Anthony & Kathleen Tomasso consent to Judgement

[swampdog]

The Tomasso's accept the Judgement (Immediately) and agree to not work in the Penny Stock World, and payback all "ill gotten gains plus interest". We shall see what that comes out to.
I noticed after some DD that Irving M. Einhorn, now legal counsel for John Edwards appears to work out of his house (in my old hometown), how ironic.
Swamp

JOHN M. McCOY III, CaL. Bar No. 166244
E-mail: mccovi úùsec.gov
2 MOLLY M. WfTE, CaL. Bar No. 171448
E-mail: whitemÚÙsec.gov
3 LESLIE A. HAA, CaL. Bar No. 199414
E-mail: hakalal~sec.gov
4
Attorneys for Plaintiff
5 Securities and Exchange Commission
Rosalind R. Tyson, Acting Regional Director
6 Andrew Petilon, Associate Regional Director
5670 Wilshire Boulevard, 11th -Ploor
7 Los Angeles, California 90036-3648
Telephone: [phone]
8 Facsimile: [phone]
9
10
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
11
12
13 SECURTIES AND EXCHANGE
14 COMMSSION,
15
16
Plaintiff,
vs.
17 CMK DIAMONDS, INC., URAN
18 CASAVANT, JOHN EDWARS,
19 GKIINYG,E RA NGTUHTOIENRYR TZO, JMAAMSSSO,
20 KATHLEEN TOMASSO, 1ST
21 GHLEOLBEANL B ASGTLOECYK, NTERVAWSFEESRTLLC,
22 SECURTIES CORPORATION,
23 DRAURMYL A NATNSDEERVS, OANN,T HSOENRGYEY
24 SANTOS, and BRIAN DVORAK,
25
26
27
28
Defendants.
Case No. 2:08-cv-00437-LRH-RJJ
CONSENT OF DEFENDANT
ANTHONY TOMASSO TO
JUGMENT OF PERMANENT
INJUCTION AN OTHER
RELIEF
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 1 of 13
1 1. Defendant Anthony Tomasso acknowledges having been served with
2 a Summons and the Complaint in this action, enters a general appearance, and
3 admits the Court's jurisdiction over him and over the subject matter of this action.
4 2. Without admitting or denying the allegations of the Complaint (except
5 as to personal and subject matter jurisdiction, which Anthony Tomasso admits),
6 Anthony Tomasso hereby consents to the entry of the Judgment in the form
7 attached hereto (the "Judgment") and incorporated by reference herein, which,
8 among other things:
9 a. permanently restrains and enjoins Anthony Tomasso from
10 violating Sections 5(a) and 5(c) of the Securities Act of 1933
11 ("Securities Act"), 15 U.S.C. §§ 77e(a) and 77e(c); and
12 b. permanently and unconditionally bars Anthony Tomasso from
13 participation in any offering of penny stock, including
14 engaging in activities with a broker, dealer, or issuer for
15 purposes of issuing, trading, or inducing or attempting to
16 induce the purchase or sale of any penny stock under
17 Section 20(g) of the Securities Act, 15 U.S.C. § 77t(g).
18 3. Anthony Tomasso agrees that the Court shall order disgorgement of
19 il-gotten gains, prejudgment interest thereon, and a civil penalty pursuant to
20 Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d). Anthony Tomasso further
21 agrees that the amounts of the disgorgement and civil penalty shall be determined
22 by the Court upon motion of the Securities and Exchange Commission
23 ("Commission"), and that prejudgment interest shall be calculated pursuant to 28
24 U.S.C. § 1961 from March 5, 2003. Anthony Tomasso further agrees that in
25 connection with the Commission's motion for disgorgement and/or civil penalties,
26 and at any hearing held on such a motion: (a) Anthony Tomasso will be precluded
27 from arguing that he did not violate the federal securities laws as alleged in the
28 Complaint; (b) Anthony Tomasso may not challenge the validity of this Consent or
2
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 2 of 13
1 the Judgment; (c) solely for the purposes of such motion, the allegations of the
2 Complaint shall be accepted as and deemed true by the Court; and (d) the Court
3 may determine the issues raised in the motion on the basis of affidavits,
4 declarations, excerpts of sworn deposition or investigative testimony, and
5 documentary evidence, without regard to the standards for summary judgment
6 contained in Rule 56(c) of the Federal Rules of Civil Procedure. In connection
7 with the Commission's motion for disgorgement and/or civil penalties, the parties
8 may take discovery, including discovery from appropriate non-parties.
9 4. Anthony Tomasso acknowledges having been fully advised and
10 informed of his right to a judicial determination in this matter.
11 5. Anthony Tomasso waives the entry of findings of fact and conclusions
