IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS PLANO DIVISION

Transcription

1 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS PLANO DIVISION SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. Civil Action No. OMAR ALI RIZVI, BELLWETHER VENTURE CAPITAL FUND I, INC., and STRATEGY PARTNERS, LLC Defendants. Plaintiff Securities and Exchange Commission ( Commission ), for its Complaint against Defendants Omar Ali Rizvi ( Rizvi ), Bellwether Venture Capital Fund I, Inc. ( Bellwether ), and Strategy Partners, LLC ( Strategy Partners )(collectively, the Defendants ), alleges as follows: Summary 1. From August 2004 through at least June 2005, Rizvi, a former securities attorney, raised approximately $1,873,385 from at least 173 investors throughout the United States in a fraudulent, unregistered securities offering on behalf of Bellwether, an unregistered investment company Rizvi controlled. Rizvi, along with Strategy Partners, an unregistered broker Rizvi controlled, offered and sold Bellwether s securities to the public in the offering. In the offering, Rizvi misrepresented or omitted to disclose to investors numerous material facts regarding, among other things, the existence of Rizvi s felony criminal record, the related surrender of his

2 law license, the professionals employed by Bellwether and Strategy Partners, Bellwether s investment returns and registration status, and the payment of commissions to affiliates. Moreover, Rizvi misappropriated and misapplied approximately $1,199,905 of the offering proceeds, contrary to representations made in the offering regarding the use of proceeds. 2. By reason of the foregoing, the Defendant Rizvi violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ( Securities Act ) [15 U.S.C. 77e(a), 77e(c), and 77q(a)], Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 ( Exchange Act ) [15 U.S.C. 78j(b) and 78o(a)(1)] and Rule 10b-5 [17 C.F.R b-5] thereunder; Defendant Bellwether violated Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. 77e(a) and 77e(c)] and Section 7(a) of the Investment Company Act of 1940 ( Investment Company Act ) [15 U.S.C. 80a-7(a)]; and Defendant Strategy Partners violated Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. 77e(a) and 77e(c)] and Section 15(a)(1) of the Exchange Act [15 U.S.C. 78o(a)(1)]. In the interest of protecting the public from any further violations of the federal securities laws, the Commission brings this action against the Defendants, seeking permanent injunctive relief, accountings, disgorgement plus prejudgment interest, and civil money penalties. Jurisdiction and Venue 3. The Commission brings this action under Section 20(b) of the Securities Act [15 U.S.C. 77t(b)], Section 21(d) of the Exchange Act [15 U.S.C. 78u(d)], and Section 42(d) of the Investment Company Act [15 U.S.C. 80a-41(d)], seeking to restrain and enjoin permanently the Defendants from engaging in the acts, practices, and courses of business alleged herein. RE: SEC v. Omar Ali Rizvi, et al. Page 2 of 14

3 4. This Court has jurisdiction over this action under Section 22(a) of the Securities Act [15 U.S.C. 77v(a)], Sections 21(e) and 27 of the Exchange Act [15 U.S.C. 78u(e) and 78aa], and Section 44 of the Investment Company Act [15 U.S.C. 80a-43]. 5. The Defendants, directly and indirectly, made use of the mails and of the means and instrumentalities of interstate commerce in connection with the transactions, acts, practices, and courses of business described in this Complaint. 6. Venue is proper because transactions, acts, practices, and courses of business described below occurred within the jurisdiction of the Eastern District of Texas. Parties 7. Plaintiff Commission is an agency of the United States of America charged with enforcing the federal securities laws. 8. Defendant Rizvi, 40 years old, resides at 2205 Simplicity Drive, Irvine, California. 9. Defendant Bellwether is a Maryland corporation with its principal place of business in Irving, California. 10. Defendant Strategy Partners is a California limited liability company with its principal place of business in Newport Beach, California. Statement of Facts The Defendants Background and Status 11. Rizvi engaged in the securities-related misconduct described herein, despite an ample legal education and experience in securities law. Rizvi completed law school in California in 1992 and graduated from Georgetown University Law School in 1993 with a Master of Laws degree in Securities and Financial Regulation. From June 1993 through RE: SEC v. Omar Ali Rizvi, et al. Page 3 of 14

