Case 1:10-cv-02031-DLI-RML Document 353 Filed 10/14/15 Page 1 of 2 PageID #: 9840

UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION
100 F Street, N.E.
Washington, D.C. 20549
Paul W. Kisslinger
Assistant Chief Litigation Counsel
DIVISION OF
ENFORCEMENT

Telephone (202) 551-4427

Facsimile (202) 772-9292

kisslingerp@sec.gov

October 14, 2015

By ECF
The Honorable Dora L. Irizarry
United States District Court
225 Cadman Plaza East
Brooklyn, New York 11201
Re: Securities and Exchange Commission v. Spongetech Delivery Systems, et al.,
10-cv-2031-DLI-RML (E.D.N.Y.)
Dear Judge Irizarry:
Pursuant to your Honors October 1, 2015 Order, I am writing on behalf of
plaintiff Securities and Exchange Commission (SEC or the Commission) to provide
a status update in the above-captioned matter.
The parties are continuing to engage in good faith settlement discussions,
pursuant to the timeline that Magistrate Judge Levy set forth in the August 25, 2015
scheduling order. See August 25, 2015 Order granting motion to adjourn status
conference [Docket Entry 349]. SEC Enforcement Division counsel has issued a
settlement demand to defendant Jack Halperins counsel, that, if accepted by Halperin,
will be presented to the Commission, and then the Court, for approval. The demand
includes injunctive relief, disgorgement with prejudgment interest, and a method for
determining civil penalties, the latter of which remains as the most contested term. The
parties will continue to negotiate in good faith the proposed civil penalties, and work
towards finalizing all proposed terms of settlement within the schedule set forth in the
August 25, 2015 Order.
As for defendant Joel Pensley, the SEC has sent draft terms of settlement to
Pensleys counsel, who is in the process of reviewing the terms with his client. As part of
the settlement package, the SEC intends to demand admissions of liability from Pensley,
and will submit proposed admissions to Pensleys counsel within the schedule set forth in

Case 1:10-cv-02031-DLI-RML Document 353 Filed 10/14/15 Page 2 of 2 PageID #: 9841

Hon. Dora L. Irizarry
October 14, 2015
-2the August 25, 2015 Order. As for the Courts inquiry into the status of Pensleys
compliance with the provision in the Preliminary Injunction [Docket Entry 112] requiring
a sworn accounting, Pensleys counsel indicated that he is in the process of reviewing
Pensleys financial information relating to his dealings with Spongetech, and will work
with the SEC to provide all required information.
Should the parties be unable to resolve the final terms of settlement, we will
respectfully request a settlement conference with Magistrate Judge Levy. We hope that
the above schedule is acceptable to the Court, and are happy to answer any questions or
concerns the Court may have.

Respectfully submitted,

/s/ Paul W. Kisslinger