Complaint

Case 6:10-cv-00408-ACC-DAB Document 1 Filed 03/16/10 Page 1 of 34
IN THE FEDERAL DISTRICT COURT OF THE MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION
FINANCIAL INDUSTRY ASSOCIATION,

G&G HOLDINGS, INC., RICHARD GOBLE, and THE CASE NO ______________
GOBLE FIRST REVOCABLE FAMILY TRUST MAY 13,
1999,
Plaintiffs,
vs.
JURY TRIAL DEMANDED

SECURITIES AND EXCHANGE COMMISSION,
FINANCIAL INDUSTRY REGULATORY AUTHORITY,
INC. (FINRA), THE DEPOSITORY TRUST AND
CLEARING CORPORATION (DTCC), MARY
SHAPIRO, GRACE VOGEL, LARRY THOMPSON,
TIMOTHY WARD, BRUCE BLATMAN, GEORGE
FRANCESCHINI, and SAM LUQUE, JR.,
Defendants.
___________________________________________________/
COMPLAINT
Plaintiffs FINANCIAL INDUSTRY ASSOCIATION, G&G HOLDINGS, INC.,
RICHARD GOBLE, and THE GOBLE FIRST REVOCABLE FAMILY TRUST MAY 13, 1999
ON BEHALF OF ITSELF AND NORTH AMERICAN CLEARING, INC., by and through their
undersigned counsel, file this complaint for interference with business relations, abuse of
process, defamation, and gross negligence against the above captioned individual Defendants,
alleging as follows:
PRELIMINARY ALLEGATIONS
Jurisdiction
1. This is a complaint for damages exceeding the sum or value of seventy-five
thousand dollars, exclusive of interest and costs, between citizens of different states with each
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Defendant either residing or maintaining its principal place of business in a state other than that
of the Plaintiffs, and this Honorable Court possesses diversity subject matter jurisdiction
pursuant to 28 U.S.C. § 1332.
Parties and Other Important Persons and Entities
2. Plaintiff G&G HOLDINGS CORPORATION, INC. (hereinafter referred to as
"G&G") is a Florida for profit holding corporation with its principal place of business located at
1385 W State Road 434, Suite 102, Longwood, FL 32750.
3. Plaintiff THE GOBLE FIRST REVOCABLE FAMILY TRUST MAY 13, 1999
(hereinafter referred to as the "Goble Trust") is a revocable trust created by Richard Goble in
1999, with Richard Goble as trustee. The trust is also the sole shareholder of G&G Holdings,
Inc., the Financial Industry Association, Inc., and North American Clearing, Inc.
4. Plaintiff RICHARD GOBLE (hereinafter referred to as "Goble") is a natural
person with offices located at 1385 W State Road 434, Suite 102, Longwood, FL 32750.
Plaintiff Richard Goble was the director of North American Clearing Corporation when they
were placed under receivership pursuant to the lawsuit filed by the Securities and Exchange
Commission.
5. Plaintiff FINANCIAL INDUSTRY ASSOCIATION (hereinafter referred to as
"FIA") FIA was the largest and most successful advocate for small broker dealers in the United
Sates and as a result of FIA’s potential takeover of FINRA’s Board from the New York Financial
Cartel (“CARTEL”), FIA was chiefly responsible to the bylaw and name change of the National
Association of Securities Dealers (NASD) to the Financial Industry Regulatory Authority
(“FINRA”). FIA elected over 30 FINRA Board Members and Committeemen prior to its
destruction by the defendants. Largely because of FIA’s efforts, there is another pending case
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directly accusing SEC, FINRA, and Mary Schapiro of fraud and is filed in the Southern District
of New York Case No.: 07-CV-2014 (JSR).
6. Defendant SECURITIES AND EXCHANGE COMMISSION (hereinafter
referred to as "SEC") is an agency of the United States government with offices headquartered at
100 F Street N.E., Washington DC 20549. The mission of the Securities and Exchange
Commission according to its website is to protect investors, maintain fair, orderly and efficient
markets, and facilitate capital formation. The Securities and Exchange Commission, through its
officers and employees, embarked on a program to deprive Plaintiffs of due process, and shut
down and destroy the business enterprises of Plaintiffs in retaliation for certain political events
that had been taking place.
7. Defendant FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.
(hereinafter referred to as "FINRA") is a Delaware private nonprofit corporation with its
principal place of operations located at 1735 K Street NW, Washington DC 20006. FINRA is a
Delaware corporation, registered with the Securities and Exchange Commission ("SEC") as a
national securities association pursuant to the 1938 Maloney Act Amendments to the Securities
Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78o-3, 78s(a)(1). FINRA has been
commissioned by the financial industry to protect investors by making sure the securities
industry operates fairly and honestly. FINRA failed to perform these duties when it deliberately
and intentionally sought to interfere with the businesses of Plaintiffs without adequate cause,
defame Plaintiffs, abuse process, and conduct a wholly inadequate and negligent investigation of
NACI prior to recommending SEC action at detriment to Plaintiffs.
8. Defendant DEPOSITORY TRUST AND CLEARING CORPORATION
(hereinafter referred to as "DTCC"), is a New York for profit corporation with its principal place
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of business located at General Counsel's Office, 55 Water Street, 22nd Floor, New York, NY
10041. The corporation, through its subsidiaries, provides clearing, settlement, and information
services for the financial industry. The DTCC, through its agent Larry Thompson, shut down the
operations of NACI on the mere allegations of NACI employees Ward and Blatman immediately
before the SEC filed injunctive relief against Goble, and without any investigation or
consultation with the owner Goble. After being confronted immediately thereafter by Goble who
explained the true and compliant state of the company, not only did Larry Thompson refuse to
investigate the differing allegations before continuing to deprive NACI of its ability to operate,
but also threatened Goble with more severe sanctions.
9. CARLTON FIELDS, P.A., while not presently a party to this lawsuit, (hereinafter
referred to as "Carlton") is a Florida professional association and a law firm with its principal
place of business located at Corporate Center Three and International Plaza, 4221 West Boy
Scout Boulevard, Suite 1000, Tampa, FL 33607. Carlton Fields presents itself as a firm that
handles mass tort litigation, mergers, acquisitions, securities offerings, and bankruptcies among
other areas of law.
10. SUTHERLAND, ASBILL & BRENNAN, LLP, while not presently a party to this
lawsuit, (hereinafter referred to as Sutherland Asbill) is a Georgia limited liability partnership
whose principal place of business is located at 999 Peachtree Street, N.E., Suite 2300, Atlanta,
GA 30309. It is a full service law firm and was the firm of the assigned receiver for North
American Clearing, Inc.
11. Defendant MARY SHAPIRO (hereinafter referred to as "Shapiro") is the present
Chairman of the Securities and Exchange Commission. During the matters at issue in this suit,
she was the Chairwoman of FINRA which was before that time known as the National
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Association of Securities Dealers (or NASD). Mary Shapiro was instrumental in setting in
motion the intentional interference with Plaintiff's business operations.
12. Defendant GRACE VOGEL (hereinafter referred to as "Vogel") is the executive
Vice President of Member Regulation at FINRA. Grace Vogel was acting in consort with Mary
Shapiro to interfere with Plaintiffs' businesses as a result of political activity of the Plaintiffs.
Vogel was directing the FINRA investigators of NACI ("FINOPS").
13. Defendant LARRY THOMPSON (hereinafter referred to as "Thompson") is the
managing director and general counsel of the DTCC and was responsible for gross negligence,
intentional interference, and improperly shutting down Plaintiff's business operations. The
DTCC, through its agent Thompson, shut down the operations of NACI on the mere allegations
of NACI employees Ward and Blatman immediately before the SEC filed injunctive relief
against Goble, and without any investigation or consultation with the owner Goble. After being
confronted immediately thereafter by Goble who explained the true and compliant state of the
company, not only did Thompson refuse to investigate the differing allegations before continuing
to deprive NACI of its ability to operate, but also threatened Goble with more severe sanctions.
14. WILLIAM BRENNAN and FRANK CHANTAYAN, while not presently parties
to this lawsuit, (hereinafter referred to as "Brennan" and "Chantayan" respectively) are attorneys
for the lawfirms Sutherland Asbill and Carlton Fields respectively. They represented Peter
Anderson and Robert Gilbert.
15. PETER J. ANDERSON, while not presently a party to this lawsuit, (hereinafter
referred to as "Anderson") was the receiver assigned to North American Clearing in the SEC
lawsuit, and attorney for the law firm Sutherland Asbill. He is responsible for gross negligence
against the shareholders of NACI, failing to adequately protect the interests of shareholders, and
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promoting the filing of a fraudulent liquidation/bankruptcy action against NACI. He is
responsible for gross negligence against the shareholders of NACI, and recommending a
fraudulent and unnecessary bankruptcy proceeding to the SIPC by falsely representing the
accounting and financial condition of NACI with the assistance of Sam Luque, Jr. and other
employees of the receivership.
17. ROBERT GILBERT (hereinafter referred to as "Gilbert"), while not presently a
party to this lawsuit, is a natural person and an attorney shareholder at Carlton Fields, P.A. who
was appointed trustee to administer the bankruptcy filed by the receiver in the SIPC action
against North American Clearing, Inc. pending before the United States Bankruptcy Court. Mr.
Gilbert has irresponsibility and with gross negligence allowed bankruptcy liquidation of NACI to
continue unabated despite his knowledge that the financial condition of the company did not
warrant such drastic action.
18. Defendant GEORGE FRANCESCHINI (hereinafter referred to as "Franceschini")
is a branch chief at the SEC and was responsible for coordinating and planning improper action
that interfered with Plaintiffs' businesses.
19. Defendant TIMOTHY WARD (hereinafter referred to as "Ward) is a natural
person who was the Chief Financial Officer of North American Clearing, Inc. at the time the
SEC began its action against Plaintiffs. He lied to the SEC regarding the activities of NACI, and
under pressure from FINRA.
20. Defendant BRUCE BLATMAN (hereinafter referred to as "Blatman") is a natural
person who was the President of North American Clearing, Inc. at the time the SEC began its
action against Plaintiffs. He lied to the SEC regarding the activities of NACI, and under pressure
from FINRA.
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21. Defendant SAM LUQUE, JR. (hereinafter referred to as "Luque") is a natural
person and an employee of the SEC, and the NACI receiver. Mr. Luque was originally an
employee of the SEC, and upon information and belief now runs an independent consulting
company that works with the SEC. Luque, with no formal accounting training or education, was
hired by the NACI Receiver Anderson and the SEC to create fabricated NACI financials that
were used in the NACI fraudulent bankruptcy filing in July 2008.
PRELIMINARY BACKGROUND FACTS
22. Richard Goble opened a company called North American Clearing (NACI) in
1995, a business whose primary purpose was clearing transactions for broker-dealers (the
corporation's latest annual report is hereinafter attached as Plaintiffs' Exhibit "A"). The business
was not itself a broker- dealer but a place where transactions could be cleared efficiently. At the
time of opening and until the present day, NACI was under the regulatory authority of NASD
and now FINRA (since the merger of the New York Stock Exchange with NASD).
23. After Goble opened up his clearing business, a significant number of broker-
dealers and other member firms that were regulated by the National Association of Securities
Dealers (NASD, now FINRA) became increasingly concerned at their diminishing voice within
the self regulatory organization, and the increasingly burdensome regulations imposed on them
by the SEC and NASD (now FINRA), making it more difficult for them to establish and
maintain viable businesses. As a result, NACI decided to utilize its political rights within the
organization to ensure the viability of small broker-dealer firms and NACI's customers.
24. Part of NACI's response was to organize and nominate candidates for local
FINRA district elections around the country, beginning with the district covering the
southeastern United States.
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25. In response to these issues, Goble opened the Financial Industry Association
(hereinafter referred to as "FIA"), a Florida domestic for profit corporation founded in February
2006 that has been mainly involved in selecting and determining appropriate candidates for
board seats in the regional districts of NASD (now FINRA), and in attempting to secure these
positions to ensure adequate representation for small broker-dealer firms and as directed by the
Maloney Act of 1938 and the NASD charter of 1939.
26. Candidates that ran under the guidance and direction of the FIA were largely
successful, and in 2006 two of three FIA picked candidates were elected NASD Board of
Governor seats. This was a remarkable accomplishment given the history of the NASD (now
FINRA). The one candidate to lose, Goble himself, continued to organize and galvanize the
small firms into asserting their rights within NASD. It was later discovered the possible reason
for Goble's defeat is that Schapiro, then Chairman of FINRA, had allowed many of Goble’s
faxed ballots to be uncounted or discarded. This clearly showed the bias of many in power at
FINRA that FIA was exposing.
27. The FIA also spearheaded a petition in 2006 demanding the investigation of
NASD (now FINRA) for abusing its powers in favor of large firms against small firms,
especially regarding NASD (now FINRA) audits. It also requested the resignation of NASD's
(now FINRA's) then chief executive Schapiro for being blatantly aligned with the large Wall
Street firms' interests.
28. As a result of the election activities of the FIA, the regional districts and board of
governors of NASD (now FINRA) were coming increasingly under the influence of the small
firms, with the ultimate goal of the FIA to free up burdensome and unfair regulations on these
businesses.
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29. In August 2006, the FIA spearheaded further election activities and announced it
would be selecting independent candidates to contest the handpicked NASD (now FINRA)
candidates in every regional and national position. This was an unprecedented move in the
history of NASD (now FINRA).
30. At the time these activities and elections were taking place, Mary Schapiro was
Chief Executive of NASD (now FINRA). Mary Schapiro, realizing that small broker-dealer
firms were beginning to gain increasing influence in the regional districts within NASD, and
having had her position within the organization protected through the influence of Goldman
Sachs and other large financial corporations, including the main Wall Street financial services
firms, became increasingly intent on working within NASD to reduce the influence the activist
small firms were having over policy and regulatory decisions.
31. Mary Schapiro met with Goble and and John Busacca, NACI’s president and the
co-founder of FIA in Spring 2006 over lunch, explaining that Goldman Sachs and other large
financial institutions "paid NASD's bills", and for this reason Schapiro was insisting that FIA
cease attempting to nominate its own members for election to NASD Committee and Board
seats. No FINRA large clearing firm President had ever received any similar Wells notice in
history.
33. During this time many small firms were being threatened with audits and other
burdensome oversight, even to the point of being shut down, to the extent that they were
cooperating with FIA and its attempts to secure a more prominent voice for small firms within
the organization. These threats extended to Richard Goble and NACI. Most of the audits and
disciplinary acts were either completely specious or for minor infractions that could have been
easily resolved.
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34. Two days after Mr Busacca of the FIA announced that all FINRA Board seats
would be contested in the late 2006 election, a "Wells Notice" was issued against Mr. Busacca
and Goble. This notice is supposed to be sent by NASD (now FINRA) when it suspects that
illegitimate and illegal activities are taking place in a particular firm under its authority. It
declared "the staff has made a preliminary determination to recommend that disciplinary action
be brought against North American Clearing (NAC) and the individuals below for various
violations of NASD and other applicable rules and regulations… (1) NAC prepared inaccurate
customer reserve formula computations and failed to make required deposits to its special
reserve account, and failed to notify NASD of its failure to make such required deposit…"
(attached as Plaintiff's Exhibit "B").
35. At this point, it was becoming clear that the NASD and its financial backers like
Goldman Sachs' response to the petition that was organized by FIA were hostile. Many of the
firms that signed the petition began to be promptly audited by FINRA for insignificant reasons.
36. The petition was hand delivered to Mr. Robert Colby of the SEC and hand
delivered in four individual private meetings with Goble to four SEC Commissioners appointed
by the President of the United States, and Barney Frank Chairman of the House Financial
Committee in a private meeting with the FIA, and to a staff member of Senator Jack Reid
Chairman of the Senate Financial Committee. Aside from audits of the firms that signed the
petition, it was wholly ignored by the SEC and no response was forthcoming.
37. The FIA petition was increasing pressure on Mary Schapiro to resign, and she
