6. As to statements regarding his present assets, defendant Smith has admitted that he submitted to the Commission false financial statements. He admitted that he omitted on his financial statement the alleged payments to Mr. Quinn, his ownership of certain stocks, and the correct valuation of his assets. (C. Smith Tr. 210; compare Pl. Ex. 126 with C. Smith Tr. 285, 217, 221, 226-28).
7. As for income, defendant Smith has stated that his income most recently was $ 26,000 a year. However, the Commission has uncovered deposits of over $ 70,000 in eight months since the Court's order entering Final Judgment. (C. Smith Tr. 21-23, 106, 177-80, 282, 149-53; Pl. Ex. 153, 159, 146, 145, 147; Pl. Ex. G, H, I, J. L, M, N, P, Q). When pressed, Smith has admitted that in 1996 he had an income of approximately $ 100,000. (Pl. Ex. 153; C. Smith Tr. 467-68). He also admitted depositing $ 25,000 in an account for a nest egg for his wife. (Pl. Ex. 153; C. Smith Tr. 466-67, 469-70; C. Smith Aff. PP 16 and 17).
8. Defendant Smith has also variously listed his net worth as $ 500,000 on one investment account, and $ 100,000 on his bankruptcy petition. (Pl. Ex. 153; C. Smith Tr. 467-68).
9. The Commission also uncovered a bank account which lists Mr. Quinn as the owner/principal of an account for Atlantic Pacific on which checks have been drawn by Mr. Quinn. Defendant Smith incorrectly claims that the account is in the name of Pacific Coast Guarantee, a different business, and not Atlantic Pacific. (Compare Pl. Ex. F with Smith Aff. P 28).
The Commission has laid out a pattern of false statements by defendant Smith, has identified income, assets, and net worth statements with supporting documentation or testimony which belie defendant Smith's claim of poverty. Other than filing for bankruptcy, which in and of itself proves nothing, Defendant Smith has provided the Court with no documentary proof that supports his claim that he does not have the income or the assets to pay this disgorgement, and/or that he has not had the income and assets to pay the disgorgement to date. It is also clear to the Court that it is imperative that defendant Smith be required to identify, under oath, a detailed statement of his assets and income with supporting documentation.
CONCLUSIONS OF LAW
The Court has inherent power to enforce compliance with its lawful orders. Civil contempt is the remedial device available to the Court to achieve compliance with its orders. See Shillitani v. United States, 384 U.S. 364, 16 L. Ed. 2d 622, 86 S. Ct. 1531 (1966); 18 U.S.C. § 401. The Commission has met its burden by proving by clear and convincing evidence that there was a lawful court order in effect, which required defendant Smith to pay a disgorgement fee, and that the defendant has failed to comply with the court's order. Petroleos Mexicanos v. Crawford Enterprises, Inc., 826 F.2d 392 (5th Cir. 1987).
Defendant Smith has not met his burden of proving that he lacks the financial ability to pay the disgorgement at this time, or at any time since the court order in this case, or that he has made reasonable efforts to meet his obligations to the court. To the contrary, it is clear to the Court that he has had more than sufficient funds or assets to make the required payment, but has either dispersed or spent the funds and assets with no credible explanation as to what other obligations he has which would take precedence over the obligations to the court. The admittedly false financial statements he has produced, and the lack of documentation to support his claims defeats his plea of poverty. CFTC v. Wellington Precious Metals, Inc., 950 F.2d 1525 (11th Cir.), cert. denied, 506 U.S. 819 (1992); Huber v. Marine Midland Bank, 51 F.3d 5 (2d Cir 1995).
For the foregoing reasons, the Court finds Relief Defendant Charles Smith in civil contempt. An order accompanies this Memorandum Opinion.
JUDGE COLLEEN KOLLAR-KOTELLY
United States District Judge
Nov. 6, 1997
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