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[QUOTE]Originally posted by 66inxs: [QB] IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION SECURITIES AND EXCHANGE : COMMISSION, : : Plaintiff, :: CIVIL ACTION NO. vs. : : 1:06-CV-2568-CC CONVERSION SOLUTIONS HOLDING : CORPORATION and RUFUS PAUL : HARRIS a/k/a PAUL RUFUS HARRIS, : : Defendants. : ORDER This matter is presently before the Court on Defendant Rufus Paul Harris’ Motion for Reconsideration / Rehearing of the October 30th Order Entered by this Court [Doc. No. 20], Plaintiff’s Motion for Default Judgment [Doc. No. 21], and Defendant Harris’ Verified Motion to Compel Discovery and Motion for Sanctions for Failing to Disclose [Doc. No. 23]. The Court will address each motion in turn below. I. MOTION FOR RECONSIDERATION On October 30, 2007, this Court entered an Order denying Defendant Harris’ motion to set aside the entry of default against him on the grounds that Mr. Harris had failed to show good cause for setting aside the entry of default, pursuant to Federal Rule of Civil Procedure 55. On November 7, 2007, Mr. Harris filed the instant motion for reconsideration of that decision. A motion for reconsideration is not a form of relief explicitly recognized by the Federal Rules of Civil Procedure. Although not specifically mentioned in the rules, motions seeking to have the court reconsider an earlier ruling are usually considered pursuant to Rule 59. Federal Rule of Civil Procedure 59(e) authorizes a motion to alter or amend a judgment after its entry. Reconsideration is only proper Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 1 of 15 - 2 - if the movant has demonstrated that: (1) there has been an intervening change in the law, (2) new evidence has been discovered that was not previously available to the parties at the time the original order was entered or (3) reconsideration is necessary to correct a clear error of law or prevent manifest injustice. Bryan v. Murphy, 246 F. Supp. 2d 1256, 1258-59 (N.D. Ga. 2003). As the Local Rules of this Court direct, “[m]otions for reconsideration shall not be filed as a matter of routine practice.” Local Rule 7.2E. The decision whether to alter or amend a judgment pursuant to Rule 59(e) is “committed to the sound discretion of the district judge.” Mincey v. Head, 206 F.3d 1106, 1137 (11th Cir. 2000)(citation omitted). Rule 59(e) motions must be filed no later than ten days after entry of the judgment. Fed. R. Civ. P. 59(e). The Local Rules of this Court expressly require that motions for reconsideration be filed within ten (10) days after the entry of the Order that the movant contends should be reconsidered. See Local Rule 7.2E. Mr. Harris’ motion for reconsideration is timely, and the Court accordingly proceeds to consider the merits of the motion. Mr. Harris identifies the following grounds to support his motion for reconsideration: (1) the Court did not conduct a hearing on the motion; (2) Defendant did not have sufficient funds to hire an attorney to defend him in this action; (3) Defendant was relieved of his position with Conversion Solutions Holding Corporation and accordingly did not have access to records necessary to formulate a defense; (4) the Securities and Exchange Commission (the “SEC”) seized records and deprived Defendant of access to the records necessary to prepare an answer; (5) Defendant cooperated with the SEC and understood that the SEC would subpoena the documents necessary for Mr. Harris’ defense; (6) improper conduct on the part of the SEC and SEC counsel, including withholding of information from Mr. Harris; (7) that when Defendant realized that the SEC would not supply him with the necessary information, he filed an answer; ( the SEC has unclean hands Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 2 of 15 - 3 - and has withheld exculpatory evidence; (9) Mr. Harris’ failure to file a timely answer was caused by the actions of the SEC’s counsel; and (10) three additional events prevented Mr. Harris from filing an answer, including the seizure of an email account, the seizure of the names of illegal shareholders, and the unavailability of office phone recordings and messages. Notwithstanding these various arguments, however, Mr. Harris has not identified a change in the law, newly-discovered evidence, or a need to correct clear error that would support his request that the Court reconsider its October 30, 2007 Order. Instead, Mr. Harris’ motion for reconsideration merely recites arguments that could have been made in his initial motion to set aside default, and it provides no basis for the Court to reconsider its prior decision. See Pres. Endangered Areas of Cobb’s History, Inc. v. U.S. Army