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1
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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
CONTEMPT JOHNSTON COURT INTERROGATORIES SECURITIES CIVIL CONTEMPT EXCHANGE ACT SANCTIONS REQUEST DOLLAR PONZI SCHEME FRAUDULENT CERTIFICATES CANADIAN TRADE BANK UNDERLYING COMPLAINT COMMISSION CHARGED JOHNSTON VIOLATIONS THEREUNDER FAILURE REQUIRING JUDGEMENT COSTS ATTORNEYS FEES DISCOVERY SANCTIONS SET FEDERAL RULES CIVIL PROCEDURE CONTEMPT MOTION COUNSEL ORDERED JOHNSTON RELIEF |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15463 / August 28, 1997
SEC v. Michael J. Randy, et al., N.D. IL, No. 94-C-5902, filed
September
27, 1994.
The Commission announced that on August 5, 1997, it filed a civil
contempt
action against David Johnston (Johnston), a defendant in a $15
million
dollar Ponzi Scheme involving fraudulent Certificates of Deposit
purportedly issued by Canadian Trade Bank. In the underlying
Complaint,
the Commission charged Johnston and others with violations of
Sections
5(a), 5(c), 17(a) of the Securities Act of 1933 and Sections 10(b)
and
15(a)(1) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder.
The Commission moved the Court for an order of civil contempt and
other
sanctions for Johnston's failure to comply with Court orders dated
April
23, 1997 and June 19, 1997 requiring him to answer Interrogatories
propounded upon him by the Commission. The Commission moved for
contempt
as well as a judgment of default. The Commission also moved for
costs,
attorneys fees and other discovery sanctions set forth in Rule 37(b) of
the
Federal Rules of Civil Procedure.
The Honorable Wayne Andersen heard the contempt motion on August 14.
Johnston's counsel appeared via telephone and requested another
opportunity
to answer the Interrogatories. After consideration, the Court
granted
counsel's request and ordered Johnston to answer and/or respond to
the
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