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10-457 - Securities and Exchange Commission v. McGinn, Smith & Co, Inc. et al


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10-457 - Securities and Exchange Commission v. McGinn, Smith & Co, Inc. et al
May 9, 2011
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MEMORANDUM-DECISION and ORDER, that Lynn Smith's 224 Motion to Dismiss is DENIED. That the Trust, Geoffrey Smith, and Lauren Smith's 283 Motion to Dismiss is GRANTED in part as to the fraudulent conveyance claims against Lauren Smith and Geoffrey Smith in his individual capacity. That the Trust, Geoffrey Smith, and Lauren Smith's 283 Motion to Dismiss is DENIED in part as to the fraudulent conveyance claim against the Trust. That the SEC is GRANTED limited leave to re-amend its complaint, in full compliance with the terms of this Order, within thirty (30) days from the date of the filing of this Order, after which Geoffrey Smith and Lauren Smith shall respond to the complaint as permitted under the Federal Rules of Civil Procedure. That if the SEC fails to file an amended complaint within thirty (30) days from the date of the filing of this Order, the Clerk of the Court shall enter judgment dismissing Geoffrey Smith and Lauren Smith from this action without further order of the court. Signed by Judge Gary L. Sharpe on 5/6/2011. (jel, )
April 4, 2012
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MEMORANDUM-DECISION and ORDER. IT IS HEREBY ORDERED that Timothy McGinn's motion for the release of assets from the preliminary injunction to pay attorney's fees and costs in the parallel criminal action 439 is GRANTED in part and DENIED in part as set forth in this Order; 2) David Smith's motion for the release of assets from the preliminary injunction to pay attorney's fees and costs in the parallel criminal action 440 is GRANTED in part and DENIED in part as set forth in this Order; and 3) The Trust's motion for the release of assets from the preliminary injunction to pay past and future expenses, to reimburse David Smith and his wife for Trust expenses they paid, and for payment of attorney's fees and costs in this action 441 is DENIED in all respects. Signed by Magistrate Judge David R. Homer on 4/4/2012. (mab)
April 4, 2012
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ORDER regarding 453 the motion of William J. Brown, as Receiver, for an Order Approving the Sale and Bidding Procedures with Respect to the Sale of Certain Alarm System Monitoring Accounts. IT IS HEREBY ORDERED that the Motion is APPROVED. IT IS FURTHER ORDERED that the Receiver's interests in the Accounts and assets on the Rider to the APA shall be sold and assigned to the Purchaser without recourse, representation or warranty and free and clear of all liens, claims, encumbrances and other interests, with such liens and claims, if any, attaching to the net proceeds of sale. IT IS FURTHER ORDERED that the Receiver is authorized to pay the break-up fee of $60,000.00 to the stalking horse bidder, Alarm Services, LLC. Signed by Magistrate Judge David R. Homer on 4/4/2012. (mab)
October 15, 2012
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MEMORANDUM-DECISION and ORDER granting 538 Sealed Application. Signed by Magistrate Judge Christian F. Hummel on 10/15/2012. (dpk)
January 8, 2013
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MEMORANDUM-DECISION AND ORDER re 556 Sealed Document filed by David L. Smith. It is hereby ORDERED, that Dreyer Boyajian LLP's Fourth Application for compensation for legal services rendered between 12/1/2012 and 12/31/2012 in the amount of $66,717.50 is approved. ORDERED that the application by Dreyer Boyajian LLP for reimbursement of costs expended between 12/1/2012 and 12/31/2012 in the amount of $900.89 is approved. ORDERED that Dreyer Boyajian LLP may make further applications as deemed appropriate. ORDERED that Dreyer Boyajian LLP is authorized to make the payments allowed pursuant to this Order. Signed by Magistrate Judge Christian F. Hummel on 1/8/2013. (dpk)
February 19, 2013
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MEMORANDUM-DECISION AND ORDER re 561 Amended Fifth Application for Attorney's Fees and Costs filed by David L. Smith. ORDERED that Dreyer Boyajian LLP's Fifth Amended Application for compensation for legal services rendered between 1/1/2013 and 1/31/2013 in the amount of $92,137.50 is approved. ORDERED that the application by Dreyer Boyajian LLP for reimbursement of costs expended between 1/1/2013 and 1/31/2013 in the amount of $3,502.09 is approved. ORDERED that Dreyer Boyajian LLP may make further applications as deemed appropriate. ORDERED that Dreyer Boyajian LLP is authorized to make the payments allowed pursuant to this Order. Signed by Magistrate Judge Christian F. Hummel on 2/19/2013. (dpk)
