SECURITIES EXCHANGE COMMISSION v. MILLER

ury wanted to "tar and feather" him because he was a CEO, and the "public right now has a general viewpoint" that all CEOs are guilty)). He agreed with the statement that "there is a [guilty verdict] out there, but [he] didn't do it," and that he is the "victim in all this." ( Id. at 12:7-9; 59:22-23.)

He went on to ask plaintiff's attorneys, "So did you know I was innocent? Yes. What happened was we got too far into this case, the SEC had too much invested and you couldn't drop the case. So am I bitter about it? I'm bitter that I didn't put it in writing to save the issues with my family but I'm bitter at you three individuals because your decision to chase me and pursue me had nothing even to do with what the original case was." (Tr. [154] at 11:10-16.)

Judge Baverman was unpersuaded by these arguments, stating that "if the jury was thinking like the court was thinking, it did not find the defendant's testimony to be credible," that he did not "see any realization by [defendant] that a fair and impartial jury would look at this evidence and find that [he] violated the securities laws," and that "[t]here is no acceptance of responsibility, to borrow from the sentencing guidelines . . . there is no inclination [sic] in [defendant's] statements that [he] did wrong." (Tr. [154] at 89:8-10, 23-25; 90-6.) He stated that "[t]he jury was very intelligent, and [] a jury can differentiate" "between argument and fact and this jury did not, in my opinion, put a strike against Mr. Miller for being a CEO of a company. . . . [it] can distinguish those CEOs who act responsibly and those who do not, and [] that's what they saw in this case." ( Id. at 88:21-24.) Finally, he noted that "[t]he fact that other people did wrong or may have done wrong or could have been the greater subject of the SEC's attention does not excuse [defendant's] conduct as found by the jury, who, after all, observed all of these individuals who came in and testified"; rather, "[t]his case was about [defendant's conduct and the jury found that [his] conduct violated the law." ( Id. at 90:7-12.)

The Court has reviewed the record and it concurs with Judge Baverman's assessment. The Court concludes that Miller has not shown sufficient recognition of the wrongful nature of his conduct, and accordingly this factor weighs in favor of plaintiff. See SEC v. Lipson, 278 F.3d 656, 664 (7th Cir. 2002) ("[t]he criminal who in the teeth of the evidence insists that he is innocent, that indeed not the victims of his crime but he himself is the injured party,

Plaintiff also argues that Miller's arbitration against Morgan Keegan, in which Miller demands over $71 million in damages and blames Morgan Keegan for the downfall of Master Graphics, highlights his refusal to accept responsibility. (Pl.'s Br. [142] at 4 n. 1; Pl.'s Resp. [180] at 4 n. 5.) Defendant alleged that Morgan Keegan reneged on a promise to grant him personally a margin loan for 50% of the post-IPO market value of his Master Graphics stock, instead loaning him only 10% of the value, and accused Morgan Keegan of spreading negative information about Master Graphics and him personally in the market, which led to the Company's demise. (Pl.'s Resp. [180] at 2 n. 2.) The arbitration dismissed Miller's claims with prejudice; he states that the case was dismissed on a technicality. (Tr. [154] at 52:4-5.) However, this case involves promises and assurances Miller was given by Morgan Keegan prior to the IPO, so the Court finds it is irrelevant to the instant determination of remedies.

demonstrates by his obduracy the likelihood that he will repeat his crime, and this justifies the imposition of a harsher penalty on him.").

(6) Likelihood that Defendant's Occupation Will Present Opportunities for Future Violations

Plaintiff argues that Miller is a serial entrepreneur and promoter who has been involved in large deals since the 1980s. ( See, e.g., Pl.'s Br. [142] at 15.) Starting in 2002 and during the pendency of this case, he attempted to put together a large deal to create a new commercial airline, DirectAir, with billions of dollars of investor funding and $300 million in loan guarantees from the state of Louisiana. ( See Miller Aff., attached as Ex. 4 to Opp'n [144] at ¶ 4.) Judge Baverman stated during the Remedies Hearing that "obviously, there is an opportunity for future violation because this is Mr. Miller's business." (Tr. [154] at 93:15-16.)