began using her position within NASD (now FINRA) to resist this pressure. Through her
authority, numerous small firms were being audited, including those who signed the petition.
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Part of her strategy, developed in consort with the large Wall Street firms, was to merge the
NYSE (owned by Goldman Sachs) with the then NASD (now FINRA).
38. Two weeks after the August 2006 FIA nomination announcement, and twelve
days after the issuance of the "Wells Notice" to NACI, NASD (now FINRA) under the direction
of Mary Schapiro announced their intention to merge NYSE regulatory division owned and
controlled by Goldman Sachs and NASD (now FINRA) into the new self regulatory organization
to known as the "Financial Industry Regulatory Authority, Inc." or FINRA.
39. FIA and its supporters immediately began to fight the proposal, because it
reduced the small firm representation on the board of governors to a mere three seats, as opposed
to the original possible maximum of twenty-four seats.
40. Given the majority ownership control of NYSE by Goldman Sachs, the merger
would also in this way serve to solidify the influence of the large broker-dealers. In short, the
ability of small broker-dealer firms to ensure viable representation in making decisions over their
own regulation would be severely curtailed or would end altogether.
41. During the election following FIA's announcement to contest all open district
seats and announcement of the planned NYSE/NASD merger, FIA candidates are elected to
twenty-one of the thirty-five nationwide regional seats. This was again a stunning victory for
small firms in their quest to fairly regulate themselves.
42. This huge success of FIA was the catalyst for the elimination of the small firm
voting rights and small firm control of the NASD, as directed by the United States Congress.
Removing small firm voting rights became a high priority for Mary Schapiro, Goldman Sachs,
and all of the other involved large firms.
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43. After the announcement of the proposed NYSE/NASD merger, the FIA and the
Independent Broker Dealer Association (hereinafter known as "IBDA") again called for the
resignation of Shapiro and her top management in December 2006 through a vote of no
confidence among member firms. This vote was solicited in response to the proposed NYSE and
NASD (now FINRA) merger. The press release announcing the vote is attached and
incorporated as Exhibit "C".
44. One month later, in January 2007, Shapiro and supporters hired an aggressive
proxy firm to threaten small broker-dealers into voting for the merger. This was accomplished
by offering the carrot of thirty-five thousand dollars ($35,000) payment to small firms, based on
the money that already belonged to the small firms through their membership ownership of
FINRA, if the merger was approved. Advertisements and flyers of NASD's efforts are attached
as Plaintiff's Exhibit "D".
45. In addition, FINRA and SEC enforcement officers responsible for investigations
and audits were enlisted to solicit "get out the vote" calls to member firms, which served the
double purpose of notification and intimidation. The FINRA announcements carried the
implication that their support was necessary, or "anything could happen", including a haphazard
and uncertain regulatory future for the small firms, and retaliation for failure to cooperate.
46. Shapiro traveled the country in January seeking to influence small firms to
approve the merger. Notifications of merger details issued by Shapiro were filled with
deceptions and misrepresentations. It indicated that the minimum amount of small firm
representation would increase, but failed to indicate that total small firm representation would
likely be reduced. It also deceptively failed to indicate the reasonableness of any potential
payout to the small firms for approving the merger.
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47. In reality, FIA believed board membership would now be limited to three seats for
small firms, most of the remaining being essentially handpicked representatives of the large Wall
Street firms. By January 22, 2007 the merger had been approved over the protestations and
activism of FIA and its allied organizations.
48. Soon after Shapiro's national tour, Goble on behalf of NACI and FIA met with
commissioners of the SEC to see what could be done about the proposed merger. Annette
Nazareth, Raul Campos, Paul Akins and Kathleen Casey individually attended the private
meeting.
49. Nazareth bluntly informed FIA at the meeting that the merger was being
promoted by the Wall Street firms, done to solidify their interests and curtail the recent successes
of the small firms in winning elections to regional and board seats, and eventually in the hope of
running many of the small firms into insolvency.
50. Nazareth further indicated that the Wall Street firms had no intention of
complying with the Maloney Act of 1938 (Section 15A of the Securities Exchange Act of 1934-
particularly subsection b(4)), which required fair representation of all member firms. She
indicated that FINRA was the means by which the large Wall Street firms would ensure their
influence, and hoped to make it almost impossible for small firms to retain their present
influence.
51. In August 2007, FIA and IBDA again announced their intent to offer candidates
for all open seats in that year's elections, this time for a total of seven seats.
52. After this announcement, NACI and Busacca who were both fighting through the
FIA and IBDA for the rights of small firms and helped make the announcement, were both cited
in a FINRA regulatory complaint on August 13, 2007. The allegations on which the complaint
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was based were again mostly unfounded or minor (Exhibit "E"). FIA, NACI, and IBDA felt that
they were being deliberately targeted.
53. In September 2007 FINRA issued a letter (attached as Exhibit "F" and
incorporated by reference) to NACI that it was staying any further disciplinary proceedings
based upon its prior 2006 "Wells Notice", after being unable to find any relevant required
evidence to continue the investigation.
54. This demonstrated the speciousness of the original Wells Notice. Nothing in this
letter indicated abating, cancelling, or modifying the new disciplinary action initiated in August
2007. In short, it appeared FINRA was throwing allegation after allegation at NACI in order to
wear Plaintiffs down, and the moment one specious investigation was closed a new one seemed
to begin.
55. At this same time (late 2007- 2008) it was becoming clear to FINRA insiders and
Plaintiffs that massive fraud was being perpetrated by the large financial services firms on Wall
Street, including Goldman Sachs, regarding their activities and leveraging before the now well-
known late 2008 financial crisis.
56. FIA's position was that FINRA had done nothing to investigate or discipline these
firms for their irresponsible violations of numerous FINRA rules. In fact, FINRA appeared to be
covering up the activities of these firms for as long as possible.
57. FIA, through Goble and his membership on the board of FINRA, threatened to
publicize the huge discrepancy between FINRA's minor discipline of these large firms for their
serious transgressions of FINRA regulations, and the FINRA's overbearing discipline against the
small broker-dealer firms. It was during the climate of these discussions and arguments that all
of the following allegations take place.
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FACTS FROM FINRA'S MARCH- MAY 2008 AUDIT
58. In March 2008, FINRA began its annual audit of NACI. During its audit, FINRA
representatives communicated mostly with Blatman (the President) and Ward (the CFO) of
NACI.
59. While initially the investigation seemed to turn up nothing extraordinary,
eventually FINRA claimed to uncover damning information relating to NACI apparently
experiencing a "financial crisis", unauthorized trades occurring in customer accounts in order to
generate cash funds for operations purposes, and manipulating the firm's account processing
system by recording $5.1 million in money market purchases without offsetting this amount by
the money market sales in order to keep available funds for operating expenses at their maximum
level. All of these allegations were unfounded.
60. While purporting to be a legitimate investigation, this investigation was actually
requested and directed by Shapiro and Vogel. This was ultimately due to the pressure of
Goldman Sachs and other "cartel" Wall Street firms.
61. At this time while Goble was the only non-hand picked member of the FINRA
Board of Governors , and was also seen by Schapiro and the Firms as the perfect opportunity to
shut down FIA and its successful operations to ensure fair representation for small member firms
in the board and regions would never happen or would be delayed for a very long time.
62. At the time of the FINRA investigation that lead to SEC's federal court complaint,
Ward was delinquent in his child support payments by over $30,000 as calculated by the child
support enforcement agency of his original state of Wisconsin. Ward had been moving from job
to job throughout the country in an attempt to evade these obligations.
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63. NACI and Goble were contacted by the child support enforcement agency about
the time of the FINRA audit. Ward at this time was fearful of being terminated by NACI
because of the child support issue.
64. The recent revelation of Ward's child support issues to NACI and Goble, coupled
with a minor miscalculation Ward made in May 2008 concerning NACI's reserve compilation,
induced him to invent a false story about the insolvency of NACI while under pressure from
FINRA regulators to "tell all" or face the loss of his job.
65. FINRA regulators exaggerated the seriousness of the violations of Ward's
mistaken reserve miscalculation in their interviews with Ward. They hoped that he would
succumb to pressure and reveal any additional information about NACI's possible violations.
66. Ward, nervous he could be fired by NACI at any time after the discovery of the
child support evasion problem, and lose his job as CFO of the company- devised a plan with
Blatman (the President of NACI) to fabricate additional false allegations and lie to FINRA.
67. Ward and Blatman were hoping their cooperation with FINRA regulators and
FINOP investigators would enable them to completely control NACI. They felt their positions
would be preserved with a new corporate management introduced by the SEC, and the loss of
Goble. Ward also faced arrest by the State of Wisconsin for child support evasion should he be
fired by Goble.
68. Ward's miscalculation of the May 2008 reserve compilation caused him to be
threatened by FINRA with severe sanctions unless he fully "cooperated" to bring down NACI
and expose any other violations.
69. Ward's inexperience in the industry made him oblivious that these threats from
FINRA were without basis, as threats rarely if ever carried out. Ward did not realize that without
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an intention to defraud these were minor mistakes and rule violations that likely would not result
in any serious sanctions.
70. Ward also saw advantages to his own career, and used this opportunity to
fabricate deliberate unauthorized money market transfers stories, combined with his false claim
of corporate insolvency.
71. Increasing EBOC reserves were required to be held in May 2008 as FINRA's
requirements became more and more stringent.
72. Before the investigation, in early 2008, a number of "trade breaks" occurred at
NACI. These trade breaks were the result of software glitches as NACI was instituting new
financial software. In addition, FINRA's 2007 complaint filed against NACI was being resolved
at this time. This complaint alleged insufficient funds in the EBOC accounts.
73. At the suggestion of the SEC, it was determined that NACI was able to
recalculate and recategorize some of the EBOC calculations, and that when this was done they
were found to have the required sufficient funds.
74. In May 2008 a particular trade break occurred that attracted the attention of the
FINOP investigators. As part of the ordinary course of business, Richard Goble as owner of
NACI, along with Blatman and Ward, sought to obtain an approximately five million dollar loan
from the firm's bank, to purchase money market positions and decrease the required regulatory
reserve amounts. These freed up funds would assist the firm in its ordinary clearing obligations,
but were preventative only, and were not required for the company to survive on a day to day
basis.
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75. The bank declined to extend the loan. Faced with this, Blatman and Ward should
have reversed a corresponding money market purchase that they had initiated, in order to ensure
reserve account amounts were adequate.
76. Unlike prior "trade breaks" which were really differences based on how the
reserve amount should be calculated, Blatmann honestly forgot to reverse the transaction when
the loan was not approved, and when Ward calculated the reserve requirement, the calculation
erroneously indicated funds could be withdrawn from the reserve account.
77. As a result, the funds were erroneously withdrawn and the EBOC account was
underfunded. This was not intentional or deliberate on the part of NACI. The ongoing FINRA
audit in less than 24 hours discovered this erroneous withdrawl from the reserve account. Since
the withdrawal was purely erroneous, this constituted a "trade break", or an unintended error that
should not result in serious sanctions from FINRA.
78. Yet FINRA, as part of its investigation, intimidated the inexperienced Ward and
Blatman into "wrongfully confessing" that the entire scheme was intentional, and that NACI was
somehow insolvent.
79. These unintentional "trade breaks", including ones involving millions of dollars
for small firms, happen on occasion without ever resulting in any significant sanctions.
80. Under pressure from FINRA regulators, Ward lied about the supposed insolvency
and capital deposit requirement of NACI. These allegations of insolvency and intentional fraud
were later determined to be falsehoods by Plaintiffs and their counsel then appearing in the SEC
proceedings.
81. After the audit and "investigation" of the FINOPS, Schapiro was faced with a
situation that could be turned into an opportunity to shut down the head of FIA and the voice for
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small firms within FINRA. She immediately pressured the SEC to file a complaint for an
injunction against NACI based upon scanty and unreliable evidence and no clear independent
evidence of any intentional act of fraud on customer accounts. FINRA knew it was relying upon
hastily gathered evidence, and an incomplete investigation.
82. Shapiro and Vogel also intended to destroy and interfere with the contracts and
business relationships of NACI, G&G Holdings, and FIA relating to their customers and
constituents. They did this by recommending that the SEC, on scanty evidence and without a
more thorough investigation, file an action for injunctive relief against NACI and Goble.
83. Thompson, acting on behalf of the DTCC, shut down NACI a day prior to the
SEC filing, and also threatened NACI directly with being permanently shut down, even after
Goble and NACI showed Thompson that it could make a reserve deposit at any time, and that the
cash position of the firm was sound.
84. Thompson, in concert with Shapiro and Vogel of FINRA and on behalf of DTCC,
intended to destroy and interfere with the contracts and business relationships of NACI, G&G
Holdings, and FIA regarding their customers and constituents. Larry Thompson acted to
interfere by shutting down NACI a day before the SEC action was filed. Thompson, as general
counsel of DTCC, issued the letter suspending NACI access to DTCC. (DTCC letter to NACI
declaring suspension of access is hereinafter attached as Plaintiff's Exhibit "G")
85. Thompson's career had been assisted by the large Wall Street firms, he was aware
of the political conflict within FINRA between FIA and the large Wall Street firms, and he
deliberately decided to aid and participate in Shapiro's attempt to destroy NACI.
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86. He did this ultimately from the pressure of the Wall Street firms. Thompson
deliberately lied to the board of the DTCC, falsely informing them that NACI was insolvent,
despite being clearly shown that the firm was completely viable.
87. The SEC action (Case No. 6:2008-CV-00829) was filed and served on May 27,
2008 by the SEC under the direction of Shapiro and Vogel, alleging improper liquidation of
customer accounts to save NACI from insolvency. It was based entirely upon the allegations of
Ward and Blatman, without any corroboration from Goble, or questioning of Goble.
88. Prior to filing the complaint, Goble was always able to clearly explain and
demonstrate to FINOP investigators how NACI was complying with the FINRA audit and
federal regulations.
89. Without any substantiation, and only based on the testimony of Ward and
Blatman and a few vague financial statements, FINRA recommended the SEC file a civil action
against NACI to subject it to a temporary restraining order and then eventually shut it down
entirely (the original complaint and memorandum of law for temporary restraining order (Case
No. 6:2009-CV-00829 are hereinafter attached and incorporated as Exhibit "H").
90. In this complaint, the SEC alleged that the EBOC accounts were not holding the
reserves required by federal regulations. This was incorrect. The EBOC accounts were holding
the required amount. FINRA and SEC during their investigations, and with Ward's help, were
calculating them a different way than NACI had previously done. NACI's calculations were also
a valid way to calculate the required reserve amounts, and was a method given directly by the
FINOP regulators to Ward.
91. Ward knew about both methods of calculating the reserve and used this to his
advantage in accusing NACI of deliberately violating federal regulations. Deposition testimony
20