12 of law pursuant to Rule 52 of the Federal Rules of Civil Procedure.
13 6. Anthony Tomasso waives the right, if any, to a jury trial, to seek relief
14 from the Judgment under Rule 60(b) of the Federal Rules of Civil Procedure, and
15 to appeal from the entry of the Judgment.
16 7. Anthony Tomasso enters into this Consent voluntarily and represents
17 that no threats, offers, promises, or inducements of any kind have been made by
18 the Commission or any member, officer, employee, agent, or representative of the
19 Commission to induce him to enter into this Consent.
20 8. Anthony Tomasso agrees that this Consent shall be incorporated into
21 the Judgment with the same force and effect as if fully set forth therein.
22 9. Anthony Tomasso wil not oppose the enforcement of the Judgment
23 on the ground, if any exists, that it fails to comply with Rule 65( d) of the Federal
24 Rules of Civil Procedure, and hereby waives any objection based thereon.
25 Anthony Tomasso understands that the Court may adjudge him in civil or criminal
26 contempt ifhe violates any provision of the Judgment entered pursuant to this
27 Consent.
28
3
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 3 of 13
1 10. Anthony Tomasso waives service of the Judgment and agrees that
2 entry of the Judgment by the Court and filing with the Clerk of the Court will
3 constitute notice to Anthony Tomasso of its terms and conditions. Anthony
4 Tomasso further agrees to provide counsel for the Commission, within thirt days
5 after the Judgment is filed with the Clerk of the Court, with an affidavit or
6 declaration stating that Anthony Tomasso has received and read a copy of the
7 Judgment.
8 11. Consistent with 17 C.F.R. § 202.5(f), this Consent resolves only the
9 claims asserted against Anthony Tomasso in this civil proceeding. Anthony
10 Tomasso acknowledges that no promise or representation has been made by the
11 Commission or any member, officer, employee, agent, or representative of the
12 Commission with regard to any criminal liability that may have arisen or may arise
13 from the facts underlying this action or immunity from any such criminal liability.
14 Anthony Tomasso waives any claim of Double Jeopardy based upon the settlement
15 of this proceeding, including the imposition of any remedy or civil penalty herein.
16 Anthony Tomasso further acknowledges that the Court's entry of a permanent
17 injunction may have collateral consequences under federal or state law and the
18 rules and regulations of self-regulatory organizations, licensing boards, and other
19 regulatory organizations. Such collateral consequences include,' but are not limited
20 to, a statutory disqualification with respect to membership or participation in, or
21 association with a member of, a self-regulatory organization. This statutory
22 disqualification has consequences that are separate from any sanction imposed in
23 an administrative proceeding. In addition, in any disciplinary proceeding before
24 the Commission based on the entry of the injunction in this action, Anthony
25 Tomasso understands that he shall not be permitted to contest the factual
26 allegations of the Complaint in this action.
27 12. Anthony Tomasso understands and agrees to comply with the
28 Commission's policy "not to permit a defendant or respondent to consent to a
4
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 4 of 13
1 judgment or order that imposes a sanction while denying the allegation in the
2 complaint or order for proceedings." 17 C.F.R. § 202.5. In compliance with this
3 policy, Anthony Tomasso agrees: (i) not to take any action or to make or permit to
4 be made any public statement denying, directly or indirectly, any allegation in the
5 Complaint or creating the impression that the Complaint is without factual basis;
6 and (ii) that upon the filing of this Consent, Anthony Tomasso hereby withdraws
7 any papers filed in this action to the extent that they deny any allegation in the
8 Complaint. If Anthony Tomasso breaches this agreement, the Commission may
9 petition the Court to vacate the Judgment and restore this action to its active
10 docket. Nothing in this paragraph affects Anthony Tomasso' (i) testimonial
11 obligations; or (ii) right to take legal or factual positions in litigation or other legal