Defendant argues that the verdict against him has made it difficult for him to be presented with opportunities to violate the federal securities laws, stating that after the verdict was made public in 2007, he came to an agreement with potential financiers and management of DirectAir that he would not have an executive-related role or board of director position with DirectAir. ( Id. at ¶¶ 6, 7.)

Defense counsel provided numerous letters in support of Miller, including from his wife, former colleagues, and a Louisiana state senator. ( See Exs. A1-A9 to Opp'n [144].) The Court notes that some of these letters are from the early 1990s, and others are from 2002, well before the Complaint [1] was filed in this case in June 8, 2004. ( See id.) The most salient recommendation comes from Andrew LaTrobe, a loan officer with whom Miller worked on the DirectAir deal, who wrote, "For almost eight years[,] I have seen no evidence of any attempt by Mr. Miller to exaggerate the facts for the purpose of reaching a goal, in spite of the billions of dollars of potential value (and annual economic impact) that could be created for a region in desperate need." (Ex. Al of Ex. 4 to Opp'n [144].) Miller's wife wrote to the Court on October 22, 2008 that the only paying job he has

is leading the music for a satellite church that pays him $300/week. That is our only steady source of income. He occasionally gets a consulting job that helps financially, but now that he has been found guilty of civil fraud, I am sure that source of income may be affected as well.

(Ex. A2 to Opp'n [144].)

Despite defendant's apparent lack of current job prospects, the Court finds that defendant's background as an entrepreneur and his proven ability to start a private company and take it public weighs in favor of an injunction. See Commodity Futures Trading Comm'n v. Sidoti, 178 F.3d 1132, 1137 (11th Cir. 1999) (affirming district court's injunction against future violation of Commodity Exchange Act given likelihood of future violation).

As plaintiff has noted, it is somewhat disturbing that, in the many years since the demise of the company, the defendant has never obtained a traditional 9-5, wage-paying job. Instead, he seems to always be in pursuit of the next big deal.

Judge Baverman noted that, in totality, "the SEC has established a reasonable likelihood that the wrong will be repeated." (Tr. [154] at 92:20-21; 93:1-6.) The Court agrees, noting that defense counsel essentially conceded the necessity of an injunction. Accordingly, because of defendant's intentional, knowing conduct, the Court imposes a permanent injunction against defendant. See Ginsburg, 362 F.3d 1292 at 1305 (stating that "[i]f no injunction is to be entered where every factor weighs in favor of an injunction, then the factors would be meaningless. They are not, and it was a clear error of judgment not to enjoin [defendant] to refrain from violating the securities laws in the future"; injunctions are reserved for "intentional, knowing conduct, as opposed to more minor, technical violations"); SEC v. Scherm, 854 F. Supp. 900, 908 (N.D. Ga. 1993) (Forrester, J.) (issuing injunction because "conduct was repeated and of significant value. The repeated nature of his wrongdoings indicates a blatant disregard for securities laws and the sanctity of other people's money. Given his sophisticated business background and his continued denial of any wrongdoing, this court finds that the evidence provides sufficient grounds to support a permanent injunction to prevent further violations."); SEC v. Carriba Air, Inc., 681 F.2d 1318, 1322 (11th Cir. 1982) (affirming district court's injunction of defendant where virtually all factors cut against defendant).

He also correctly noted the risk of bad precedent by not imposing an injunction: that future defendants would refer to this case and state, "See, even a judge didn't believe the jury verdict." (Tr. [154] at 93:14.)

Defense counsel stated, "We are not sitting here saying nothing is going to happen off a jury verdict. We understand," but "[w]e just weren't going to concede it." (Tr. [178] at 19:1-5.)

B. Disgorgement, Prejudgment Interest, and Civil Penalties

Plaintiff asks the Court to issue an order requiring defendant to disgorge any ill-gotten gains together with prejudgment interest and requiring defendant to pay civil monetary penalties.

