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Securities and Exchange Commission v. TG Capital LLC

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


February 9, 2009

SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF,
v.
TG CAPITAL LLC, A NEVADA LIMITED LIABILITY COMPANY, THANH VIET "JEREMY" CAO, AN INDIVIDUAL, AND LODAVINA GROSNICKLE, AN INDIVIDUAL, DEFENDANTS.

The opinion of the court was delivered by: Honorable Cormac J. Carney United States District Judge

[PROPOSED] ORDER FINDING DEFENDANT THANH VIET "JEREMY" CAO TO BE IN CIVIL CONTEMPT OF PRELIMINARY INJUNCTION AND IMPOSING SANCTIONS

Upon the motion of Plaintiff Securities and Exchange Commission (the "Commission"), this Court issued an Order to Show Cause why defendant Thanh Viet "Jeremy" Cao ("Cao") should not be found in civil contempt for violating the asset freeze provisions of this Court's June 18, 2007 Preliminary Injunction and preceding May 22, 2007 Temporary Restraining Order in this action. Pursuant to that Order to Show Cause, the matter came on regularly for hearing at 9:00 a.m. on January 22, 2009. John M. McCoy III appeared for the Commission, Jeffrey Bradpiece appeared for Cao, and Robert B. Ericson appeared for court-appointed receiver John Cotton. Cao did not personally appear at the hearing as required by the Court's Order to Show Cause. The Court notes, however, that it was informed by counsel for the Commission that Cao may have been engaged in trial as a defendant in an unrelated criminal proceeding pending in the Superior Court for the County of Orange, California.

In addition to the evidence previously submitted in connection with its motion for the issuance of an Order to Show Cause, the Commission presented the testimony of Mr. Ericson. Exhibits 1, 2, 3 and 4 introduced during the course of Mr. Ericson's testimony were admitted into evidence. Counsel for Cao cross-examined Mr. Ericson but presented no other evidence. The Court took judicial notice of relevant entries and filings in the docket for this matter.

On this record, Court finds by clear and convincing evidence that Cao violated paragraphs V and VI of June 18, 2007 Preliminary Injunction in this action by causing funds in the amount of $241,687.85 to be transferred, after the issuance and service of that Preliminary Injunction, from an OptionsXpress brokerage account held in the name of Eastpoint Management Corp that Cao controlled. Accordingly, the Court holds that Cao is in civil contempt of paragraphs V and VI of the June 18, 2007 Preliminary Injunction and shall remain in contempt unless and until he purges himself thereof.

Cao is hereby ordered to deliver to the court-appointed receiver in this action, John Cotton of Cotton & Gundzik LLP, $241,687.75 in good funds on or before February 23, 2009. If Cao contends he is unable, despite his best efforts, to deliver that sum to the receiver by February 23, 2009, he shall file with the Court, by no later than February 23, 2009, a detailed written explanation of his efforts to comply with this Order and the reasons he was unable to do so. If, by February 23, 2009, Cao has not either delivered the full $241,687.75 in good funds to the receiver or sufficiently demonstrated to the Court that he is unable to do so, the Court will assess cumulative monetary sanctions of $1,000 per calendar day beginning on February 24, 2009, and continuing thereafter until otherwise ordered by this Court.

Unless the Court is notified by the receiver on or before February 23, 2009, that the sum of $241,687.75 in good funds has been received from Cao, the Court will hold a further status hearing in this matter at 3:30 p.m. on March 9, 2009. Cao and his counsel of record are ordered to appear at the March 9 hearing.

20090209

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