Corps of Eng’rs, 916 F. Supp. 1557, 1560 (N.D. Ga. 1995) (“A motion for reconsideration is not an opportunity for the moving party . . . to instruct the court on how the court ‘could have done it better’ the first time.”); Carey v. BellSouth Short Term Disability Plan, No. 1:06-CV-2589-WSD, 2008 U.S. Dist. LEXIS 15490 (N.D. Ga. Feb. 29, 2008) (“A motion for reconsideration should not be used to present the Court with arguments already heard and dismissed, or to offer new legal theories or evidence that could have been presented in a previously-filed motion.”). Mr. Harris’ motion for reconsideration is therefore DENIED. II. MOTION FOR DEFAULT JUDGMENT On October 24, 2006, the SEC filed its Complaint for Injunctive and Other Relief [Doc. No. 1] (“Complaint”) in the instant case. The next day, on October 25, 2006, the Court held a hearing on the SEC’s motion for temporary restraining order and thereafter granted the SEC’s motion. Defendant Harris was present at the October 25, 2006 hearing. On November 16, 2007, the SEC filed proof of service indicating that Mr. Harris was served with a copy of the summons and Complaint Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 3 of 15 1 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1982) (en banc), the United States Court of Appeals for the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit entered prior to October 1, 1981. - 4 - on November 4, 2006 [Doc. No. 9-3] and Defendant Conversion Solutions Corporation (“Conversion”) was served with a copy of the summons and Complaint on October 26, 2006 [Doc. No. 9-2]. Neither Defendant filed a timely answer, and the Clerk of Court entered default against Mr. Harris on November 29, 2006 and against Conversion on November 17, 2006, pursuant to Federal Rule of Civil Procedure 55(a). On April 27, 2007, Mr. Harris filed an answer, purportedly on behalf of himself and Conversion. This Court struck the April 24, 2007 answer and denied Mr. Harris’ motion to set aside the entry of default on October 30, 2007. As set forth in the previous section, the Court has denied Mr. Harris’ motion for reconsideration of the October 30, 2007 Order. The SEC moves for default judgment against both Defendants pursuant to Federal Rule of Civil Procedure 55(b). A. Legal Standard The entry of default judgment by a court is discretionary. See Fed. R. Civ. P. 55(b) (noting that judgment by default may be entered). To determine whether default judgment is appropriately entered, the court considers the allegations in the complaint. “The defendant, by his default, admits the plaintiff’s well-pleaded allegations of fact.” Nishimatsu Constr. Co. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).1 “There must be a sufficient basis in the pleadings for the judgment entered.” Id. Although a defaulted defendant is deemed to “admit the plaintiff’s well-pleaded allegations of fact,” that defendant “is not held to admit facts that are not well-pleaded or to admit conclusions of law.” Id. B. Analysis The Court will first review the claims for relief asserted in the Complaint. The Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 4 of 15 - 5 - Complaint asserts that both Defendants violated of Section 10(b) of the Exchange Act and Rule 10b-5. The Complaint additionally alleges that Conversion violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11 and that Mr. Harris aided and abetted Conversion’s violations. Finally, the Complaint alleges that Mr. Harris signed false certifications, in violation of Rule 13a-14. 1. Well-pleaded allegations of fact By their default, Mr. Harris and Conversion have admitted the Complaint’s well-pleaded allegations of fact. Accordingly, the Court considers the facts set forth below when evaluating Defendants’ liability in this case. Conversion is a publiclytraded company, incorporated in Delaware on February 11, 2005, with a principal place of business in Kennesaw, Georgia. Conversion purports to be a “diversified holdings company which was formed to originate, fund and source funding for asset-based transactions in the private market.” Conversion’s stock has been quoted publicly on the OTC Bulletin Board under the symbol CSHD or CDSH.OB since August 2006 and is also traded on the Berlin stock exchange. At the time the Complaint was filed, Defendant Harris was the Chief Executive Officer (“CEO”) of Conversion. On September 26, 2006, Conversion filed a Form 8-K with the SEC using Mr. Harris’ electronic signature. The Form 8-K stated that Conversion’s “Board of Directors has approved a contract extension with the Caracas Group and accepted into its Asset Management Portfolio an additional 5 Billion Euro denominated Global Bonds on the Republic of