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Order Regarding Assets of George Hudgins
Order Regarding Assets of George Hudgins
NOW COMES George Hudgins, by and through his attorney, and files this Response to
1. Mr. Hudgins would show this Court, because of this asset freeze he has been
unable to secure accounting help to assist him in preparing such an accounting. However, he has
2. Mr. Hudgins, through his attorney, has been in contact with the CFTC and is
currently in the process of negotiating the terms of an agreed motion requesting the Court to
appoint a receiver. Mr. Hudgins believes that the appointment of a receiver will facilitate the
3. Mr. Hudgins anticipates that the motion and proposed order regarding the
appointment of the Receiver will be filed with the Court early next week. Mr. Hudgins’ counsel
has received a copy of a proposed motion from the CFTC and will review that motion over the
367924
Case 6:08-cv-00187-LED Document 23 Filed 05/30/2008 Page 2 of 2
Respectfully submitted,
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the above and foregoing document was
served upon the following counsel of record via the ECF system on this 30th day of May, 2008:
Kim Bruno
U.S. Commodity Futures Trading Commission
Division of Enforcement
1155 21st Street, N.W.
Washington, DC 20581
(202) 418-5368
[email protected]
367924
Case 6:08-cv-00187-LED Document 23-2 Filed 05/30/2008 Page 1 of 2
EXHIBIT A
1
Kubota Credit note $7,000.
Plaintiff,
v.
CIVIL ACTION NO.: 6:0ScvlS7
GEORGE D. HUDGINS, individually and dba :
GEORGE D. HUDGINS, L.L.C. .
Defendant
"Plaintiff') and Defendant George D. Hudgins, individually and doing business as George D.
Hudgins, L.L.c. ("Hudgins" or "Defendant"), respectfully and jointly request that this Court
enter the attached Consent Order of Preliminary Injunction and Other Equitable Relief
("Consent Order") which, among other things, (1) enjoins and restrains Defendant from violating
certain provisions of the Commodity Exchange Act, as amended ("Act" or "CEA"), 7 U.S.C. §§
1 et seq. (2002), and the Regulations promulgated thereunder ("CFTC Regulations"), 17 C.F.R.
§§ 1.1 et seq. (200S), and (2) appoints Mr. Kelly Crawford of the law firm Scheef & Stone,
L.L.P. as Receiver to take control ofDefendants assets currently frozen pursuant to the Cour's
May 13, 200S Ex Parte Statutmy Restraining Order to Freeze Assets and Preserve Books and
Records andfor an Accounting, and an Order to Shmi' Cause Regarding Preliminary Injunction
Case 6:08-cv-00187-LED Document 25 Filed 06/06/2008 Page 2 of 2
("SRO") in order to administer this case by marshalling assets and records, preserving such
assets, locating and communicating with the commodity pool participants and prospective pool
each customer, and investigating and processing commodity pool participant claims.
Respectfully submitted,
Kim G. Bruno, Counsel to the Director Meadows, Collier, Reed, Cousins & Blau
(D.C. Bar No. 389899) L.L.P.
kbrunoØ?cftc.gov (admitted pro hac vice) 601 Main Street, Suite 3700
Dallas, TX 75202
United States Commodity Futures Trading Telephone: (214) 744-3700
Commission Fax: (214) 747-3732
Division of Enforcement
1155 21st Street, NW,
Washington, D.C. 20581
Telephone: (202) 418-5000
Fax: (202) 418-5531
2
Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 1 of 19
Plaintiff,
v.
CIVIL ACTION NO.: 6-08 CV 187
GEORGE D. HUDGINS, individually and dba ~
GEORGE D. HUDGINS, L.L.C.
Defendant
13, 2008, a Complaint for Permanent Injunction, Civil Monetar Penalties, and Other Equitable
Relief ("Complaint") against Defendant, George D. Hudgins, individually, and dba George D.
antifraud provisions and registration requirements of the Commodity Exchange Act, as amended
("Act" or "CEA"), 7 U.S.C. §§ 1 et seq. (2002), and the Regulations promulgated thereunder
("CFTC Regulations"), 17 C.F.R. §§ 1.1 et seq. (2008). The Commission also moved pursuant
Based upon the attached wrtten consent of Defendant to this Order of Preliminary
Injunction and Other Equitable Relief ("Order"), the Couii finds, for the purpose of this Order,
that Defendant acknowledges service of the Summons and Complaint in this action. The Court
further finds that Defendant, without admitting or denying the allegations of the Complaint
except as to jurisdiction and venue as stated below, consents to the entry of this Order. The
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Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 2 of 19
Cour also finds that Defendant's consent to this Order is entered into voluntarily and that no
promise or threat has been made by the CFTC, or any member, officer, agent, or representative
I.