from Ward regarding the two or even more ways to calculate the reserve amount authorized by
regulations is hereinafter attached as Plaintiff's Exhibit "I".
92. An occasional miscalculation of the EBOC reserve account would not have been a
serious matter had not Ward and Blatman also accused NACI of sweeping customer money
market accounts and moving these amounts into its firm's operating accounts. These allegations
also formed the basis of the SEC's complaint.
93. The SEC knew that these allegations were not founded on other readily available
evidence. Additionally, the SEC sought no explanation from Goble. They did not even attempt
to question Goble to help resolve these issues. The sweeps and transfers alleged in the SEC
complaint never occurred. No money was ever at any time used to pay NACI's operating
expenses.
94. The account statements provided as exhibits in the SEC suit showed nothing
except that an erroneous transaction had occurred.
95. In reality, all transfers from money market to cash positions and back were
documented on all customer statements. The initial agreement signed by all clients indicated that
these transactions could take place, and all customers consented to these transactions. Luque in
his deposition pursuant to the original SEC action admitted that NACI would have the right to
liquidate money market funds for certain allowed purposes, including the purposes actually used
by NACI (a copy of the relevant pages of this deposition is hereinafter attached as Plaintiff's
Exhibit "J").
96. No transfer was ever made to prevent the firm's insolvency. The transfers were
made in the ordinary course of business as preventative measures. At no point was the business
21

