small Business Regulatory Enforcement Fairness Act of 1996, or any other provision of law to
seek from the United States, or any agency, or any official of the United States acting in his or
her official capacity, directly or indirectly, reimbursement of attorney’s fees or other fees,
expenses, or costs expended by Defendant to defend against this action. For these purposes,
Defendant agrees that Defendant is not the prevailing party in this action since the parties have
reached a good faith settlement.

13. In connection with this action and any related judicial or administrative

proceeding or investigation commenced by the Commission or to which the Commission is a


effective date of the registration statement) any public proceeding or examination

under Section 8 of the Securities Act [15 U.S.C. § 77h].

Iv.
[OFFICER AND DIRECTOR BAR]

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant to Section
21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], and Section 20(e) of the Securities Act
[15 U.S.C. § 77t(e)], Defendant is prohibited from acting as an officer or director of any issuer
that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C.

§ 781] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C.
§ 780(d)].
Vv.
[PENNY STOCK BAR]

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently barred from participating in an offering of penny stock, including engaging in
activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or
attempting to induce the purchase or sale of any penny stock. A penny stock is any equity
security that has a price of less than five dollars, except as provided in Rule 3a51-1 under the

Exchange Act [17 C.F.R. 240.3a51-1].


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES SECURITIES :
AND EXCHANGE COMMISSION, : Civil Action No: 03 C 2182

Plaintiff, ;

Judge Gottschall
v.

FRANK J. CUSTABLE, JR., et al., : Magistrate Judge Valdez

Defendants. :

FINAL JUDGMENT AS TO DEFENDANT DAVID GILES
The Securities and Exchange Commission having filed a Complaint and Defendant David
Giles (“Defendant”) having entered a general appearance; consented to the Court’s jurisdiction
over Defendant and the subject matter of this action; consented to entry of this Final Judgment
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:
IL

[PERMANENT INJUNCTION AGAINST FUTURE
VIOLATIONS OF SECTION 10(b) OF SECURITIES EXCHANGE ACT]

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant and
Defendant’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, directly or indirectly, Section
10(b) of the Securities Exchange Act of 1934 (the “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


party, Defendant (i) agrees to appear and be interviewed by Commission staff at such times and +*:-
places as the staff requests upon reasonable notice; (ii) will accept service by mail or facsimile
transmission of notices or subpoenas issued by the Commission for documents or testimony at
depositions, hearings, or trials, or in connection with any related investigation by Commission
staff; (iii) appoints Defendants eadonsignedateney as agent to receive service of such notices
and subpoenas; (iv) with respect to such notices and subpoenas, waives the territorial limits on
service contained in Rule 45 of the Federal Rules of Civil Procedure and any applicable local
rules, provided that the party requesting the testimony reimburses Defendant’s travel, lodging, and
subsistence expenses at the then-prevailing U.S. Government per diem rates; and (v) consents to
personal jurisdiction over Defendant in any United States District Court for purposes of
enforcing any such subpoena.

14. Defendant agrees that the Commission may present the Final Judgment to the
Court for signature and entry without further notice.

15. Defendant agrees that this Court shall retain jurisdiction over this matter for the

purpose of enforcing the terms of the Final Judgment.

. »
Dated: b6/4 log By: Laud Alu
David Giles

On Dito bec Y. 2009, Cr Gi fes a person known to me,

personally appeared before me and acknowledged executing the foregoing Consent.

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to engage in any transaction, pfactice, or course of business which operates or

would operate as a fraud or deceit upon the purchaser.

iil.

[PERMANENT INJUNCTION AGAINST FUTURE
VIOLATIONS OF SECTION 5(a) OF SECURITIES ACT]

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant

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

participation with him who receive actual notice of this Final 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:

@

(b)

©

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;

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

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


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES SECURITIES :

AND EXCHANGE COMMISSION, : Civil Action No: 03 C 2182
Plaintiff, :

Judge Gottschall
Vv.

FRANK J. CUSTABLE, JR., et al., : Magistrate Judge Valdez

Defendants. :

CONSENT OF DEFENDANT DAVID GILES TO FINAL JUDGMENT.
1. Defendant David Giles (“Defendant”) acknowledges having been served with the

complaint in this action, enters a general appearance, and admits the Court’s jurisdiction over
Defendant and over the subject matter of this action.

