Post by soonerlew on Mar 27, 2008 7:36:31 GMT -5
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V. Conclusion – Incarceration of Altomare is the Only Viable Sanction.
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Doc 302 Extract – part 13
V. Conclusion – Incarceration of Altomare is the Only Viable Sanction.
The judgment unambiguously required Altomare to disgorge $1,419,025 in ill-gotten gains and pay $283,073 in prejudgment interest within ten days of entry of the judgment on March 8, 2007. Altomare did not make the payments as ordered. He has made four payments totaling $60,000 subsequent to the Court’s contempt hearing on October 12, 2007. Rather than acting diligently to disgorge his illicit profits, Altomare repeatedly flouted the judgment by using his available funds to purchase luxury goods. As discussed above, while disgorging only minimal funds, Altomare (1) has spent at least $690,492 to remodel and furnish a second home; (2) received at least $1,740,000 in compensation from Universal Express during 2007 for which he has not accounted; (3) gave his sons $134,200 during 2006 and 2007 which he has not attempted to recover; (4) obtained at least $160,466 from his credit line at Washington Mutual and $288,900 from his credit line at Wachovia which he did not use to pay the judgment; (5) sold at least $570,000 in jewelry for which he has not accounted; (6) provided incomplete bank records and no sworn accounting; (7) failed to identify all of his assets; and (8) lied to the Court. Altomare’s failure to provide credible evidence of the sources of over $1.5 million in deposits into the Wachovia bank account during 2007 and no information on over $1.6 million in distributions does not meet his burden of demonstrating an inability to disgorge his illicit profits in spite of repeated opportunities to do so.
Incarceration under a civil contempt order pending compliance with the Court’s order is within the Court’s authority and is a well-recognized method of coercing compliance with court orders. SEC v. Bremont, 2003 U.S. Dist. LEXIS 10279 at *20-21, citing Shillanti v. United States, 384 U.S. 364, 370-71 (1966) and United States v. Bayshore Assocs., Inc., 934 F.2d 1391, 1400 (6th Cir. 1991). In determining an appropriate sanction for civil contempt, a court must consider: (1) the character and magnitude of the harm threatened by the continued contumacy; (2) the probable effectiveness of any suggested sanction in bringing about compliance; and (3) the contemnor’s financial resources and the consequent seriousness of the burden of the sanction. Bremont at *21, citing Dole Fresh Fruit Co. v. United Banana Co., 821 F.2d 106, 110 (2d Cir. 1987).
Altomare should be incarcerated. His continuing refusal to satisfy the judgment undermines the deterrent effect of the Commission’s enforcement actions as well as the enforcement powers of the Court. No other sanction will coerce Altomare to comply. He has already violated the judgment by issuing over 20 billion shares of unregistered Universal Express stock, has paid only $60,000 toward satisfaction of the judgment while more than $3.8 million passed through his bank accounts, has failed to meet his burden of establishing his inability to pay, and has lied to the Court. There is every reason to expect that Altomare will defy further orders of the Court.
Ordering Altomare to pay a daily fine until he complies with the judgment would be futile because he has refused to pay despite the availability of funds and the continued accrual of post-judgment interest. There is no reason to believe that the imposition of fines would be any more likely to coerce his compliance with the judgment. Incarceration is appropriate and reasonable in these circumstances and has been ordered where defendants in securities fraud cases have failed to pay court ordered disgorgement. See SEC v. Kenton Capital, Ltd., 983 F. Supp. at 17-18; SEC v. Margolin, 1996 U.S. Dist. LEXIS 11299 at *13-15; SEC v. Porto, 748 F. Supp. 671, 672 (N.D. Ill. 1990).
For the reasons discussed above, the Commission respectfully requests that the Court incarcerate Altomare until he pays the disgorgement and prejudgment interest in full, or proves categorically and in detail that any payment is impossible.
Dated: March 21, 2008
Respectfully submitted,
s/ Leslie J. Hughes
Leslie J. Hughes
Attorneys for the Plaintiff
Securities and Exchange Commission
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03/21/2008 302 MEMORANDUM OF LAW in Support re: 191 MOTION for Sanctions and Entry of Contempt against Universal Express, Altomare and Gunderson. Summarizing evidence presented at February 4 2008 hearing that establishes Altomare's continuing contempt. Document filed by U.S. Securities and Exchange Commission.