4 November 2001, Rizvi practiced securities law in California, providing securities-related legal counsel to companies, among other things. 12. In November 2001, the State Bar of California suspended Rizvi s law license following his August 2001 conviction on multiple violent felonies, including assault with a deadly weapon. For these crimes, Rizvi was sentenced on August 17, 2001, to 270 days imprisonment and five years probation. In December 2001, Rizvi voluntarily surrendered his law license in lieu of disbarment in California. 13. Rizvi formed Bellwether in September 2002 and has controlled the company from its inception through the present. Bellwether is an investment company that was originally incorporated as Landmark Microcap Fund, Inc. The company changed its name to Rhino Microcap Fund, Inc. in November 2002, to Tiger Fund, Inc. in January 2003, and then to Bellwether in March Bellwether has never been registered with the Commission as an investment company pursuant to Section 8 of the Investment Company Act [15 U.S.C. 80a-8]. Moreover, Bellwether has never filed a registration statement with the Commission under Section 12 of the Exchange Act [15 U.S.C. 78l]. 14. Rizvi formed Strategy Partners in June 2002 and has owned and controlled the company since its inception through the present. Strategy Partners has never been registered with the Commission in any capacity. The Fraudulent Securities Offering 15. In August 2004, Rizvi filed with the Commission a Form 1-E on Bellwether s behalf, providing notice of the company s intent to raise funds in a securities offering under Securities Act Regulation E [17 C.F.R a]. Regulation E, which is available exclusively to registered small business investment companies and to statutorily created entities RE: SEC v. Omar Ali Rizvi, et al. Page 4 of 14

5 called business development companies ( BDCs ), permits these entities to raise up to $5 million per year in public securities offerings that are exempt from registration under the Securities Act. Regulation E, Rule 605(a)(1) prohibits a written offer of securities to be made unless an offering circular containing the information set forth in Schedule B of Regulation E is given to the person to whom such offer is made. Schedule B, Item 7 requires the offering circular to include, among other things, an income statement for each of the last two fiscal years. 16. Pursuant to Section 54 of the Investment Company Act [15 U.S.C. 80a-53], a company is only eligible to become a BDC if it has a class of equity securities registered under Section 12 of the Exchange Act [15 U.S.C. 78l] or if it has filed a registration statement under that section. An eligible company becomes a BDC by filing Form N-54A [17 C.F.R ] with the SEC. Because Bellwether has never filed a registration statement under Section 12 of the Exchange Act [15 U.S.C. 78l], Bellwether was never eligible to become a BDC. Moreover, Bellwether never filed a Form N-54A with the SEC, so it never became a BDC. Because Bellwether was neither a registered small business investment company nor a BDC, the Regulation E registration exemption was not applicable to any Bellwether securities offering, despite Bellwether s August 2004 Form 1-E filing. 17. From August 2004 through at least June 2005, in purported reliance on the Regulation E exemption and the August Form 1-E filing, Bellwether raised approximately $1,873,385 from at least 173 investors throughout the United States. Through Strategy Partners, Rizvi employed a team of sales persons who also solicited investors in the Bellwether offering. From the offering proceeds, Strategy Partners paid these sales persons at least a 10% commission on each sale of Bellwether securities. RE: SEC v. Omar Ali Rizvi, et al. Page 5 of 14