November 22, 2013
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MEMORANDUM DECISION and ORDER re 604 Status Report filed by William J Brown. It is ORDERED that the Receiver may proceed with the sale of the Sacandaga Lake Property pursuant to the report filed with the court (Dkt. No. 604). Signed by Magistrate Judge Christian F. Hummel on 11/22/2013. (lah)
February 21, 2014
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MEMORANDUM-DECISION AND ORDER denying 660 Motion to Amend Documentation. It is hereby ORDERED that the Trust's motion to amend its documentation to delete the provisions authorizing the Trust to enter into the private annuity agreement with David and Lynn Smith is DENIED. Signed by Magistrate Judge Christian F. Hummel on 2/21/2014. (dpk)
December 12, 2014
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ORDER - ORDERED that Timothy McGinn and Nancy McGinn either notify the court and opposing counsel of their intention not to respond to the SEC's motion or file their response(s) within FOURTEEN (14) DAYS of this Orders filing date; and it is further ORDERED that if Timothy McGinn and/or Nancy McGinn file(s) a response, the SEC may file a reply within SEVEN (7) DAYS from the filing of the response(s). Signed by Chief Judge Gary L. Sharpe on 12/12/2014. (jel, )
February 17, 2015
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MEMORANDUM-DECISION and ORDER - ORDERED that the SEC's motion for summary judgment is GRANTED IN PART and DENIED IN PART as follows: GRANTED with respect to the SEC's first cause of action alleging violations of § 17(a) of the Securities Act, as against MS & Co., MS Advisors, MS Capital, McGinn, and Smith; GRANTED with respect to the SEC's second cause of action alleging violations of § 10(b) of the Exchange Act, and Rule 10b-5 thereunder, as against MS & Co., MS Advisors, MS Capital, McGinn, and Smith; GRANTED with respect to the SEC's third cause of action alleging violations of § 15(c)(1) of the Exchange Act as against MS & Co., and aiding and abetting violations of § 15(c)(1) as against McGinn and Smith; GRANTED with respect to the SEC's fourth cause of action alleging violations of the Advisors Act as against MS & Co., MS Advisors, McGinn, and Smith; GRANTED with respect to the SEC's sixth cause of action alleging violations of §§ 5(a) and 5(c) of the Securities Act as against MS & Co., MS Capital, McGinn, and Smith; GRANTED with respect to the SEC's request for a permanent injunction barring McGinn and Smith from committing future violations of §§ 5(a), 5(c), and 17(a) of the Securities Act, § 10(b) of the Exchange Act, and Rule 10b-5 thereunder, § 15(c)(1) of the Exchange Act, and Rule 10b-3 thereunder, and §§ 206(1), 206(2), and 206(4) of the Investment Advisers Act, and Rule 206(4)-8 thereunder; and GRANTED with respect to the SEC's request for an order barring McGinn from serving as an officer or director of a public company; and DENIED with respect to the SEC's request for civil penalties; and it is further; ORDERED that the court reserves judgment on the SEC's request for disgorgement of profits, only as to the appropriate amount. If the SEC wishes to pursue this theory, consistent with this Memorandum-Decision and Order, the SEC must provide a reasonable approximation of the profits causally connected to the violations within SEVEN (7) DAYS from the issuance of this Memorandum-Decision and Order. Smith may respond within SEVEN (7) DAYS after the SEC files its submission; and it is further; ORDERED that the court reserves judgment on the remainder of the SEC's motion; and it is further ORDERED that, within SEVEN (7) DAYS of this Memorandum-Decision and Order, the SEC inform the court whether it has abandoned and/or withdrawn its fifth cause of action and sixth cause of action insofar as it is alleged against the Four Funds, or whether it seeks a trial on those claims; and it is further ORDERED that McGinn and Smith are enjoined from committing future violations of §§ 5(a), 5(c), and 17(a) of the Securities Act, § 10(b) of the Exchange Act, and Rule 10b-5 thereunder, § 15(c)(1) of the Exchange Act, and Rule 10b-3 thereunder, and §§ 206(1), 206(2), and 206(4) of the Investment Advisers Act, and Rule 206(4)-8 thereunder; and it is further ORDERED that McGinn is permanently and unconditionally barred from acting as an officer or director of any issuer that has a class of securities registered pursuant to 15 U.S.C. § 78l or that is required to file reports pursuant to 15 U.S.C. § 78o(d). Signed by Chief Judge Gary L. Sharpe on 2/17/2015. (jel, )
