SEC v. WILLIE J. GAULT

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,

          vs.

HEART TRONICS, INC., MITCHELL
JAY STEIN, WILLIE JAMES GAULT,
J.
 ROWLAND PERKINS, II, MARTIN
BERT CARTER,   MARK CROSBY
NEVDAHL, and RYAN ALLAN
RAUCH,
          Defendants,
TRACEY HAMPTON-STEIN, ARC
FINANCE GROUP, LLC, ARC BLIND
TRUST, THS BLIND TRUST, JAYMI
BLIND TRUST, OAK TREE
INVESTMENTS BLIND TRUST, WBT
INVESTMENTS BLIND TRUST,
CATCH 83 GENERAL PARTNERSHIP,
and FIVE INVESTMENTS
PARTNERSHIP,
Relief Defendants.
Case No. SACV11-1962-JVS(ANx)
FINAL JUDGMENT AGAINST
DEFENDANT WILLIE J. GAULT
IMPOSING PERMANENT
INJUNCTIONS AND OTHER
EQUITABLE RELIEF,
DISGORGEMENT WITH
PREJUDGMENT INTEREST,
AND A CIVIL PENALTY
Consistent with the Jury’s Verdict Against Defendant Willie J. Gault as to
Claims Four, Six and Seven (Docket No. 255) and the Court’s Order Granting
Plaintiff’s Motion for Order on Remedies and Final Judgment as to Defendant
Gault (Docket No. 385):
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that
Defendant Gault and his agents, servants, employees, attorneys, and all persons in
active concert or participation with them who receive actual notice of this

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Judgment by personal service or otherwise are permanently restrained and
enjoined from violating, directly or indirectly, Section 17(a)(3) of the Securities
Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)(3)] 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 use of the mails to engage in any
transaction, practice, or course of business which operates or would operate as a
fraud or deceit upon the purchaser.
II.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED THAT
Defendant Gault and his agents, servants, employees, attorneys, and all persons in
active concert or participation with them who receive actual notice of this
Judgment by personal service or otherwise are permanently restrained and
enjoined from violating, directly or indirectly, Section 13(b)(5) of the Securities
Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78m(b)(5)] by knowingly
circumventing or failing to implement a system of internal accounting controls or
knowingly falsifying any book, record, or account described in Section 13(b)(2) of
the Exchange Act [15 U.S.C. § 78m(b)(2)].
III.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendant Gault and his agents, servants, employees, attorneys, and all persons in
active concert or participation with them who receive actual notice of this
Judgment by personal service or otherwise are permanently restrained and
enjoined from violating, directly or indirectly, Rule 13a-14 of the Exchange Act
[17 C.F.R. § 240.13a-14] by filing or causing to be filed any certification that is
false or misleading.
IV.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
pursuant to the Court’s inherent authority to fashion appropriate equitable relief in

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this matter, and Section 21(d)(5) of the Exchange Act [15 U.S. Code § 78u] for
the benefit of investors, Defendant Gault is permanently enjoined from acting as
an officer or director of any issuer that has a class of securities registered pursuant
to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file
reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)].  The
Court retains jurisdiction for the purpose of withdrawing the bar imposed by this
paragraph upon a proper showing by Gault that he is rehabilitated and fit to serve
as an officer or director.  In particular, upon notice to the Commission, Gault may
move the Court to lift this bar by affirmatively demonstrating that he has made
himself knowledgeable of the requirements of the securities laws imposed on
officers and directors and that he has otherwise become competent and fit to serve
as an officer or director.  The Court will consider and decide such a motion after
providing the Commission a reasonable opportunity to respond and holding any
evidentiary hearing that may be appropriate to aid in deciding the motion.
V.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendant Gault is liable for disgorgement of $101,000, representing ill-gotten
gains causally connected to his involvement in the defrauding of an investor,
together with prejudgment interest in the amount of $27,570.58.  Defendant shall
satisfy this obligation by paying $128,570.58 to the Securities and Exchange
Commission within 14 days after entry of this Judgment.  Defendant may transmit
payment electronically to the Commission, which will provide detailed ACH
transfer/Fedwire instructions upon request.   Payment may also be made directly
from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm.  Defendant may also pay by certified
check, bank cashier’s check, or U.S. postal money order payable to the Securities
and Exchange Commission, which shall be delivered or mailed to:

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Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title, civil action number,
and name of this Court; Willie J. Gault as a defendant in this action; and
specifying that payment is made pursuant to this Final Judgment.  Defendant shall
simultaneously transmit photocopies of evidence of payment and case identifying
information to the Commission’s counsel of record.  By making this payment,
Defendant relinquishes all legal and equitable right, title, and interest in such
funds and no part of them shall be returned to Defendant.
The Commission shall hold the funds (collectively, the “Fund”) and may
propose a plan to distribute the Fund subject to the Court’s approval.  The Court
shall retain jurisdiction over the administration of any distribution of the Fund.  If
the Commission staff determines that the Fund will not be distributed, the
Commission shall send the Fund to the United States Treasury.
The Commission may enforce the Court’s judgment for disgorgement and
prejudgment interest by moving for civil contempt (and/or through other
collection procedures authorized by law) at any time after 14 days following entry
of this Final Judgment.  Defendant shall pay post judgment interest on any
delinquent amounts pursuant to 28 U.S.C. § 1961.
VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendant Gault shall pay civil penalties in the amount of $78,000, pursuant to
Section 20 of the Securities Act [15 U.S.C. § 77t(d)(2)] and Section 21 of the
Exchange Act[15 U.S.C. § 78u(d)(3)].  Gault shall satisfy this obligation by making
this payment to the Securities and Exchange Commission within 14 days after entry
of this Judgment.  He may transmit payment electronically to the Commission,
which will provide detailed ACH transfer/Fedwire instructions upon request.

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Payment may also be made directly from a bank account via Pay.gov through the
SEC website at http://www.sec.gov/about/offices/ofm.htm.  Defendant may also
pay by certified check, bank cashier’s check, or U.S. postal money order payable to
the Securities and Exchange Commission, which shall be delivered or mailed to:
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title, civil action number,
and name of this Court; Willie J. Gault as a defendant in this action; and specifying
that payment is made pursuant to this Final Judgment.  Defendant shall
simultaneously transmit photocopies of evidence of payment and case identifying
information to the Commission’s counsel of record.  By making this payment,
Defendant relinquishes all legal and equitable right, title, and interest in such funds
and no part of them shall be returned to Defendant.
The Commission shall send the civil penalty amount paid pursuant to this
paragraph to the United States Treasury.  Defendant shall pay post-judgment
interest on any delinquent amounts pursuant to 28 USC § 1961.
VII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this
Court shall retain jurisdiction of this matter for the purposes of enforcing the
terms of this Judgment and all order and decrees which may be entered herein,
and to entertain any suitable application or motion for additional relief within the
jurisdiction of this Court.
VIII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, there
being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil
Procedure, the Clerk of the Court is ordered to enter this Judgment forthwith and

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without further notice.  Any remaining claims against the Defendant are dismissed
with prejudice pursuant to Rule 42(a)(2) of the Federal Rules of Civil Procedure.
Dated:  April 14, 2016 	____________________________
HONORABLE JAMES V. SELNA
UNITED STATES DISTRICT JUDGE

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Case 8:11-cv-01962-JVS-AN Document 387 Filed 04/14/16 Page 1 of 6 Page ID #:8445 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff,

 vs. 


HEART TRONICS, INC., MITCHELL 
JAY STEIN, WILLIE JAMES GAULT,  
J. ROWLAND PERKINS, II, MARTIN 
BERT CARTER, MARK CROSBY 
NEVDAHL, and RYAN ALLAN 
RAUCH,

 Defendants, 

TRACEY HAMPTON-STEIN, ARC 
FINANCE GROUP, LLC, ARC BLIND 
TRUST, THS BLIND TRUST, JAYMI 
BLIND TRUST, OAK TREE 
INVESTMENTS BLIND TRUST, WBT 
INVESTMENTS BLIND TRUST, 
CATCH 83 GENERAL PARTNERSHIP, 
and FIVE INVESTMENTS 
PARTNERSHIP, 

Relief Defendants. 

