Opinion
5:20-cv-02178-MEMF (JGBx)
05-13-2022
SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. JILLIAN SIDOTI, Defendant.
FINAL JUDGMENT AS TO DEFENDANT JILLIAN SIDOTI [ECF NO. 49]
MAAME EWUSI-MENSAH FRIMPONG UNITED STATES DISTRICT JUDGE
The Securities and Exchange Commission having filed a Complaint and Defendant Jillian Sidoti (“Sidoti”) having entered a general appearance; consented to the Court's jurisdiction over Sidoti 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 and except as otherwise provided herein in paragraph VIII); waived findings of fact and conclusions of law; and waived any right to appeal from this Final Judgment:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Sidoti is permanently restrained and enjoined from violating Sections 17(a)(1) and (3) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. §77q(a)(1), (3)] 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; or
(b) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Final Judgment by personal service or otherwise:
(a) Sidoti's officers, agents, servants, employees, and attorneys; and
(b) other persons in active concert or participation with Sidoti or with anyone described in(a).
II.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Sidoti is 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 instrumentality of 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.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Final Judgment by personal service or otherwise:
(a) Sidoti's officers, agents, servants, employees, and attorneys; and
(b) other persons in active concert or participation with Sidoti or with anyone described in(a).
III.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Sidoti is permanently restrained and enjoined from violating Section 5(a) and (c) of the Securities Act [15 U.S.C. §77e(a), (c)] by, directly or indirectly, in the absence of any applicable exemption:
(a) 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; or
(b) 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 or examination under Section 8 of the Securities Act [15 U.S.C. §77h].
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Final Judgment by personal service or otherwise:
(a) Sidoti's officers, agents, servants, employees, and attorneys; and
(b) other persons in active concert or participation with Sidoti or with anyone described in(a).
IV.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Sidoti is restrained and enjoined for a period of 5 years from the date of entry of this Final Judgment against directly or indirectly providing professional legal services to any person or entity in connection with the offer or sale of securities pursuant to, or claiming, an exemption under Section 4(a)(1) of the Securities Act, predicated on Securities Act Rule 144, or any other exemption from the registration provisions of the Securities Act, including, without limitation, participation in the preparation or issuance of any opinion letter relating to such offering or sale.
V.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Sidoti is barred for a period of 5 years from the date of entry of this Final Judgment 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].
VI.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Sidoti is liable for disgorgement of $14,168.70, representing net profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $4,664.86, and a civil penalty in the amount of $22,000 pursuant to pursuant to Section 20(d) of the Securities Act [15 U.S.C. §77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)]. Sidoti shall satisfy this obligation by paying $40,833.56 to the Securities and Exchange Commission within 30 days after entry of this Final Judgment.
Sidoti may transmit payment electronically to the Commission, which will provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly from a bank account via Pay.gov through the SEC website at http://www.sec.gov/about/offices/ofm.htm. Sidoti may also pay by certified check, bank cashier's check, or United States postal money order payable to the Securities and Exchange Commission, which shall be delivered or mailed to:
Enterprise Services Center Accounts Receivable Branch 6500 South MacArthur Boulevard
Oklahoma City, OK 73169 and shall be accompanied by a letter identifying the case title, civil action number, and name of this Court; Jillian Sidoti as a defendant in this action; and specifying that payment is made pursuant to this Final Judgment.
Sidoti shall simultaneously transmit photocopies of evidence of payment and case identifying information to the Commission's counsel in this action. By making this payment, Sidoti relinquishes all legal and equitable right, title, and interest in such funds and no part of the funds shall be returned to Sidoti.
The Commission may enforce the Court's judgment for disgorgement and prejudgment interest by using all collection procedures authorized by law, including, but not limited to, moving for civil contempt at any time after 30 days following entry of this Final Judgment.
The Commission may enforce the Court's judgment for penalties by the use of all collection procedures authorized by law, including the Federal Debt Collection Procedures Act, 28 U.S.C. §3001 et seq., and moving for civil contempt for the violation of any Court orders issued in this action. Sidoti shall pay post judgment interest on any amounts due after 30 days of the entry of this Final Judgment pursuant to 28 U.S.C. §1961. The Commission shall hold the funds, together with any interest and income earned thereon (collectively, the “Fund”), pending further order of the Court.
The Commission may propose a plan to distribute the Fund subject to the Court's approval. Such a plan may provide that the Fund shall be distributed pursuant to the Fair Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. The Court shall retain jurisdiction over the administration of any distribution of the Fund and the Fund may only be disbursed pursuant to an Order of the Court.
Regardless of whether any such Fair Fund distribution is made, amounts ordered to be paid as civil penalties pursuant to this Final Judgment shall be treated as penalties paid to the government for all purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, Sidoti shall not, after offset or reduction of any award of compensatory damages in any Related Investor Action based on Sidoti's payment of disgorgement in this action, argue that she is entitled to, nor shall she further benefit by, offset or reduction of such compensatory damages award by the amount of any part of Sidoti's payment of a civil penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty Offset, Sidoti shall, within 30 days after entry of a final order granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the Penalty Offset to the United States Treasury or to a Fair Fund, as the Commission directs. Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed in this Final Judgment. For purposes of this paragraph, a “Related Investor Action” means a private damages action brought against Sidoti by or on behalf of one or more investors based on substantially the same facts as alleged in the Complaint in this action.
VII.
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 Sidoti shall comply with all of the undertakings and agreements set forth therein.
VIII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely for purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. §523, the allegations in the Complaint are true and admitted by Sidoti, and further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by Sidoti under this Final Judgment or any other judgment, order, consent order, decree or settlement agreement entered in connection with this proceeding, is a debt for the violation by Sidoti of the federal securities laws or any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19).
IX.
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.