1. Disgorgement

Plaintiff argues for disgorgement in the amount of $10,184. (Pl.'s Br. [142] at 2.)

a. Standard for Disgorgement

Once a court determines that a federal securities law violation has occurred, it has broad equitable powers to fashion appropriate remedies, including ordering culpable defendants to disgorge their profits. SEC v. Lorin, 76 F.3d 458, 461-62 (2nd Cir. 1996); see also SEC v. First Jersey Sec., Inc., 101 F.3d 1450, 1474-75 (2nd Cir. 1996) (district courts have broad discretion to determine whether to order disgorgement and the amount to be disgorged). In fact, district courts have so much latitude in these matters that a decision not to order disgorgement will not be disturbed by an appellate court unless it is established that the district court abused its discretion. See, e.g., First Jersey Sec., 101 F.3d at 1475; SEC v. Posner, 16 F.3d 520, 522 (2nd Cir. 1994).

The primary purpose of disgorgement as a remedy for violation of the securities laws is to deprive violators of their ill-gotten gains. SEC v. Wang, 944 F.2d 80, 85 (2nd Cir. 1991); see also Blatt, 583 F.2d at 1335 (the remedy of disgorgement is designed both to deprive a wrongdoer of his unjust enrichment and to deter others from violating the securities laws). Because disgorgement is remedial and not punitive, the court's power to order disgorgement "extends only to the amount with interest by which the defendant profited from his wrongdoing." Id.

"The SEC is entitled to disgorgement upon producing a reasonable approximation of a defendant's ill-gotten gains." Calvo, 378 F.3d at 1217. The disgorged amount must be causally connected to the violation. Id. Once the SEC meets its burden of producing a reasonable approximation of defendant's ill-gotten gains, "[t]he burden then shifts to the defendant to demonstrate that the SEC's estimate is not a reasonable approximation." Id. In determining whether the SEC has met its burden, "[e]xactitude is not a requirement; `[s]o long as the measure of disgorgement is reasonable, any risk of uncertainty should fall on the wrongdoer whose illegal conduct created that uncertainty.'" Id. (citations omitted).

b. Analysis

In denying defendant's Motion for Summary Judgment [25], the Court rejected all defendant's theories for disgorgement except for the interest theory. ( See July 31, 2006 Order [52] at 37.) This theory stated that Miller's ill-gotten gain equaled the interest on the $827,000 that he paid to satisfy the initial margin call from Prudential on July 2, 1999: specifically, had he not inflated the first quarter earnings, the poor earnings would have caused the price of the Company's stock to drop below $4.25 (the price that triggered the margin call) in or around May 17, 1999 rather than July 1999. (Pl.'s Br. [142] at 19.)

The Court may take judicial notice of prevailing prime rates of interest during that time, which was 7.75%. See Levan v. Capital Cities/ABC, Inc., 190 F.3d 1230, 1235 n. 12 (11th Cir. 1999);http://www.federalreserve.gov/releases (identifying prime interest rates). Applying the prevailing interest rate, the ill-gotten gain is $10,184.

This figure is derived by multiplying ($827,000 X (7.75%, the prevailing interest rate) X (55 days/365)).

Judge Baverman indicated at the Remedies Hearing that he would issue the disgorgement of $10,184. (Tr. [154] at 93:17-24; 94:17; 96:10-12.) The Court, however, concludes that this item of enrichment was more theoretical, than real, and declines to do so.

The Court notes, as it did in its July 31, 2006 Order, that "the amount of interest attributable to this delay is de minimus, in the scheme of things and arguably not worth the litigation expense and court resources expended in litigating this theory." ( See July 31, 2006 Order [52] at 36 n. 13.)

2. Prejudgment Interest

Plaintiff argues that defendant should be required to pay prejudgment interest on this disgorgement in an amount of $8,476.51. (Pl.'s Br. [142] at 20.)

a. Standard for Prejudgment Interest

Like the decision to grant disgorgement and the decision about the amount of disgorgement, the decision whether to award prejudgment interest is left to the Court's broad discretion. First Jersey Sec., 101 F.3d at 1476. "[R]equiring the payment of interest prevents a defendant from obtaining the benefit of what amounts to an interest free loan procured as a result of illegal activity." SEC v. Robinson, No. 00 Civ. 7452 RMB AJP, 2002 WL 1552049, at *9 (S.D.N.Y. July 16, 2002) (citations and internal quotation marks omitted).

b. Analysis

Defendant argues with the calculation mechanism plaintiff used to determine the amount of prejudgment interest, stating that plaintiff's calculation began the prejudgment interest period too early. (Opp'n [144] at 39-40.) However, defendant does not state the amount he actually wants. ( See id.) Furthermore, no federal statute expressly controls the amount of prejudgment interest applicable to disgorgement awards in securities fraud cases, and in the absence of a controlling statute, district courts have the discretion to award or not award prejudgment interest. SEC v. Carrillo, 325 F.3d 1268, 1269 (11th Cir. 2003).

