district a tj jant a div:ision - sec.gov | homedefendant evans by personal service on april 16,...

UNITED ST ATES DIS'fRIC�f COURT FOR THE NORTHERN DISTRICT OF GEORGIA

A TJ_JANT A DIV:ISION

SEC.URI1,IES AND EXCHANGE COMM.ISSI ON,

Plaintiff,

v.

JAMES A. EV AN·s, JR., d/b/a CASHFLOWBOT.COM, d/b/a DOLLA.RMONSTER,

:Defenda11ts

Civil Action No.

1 :15-cv-01118-RWS

CORRECTE.D DEFAULT JUDGMENT QRD:ER OF PERMANENT . . . . . . - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' · ·· · · · - ·- - - .. -···· .

l'.NJUNCTlON AND OTHER RELIEF AS TO DEFENDANT JAMES A. EV ANS, J.�., 4/b/a CASHFLOWBOT.CQM,,uud/b/a DOLLARMONST:ER

The United States Securities and Exchange Commission filed its com.plaint

against Defendant James A.. .Evans, Jr., d/b/a (�ash.tlowb(1t.com, d/b/a

.DollarMonster ("Defenda.nt .Evans") on April 13, 2015. The SEC served

Defendant Evans by personal service on April 16, 2015, and his answer or

responsiv·e pleading was due on :May 7, 2015. Defenda11t Evans .failed to file an

answer or other responsive pleading. The s:EC moved for entry of default against

I)efen.dant Evans t)n June 3, 2()15, and the clerk of court entered default the same

day. rl�he SEC has now moved the Co·urt for a final judgment by default against

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Case 1:15-cv-01118-RWS Document 9 Filed 09/30/15 Page 1 of 19

Defendant Evans. 'I'he Court hereby grants the SEC's motion and. has set forth

relevant findings of fact and conclusions of law below.

FINDINGS AND CONCL.USlONS

Given the failure of Defendant Eva11s to answer or otherwise def end the

allegations against him, tl1e following allegatio11s of the SEC's Complaint are now

deemed to be true, and are tnade tl1e findings of this Court:

Between on or about January 2012 and April 2014, :Defendant Evan.s

perpetrated a .Ponzi scheme by operating a website at the domain name

"Cashflo·wbot.com," using the ·b·usiness i1ame "DollarMonster." (��1 & 8,

Complaint).

DollarMonster promoted itself' to investors as a "private fund" with an o_paque

investment strategy where in.vestors would make "big profits." (if2, Complaint).

Although the DollarMo·nster website disclosed that "profit" payouts were linked

to DollarMonster's receipt of additional investment funds, it misrepresented to

investors that DollarMonster had paid out invest1nent returns exceeding the money

that investors had contributed, indicating that the enterprise was somehow

generating investment profits and 11ot Just payi11g i11vestors fron1 the receipt of new

funds. (if3, Complaint).

Beginning in late 2(ll 3, the DollarMonster website misrepresented to investors

that DollarMonster was a "financial advisor" witl1 more t11an 120 management

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teams and $38 1nillion 111 assets u11der n1anageme·n.t. Cif4, Cotnplaint)� . .

The Dollar:Mon.ster · we·.bsite · fu.rther mis-represented to investors · that

. in the ·fu11d. (iJ5, Complaint). ·

A lat@r iteration of tl1e website misre,presen·ted to itivestors that IDollaFM=e>nster

was a "private Holdi.ng Co1npany'' tl1at invested i.rl assets su·ch as gold, silver, real

estate, stocks and bonds. (,f6, Co·m_plaint) .

. Addition.ally, the ·website p·urported to offef. investors the opportu11ity to . . . . . . . . . . . -. : ' . .

· p·urchase sl1ares o.f stock in the l·Idlding Company, an.d to pay investors monthly . . . . . . .

·. . . .

d . . . . d. . ·;i . . . ·(·i1··7· ·c·· -�"1. 1 • ) 1v1 .. e)lt.I pa.yments. . , · · · • om.p1:a1nt .

Defendant Evans raised.> ·

III, Section 1 O(b) of· tl1e Sec·urities Exchange Act of 1934 ("Exchange Act") [15

U.S.C. § 78j(b)] a11d R·ule lOb-5 thereunder [17 C.F.R. § 240.lOb-5) in Count IV,

a11d Sectio11 206(4) 11f the Investme11t Advisers Act of 1940 ("Advisers Act'')• [ 15

·u·.s.c. § 80b-6(4)J and Rule 206(4)-8 the.re·und.er [17 C.F.R. § 275.20694)-8] in

Count V. (ilt l ,, Complaint).