Venezuela with an 11% annual coupon.” This statement, which was also made in a September 25, 2006 press release, was false. The Form 8-K and the press release stated that the bond had been loaded in the Euroclear system with an international security identification number of DE0006106875 and a Common Code of 012481241. These identifying codes Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 5 of 15 - 6 - correspond to a €700 million bond series issued by Venezuela, not a €5 billion series. On September 27, 2006, Conversion and Mr. Harris issued another press release restating the same claim. Conversion does not own or manage as an asset the entire €700 million bond series issued by Venezuela corresponding to the identifying codes used in the press releases and the Form 8-K. There has been trading activity in the €700 million Venezuelan bond series in question during the period Conversion claims to have owned it. On September 27, 2006, Conversion and Mr. Harris issued another press release stating that Conversion had “obtained contracts from . . . Deutche [sic] Bank, ABN Amro Bank, Dresdner Bank and Kommerce [sic] Bank” and that “the mentioned banks will be the foundation for our projected funding platform.” The press release contained material misstatements of fact or, at a minimum, was misleading. On September 26, 2006, Conversion filed an amended current report under Form 8-K/A with the SEC. Audited financial statements for the period ending June 30, 2006 were attached to the Form 8-K/A. In the financial statements, Conversion listed assets including a long-term investment in bonds valued at $500 million. Note 12 to the financial statements explained that, on March 15, 2006, Conversion “acquired full ownership of Global Bonds issued through the Republic of Venezuela with an issuance date of July 31, 1998 and a maturity date of August 15, 2018. The principal amount of the bonds is $500,000,000 USD with a fixed interest rate of 13.625%, computed on a semi-annual basis.” Note 12 went on to give the Common and international security identification numbers for the bonds and stated that the bonds had been acquired on March 15, 2006. Conversion’s claim to have acquired the entire series of $500 million Venezuela bonds on March 15, 2006 and to have held them through June 30, 2006, is false. Some, and possibly all, of the $500 million Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 6 of 15 - 7 - Venezuelan bond issue was owned by entities other than Conversion during the relevant time period. There has been trading activity in the bond issue during the period Conversion claims to have owned it. A substantial portion of the $500 million bond issue, approximately $39 million, has been owned by corporate affiliates of FMR Co. (Fidelity Investments) during the relevant period. On October 16, 2006, Conversion filed an annual report on Form 10-KSB with the SEC. On October 17 and 19, 2006, Conversion filed amended annual reports on Forms 10-KSB/A with the SEC. With regard to the $500 million Venezuelan bond issue, the audited financial statements attached to these forms were essentially identical to those incorporated in the Form 8-K/A discussed above. Conversion’s claim to have acquired the entire series of $500 million Venezuela bonds on March 15, 2006 and held them through June 30, 2006, was repeated in the Form 10-KSB and the Forms 10-KSB/A. Mr. Harris, the CEO, caused the above-referenced statements to be made and either knew the statements were false and misleading or recklessly disregarded the risk that they were false and misleading. Conversion and Mr. Harris, directly or indirectly, made use of the mails or means or instruments of transportation or communication in interstate commerce. Trading activity in Conversion’s stock increased dramatically after the two September 27, 2006 press releases were issued. On Tuesday, September 26, 2006, Conversion’s stock closed at a price of $1.01 per share on a volume of 498,303 shares traded. On September 27, 2006, the stock closed at $1.75 per share on a volume of 4,932,180 shares, an increase of over 73% in price and almost 890% in trading volume. On September 28, 2006, Conversion’s stock closed at $3.02 per share on a volume of 14,037,728 shares traded. Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 7 of 15 - 8 - 2. Violations established by Defendants’ admission of well-pleaded facts As previously noted, the SEC alleges that Conversion and Mr. Harris violated Section 10b of the SEC, 15 U.S.C. § 78j(b), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. Section 10b states: It shall be unlawful for any person . . . [t]o use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 15 U.S.C. § 78j(b). Rule 10b-5(b) provides that “t shall be unlawful for any person . . . [t]o 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. . . .” 