12 proceedings in which the Commission is not a party.
13 13. Anthony Tomasso hereby waives any rights under the Equal Access to
14 Justice Act, the Small Business Regulatory Enforcement Fairness Act of 1996, or
15 any other provision of law to seek from the United States, or any agency, or any
16 official of the United States acting in his or her official capacity, directly or
17 indirectly, reimbursement of attorney's fees or other fees, expenses, or costs
18 expended by Anthony Tomasso to defend against this action. For these purposes,
19 Anthony Tomasso agrees that Anthony Tomasso is not the prevailing party in this
20 action since the parties have reached a good faith settlement.
21 14. In connection with this action and any related judicial or
22 administrative proceeding or investigation commenced by the Commission or to
23 which the Commission is a party, Anthony Tomasso (i) agrees to appear and be
24 interviewed by Commission staff at such times and places as the staff requests
25 upon reasonable notice; (ii) wil accept service by mail or facsimile transmission of
26 notices or subpoenas issued by the Commission for documents or testimony at
27 depositions, hearings, or trials, or in connection with any related investigation by
28 Commission staff; (iii) with respect to such notices and subpoenas, waives the
5
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 5 of 13
1 territorial limits on service contained in Rule 45 of the Federal Rules of Civil
2 Procedure and any applicable local rules, provided that the part requesting the
3 testimony reimburses Anthony Tomasso' travel, lodging, and subsistence expenses
4 at the then-prevailing U.S. Governent per diem rates; and (iv) consents to personal
5 jurisdiction over Anthony Tomasso in any United States District Court for
6 purposes of enforcing any such subpoena.
7 15. Anthony Tomasso agrees that the Commission may present the
8 Judgment to the Court for signature and entry without further notice.
9 16. Anthony Tomasso agrees that this Court shall retain jurisdiction over
10 this matter for all purposes, including implementing and enforcing the terms of the
11 Judgment and all other orders and decrees that have been and may be entered
12 herein and granting such other relief as the Court may deem necessary and just.
13 17. Anthony Tomasso represents that he has read and understands each
14 provision of this Consent and the attached Judgment before signing the Consent.
15
16 DATED: ~/g6/tl~
17
18
19
20
.h~.~-=--
NY TOMASSO
21
22
23
24
25
26
27
28
On ~ 30 ,2008, Anfhun 'ÎmA~ , a person
known me, personally appeared befol" me and acknowledged executing the foregoing Consent. ~. .~
\\,\111N"o,"t I uub rlUic) J.'l ",\ l.M. !S"" Commission expires: ft//U ~,. ,;" .
",' _,0 .. ... ..". ", =-:::: : . :.. . ..,..:. ...c.a'.:-l .oI." t._'. .:. :' : ~:-: -: " l- .. ~
-": S...'".~ ....' .~:
"' "OI"ii F.'", "."...
6
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 6 of 13
1 JOHN M. McCOY III, CaL. Bar No. 166244
E-mail: mccovi ÚÙsec.gov
2 MOLLYM. WfTE, CaL. BarNo. 171448
E-mail: whitemÚÙsec.gov
3 LESLIE A. HAA, CaL. BarNo. 199414
E-mail: hakalal~sec.gov
4
Attorneys for Plaintiff
5 Securities and Exchange Commission
Rosalind R. Tyson, Acting Regional Director
6 Andrew Petilon, Associate Regional Director
5670 Wilshire Boulevard, 11 thFloor
7 Los Angeles, California 90036-3648
Telephone: [phone]
8 Facsimile: [phone]
9
10
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
11
12
13 SECURTIES AND EXCHANGE
14 COMMSSION,
15 Plaintiff, 16 vs.
17 CMK DIAMONDS, INC., URAN
18 CASAVANT, JOHN EDWARS,
19 GKIINYG,E RA NGTUHTOIENRYR TZO, JMAAMSSSO,
20 KATHLEEN TOMASSO, 1ST
21 GHLEOLBEANL B ASGTLOECYK, NTERVAWSFEESRTLLC,
22 SECURTIES CORPORATION,
23 DRAURMYALN TASNEDEVR,S OANN,T HSOENRGYEY
24 SANTOS, and BRIAN DVORAK,
25
26
27
28
Defendants.
Case No. 2:08-cv-00437-LRH-RJJ
(PROPOSED) JUGMENT
OF PE~ENT INJUNCTION
AND OTHER RELIEF AGAINST
DEFENDANT ANTHONY
TOMASSO
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 7 of 13
1 Plaintiff Securities and Exchange Commission ("Commission") having filed
2 a Complaint ("Complaint") and Defendant Anthony Tomasso having waived been
3 served with a Summons and the Complaint; entered a general appearance;
4 consented to the Court's jurisdiction over Anthony Tomasso and the subject matter