The SEC brought this action pursuant to Sections 20 and 22 of the Securities

Act [15 U.S.C. §§ 77t and 77v], Sections 2l(d) and 2l(e) of the Exchange Act [15

U.S.C. §§ 78u(d) and 78u(e)] and Sections 209 and 214 of the Advisers Act [15

U.S.C. §§ 80b-9 and 80b-14] to enjoin Defendant Evans from e·ngagi11g i11 the

transactions, acts, practices, and courses of business alleged in the Complaint, and

transactions, acts, practices, and courses of business of similar purport and object, for

civil penalties and for other equitable relief (if 12, Complaint).

This Court has jurisdiction over this a.ction pursu.ant to Sections 20 and. 22 of

the Securities Act [15 U.S.C. § 77t and 77v], Sections 2l(d), 21(e), and 27 of the

Exchange Act [15 U.S.C. §§ 78u(d), 78·u(e}, and 78aa] and Section 214 of the

Advisers Act [15 U.S.C. so·b-14]. (if13, Cotnplaint).

Defendant Evans, directly and indirectly, m.ade use of the ma.ils, the means and

instruments of transportation and co.mmunication in i11terstate com1nerce and the

means and instrumentalities of interstate commerce in connection with the

transactions, acts, practices, and courses of· busin.ess alleged in the Co1nplai11t and.

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111ade use of the mails and the means or instrumentalities of interstate commerce to . - ' - . . . . . . . . · - .

efiect transactions, or to induce or to attempt to induce the purchase or sale of

securities alleged i11 this Complaint. (iJ14, Complaint).

Venue is proper in this Court as certain of the transactions, acts, practices, and

courses of business constituting violations of the Securities Act, the Exchange Act

and the Advisers Act occutTed in the N·orthem District of Georgia. In addition,

Defendant Evans resides in the Northern District of Georgia. (iJ16, Complaint).

Defe11dant Eva11s, 33, resides in resides in Villa Rica, Georgia. He is not

.registered with the SEC in any capacity a11d does not hold a11y securities lice11ses.

(ifl 7, Complaint).

From at least January 2012, .Defendant Evans operated DollarMonster as an

internet-based investment accessible through a website using the domain name

Cashflowbot.co·n1. (if18, Complaint).

Although Defendant Evans did not })rovide h.is n.an1e to the domain .registrar for

Cashflowbot.com, the phone number .Provided to it matches the phone number that

Defendant Evans provided to his bank. Defendant Evans also paid the domain

registrar for the Dollar:M:onster website by using a personal credit card, issued in

his r1a1ne. (,19, Com.plaint).

In order to in.·v·est through DollarMonster, investors were instructed to

provided email-based fund transfer services. (,20, Co1nplaint) .

Defenda11t Evans opened the Solid Trust account for DollarM011ster in, his own

name, and linked tl1at account to his perso11al bank account, over which he

inaintained exclusive control. (�21, Complai11t).

The un_(ierlying mec·hanics of tl1e DollarMonster sche1ne were si1nple : investors

deposited funds into their Solid Trust accounts and then transferred those funds to

a Solid Trust account controlled by Defendant Evans. Defendant Eva.ns then

transferred a portion of the funds to his personal bank accou.nt, and also

re(iistributed funds to inv·estors' Solid �rrust accounts as purported invest1nent

returns. CiJ22, Complaint) .

Investors were able to log into their DollarM011ster aacou11ts, wl1ich in.eluded

the purported dollar ·value of their acco·unts (without identifying any underlying

securities or ownership interests), inclu·ding purported eamin.gs. (i!23, Complaint).

l"'he DollarMonste.r website did not contain language limiting investors to

accredited or s·ophisticated investors, nor did. the process of registrati(Jil or creating

an account req.uire intor1nation indicati11g wheth.er investors were sophisticated or

accredited . Cil24, Complaint) .

1:�0 the contrary, at o·n.e point i11 tin1e the DollarMonster website stated that the

sign-·up process required "no paperwork" and at another stated that the progran1

was "available to everyone regardless ... tlf how in.uch yo·u have to iµvest." (il25,

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Complaint).

The DollarMonster website provided an opaque description of a purportedly

"reliable" investment opport:unity whereby investors would make "big" profits.

(if26, Complaint).

