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United States Securities & Exchange Commission v. E-Smart Technologies, Inc.

United States District Court, District of Columbia

March 1, 2013

U.S. SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
E-SMART TECHNOLOGIES, INC., et al., Defendants.

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[Copyrighted Material Omitted]

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Kenneth John Guido, Jr., U.S. Securities & Exchange Commission, Washington, DC, for Plaintiff.

Robert J. Rowen, pro se.

AMENDED MEMORANDUM OPINION AND ORDER

JAMES E. BOASBERG, District Judge.

The Securities and Exchange Commission filed this suit against e-Smart Technologies, Inc., three other companies, and five individuals, asserting numerous violations of the securities laws. One of those individuals, Defendant Robert J. Rowen, has now filed a Motion to Dismiss, contending that this Court has no jurisdiction over him, that venue is improper here, and that the SEC's Complaint is legally insufficient. Finding Rowen not to prevail on any of his arguments, the Court will deny the Motion.

I. Background

The SEC alleges that e-Smart is a technology business engaged in selling an identification-verification system called a " smart card." Compl., ¶ 16. Among its various misdeeds, e-Smart is alleged to have " engaged in an unregistered offering of millions of shares of its securities in violation of Section 5 of the Securities Act." Id., ¶ 61. This was accomplished through a sham " convertible loan scheme." Id., ¶ 64.

From 2005-07, Defendant Rowen and two other individuals " solicited investors to purchase e-Smart stock" and " were paid a 5-10% commission ... for each sale of e-Smart shares they facilitated." Id., ¶ 75. " Rowen accomplished at least 20 transactions which brought in over $350,000 and sold over 4.5 million e-Smart shares." Id., ¶ 78. At the time, Rowen was not " registered with the Commission as a broker-dealer or associated with a registered broker-dealer." Id., ¶ 79. As a result, the two counts of the Complaint against Rowen allege that he violated the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c), by selling unregistered securities, see Compl., ¶¶ 90-93, and violated the Exchange Act, 15 U.S.C. § 78 o (a), by selling securities without being registered as a broker or dealer. Compl., ¶¶ 113-15.

Rowen filed his Motion to Dismiss on July 8, 2011. After initial briefing had been completed, the Court asked for supplemental briefs on the applicability of the recent D.C. Circuit decision on venue in SEC v. Johnson,650 ...


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