VIRGINIA M. KENDALL, District Judge.
The SEC respectfully moves for the entry of final judgment against relief defendant David Slagter. In a nutshell, the SEC and Slagter have reached a settlement that will require Slagter to pay hundreds of thousands of dollars. Those funds — $362,486, to be exact — will provide meaningful, much-needed relief to injured investors.
The proposed settlement also will bring this case to a close. This Court has already entered judgment against all of the other defendants and relief defendants.
In support of this motion, the SEC states as follows:
1. The SEC filed this action on an emergency basis on March 23, 2017. The Complaint alleged that Daniel Glick perpetrated a multi-million-dollar fraud against his clients, many of whom were elderly. He took advantage of senior citizens who entrusted him with their retirement savings.
2. The United States later charged Glick with wire fraud, and he eventually pleaded guilty. Judge Gettleman ultimately sentenced Glick to 151 months in prison, and ordered him to pay more than $5.2 million in restitution. See United States v. Glick, 17-cr-739 (N.D. Ill) (Dckt. No. 40) (Judgment in a Criminal Case). This Court later entered judgment against Glick and his companies, too. See Dckt. Nos. 137-139.
3. The SEC also brought claims against David Slagter and Edward Forte. The Complaint alleged that they were relief defendants, meaning that they received the fruits of Glick's fraud. "Collectively, Forte and Slagter received more than $1.5 million from Glick. The money that Forte and Slagter received is substantially traceable to the funds that Glick received from investors." See Cplt., at ¶ 8; see also id. at Count IV.
4. This Court entered a default judgment against Edward Forte for his repeated failure to comply with this Court's deadlines. The judgment against Forte totals $1,044,270. See Dckt. No. 151.
5. The SEC has now reached a settlement with Slagter, the last remaining party. The SEC respectfully submits the Consent of Relief Defendant David Slagter (Ex. 1), as well as the proposed final judgment (Ex. 2).
6. The proposed final judgment requires Slagter to pay $362,486. Slagter will pay $336,249 within 10 days, and will pay the remaining $26,237 within 360 days. The settlement amount ($362,486) is equal to an inheritance that Slagter recently received from a deceased relative. See 4/3/19 Tr., at 9-10; see also Dckt. No. 166 (discussing the inheritance).
7. The proposed final judgment also includes a financial waiver for Slagter, given his financial condition as represented in sworn financial statements. Specifically, the proposed final judgment provides that Slagter is liable for disgorgement of ill-gotten gains in the amount of $611,064, and prejudgment interest thereon in the amount of $107,855, for a total of $718,919. But based on the representations made by Slagter in sworn financial statements, payment of all but $362,486 is waived due to inability to pay.
8. The waiver depends on the truthfulness and accuracy of Slagter's sworn financial statements. Slagter has agreed that the SEC may petition the Court for an order requiring him to pay the unpaid portion of the judgment (that is, $356,433, which is $718,919 minus $362,486) if it learns that his representations were fraudulent, misleading, inaccurate, or incomplete in any material respect.
9. Slagter will pay the funds to the SEC, which will hold the funds for the time being. The proposed final judgment provides that the SEC may propose a plan to distribute the funds to the victims, subject to the Court's approval. See Proposed Final Judgment, at 4-5. SEC counsel expect to confer with the victims and work with the SEC's Office of Distributions to propose a distribution plan to this Court. The SEC will submit its plan to the Court at an appropriate time.
10. The SEC's Office of Distributions specializes in equitably distributing funds to fraud victims. The mission of the Office of Distributions is to be the investors' advocate by returning money to victims whenever practicable in a fair, reasonable, and efficient manner.
11. The proposed final judgment does not include an injunction because Slagter was a relief defendant, not a defendant, and thus was not charged with violating the federal securities laws. Instead, the SEC alleged that Slagter received ill-gotten gains as a result of defendant Daniel Glick's fraud.
12. Slagter agreed that the SEC may present the proposed final judgment to this Court for its signature and entry. See Consent of Relief Defendant David Slagter, at ¶ 13.
13. In the end, the proposed final judgment will bring this litigation to a successful close. Daniel Glick — the perpetrator of the fraud — will spend over a decade in federal prison. And the two relief defendants, David Slagter and Edward Forte, will have judgments entered against them totaling $1,430,756.
WHEREFORE, the SEC respectfully moves for the entry of final judgment against relief defendant David Slagter.
1. Relief Defendant David Slagter ("Relief Defendant Slagter") acknowledges having been served with the Complaint and the summons in this action, enters a general appearance, and admits the Court's jurisdiction over Relief Defendant Slagter and over the subject matter of this action.