6 18. The Bellwether Form 1-E included an offering circular, which was drafted by Rizvi and contained certain representations regarding the offering. The offering circular did not include an income statement, as required by Regulation E, Rule 605(a)(1). Bellwether also issued a press release on April 12, 2005, also drafted by Rizvi, describing the investment company s business during the offering. In addition, the Defendants solicited investors on behalf of Bellwether through Bellwether s website, which Rizvi reviewed and approved. The Defendants also solicited investors by oral presentation, by , and through pre-recorded messages delivered through automated telephone calls to recipients throughout the United States. The Misleading Statements and Misapplication of Offering Proceeds 19. These offering materials contained the following false or misleading statements. The offering circular stated that Bellwether had elected to be treated as a business development company under the Investment Company Act of The press release and website also said that Bellwether was a BDC. In reality, Bellwether had not filed an election to become a BDC and, therefore, was never subject to regulation as a BDC. 20. The offering circular stated no sales commissions or finders fees will be paid to any employee of the Fund or its officers, directors or affiliates in connection with the offer for sale, sale or distribution of the securities contemplated within this offering. In reality, Bellwether paid commissions and finders fees to its affiliate, Strategy Partners, and to employees of Strategy Partners. 21. The offering circular provided a detailed description of Rizvi s legal education and legal career dating back over 10 years, noting that Rizvi was [n]o longer active in practice as a securities law. The offering circular omitted to disclose, however, that California suspended RE: SEC v. Omar Ali Rizvi, et al. Page 6 of 14

7 Rizvi s law license following his criminal convictions and that Rizvi subsequently surrendered his law license in lieu of disbarment. 22. The website said that Steven Levine is a partner in Strategy Partners and serves as Executive Vice President of Credit and Margin Regulation for Bellwether, providing oversight to Bellwether s overall development and use of leverage. According to the offering circular, Levine was the Assistant Chief of Credit Regulations at the New York Stock Exchange before he retired in In reality, Levine was not a partner in Strategy Partners and was not an Executive Vice President at Bellwether. Moreover, Levine did not provide any oversight to Bellwether. The offering circular contained virtually identical false statements regarding Levine s association with Bellwether and Strategy. 23. The website said that Charles B. Manuel acts in the capacity of chief compliance officer to Bellwether and is partner of and general counsel to Strategy Partners. The website describes Manuel as a graduate of Harvard Law School who was a senior partner at the law firm Morgan, Lewis & Bockius, LLP for seven years. In reality, Manual never served as either a partner or the general counsel of Strategy Partners and never served as Bellwether s chief compliance officer. 24. The offering circular said that, after Bellwether paid certain expenses from the offering proceeds including a $259,852 payment to Strategy Partners in reimbursement of expenses Strategy Partners purportedly advanced Bellwether in 2003 Bellwether would apply 73% of the offering proceeds to investment in venture financing transactions. According to the offering circular, if the offering raised the maximum $5 million, then Bellwether would have $3,664,148 available for investment (73% of $5 million). In fact, the offering raised only approximately $1,873,385. Bellwether spent only approximately $673,480 (36%) of the offering RE: SEC v. Omar Ali Rizvi, et al. Page 7 of 14

8 proceeds in venture financing transactions. Rizvi transferred all the remaining offering proceeds away from Bellwether, leaving no other proceeds available for investment in venture financing transactions. For example, Bellwether paid Strategy Partners approximately $962,644 of the offering proceeds approximately $702,792 more than the disclosed $259,852 payment to reimburse Strategy Partners for the purported 2003 advancement. 25. The press release of April 12, 2005, stated that Bellwether had experienced a 550% return on its investments in the past year. In reality, Bellwether never realized any gains on its holdings and never paid any returns to its investors. 26. The automated phone message, which Rizvi reviewed and approved, stated, Our last investment realized returns of over 800%. In reality, Bellwether never realized any returns. 27. The website contained the text of a presentation entitled Pre-IPO Launch. The presentation s bullet points said that Bellwether s Specialized Investment Strategy Returned in excess of 1000% in Again, Bellwether never in fact had any returns. FIRST CLAIM Violations of Section 5(a) and 5(c) of the Securities Act 28. Plaintiff Commission re-alleges and incorporates paragraphs 1 through 27 of this Complaint by reference as if set forth verbatim. 29. Defendants, directly or indirectly, singly and in concert with others, have been offering to sell, selling, and delivering after sale, certain securities, and have been, directly and indirectly: (a) making use of the means and instruments of transportation and communication in interstate commerce and of the mails to sell securities, through the use of written contracts, offering documents and otherwise; (b) carrying and causing to be carried through the mails and in interstate commerce by the means and instruments of transportation, such securities for the RE: SEC v. Omar Ali Rizvi, et al. Page 8 of 14