17 C.F.R. § 240.10b-5. To state a claim under Section 10(b) and Rule 10b-5, the SEC must show: “(1) a misrepresentation or omission, (2) that was material, (3) which was made . . . in connection with the purchase or sale of securities . . . , (4 ) scienter, and (5) the involvement of interstate commerce, the mails, or a national securities exchange.” Securities and Exchange Commission v. Dauplaise, No. 6:05-cv-1391-Orl-31KRS, 2006 U.S. Dist. LEXIS 9589 (M.D. Fla. Feb. 22, 2006). Scienter may be established by a showing of severe recklessness, which is defined as “those highly unreasonable omissions or misrepresentations that involve not merely simple or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and that present a danger of misleading buyers or sellers which is either known to the defendant or is so obvious that the defendant must have been aware of it.” Ziemba v. Cascade Int'l, Inc., 256 F.3d 1194, 1202 (11th Cir. 2001) (citation omitted). Material information is “information that is substantially likely to be important to a reasonable investor in deciding whether to purchase, sell, or hold securities.” Dauplaise, *17 n.13 (citation and marks omitted). Having carefully and thoroughly Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 8 of 15 - 9 - reviewed the Complaint, the Court concludes that the well-pleaded allegations contained therein, as set forth above and which Mr. Harris and Conversion have admitted by virtue of their default, establish a violation of Section 10(b) and Rule 10b-5. Conversion’s filings with the SEC, signed by Mr. Harris, represented that Conversion owned and/or managed millions of dollars in bonds which were not, in fact, owned or managed by Conversion, and this information could only be described as information that would be important to a reasonable investor. Press releases were issued containing the same false information. The release of this information influenced the price and trading of Conversion’s stock. Mr. Harris knew that the bond information was false and/or acted with severe recklessness in connection with the SEC filings and press releases, and Mr. Harris’ scienter may be imputed to Conversion. See SEC v. K.W. Brown & Co., No. 05-80367-CIVMIDDLEBROOKS/ JOHNSON, 2007 U.S. Dist. LEXIS 97024, (S.D. Fla. Dec. 19, 2007). A violation of Section 10(b) and Rule 10b-5 has been established. The SEC additionally alleges that Conversion violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11 and that Mr. Harris aided and abetted Conversion’s violations. Section 13(a) requires that each issuer of registered securities file with the Commission certain information and reports. It reads as follows: Periodical and other reports (a) Reports by issuer of security; contents Every issuer of a security registered pursuant to section 78l of this title shall file with the Commission, in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate for the proper protection of investors and to insure fair dealing in the security-- (1) such information and documents (and such copies thereof) as the Commission shall require to keep reasonably current the information and documents required to be included in or filed with an application or registration statement filed pursuant to section 78l of this title, except Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 9 of 15 - 10 - that the Commission may not require the filing of any material contract wholly executed before July 1, 1962. (2) such annual reports (and such copies thereof), certified if required by the rules and regulations of the Commission by independent public accountants, and such quarterly reports (and such copies thereof), as the Commission may prescribe. Every issuer of a security registered on a national securities exchange shall also file a duplicate original of such information, documents, and reports with the exchange. 15 U.S.C. § 78m(a). Rules 13a-1 requires registrants to file annual reports on Form 10-K and Rule 13a-11 requires a registrant to file current reports on Form 8-K. See 17 C.F.R. § 240.13a-1; 17 C.F.R. § 240.13a-11. Rule 12b-20 requires that other material information be disclosed as necessary to make the required statements not misleading. 