2. Without admitting or denying the allegations of the Complaint (except as provided herein in paragraph 11 and except as to personal and subject matter jurisdiction, which Relief Defendant Slagter admits), Relief Defendant Slagter 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) orders that Relief Defendant Slagter is liable for disgorgement in the amount of $611,064, representing profits gained as a result of Daniel Glick's violations of the federal securities laws, and pre-judgment interest thereon in the amount of $107,855, for a total of $718.919, but that, based on Relief Defendant Slagter's sworn representations in his Statement of Financial Condition dated June 4, 2019, and other documents and information submitted to the Commission, payment of all but $362,486 of the disgorgement and pre judgment interest thereon shall be waived:
(b) orders that within 10 days after being served with a copy of the Final Judgment, Law Offices of James A. McGurk, P.C. shall transfer $35,000, held in escrow in the BMO Harris Bank Client Funds Trust Account of the Law Offices of James A. McGurk, P.C. for the benefit of Relief Defendant Slagter, to the Commission;
(c) orders that within 10 days after being served with a copy of the Final Judgment. Relief Defendant Slagter shall transfer $301,249 held in the Vanguard brokerage account ending in x6931 and the Vanguard Inherited IRA account ending in x4215, to the Commission: and
(d) orders that within 360 days after being served with a copy of the Final Judgment. Relief Defendant Slagter shall transfer $26,237 to the Commission.
Relief Defendant Slagter 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 websitc at
and shall be accompanied by a letter identifying the case title, civil action number, and name of this Court; David Slagter as a relief defendant in this action; and specifying that payment is made pursuant to the Final Judgment.
3. Relief Defendant Slagter acknowledges that the Court is not requiring payment of $356,433 of disgorgement and pre-judgment interest based on Relief Defendant Slagter's sworn representations in Relief Defendant Slagter's Statement of Financial Condition dated June 4. 2019 and other documents and information submitted to the Commission. Relief Defendant Slagter further consents that if at any time following the entry of the Final Judgment the Commission obtains information indicating that Relief Defendant Slagter's representations to the Commission concerning Relief Defendant Slagter'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 Relief Defendant Slagter, petition the Court for an order requiring Relief Defendant Slagter to pay the unpaid portion of the disgorgement, pre-judgment and post-judgment interest thereon. In connection with any such petition, the only issue shall be whether the financial information provided by Relief Defendant Slagter 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 Relief Defendant Slagter 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. Relief Defendant Slagter 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 interest, or post-judgment interest should not be ordered; (4) contest the amount of disgorgement or pre-judgment or post-judgment interest; or (5) assert any defense to liability or remedy. including but not limited to any statute of limitations defense.
4. Relief Defendant Slagter waives the entry of findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure.
5. Relief Defendant Slagter waives the right, if any, to a jury trial and to appeal from the entry of the Final Judgment.
6. Relief Defendant Slagter 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 Relief Defendant Slagter to enter into this Consent.
7. Relief Defendant Slagter agrees that this Consent shall be incorporated into the Final Judgment with the same force and effect as if fully set forth therein.
8. Relief Defendant Slagter 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. Relief Defendant Slagter 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 Relief Defendant Slagter of its terms and conditions. Relief Defendant Slagter further agrees to provide counsel for the Commission, within thirty days after the Final Judgment is tiled with the Clerk of the Court, with an affidavit or declaration stating that Relief Defendant Slagter 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 Relief Defendant Slagter in this civil proceeding. Relief Defendant Slagter 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. Relief Defendant Slagter waives any claim of Double Jeopardy based upon the settlement of this proceeding, including the imposition of any remedy or civil penalty herein.
11. Relief Defendant Slagter understands and agrees to comply with the terms of 17 C.F.R. § 202.5(e), which provides in part that it is 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 allegations in the complaint or order for proceedings," and "a refusal to admit the allegations is equivalent to a denial, unless the defendant or respondent states that he neither admits nor denies the allegations." As part of Relief Defendant Slagter's agreement to comply with the terms of Section 202.5(e), Relief Defendant Slagter: (i) will not take any action or 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; (ii) will not make or permit to be made any public statement to the effect that Relief Defendant Slagter does not admit the allegations of the Complaint, or that this Consent contains no admission of the allegations, without also stating that Relief Defendant Slagter does not deny the allegations; (iii) upon the filing of this Consent. Relief Defendant Slagter hereby withdraws any papers filed in this action to the extent that they deny any allegation in the Complaint: and (iv) stipulates solely for purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code. 11 U.S.C. § 523, that the allegations in the Complaint are true, and further, that any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under the 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 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). If Relief Defendant Slagter 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 Relief Defendant Slagter'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. Relief Defendant Slagter 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 Relief Defendant Slagter to defend against this action. For these purposes, Relief Defendant Slagter agrees that Relief Defendant Slagter is not the prevailing party in this action since the parties have reached a good faith settlement.
13. Relief Defendant Slagter agrees that the Commission may present the Final Judgment to the Court for signature and entry without further notice.
14. Relief Defendant Slagter agrees that this Court shall retain jurisdiction over this matter for the purpose of enforcing the terms of the Final Judgment.