9 purpose of sale and for delivery after sale; and (c) making use of the means or instruments of transportation and communication in interstate commerce and of the mails to offer to sell such securities. 30. As described in paragraphs 1 through 27, the investments described herein have been offered and sold to the public. No registration statements were ever filed with the Commission or otherwise in effect with respect to these securities. 31. By reason of the foregoing, the Defendants have violated and, unless enjoined, will continue to violate Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. 77e(a) and 77e(c)]. SECOND CLAIM Violations of Section 17(a) of the Securities Act 32. Plaintiff Commission re-alleges and incorporates paragraphs 1 through 27 of this Complaint by reference as if set forth verbatim. 33. Defendant Rizvi, directly or indirectly, singly or in concert with others, in the offer or sale of securities, by use of the means and instrumentalities of interstate commerce and by use of the mails has: (a) employed devices, schemes, and artifices to defraud; (b) obtained money or property by means of untrue statements of a material fact and omitted to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engaged in transactions, practices, and courses of business which operate or would operate as a fraud and deceit upon the purchasers. 34. As a part of and in furtherance of his scheme, the Defendant Rizvi, directly and indirectly, prepared, disseminated, or used contracts, written offering documents, promotional materials, investor and other correspondence, and oral presentations, which contained untrue RE: SEC v. Omar Ali Rizvi, et al. Page 9 of 14

10 statements of material facts and misrepresentations of material facts, and which omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, including, but not limited to, those set forth in Paragraphs 1 through 27, above. 35. With respect to violations of Sections 17(a)(2) and (3) of the Securities Act, Defendant Rizvi was negligent in his actions regarding the representations and omissions alleged herein. With respect to violations of Section 17(a)(1) of the Securities Act, Defendant Rizvi made the above-referenced misrepresentations and omissions knowingly or with severe recklessness regarding the truth. 36. By reason of the foregoing, Defendant Rizvi has violated and, unless enjoined, will continue to violate Section 17(a) of the Securities Act [15 U.S.C. 77q(a)]. THIRD CLAIM Violations of Section 10(b) of the Exchange Act and Rule 10b Plaintiff Commission re-alleges and incorporates paragraphs 1 through 27 of this Complaint by reference as if set forth verbatim. 38. Defendant Rizvi, directly or indirectly, singly or in concert with others, in connection with the purchase or sale of securities, by use of the means and instrumentalities of interstate commerce and by use of the mails has: (a) employed devices, schemes, and artifices to defraud; (b) made untrue statements of a material fact and omitted to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engaged in acts, practices, and courses of business which operate or would operate as a fraud and deceit upon purchasers, prospective purchasers, and any other persons. RE: SEC v. Omar Ali Rizvi, et al. Page 10 of 14

11 39. As a part of and in furtherance of his scheme, Defendant Rizvi, directly and indirectly, prepared, disseminated, or used contracts, written offering documents, promotional materials, investor and other correspondence, and oral presentations, which contained untrue statements of material facts and misrepresentations of material facts, and which omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, including, but not limited to, those set forth in Paragraphs 1 through 27 above. 40. Defendant Rizvi made the above-referenced misrepresentations and omissions knowingly or with severe recklessness regarding the truth. 41. By reason of the foregoing, Defendant Rizvi violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R b-5]. FOURTH CLAIM Violations of Section 15(a)(1) of the Exchange Act 42. Plaintiff Commission re-alleges and incorporates paragraphs 1 through 27 of this Complaint by reference as if set forth verbatim. 43. Defendants Rizvi and Strategy Partners, by engaging in the conduct described above, directly or indirectly made use of the mails or means or instrumentalities of interstate commerce to effect transactions in, or to induce or attempt to induce, the purchase or sale of securities, without being registered as a broker or dealer, or being associated with a registered broker or dealer in accordance with Section 15(a) (1) of the Exchange Act [15 U.S.C. 78o(a) (1)]. 44. Accordingly, Defendants Rizvi and Strategy Partners were brokers within the definition of that term in Section 3(a)(4) of the Exchange Act which defines broker as any RE: SEC v. Omar Ali Rizvi, et al. Page 11 of 14