facing imminent insolvency or a crisis. Testimony from Ward basically admitting as much is
attached as Plaintiff's Exhibit "K".
97. Any transfers and sweeps of money market accounts were permitted according to
NACI's agreement with its clients, where it specifically mentions that NACI reserved the right to
transfer money between the money market and other accounts (see Plaintiff's Exhibit "L").
98. The sweep accounts were not business operating accounts, but other allowed
accounts including margin debts, fails to receive and deliver, and the DTCC settlement account.
At no time did NACI use client funds to pay its operating expenses because of insolvency.
99. Schapiro and Vogel knew that the case resulting from the investigation they
headed was without solid basis. The proceeding was intended to interfere with and destroy
NACI's business relationships. The SEC aggressively pursued the case against NACI, asking on
ex parte motion, without any opportunity for NACI or G&G Holdings to properly respond, that a
temporary restraining order/injunction be imposed on the company.
100. A receiver was also requested for NACI. At no time before the ex parte actions
by the SEC did the SEC even attempt to communicate with Goble about any of the false
allegations from Blatman and Ward. It is clear that the SEC was never seeking the truth about
Ward's and Blatman's false allegations.
101. On the same date (May 27, 2008), two motions- the Emergency Motion for
Temporary Restraining Order, and Emergency Motion to Appoint Receiver- were filed by the
SEC.
102. Receiver Anderson of Sutherland Asbill was appointed for NACI. Through
appointment of the Receiver, Goble was denied access to his e-mails, records, statements and
other important items, including many items that related to the political activities of FIA. Thus,
22

on the very same day, the judge in the case entered orders implementing the SEC's requests.
Defendants had no time to respond to these motions. NACI's business was immediately
interrupted and the company began losing substantial revenues.
103. Ultimately, the goal of Shapiro, Vogel, Anderson, and Cartel was to use the
Receiver to keep Goble from important FIA records and activities, immediately remove Goble
from FINRA’s Board of Governors, and eventually use the Securities Investor Protection Act of
1970 to force NACI into fraudulent bankruptcy referral. This was intended to forever destroy
Goble's influence in the industry.
104. FINRA's ultimate goal of forcing NACI into and fraudulent bankruptcy and
liquidation was implemented by the formal application of the Securities Investor Protection
Corporation filed and served in the SEC action by Securities Investor Protection Corporation
(SIPC) lawyers (Case No. 6:2008-CV-00829) on July 24, 2008. This was a formal SIPC
application for a protective decree filed pursuant to 15 U.S.C. §78eee(b)(1)(B).
105. The misguided and fraudulent liquidation proceedings began a mere two months
after the filing of the original action. Four days after the SIPC application was entered, Judge
Scriven ordered the case transferred to the United States Bankruptcy Court for the Middle
District of Florida, and the appointment of Gilbert as Trustee to oversee the continued liquidation
of NACI.
106. SIPC requested this decree at the direction of the SEC. SIPC performed its
functions grossly negligently, failing to seek a protective decree in the proper manner. SIPC,
through its employees and agents, sought to interfere with the business of NACI by filing a
frivolous action based upon unreliable evidence including negligently and fraudulently prepared
23

financial statements and coerced witnesses who received substantial amount of wages and
bonuses from the SEC for their testimony.
107. This included Blatman and Ward who were paid more than their average normal
wages by the SEC after the ex parte TRO and ex parte Receiver were put in place under false
pretenses.
108. SIPC based its action for the protective decree on the financial statements of
Luque, at the time an employee of the SEC. Luque had no formal accounting education. The
financial statements falsely purported that NACI was insolvent to the extent of 2.5 million
dollars, when in fact it was solvent by approximately 3 million dollars. The fraudulent and false
financial statements are hereinafter attached as Exhibit "M".
109. Based upon these fraudulent and negligently prepared financials, ultimately
designed for shutting down and interfering with Plaintiffs' businesses including NACI and FIA,
the protective order was entered in the SEC case and bankruptcy liquidation was allowed to
proceed under Bankruptcy Case No. 6:08-ap-00145-KSJ.
110. Luque has no formal education and no degrees in the field of accounting. SIPC
based its request for protective order on the basis of financials filed by someone with no formal
accounting training.
111. SIPC conducted its own professional financial analysis after the bankruptcy
filing. These financials were provided to Gilbert. Gilbert's SIPC financials, in October, 2008,
clearly demostrated that NACI had actually been solvent to the extent of approximately three
million dollars.
24

112. There was thus a vast difference between the fraudulently prepared financials of
Luque's analysis commissioned by the receiver at the request of the SEC, and SIPC's prepared
financials after the protective order had already been entered.
113. Despite becoming aware of these new financials soon after the protective order
was entered, Gilbert as Trustee of the estate continued to liquidate Plaintiffs' businesses pursuant
to the protective order. Gilbert intentionally continued to liquidate the business even after
finding that the protective order had no basis. No motion to reconsider the protective order was
filed, and nothing was accomplished to mitigate damages to Plaintiffs as a result of the loss of
NACI.
114. Plaintiffs have since hired an expert to review the financials and this expert has
independently concluded that NACI's financials were not violating FINRA or SEC regulations
such as to warrant the action that was taken against NACI. The report of the expert is hereinafter
attached as Plaintiff's Exhibit "N".
COUNT I AGAINST ALL DEFENDANTS- TORTIOUS INTERFERENCE WITH

PLAINTIFFS' BUSINESS RELATIONSHIPS
115. Plaintiffs reallege and reincorporate paragraphs 1 through 114 herein.
116. All Defendants, jointly and severally, did intend and did interfere with the
business relationships of Plaintiff. Defendants knew that NACI had multiple valuable contracts
with numerous clients. These contracts were also essentially the business relationships of
Plaintiffs The Goble Trust and Goble, who took substantial efforts to forge these relationships
with NACI and profit from them.
117. FINRA, through its agents Schapiro and Vogel, conducted deliberately fraudulent
and irresponsible investigation practices in order to interfere with Plaintiffs' business, and
recommended to the SEC the filing a frivolous injunction action designed to destroy NACI's
25

operations. FINRA's investigations were unjustified and intended to deter NACI's present clients
from continuing to place confidence in the business activities of NACI.
118. Plaintiffs, through NACI, had developed and fostered numerous relationships
with broker-dealers across the country. These relationships were the source of income for NACI
and ultimately for Goble Trust.
119. FINRA, through its agents Schapiro and Vogel, conducted a wholly baseless and
improper investigation. FINRA failed to investigate all the information readily available to it
before filing its complaint in federal district court. When the complaint was filed, NACI's and
Goble Trust's business relationships with its present clients were for all intents and purposes
effectively annihilated.
120. Once the injunction was filed, Anderson and Sutherland Asbill conducted the
receivership with the ultimate view to the destruction of Plaintiffs' stock value in NACI, by
liquidating and closing down accounts, and destroying the relationships developed between
NACI and its member broker-dealer companies.
121. Once the SIPC liquidation proceeding was initiated, Gilbert and Carlton Fields
unjustifiably conducted the fraudulent bankruptcy proceeding with a view to forever destroying
NACI's business relationship with its clients through the liquidation.
122. Defendant Luque deliberately assisted the receiver in fabricating false financial
statements about NACI in an attempt to reduce the confidence of NACI's clients and destroy its
business relationships, ultimately with a view to sending the company into SIPC liquidation
proceedings.
123. As a result of Defendants' actions, Plaintiffs' business relationships through NACI
and on behalf of themselves were all destroyed. The destruction of these relationships have
26

resulted in substantial lost revenue to NACI, future dividend and distribution income to Plaintiff
Goble Trust through its ownership of NACI, lost rent to G&G Holdings, indirectly caused the
destruction of the property of FIA, as well as the destruction of Plaintiff Goble Trust's stock
value in NACI, all to the extent of one hundred million dollars or more.
WHEREFORE Plaintiff requests against all Defendants compensatory damages in the
amount of one hundred million dollars, costs of this suit, and such other and further relief as this
Honorable Court deems proper.
COUNT II AGAINST SEC AND SIPC- ABUSE OF PROCESS
133. Plaintiff realleges and reincorporates paragraphs 1 through 114 above.
134. Defendant SIPC, through its agents, in filing its recommendation for protection,
did issue process and suit against NACI for a purpose other than the intended litigation- namely
to assist FINRA and the SEC in shutting down NACI, and through that Goble and FIA's
participation and activism on the FINRA board.
135. Anderson and Sutherland Asbill, in deliberately continuing to conduct
receivership proceedings of NACI and recommend the liquidation of NACI, engaged in litigation
other than for its intended purpose- namely for the improper and unnecessary purpose of shutting
down NACI no matter what the finances and accounting of the company indicated would be in
the best interests of creditors and shareholders.
136. Gilbert and Carlton Fields, in deliberately continuing as Trustee to conduct
bankruptcy liquidation proceedings against NACI and throughout the proceedings continuing to
liquidate NACI, engaged in litigation before the Courts other than for its intended purpose-
namely for the improper and unnecessary purpose of shutting down NACI no matter what the
27

finances and accounting of the company indicated would be in the best interests of creditors and
shareholders at the time.
137. As a result of Defendants' actions, Plaintiffs were collectively damaged to the
extent of millions of dollars. As a result of Defendants' actions, Plaintiffs' business relationships
through NACI and on behalf of themselves were all destroyed. The destruction of these
relationships have resulted in substantial lost revenue to NACI, future dividend and distribution
income to Plaintiff Goble Trust through its ownership of NACI, lost rent to G&G Holdings,
indirectly caused the destruction of the property of FIA, as well as the destruction of Plaintiff
Goble Trust's stock value in NACI, all to the extent of one hundred million dollars or more.
WHEREFORE Plaintiffs request against all Defendants SEC and SIPC compensatory
damages in the amount of one hundred million dollars, costs of this suit, and such other and
further relief as this Honorable Court deems proper.
COUNT IV AGAINST ALL DEFENDANTS- GROSS NEGLIGENCE
138. Plaintiff realleges and reincorporates paragraphs 1 through 114 above.
139. Defendants and their agents, through their actions at various stages before and
during the SEC proceeding against NACI, each breached a duty of care they had toward
Plaintiffs. These breaches of this duty of care constituted not mere negligence only, but gross
negligence.
140. Defendants FINRA and SIPC had a duty to Plaintiffs to thoroughly and fairly
investigate all claims suspected or arising pursuant to their regulatory authority. Defendants had
a duty to be impartial and fair in their evaluation of the evidence, and only impose sanctions and
issue process it was validated by evidence of violations.
28

141. At the very least, SIPC had a duty to ensure the financials of NACI were being
accurately assessed and justified a bankruptcy liquidation of the company prior to initiating
bankruptcy proceedings.
142. Defendant FINRA breached its duty to Defendants when Defendant FINRA
misleadingly recommended to SEC that the action for relief be filed in Federal District Court.
Defendant failed to adequately investigate the allegations of Ward and Blatman, and compile all
relevant evidence (including thoroughly interviewing Goble) before making this hasty
recommendation to the SEC.
143. FINRA was not only negligent, but grossly negligent and was aware that there
was considerable risk no action worthy of sanctions had taken place. FINRA knew there was
considerable risk in not interviewing Goble and seeking a proper explanation from all of NACI's
officers.
144. Defendant SIPC breached its duty to make a thorough and accurate accounting of
NACI and determine that its recommendation for liquidation/bankruptcy proceedings was truly
in the best interest of creditors. SIPC failed to make this accurate and proper accounting, and
used inaccurate information. SIPC was not merely negligent, but grossly negligent and
knowingly failed to fulfill all of its obligations under the statute. SIPC proceeded knowing the
substantial risk that there was not enough evidence to proceed.
145. Carlton Fields, Gilbert, Sutherland Asbill, and Anderson all negligently
contributed to the unnecessary destruction of NACI by failing to address the issue of NACI's
solvency, and appropriately fulfill their fiduciary duties to the company's creditors, shareholder
and clients when it was determined that NACI was not insolvent or facing financial distress that
would or could harm the various interests in the company.
29

146. Carlton Fields, Gilbert, Sutherland Asbill, and Anderson failed to stay, abate, or
otherwise appropriately address the continued dismantling of NACI when it was realized NACI
was never in danger of insolvency, distress, or a danger to its clients, creditors, and shareholders.
They had a fiduciary and common law duty to NACI's shareholders to manage the company
appropriately.
147. These Defendants were not only negligent, but also grossly negligent in that they
were aware there was a substantial risk that the dismantling of NACI was not being done in the
interests of creditors and shareholders.
148. These Defendants failed to adequately manage the company and determine the
extent of its solvency, as well as the propriety and necessity of dismantling the company in
bankruptcy proceedings or pursuant to the receivership.
149. Defendant Thompson decided to shut down the operations of NACI prior to the
SEC filing without proper or adequate investigation into the matter. Thompson had no intention
of conducting an appropriate investigation into the allegations and recklessly was the first to shut
down the operations of NACI, even before the action and injunction were filed by the SEC.
150. As a result of the decision of Thompson, the DTCC failed to abide by its own
standards and regulations in the closing of NACI, and failed to perform its applicable duty to
fairly regulate NACI's industry and protect NACI and its shareholders from unfair practices of
the agency.
151. Defendant Thompson was even contacted by owner Goble who attempted to
explain that no violations were occurring. Thompson not only refused to listen to Goble's
explanation, but threatened that NACI would be permanently dismantled and liquidated if Goble
30

sought to file an appeal within the DTCC against Thompson's temporary order to shut down
NACI.
152. Thompson knew there was substantial risk that NACI and its shareholders would
be unnecessarily harmed by his threats and actions against the company. Thompson therefore
engaged in gross negligence.
153. Defendants Ward and Blatman intentionally misrepresented the internal
operations of NACI. They also spoke regarding issues of which they had no knowledge to SEC
and FINRA investigators, recklessly made numerous unfounded allegations against NACI, and
breached their duties as employees of NACI and in their service to NACI's clients. Defendants'
actions were therefore grossly negligent.
154. Defendant Luque engaged in improper accounting practices in fashioning and
summarizing the books of NACI, and failed to carefully compile the recordkeeping of NACI to
present an accurate picture of the company's solvency. Luque, Jr. failed to accurately determine
the condition of NACI pursuant to the duties of his employment under the receiver, and thereby
breached his duties to the shareholders of NACI, by failing to act in the best interest of the
company.
155. All of the Defendants' acts of negligence described in these allegations
proximately caused the damages suffered by Plaintiffs. These damages were the foreseeable
results of Defendants' breaches of duty.
156. As a result of Defendants' negligence, Plaintiffs have been damaged to the extent
of millions of dollars due to loss of corporation share value through the dismantling of NACI,
loss of rental revenues, loss of prospective corporate earnings and distributions, and loss of assets
of the company held as collateral by G&G Holdings and Richard Goble. As a result of
31

Defendants' actions, Plaintiffs' business relationships through NACI and on behalf of themselves
were all destroyed. The destruction of these relationships have resulted in substantial lost
revenue to NACI, future dividend and distribution income to Plaintiff Goble Trust through its
ownership of NACI, lost rent to G&G Holdings, indirectly caused the destruction of the property
of FIA, as well as the destruction of Plaintiff Goble Trust's stock value in NACI, all to the extent
of one hundred million dollars or more.
WHEREFORE Plaintiffs seek against all Defendants millions of dollars of
compensatory damages in the amount of one hundred million dollars, costs of this suit, rental
proceeds, and such other and further relief as this Honorable Court deems proper
COUNT IV AGAINST DEFENDANTS FINRA, SEC, SCHAPIRO, VOGEL, and LUQUE-

DEFAMATION OF GOBLE TRUST AND GOBLE
157. Plaintiffs reallege and reincorporate paragraphs 1 through 114 above.
158. Defendant FINRA, by itself and through its agents Mary Schapiro and Grace
Vogel, did knowingly and intentionally utter false statements, or alternatively uttered statements
that it should have known were false, regarding the condition of NACI to officers of the SEC.
These statements included statements to investigators at the SEC just prior to its last
investigation of NACI, stating and implicating the officers of NACI were intentionally shifting
funds to its operating account to remain solvent. Defendants knew that these statements were
false, or at least should have known that they were false.
159. As a result of FINRA's false allegations to Defendant SEC, the SEC itself
launched a campaign to publish erroneous information about the condition of NACI. (See
Plaintiff's Exhibit "O")
32

