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Securities and Exchange Commission v. Vassallo

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA SACRAMENTO


October 26, 2010

SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF
v.
ANTHONY VASSALLO, ET AL, DEFENDANTS.

The opinion of the court was delivered by: Judge Hon. Lawrence K. Karlton

ORDER GRANTING RECEIVER'S DISGORGEMENT MOTION FOR ORDER DIRECTING WELLS FARGO BANK TO RELEASE TO RECEIVER ALL FUNDS IN USR SITE ACQUISITION, LLC SAVINGS ACCOUNT Date: October 25, 2010 Time: 10:00 a.m. Location: Courtroom 4, 15th Floor

The disgorgement motion of Receiver Stephen E. Anderson ("Receiver") directing Wells Fargo Bank to release to Receiver all funds contained in Wells Fargo Business Performance Savings Account Number XXX-XXX7703, in the name of USR Site Acquisition, LLC ("USR Savings Account"), came on regularly for hearing in Courtroom 4 of the above-entitled Court on October 25, 2010, at 10:00 a.m., the Honorable Lawrence K. Karlton presiding, with counsel appearing on behalf of Receiver. The Court having considered the papers submitted in support of and in opposition to such motion, and the arguments of counsel and for good cause shown,

THE COURT FINDS AND ORDERS AS FOLLOWS:

Adequate and fair notice of this disgorgement motion was provided to USR Site Acquisition, LLC and Charles "Charlie" Jarvis ("Jarvis") pursuant to the Court's August 20, 4 2009 Order.

Two million dollars ($2,000,000) of Equity Investment Management and Trading, Inc. ("EIMT") investor funds were transferred by EIMT to Jeff Dennis Ferentz ("Ferentz") in connection with a purported "bank sanctioned high yield funding program." Of that $2 million, $591,500 in EIMT investor funds was transferred to a Wells Fargo Business Checking Account Number XXX-XXX7037, in the name of USR Site Acquisition, Inc. ("USR Checking Account"), on which Jarvis was an authorized signatory. EIMT investor funds were then transferred from the USR Checking Account to the USR Savings Account, on which Jarvis was also an authorized signatory. Ferentz died in June 2008.

Other than interest, no funds have been deposited in the USR Savings Account since November 2007. Jarvis has used the funds in the USR Savings Account to pay for personal expenses.

This Court issued an order on April 21, 2010 (Doc. No. 259) (the "April 21, 2010 Order") freezing the USR Saving Account, which had a balance of $168,055.45 as of March 31, 2010.

There was no legitimate business reason for the transfer of $2 million in EIMT investor funds to Ferentz, the subsequent transfer of EIMT investor funds to the URS Checking Account, or the subsequent transfer of EIMT investor funds to the USR Savings Account, EIMT obtained no benefit from the purported "bank sanctioned high yield funding program." Although Receiver has demanded return of the EIMT investor funds under the control of Jarvis in the USR Savings Account, Jarvis has refused to return the funds to Receiver.

All of the money contained in the USR Savings Account is held in constructive trust for EIMT for the benefit of its investors. Therefore, Receiver's motion is hereby GRANTED.

Wells Fargo Bank is directed to immediately release to Receiver Stephen E. Anderson all funds in Wells Fargo Business Performance Savings Account Number XXX-XXX7703, in the name of USR Site Acquisition, LLC, frozen by the April 21, 2010 Court Order, and shall remit to Receiver any interest earned on such funds during the time the funds were frozen by the April 21, 2010 Court Order.

IT IS SO ORDERED.

Dated: October 25, 2010

20101026

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