Securities and Exchange Commission v. First Pacific Bancorp
United States Court of Appeals for the Ninth Circuit
142 F.3d 1186 (1998)
Sands (defendant), running both failing Bancorp and shell company PacVen (defendants), fraudulently diverted PacVen offering proceeds into Bancorp's all-or-nothing public offering to try to meet its minimum investment threshold, but even combined the funds fell short; rather than returning investors' money as the prospectus promised, Sands used his own funds after the deadline to meet the threshold, while continuing to draw a substantial salary from Bancorp. The SEC (plaintiff) sued and the district court ordered Sands, Bancorp, and PacVen to jointly and severally disgorge the $688,000 raised and permanently barred Sands from serving as a public company officer or director.
Whether a district court has broad equity power to order disgorgement of ill-gotten gains fraudulently obtained from investors through a securities-law violation.