17 C.F.R. § 240.12b-20. As this Court has noted, “[t]hese reporting requirements were designed to ensure that investors receive adequate information upon which to base their investment decisions [and] are a crucial element in the federal government’s efforts to maintain the integrity of the nation’s financial markets.” SEC v. World-Wide Coin Investments, Ltd., 567 F. Supp. 724, 789 (N.D. Ga. 1983). “Courts have held that implicit in the reporting requirements of the Exchange Act is a duty to report truthfully and completely.” SEC v. Indigenous Global Dev. Corp., No. C-06-05600 JCS, 2008 U.S. Dist. LEXIS 50434 (N.D. Cal. June 30, 2008) (citing SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1165 (D.C. Cir. 1978)). To establish a violation of Section 13(a) and the related rules, the SEC is not required to show scienter. See SEC v. Koenig, 469 F.2d 198, 200 (2d Cir. 1972); SEC v. McNulty, No. 94 Civ. 7114 (MBM), 1996 U.S. Dist. LEXIS 10649 (S.D.N.Y. July 29, 1996). The Complaint alleges that in September and October 2006, Conversion filed with the SEC a current report and an amended current report on Forms 8-K and 8-K/A and an annual report and two amended annual reports on Forms 10-KSB and 10-KSB/A that fraudulently overstated Conversion’s assets. The fraudulent overstatement of Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 10 of 15 - 11 - assets relates to the purported bond ownership and related bond amounts that have previously been discussed in this Order. The Court finds that the well-pleaded allegations of the Complaint are sufficient to establish that Conversion violated the reporting requirements. The SEC alleges that Mr. Harris aided and abetted Conversion’s violations of the reporting requirements. “For aiding and abetting liability under the federal securities laws, three elements must be established: (1) a primary or independent securities law violation committed by another party; (2) awareness or knowledge by the aider and abettor that his or her role was part of an overall activity that was improper; . . . and (3) that the aider and abettor knowingly and substantially assisted the conduct that constitutes the violation.” K.W. Brown & Co., 2007 U.S. Dist. LEXIS 97024, at *76-77 (citations omitted); see also 15 U.S.C. § 78t(e). “The element of substantial assistance is met when, based upon all the circumstances surrounding the conduct in question, a defendant’s actions are a ‘substantial causal factor’ in bringing about the primary violation.” K.W. Brown & Co., 2007 U.S. Dist. LEXIS 97024, at *79 (citations omitted). As previously stated, the SEC has established Conversion’s violations of the reporting requirements. According to the well-pleaded allegations of the Complaint, Mr. Harris caused the false statements and reports to be made. The SEC has established that Mr. Harris aided and abetted Conversions reporting violations. Finally, the Complaint alleges that Mr. Harris signed false certifications, in violation of Rule 13a-14. Rule 13a-4 provides that each report required to be filed under Section 13(a) of the Exchange Act, including Forms 10-Q, 10-K, 20-F or 40-F, and each periodic report containing financial statements, must include a certification signed by the principal executive and principal financial officer indicating that, among other things, the report contains no material misstatements and omits no Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 11 of 15 - 12 - material information, to the best of the officer’s knowledge. 17 C.F.R. § 240.13a-14. The Court finds that, based on the well-pleaded allegations of the Complaint, Mr. Harris violated this requirement by signing certifications of forms filed with the SEC, even though he knew that the forms contained material misstatements. 3. Relief Having found Defendants liable for the violations alleged in the Complaint, the Court next considers the question of relief. The SEC requests permanent injunctive relief, an Order barring Mr. Harris from acting as a director or officer of certain organizations, and a civil penalty. The Court has scheduled an evidentiary hearing on September 10, 2008 at 1:30 pm to determine the appropriate relief in this case. The SEC “is entitled to injunctive relief when it establishes (1) a prima facie case of previous violations of federal securities laws, and (2) a reasonable likelihood that the wrong will be repeated.” S.E.C. v. Calvo, 378 F.3d 1211, 1216 (11th Cir. 2004)(citation omitted); see also S.E.C. v. Unique Financial Concepts, Inc., 119 F. Supp.2d 1332, 1338 (S.D. Fla. 1998)(citations omitted). “Indicia that a wrong will be repeated include the egregiousness of the defendant's actions, the isolated or recurrent nature of the infraction, the degree of scienter involved, the sincerity of the defendant's assurances against future violations, the defendant's recognition of the wrongful nature of the conduct, and the likelihood that the defendant's occupation will present opportunities for future violations.” Calvo, 378 F.3d at 1211 (citations and marks omitted). By