j - seccase 1:17-cv-04240-vm document 6 filed 06/12/17 page 3 of 14 3018474300 6/9/2017 3:36:18 pm...

3018474300 6/9/2017 3:36:18 PM PAGE 5/016 Fax server

USDCSDNV 1lOCUMENT ELECTRONICALLY FILED DOC#:

-~-~-n.--+-i.....+-+-........

DATE f'ILED: __ ........,; _ _,_.....__ UNITED STATES DlSTRJCT COURT C::::=========~:::::!I

SOUTHERN DISTRICT OF NEW YORK

SEClJRITIES A.ND EXCHANGE COl\.1MJSSION,

Plaintiff,

V, !'I- -CV--f J.. /fO

DAVID N. FUSELIBR, ROY W. ERWJN, and INTEGRATED FREJGHT CORPORATION,

________ n_e_fo_n_d_an:-ts_. _ _J CONSENT OF DEFENDANT ROY W. ERWIN

1. Defendant Roy W, Erwin ("Defendant") w.1ives service of a summons and !he

Complaint in this action, enters a general appearance, and admits the Court's jmisdiction over

I>efondant and over the subject matter of this action.

2. \\t1thout admitting or denying the allegations of the complaint ( ex:cept as provided

herein in para.graph 11 and except as 1o personal and subject matter jurisdiction,. which

Defondaut admits), Defendant hereby consents to tbe entry of the final judgment in th~ forn1

a1tached hereto (the "Final Judgmenf') and inc.oYporated by reference herein,. which, among other

things:

(a) pennanentJy restrains and enjoins Defendant front violation of Section

l7(a) of the Securities Act (1fl933 ("Securities Act") [15 U.S.C. §

77q(al], Section 10(11) of the Secmitie.~ Exchange Act of l 934 ("Exchange

Acf') [15 U.S.C. § 78j(b)J and Rule !Ob-5 the1·ew1der [17 C.F.R §

240. l Ob-.S]; and

Case 1:17-cv-04240-VM Document 6 Filed 06/12/17 of 14

3018474300 6/9/2017 3:36:18 PM PAGE 6/016 Fax Server

(b) orders Dcfondant to pay a civil penalty in the amount of $25,000 under

Section 20(d) of the Securities Act [J5 U;S,C. § 77t(d)] and Section

21{d)(3) of the Exchonge Act [15 U.S.C. § 78u(cf){3)).

3. Defendant agrees that he shall not seek or accept, directly or indirectly,

reimbursement or ind<:mnification from any source, including but not limite.d to pa}'lnc;;;"!lt made

pursuant to lll>Y inslll'lmce policy, with regard to a...~y civil penalty amounts that Defundant pays

pursuant to the Final Judgment, regardle.<>s of whether such penalty amounts or any pait thereof

are added to a distribution fond or otherwise used for the benefit ofinvestor:>. Defendant filrther

agrees that he shall not claim, a~sert, or apply for a tax deduction or tax credit with regard to any

federal, sl:llte. or local tnx for any penalty amounts that Defendant pays purslmnt to the Final

Judgment, regardless of whether such penalty amolmts or any part thereof ai·c added to a

distribnti o.n futid •>t otherwise \?Sed for the benefit of invcsio:rs.

4. Defendant waives the entry offi.ndiugs of fact and conclusions of law pursuant to

Rule 52 of the Federal Rules of Civil Procedure.

5. Defendant waives the right, if an.y, to a jury trial und to appeal :from the entry of

the Final Judgment.

6. Defendimt enters into this Consent voluntarily and repr~<r.e:.nts that no threats.

offers, promises, or inducernent-s (lf any kind have been made by the Coromissiou <1r any

member, officer, employee, agent, or repre:sc::ntative of the Commission to induce Defondant to

enter into this Consent.

7. Defendant agrees th.at this Consent sb.all be incorporated into the F [nal J udgmenl

with the swm::: force aod effect as if fully set forth therein.

l



8.: Dcfondant wiU hot oppose the enfoft'en1cnt~of tll.c t<hml fo~~ent on ihe gro\.ltld,

if m1y exists, that itfails toco!n.ply'<vith Rule.65(d) of(he Feder_il Rufos.ofCivil Procedure, and

hereby vraives any objectfon based thereon.

