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SEC v. KENTON CAPITAL

November 6, 1997

SECURITIES AND EXCHANGE COMMISSION, Plaintiff
v.
KENTON CAPITAL, LTD.; DONALD C. WALLACE; JEFFREY E. CARTER; TRACY FRENCH; HARRY WATSON; DELTAUR PARTNERS; and TERRY PLACK, Defendants; ATLANTIC PACIFIC GUARANTEE CORPORATION and CHARLES SMITH, Relief Defendants



The opinion of the court was delivered by: KOLLAR-KOTELLY

ORDER HOLDING DEFENDANT CHARLES SMITH IN CIVIL CONTEMPT AND IMPOSING SANCTIONS

 (November 6, 1997)

 This matter is before the Court on the application of Plaintiff Securities and Exchange Commission (Commission) for an order holding Relief Defendant Charles Smith in civil contempt [# 115] for his violation of the Court's Judgment requiring disgorgement of $ 126,584, plus prejudgment and postjudgment interest, reinstating an asset freeze, and requiring an accounting. The Court has considered the Commission's Application; supporting Memorandum; exhibits; opposing papers submitted on behalf of the named defendant, including the suggestion of an automatic stay as a result of defendant's filing of a petition in bankruptcy; the Commission's response; and arguments upon the application heard by telephone conference on October 29, 1997, and at a hearing on October 30, 1997; the full record herein. The Court's Memorandum Opinion issued this date which sets out the Court's findings of fact and conclusions of law which is incorporated as part of this order.

 WHEREAS, it appears from the above-described materials that:

 1. Relief Defendants Charles Smith and Atlantic Pacific Guarantee Corporation have failed to comply with the Judgment of this Court dated July 19, 1996, requiring them to disgorge investor funds in the amount of $ 126,584, plus prejudgment interest, into the registry of this Court, for which sum they are jointly and severally liable;

 2. Defendant Charles Smith has failed to demonstrate an inability to comply with the Judgment;

 3. The Court is conducting this contempt proceeding to uphold the dignity of the Court and to vindicate the authority of the Court to enforce its orders; and

 4. This contempt proceeding also falls within the exceptions of 11 U.S.C. §§ 364 (b)(4) & (5) as it relates to assets and income identification and an accounting to mitigate any harm done to the Commission by the non-payment, and so is not subject to the automatic stay, although execution on the money judgment will require action by the Bankruptcy Court.

 WHEREFORE, the Court is satisfied that the Commission has made a sufficient and proper showing in support of the relief granted herein, pursuant to 18 U.S.C. § 401.

 NOW THEREFORE,

 I.

 IT IS HEREBY ORDERED that Charles Smith is in civil contempt of the order of this Court contained in the Judgment of July 19, 1996, regarding disgorgement of investor funds to the United States.

 II.

 IT IS FURTHER ORDERED that Charles Smith identify assets sufficient to pay the judgment in this action of the amount of $ 126,584, plus prejudgment interest of $ 9,984.35, for a total disgorgement amount of $ 136,468.35, plus ...


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