5 of this action; consented to entry of this Judgment without admitting or denying the
6 allegations of the Complaint (except as to jurisdiction); waived findings of fact and
7 conclusions of law; and waived any right to appeal from this Judgment: 8 I.
9 IT is ORDERED, ADJUDGED, AND DECREED that ANTHONY
10 TOMASSO and his agents, servants, employees, attorneys, and all persons in
11 active concert or participation with them who receive actual notice of this
12 Judgment by personal service or otherwise are permanently restrained and enjoined
13 from violating Section 5 of the Securities Act of 1933 ("Securities Act"), 15 U.S.C.
14 § 77e, by, directly or indirectly, in the absence of any applicable exemption:
15 (a) Unless a registration statement is in effect as to asecurity, making use
16 of any means or instruments of transportation or communication in
17 interstate commerce or of the mails to sell such security through the
18 use or medium of any prospectus or otherwise;
19 (b) Unless a registration statement is in effect as to a security, carring or
20 causing to be carried through the mails orin interstate commerce, by
21 any means or instruments of transportation, any such security for the
22 purpose of sale or for delivery after sale; or
23 (c) Making use of any means or instruments of transportation or
24 communication in interstate commerce or of the mails to offer to sell
25 or offer to buy through the use or medium of any prospectus or
26 otherwise any security, unless a registration statement has been filed
27 with the Commission as to such security, or while the registration
28 statement is the subject of a refusal order or stop order or (prior to the
2
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 8 of 13
1 effective date of the registration statement) any public proceeding or
2 examination under Section 8 of the Securities Act, 15 U.S.C. § 77h. 3 n
4 IT is FURTHER ORDERED, ADJUDGED, AN DECREED that Anthony
5 Tomasso is permanently and unconditionally bared from participation in any
6 offering of penny stock, including engaging in activities with a broker, dealer, or
7 issuer for purposes of issuing, trading, or inducing or attempting to induce the
8 purchase or sale of any penny stock. A penny stock is any equity security that has
9 a price of less than five dollars, except as provided in Rule 3a51-1 under the
10 Securities Exchange Act of 1934, 17 C.F.R. 240.3a51-1. 11 III.
12 IT is FURTHER ORDERED, ADJUDGED, AND DECREED that Anthony
13 Tomasso shall pay disgorgement of il-gotten gains, prejudgment interest thereon,
14 and a civil penalty pursuant to Section 20(d) of the Securities Act, 15 U.S.C.
15 § 77t( d). The Court shall determine the amounts of the disgorgement and civil
16 penalty upon motion of the Securities and Exchange Commission ("Commission").
17 Prejudgment interest shall be calculated pursuant to 28 U.S.C. § 1961 from
18 March 5,2003. In connection with the Commission's motion for disgorgement
19 and/or civil penalties, and at any hearing held on such a motion: (a) Anthony
20 Tomasso will be precluded from arguing that he did not violate the federal
21 securities laws as alleged in the Complaint; (b) Anthony Tomasso may not
22 challenge the validity of this Consent or the Judgment; (c) solely for the purposes
23 of such motion, the allegations of the Complaint shall be accepted as and deemed
24 true by the Court; and (d) the Court may determine the issues raised in the motion
25 on the basis of affidavits, declarations, excerpts of sworn deposition or
26 investigative testimony, and documentary evidence, without regard to the standards
27 for summary judgment contained in Rule 56(c) of the Federal Rules of Civil
28 Procedure. In connection with the Commission's motion for disgorgement and/or
3
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 9 of 13
1 civil penalties, the parties may take discovery, including discovery from
2 appropriate non-parties. 3 iv.
4 IT is FURTHER ORDERED, ADJUDGED, AND DECREED that the
5 provisions of the Consent filed concurrently with this Judgment are incorporated
6 herein with the same force and effect as if fully set forth herein, and that Anthony
7 Tomasso shall comply with all of the undertakings and agreements set forth
8 therein. 9 ~