The website misrepresented DollarMonster by identifying it as "a successful

group of experienced Internet Investors" and by saying that "DollarMonster has

been working as a private fund since 2003, a�d si11ce 2004 have opened up to the

public worldwide" [sic]. (�[27, Complaint).

Th.e website misrepresented that Dollar Monster's missio11 was "to provide o·u.r

investors with a great opportunity for their funds - by investing as prudently as

possible - to gain hig·h rates in return."

· Inves.t111e11t Pool goes off to pay the next person in line to be paid� giving the111 a

re�uru of 200%, and you are then put at the ei1d. pf the 1i.11e. .Each< time more

inv·estn1ents come i11, n1ore people get paid. and the line moves forw·a,rd�. . If

. investors do not it1vest, then the line doesn't move.'' (,r:31, CoD.1'.pla'.lnt). ·

· However, the website· also speGifi.cally· misrepre.s@11ted that DollarMonster had

paid ottt investmen.t returns exceeding the amo11.nt o·f money that investors 11.ad . .

contributed, indicating, falsely, that the enterprise was somehow . generating ·

investment .. profits a11d not just paying in.·v.estors through the .re.�.eipts o.f n.e:w.

investor funds. (�32, Complaint).

· Furthermore, · the I)ollarMomster vvebsite

identify the specific investments purportedly made with investor funds. (�36,

Complaint).

In October 201 3 , t11e DollarMonster website misrepresented that DollarM(lnster

was a "financial advisor" with inore than 120 manage1nel1t teams and $38 million

of assets under management." (i!37, Complaint).

In N·ovember 2013, the DollarMonster website further misrepresented that

DollarMonster managed a hedge fund that purchased stocks on behalf of investors

in the fund. (if38, Com.plaint).

In this regard, the website falsely claimed that DollarMonster had used investor

funds to profitably invest in stocks with a market value of $3.2 million. (iJ39,

Complaint).

'I"he website further falsely claimed that DollarM011ster investors could share in

the profits with a simple click of the "cashou.t" a11d "withdraw money" buttons on

the Cashflowbot.com website. Cil40, Complaint).

Finally, a subsequent version of the website in February 2014 misrepresented

DollarMonster as "a private Holding Cotnpa·ny" that invested in securities and

commodities, including gold, silver, real estate, stocks, and bonds. cil41,

Complaint).

In July 2014, shortly after the SEC issued a subpoena to Defendant Evans as

part of its investigation into the 111atter, the DollarM.onster website ceased

9


operation..

Defendant .Evans made use of the means or instruments of transportation or

communication in interstate commerce or of the mails to offer or sell securities,

without a registration statement having been filed witl1 t'he SEC as to such

securities. (if5 l, Complaint).

Defendant Evans's advice involved securities, as at least one iteration of the

DollarMonster website specifically misrepresented that the fund purchased stocks

on behalf of' investors. (iJ66, Complaint).

Defe�ndant Evans received compensation by :withdrawing more tha.n $30,000 of

investor funds for 'his personal use, roughly n1atcl1ing the disclosed fees of 2.5% of

fu11ds i11vested. Accordingly, Defendant Evans was both an investment adviser,

and as a representative of DollarMonster, a person associated with an investment

adviser. (if67, Complaint).

I.

Irr IS HEREBY. OR:DERED, ADJUDG:ED, AND .DECREED that Defendant

:Evans is permanently restrained and enjoined from violating Section 5 of the

Securities Act [15 U.S.C. § 77e] by, directly or indirectly, in the absence of any

applicable exem.ption:

(a) lJnless a registration stateme11t is it1 etiect as to a security, making ·use

of .. any mea.n.s or instrun1ents oftra11sporta.tion or co·.m:m�unication i11

11


interstate con1mcrce or of the mails to sell such security through the

use or medium of a11y prospectus or otherwise;

(b) Unless a registration state1nen.t is in effect as to a security, carryin.g or

causing to be carried through the inails or in interstate commerce, by

any means or instruments of transportation, any such security for the

pu;rpose of sale or for delivery after sale; or

( c) .Making use of any means or instruments of transportation or

com·munication 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 a.ny security, unless a. registration. statement h.as been filed

with the Co.mmission 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) ai1y public proceeding or

examination under Section. 8 of the Sec·urities Act [15 U.S.C. § 77h].

I'I, IS FURTHER O:R.D:E.RE·o, ADJUDGED, AND DECREE:D that, as

provid.ed in Federal Ilu1e of Civil Procedure 65( d)(2), the foregoi11g paragraph also

binds the following who receive actual notice of this Final Judgment by personal

service or otherwise: {a) Defendant Evan's officers, agents, serva11ts, employees,

and attorneys; and (b) other persons in active concert or participation with

Defendant Evans or with anyone described in (a).