Judge Baverman indicated he was not likely to award prejudgment interest because of the long delay in trying the case. (Tr. [154] at 94:12-16 ("This case has gone on for a long time and I don't think it's the fault of anybody, so I think that all the delay involved attributing the interest to Mr. Miller, whatever that amount is . . . that just doesn't seem right[;] I would [only] impose a disgorgement.").) The Court likewise declines to impose prejudgment interest.

3. Civil Penalties

Defendant argues again that the SEC's claim for a civil penalty is time-barred. (Opp'n [144] at 23.) The Court has already rejected this argument in defendant's Motion for Summary Judgment [25], and it will therefore consider the issuance of a civil penalty. ( See July 31, 2006 Order [52].)

In plaintiff's initial brief regarding remedies, it did not recommend a specific amount of civil penalty, although it stated that the Court could award up to $880,000. (Pl.'s Br. [142] at 21.) During the October 8, 2009 hearing, the Court suggested that the SEC should recommend a dollar amount for the civil penalty against defendant. ( See October 8, 2009 Tr. [178] at 11-12.) Accordingly, the SEC filed a Clarification Regarding Civil Penalties [183] and requested that the Court impose a civil penalty in the amount of $225,000.

a. Standard for Civil Penalties

Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act provide that the SEC may seek to have a Court impose civil penalties. A civil penalty is determined "in light of the facts and circumstances" of a particular case. 15 U.S.C. § 78u(d)(3)(B)(i). First tier penalties (arising from conduct that occurred before February 1, 2001, but not earlier than 1996) can be imposed up to the larger of $5,500 for a natural person or $55,000 for any other person, for each violation, or the amount of ill-gotten gain. 15 U.S.C. § 78u(3)(B)(i). When the violation involves fraud, second tier penalties may be imposed up to $55,000 for a natural person or $275,000 for any other person, for each violation, or the amount of the ill-gotten gain. 15 U.S.C. § 78u(B)(ii). A third tier civil penalty of up to the larger of $110,000 for a natural person or $550,000 for any other person, for each violation, or the amount of ill-gotten gain may be imposed when any provision of the Securities Act or the Exchange Act is violated, if the violation involved fraud or deceit and the violation resulted in substantial losses or created a significant risk of substantial losses to other persons. 15 U.S.C. § 78u(3)(B)(iii)(bb). In determining whether to award civil penalties, courts consider numerous factors, including the egregiousness of the violation, the isolated or repeated nature of the violations, the degree of scienter involved, whether the defendant concealed his trading, and the deterrent effect given the defendant's financial worth. SEC v. Sargent, 329 F.3d 34, 42 (1st Cir. 2003).

Civil monetary penalties pursuant to the Securities Act and the Exchange Act are required to be adjusted for inflation, but Miller's conduct occurred in 1999, before the time that the adjustment became effective in early 2001, so this amount is the amount for the relevant time of the violation. 17 C.F.R. § 201.1001.

b. Analysis

Because the relevant statutes authorize penalties for "each violation," courts are empowered to multiply the statutory penalty amount by the number of statutes the defendant violated, and many do. See, e.g., SEC v. Moran, 944 F. Supp. 286, 296 n. 13 (S.D.N.Y. 1996) (for individual defendant found liable for four statutory violations and two rule violations, court noted that second tier penalty could be up to six times the $50,000 statutory amount, or $300,000). Plaintiff initially argued in its Brief Supporting Imposition of Disgorgement, Prejudgment Interest, Civil Penalties, and an Officer and Director Bar Against John P. Miller [142] that the Court should impose a penalty based on the eight rules and statutes Miller violated, for a total of $880,000. (Pl.'s Br. [142] at 21.) Defendant argued, however, that because defendant was accused of conducting a single comprehensive scheme, the scheme should be considered a single violation. (Opp'n [144] at 30.)