12 person engaged in the business of effecting transactions in securities for the account of others. Defendants Rizvi or Strategy Partners were never so registered and, acted as brokers which included: (1) solicitation of investors to purchase securities; (2) involvement in negotiations between the issuer and the investor; and (3) receipt of transaction-related compensation. 45. By reason of the foregoing, Defendants Rizvi and Strategy Partners violated and, unless enjoined, will continue to violate Section 15(a) (1) of the Exchange Act [15 U.S.C. 78o(a) (1)]. FIFTH CLAIM Violations of Section 7(a) of the Investment Company Act 46. Plaintiff Commission re-alleges and incorporates paragraphs 1 through 27 of this Complaint by reference as if set forth verbatim. 47. Defendant Bellwether issued securities in a public offering and held itself out as being engaged primarily, or proposed to engage primarily, in the business of investing, reinvesting, or trading in securities. 48. Accordingly, Defendant Bellwether was an investment company within the definition of that term in Section 3(a)(1) of the Investment Company Act [15 U.S.C. 80a-3(a)(1)], and was required to register as an investment company with the Commission under Section 8(a) of the Investment Company Act [15 U.S.C. 80a-8(a)]. Defendant Bellwether was never so registered and, while acting as an investment company, Bellwether offered, purchased and sold securities by the use of the mails and the means and instrumentalities of interstate commerce and engaged in business in interstate commerce. 49. By reason of the foregoing, Defendant Bellwether violated and, unless enjoined, will continue to violate Section 7(a) of the Investment Company Act [15 U.S.C. 80a-7(a)]. RE: SEC v. Omar Ali Rizvi, et al. Page 12 of 14

13 RELIEF REQUESTED WHEREFORE, Plaintiff respectfully requests that this Court: I. Permanently enjoin each Defendant from violating Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. 77e(a) and 77e(c)]. II. Permanently enjoin Defendant Rizvi from violating Section 17(a) of the Securities Act [15 U.S.C. 77e(a)] and Section 10(b) of the Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 [17 C.F.R b-5] thereunder. III. Permanently enjoin Defendant Bellwether from violating Section 7(a) of the Investment Company Act [15 U.S.C. 80a-7(a)]. IV. Permanently enjoin Defendants Rizvi and Strategy Partners from violating Section 15(a)(1) of the Exchange Act [15 U.S.C. 78o(a)(1)]. V. Order the Defendants to disgorge an amount equal to the funds and benefits obtained illegally, or to which they are otherwise not entitled, as a result of the violations alleged, plus prejudgment interest on that amount. VI. Order the Defendants to pay civil monetary penalties in an amount determined as appropriate by the Court pursuant to Section 20(d) of the Securities Act [15 U.S.C. 77t(d)], RE: SEC v. Omar Ali Rizvi, et al. Page 13 of 14

14 Section 21(d) of the Exchange Act [15 U.S.C. 78u(d)], and Section 42(e) of the Investment Company Act [15 U.S.C. 80a-41(e)] for the violations alleged herein. VII. Order the Defendants to provide a sworn accounting, providing a detailed account of the receipt and disposition of all proceeds from the offering described in Paragraphs 1 through 27, above. VIII. Order such other relief as this Court may deem just and proper. Respectfully submitted, DATED: July 31, 2009 s/timothy S. McCole TIMOTHY S. McCOLE Plaintiff s Lead Attorney Mississippi Bar No United States Securities and Exchange Commission Burnett Plaza, Suite Cherry Street, Unit 18 Fort Worth, Texas Telephone: (817) FAX: (817) McColeT@SEC.gov RE: SEC v. Omar Ali Rizvi, et al. Page 14 of 14