160. As a result of Defendants' actions, NACI's business was destroyed due to the
overzealous and inappropriate investigation of the SEC into allegations that were baseless.
161. Defendant Luque formulated and defamed NACI by understating its solvent
position to regulators. Luque's computations falsely indicated that NACI's financial position was
insolvent and that it was incapable of properly running its business without great danger to its
clients. This information was then widely published and destroyed NACI's viability as a
business. Luque knew or should have known that these accounting statements he prepared about
NACI were false.
162. Plaintiffs have suffered substantial injury as a result of these acts of Defendants
into the millions of dollars. As a result of Defendants' actions, Plaintiffs' business relationships
through NACI and on behalf of themselves were all destroyed. The destruction of these
relationships have resulted in substantial lost revenue to NACI, future dividend and distribution
income to Plaintiff Goble Trust through its ownership of NACI, lost rent to G&G Holdings,
indirectly caused the destruction of the property of FIA, as well as the destruction of Plaintiff
Goble Trust's stock value in NACI, all to the extent of one hundred million dollars or more.
WHEREFORE, Plaintiffs Goble Trust and Goble seek compensatory damages in the
amount of one hundred million dollars, costs of this suit, attorney's fees, and such other and
further relief as this Honorable Court deems proper against Defendants.
DATED this 16th day of March, 2010
Respectfully submitted,
/s/ Philip Bartlett________________

Philip Bartlett, Esq.
Florida Bar No. 0045318
33

The Bartlett Law Firm, P.A.

230 East Marks Street
Orlando, FL 32803
(321) 319-0587 (telephone)
(866) 596-9215 (facsimile)
phil@pdbartlettlaw.com (e-mail)
Attorney for Plaintiffs.
34

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EXHIBIT C
Abou
ut NASD | Press Rooom | Registration & Qualifications | Reggulatory Services | Resources
R | Career Opportunities | Sitee Map | Contact Us
Regulato
ory Consolidation Plan
n
Searc
ch
NASD and NY YSE Announce New SRO
On Novemberr 28, 2006, NASD D and the New Yo ork Rem
member to V
Vote by Janua
ary 19
Stock Exchange (NYSE) annou unced a plan to
consolidate their member regulation operations into a
new self-regullatory organizatio on (SRO) that will be the
Top
p Links single regulato
or for all securitie
es firms doing bus
siness
with the public
c in the United Sta ates. Read more about
Firmss the plan.
Inform
mation for Firms
Brokeers Setting th
he Record Straig
ght About NASD
D's N Capital
Net Benefits Call (877) 381-
Inform
mation for Brokerrs Consolidation Plan Reequirement Governance 4017
$35,,000 Payment Changes More on Voting/
We are awware that organizzations other than
n Get the Proxy
NASDD Manual
NASD hav ve been making misstatements
m
Access the NASD Manual Online
regarding the regulatory co
onsolidation plan Who's Endorsin
ng this Deal?
?
and memb ber vote. NASD wants
w to ensure th
hat
Notic
ces to Members The plan to consolidaate the member reegulation
all membeers have access tot the facts aboutt
Reguulations and Proposals operrations of NASD aand NYSE into a new self-
the consolidation plan:
regulatory organizatio
on (SRO) has rec ceived wide
supp
port. Read what N NAIBD, FSI, SIFM MA, STA, ICI,
TRACCE Information annd • Thhe one-time paym ment of $35,000 is NASAA and other ind dustry leaders are
e saying about
Corpoorate Bond Data th
he maximum amount the IRS willl how the consolidationn will benefit mem
mber firms, capital
Corpoorate Bond Markeet peermit NASD to make m to members s markkets and investorss.
Repoorting & Dissemination Data annd still retain tax-exempt status
and Information • No firm or group of firms will e a question? Em
Have mail
re
eceive more than n $35,000 cons
solidationinfo@n
nasd.com now.
FAQ • NASD will not incrrease the net
Answ
wers to Commonly
y Asked caapital requireme ent for firms unde
er
Ques
stions th
he new SRO and there will be no Inv
vestor Inforrmation
m
minimum trade re
equirement
NASD D Investor Educa
ation • NASD regulated firrms will not be Befoore you invest, NA ASD recommends s that you take
Founndation suubject to any ne ew requirements s the tiime to familiarize
e yourself with Inv
vestor Information
n
Finding Ways to Prote
ect orr rules as a result of this transaction to he
elp you make morre informed inves stment decisions.
stors Through Education
Inves • NASD has preserv ved the rights off M
Mutual Fund Expe ense Analyzer
member firms by negotiating for
m Mutual Fund Brea
M akpoint Search To
ool
brroad industry representation on the Investor Alerts
neew Board
N
NASD BrokerCheeck
• Small firms in parrticular are
guuaranteed more seats (3) on the Investor Complainnt Center
neew Board than on n the existing NAS
SD Investor Claims F
Funds
Booard (1)
What's Ne
ew
Member Alert
Out of respectt for former Presiddent Gerald R. Fo
ord,
NASD will be closed for genera al business purpo
oses
on Tuesday, January
J 2, 2007.
Notices to Members
News Release
es
Archive of Rece
ent Announcements
s
About NASD | Press Ro

oom | Resources | Career Opportunities | FAQ | Site Map | Contact Uss
©2007 NA ed. | Legal

ASD. All rights reserve Notices
s and Privacy Policy.
EXHIBIT D
Geneeral Information | Mem

mber Meetin
ngs Schedule
Home >
Regulattory
Consoliidation
> Geneeral
Informaation >
Search Assertioons and
Facts
General Innformation Prinnter-
News Releease Friendly
Announcem ment Remarkks Regulaatory
Consolidattion Facts Consollidation
Communiccations to Firrms - Asserrtions
FAQ and Faacts
Assertions and Facts NASD member firm ms have beenn
receivinng numerouss communications
from soources other than NASD that
are relaated to the reecently annouunced
regulatoory consoliddation plan. TheT
NASD believes thaat some of thhose
commuunications coontain
misstateements of faact, and wouuld like
to set thhe record strraight to ensuure that
all mem mbers have access
a to acccurate
informaation and a fair
f voting prrocess.
Assertiion:
After coonsolidationn, firms that are

a
currentlly regulated only by NA ASD
will be subject to NYSE
N rules.
Fact:
NASD regulated firrms will not be

subject to any new requirementts or
rules ass a result of this
t transactiion.
Once thhe consolidaation is compplete,
the neww SRO—in consultation
c with
industry committees and after Board

approval—will adopt a uniform set of
rules flexible enough to accommodate
the different business mixes and firm
sizes in the industry.
Assertion:
The balance of small and large firms

on the proposed Board of Governors
is unfair to small firms.
Fact:
Quite the opposite is true. The

consolidation gives small firms three
guaranteed seats on the Board of
Governors, which is the same amount
as large firms and more than small
firms currently are guaranteed on the
NASD Board. The consolidation
preserves industry representation in
the SRO process and guarantees that
firms of all sizes will have a
significant voice in the governance of
the new SRO. In negotiating the
transaction, NASD's leadership
insisted on industry representation
and, in particular, on guaranteed
small firm representation. The
governance structure achieves those
critical goals and is fair and balanced.
Assertion:
NASD can increase the amount of the

$35,000 one-time payment due to all
member firms if the consolidation is
approved. A much larger payment
can and should be made.
Fact:
A larger payment isn't possible.

NASD is a tax-exempt organization
and therefore is limited by tax laws
regarding size and source of

payments it can make to its members.
The payment of $35,000 per member
firm, or a total of $178 million, will
be funded by—and therefore limited
by—the expected value of the
incremental cash flows that will be
produced by the consolidation
transaction. If the special member
payment was higher, it could
seriously jeopardize NASD's status as
a tax-exempt organization, which
would result in significantly higher
fees for firms.
In addition to the special member

payment being funded by the
transaction itself, NASD is also
committed to reducing the costs of
regulation as efficiencies accrue from
the consolidation, and expects to
share those efficiencies with its
members through discounts in yearly
gross income assessments and
reductions in fees.
Assertion:
The proposed governance changes

will effectively restrict the rights of
NASD member firms.
Fact:
Quite the opposite. NASD was

absolutely determined to have broad
industry representation—and small
firm representation in particular—and
we negotiated the best possible
agreement to preserve our bedrock
principle of industry participation.
Each member firm will still get one
vote for all:
• By-Law changes,
• District committee elections,
and
• Board elections in their firm

category.
Assertion:
NASD is rushing its members to vote

on the proposed By-Law amendments
before they have had ample
opportunity to review them.
Fact:
NASD is not rushing the vote. We are

committed to full disclosure and
answering member questions about
the consolidation plan and its
implementation—including the By-
Law amendments that are needed and
the special member meeting that will
be held. NASD management is
currently in the process of meeting
with members across the country to
provide more information and answer
their questions. All members also will
receive (by mail) a detailed
information package about the plan
and the By-Law amendments that will
be voted on at the special meeting.
Members will then have 30 days in
which to vote, which is in accordance
with NASD's By-Laws and consistent
with past NASD member votes.
Assertion:
Small firms will be better off if they

reject this deal.
Fact:
If NASD member firms don't vote to

approve the By-Law amendments
needed to effectuate this deal, there
can be no assurances about the shape
of self-regulation moving forward.
The SEC is committed to ending
redundant, inefficient regulation, and
this cann be achievedd through thhe

consolidation plan that
t the NAS SD
Board ofo Governors overwhelm mingly
approveed. For exam mple, the SEC
recentlyy approved the
t NYSE's
governaance structurre—which
prohibits all industrry participatiion at
the boaard level—ass fair
representation of thhe industry. The
T
SEC coould choose other
o ways tot
change the SRO system that woould
not perm mit the broad industry
particippation of the current plann.
Assertiion:
Investoors will have less protection as