10 IT is FURTHER ORDERED, ADJUDGED, AND DECREED that this
11 Court shall retain jurisdiction of this matter for the purposes of enforcing the terms
12 of this Judgment. 13 Vi.
14 There being no just reason for delay, pursuant to Rule 54(b) of the Federal
15 Rules of Civil Procedure, the Clerk is ordered to enter this Judgment forthwith and
16 without further notice.
17
18
19 Dated:
20
21
22
23
24
25
26
27
28
THE HONORALE LARY R. HICKS
UNTED STATES DISTRICT JUDGE
4
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 10 of 13
1
PROOF OF SERVICE
I am over the age of 18 years and not a party to this action. My business address is:
2
3
4
(XJ U.S. SECURTIES AND EXCHANGE COMMISSION, 5670 Wilshire
Boulevard, 11th Floor, Los Angeles, California 90036-3648
Telephone No. [phone]; Facsimile No. [phone].
5 On June 5, 2008, I served the following document entitled Consent of Defendant
Anthony Tomasso to Judgment of Permanent Injunction and Other Relief on the
6 parties whose service of process forms have been filed in this action and others,
addressed as stated on the attached service list:
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
(XJ OFFICE MAIL: By placing in sealed envelope(s), which I placed for
collection and mailing today following ordinary business practices. I am
readily familiar with this agency's practice for collection and processing of
corres20ndence for mailingh' such correspondence would be deposited with
the U.S. Postal Service on t e same day II the ordinary course of business.
( J
PERSONAL DEPOSIT IN MAIL: By placing in sealed
envelope(s), which I personally deposited with the U.S. Postal Service.
Each such envelope was deposited with the U.S. Postal Service at Los
Angeles, California, with first class postage thereon fully prepaid.
EXPRESS U.S. MAIL: Each such envelope was deposited in a
facility r~gularly maintained at the U.S. Postal Service for receipt of
Express Mail at Los Angeles, California, with Express Mail postage
paid.
HAND DELIVERY: I caused to be hand delivered each such envelope to
the office of the addressee as stated on the attached service list.
( J
( J
( J FEDERAL EXPRESS: By placing in sealed envelope(s) designated by
Federal Express with delivery fees paid or provided for, which I deposited in
a facility regularly maintained by Federal Express or delivered to a rederal
Express courier, at Los Angeles, California.
ELECTRONIC MAIL: By transmitting the document by electronic mail
to the electronic mail address as stated on the attached service list.
FAX: By transmitting the document by facsimile transmission. The
transmission was reported as complete and without error.
( J
( J
(XJ (Federal) I declare that I am employed in the office of a member of the bar
23 of this Court, at whose direction the service was made. I declare under
~: . penalty of perjury that the foregoing is tre an 'J~ .... ~
Date. June 5, 2008 ~(..._~_/.
26 OLIVIA CA I
27
28
1
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 11 of 13
1
2
3
4
SEC v. CMKM DIAMONDS, INC., et al.
United States District Court - District of Nevada
Case No. 2:08-cv-00437-LRH-RJJ
SERVICE LIST
5 Irving M. Einhorn
6 Law Offices of Irving M. Einhorn 1710 10th Street
7 Manhattan Beach, CA 90266
8 Attorney for Defendant John Edwards
9 Mark S. Dzarnoski
10 Gordon & Silver, Ltd.
3960 Howard Hughes Pkwy.
11 Ninth Floor
12 Las Vegas, NV 89169 Attorney for Helen Bagley and 1st Global Stock Transfer LLC
13
14 Urban A. Casavant
RR 5 Site 16 Box 29
15 Prince Albert, Saskatchewan S6V 5R3
16 Canada
17 John Wesley Hall, Jr.
18 1311 Broadway
Little Rock, AR 72202-4843
19 Attorney for Brian Dvorak
20
Kathleen Tomasso
21 9580 Lake Serena Drive
22 Boca Raton, FL 33496
23 Anthony Tomasso
24 9580 Lake Serena Drive
Boca Raton, FL 33496
25
26 Sergey Rumyantsev
1951 North Jones Blvd #202
27 Las Vegas, NV 89108
28
2
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 12 of 13
1 Anthony Santos
2 6965 North Durango Drive Suite 1115-381
3 Las Vegas, NV 89149
4 NevWest Securities Corporation
5 c/o Anthony Santos
6965 North Durango Drive Suite 1115-381
6 Las Vegas, NV 89149
7
Brent R. Baker
8 Parsons Behle & Latimer
9 201 S. Main Street, Suite 1800
Salt Lake City, Utah 84111
10 Attorney for Daryl Anderson
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
3
Case 2:08-cv-00437-LRH-RJJ Document 44 Filed 06/05/2008 Page 13 of 13

