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United States Securities and Exchange Commission v. North Dakota Developments, LLC

United States District Court, D. North Dakota, Northwestern Division

May 18, 2015

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
NORTH DAKOTA DEVELOPMENTS, LLC, ROBERT L. GAVIN, and DANIEL J. HOGAN, Defendants, and NORTH DAKOTA DEVELOPMENTS PROPERTY MANAGEMENT LLC, GREAT AMERICAN LODGE LLC, NDD HOLDINGS 1 LLC, NDD HOLDINGS 2 LLC, NDD MODULAR LLC, AUGUSTA EXPLORATION, LLC, and AMES ENGINEERING & DEVELOPMENT SERVICES LLC, Relief Defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION AND APPOINTMENT OF RECEIVER, ASSET FREEZE, AND OTHER EQUITABLE RELIEF

DANIEL L. HOVLAND, District Judge.

Before the Court is an Order to Show Cause why the relief granted in this Court's Order Granting Plaintiff's Motion for Temporary Restraining Order should not continue pending a hearing on the merits of this matter and a receiver be appointed. See Docket No. 5. Defendant North Dakota Developments, LLC ("NDD"), North Dakota Developments Property Management LLC, Great American Lodge LLC, NDD Holdings 1 LLC, NDD Holdings 2 LLC, NDD Modular LLC, and Ames Engineering & Development Services LLC have been served with process through their registered agents for service of process. See Docket Nos. 8 and 12. Defendant Robert Gavin has been served with process through counsel. See Docket No. 7. Defendant Daniel Hogan has been served with process by email. See Docket No. 8. Defendant Gavin consented to the entry of a preliminary injunction and the appointment of a receiver in this matter.

The Court has held a hearing on the Order to Show Cause and heard all argument made by the parties. Based on the record in this matter, the Court FINDS that there is good cause to continue the relief granted in the Order Granting Plaintiff's Motion for Temporary Restraining Order and appoint a receiver. Accordingly, the Court ORDERS the following:

I.

That, until final judgment in this matter enters, Defendants North Dakota Developments, LLC, Robert Gavin, and Daniel Hogan and their officers, directors, subsidiaries, affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, and each of them, are enjoined and restrained from, directly or indirectly, in the offer or sale of any security by the use of any means or instruments of transportation, or communication in interstate commerce or by the use of the mails: (1) employing any device, scheme, or artifice to defraud; or (2) obtaining money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (3) engaging in any transaction, practice, or course of business that operates or would operate as a fraud or deceit upon the purchaser in violation of Section 17(a) of the Securities Act of 1933 [15 U.S.C. § 77q(a)].

II.

That, until final judgment in this matter enters, Defendants North Dakota Developments, LLC, Robert Gavin, and Daniel Hogan and their officers, directors, subsidiaries, affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, and each of them, are enjoined and restrained from directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange in connection with the purchase or sale of any security: (1) employing any device, scheme, or artifice to defraud; (2) making any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (3) engaging in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person in violation of Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5].

III.

That, until final judgment in this matter enters, Defendants North Dakota Developments, LLC, Robert Gavin, and Daniel Hogan and Relief Defendants North Dakota Developments Property Management LLC, Great American Lodge LLC, NDD Holdings 1 LLC, NDD Holdings 2 LLC, NDD Modular LLC, Augusta Exploration, LLC, and Ames Engineering & Development Services LLC, and their officers, directors, successor corporation, subsidiaries and affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, and each of them, shall refrain from, directly or indirectly, accepting, taking control of, or depositing in any financial institution, funds from investors.

IV.

That, until final judgment in this matter enters:

A. Except as otherwise specified in this Order, the assets, funds, or other property of Defendants North Dakota Developments, LLC, Robert Gavin, and Daniel Hogan and Relief Defendants North Dakota Developments Property Management LLC, Great American Lodge LLC, NDD Holdings 1 LLC, NDD Holdings 2 LLC, NDD Modular LLC, Augusta Exploration, LLC, and Ames Engineering & Development Services LLC, wherever located, which derive, directly or indirectly, from any investor funds obtained by or on behalf of the Defendants or Relief Defendants in connection with the scheme alleged in the SEC's Complaint, are frozen.[1]

B. Except as otherwise specified in this Order, Defendants North Dakota Developments, LLC, Robert Gavin, and Daniel Hogan and Relief Defendants North Dakota Developments Property Management LLC, Great American Lodge LLC, NDD Holdings 1 LLC, NDD Holdings 2 LLC, NDD Modular LLC, Augusta Exploration, LLC, and Ames Engineering & Development Services LLC, and their officers, directors, successor corporations, subsidiaries, affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, and each of them, shall hold and retain within their control, and otherwise prevent any disposition, transfer, pledge, encumbrance, assignment, dissipation, concealment, or other disposal whatsoever of any of their funds or other assets or things of value presently held by them, under their control or over which they exercise actual or apparent investment or other authority, in whatever form such assets may presently exist and wherever located, which derive, directly or indirectly, from any investor funds obtained by or on behalf of the Defendants and Relief Defendants in connection with the scheme alleged in the SEC's Complaint; and

C. Except as otherwise specified in this Order, any bank, financial or brokerage institution or other person or entity holding any funds, securities or other assets which derive, directly or indirectly, from any investor funds obtained by or on behalf of Defendants North Dakota Developments, LLC, Robert Gavin, and Daniel Hogan or Relief Defendants in connection with the scheme alleged in the SEC's Complaint, held in the name of, for the benefit of, or under the control of Defendants North Dakota Developments, LLC, Robert Gavin, and Daniel Hogan or Relief Defendants North Dakota Developments Property Management LLC, Great American Lodge LLC, NDD Holdings 1 LLC, NDD Holdings 2 LLC, NDD Modular LLC, Augusta Exploration, LLC, and Ames Engineering & Development Services LLC, or their officers, directors, successor corporations, subsidiaries, affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with them, and each of them, shall hold and retain within their control and prohibit the withdrawal, removal, transfer or other disposal of any such funds or other assets.

D. Except as otherwise specified in this Order, no person or entity, including the Defendants, Relief Defendants, or any creditor or claimant against any of the Defendants or Relief Defendants, or any person acting on behalf of such creditor or claimant, shall take any action to interfere with the asset freeze, including, but not limited to, the filing or continuance of any lawsuits, liens, or encumbrances, or bankruptcy cases to impact the property and assets subject to this order or collection of any judgments arising from such actions; provided, however, that any party or non-party may seek leave from this order upon a proper showing.

E. For purposes of this Order, the assets held in escrow in the name or for the benefit of North Dakota Developments, LLC are not considered assets of the Defendants or Relief Defendants and are exempt from the freeze ordered herein ...


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