1. For the purposes of this Order, this Cour has jurisdiction over Defendant and the
subject matter of this action pursuant to Section 6c of the Act, 7 U.S.C. §13a-l, which
authorizes the Commission to seek injunctive relief against any person whenever it shall appear
that such person has engaged, is engaging or is about to engage in any act or practice constituting
a violation of any provision of the Act or any rule, regulation or order thereunder.
2. Venue properly lies with this Cour pursuant to Section 6c(e) of the Act, 7 U.S.C.
§ 1.1 3a- 1 (e), in that Defendant is found, inhabits or transacts business in this district, and the acts
and practices in violation of the Act have occurred, are occurrng or are about to occur within
this district.
II.
RELIEF GRANTED
employees, and attorneys, and those persons in active concert or participation with him, are
enjoined and restrained, until further order ofthis Court, from directly or indirectly:
a. In or in connection with any order to make, or the making of, any contract
2
Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 3 of 19
on behalf of any other persons, where such contract for future delivery
§§ 6b(a)(2)(i)-(iii);
,.
.)
Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 4 of 19
be binding upon Defendant, upon any person acting in the capacity of agent, servant, employee,
or attorney of Defendant, and upon any person who receives actual notice of this Order by
personal service or otherwise insofar as he or she is acting in active conceii or paiiicipation with
Defendant.
Appointment 0/ Receiver
5. IT is FURTHER ORDERED that Mr. Kelly Crawford of the law fiim ofScheef
& Stone, L.L.P. is appointed as the Receiver for Defendant's Assets, as defined under the SRO,
with full powers of an equity receiver. The Cour makes this appointment of a Receiver after
having duly considered the qualifications and experience of said Receiver and determining said
Receiver qualified as reflected in Mr. Crawford's curriculum vitae setting forth his qualifications
and experience, and his fee schedule attached hereto as Exhibit A. The Receiver shall be the
6. The "Receiver Estate" shall consist of all Defendant's Assets, as that term is
defined in Paragraph 11 of the SRO, that are under the Receiver's possession, custody, or control
or, per the SRO, should be under the Receiver's possession, custody, or control. No person
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Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 5 of 19
holding or claiming any position of any SOli with the Receiver Estate shall possess any authority
to act by or on behalf of any of the Receiver Estate, except as authorized by the Receiver.
Powers 0/ Receiver
7. IT is FURTHER ORDERED that the Receiver shall have and possess all powers
and rights to administer and manage the Receiver Estate in the Receiver's discretion, including
assets held by third parties that are subject to the SRO, and take such action as approved by the
including, but not limited to, making a determination of the account values
b. The Receiver shall take exclusive custody, control, and possession of the
Receiver Estate. Further, the Receiver shall have full power to sue for,
collect, receive and take possession of all goods, chattels, rights, credits,
moneys, effects, land, leases, mail, books, records, work papers, and
Defendant shall be under the Receiver's control, but shall remain in the
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Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 6 of 19
c. The Receiver shall take all steps necessary to secure the business premises
of Defendant, including but not limited to, 3737 Financial L.P. a/a
Hudgins Group a/a Hudg-Investments, and any and all other premises
d. The Receiver shall preserve, hold and manage the Receiver Estate, and
perform all acts necessary to preserve the value of the Receiver Estate, in
including but not limited to, 3737 Financial L.P. a/k/a Hudgins Group
a/a Hudg- Investments, by performing all acts incidental thereto that the
g. The Receiver shall collect all money owed to the Receiver Estate;
Defendant or to carry out his or her duties pursuant to this Order or the
SRO;
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Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 7 of 19
depositories for fuds of the Defendant. The Receiver shall deposit all
funds of the Defendant in such designated accounts and shall make all
accounts.
L. The Receiver shall make payments and disbursements from the Receiver
Estate that are necessar or advisable for carrying out the directions of, or
exercising the authority granted by, this Order. The Receiver shall apply
to the Couii for prior approval of any payment of any debt or obligation
incured by Defendant prior to the date of entry of this Order or the SRO,
notice of the entry of this Order or the SRO to any person, agency or entity the Receiver deems
appropriate by delivery of a copy of this Order or the SRO by hand, U.S. Mail, International
7
Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 8 of 19
Mail, express mail, courier service, facsimile, e-mail or any other reasonable means of delivery,
and that immediately upon service of this Order or the SRO upon Defendant and/or any other
person or entity, and to the extent that they have not already done so, they shall forthwith or
within such time as permitted by the Receiver in writing, deliver over to the Receiver:
a. Possession and custody of all funds, assets, property, and all other assets,
limited to, all books and records of accounts, all financial and accounting
c. Possession and custody of all fuds and other assets belonging to members
Defendant, including but not limited to, access to the business premises of
property; and
or obligations of Defendant.