[swampdog]

Irving M. Einhorn, Esq.- here is a website link to another case where Einhorn used the technique of failure to properly supervise as a defense. Seemed to be pretty successful, depending on your idea of success. I think we may see some of this defense in the case against John Edwards.
Just my opinion.
Swamp
www.sec.gov/litigation/opinions/34-41755.htm

pretty worthless website for Einhorn
www.lawyers.com/einhornlaw/index.jsp

this quote from another source. Notice Einhorn's previous job.

"SEC rules don't specifically require disclosure of transgressions so far in the past. But it is a judgment call, and Duquette's failure to volunteer these incidents raises questions. "Any competent and reputable attorney is going to say, you've got to disclose this," said Irving M. Einhorn, a securities attorney and former head of the Los Angeles SEC office."

[swampdog]

US Bankruptcy Court Southern District of Florida
The Tomasso's (Tomassi?) declare BK, here is a "Statistical Summary of Certain Liabilities and Related Data"
(Thanks to Pedro2004)

It's easy in today's world to hide your wealth. I find the trick to foreclose on yourself to save your home from creditors particularly offensive, (but legal, what a country).

viewer.zoho.com/docs/w91le

This exercise worked to perfection by those in the know of our legal system.
Swamp

[logictx]

The more I learn, the less I trust.

[swampdog]

(Thanks to nufced for updated info.)
Looks like BK won't be successful in this case. Which means it probably won't work for Brian Dvorak either.
Swamp

Update Tomassos BK and the SEC
« Thread Started Today at 1:30pm »

--------------------------------------------------------------------------------
On June 5, 2008, defendants Kathleen Tomasso and Anthony Tomasso filed
what appears to be a motion to stay the instant action until after the completion of
their bankruptcy proceedings. The Court should not stay this action because
(1) the prosecution of an enforcement action by the Securities and Exchange
Commission (“Commission”) is excepted from the automatic stay imposed by 11
U.S.C. § 362(a); and (2) the Tomassos’ liability to the Commission will not be
Case 2:08-cv-00437-LRH-RJJ Document 57 Filed 06/19/2008 Page 1 of 9
2

discharged in their Chapter 7 case.
I. Summary of Facts
The Commission filed this action on April 7, 2008. Shortly thereafter, the
Commission learned that two of the defendants, Kathleen Tomasso and Anthony
Tomasso, had filed a petition for Chapter 13 bankruptcy relief in the United States
Bankruptcy Court for the Southern District of Florida on December 21, 2007. At
the time the Tomassos filed their bankruptcy petition, they knew that the
Commission was investigating their conduct because the Commission had served
them with subpoenas and had taken their testimony (during which the Tomassos
asserted their Fifth Amendment right not to testify). Nevertheless, the Tomassos
did not list the Commission as a creditor when they filed their bankruptcy papers.
On April 22, 2008, the Tomassos converted their bankruptcy to a case under
Chapter 7. In early May, the Commission sent the Tomassos’ bankruptcy counsel
and the Chapter 7 Trustee a letter notifying them of the Commission’s litigation.1


On May 22, 2008, the Commission learned that the Chapter 7 Trustee was forced
to remove herself as trustee because she had invested in CMKM Diamonds’ stock.

On May 30, 2008, Kathleen and Anthony Tomasso executed Consents to
Judgments of Permanent Injunction and Other Relief, agreeing to entry of a
permanent injunction and a penny stock bar. The Commission filed the consents
on June 5, 2008, and the Court entered the judgments on June 9, 2008. Thus, the
only remaining issues as to the Tomassos are the amount of disgorgement,
prejudgment interest, and civil penalty that the Tomassos should pay.
On June 1, 2008, Eric Klein, the lawyer who represents the Tomassos in
their bankruptcy action, signed a two-paragraph “Suggestion of Bankruptcy” in
this civil enforcement action, which he apparently mailed to the Clerk of the Court.
The Clerk of the Court filed that document on June 5, 2008.
1 On June 11, 2008, the Tomassos amended their bankruptcy papers to reflect the
Commission’s claim.
Case 2:08-cv-00437-LRH-RJJ Document 57 Filed 06/19/2008 Page 2 of 9
3