15 JS 44(Rev. 3/99) CIVIL COVER SHEET The JS-44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.) I.(a) PLAINTIFFS SECURITIES AND EXCHANGE COMMISSION (b) COUNTY OF RESIDENCE OF FIRST LISTED PLAINTIFF (EXCEPT IN U.S. PLAINTIFF CASES) DEFENDANTS OMAR ALI RIZVI, BELLWETHER VENTURE CAPITAL FUND I, INC., and STRATEGY PARTNERS, LLC. County of Residence of First Listed Defendant: Orange (IN U.S. PLAINTIFF CASES ONLY) NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND INVOLVED. (c) ATTORNEY (FIRM NAME, ADDRESS, AND TELEPHONE NUMBER) ATTORNEYS (IF KNOWN) Timothy McCole, Esq. Securities & Exchange Commission, Burnett Plaza, Suite Cherry Street, Unit #18, Fort Worth, TX (817) II. BASIS OF JURISDICTION (PLACE AN X IN ONE BOX ONLY) III. CITIZENSHIP OF PRINCIPAL PARTIES (For Diversity Cases Only) 1 U.S. Government Plaintiff 2 U.S. Government Defendant 3 Federal Question (U.S. Government Not a Party) 4 Diversity (Indicate Citizenship of Parties in Item III) IV. NATURE OF SUIT (PLACE AN X IN ONE BOX ONLY) PTF PTF Citizen of This State 1 1 Citizen of Another State 2 2 Citizen or Subject of a 3 3 Foreign Country (PLACE AN X IN ONE BOX FOR PLAINTIFF AND ONE BOX FOR DEFENDANT) PTF PTF Incorporated or Principal Place 4 4 of Business In This State Incorporated and Principal Place 5 5 of Business in Another State Foreign Nation 6 6 CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES 110 Insurance 120 Marine 130 Miller Act 140 Negotiable Instrument 150 Recovery of Overpayment & Enforcement of Judgment PERSONAL INJURY 310 Airplane 315 Airplane Product Liability 320 Assault, Libel & Slander PERSONAL INJURY 362 Personal Injury - Med. Malpractice 365 Personal Injury - Product Liability 610 Agriculture 620 Other Food & Drug 625 Drug Related Seizure of Property 21 USC Liquor Laws 422 Appeal 28 USC Withdrawal 28 USC State Reapprotionment 410 Antitrust 430 Banks and Banking 450 Commerce/ICC Rates/etc. 460 Deportation 151 Medicare Act 330 Federal 368 Asbestos Personal 640 R.R. & Truck PROPERTY RIGHTS 470 Racketeer Influenced Employers Liability Injury Product Liability and Corrupt Organizations 152 Recovery of Defaulted Student Loans (Excl. Veterans) 340 Marine 345 Marine Product Liability PERSONAL PROPERTY 370 Other Fraud 371 Truth in Lending 153 Recovery OF Overpayment of Veteran s Benefits 350 Motor Vehicle 380 Other Personal Property Damage 160 Stockholders Suits 355 Motor Vehicle 385 Property Damage 710 Fair Labor Standards Act 190 Other Contract Product Liability Product Liability 195 Contract Product Liability 360 Other Personal 720 Labor/Mgmt. Relations Injury REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS 730 Labor/Mgmt. Reporting & 210 Land Condemnation 441 Voting 510 Motions to Vacate Sentence 220 Foreclosure 442 Employment Habeas Corpus: 230 Rent Lease & Ejectment 443 Housing/ 530 General 240 Torts to Land Accommodations 535 Death Penalty 245 Tort Product Liability 444 Welfare 540 Mandamus & Other 290 All Other Real Property 440 Other Civil 550 Civil Rights Rights V. ORIGIN (PLACE AN X IN ONE BOX ONLY) 650 Airline Regs. 660 Occupational Safety/Health 690 Other 820 Copy rights 830 Patient 840 Trademark 810 Selective Service 850 Securities Commodities/ Exchange LABOR SOCIAL SECURITY 875 Customer Challenge 12 USC HIA (1395FF) 862 Black Lung (923) 863 DIWC/DIWW (405(g)) 891 Agricultural Acts 892 Economic Stabilization Act 864 SSID Title XVI 893 Environmental Matters Disclosure Act 865 RSI (405(g)) 894 Energy Allocation Act 740 Railway Labor Act FEDERAL TAX SUITS 895 Freedom of Information Act 790 Other Labor Litigation 870 Taxes (U.S. Plaintiff or Defendant) 791 Empl. Ret. Inc. 871 IRS - Third Party Security Act 26 USC Appeal of Fee Determination Under Equal Access to Justice 950 Constitutionality of State Statutes 890 Other Statutory Actions 1 Original Proceeding 2 Removed from State Court 3 Remanded from Appellate Court 4 Reinstated or 5 Transferred from 6 Multidistrict 7 Appeal to District Reopened another district Litigation Judge from Magistrate (Specify) Judge CAUSE OF ACTION (CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU ARE FILING AND WRITE BRIEF STATEMENT OF CAUSE. DO NOT CITE JURISDICTIONAL STATUTES UNLESS DIVERSITY.) Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 [15 U.S.C. 77e(a), 77e(c) and 77q(a)]; Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 [15 U.S.C. 78j(b) and 78o(a)(1)] and Rule 10b-5 thereunder [17 C.F.R b-5]; Section 7(a) of the Investment Company Act VII. REQUESTED IN CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint: : UNDER F.R.C.P. 23 JURY DEMAND YES NO VIII. RELATED CASE(S) (See Instructions): IF ANY DOCKET NUMBER DATE July 31, 2009 SIGNATURE OF ATTORNEY OF RECORD /s Timothy S. McCole FOR OFFICE USE ONLY Receipt # AMOUNT APPLYING IFP JUDGE MAG. JUDGE