Nothing in this paragraph shall require the Defendant to deliver to the Receiver any wages earned
by the Defendant after the date of this order appointing the Receiver except to the extent that the
wages relate, in any way, to the conduct alleged by the Commission in its Complaint in this matter,
8
Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 9 of 19
including but not limited to whether the origin of the wages was either directly or indirectly monies
from prior, curent and/or prospective pool paricipants of3737 Financial L.P. aka Hudgins Group
aka Hudg-Investments ("3737 Financial"), prior, curent and/or prospective investors of the
Defendant, or Defendant's prior and/or curent agents servants, employees, attorneys, and persons
in active concert or participation with the Defendant. All of Defendant's wages not delivered to the
Receiver shall be deposited into a segregated account, which shall be opened by the Defendant no
later than five days from the date of this order. Within the same five day period, the name, location,
account number and signatories to the account shall be provided to the Receiver and the
living expenses not to exceed $6000 per month. Each withdrawal shall be supp0l1ed by an
appropriate receipt and each receipt shall be provided montWy to the Receiver and the Commission.
. Furher, the Defendant's attorney shall deliver to the Receiver and the Coiniission montWy account
statements. The Receiver and Commission reserve the right to object to the appropriateness of any
expenditue. Defendant may make fuher application to modify the amount of montWy
9. The Receiver shall maintain those documents delivered pursuant Paragraph 4(b)
in Dallas, Texas subject to the approval of the United States Attorney's Offce for the Eastern
District of Texas and allow Plaintiff, Defendant, any state and Federal governent agencies, their
agents, servants, employees, attorneys, and persons in active concert or participation with them
Report by Receiver
10. IT is FURTHER ORDERED that the Receiver shall provide an initial repOli to
the Court and the Paiiies within 30 days of the date ofthis order, subject to such reasonable
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Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 10 of 19
extensions as the Court may grant, that details (i) all of Defendant's Assets, as defined in the
SRO (including the location of such assets), contained in the Receiver Estate; and (ii) the account
values for all accounts of pool participants or prospective pool participants or clients or investors
controlled or managed by Defendant. The Receiver shall provide additional reports and/or
updates as he deems necessary in the course of fulfilling his duties set forth herein or as
11. IT is FURTHER ORDERED that (i) all persons, including but not limited to
the Defendant and his agents, servants, employees, assigns, attorneys, and persons in active concert
or paricipation with the Defendant, including any successor thereof, and any persons who receive
actual notice ofthis Order of the SRO by personal service or otherwise, are enjoined from in any
way interfering with the operation of the Receiver Estate or in any way disturbing the assets of
the Receiver Estate and from fiing or prosecuting any actions or proceedings which involve the
Receiver or which affect the Receiver Estate, specifically including any proceeding initiated
pursuant to the United States Bankptcy Code, except with the prior pennission ofthis Cour,
and (ii) that Defendant and his agents, servants, employees, assigns, attorneys, and persons in
active concert or participation with the Defendant, including any successor thereof, and any
persons who receive actual notice of this Order or the SRO by personal service or otherwise,
shall cooperate in every way with the Receiver and others working with the Receiver in the
administration of the Receiver Estate and provide such information related to the Receiver Estate
as the Receiver and those working with the Receiver reasonably request. Nothing in this
paragraph shall prevent the Defendant from objecting to the Receiver's control of assets which do
not relate to the conduct alleged by the Commission in its Complaint in this matter or assets which
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Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 11 of 19
do not or did not relate, directly or indirectly, to monies from prior, cuiTent and/or prospective pool
paricipants of 3737 Financial or prevent the Plaitiff from responding to such objection. Fui1her,
nothing in this paragraph shall prevent the Commission from objecting to the Receiver's failure to
control assets which relate to the conduct alleged by the Commission in its Complaint in this matter
or assets which relate, directly or indirectly, to monies from prior, current and/or prospective pool
participants of 3737 Financial, or prevent the Defendant from responding to such objection.