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II.

IT IS HERE.BY F-URTlIER ORDER-ED, ADJUDGED, AND DEC.R.E.ED

tl1at Defe11dant _Evans is pern1anently restrained and e11joined fro,m violating

Section 17(a) of the Securities Act of 1933 (the "Securities Act") [15 U.S.C. §

77q(a)] in the offer or sale of a11y sec·urity by the use of any mea11s 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;

(b) to o-btain mone=y or property by n1eans of any untrue stateme.nt of a

material fact or any omission of a material fact necessary in order to

n1ake the statements made, in light of the circumstances u11der which

they were made, not misleading; or

(c) to engage in any transacti.o.n, practice, or course (rf ·b·usiness which

operates or would operate as a fraud or deceit upon the purchaser,

by directly or indirectly, disseminating false or 1nisleading documents, materials,

or information or making either orally or in writing, any false or misleading

statement i11 a11y communication with any investor or prosp=ective investor, about:

(A) the use of in_vestor :funds;

(B) the risk of investrne11t; or

(C) the existence an.di or nature of any pro'f1t generating enterprise

13


IT IS F"UR'I�J-IEI�. OilDERED, ADJUDGED, A.ND DECREED that, as

provided in. Federal R·ule of� Civil Procedure 65(d)(2), the foregoing paragrapl.1 also

binds the following wl10 receive actual notice of this Final Judgment by personal

service or otherwise: (a) Defendant Evan's officers, agents, servants, employees,

and attorneys; a11d. (b) other persons i11 active co11cert or participation with


III.

IT IS HER.EB.Y FURTHER ORDE:RED, A:DJUDGED, AN.D DECilEED

that :Defendant Evar1s is permru1ently restrained a11d enjoin.ed from violating,

directly or indirectly, Section 1 O(b) of the Securities Exchange Act of' 1934 (the

"Exchange Act") [15 U.S.C. § 78j(b)] and Rule IOb-5 promulgated thereunder

[17 C .. F.R. § 240, lOb-5], by using any means or instru·mentality of interstate

co1nmerce, or ot .. the mails, or o·f any facility of any national securities excha11ge, in

connection with the purchase or sale of any security:

(a) to employ any· device, schetne, or artifice to defraud;.

(b) to n1ake any untrue statement of a. material fact or to on1it to state a

material fact necessary i11 order to mak.e the stateme.nts inade, in the

light of the circumstances u11der which they were made, not

misleading; or

14


( c) to engage in any act, practice, or course of business which operates or

wo·uld operate as a fraud or deceit upon any person,

by directly or indirectly disseminating false or misleading docun1ents, materials, or

i11formation. or making either orally or in writing, any false or misleading statement

in any communication with any investor or prospective investor, about:

(A) the use of investor funds;

(B)··· · the risk of investment; and

(C) the existe11ce and/or nature of any profit generating enterprise

IT IS FURTH.ER ORDERE.D, ADJUDGED, AND DECREE.D that, as

provided in Federal Rt1le 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) Defendant Evan's officers, agents, servants, employees,

and attorneys; and (b) other persons in active concert or participation with


IV.

IT IS FlJRTHE.R O:R.DERED ADJU.DGED, AND D'.ECREED that

.Defendant Evans is permanently enjoined and restrained from violating

Section 206(4) of' the Advisers Act [15 ·u·.s.c. § 80b-6(4)] a11d Rule 206(4)-8

thereunder [17 C.F.R. § 275.206(4)-8] by:

15


(a) 11iaking untru.e stateme11ts of material tacts a11dlor otnitting to state

,material facts .n.ecessary to make the staterner1ts made, .i11 th,� light @f

the circ·umstances tin�der whiol1 they ·were n1ade, not .misleading to a.ny

• ' . · . . - -_ ·: _: _- - .:··_ ·:_- :- .:-· . ' .:·- ' , ·.- · .• . : > · . ·· · .··:. - _·.