9. ~fendimt waiv~~; $.civlce of the FinaUudgment and agrees that en,tl:)I ofthe Ffoal

J\1dg1ne11t by the Court .and filing with. the Cletk Mr.ll~ Cciurt ·\vUl .;,oostitutenotice tnDefondattt

ofil'>fom1s a.ildce!ndi.tfon::i. Dcfendantf\lrther ~gr~~t9 provi;;J.ec6til!St?l for thi7Commission,

'.\rithln. thirtjdays after: the Final Judgment:lk filed ·with the Clerk.oi'tlie Court, With im affidavit

o.r declarl.ltimi si&l.ihg :that Pefendant has ~receJyed a..'ld read a ccipy. of the Finru Judgment.

10, Consistent\Vith 17 c~F.R §''.402;5(1) •. this Consent;-tefolves <Inly the dajms

representation: has hecn: xnade by .the .Commission onl:ny m~rnbet, officer; employee.agent, or

rc1)re9.t.'tl1ativ~ of the Commission with regard to futy mmifutl.lfability. that may have arisen or

mayar:l$e from the mets UJ1der!ymg thj~ action Oi: imtrmnify fr0m any such criminal liability.

Defel)dant waives any- cl.Um of lloubl.e Jeopardy based upo11 the .scttfement of !Jli:s proceeding,

iududing the imposition of any remedy or dvU penalty herein. Defondantfor:tber .ackhowledg~

that the Cou...'1:'$ entty of a permanent h;ijunction may ha'Ve col late:r~il ccmsequc.mces unde1 federal

or state law amf the ntles and regillations ofseif-tcgulatbry organizations~ lk.ensing boards, and

other regulatory.otgani:r.ations.; S)1ch·c0Uatera!·eonaeqt1ences include, hut arc not·limited to, .a

statt.'foty disq"aHfication v.i.tll respect to memberi>hip or participation in, or assodation with a

member of, a se!f:.regulatory orga:ni:r,atfon. This statutory disqualification has consequences that

are separate frotn any saiicfam impo;;ed inan atlmini.<;trative procee.dir.g; ln :idditk'r., in any

disciplinary proceeding·before the Com .. 1111ssion based ml the entry nfthe injunction in this



action, Defondaut ~1dermmds that he :shall not be permitted to c-ontest tbe fu.ctu.al allegations of

!he complaint in this action.

l 1. Defendant understands and agrees to comply with the terms of 17 C.F .R..

§ 202.5(e), which provides in part <hat it.is the Commission's policy "not t(! perxni!: a defendant

or respondent to consent to a judgment or order that imposes a sunction while denying the

allegations in th.e romplaint or order for proceedings," and "a renl.S'al to admit the allegations is

equivalent to a denial, unless the defendant or respondent states thnt he neither admits or denies

the allegations." As part of Defendant's agreement to comply with the tern.ts of Section 202.5(e),

Defendant: (i) will not take any action Qr m.a.ke (.1r permit to be m.ru:le any public. stalemerit

denying, directly or indirectly, any allegation in the compla.irit or .:reating the impression that the

complaint is without factual basis; (ii) will not make or pE.'I?llit to be made any public statement

to the effect that Defendant does not admit the allegations of the complaint, or that this Consent

contain:; no admissi~)n of the allegations, without also stating that Defendant docs not deny the

allegations; (iii) upon the filing of this Consent, Defendant hereby withdraws any papers filed in

this action to the extent that they deny any allegation in t:he complaint; and (iv) stipulatei; solely

for purp-;>ses 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

disg<1rgement, prejudgment interest, ci•lil penalty cir other amounts dl1e by Defendant under the

Final Judgment o.r .any l)ther j~1dgment. order. oonsw~t ;:irder, decree or settlement agreement

caten:-d iu connection with this proceeding, is a debt for the violation by Defendant of the federal

:secu.-ities lawi; or any rcg.ilatfoll or order issued 1mder such lav..-s, as set forth io Section

.52'3(a)(l 9) of the Bankruptcy Code, 1 l U.S.C. § S23{a)(l 9). If Defendant breaches !his

agreement,. the Commission may petition the Court to ·vacate the Final Judgment and restore this

4



action to its active docket. Nothing in this paragraph affects Defendant's: (i) testimonial

obligations; or (ii) right to 1ake legal or factmil positions in litigation or other legal proceedings

In v.tdch the Commission is uot a party.

t 2. Defendant he.woy waives any right..i:; under the Equal. Access to Justice Act, the

Small Business Regulatory Enforcement Fairness Act of 1996, 01· any other p:rovis]Qn of law to

seek from the United St.ates, or imy agency, or any official of the United States acting in h:is or

h1,'T official capacity, directly or indirectly, reimburseme11t of attorney's fees or other fees,

expenses, or costs expended by Defendant to defend against this action. For these purposes,

Defon.dan1 agrees !ha! Defendant is not the prevailing party in 1his action since the parties have

reached a good faith settlement.