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V. Conclusion – Incarceration of Altomare is the Only Viable Sanction.
----------------------------------------------
Doc 302 Extract – part 13
V. Conclusion – Incarceration of Altomare is the Only Viable Sanction.
The judgment unambiguously required Altomare to disgorge $1,419,025 in ill-gotten gains and pay $283,073 in prejudgment interest within ten days of entry of the judgment on March 8, 2007. Altomare did not make the payments as ordered. He has made four payments totaling $60,000 subsequent to the Court’s contempt hearing on October 12, 2007. Rather than acting diligently to disgorge his illicit profits, Altomare repeatedly flouted the judgment by using his available funds to purchase luxury goods. As discussed above, while disgorging only minimal funds, Altomare (1) has spent at least $690,492 to remodel and furnish a second home; (2) received at least $1,740,000 in compensation from Universal Express during 2007 for which he has not accounted; (3) gave his sons $134,200 during 2006 and 2007 which he has not attempted to recover; (4) obtained at least $160,466 from his credit line at Washington Mutual and $288,900 from his credit line at Wachovia which he did not use to pay the judgment; (5) sold at least $570,000 in jewelry for which he has not accounted; (6) provided incomplete bank records and no sworn accounting; (7) failed to identify all of his assets; and (8) lied to the Court. Altomare’s failure to provide credible evidence of the sources of over $1.5 million in deposits into the Wachovia bank account during 2007 and no information on over $1.6 million in distributions does not meet his burden of demonstrating an inability to disgorge his illicit profits in spite of repeated opportunities to do so.
Incarceration under a civil contempt order pending compliance with the Court’s order is within the Court’s authority and is a well-recognized method of coercing compliance with court orders. SEC v. Bremont, 2003 U.S. Dist. LEXIS 10279 at *20-21, citing Shillanti v. United States, 384 U.S. 364, 370-71 (1966) and United States v. Bayshore Assocs., Inc., 934 F.2d 1391, 1400 (6th Cir. 1991). In determining an appropriate sanction for civil contempt, a court must consider: (1) the character and magnitude of the harm threatened by the continued contumacy; (2) the probable effectiveness of any suggested sanction in bringing about compliance; and (3) the contemnor’s financial resources and the consequent seriousness of the burden of the sanction. Bremont at *21, citing Dole Fresh Fruit Co. v. United Banana Co., 821 F.2d 106, 110 (2d Cir. 1987).
Altomare should be incarcerated. His continuing refusal to satisfy the judgment undermines the deterrent effect of the Commission’s enforcement actions as well as the enforcement powers of the Court. No other sanction will coerce Altomare to comply. He has already violated the judgment by issuing over 20 billion shares of unregistered Universal Express stock, has paid only $60,000 toward satisfaction of the judgment while more than $3.8 million passed through his bank accounts, has failed to meet his burden of establishing his inability to pay, and has lied to the Court. There is every reason to expect that Altomare will defy further orders of the Court.
Ordering Altomare to pay a daily fine until he complies with the judgment would be futile because he has refused to pay despite the availability of funds and the continued accrual of post-judgment interest. There is no reason to believe that the imposition of fines would be any more likely to coerce his compliance with the judgment. Incarceration is appropriate and reasonable in these circumstances and has been ordered where defendants in securities fraud cases have failed to pay court ordered disgorgement. See SEC v. Kenton Capital, Ltd., 983 F. Supp. at 17-18; SEC v. Margolin, 1996 U.S. Dist. LEXIS 11299 at *13-15; SEC v. Porto, 748 F. Supp. 671, 672 (N.D. Ill. 1990).
For the reasons discussed above, the Commission respectfully requests that the Court incarcerate Altomare until he pays the disgorgement and prejudgment interest in full, or proves categorically and in detail that any payment is impossible.
Dated: March 21, 2008
Respectfully submitted,
s/ Leslie J. Hughes
Leslie J. Hughes
Attorneys for the Plaintiff
Securities and Exchange Commission
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03/21/2008 302 MEMORANDUM OF LAW in Support re: 191 MOTION for Sanctions and Entry of Contempt against Universal Express, Altomare and Gunderson. Summarizing evidence presented at February 4 2008 hearing that establishes Altomare's continuing contempt. Document filed by U.S. Securities and Exchange Commission.
cmkxclubhouse.proboards76.com/index.cgi?board=general&action=display&thread=1206598896