12. IT is FURTHER ORDERED that except by leave of the Cour, during the
pendency of the Receiver Estate ordered herein, Defendant and all other persons and entities be
and hereby are stayed from taking any action to establish or enforce any claim, right or interest
for, against, on behalf of, in, or in the name of Defendant, the Receiver, any of Defendant's
Assets, as defined in the SRO, the Receiver Estate, or the Receiver's duly authorized agents
acting in their capacities as such, including but not limited to, the following actions:
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Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 12 of 19
d. Doing any act or thing to interfere with the Receiver taking control,
This Paragraph does not stay the commencement or continuation of an action or proceeding by a
13. IT is FURTHER ORDERED that pursuant to 28. U.S.C. § 754 upon the posting
of a bond in the amount of $ 1 0,000 by the Receiver, the Receiver shall be vested with complete
jurisdiction and control of all property, real, personal or mixed situated in different districts, with
the right to take possession thereof and shall have capacity to sue in any district without ancilary
appointment.
Receiver Compensation
14. IT is FURTHER ORDERED that the Receiver and all personnel hired by the
Receiver as herein authorized, including counsel to the Receiver, are entitled to reasonable
compensation for the performance of duties pursuant to this Order and for the cost of actual out-
of-pocket expenses incurred by them, solely from the assets now held by, or in the possession or
control of, or which may be received by Defendant. The Receiver shall file with the Cour and
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Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 13 of 19
serve on the parties periodic requests for the payment of such reasonable compensation, with the
first such request filed no more than sixty (60) days after the date of this Order. The Receiver
shall not increase the hourly rates used as the bases for such fee applications without prior
approval ofthe Couii. The Commission shall have the right to object to any fee application
III.
15. IT IS FURTHER ORDERED that this Order shall remain in full force and
effect until further order of this Cour, and that this Cour retains jurisdiction of this matter for all
purposes. The Statutory Restraining Order ordered by the Cour on May 13, 2008, except to the
extent that it is modified by this Order, shall remain in full force and effect until further order of
this Cour.
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Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 14 of 19
Consent Order Of Permanent Injunction And Other Equitable Relief consented to and approved
Kim G. Bruno, Counsel to the Director Meadows, Collier, Reed, Cousins & Blau
(D.C. Bar No. 389899) L.L.P.
kbruo(?cftc.gov (admitted pro hac vice) 601 Main Street, Suite 3700
Dallas, TX 75202
United States Commodity Futures Trading Telephone: (214) 744-3700
Commission Fax: (214) 747-3732
Division of Enforcement
1155 21st Street, NW,
Washington, D.C. 20581
Telephone: (202) 418-5000
Fax: (202) 418-5531
14
Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 15 of 19
EXHIBIT A
Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 16 of 19
Kelly Crawford, a cum laude graduate of the SMU School of Law, and
AV Rated attorney, is now in his 22nd year of practicing law. Mr. Crawford
continues to focus his practice on investment fraud and recovering stolen or
misappropriated funds for investors. Mr. Crawford has worked extensively
with the Securities and Exchange Commissioni the United States Commodity
Futures Trading Commission, the Department of Justice, and United States
Marshalls. Mr. Crawford has been appointed a Receiver in various
investment fraud cases by a number of judges of the United States District
Court for the Northern District of Texas.
. Panelist on topic of Receiverships presented at the Annual Southwest Securities Enforcement Conference
sponsored by The Fort Worth District Office of the Securities and Exchange Commission.
Case 6:08-cv-00187-LED Document 25-2 Filed 06/06/2008 Page 18 of 19
. Order of Barristers
. Appointed by the Governor of New Mexico to serve as an ex-officio member of the Board of Educational
Finance
· Undergraduate degree in government and journalism, cum. laude, from New Mexico State University in
1982. Mr. Crawford served as Student Body President at NMSU and was an ex-offcio member of the
Board of Regents..
Reported Cases
Mr. Crawford's successful experience in handling lawsuits is reflected in the following reported cases in
which Mr. Crawford served as counsel:
· Seawright v. Charter Furniture Rental, Inc., 39 F. Supp. 2d 795 (N.D. Tex. 1999), where the Court found
807. .
that "lead counsel for Charter, Kelly Crawford, is an experienced, able practitioner who specializes in the
area of commercial litigation, including employment disputes..The Court found the Quality of their written
work to be excellent. Their rates...certinly comport with the going rate for attorneys in this district and
division with their Qualifications and experience. In fact, the hourly rates are on the low side." 39 F.2d at
· Christopher v. Diamond Benefits Life Ins. Co., 35 F.3d 232 (5th Cir. 1994).
Fee Schedule
Hourly Rates: