Case 1:14-cv-02468-MHC Document 52 Filed 09/21/15 Page 1 of 7

IN T H E UNITED STATES D I S T R I C T COURT

F O R T H E NORTHERN DISTRICT OF G E O R G I A
ATLANTA DIVISION

S E C U R I T I E S AND E X C H A N G E
COMMISSION,
Plaintiff,

C I V I L ACTION F I L E
NO. l:14-CV-2468-MHC

V.

THOMAS J . L A W L E R and
F R E E D O M FOUNDATION USA
L L C dba F R E E D O M C L U B USA,
Defendants,
DIVINE SPIRIT L L C ,
O R D E R PROCESSING L L C ,
P R O S P E R I T Y SOLUTIONS L L C ,
and V I O L E T BLESSINGS L L C ,
Relief Defendants.

ORDER
On July 31, 2014, Plaintiff Securities and Exchange Commission (the
"Commission") filed its Complaint alleging that Defendants Thomas J. Lawler
("Lawler") and Freedom Foundation USA dba Freedom Club USA (collectively,
"Defendants") violated Sections 5(a), 5(c), and 17(a) ofthe Securities Act of 1933,
15 U.S.C. 77e(a), 77e(c), and 77q(a) ("Securities A c f ) , Section 10(b) ofthe

Case 1:14-cv-02468-MHC Document 52 Filed 09/21/15 Page 2 of 7

Securities Excliange Act of 1934, 15 U.S.C. 78j(b) ("Exchange Act"), and

Exchange Act Rule lOb-5, 17 C.F.R. 240.10b-5. Compl. [Doc. 1] T | 4 . After
conducting a telephone conference hearing that same day at which Lawler was a
participant. Transcript of Telephone Conference Proceedings Before Judge
Totenberg, July 31, 2014 [Doc. 23], the Court found that there was good cause to
believe that, unless restrained by the Court, Defendants would dissipate, conceal,
or transfer assets which could be the subject of a future order directing
disgorgement or the payment of civil monetary penalties. Order of July 31, 2014
[Doc. 6]. Consequently, the Court entered a temporary restraining order, order
freezing assets and for an accounting, order prohibiting destruction of documents,
and order expediting discovery. I d Among the directives of the temporary
restraining order were the following:
IL
I T IS F U R T H E R ORDERED that each defendant and each relief
defendant shall submit in writing to this Court and Plaintiff
Commission, on or before Tuesday, August 5th at Noon, the
following identifying information:
(A) all names by which every person with authority to
exercise control of the defendants is known, all business and
residence addresses, postal box numbers, telephone numbers,
and facsimile numbers, e-mail addresses and the nationality of
such persons; and

Case 1:14-cv-02468-MHC Document 52 Filed 09/21/15 Page 3 of 7

(B) each account with any financial institution or brokerage

firm maintained in either defendant's or any relief defendant's
names or held for either defendant's or any relief defendant's
direct or indirect beneficial interest from January 1, 2004
through the present.

VIII.
I T IS F U R T H E R ORDERED that each defendant prepare and
present to this Court and to the Commission a sworn accounting of all
funds received by that defendant pursuant to the scheme described in
the Commission's Complaint and of the disposition and use of said
proceeds. This accounting shall include, but not be limited to, the
names and address of each investor (for entities contracting with
investors), the amount invested, the total amount received from
investors, the date each such investment was made and a listing of all
expenditures showing the amount and to whom paid and the date of
payment. The accountings shall be submitted to this Court and served
upon the Commission within 20 days from the date of entry of this
Order, unless the Court modifies this provision at the scheduled TRO
hearing.^
Id. at 5, 10 (emphases in original). The Court also ordered that each defendant and
relief defendant, including Lawler, appear before the Court on August 8, 2014, to
show cause why a preliminary injunction should not be granted extending the asset
freeze until a final adjudication on the merits may be had. Id. at 9-10.
On August 8, 2014, the Court conducted a hearing on the SEC's request for
a preliminary injunction and continued asset freeze. Transcript of Courtroom

The provision was never modified.

3

Case 1:14-cv-02468-MHC Document 52 Filed 09/21/15 Page 4 of 7

Proceedings Before Judge Totenberg, Aug. 8, 2014 [Doc. 24]. Lawler did not
appear but the Court contacted him by telephone from the courtroom, although it is
unclear how long he remained on the line. Id. at 4-11, 60. After finding the
Commission had established a prima facie case that Defendants violated the
Securities Act, the Exchange Act, and Exchange Act Rule lOb-5, the Court entered
a preliminary injunction and continued the asset freeze against Defendants. Order
of August 11, 2014 [Doc. 18]. Among the directives of the preliminary injunction
order was that, no later than August 25, 2014, Lawler "comply fully with
paragraph[] I I . . . of this Court's Order of July 31, 2014." I d at 9. In addition, it
was further ordered that Lawler "no later than September 2, 2014, repatriate all
assets transferred overseas, and shall provide the [Commission] with notice of the
efforts taken to effect such repatriation. Defendants . . . shall deposit the entirety
of any repatriated sums into the registry of the Court where they will remain
pending fiirther Order of this Court." I d at 10. The docket shows that Lawler has
failed to comply with the Court's Orders of July 31, 2014, or August 8, 2014.
The Commission has also issued a notice for Lawler's deposition and a
subpoena requiring him to bring the information that the Court previously ordered
to be produced in the sworn accounting. [Doc. 45.] Lawler failed to appear at his
scheduled deposition and has yet to produce the information ordered by the Court.
4

Case 1:14-cv-02468-MHC Document 52 Filed 09/21/15 Page 5 of 7

On July 14, 2015, the Commission filed a "Motion for an Order to Show
Cause Why Defendant Thomas J. Lawler Should Not Be fJeld in Contempt For
Failing to Comply With This Court's Previous Orders." [Doc. 48.] On September
2, 2015, this Court issued an Order directing Lawler to appear in this Court on
September 21, 2015 and show cause, i f any there be, as to why this Court should
not issue an order holding him in civil contempt for violating this Court's previous
orders. [Doc. 49.] Lawler was served not only through the Clerk's office but also
through a process server engaged by the Commission, who effectuated service on
Lawler's wife. [Doc. 50.^
After consideration of the entire record of this case, the Court hereby finds
that Defendant Thomas J. Lawler is in willful contempt of this Court's Orders of
July 31, 2014, and August 8, 2014. Defendant Lawler is hereby ORDERED to
comply with the following actions no later than five o'clock p.m. on Monday,
September 28, 2015:
1.

Defendant Lawyer shall submit in writing to this Court and the

Commission the following information:
(A)

All names by which every person with authority to exercise

control of the defendants or the relief defendants is known, all
business and residence addresses, postal box numbers,
5

Case 1:14-cv-02468-MHC Document 52 Filed 09/21/15 Page 6 of 7

telephone numbers, and facsimile numbers, e-mail addresses

and the nationality of such persons; and
(B)

Each account with any fmancial institution or brokerage firm

maintained in defendant's or any relief defendant's names or
held for either defendant's or any relief defendant's direct or
indirect beneficial interest from January 1, 2004 through the
present.

2.

Defendant Eawler shall prepare and present to this Court and to the
Commission a sworn written accounting of all funds received by him
or any other defendant or relief defendant pursuant to the scheme
described in the Commission's Complaint and ofthe disposition and
use of said proceeds. This accounting shall include, but not be limited
to, the names and address of each investor (for entities contracting
with investors), the amount invested, the total amount received from
investors, the date each such investment was made and a listing of all
expenditures showing the amount and to whom paid and the date of
payment.

3.

Defendant Eawler shall repatriate all assets transferred overseas,

provide the Commission with notice of the efforts taken to effect such
6

Case 1:14-cv-02468-MHC Document 52 Filed 09/21/15 Page 7 of 7

repatriation, and deposit tlie entirety of any repatriated sums into the
registry ofthe Court where they will remain pending further Order of
this Court.
4.

Defendant Lawler shall appear and sit for a deposition to be

conducted by counsel for the Commission.

I f Defendant Lawler fails to comply with this Order by five o'clock p.m. on
Monday, September 28, 2015, then he shall pay a fine of one thousand ($1,000)
dollars per day beginning on Tuesday, September 29, 2015, until he shall purge
himself of his contempt. I f Defendant Lawler has not fully complied with this
Order by Monday, October 5, 2015, then the daily fme shall increase to two
thousand ($2,000) dollars per day. I f Defendant Lawler has not fully complied
with this Order by October 13, 2015, upon motion supported by sworn statement or
affidavit presented by the Commission, the Court intends to incarcerate Defendant
Lawler until he shall purge himself of his contempt and compliance is complete.
Any fine payable shall be delivered to the Clerk of Court by 3:00 p.m. in the
afternoon of the day in which the funds are due to be paid.

MARK H. COHEN
United States District Judge
7