-.. . _ :,j . . �:: . . :- _ - --_-_ _ --·:: _: --- -, : ____ -:_· .·::._ < _.·· _-:- -_ :•

___ :-__

:. 111vestor or pr0spectrve 111vestor 1.n a_poolectt11ve=stm�n¥ veh10[€; or

. ' . . . ' (b) · engaging in a.cts, practices, anli coµrses ot'" l:J"usiness th.at w·ere

fraudulent, deceptive, and/or manipulative with respect to any investor

or prospecti"\te inM:estor in a }Jooled investment vehicle,

by directly or in.dire.etly dissemi.na·ting fa.ls� or 1nisleading documents, tnaterials, · ·

or information or n1a.king either orally or in. writing, a11y false or misleading

stateme11tin a11y con1111unication with any investor or prospective inV�stor,

about:

(A) fhe use of i11vestor fur1ds;

(B) the risk of investment; and

· · (C) tl1e existence and/or nature of at1y profit generating enterprise

IT IS :FU.Rl�llEll f)Il'.DEllED, ADJUDGED, AND' DECREED tl1a.t, as ..

provicle.d i11 l�ederal Rule of Civil Procedure 65(d)(2), th.e foregoing ·panag.r-aph also

bi11ds the following who receive actual n·otice of� this Final Judg11l.ent by personal

: . . service or atl1tJrwise: (a} ·oefendant Evan's offi.c.ers, a.gents, servants, emplc.1yees,

and attorneys; and (b) other perso11s in aqtive concert · or participation. with

I)efe11dant Evans or with a.nyon.e desctibed in{a).

16


v.

IT IS .H.EREBY FURTHER O.RDER.ED, ADJUD=GED, AND DEC:R:E.E:D

that disgorgement and prejudgment interest thereon against Defendant Evan.s is

legally appropriate, to the extent it could be shown that he profited from tl1e fraud

outlined in the SEC's complaint. Defendant Evans obtained gro·ss proceeds (that

is, his "ill-gotten gains" or "profits") of $1,146.,307.67 from the approximately

3,444 investors who contributed money through DollarM.on.ster for the sec·urities

referenced in. the C(lm.plaint. See Plaintiffs -Ml)titJn for Default Judgment, Exhibit

A. The prejudgment interest on that amount is $116,942.42. Id. rfhus, the Cot111

orders that Defendant Evans shall pay a total amount of disgorgement and

prejudg1nent interest of $1,263,250.09.

VI.

IT IS HEREBY FURTHER OR:DERE.D, ADJUDGED, AND DECREED

tl1at a civil penalty· p·urs·uant to Section 2l(d)(3) of the Excha11ge Act [15 U.S.C. §

78u(d)(3)] and Sections 209(d) and 209(e) of tl1e Advisers Act [15 U.S.C. §§ 80b-

9] is appropriate in this case. As the sche1ne outlined in the complaint (to which

Defendant Evans has defaulted) involved fraud, the Court also orders that

Defenda11t Evans shall pay a civil penalty in the amount o=f� $,.6Q,000=, within 60 days

of the entry of this f"in.al J·udgment, to the ·united States Treasury. If timely

payment is not made, additional interest shall accrue pursuant to 28 U.S.C. § 1961.

17


Pay1nent must be 1nade in 011e of the following ways: {1) Defendant Evans may

make direct paym.ent from a ba.nk account via Pay.gov through the SEC website at

http://www.sec.gov/about/offices/ofm.htrn; or (2) Defendant Evans may pay by

certified check, bank cashier's check, or United States postal money order, 1nade

payable to the Securities and Exchange Com.mission. and hand-d.eliver or ·mail to:

Enterprise Services Center Acc,ounts Rec.eivable Branch HQ Bldg., Rooml81, AM.Z-341 6500 South MacArthur Boulevard Oklaho1na City, OK 73169

Payments by check or money order must be accompanied by a cover letter

identifying :Evans as a Defendant in this proceeding, and tl1e file number of this

proceeding; a copy of the cover letter and check or inoney order must be sent to

Robert F. Schroeder, Senior Trial Counsel, Divisio11 of E·nforce1nent, 950 East

Paces Ferry Road, ·N.E�, S·uite 900, Atlanta, Georgia 30326.

VII.

IT IS FURTHER ORDERED, ADJU.DG.EI), AND DECREED that,

·pursuant to Rule 54(b ) , there is no Just reason for delay in the in. the entry of this

final j-udgrnent against 1.�KO, a11d tl1e Clerk is directed to enter thisjudgment at this

tirn.e. This Order is 1iu11c pro ti1nc t(1 .August 3, 2015.

18


VIII.

IT IS FURTHER ORDERED, ADJU.DGED, AND DECRE.ED that this

Co1t11 shall retain jurisdiction of this n1atter for the p11rposes of enforcing the terms

of this Final Judg·ment.

Richard W. ory, Judge United States District Cou

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