In finding Miller liable on all counts, the jury found that Miller's conduct involved fraud on the first three counts; therefore, a second or third tier penalty is appropriate for those counts. See generally 15 U.S.C. § 78u(3)(B). Defendant has argued that plaintiff has failed to show the applicability of a third tier penalty, because plaintiff has neither shown that substantial losses actually occurred or that there was the risk of same.

The Court concludes that an argument could certainly be made that Miller's conduct created a significant risk of substantial losses to other persons. 15 U.S.C. § 78u(3)(B)(iii)(bb). The significant drop in Master Graphics' share price after the Company announced it would not meet its second quarter earnings target shows defendant's earlier manipulation of Master Graphics' earnings created "significant risk of substantial losses"; for example, the share price dropped 21% after it was announced in June 1999 that Master Graphics would not meet its second quarter earnings target. Id. Yet, defendant is also correct that the SEC has not seemed particularly enthusiastic in making this argument. As the Court's ultimate penalty can be supported without the need to decide this, the Court does not reach the question whether third tier penalties are applicable.

The Court also concludes that an analysis of the Sargent favors assessing a civil penalty. Sargent, 329 F.3d at 42. The Court has already determined that Miller's conduct was egregious, involved a high level of scienter, and was more than "one isolated scheme." (Opp'n [144] at 28.) Defendant argues that his actions were not egregious because his conduct "did not involve significant falsification of financial records." ( Id. at 27.) He also argues that his scheme did not involve a high degree of scienter because his scheme was "open and notorious" and he did not "take great measures to conceal the plan from Company insiders. . . ." ( Id. at 12, 28.) However, Miller's conversations outside the presence of Fair and Henson, as well as his keeping the Plan from the Company accountant and investors, contradict this assertion. ( See, e.g., Pl.'s Resp. [180] at 14.) Defendant argues that he did not gain a large personal benefit, but instead lost everything. ( See, e.g., Tr. [154] at 80:3-7 ("This was a very narrow, very narrow scheme. . . . It was a plan that he imposed on others as well as himself. This is not a CEO who was high-handed and wasn't willing to put his own salary at risk. He got no severance, [] no economic benefit from this."))

This argument is also unpersuasive, as defendant stood to gain a great deal of money because he hoped his shares of Master Graphics would become worth as much as $200 million. (Pl.'s Resp. [180] at 6). Defendant also argues that he should not have to pay a civil penalty because he has already undergone and will continue to undergo suffering as a result of this verdict. ( See, e.g., Opp'n [144] at 24.) Defendant cited Snyder, in which the court found that:

The SEC's arguments [for a civil penalty] trivialize the devastating effects that Defendant has suffered on account of this litigation. . . . the Court finds that Defendant's prospects of ever again working for a public company are nonexistent, and his chances for employment in accounting at a level even remotely commensurate with his education and experience are very close to nonexistent. Having been precluded from working for certain [] clients as a result of the jury's verdict against him, Defendant is no longer able to earn a high income, or perhaps even a modest one. Defendant has amply demonstrated the financial hardship and extreme emotional toll that he has suffered, the effects of which he will likely experience for years into the future. This hardship and Defendant's current financial situation indicate that imposing civil penalties would be inappropriate.

Snyder, 2006 WL 6508273, at *12. (Opp'n [144] at 25.) However, even when courts consider alleged hardships, they still often impose remedies after examining the record in totality. See, e.g., Meadows v. SEC, 119 F.3d 1219, 1228 n. 21 (5th Cir. 1997) (affirming SEC's administrative decision to bar broker from association with broker-dealers, with right to reapply in two years, and imposing $1000,000 fine, despite defendant's claim that the bar was a "death knell" for his career).

Defendant cites other cases from district courts around the country in which defendants were not assessed civil penalties because they were impecunious or because they did not gain a large personal benefit. ( See Opp'n [144] at 29, 31.) However, these cases are not controlling or binding on the Court. More importantly, the Eleventh Circuit has stated that "nothing in the securities laws expressly prohibits a court from imposing penalties or disgorgement liability in excess of a violator's ability to pay." SEC v. Warren, 534 F.3d 1368, 1370 (2008).