March 30, 2015
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MEMORANDUM-DECISION and ORDER - That the remainder of the SEC's motion for summary judgment (Dkt. No. 708, Attach. 1 at 14-29, 32-40) is GRANTED. That the SEC's requests for disgorgement of profits in the amount of $87,433,218 and prejudgment interest in the amount of $11,668,132 are GRANTED. That $99,101,350 - the total amount of disgorged profits plus prejudgment interest - be returned to defrauded investors. That the following assets may be applied in order to satisfy the disgorgement order: (1) the Stock Account; (2) the Smith Vero Beach Home; (3) the Checking Account; and (4) the Smith Trust. That the Clerk defer entering judgment as against the Four Funds, MS & Co., MS Advisors, and MS Capital pending further direct from the court. That Brown, on behalf of the Four Funds, may consent to entry of judgment on the SEC's fifth and sixth causes of action, and is directed to file his consent with the court within fourteen (14) days of this Memorandum-Decsiion and Order. That Brown is further directed to inform the court, in writing, once the funds have been distributed to investors and he is ready to close the receivership, so that the court may enter judgment. That L. Smith's motion for summary judgment (Dkt. No. 696) is DENIED as moot. That the Smith Trust, L.T. Smith, and G. Smith's motion for summary judgment (Dkt. No. 704) is DENIED. Signed by Chief Judge Gary L. Sharpe on 3/30/2015. (jel, )
June 25, 2015
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FINAL JUDGMENT AS TO DEFENDANT DAVID L. SMITH: in favor of Securities and Exchange Commission against David L. Smith. On February 17, 2015 and March 30, 2015, having issued Memorandum-Decision and Orders (Dkt. 807, 816) granting plaintiff Securities and Exchange Commission's motion for summary judgment of the First, Second, Third, Fourth, Sixth and Eighth Claims for relief. It is hereby ORDERED that Defendant David L. Smith is permanently enjoined and restrained from violating the sections of the Securities Act of 1933 noted herein, the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the of the mails, directly or indirectly as noted in the physical order. Pursuant to FRCvP 65(d)(2) directs that the following people receive personal service or otherwise, of this final judgment, (a) upon Defendant Smith's officers, agents, servants, employees and attorneys and (b) other persons in active concert or participation with Defendant Smith. It is further ORDERED that Defendant Smith is liable for disgorgement of $87,433,218, representing profits gained as a result of the conduct alleged in the Second Amended Complaint, together with prejudgment interest thereon in the amount of $11,668,132, for a total of $99,101,350. This liability for disgorgement and prejudgment interest shall be a joint and several liability of Defendant David L. Smith and Defendant Timothy M. McGinn. Defendant Smith shall satisfy this obligation by paying $99,101,350 to William J. Brown, Esq., the Receiver appointed herein, within 14 days after the entry of this Final Judgment. See Order for further instruction on the impact of this payment. David Smith is a joint owner of a brokerage account in the name of Lynn A. Smith and is the beneficial owner of assets of David L. and Lynn A. Smith Irrevocable Trust U/A 8/04/04 as such, all cash and securities, shall be treated as an asset and shall be applied to Smith's payment obligation under this Final Judgment. David L. Smith transfers to L. Smith the titles of properties noted in section 7 (C) on page 7 are hereby set aside. The Receiver shall hold all payments received and should submit to the Court a proposed Plan of Distribution. The Receiver is authorized to liquidate and monetize any assets recovered and deposit the proceeds thereof in an appropriate account. This Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. Signed by Chief Judge Gary L. Sharpe. [Copy served upon pro se defendant Nancy McGinn via regular mail.] (mc)
June 25, 2015