16 INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS-44 Authority For Civil Cover Sheet The JS-44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently a civil cover sheet is submitted to the Clerk of Court for each civil complaint filed. The attorney filing a case should complete the form as follows: I. (a)plaintiffs - Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title. (b) County of Residence. For each case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the defendant is the location of the tract of land involved.) (c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section (see attachment). II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.C.P., which requires that jurisdictions be shown in pleadings. Place an X in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below. United States plaintiff. (1) Jurisdiction based on 28 U.S.C and Suites by agencies and officers of the United States are included here. United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an X in this box. Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box 1 or 2 should be marked. Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; federal question actions take precedence over diversity cases.) III. Residence (citizenship) of Principal Parties. This section of the JS-44 is to be completed if diversity of citizenship was indicated above. Mark this section for each principal party. IV. Nature of Suit. Place an X in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section IV above, is sufficient to enable the deputy clerk or the statistical clerks in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most definitive V. Origin. Place an X in one of the seven boxes. Original Proceedings. (1) Cases which originate in the United States district courts. Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section When the petition for removal is granted, check this box. Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date. Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date. Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers. Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section When this box is checked, do not check (5) above. Appeal to District Judge from Magistrate Judgment. (7) Check this box for an appeal from a magistrate judge s decision. VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. VII. Requested in Complaint. Class Action. Place an X in this box if you are filing a class action under Rule 23, F.R.Cv.P. Demand. In this space enter the dollar amount (in thousands of dollars) being demanded or indicate other demand such as a preliminary injunction. Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded. VIII. Related Cases. This section of the JS-44 is used to reference related pending cases if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases. Date and Attorney Signature. Date and sign the civil cover sheet.