13. Defen.dant agrees that the Commission may present the Final Judgment to the

Court for :signature and entry witl1out further notice.

5

ff



Qn. tq lL~µ!if:k'i•~W1£, <Bn Lc__k!:~~l.ti.!.Li.2l.:--··-,~' a pei"s(m JmoWtHo me, p1::rsoil1tlly appeared befrjte i11e an.cl ;:lclmo\Jtedgcd <~xecuting the ihtegding Ck1i1Mnt

Approved as 10 form:


3018474300 6/9/2017 3:36:18 PM PAGE 11/016

UNlTED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

---'--"-------------------------------------------·'---------.

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

Fax Server

1 7-cv-04240-VM

DAVID N. FUSELIER, ROY W. ERWIN, and

V.

INTEGRATED FREIGHT CORPORATION,

Dcfondants.

-----------------------------------------------

FINAL JUDGMENT AS TO DEFEN.DANT ROY \V. ER\VIN

The Securities and Exchange Commission having filed a Complaint and Defendant Roy

W. Erwin CDefendanf') having entered a general appearance; consented to the Court's

jurisdiction over Defendant 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 VU); waived findings of fact

and conclusions oflaw; and waived any right to appeal from this Final Judgment:

I.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that

Defendant is permanently restrained and enjoined from violating, directly or indirectly, Section

l 7(a) of the Securities Act of 1933 (the «Securities Act") [15 U.S.C. § 77q(a)] in the offer or sale

of any security by the use of any means or instrnments 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;

(h) to obtain money or property by means of any untrue statement of a material fact

or any omission of a material fact necessary in order to make the statements

made, in light of the circumstances under which they were made, not misleading;

or

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

would operate as a fraud or deceit upon the purchaser.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in

Federal Rule 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) Defendanfs

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or

participation with Defendant or with anyone described in (a).

IJ.

IT rs HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is

permanently restrained and enjoined from violating, directly or indirectly, Section lO(b) of the

Securities Exchange Act of 1934 {the "Exchange Act") [15 U.S.C. § 78j(b)] and Rule lOb-5

promulgated thereunder [17 C.F.R. § 240. lOb-5], by using any means or instrumentality of

interstate commerce, or of the mails, or of any facility of m1y national sccuritie8 exchange, in

connection with the purchase or sale of any security:

(a) to employ any dcvict>:, scheme, or aiiificc to defraud;

(b) to make 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

2



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

operate as a fraud or deceit upon any person.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in

Federal Rule 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's

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or

participation with Defendant or with anyone described in (a).

Ill.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant to

Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(cl}(2)] and Section 20(e) of the Securities

Act [15 lJ.S.C. § 77t(e)], Defendant is prohibited, for three years following the date of entry of

this Final Judgment, from acting as an officer or director of any issuer that has a dass of

sel:uriti es registered pursuant to Section 12 of the Exchange Act ( l 5 lJ .S. C. § 7 81] or that is

required to file reports pursuant to Section 15(d) of the Exchange Act [15 lJ.S.C. § 78o(<l)].

IX.

IT IS HEREBY l"URTHER ORDERED, ADJUDGED, AND DECREED that

Defendant is permanently barred from participating in an offering of penny stock, including

engaging in activities with a broker, dealer, or issuer for purposes ofissuing, trading, or inducing

or attempting to induce the purchase or sale of any penny stock. A penny stock is any equity

security that has a price of less than five dollars, except as provided in Rule 3a5 l-1 under the

Exchange Act [17 C.F.R. § 240.3a51-l].

v.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant shall

3



pay a civil penalty in the amount of $25,000 to the Securities and Exchange Commission

pursuant to under Section 20(d) of the Securities Act [ l 5 U.S.C. § 77t(d)] and Section 21 (d)(3)

of the Exchange Act [15 U.S.C. § 78u(d)(3)]. Defendant shall make this payment within 14 days

after entry of this Final Judgment.