Furthermore, the Court has taken defendant's financial circumstances into account in setting a penalty. Yet, even though defendant is not presently employed and he states that he and his wife have less than $5,000 in total assets, Miller still has the potential to acquire enough money to pay a substantial fine. (Opp'n [144] at 29.)

Accordingly, considering all the above factors, the Court assesses a civil penalty of $75,000, against defendant.

C. Director and Officer Bar

Plaintiff requests the Court enter an Order permanently prohibiting defendant from acting as an officer or director of any issuer of securities registered with the SEC pursuant to Section 12 of the Exchange Act, or required to file reports with the SEC pursuant to Section 15(d) of the Exchange Act. (Pl.'s Br. [142] at 15-16).

1. Standard for Director and Officer Bar

Section 21(d)(2) of the Exchange Act and Section 20(e) of the Securities Act provide for officer and director bars and penalties. See 15 U.S.C. § 78u(d)(2) ; 15 U.S.C. § 77t(e). The Court may enter

15 U.S.C. § 78u(d)(2) states that

the court may prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who violated section 78j(b) of this title or the rules or regulations thereunder from acting as an officer or director of any issuer that has a class of securities registered pursuant to section 781 of this title or that is required to file reports pursuant to section 78o(d) of this title if the person's conduct demonstrates unfitness to serve as an officer or director of any such issuer.

15 U.S.C. § 78u(d)(2).

15 U.S.C. § 77t(e) states that

In any proceeding under subsection (b) of this section, the court may prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who violated section 77q(a)(1) of this title from acting as an officer or director of any issuer that has a class of securities registered pursuant to section 781 of this title or that is required to file reports pursuant to section 78o(d) of this title if the person's conduct demonstrates unfitness to serve as an officer or director of any such issuer.

15 U.S.C. § 77t(e).

such an order if it finds that defendant's "conduct demonstrates unfitness to serve as an officer or director of any such issuer." 15 U.S.C. § 78u(d)(2). The Court has substantial discretion in determining whether to determine such a bar. SEC v. Amazon Nat'l Treasures, 132 F. App'x 701, 703-04 (9th Cir. 2005).

The relevant statutes were amended in 2002 as part of the Sarbanes-Oxley Act ("Sarbanes-Oxley") to substitute the term "unfitness" for "substantial unfitness"; i.e., a defendant's conduct must demonstrate "unfitness to serve as an officer or director of any such issuer." 15 U.S.C. § 78u(d)(2); see Sarbanes-Oxley Act of 2002, Pub.L. No. 107-204, § 305(a)(1)-(2), 116 Stat. 745, 778-779 (2002). Congress's intent was to reduce the government's burden. See S. REP. 107-205, at 27 (2002) ("The Commission has argued that the `substantial unfitness' standard for imposing bars is inordinately high, causing courts to refrain from imposing bars even in cases of egregious misconduct. The amended legislation rectifies this deficiency by modifying the standard governing imposition of officer and director bars from `substantial unfitness' to `unfitness.'").

Furthermore, the parties disagree on whether the Court should apply the "unfitness" test or the "substantial unfitness" test, as the conduct at issue occurred in 1999, before the statute was amended, and courts apply slightly different criteria to the two tests.

The criteria for the "substantial unfitness" test were as follows: "(1) the `egregiousness' of the underlying securities law violation; (2) the defendant's `repeat offender' status; (3) the defendant's `role' or position when he engaged in the fraud; (4) the defendant's degree of scienter; (5) the defendant's economic stake in the violation; and (6) the likelihood that misconduct will recur." See, e.g., SEC v. Patel, 61 F.3d 137, 141 (2d Cir. 1995); SEC v. First Pac. Bancorp, 142 F.3d 1186, 1193 (9th Cir. 1998).

In 2007, the District Court for the District of Columbia laid out the factors to use in determining "unfitness":

(1) the nature and complexity of the scheme; (2) the defendant's role in the scheme; (3) the use of corporate resources in executing the scheme; (4) the defendant's financial gain (or loss avoidance) from the scheme; (5) the loss to investors and others as a result of the scheme; (6) whether the scheme represents an isolated occurrence or a pattern of misconduct; (7) the defendant's use of stealth and concealment; (8) the defendant's history of business and related misconduct; and (9) the defendant's acknowledgment of wrongdoing and the credibility of his contrition.