Case No. SACV11-1962-JVS(ANx) 

FINAL JUDGMENT AGAINST 
DEFENDANT WILLIE J. GAULT 
IMPOSING PERMANENT 
INJUNCTIONS AND OTHER 
EQUITABLE RELIEF, 
DISGORGEMENT WITH 
PREJUDGMENT INTEREST, 
AND A CIVIL PENALTY 

Consistent with the Jury’s Verdict Against Defendant Willie J. Gault as to 

Claims Four, Six and Seven (Docket No. 255) and the Court’s Order Granting 

Plaintiff’s Motion for Order on Remedies and Final Judgment as to Defendant 

Gault (Docket No. 385): 

I. 

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that 

Defendant Gault and his agents, servants, employees, attorneys, and all persons in 

active concert or participation with them who receive actual notice of this 



    

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Case 8:11-cv-01962-JVS-AN Document 387 Filed 04/14/16 Page 2 of 6 Page ID #:8446 

Judgment by personal service or otherwise are permanently restrained and 

enjoined from violating, directly or indirectly, Section 17(a)(3) of the Securities 

Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)(3)] 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 use of the mails to engage in any 

transaction, practice, or course of business which operates or would operate as a 

fraud or deceit upon the purchaser. 

II. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED THAT 

Defendant Gault and his agents, servants, employees, attorneys, and all persons in 

active concert or participation with them who receive actual notice of this 

Judgment by personal service or otherwise are permanently restrained and 

enjoined from violating, directly or indirectly, Section 13(b)(5) of the Securities 

Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78m(b)(5)] by knowingly 

circumventing or failing to implement a system of internal accounting controls or 

knowingly falsifying any book, record, or account described in Section 13(b)(2) of 

the Exchange Act [15 U.S.C. § 78m(b)(2)]. 

III. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that 

Defendant Gault and his agents, servants, employees, attorneys, and all persons in 

active concert or participation with them who receive actual notice of this 

Judgment by personal service or otherwise are permanently restrained and 

enjoined from violating, directly or indirectly, Rule 13a-14 of the Exchange Act 

[17 C.F.R. § 240.13a-14] by filing or causing to be filed any certification that is 

false or misleading.  

IV. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that 

pursuant to the Court’s inherent authority to fashion appropriate equitable relief in 

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Case 8:11-cv-01962-JVS-AN Document 387 Filed 04/14/16 Page 3 of 6 Page ID #:8447 

this matter, and Section 21(d)(5) of the Exchange Act [15 U.S. Code § 78u] for 

the benefit of investors, Defendant Gault is permanently enjoined from acting as 

an officer or director of any issuer that has a class of securities registered pursuant 

to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file 

reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)].  The 

Court retains jurisdiction for the purpose of withdrawing the bar imposed by this 

paragraph upon a proper showing by Gault that he is rehabilitated and fit to serve 

as an officer or director. In particular, upon notice to the Commission, Gault may 

move the Court to lift this bar by affirmatively demonstrating that he has made 

himself knowledgeable of the requirements of the securities laws imposed on 

officers and directors and that he has otherwise become competent and fit to serve 

as an officer or director. The Court will consider and decide such a motion after 

providing the Commission a reasonable opportunity to respond and holding any 

evidentiary hearing that may be appropriate to aid in deciding the motion. 

V. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that 

Defendant Gault is liable for disgorgement of $101,000, representing ill-gotten 

gains causally connected to his involvement in the defrauding of an investor, 

together with prejudgment interest in the amount of $27,570.58. Defendant shall 

satisfy this obligation by paying $128,570.58 to the Securities and Exchange 

Commission within 14 days after entry of this Judgment.  Defendant may transmit 

payment electronically to the Commission, which will provide detailed ACH 

transfer/Fedwire instructions upon request. Payment may also be made directly 

from a bank account via Pay.gov through the SEC website at 

http://www.sec.gov/about/offices/ofm.htm.  Defendant may also pay by certified 

check, bank cashier’s check, or U.S. postal money order payable to the Securities 

and Exchange Commission, which shall be delivered or mailed to:  

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http://www.sec.gov/about/offices/ofm.htm
http:128,570.58
http:27,570.58


    

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Case 8:11-cv-01962-JVS-AN Document 387 Filed 04/14/16 Page 4 of 6 Page ID #:8448 

Enterprise Services Center 
Accounts Receivable Branch 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 

and shall be accompanied by a letter identifying the case title, civil action number, 

and name of this Court; Willie J. Gault as a defendant in this action; and 

specifying that payment is made pursuant to this Final Judgment.  Defendant shall 

simultaneously transmit photocopies of evidence of payment and case identifying 

information to the Commission’s counsel of record.  By making this payment, 

Defendant relinquishes all legal and equitable right, title, and interest in such 

funds and no part of them shall be returned to Defendant. 

The Commission shall hold the funds (collectively, the “Fund”) and may 

propose a plan to distribute the Fund subject to the Court’s approval. The Court 

shall retain jurisdiction over the administration of any distribution of the Fund.  If 

the Commission staff determines that the Fund will not be distributed, the 

Commission shall send the Fund to the United States Treasury. 

The Commission may enforce the Court’s judgment for disgorgement and 

prejudgment interest by moving for civil contempt (and/or through other 

collection procedures authorized by law) at any time after 14 days following entry 

of this Final Judgment. Defendant shall pay post judgment interest on any 

delinquent amounts pursuant to 28 U.S.C. § 1961.   

VI. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that 

Defendant Gault shall pay civil penalties in the amount of $78,000, pursuant to 

Section 20 of the Securities Act [15 U.S.C. § 77t(d)(2)] and Section 21 of the 

Exchange Act[15 U.S.C. § 78u(d)(3)].  Gault shall satisfy this obligation by making 

this payment to the Securities and Exchange Commission within 14 days after entry 

of this Judgment. He may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon request. 

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Case 8:11-cv-01962-JVS-AN Document 387 Filed 04/14/16 Page 5 of 6 Page ID #:8449 

Payment may also be made directly from a bank account via Pay.gov through the 

SEC website at http://www.sec.gov/about/offices/ofm.htm. Defendant may also 

pay by certified check, bank cashier’s check, or U.S. postal money order payable to 

the Securities and Exchange Commission, which shall be delivered or mailed to: 

Enterprise Services Center 
Accounts Receivable Branch 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 

and shall be accompanied by a letter identifying the case title, civil action number, 

and name of this Court; Willie J. Gault as a defendant in this action; and specifying 

that payment is made pursuant to this Final Judgment.  Defendant shall 

simultaneously transmit photocopies of evidence of payment and case identifying 

information to the Commission’s counsel of record.  By making this payment, 

Defendant relinquishes all legal and equitable right, title, and interest in such funds 

and no part of them shall be returned to Defendant. 

The Commission shall send the civil penalty amount paid pursuant to this 

paragraph to the United States Treasury.  Defendant shall pay post-judgment 

interest on any delinquent amounts pursuant to 28 USC § 1961. 

VII. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this 

Court shall retain jurisdiction of this matter for the purposes of enforcing the 

terms of this Judgment and all order and decrees which may be entered herein, 

and to entertain any suitable application or motion for additional relief within the 

jurisdiction of this Court. 

VIII. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, there 

being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil 

Procedure, the Clerk of the Court is ordered to enter this Judgment forthwith and 

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http://www.sec.gov/about/offices/ofm.htm


    

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Case 8:11-cv-01962-JVS-AN Document 387 Filed 04/14/16 Page 6 of 6 Page ID #:8450 

without further notice.  Any remaining claims against the Defendant are dismissed 

with prejudice pursuant to Rule 42(a)(2) of the Federal Rules of Civil Procedure. 

Dated: April 14, 2016 	 ____________________________ 
HONORABLE JAMES V. SELNA 
UNITED STATES DISTRICT JUDGE 

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