virtue of the default judgment in the instant case, the SEC has established a prima facie case of Defendants’ violations of federal securities laws. As to the requirement that the SEC establish a reasonable likelihood that the wrong will be repeated, the Court will allow the SEC to present evidence regarding this issue at an evidentiary hearing before this Court and will determine at that time Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 12 of 15 2 Under a previous version of the statute, courts considered “(1) the ‘egregiousness’ of the underlying securities law violation; (2) the defendant's ‘repeat offender’ status; (3) the defendant's ‘role’ or position when he engaged in the fraud; (4) the defendant's degree of scienter; (5) the defendant's economic stake in the violation; and (6) the likelihood that misconduct will recur.” SEC v. First Pac. Bancorp, 142 F.3d 1186 (9th Cir. 1998) (citation and marks omitted) - 13 - whether injunctive relief is appropriate. The SEC asks that the Court enter an Order that permanently prohibits Mr. Harris from acting as an officer or director of any issuer of registered securities or of any entity required to file reports with the SEC. Pursuant to Section 21(d)(2) of the Exchange Act, this Court may enter such an Order if Mr. Harris’ “conduct demonstrates unfitness to serve as an officer or director of any such issuer.” 15 U.S.C. § 78u(d)(2). This Court has substantial discretion when determining whether to impose such a bar. SEC v. Amazon Natural Treasures, 132 Fed. Appx. 701 (9th Cir. 2005). To determine whether to order the bar, the Court considers the following factors: “(1) the nature and complexity of the scheme; (2) the defendant's role in the scheme; (3) the use of corporate resources in executing the scheme; (4) the defendant's financial gain (or loss avoidance) from the scheme; (5) the loss to investors and others as a result of the scheme; (6) whether the scheme represents an isolated occurrence or a pattern of misconduct; (7) the defendant's use of stealth and concealment; ( the defendant's history of business and related misconduct; and (9) the defendant's acknowledgment of wrongdoing and the credibility of his contrition.” SEC v. Levine, 517 F. Supp. 2d 121, 145-46 (D.D.C. 2007).2 The Court will determine the appropriate bar that should be imposed in this case, if any, after hearing evidence on this issue. Finally, the SEC requests that substantial civil penalties be awarded in this case. Pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 13 of 15 - 14 - Exchange Act, this Court may impose monetary penalties. The decision to impose a penalty, and the amount of any such penalty, is a matter within the discretion of the Court. See 15 U.S.C. § 78u(d)(3); 15 U.S.C. § 77t(d)(1). The Exchange Act sets forth tiered categories establishing the limitations of the civil penalties. The SEC seeks a third tier civil penalty in this case, pursuant to 15 U.S.C. § 77t(d)(2)(C) and 15 U.S.C. § 78u(d)(3)(B)(iii). “According to those statutes, a third tier civil penalty is available if (1) the securities violation involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement, and (2) the violation directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons.” SEC v. Kamardin, No. 8:07-cv-159-T-24-MAP, 2007 U.S. Dist. LEXIS 44260 (M.D. Fla. June 19, 2007). The SEC seeks to present evidence on the losses caused by the securities violations in this case, and the Court will consider such evidence in determining the amount of civil penalty that should be imposed. III. MOTION TO COMPEL Insofar as the Court has denied Mr. Harris’ motion for reconsideration and has entered default judgment against him, the motion to compel is due to be DENIED as moot. IV. CONCLUSION For the foregoing reasons, the Court DENIES Defendant Rufus Paul Harris’ Motion for Reconsideration / Rehearing of the October 30th Order Entered by this Court [Doc. No. 20], GRANTS Plaintiff’s Motion for Default Judgment [Doc. No. 21], and DENIES as moot Defendant Harris’ Verified Motion to Compel Discovery and Motion for Sanctions for Failing to Disclose [Doc. No. 23]. Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 14 of 15 - 15 - The Court will hold a hearing on September 10, 2008 at 1:30 pm to determine the appropriate relief to be awarded in this case. SO ORDERED this 21st day of July, 2008. s/ CLARENCE COOPER CLARENCE COOPER UNITED STATES DISTRICT JUDGE Case 1:06-cv-02568-CC Document 27 Filed 07/21/2008 Page 15 of 15 Home Help Search Profile My Messages Calendar Members Gallery Logout Hot Stock Forums News IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION [/QB][/QUOTE]
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