On
Approved as to form:
The Securities and Exchange Commission having filed a Complaint and Relief Defendant David B. Slagter ("Relief Defendant Slagter") having entered a general appearance; consented to the Court's jurisdiction over Relief Defendant Slagter 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 IV); waived findings of fact and conclusions of law; and waived any right to appeal from this Final Judgment:
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Relief Defendant Slagter is liable for disgorgement of $611,064, representing profits gained as a result of Daniel Glick's violations of the federal securities laws, together with prejudgment interest thereon in the amount of 5107,855, for a total of $718,919. Based on Relief Defendant Slagter's sworn representations in his Statement of Financial Condition dated June 4, 2019, and other documents and information submitted to the Commission, however, payment of all but $362,486 of the disgorgement and pre judgment interest thereon is waived.
Relief Defendant Slagter shall pay $362,486 in installments to the Commission according to the following schedule: (1) $336,249 within 10 days of entry of this Final Judgment; and (2) $26,237 within 360 clays of entry of this Final Judgment. Payments shall be deemed made on the date they are received by the Commission and shall be applied first to post-judgment interest, which accrues pursuant to 28 U.S.C. § 1961 on any unpaid amounts due after 14 clays of the entry of Final Judgment. Prior to making the final payment set forth herein, Relief Defendant Slagter shall contact the staff of the Commission for the amount clue for the final payment.
If Relief Defendant Slagter fails to make any payment by the date agreed and/or in the amount agreed according to the schedule set forth above, all outstanding payments under this Final Judgment, including post-judgment interest, minus any payments made, shall become clue and payable immediately at the discretion of the staff of the Commission without further application to the Court.
The determination to waive payment of all but $362,486 of the disgorgement and prejudgment interest is contingent upon the accuracy and completeness of Relief Defendant Slagter's Statement of Financial Condition. If at any time following the entry of this Final Judgment the Commission obtains information indicating that Relief Defendant Slagter'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 Relief Defendant Slagter, petition the Court for an order requiring Relief Defendant Slagter to pay the unpaid portion of the disgorgement, as well as pre judgment and post-judgment interest thereon. In connection with any such petition, the only issue shall be whether the financial information provided by Relief Defendant Slagter was fraudulent, misleading, inaccurate, or incomplete in any material respect as of the tune such representations were made. In its petition, the Commission may move this Court to consider all available remedies, including, but not limited to, ordering Relief Defendant Slagter to pay fluids or assets, directing the forfeiture of any assets, or sanctions for contempt of this Final Judgment. The Commission may also request additional discovery. Relief Defendant Slagter 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 interest, or post-judgment interest should not be ordered; (4) contest the amount of disgorgement and prejudgment and post-judgment interest; or (5) assert any defense to liability or remedy, including, but not limited to, any statute of limitations defense. Defendant shall also pay post-judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 1961.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that within 10 days after being served with a copy of this Final Judgment: (1) Law Offices of James A. McGurk, P.C. shall transfer the entire balance of any and all moneys received from Relief Defendant Slagter and held in escrow in the Client Funds Trust Account of the Law Offices of James A. McGurk, P.C. held at BMO Harris Bank totaling $35,000 to the Commission; and (2) Relief Defendant Slagter shall transfer $301,249 held in the Vanguard brokerage account ending in x6931 and the Vanguard IRA account ending in x4215 to the Commission. Following the successful transfer of $301,249 to the Commission from these accounts, this Court's Order restricting Relief Defendant Slagter's use of funds in these accounts shall be lifted and Relief Defendant Slagter may access any residual balance without restriction.
Relief Defendant Slagter 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
and shall be accompanied by a letter identifying the case title, civil action number, and name of this Court; and specifying that payment is made pursuant to this Final Judgment.
Relief Defendant Slagter shall simultaneously transmit photocopies of evidence of payment and case identifying information to the Commission's counsel in this action. By making this payment, Relief Defendant Slagter relinquishes all legal and equitable right, title, and interest in such fluids and no part of the funds shall be returned to Relief Defendant Slagter.
The Commission shall hold the funds (collectively, the "Fund") and may propose a plan to distribute the Fund subject to the Court's approval. The Court shall retain jurisdiction over the administration of any distribution of the Fund. If the Commission staff determines that the Fund will not be distributed, the Commission shall send the funds paid pursuant to this Final Judgment to the United States Treasury.
The Commission may enforce the Court's judgment by moving for civil contempt (and/or through other collection procedures authorized by law) at any time after 14 days following entry of this Final Judgment.
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 Relief Defendant Slagter shall comply with all of the undertakings and agreements set forth therein.
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 Relief Defendant Slagter, and further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by Relief Defendant Slagter 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 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).
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.
I hereby certify that on June 14, 2019, I served a copy of the Motion for EMI), of Judgment Against Relief Defendant David Slagter and the Notice of Motion on counsel of record through the Court's ECF system. I also served relief defendant Edward Forte by email and by U.S. Mail at the address below:
