United States District Court, D. Colorado
U.S. SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
GEOFFREY H. LUNN, DARLENE A. BISHOP, and VINCENT G. CURRY, Defendants.
RAYMOND P. MOORE UNITED STATES DISTRICT JUDGE.
matter is before the Court on “Plaintiff's Renewed
Motion for Order Setting Disgorgement, Prejudgment Interest
and Civil Penalty against Defendant Geoffrey H. Lunn”
(the “Renewed Motion”) (ECF No. 61), as
supplemented by the “Supplemental Brief Regarding
Disgorgement” (the “Supplement”) (ECF No.
63). For the reasons set forth below, the Renewed Motion is
GRANTED as stated herein.
according to Plaintiff U.S. Securities and Exchange
Commission's (the “Commission”) Complaint,
between February 2010 and February 2011, Defendant Geoffrey
H. Lunn carried out a fictitious investment scheme through a
fictitious business called Dresdner Financial. Through false
statements, Defendant sought “Affiliates” to
invest with Dresdner and market Dresdner's investment
program to others. Describing the investment as “100%
guaranteed, ” Defendant raised more than $5.77 million
from at least 70 investors throughout the United States and
several foreign countries. Such funds were deposited into an
account in the name of WGC Group, Inc., which was owned and
controlled by Defendant. Such funds were not used for
investments as promised; instead, Defendant used the money to
make cash withdrawals, pay Affiliates, pay $1 Million to a
favored investor, provide money to three Las Vegas
“call girls, ” and pay his personal and business
expenses. Based on Defendant's conduct, the Commission
asserted five claims against him and two Affiliates, alleging
Defendant acted fraudulently and with scienter. Those claims
are: Violations of Securities Act Sections 5(a) and 5(c);
Violations of Exchange Act Section 10(b) and Rule 10b-5;
Violations of Securities Act Section 17(a)(1); Violations of
Securities Act Sections 17(a)(2) and 17(a)(3); and Violations
of Exchange Act Section 15(a). The Commission sought
injunctive relief, disgorgement, prejudgment interest, and
civil monetary penalties.
the filing of the Complaint, a default judgment was entered
against Co-Defendant Curry (an Affiliate) to disgorge $399,
930 in ill-gotten gains, plus $28, 914.11 in prejudgment
interest, for a total of $428, 844.11. (ECF No. 27.)
Thereafter, Defendant and the Commission reached a bifurcated
settlement agreement. This agreement provided for the
immediate entry of an order of permanent injunctive relief
against Defendant, and for briefing to allow the Court to
determine the amount of disgorgement, prejudgment interest,
and civil penalty to award. On August 1, 2013, upon joint
motion filed by the Commission and Defendant, and in
accordance with the parties' agreement, the Court entered
a consent judgment (the “Judgment”) against
Defendant. (ECF Nos. 33, 39, 40.)
the Judgment, Defendant was - and is - permanently enjoined
from engaging in various actions and matters. In addition,
Defendant agreed he would “pay disgorgement of
ill-gotten gains, prejudgment interest thereon, and a civil
penalty 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)], ” as determined by
the Court. (ECF No. 40, page 4 (brackets in original).)
Defendant also agreed that he would pay prejudgment interest
calculated from the date of violation based on the rate of
interest used by the Internal Revenue Service, as set forth
in 26 U.S.C. § 6621(a)(2).
order to determine the amount to be awarded against
Defendant, the Judgment contemplated the Commission would
file a motion, a hearing may be held on such motion, and
discovery may also be had. The Judgment also stated the Court
may determine the issues raised in the motion on the basis of
affidavits and other documents. In addition, Defendant agreed
that the allegations of the Complaint should be accepted and
deemed true by the Court, and that he would be precluded from
arguing that he did not violate the federal securities laws
as alleged in the Complaint.
anticipated under the Judgment, the Commission filed a Motion
for Order Setting Disgorgement, Prejudgment Interest and
Civil Penalty against Defendant Geoffrey H. Lunn. (ECF No.
41.) However, before that motion was ruled upon, this case
was administratively closed pending the conclusion of a
parallel criminal matter against Defendant, U.S. v.
Lunn, 14-cr-00161-REB-01, also pending in the District
of Colorado. A judgment and a restitution order have now been
entered against Defendant in the parallel criminal case. That
order requires Defendant to pay restitution in the amount of
$3, 922, 935, which is to be paid to the victims. The
resolution of the criminal case gave rise to the reopening of
this civil case and the Renewed Motion now before the Court.
Defendant has filed no response to the Renewed Motion, or its
Supplement. The Renewed Motion is now ripe for
on Defendant's agreement, the Court deems - and,
accordingly, finds - the allegations of the Complaint to be
true, i.e., that Defendant fraudulently solicited
and received more than $5.7 Million from at least 70
investors and misappropriated such funds for uses other than
as represented. In addition, based on the affidavits and
other materials submitted by the Commission, the Court finds
of the $5, 770, 813 received by Defendant, $1, 094, 000 was
used to pay three investors who had deposited a total of
$303, 973 into the WGC account.
stated, the Judgment references a hearing as part of the
process to determine the amount to be paid by Defendant. The
Court does not read the parties' agreement or Judgment to
require a hearing to be held. Moreover, no party has
requested a hearing. Indeed, Defendant neither responded to
the Renewed Motion nor updated his contact information.
Finally, the Court finds upon review of the record that no
hearing is required. For example, there is no indication that
there will be any additional arguments or evidence to be
presented on the issues at hand should a hearing be held.
There is no any indication by any party that the record
before the Court is incomplete. Accordingly, under such facts
and circumstances, the Court finds a hearing is not required
DISGORGEMENT AND ...