2. Without admitting or denying the allegations of the complaint (except as to
personal and subject matter jurisdiction, which Defendant admits), Defendant hereby consents to
the entry of the Final Judgment in the form attached hereto (the “Final Judgment”) and
incorporated by reference herein, which, among other things:

(a) _ permanently restrains and enjoins Defendant from violations of Sections 5
and 17(a) of the Securities Act of 1933 [15 U.S.C. §§ 77e and 77q(a)],
Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”)
[15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];

(6) orders Defendant to pay disgorgement in the amount of $68,239, plus

prejudgment interest thereon in the amount of $33,502, but waiving such


any assets, or sanctions for contempt of this Final Judgment, The Commission may also request
additional discovery. Defendant may not, by way of defense to such petition: (1) challenge the
validity of the Consent or this Final Judgment; (2) contest the allegations in the Complaint filed
by the Commission; (3) assert that payment of disgorgement, pre-judgment and post-judgment
interest or a civil penalty should not be ordered; (4) contest the amount of disgorgement and pre-
judgment and post-judgment interest; (5) contest the imposition of the maximum civil penalty
allowable under the law; or (6) assert any defense to liability or remedy, including, but not
limited to, any statute of limitations defense.
VI.

[INCORPORATION OF CONSENT]

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

Vil.
[RETENTION OF JURISDICTION]
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain

jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.


Vv. .
[MONETARY RELIEF]

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable
for disgorgement of $68,239, representing profits gained as a result of the conduct alleged in the
Complaint, together with prejudgment interest thereon in the amount of $33,502, for a total
monetary judgment of $101,741. Based on Defendant’s sworn representations in his Statement
of Financial Condition and other documents and information submitted to the Commission,
however, the Court is not ordering Defendant to pay a civil penalty and payment of all
disgorgement and pre-judgment interest thereon is waived. The determination not to impose a
civil penalty and to waive payment of all disgorgement and pre-judgment interest is contingent
upon the accuracy and completeness of Defendant’s Statement of Financial Condition. If at any
time following the entry of this Final Judgment the Commission obtains information indicating
that Defendant’s representations to the Commission concerning his assets, income, liabilities, or
net worth were fraudulent, misleading, inaccurate, or incomplete in any material respect as of the
time such representations were made, the Commission may, at its sole discretion and without
prior notice to Defendant, petition the Court for an order requiring Defendant to pay the unpaid
portion of the disgorgement, pre-judgment and post-judgment interest thereon, and the maximum
civil penalty allowable under the law. In connection with any such petition, the only issue shall
be whether the financial information provided by Defendant was fraudulent, misleading,
inaccurate, or incomplete in any material respect as of the time such representations were made.
In its petition, the Commission may move this Court to consider all available remedies,

including, but not limited to, ordering Defendant to pay funds or assets, directing the forfeiture of


instrumentality of interstate commerce, or of the mails, or of any facility of any national 7
eee
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.

Il.
[PERMANENT INJUNCTION AGAINST FUTURE
VIOLATIONS OF SECTION 17(a) OF SECURITIES ACT]

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
and Defendant’s agents, servants, employees, attomeys, and all persons in active concert or
participation with them who receive actual notice of this Final J udgment by personal service or
otherwise are permanently restrained and enjoined from violating Section 17(a) of the Securities
Act of 1933 (“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


8. Defendant will not oppose the enforcement of the Final Judgment on the ground,
if any exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure, and
hereby waives any objection based thereon.

9. Defendant waives service of the Final Judgment and agrees that entry of the Final
Judgment by the Court and filing with the Clerk of the Court will constitute notice to Defendant
of its terms and conditions. Defendant further agrees to provide counsel for the Commission,
within thirty days after the Final Judgment is filed with the Clerk of the Court, with an affidavit
or declaration stating that Defendant has received and read a copy of the Final Judgment.

