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U.S. Securities and Exchange Commission v. Quan

United States District Court, D. Minnesota

December 10, 2014

U.S. Securities and Exchange Commission, Plaintiff,
v.
Marlon Quan; Acorn Capital Group, LLC; Stewardship Investment Advisors, LLC; Stewardship Credit Arbitrage Fund, LLC; Putnam Green, LLC; Livingston Acres, LLC; and ACG II, LLC, Defendants, Nigel Chatterjee; DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main; Sovereign Bank; Topwater Exclusive Fund III, LLC; Freestone Low Volatility Partners, LP; and Freestone Low Volatility Qualified Partners, LP; Intervenors, and Gary Hansen, Receiver

For United States Securities And Exchange Commission, Plaintiff: Charles J Kerstetter, John E Birkenheier, Sally J Hewitt, Timothy S Leiman, U.S. Securities & Exchange Commission, Chicago, IL USA; James S Alexander, United States Attorney's Office, Mpls, MN USA; Michael Mueller, SEC - Chicago Regional Office, Chicago, IL USA.

For Marlon Quan, Defendant: Christopher T Casamassima, LEAD ATTORNEY, PRO HAC VICE, Wilmer Cutler Pickering Hale and Dorr LLP, Los Angeles, CA USA; Laura Schwalbe, LEAD ATTORNEY, PRO HAC VICE, Wilmer Cutler Pickering Hale & Dorr LLP, Washington, DC USA; Sanket J. Bulsara, LEAD ATTORNEY, PRO HAC VICE, Wilmer Cutler Pickering Hale and Dorr LLP, New York, N.Y. USA; Thomas J Radio, LEAD ATTORNEY, Best & Flanagan LLP, Mpls, MN USA; Brian R Michael, PRO HAC VICE, Wilmer Cutler Pickering Hale & Dorr, Los Angeles, CA USA; Bruce E Coolidge, PRO HAC VICE, Wilmer Cutler Pickering Hale & Dorr LLP, Washington, DC USA.

For Acorn Capital Group, Llc, Stewardship Investment Advisors, Llc, Florene Quan, Relief Defendant, Defendants: Christopher T Casamassima, LEAD ATTORNEY, PRO HAC VICE, Wilmer Cutler Pickering Hale and Dorr LLP, Los Angeles, CA USA; Sanket J. Bulsara, LEAD ATTORNEY, PRO HAC VICE, Wilmer Cutler Pickering Hale and Dorr LLP, New York, N.Y. USA; Thomas J Radio, LEAD ATTORNEY, Best & Flanagan LLP, Mpls, MN USA; Bruce E Coolidge, PRO HAC VICE, Wilmer Cutler Pickering Hale & Dorr LLP, Washington, DC USA; Laura Schwalbe, Wilmer Cutler Pickering Hale & Dorr LLP, Washington, DC USA.

For Stewardship Credit Arbitrage Fund, Llc, Putnam Green, Llc, Livingston Acres, Llc, Defendants: Ranelle A Leier, LEAD ATTORNEY, Oppenheimer Wolff & Donnelly LLP, Mpls, MN USA; Gary M Hansen, Oppenheimer Wolff & Donnelly LLP, Mpls, MN USA.

For Acg Ii, Llc, Defendant: Bruce E Coolidge, Laura Schwalbe, Wilmer Cutler Pickering Hale & Dorr LLP, Washington, DC USA; Thomas J Radio, Best & Flanagan LLP, Mpls, MN USA.

For Nigel Chatterjee, Intervenor: Charles A Dale, III, Mackenzie L Shea, PRO HAC VICE, K& L Gates LLP, One Lincoln St, Boston, MA USA; John Harper, III, Messerli & Kramer P.A., Mpls, MN; Nicholas J. Eugster, INACTIVE.

For Dz Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt AM Main, Intervenor: Hille R Sheppard, James A. Fortosis, Mark Borrelli, LEAD ATTORNEY, PRO HAC VICE, Sidley Austin LLP, Chicago, IL USA; Stephen Curtis Carlson, LEAD ATTORNEY, Sidley Austin LLP, Chicago, IL USA.

For Sovereign Bank, Intervenor: Ben M Krowicki, LEAD ATTORNEY, PRO HAC VICE, Bingham McCutchen LLP, Hartford, CT USA; Joshua A Hasko, LEAD ATTORNEY, Messerli & Kramer PA, Mpls, MN USA.

For Topwater Exclusive Fund Iii, Llc, Freestone Low Volatility Partners, LP, Freestone Low Volatility Qualified Partners, LP, Intervenors: Eric M Fishman, Jonathan T Shepard, Robert M Fleischer, LEAD ATTORNEY, PRO HAC VICE, Pryor Cashman LLP, New York, N.Y. USA; George E. Warner, Jr, Warner Law, LLC, Minneapolis, MN USA.

For Gary Hansen, Receiver: Gary M Hansen, LEAD ATTORNEY, Oppenheimer Wolff & Donnelly LLP, Mpls, MN USA; Ranelle A Leier, Oppenheimer Wolff & Donnelly LLP, Mpls, MN USA.

ORDER FOR AMENDED JUDGMENT

ANN D. MONTGOMERY, UNITED STATES DISTRICT JUDGE.

This matter is before the Court on Plaintiff United States Securities and Exchange Commission's (" SEC") FRCP 59(e) Motion to Amend Judgment [Docket No. 583]. The SEC asks the Court to amend the September 22, 2014 Judgment [Docket No. 578] entered against Defendants Marlon Quan (" Quan"), Acorn Capital Group, LLC (" Acorn"), Stewardship Investment Advisors, LLC (" SIA"), and ACG II, LLC's (" ACG II") (collectively, " Defendants"). The Judgment orders Defendants to pay, jointly and severally, disgorgement of $80, 613, 589 together with prejudgment interest calculated from January 1, 2009 to December 31, 2013, using the Internal Revenue Service delinquent tax rate for unpaid taxes. See Judgment at 3.

The SEC requests that the Judgment be amended to include the figure of $15, 578, 083.73, which is the amount of interest owed on $80, 613, 589 using the rate and time period ordered by the Court. See Exhibit A [Docket No. 585] (Ryba Decl.) at Ex. 1 (calculating interest). The SEC also requests that the Judgment be amended to state that Defendants' total liability of $96, 191, 672.73 is credited by two payments totaling $1, 142, 000 which Defendants made to defrauded investors, leaving a judgment balance of $95, 049, 672.73.

The Motion was filed on October 20, 2014. No responses were filed on or before the December 10, 2014 hearing date. The Court canceled the hearing and took the matter under advisement on the filings submitted.

Based upon the files and records herein, IT IS HEREBY ORDERED:

1. Plaintiff United States Securities and Exchange Commission's FRCP 59(e) Motion to Amend Judgment [Docket No. 583] is GRANTED.
2. The September 22, 2014 Judgment [Docket No. 578] shall be amended by replacing Paragraphs D through F of the Judgment with Paragraphs D through G below:

D.

IT IS FURTHER ORDERED AND ADJUDGED that Defendants are liable, jointly and severally, for disgorgement of $80, 613, 589 together with prejudgment interest of $15, 578, 083.73. Defendants' total liability of $96, 191, 672.73 is hereby credited by two payments, totaling $1, 142, 000, which Defendants made to defrauded investors, leaving a judgment balance of $95, 049, 672.73. Payments of such judgment balance shall be made to the Clerk of this Court.

E.

IT IS FURTHER ORDERED AND ADJUDGED that this Amended Partial Final Judgment is entered nunc pro tunc as of September 22, 2014, the date on which Defendants were found liable, jointly and severally, for disgorgement of $80, 613, 589, and prejudgment interest of $15, 578, 083.73.

F.

IT IS FURTHER ORDERED AND ADJUDGED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Amended Partial Final Judgment.

G.

There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, the Court hereby directs the Clerk to enter this Amended Partial Final Judgment.

LET PARTIAL FINAL JUDGMENT BE ENTERED ACCORDINGLY.


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