ROBERT E. BLACKBURN, District Judge.
On February 12, 2015, Plaintiff United States Securities and Exchange Commission ("Commission" or "SEC") filed an emergency motion for an ex parte Order: (1) freezing funds and other assets of Defendants Kristine L. Johnson, Troy Barnes, and Work With Troy Barnes, Inc., and Relief Defendant Achieve International, LLC, wherever located, which are derived directly or indirectly from any investor funds obtained by or on behalf of Defendants or Relief Defendant in connection with the scheme alleged in the SEC's Complaint; (2) prohibiting Defendants and Relief Defendant from the acceptance, deposit, or disbursement of additional funds from investors or potential investors; (3) enjoining Defendants from violations of the antifraud provisions of the federal securities laws; (4) requiring Defendants and Relief Defendant to provide an accounting of investor funds and other assets; (5) prohibiting the destruction or alteration of documents; (6) providing for expedited discovery; (7) providing alternative service by the Commission; and (8) setting this matter for a preliminary injunction.
The court has considered the entire record of this case, including the Complaint in this action; Plaintiff's Memorandum of Law In Support of its Emergency Motion for an Order Granting an Ex Parte Asset Freeze, Temporary Restraining Order, and Other Emergency Relief; the Declarations of Jeffrey D. Felder, Helena M. Engelhart, Kerry M. Matticks, and Carmen Taveras, Ph.D, with attached exhibits, and the Certification of Counsel pursuant to Federal Rule of Civil Procedure 65(b), all attached hereto or filed concurrently.
Based on the record, the court finds as follows:
1. That the court has jurisdiction over the subject matter of this action and over the Defendants and Relief Defendant;
2. That the SEC has made a sufficient and proper showing in support of the relief granted herein, as required by Section 20(b) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77t(b)] and Section 21(d)(1) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78u(d)(1)] by establishing a prima facie case for each of the violations alleged in the Complaint and a strong likelihood that the SEC will prevail at trial on the merits and that the Defendants, and each of them, directly or indirectly, have engaged in and, unless restrained and enjoined by order of this court, will continue to engage in acts, practices, and courses of business constituting violations of Section 17(a) of the Securities Act [15 U.S.C. §§ 77e and 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. §§ 78j(b) and 78o], and/or Exchange Act Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];
3. That there is good cause to believe that, unless restrained and enjoined by order of this court, the Defendants and Relief Defendant will dissipate, conceal, or transfer from the jurisdiction of this court assets that could be subject to an order directing disgorgement or the payment of civil money penalties in this action, and that unless restrained Defendants and Relief Defendant will continue to accept funds from investors;
4. That there is good cause to believe that, unless restrained and enjoined by order of this court, Defendants may alter or destroy documents relevant to this action;
5. That there is good cause to believe that an immediate accounting is necessary to identify the source, location and use of funds obtained from investors;
6. That there is good cause to believe that expedited discovery and alternative means of service are warranted;
7. That pursuant to Fed. R. Civ. P. 65(b), this court specifically finds that there is a likelihood of irreparable injury to investors unless this order is issued ex parte. This court finds that the SEC has made a prima facie showing that Defendants have engaged in schemes to defraud investors, made false and misleading statements to investors and omitted material facts in connection with the offer and sale of securities;
8. That based on these and other facts alleged by the SEC, there is good cause to believe that Defendants and Relief Defendant will dispose of, dissipate, or remove investor funds and assets from the jurisdiction of the court. Such dissipation of investor funds and assets would constitute irreparable harm to investors. To avoid this irreparable harm, it is appropriate for the court to issue this Temporary Restraining Order ex parte so that prompt service on appropriate financial institutions and persons acting in concert with or directing the activities of Defendants and Relief Defendant can be made, thus preventing the dissipation of investor funds.