10. Consistent with 17 C.F.R. 202.5(f), this Consent resolves only the claims asserted
against Defendant in this civil proceeding. Defendant acknowledges that no promise or
representation has been made by the Commission or any member, officer, employee, agent, or
representative of the Commission with regard to any criminal liability that may have arisen or
may arise from the facts underlying this action or immunity from any such criminal liability.
Defendant waives any claim of Double Jeopardy based upon the settlement of this proceeding,
including the imposition of any remedy or civil penalty herein. Defendant further acknowledges
that the Court’s entry of a permanent injunction may have collateral consequences under federal
or state law and the rules and regulations of self-regulatory organizations, licensing boards, and
other regulatory organizations. Such collateral consequences include, but are not limited to, a
statutory disqualification with respect to membership or participation in, or association with a
member of, a self-regulatory organization. This statutory disqualification has consequences that
are separate from any sanction imposed in an administrative proceeding. In addition, in any

disciplinary proceeding before the Commission based on the entry of the injunction in this


such petition, the only issue shall be whether the financial information provided by Defendant
was fraudulent, misleading, inaccurate, or incomplete in any material respect as of the time such
representations were made. In any such petition, the Commission may move the Court to
consider all available remedies, including but not limited to ordering Defendant to pay funds or
assets, directing the forfeiture of any assets, or sanctions for contempt of the Court’s Final
Judgment. The Commission may also request additional discovery. Defendant may not, by way
of defense to such petition: (1) challenge the validity of this Consent or the Final Judgment; (2)
contest the allegations in the complaint; (3) assert that payment of disgorgement, pre-judgment
or post-judgment interest, or a civil penalty should not be ordered; (4) contest the amount of
disgorgement or pre-judgment or post-judgment interest; (5) contest the imposition of the
maximum civil penalty allowable under the law; or (6) assert any defense to liability or remedy,
including but not limited to any statute of limitations defense.

4, Defendant waives the entry of findings of fact and conclusions of law pursuant to
Rule 52 of the Federal Rules of Civil Procedure.

5. Defendant waives the right, if any, to a jury trial and to appeal from the entry of
the Final Judgment.

6. Defendant enters into this Consent voluntarily and represents that no threats,
offers, promises, or inducements of any kind have been made by the Commission or any
member, officer, employee, agent, or representative of the Commission to induce Defendant to
enter into this Consent.

7. Defendant agrees that this Consent shall be incorporated into the Final Judgment

with the same force and effect as if fully set forth therein.


payment due to Defendant’s sworn statement of financial condition, under
the terms and conditions set forth in paragraph 3 below;

(c) __ permanently bars Defendant from acting as an officer or director of any
issuer that has a class of securities registered pursuant to Section 12 of the
Exchange Act [15 U.S.C. § 781] or that is required to file reports pursuant
to Section 15(d) of the Exchange Act [15 U.S.C. § 780(d)]; and

(d) permanently bars Defendant from participating in an offering of penny
stock, including engaging in activities with a broker, dealer, or issuer for
purposes of issuing, trading, or inducing or attempting to induce the
purchase or sale of any penny stock. A penny stock is any equity security
that has a price of less than five dollars, except as provided in Rule 3a51-1
under the Exchange Act [17 C.F.R. 240.3a51-1].

3. Defendant acknowledges that the Court is not imposing a civil penalty or
requiring payment of any portion of $101,741 of disgorgement and pre-judgment interest based
on Defendant’s sworn representations in Defendant’s Statement of Financial Condition and other
documents and information submitted to the Commission. Defendant further consents that if at
any time following the entry of the Final Judgment the Commission obtains information
indicating that Defendant’s representations to the Commission concerning Defendant’s assets,
income, liabilities, or net worth were fraudulent, misleading, inaccurate, or incomplete in any
material respect as of the time such representations were made, the Commission may, at its sole
discretion and without prior notice to Defendant, petition the Court for an order requiring
Defendant to pay the unpaid portion of the disgorgement, pre-judgment and post-judgment

interest thereon, and the maximum civil penalty allowable under the law. In connection with any


VII.
[CLERK TO ENTER JUDGMENT]
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 Final Judgment forthwith and without further notice.

Dated: , 2009

Honorable Joan B. Gottschall
United States District Judge