SEC v. Levine, 517 F. Supp. 2d 121, 145-46 (D.D.C. 2007).

However, several courts have continued to apply the Patel factors, even post-Sarbanes-Oxley, suggesting that there is not a significant difference between the two tests. Furthermore, no Court of Appeals has determined which test would apply to conduct that occurred pre-Sarbanes-Oxley.

See, e.g., SEC v. Patterson, No. 03-CV-0302-CVE-PJC, 2006 WL 770626, at *3 (N.D. Okla. Mar. 23, 2006); SEC v. Henke, 275 F. Supp. 2d 1075, 1086 (N.D. Cal. 2003); SEC v. Global Telecom Servs., L.L.C., 325 F. Supp. 2d 94, 121 (D. Conn. 2004).

2. Analysis

The Court concludes that even the more onerous, pre-Sarbanes test weighs in favor of imposing a bar. The Court has already discussed most of these factors, see supra, in its analysis of injunctive relief. For example, the Court has determined that the scheme was complex and egregious, involving misrepresentations to company accountants and shareholders, and that Miller had a high degree of scienter. See Patel, 61 F.3d at 141; Levine, 517 F. Supp. 2d at 145-46. Miller also used stealth and concealment in his wrongdoing. See Levine, 517 F. Supp. 2d at 145-46. (Pl.'s Br. [142] at 17.) The Court has also determined that the Plan was not merely an isolated occurrence. See Levine, 517 F. Supp. 2d at 145-46. Miller's role was central, as he was the CEO, the scheme was his idea, and only he took part in the telephone conversations with the division presidents. See id. The Court also determined that there was substantial loss to investors and significant risk to investors of substantial losses, see supra. See id.

While Miller's actual gains were not substantial, he had a significant economic stake in the outcome, as he hoped to achieve large gains. See id.; Patel, 61 F.3d at 141. He also had a prior securities infraction: he was sanctioned in 1986 by the Louisiana Commissioner of Securities for the sale of unregistered securities and suspended from any involvement in the securities business in the State of Louisiana from August 28, 1986 to December 19, 1986. (Reply [148] at 21 n. 9.) Levine, 517 F. Supp. 2d at 145-46; Patel, 61 F.3d at 141.

Most importantly, Miller has shown no contrition, as he is vehement in his denial of any wrongdoing. ( See Pl.'s Br. [142] at 18.) Levine, 517 F. Supp. 2d at 145-46. Indeed, Miller's constant finger-pointing, rationalizations, and self-pity are both unattractive and a cause for concern as to the future likelihood of his behaving responsibly and honorably, should he acquire a position of great corporate responsibility.

In short, because Miller intends to continue as an entrepreneur and to work on high-stakes business ventures, there is a likelihood that the violations could recur. See Patel, 61 F.3d at 141. The Court therefore concludes that Miller should be subject to an officer and director bar, as the SEC has proved his substantial unfitness for being an officer or director of a publicly traded corporation.

The question is the duration of the bar. The SEC argues for a lifetime bar. Given Miller's age and the stigma that attaches to any such bar, it is likely that whatever the length of this Court's bar, it will act effectively as a lifetime bar. Nevertheless, the Court believes that it should try to assess a period that will be proportional to the conduct here. The Court concludes that a bar of approximately 15 years would be appropriate on these facts. Yet, even though the defendant clearly aspired to a corporate position during the pendency of this case, he has not served in any responsible position in a publicly-traded corporation in the last 10+ years. Thus, the defendant has already effectively served over 10 years of any bar period that would have been imposed had this case been resolved closer to the time of the offense conduct.

Accordingly, the Court will give the defendant credit for this time when he was largely absent from the corporate world and will now prospectively impose a 5-year bar.

CONCLUSION

For the above reasons, the Court issues: (1) a permanent injunction enjoining defendant (his agents, servants, employees, attorneys, and all persons in active concert or participation with them) from violating Section 17(a) of the Securities Act; Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and Section

13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder; and enjoining defendant from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder and Section 13(b)(2)(A) of the Exchange Act; (2) a civil penalty in the amount of $75,000 and (3) a director and officer bar of five (5) years.

SO ORDERED.