On June 4, 2008, the parties in this action held the early meeting of counsel,
as required by Rule 26(f) of the Federal Rules of Civil Procedure and Nevada
Local Rule 26-1(d). Kathleen and Anthony Tomasso participated in the early
meeting by telephone. At the outset of the meeting, the Tomassos explicitly stated
that they are not represented by counsel in this action. Nevertheless, Eric Klein,
the lawyer who now represents the Tomassos in their bankruptcy action, filed the
“Suggestion of Bankruptcy” in this action. It is unclear whether Mr. Klein
purports to represent the Tomassos in the instant action, but based on the
Tomassos’ statements during the June 4, 2008 meeting, the Commission believes
that the Tomassos are not represented by counsel in this action.
The current Chapter 7 Trustee, Michael R. Bakst, has noticed a July 9, 2008
Rule 2004 examination of the debtors and has served the debtors with a subpoena
duces tecum, which demands documents relating to their financial affairs.
II. The Commission’s Enforcement Action is Exempt From the Automatic
Stay
Section 362(b)(4) of the Bankruptcy Code provides that “the commencement
or continuation of an action or proceeding by a governmental unit . . . to enforce
such governmental unit’s . . . police and regulatory power” is exempt from the
automatic stay. 11 U.S.C. § 362(b)(4). Under the exception, the Commission may
prosecute its case to judgment, but may not execute on a money judgment during
the pendency of the stay. Courts have made clear that the purpose for this
exception is that bankruptcy should not be “a haven for wrongdoers.” See In re
Universal Life Church, Inc., 128 F.3d 1294, 1297 (9th Cir. 1997); see also SEC v.
Elmas Trading Corp, 620 F. Supp. 231, 240-41 (D. Nev. 1985). For this reason,
the automatic stay “should not prevent governmental regulatory, police and
criminal actions from proceeding.” In re Universal Life Church, Inc., 128 F.3d at
1297.
Case 2:08-cv-00437-LRH-RJJ Document 57 Filed 06/19/2008 Page 3 of 9
4

The Ninth Circuit recognizes two tests for determining whether a
government action fits within the section 362(b)(4) exception: (1) the pecuniary
purpose test; and (2) the public policy test. Id.; see also Lockyer v. Mirant Corp.,
398 F.2d 1098, 1108 (9th Cir. 2005); In re Jerome Berg, 230 F.3d 1165, 1167 (9th
Cir. 2000).
Under the pecuniary purpose test, court determines whether the
government action relates primarily to the protection of the
government’s pecuniary interest in the debtor’s property or to
matters of public safety or welfare. If the government’s action is
pursued solely to advance a pecuniary interest of the
governmental unit, the stay will be imposed.
The public policy test “distinguishes between government
actions that effectuate public policy and those that adjudicate
private rights.”
In re Universal Life Church, 128 F.3d at 1297; see also Lockyer, 398 F.3d at 1108-
09; In re Jerome Berg, 230 F.3d at 1167. “A suit comes within the exception of §
362(b)(4) if it satisfies either test.” Lockyer, 398 F.3d at 1108. The Commission’s
civil enforcement action satisfies both.
The Commission’s enforcement action does not relate primarily to protecting
the government’s interest in the Tomassos’ property. The primary purpose of the
Commission’s enforcement action is to protect the public welfare by enforcing the
federal securities laws. Congress provided the Commission with the express
statutory authority to administer and enforce the federal securities laws. See 15
U.S.C. § 78u. “As has been emphasized repeatedly, the purpose of the Securities
Acts is to ‘protect investors by promoting full disclosure of information thought
necessary to informed investment decisions.’” SEC v. Murphy, 626 F.2d 633, 642
(9th Cir. 1980) (quoting SEC v. Ralston Purina Co., 346 U.S. 119, 124 (1953)).
“When the Commission sues to enforce the securities laws, it vindicates public
rights and furthers the public interest.” SEC v. Rind, 991 F.2d 1486, 1491 (9th Cir.
1993).
The fact that the Commission also seeks disgorgement from the Tomassos
Case 2:08-cv-00437-LRH-RJJ Document 57 Filed 06/19/2008 Page 4 of 9
5

does not convert this enforcement action into an action seeking to obtain money
damages. Unlike damages, disgorgement is remedial; its primary purpose is not to
compensate investors, but to force a defendant to relinquish the amount of money
by which he was unjustly enriched. Indeed, the Ninth Circuit has recognized that
[d]isgorgement plays a central role in the enforcement of the
securities laws. “The effective enforcement of the federal
securities laws requires that the [Commission] be able to make
violations unprofitable. The deterrent effect of
enforcement action would be greatly undermined if securities
law violators were not required to disgorge illicit profits. . . . By
deterring violations of the securities laws, disgorgement actions
further the Commission’s public policy mission of protecting
investors and safeguarding the integrity of the markets.”
SEC v. Rind, 991 F.2d at 1491-92 (internal citations omitted); see also SEC v. First
Pacific Bancorp, 142 F.3d 1186, 1191 (9th Cir. 1998) (“Disgorgement is designed
to deprive a wrongdoer of unjust enrichment, and to deter others from violating
securities laws by making violations unprofitable.”); SEC v. Manor Nursing
Centers, 458 F.2d 1082, 1104 (2nd Cir. 1972) (“The effective enforcement of the
federal securities laws requires that the SEC be able to make violations
unprofitable.”)
Indeed, courts have ruled that injunctive actions by the Commission to
enforce the federal securities laws are actions effectuating a strong public interest
and, accordingly, are exempt from the automatic stay provisions of the Code. See,
e.g., SEC v. First Fin. Group of Texas, 645 F.2d 429, 437 (5th Cir. 1981)
(appointment of temporary receiver in injunctive action not stayed to ensure
enforcement of the federal securities laws); SEC v. Elmas Trading Corp., 620 F.
Supp. at 241 (holding that exception to automatic bankruptcy stay gave district
court ability to rule on motions by receiver appointed in SEC enforcement action);
SEC v. Towers Fin. Corp., 205 B.R. 27, 31 (S.D.N.Y. 1997) (SEC action for
injunctive relief and disgorgement was not stayed); SEC v. Bilzerian, 146 B.R. 871
(Bankr. M.D. Fla. 1992).
Case 2:08-cv-00437-LRH-RJJ Document 57 Filed 06/19/2008 Page 5 of 9
6