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FINAL JUDGMENT AS TO DEFENDANT TIMOTHY M. MCGINN: in favor of Securities and Exchange Commission against Timothy M. McGinn. On February 17, 2015 and March 30, 2015, having issued Memorandum-Decision and Orders (Dkt. 807, 816) granting plaintiff Securities and Exchange Commission's motion for summary judgment of the First, Second, Third, Fourth, Sixth and Eighth Claims for relief. It is hereby ORDERED that Defendant Timothy M. McGinn is permanently enjoined and restrained from violating the sections of the Securities Act of 1933 noted herein, the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the of the mails, directly or indirectly as noted in the physical order. Pursuant to FRCvP 65(d)(2) directs that the following people receive personal service or otherwise, of this final judgment, (a) upon Defendant McGinn's officers, agents, servants, employees and attorneys and (b) other persons in active concert or participation with Defendant McGinn. Pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C § 78u(d)(2), Defendant McGinn is prohibited from acting as an officer or director of any issuer that has a class of securities registered or is required to file reports. It is further ORDERED that Defendant McGinn is liable for disgorgement of $87,433,218, representing profits gained as a result of the conduct alleged in the Second Amended Complaint, together with prejudgment interest thereon in the amount of $11,668,132, for a total of $99,101,350. This liability for disgorgement and prejudgment interest shall be a joint and several liability of Defendant McGinn and Defendant David L. Smith. Defendant McGinn shall satisfy this obligation by paying $99,101,350 to William J. Brown, Esq., the Receiver appointed herein, within 14 days after the entry of this Final Judgment. See Order for further instruction on the impact of this payment. It is ORDERED that the property located at 26 Port Huron Drive, Niskayuna, NY from Timothy M. McGinn to the Defendant and Relief Defendant Nancy A. McGinn in October 2009 is hereby declared to have been a fraudulent conveyance and therefore the Receiver is authorized to apply the proceeds of this sale of the Niskayuna Property to the Distribution Fund. The Receiver shall hold all payments received and should submit to the Court a proposed Plan of Distribution. The Receiver is authorized to liquidate and monetize any assets recovered and deposit the proceeds thereof in an appropriate account. This Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. Signed by Chief Judge Gary L. Sharpe. [Copy served upon pro se defendant Nancy McGinn via regular mail.] (mc)
June 25, 2015
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FINAL JUDGMENT AS TO LYNN A. SMITH, LAUREN T. SMITH, GEOFFREY R. SMITH AND NANCY MCGINN: in favor of Securities and Exchange Commission against Geoffrey R. Smith, Lauren T. Smith, Lynn A. Smith and Nancy McGinn. The Court, on March 30, 2015, having issued a Memorandum-Decision and Order (Dkt. 816) granting plaintiff Securities and Exchange Commission's motion for summary judgment on the Eighth Claim for Relief as alleged in the Second Amended Complaint (Dkt. 334). The transfers noted in Section 1 of this Order were made in violation of § 276 of the New York Debtor and Creditor Law, are declared void and are hereby set aside. It is ORDERED that L. Smith, as one of the transferors of the fraudulent transfers listed in Section I(2) through I(8) in this Order, shall be jointly and severally liable, together with D. Smith, for the return all such fraudulently transferred assets, or their equivalent value, to the Receiver, subject to the offset in Section III. It is ORDERED that the transferees identified in Section I in the Order shall be jointly and severally liable with D. Smith and L. Smith for the return of all assets fraudulently conveyed to them, or their equivalent value, to the Receiver, William J. Brown, Esq. as noted herein. It is ORDERED that the Receiver shall apply all proceeds of all payments and transfers to him pursuant to this Final Judgment, including all proceeds of the sale of the Sacandaga Lake Property, the Niskayuna Property and the Vero Beach Property, and the assets in the Smith Trust and the BOA Account, to the Distribution Fund for the benefit of the defrauded investors. This Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. Signed by Chief Judge Gary L. Sharpe. [Copy served upon pro se defendant Nancy McGinn via certified and regular mail.] (mc)
July 8, 2015
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AMENDED FINAL JUDGMENT AS TO DEFENDANT TIMOTHY M. MCGINN: Amending the # 836 Judgment in favor of Securities and Exchange Commission against Timothy M. McGinn. Judgment amended to fix a monetary amount on page 6 previously listed as $11,668.132 and now updated to reflect the correct amount of $11,668,132. [Copy sent to pro se defendant Nancy McGinn via regular mail.] (mc)
October 31, 2016
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MEMORANDUM-DECISION and ORDER - That the Rabinovich's letter motion to file a sur-reply (Dkt. No. 892) is DENIED. That the Receiver's motion for an order approving of his distribution plan and authorizing interim distributions (Dkt. No. 847) is GRANTED. Signed by Senior Judge Gary L. Sharpe on 10/31/2016. (jel, )