a resultt of the propoosed regulattory
consolidation.
Fact:
Havingg the most coompetitive,

efficiennt and effectiively regulatted
capital markets in the world is in i the
best intterest of American invesstors,
and is what
w the tenss of millionss of
people who invest for f their futuure
deservee. Our self-reegulatory system
will be more efficieent and moree
robust once
o the neww organizatioon is in
place annd fully inteegrated. We will
w
replace a system off two ruleboooks,
two sepparate regulaatory staffs and
a two
compleetely differennt enforcemeent
systemss with a coorrdinated,
integratted effort to keep our maarkets
free of fraud and unnfair dealingg. And
with onne rulebook, a focused sttaff and
no wastted effort, thhe new SRO will
be able to find probblems quickeer and
deal wiith them faster.
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EXHIBIT I
Page 23
1 was the one that had to certify the FOCUS reports, and the
2 weekly reserve comp calculations, and net capital
3 computations.
4 Q Before you started work at North American Clearing,
5 had you ever done a net capital computation before?
6 A Never.
7 Q What's a reserve computation?
8 A 15c3-3 computation. Bottom line, in layman's
9 terms, you have to have a certain amount of reserves in a
10 bank for the exclusive benefit of the clients and customers.
11 And, and you have a certain amount of debits on the books,
12 and certain amount of credits on the books. The difference
13 between the debits and the credits are what you need to
14 reserve in this special bank account.
15 Q Before you began working at North American
16 Clearing, had you ever done reserve computations before?
17 A No, never.
18 Q Who did you learn how to do a reserve computation
19 from?
20 A Learned how to do it from MaryBeth Schmidt. I
21 tried to learn it from -- when I first started with the
22 company, Mr. Goble had given me three names of three prior
23 FINOPs that were on board or working as consultants for the
24 company between the time of Mr. Gallagher's death in January
25 to the beginning of April when MaryBeth Schmidt came on
Veritext/Florida Reporting Co.

Serving the State of Florida (305) 376-8800
Page 24
1 board.
2 I spoke with those three gentlemen, and I was
3 trying to learn how to do this stuff from them. It was not
4 easy, because I would get three different opinions from
5 those three gentlemen on how to do the same kind of
6 calculations.
7 Q When did you start doing the net capital
8 computation by yourself?
9 MS. PAULOSE: Objection. Relevance.
10 BY MR. LEE:
11 Q You can answer.
12 A When did I start doing it by myself? It would have
13 been starting with the August '07 FOCUS report.
14 Q How often are FOCUS reports done?
15 A Monthly.
16 Q What does a net capital computation show?
18 A Net capital computation shows the liquidity of a
19 equities firm.
20 BY MR. LEE:
21 Q What do you mean by liquidity of an equities firm?
23 You want to give me a standing objection to any
24 questions on net capital? I don't believe they're
25 relevant to allegations in the complaint. So I can

Page 25
1 keep objecting, or we can agree to a standing
2 objection on net capital.
3 MR. LEE: If you're not objecting to the
4 form of the question, it's preserved anyway, so
5 I don't have problem with if you want --
6 MS. PAULOSE: I'll just keep objecting.
7 MR. LEE: Okay.
8 A What was the question, again? I apologize.
9 BY MR. LEE:
10 Q What does liquidity mean?
11 A Liquidity is how much of the firm's capital they
12 have access to on a short-term basis. It is really the
13 equity of a firm, less any fixed assets, less any assets
14 that cannot be converted into a form of cash within 12
15 months. Examples of that would be fixed assets, any
16 intangible assets there may be, any receivables that are
17 over 12 months in nature, items like that.
18 Q In August of '07 when you first started doing net
19 capital computations, was there some minimum requirement
20 that North American Clearing had to have, in net capital?
22 A They had to have a minimum 5 percent of the total
23 allowable debits, if memory serves me right. It's been a
24 while since I've done this.
25

EXHIBIT J
74
1 to the customer.
2 Q. Well, if during the period between reserve
3 computations, if there was money received from
4 settling a trade --
5 A. Correct.
6 Q. -- that money would not have to be reserved
7 pursuant to the reserve computation until the next
8 reserve computation was performed, correct?
9 A. That's correct, sir.
10 Q. So from the period of when money is
11 received, for example, as a result of delivering
12 securities or settling a trade until the next reserve
13 computation is done, there's no requirement to do a
14 reserve computation to safeguard those funds,
15 correct?
16 A. That's correct, sir.
17 Q. And if the customers agreed that North
18 American Clearing could liquidate their money market
19 account at North American Clearing's discretion,
20 would you agree with me then that North American
21 Clearing could liquidate money market funds?
22 MR. LEVENSON: Objection to form. You can
23 answer.
24 THE WITNESS: Yes. I think I understand
25 your question. I said yes, but with the proviso
Veritext Florida Reporting Co.

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75
1 that the customer did give their written
2 permission.
3 BY MR. LEE:
4 Q. And if there was a liquidation of a money
5 market fund, as your expert report indicates, and
6 there was, therefore, cash that was utilized by North
7 American Clearing, do you know what that cash was
8 used for?
9 A. Based on my review, the money from the
10 liquidations I'm referring to were used to satisfy
11 other obligations of the broker-dealer, primarily
12 their settlement with NSCC.
13 Q. And do you know if any of the funds that
14 were liquidated from the sale of the money market
15 funds were utilized to pay any of North American
16 Clearing's overhead expenses?
17 A. Would you describe "overhead expenses" or
18 give me an example of overhead expenses.
19 Q. Were any of the funds obtained as a result
20 of the liquidation of the money market account
21 utilized for any purposes other than for North
22 American Clearing to meet its settlement obligations?
23 A. Not to my knowledge.
24 Q. And based upon your review of the documents,
25 did Richard Goble actually direct the liquidation of

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1 any money market funds?
2 A. Based on my review of the documents, it was
3 indicated in some depositions that he did have
4 knowledge of it. There was a -- one transaction -- I
5 believe it was either April 16th or April 22nd --
6 where Richard Goble, according to documents I
7 reviewed, was signatory on the instruction to wire
8 funds from the money market fund to the -- I believe
9 the firm's operating account.
10 Q. Is that the transaction where funds were
11 removed from the reserve, from the customer reserve
12 account?
13 A. I believe it was funds that were removed
14 from the money market fund and put in the firm's
15 operating account.
16 Q. When you say "operating account," are you
17 referring to the firm's settlement account?
18 A. Well, the firm had -- you know, based on
19 what I've seen, the firm had more than one bank
20 account, and I don't know specifically where that
21 money went.
22 But the funds were removed from the reserve
23 fund and there had to be a wire instruction submitted
24 to the reserve fund because it wasn't as a result of
25 a trade which created a debit balance, and pursuant

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77
1 to the operation of the money market fund, would not
2 have been automatically swept as part of the daily --
3 or wouldn't be part of the daily removal or deposit
4 to the fund based on the net balance for any given
5 day. It was something outside that, so there had to
6 be a specific wire instruction given to the fund.
7 Q. And the funds that were withdrawn, those
8 were also used for settlement obligations, correct?
9 A. It appeared so.
10 Q. On page 8 of your report --
11 A. Okay.
12 Q. -- in paragraph 27 --
13 A. Yes.
14 Q. -- you indicate that "Goble and his
15 codefendants liquidated money market funds belonging
16 to customers and subsequently altered the firm's
17 books and records to disguise the appearance of a
18 rule violation." Do you see that?
19 A. Yes, I do.
20 Q. How was North American Clearing's books and
21 records altered to disguise the appearance of a rule
22 violation?
23 A. They removed money from the reserve money
24 market fund. Again, I don't know what account it was
25 deposited to, but those monies were ultimately used

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1 to satisfy the settlement with NSCC.
2 Q. And how did North American Clearing alter
3 the firm's books and records to disguise the
4 appearance of a rule violation?
5 A. Because without those funds, they would not
6 have been able to meet their settlement with NSCC and
7 NSCC would have probably ceased to do business with
8 them if they did not meet their daily settlement. So
9 the books and records were altered in that in order
10 to get the funds to meet that settlement, they
11 removed funds from a customer money market account,
12 which is a good control location, while the money is
13 in the money market fund. They removed the monies
14 from there and utilized those monies to fulfill their
15 settlement obligation within NSCC.
16 Q. Weren't all those transactions reflected on
17 the firm's books and records?
18 A. To my knowledge, yes, they are.
19 Q. So how were the books and records altered to
20 disguise the appearance of a rule violation?
21 A. They were altered in that the entries were
22 made removing the funds from the reserve account and
23 placing them in the firm's operating account, which
24 is not a normal business occurrence.
25 Q. So it's your testimony that the actual

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89
1 identification.)
2 MR. LEVENSON: It is now in front of
3 Mr. Luque.
4 BY MR. LEE:
5 Q. Mr. Luque, have you reviewed this document
6 as part of your review of documents in this case?
7 A. It's looks familiar.
8 Q. And this is an account statement, two-page
9 printout, for Mary Cavasina and the statement period
10 is April 1, 2008 through April 30, 2008, correct?
11 A. Correct.
12 Q. And on the second page, there is a number of
13 transactions relating to money market and then the
14 reserve primary fund redemption. Are these the
15 transactions, some of the transactions, that you're
16 referring to as the liquidation of the money market
17 fund?
18 A. This is a similar statement to what I'm
19 referring to.
20 Q. And are the money market redemptions, are
21 they reflected on this statement?
22 A. Yes, they are.
23 Q. And the money with this customer that was
24 redeemed from the money market account, is that cash
25 also reflected on this statement?