Defendant 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

http://www.sec.g9_y/~.b.~~-"!t!Pffices/ofm.htm. Defendant may also pay by certified check, bank

cashier's check, or United States postal money order payable to the Securities and Exchange

Commission, which shall be delivered or mailed to

Enterprise Services Center Accounts Receivable Branch 6500 South MacArthur Boulevard Oklahoma City, OK 73169

and shall be accompanied by a letter identifying the case title, civil action number, and name of

this Court; Roy W. Erv.·in as a defendant in this action; and specifying that payment is made

pursum1t to this Final Judgment.

Defendant shall simultaneously transmit photocopies of evidence of payment m1d case

identifying infomrntion to the Commission's counsel in this action. By making this payment,

Defendant relinquishes all legal and equitable right, title, and interest in such tlmds and no part

of the funds shall be returned to Defendant. The Commission shall send the fonds paid pursuant

to this Pinal Judgment to the United States Treasury. Defendant shall pay post-judgment interest

on any delinquent amounts pursuant to 28 use § 1961 .

4



VI.

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 Defendant

shall comply with all of the undertakings and agreements set forth therein.

Vll.

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 Defondm1t, and further, any debt

for disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant 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 by Defendant of the federal

securities laws or any regulation or order issued under such laws, as set forth in Section

523(a)(19) of the Bru1kruptcy Code, 11 lJ.S.C. §523(a)(19).

VHL

IT IS FURTHER ORDERED, AD.JUDGED, AND DECREED that this Court shall

retain jurisdiction of this matter for the purposes of enforcing the tcnns of this Final Judgment.



IX.

There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil

Procedure, the Clerk is ordered to enter this Final Judgment forthwith and withnut further notice.

D•••d= / ~r :u~;

6



UNITED STATES SECURITIES AND EXCHANGE CO!v1MlSSION

NEW YORK REGIONAL OFFICE

Via Fax [7.J_~=--~05-6382j

The Honorable Victor Marrero United States District Court Southern District of New York 500 Pearl Street New York, NY 10007

BROOK.FlELD PLACE 200 VESEY STREET, ROOM 400

NEW YORK, NEW YORK 10281-1022

June 9, 2017

Re: SEC v. !).gyi_r!_l'f._E~~li~!JJLql., 17-cv-04240-VM (SD.NY.)

Dear Judge Marrero:

KRISTIN M. PAULEY (212) 336-0983 [email protected]

Plaintiff Securities and Exchange Commission ("Commission:') respectfully submits the enclosed Consent of Defendant Roy W. Erwin and proposed Final Judgment as to Defendant Roy W. Erwin.

On June 6, 2017, the Commission filed its Complaint in this case (the "Complaint"), alleging that Defendant David N. Fuselier perpetrated a scheme to fraudulently improve the financial statements of two publicly traded companies, Integrated Freight Corporation ("Integrated Freight") and New Leaf Brands, Inc. ("New Leaf,'' together with Integrated Freight, the "Companies''), by selling certain of their subsidiary companies to a newly-formed third-party, Deep South Capital LLC ("Deep South')). As a result, the Commission alleged that Integrated Freight and New Leaf filed with the Commission materially false and misleading reports during the period July 2012 to April 2015. The Commission further alleged that Mr. Erwin was complicit in Mr. Fuselier's scheme and agreed to serve as the sole owner and managing member of Deep South while knowing that the only purpose of the transactions was to make the Companies' financial statements in their public filings falsely appear stronger.

Mr. Erwin has consented to an injunction against future violations, a three-year officer and director bar, a penny stock bar, and a civil penalty in the amount of $25,000. The proposed civil penalty serves the dual purpose of penalizing Mr. Erwin for his violations and deterring from him committing future violations. In addition, the proposed injunction, officer-and-director bar, and penny stock bar are warranted and necessary to help insure that Mr. Erwin does not violate the law again in the future. For these reasons,



the proposed settlement is fair and reasonable, will serve the public interest, and will further the objectives of the law upon which the Complaint is based.

The Commission therefore respectfully requests that the Court approve and enter the proposed Final Judgment as to Defendant Roy W. Erwin.

cc: Brent Baker, Esq. Cl)fde-Snow 201 South Main Street, Suite 1300 Srut Lake City, UT 84111 Counsel to Defendant Roy W. Erwin Via E-Mail [[email protected]]

')


j - seccase 1:17-cv-04240-vm document 6 filed 06/12/17 page 3 of 14 3018474300 6/9/2017 3:36:18 pm...

Documents