1. That, pending the determination of the SEC's Motion for a Preliminary Injunction or hearing on the merits, Defendants Kristine L. Johnson, Troy Barnes, and Work With Troy Barnes, Inc., and their officers, directors, subsidiaries, affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, and each of them, are enjoined and restrained from, directly or indirectly, 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 the use of the mails: (1) employing any device, scheme, or artifice to defraud; or (2) obtaining money or property by means of any untrue statement of a material fact or any omission 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 (3) engaging in any transaction, practice, or course of business that operates or would operate as a fraud or deceit upon the purchaser in violation of Section 17(a) of the Securities Act of 1933 [15 U.S.C. § 77q(a)];
2. That pending the determination of the SEC's Motion for a Preliminary Injunction or hearing on the merits, Defendants Kristine L. Johnson, Troy Barnes, and Work With Troy Barnes, Inc., and their officers, directors, subsidiaries, affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, and each of them, are enjoined and restrained from directly or indirectly, by the use of 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: (1) employing any device, scheme, or artifice to defraud; (2) making 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 (3) engaging in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person in violation of Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5];
3. That pending the determination of the SEC's Motion for a Preliminary Injunction or hearing on the merits, the Defendants and Relief Defendant are prohibited, directly or indirectly, from accepting funds from investors for investment in any investment program. Defendants Kristine L. Johnson, Troy Barnes, and Work With Troy Barnes, Inc., Relief Defendant Achieve International, LLC, and their officers, directors, successor corporation, subsidiaries and affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, and each of them, shall refrain from accepting, taking control of, or depositing in any financial institution, funds from investors;
4. That pending the determination of the SEC's Motion for a Preliminary Injunction or hearing on the merits:
5. That Defendants Kristine L. Johnson, Troy Barnes, and Work With Troy Barnes, Inc., Relief Defendant Achieve International, LLC, and each of their successor corporations, subsidiaries, and affiliates, shall within five business days of the service of this order, each file with this Court, and serve on the SEC, at the address of its counsel of record, a sworn accounting of:
6. That the Defendants and Relief Defendant are prohibited from destroying or altering records. Pending determination of the SEC's Motion for a Preliminary Injunction or hearing on the merits, Defendants Kristine L. Johnson, Troy Barnes, and Work With Troy Barnes, Inc., Relief Defendant Achieve International, LLC, and their officers, directors, successor corporations, subsidiaries and affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, and each of them, are hereby restrained from destroying, mutilating, concealing, altering, or disposing of any document referring or relating in any manner to any transactions described in the SEC's Complaint in this action, or to any communications between or among any of the Defendants. As used in this order, "document" means the original and all non-identical copies (whether non-identical because of handwritten notation or otherwise) of all written or graphic matter, however produced, and any other tangible record, or electronic data compilation capable of reproduction in tangible form, including, without limitation, computer data, e-mail messages, correspondence, memoranda, minutes, telephone records, reports, studies, telexes, diaries, calendar entries, contracts, letters of agreement, and including any and all existing drafts of all documents;
7. That the SEC's application for expedited discovery concerning Defendants and Relief Defendant, their assets, and their activities is granted and that, commencing with the time and date of this Order, in lieu of the time periods, notice provisions, and other requirements of Rules 26, 30, 33, 34, 36, and 45 of the Federal Rules of Civil Procedure, and Rule 30.1A of the Local Rules of this Court, discovery shall proceed as follows:
8. That service of this Order, the Summons and Complaint may be made by facsimile, mail, e-mail, delivery by commercial courier, or personally by any employee of the Securities and Exchange Commission who is not counsel of record in this matter, or special process server, or any other person, or in any other manner authorized by Rule 5 of the Federal Rules of Civil Procedure and may be made on any registered agent, officer, or director of Defendants or Relief Defendant, or by publication. As indicated, discovery requests may be communicated by facsimile, mail, hand, or delivery by commercial courier;
9. That the Defendants and Relief Defendant, and each of them, shall appear before this court on
10. That the court shall retain jurisdiction of this matter for all purposes.