III. The Tomassos’ Debt Will Not Be Discharged by Their Chapter 7 Case
The discharge of liability that is provided in Chapter 7 of the Bankruptcy
Code is set out in Section 727. See 11 U.S.C. § 727. However, there are certain
exceptions to the discharge, which are set out in Bankruptcy Code Section 523(a),
11 U.S.C. § 523(a). The relevant exception here is found at Section 523(a)(19):
A discharge under section 727 . . . of this title does not discharge an
individual debtor from any debt—(19) that –(A) is for – (i) the
violation of any of the Federal securities laws (as that term is defined
in section 3(a)(47) of the Securities Exchange Act of 1934), any of the
State securities laws, or any regulation or order issued under such
Federal or State securities laws; or (ii) common law fraud, deceit, or
manipulation in connection with the purchase or sale of any security;
and (B) results, before, on, or after the date on which the petition was
filed, from – (i) any judgment, order, consent order, or decree entered
in any Federal or State judicial or administrative proceeding; (ii) any
settlement agreement entered into by the debtor; or (iii) any court or
administrative order for any damages, fine, penalty, citation,
restitutionary payment, disgorgement payment, attorney fee, cost, or
other payment owed by the debtor.
It is plain that the Tomassos’ liability to the Commission is rooted in
violation(s) of the federal securities laws. Accordingly, the Tomassos’ debt to the
Commission will not be discharged by virtue of their Chapter 7 case. Further,
because section 523(a)(19) is not among the exceptions where fraud must be
proven in the Bankruptcy Court (see 11 U.S.C. § 523(c)(1)), the lack of a discharge
as to this liability occurs automatically.
IV. Conclusion
For the foregoing reasons,2 the Court should deny the Tomassos’ motion to
stay this litigation pending resolution of their bankruptcy claims.
DATED: June 19, 2008 s/ Molly M. White_____________
MOLLY M. WHITE
LESLIE A. HAKALA
Attorneys for Plaintiff Securities and
Exchange Commission
2 The Tomassos failed to file a memorandum of points and authorities with their
motion, as required by Nevada Local Rule 7-2(a). Pursuant to Nevada Local Rule
7-2(d), the Court may, therefore, deem the Tomassos’ failure to file points and
authorities “a consent to the denial of the motion.”
Case 2:08-cv-00437-LRH-RJJ Document 57 Filed 06/19/2008 Page 6 of 9

PROOF OF SERVICE
I am over the age of 18 years and not a party to this action. My business address is:

[swampdog]

viewer.zoho.com/docs/nuqQc (thanks to nufced)
Just an update. Not much here. They didn't show up and now the Court is creating a time line and a dirctive as to when and how they "will show up". The Court wants answers.
Swamp

[saturn]

It is going to be fun to see what assets the SEC can dig up which they own. They are declaring they have nothing. Evidently they played hide and seek as kids.




Saturn

[swampdog]

These people need to go down.
The act of creating an entity and then borrowing money from your own entity and then not paying it back so that your own entity can declare default and then foreclose on you and take back the security that you put up ( in this case your own home) as collateral, is particularly offensive. The courts are not stupid to this kind of move. It may be one of the reasons that the Bankruptcy was disallowed or halted.
Once you get caught doing this kind of thing (and trust me they have been caught) the Trustee then looks at everything you do, as well as the Court System.

What worries me is what if John M. Edwards is doing or has done the same thing. What makes anyone think that we will see any money from Edwards? Please somebody answer that question. We can't even find this guy.
Swamp