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90
1 A. Yes. It's reflected as debits and credits.
2 Q. And the customer money, whether it was in
3 the money market account or in the -- or in a cash
4 account, the money never left this customer's account
5 as reflected in this statement, correct?
6 A. That's correct.
7 Q. And based upon your review of the various
8 account statements that you reviewed, weren't the
9 money market liquidations all disclosed on the
10 statements that were provided to customers?
11 A. Yes.
12 Q. And North American Clearing did not withhold
13 that information from the customers, correct?
14 A. Not to my knowledge.
15 Q. And based upon your review of the account
16 statements that you, in fact, did review, did you see
17 whether there were any misrepresentations or missing
18 information from those account statements?
19 A. That was not specifically part of my review,
20 but I did not detect any.
21 Q. In this stack of documents that I have
22 there, if you could find the expert report of Anthony
23 Ruben for me.
24 MR. LEVENSON: Mark it?
25 MR. LEE: Yes. It will be Number 6.

800-726-7007 305-376-8800
91
1 MR. LEVENSON: Yes.
2 (Exhibit No. 6 was marked for
3 identification.)
4 MR. LEVENSON: Okay. I just now placed it
5 in front of Mr. Luque.
6 BY MR. LEE:
7 Q. Mr. Luque, Exhibit Number 6 is the Expert
8 Report of Anthony Ruben. Have you reviewed this
9 report?
10 A. Yes, I have, sir.
11 Q. Did you review this report before you
12 prepared your report?
13 A. No, I did not.
14 Q. And having reviewed Mr. Ruben's report, do
15 you have any opinion that you'll be providing in this
16 case as to whether anything Mr. Ruben said was
17 inaccurate or incorrect?
18 A. I have not been asked to do that at this
19 point.
20 Q. And have you determined whether anything in
21 Mr. Ruben's report is inaccurate or incorrect?
22 A. I haven't been asked to do that either.
23 Q. Whether you've been asked to do it or not,
24 have you reviewed the report and determined whether
25 anything contained therein is incorrect or

800-726-7007 305-376-8800
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1 inaccurate?
2 A. Sir, I looked at the report. I did not
3 review it in any detail.
4 Q. There should be a document that at the top
5 it's -- the document is actually printed in a
6 landscape format, but at the top it reflects a case
7 number and it's called Net Capital Computation.
8 MR. LEVENSON: Hold on. As of June 30th,
9 2008?
10 MR. LEE: Yes.
11 MR. LEVENSON: I've got it.
12 MR. LEE: Could you mark that as the next
13 exhibit, please.
14 (Exhibit No. 7 was marked for
15 identification.)
16 MR. LEVENSON: Okay. I'm now giving it to
17 Mr. Luque.
18 BY MR. LEE:
19 Q. Mr. Luque, you've been handed a document
20 that at the top says "Net Capital Computation," and
21 it was a document filed in Case Number 08 00829.
22 Have you ever seen this document before?
23 A. I don't believe so.
24 Q. When you were providing services to the
25 receiver, did you prepare a net worth computation for

800-726-7007 305-376-8800
EXHIBIT K
Page 52
1 BY MR. LEE:
2 Q Could you explain it again?
3 MS. PAULOSE: Objection. Relevance. Asked
4 and answered.
5 A Net capital is basically the equity of a firm, less
6 all of the not allowable assets of a firm. Again,
7 nonallowable assets of a firm, as I have described before,
8 are fixed assets of the firm and intangible assets of the
9 firm. And, in this instance, aged failed to delivers.
10 Those would be nonallowable assets.
11 So the total ownership equity of the firm was three
12 million; the deductions and nonallowable assets totaled over
13 1.3 million; so the net capital was 1.695.
14 BY MR. LEE:
15 Q Do you know, as of March 31 of 2008, what North
16 American Clearing's required net capital was?
18 A The required would have been 2 percent of combined
19 aggregate debit items, or $416,000, roughly.
20 (Thereupon, the 3/31/08 Balance Sheet was marked
21 Exhibit Number 8.)
22 BY MR. LEE:
23 Q Handing to you what I've marked as Exhibit
24 Number 8. These are North American Clearing financial
25 documents, starting with a balance sheet as of March 31,

Page 53
1 2008, which is two pages; then a profit-and-loss for January
2 through March 2008, which is two pages; then a balance sheet
3 as of April 30, 2008, which is two pages; then a
4 profit-and-loss, January through April 2008, which is two
5 pages; then a balance sheet as of May 31, 2008, which is two
6 pages; then a profit-and-loss, January through May 2008,
7 which is two pages; then a balance sheet as of June 30,
8 2008, which is two pages; then, finally, a profit-and-loss
9 for January through June 2008, which is two pages.
10 Were you involved in the preparing of North
11 American Clearing's financials, such as balance sheets, and
12 the profit-and-loss statements that are Exhibit Number 8?
13 A Through March 31, yes; through April 30, and beyond
14 that, no.
15 Q Through March of 2008, based upon these financials,
16 did North American have positive or negative net income?
17 A They had positive net income.
18 Q How much is reflected on Exhibit Number 8, as the
19 positive net income for North American Clearing?
20 A $41,000. But, then once again we had taken that
21 $140,000 one-time refund, and we had put that in the March
22 financials. Had we not done that, then the company would
23 have been in a loss position of roughly $100,000.
24 Q Sure. And if you would have terminated all your
25 employees, you would have had less expenses, too; correct?

Page 54
1 MS. PAULOSE: Objection. Form.
2 A What kind of question is that?
3 BY MR. LEE:
4 Q You're not answering my question as to whether you
5 had a positive net income, and you're adding editorials, so
6 I asking you if, for example, you had terminated all the
7 employees, wouldn't that have reduced expenses?
8 MS. PAULOSE: Objection. Argumentative.
9 BY MR. LEE:
10 Q No? Yes?
11 A Then shut the doors down?
12 Q Through May 2008, what do these financials reflect
13 as to net income for North American Clearing?
14 MS. PAULOSE: Objection. Calls for speculation.
15 This witness just testified he wasn't involved in
16 preparing those reports. Also, foundation.
17 BY MR. LEE:
18 Q You can answer.
19 A Net income of $448,000.
20 Q And, through June of 2008, what does Exhibit
21 Number 8 refect as net income for North American Clearing?
22 MS. PAULOSE: Same objection.
23 A $382,000.
24 BY MR. LEE:
25 Q So if those financials are accurate, North American

Page 55
1 Clearing was actually making a profit, through June of 2008?
2 MS. PAULOSE: Same objection.
3 A I've not had a chance to review the books for
4 April, May or June, but from looking at the differences from
5 March to April of 2008, it claims that revenue basically in
6 three months' time frame went from $828,000 to, April,
7 $1,700,000. That would indicate that the business in one
8 month doubled from the previous three months. I would have
9 to see the financials of that and the accuracy, because I
10 would have a tough time believing that the company went from
11 averaging $275,000 of revenue to almost $900,000 of revenue
12 in one month.
13 BY MR. LEE:
14 Q Do you know who prepared the financial statements
15 after you left North American Clearing?
16 A I believe Mr. Goble did. I believe he signed the
17 FOCUS report from April.
18 Q Who prepared the profit-and-loss and balance
19 sheets, as of April 30, May 31, and June 30; do you know?
20 A I do not.
22 A I have no idea who did that.
23 BY MR. LEE:
24 Q Did you assist the receiver at all in preparing
25 financial documents from North American Clearing?

Page 56
1 A I assisted them in the wind-down process. I also
2 assisted them in the QuickBooks file, as to how they could
3 get access to that, what the information meant.
4 In terms of the financial statement preparation,
5 due to the pending nature of this case I was not granted
6 access to current live information, and that was a mutually
7 agreed-upon item between both the receiver and myself,
8 because I did not want to be directly involved in the
9 financial statement preparation while this case was pending.
10 Q How long did you provide services to the receiver?
11 MS. PAULOSE: Objection. Mischaracterizes
12 the witness's testimony.
13 BY MR. LEE:
14 Q How long did you work for the receiver?
15 MS. PAULOSE: Objection. Mischaracterizes
16 the witness's testimony.
17 BY MR. LEE:
18 Q What did you do for the receiver?
19 A I assisted the receiver in the wind-down process.
20 I assisted the receiver with the monthly correspondent
21 settlement for May, because the business was still active
22 from May 1st through May 21st, when the wind-down process
23 began.
24 In order to complete the information, to complete
25 the financial, you know, wind-down of the company, the

EXHIBIT L
EXHIBIT M
EXHIBIT N
EXHIBIT O
SEC Halts Florida Clearing Firm's Fraudulent Use of Customer Funds
FOR IMMEDIATE RELEASE

2008-97
Washington, D.C., May 28, 2008 — The Securities and Exchange Commission today
announced that it has obtained an asset freeze and other emergency relief to protect
investors whose funds were at risk due to fraudulent misconduct at North American
Clearing, Inc., a Longwood, Fla., based general securities and clearing brokerage firm.
North American Clearing services approximately 40 correspondent brokers and clears

transactions for over 10,000 customer accounts.
Additional Materials
• Litigation Release No. 20602
• SEC Complaint
The SEC requested the relief when it filed a complaint on May 27, 2008, against North
American Clearing, its founder and director Richard L. Goble, its president Bruce B. Blatman,
and its former financial and operations principal Timothy J. Ward, charging them with fraud
and other securities laws violations. The SEC's complaint alleges that the defendants
engaged in illegal activities, including the misuse of customer funds, in order to hide North
American Clearing's financial problems and to pay for its daily business operations.
In addition to the asset freeze, the SEC obtained a temporary restraining order against the
defendants and an order appointing a receiver over North American Clearing.
Linda Chatman Thomsen, Director of the SEC's Division of Enforcement, said, "Protecting
customer funds from misuse by a broker-dealer, as we allege here, is a fundamental part of
our enforcement efforts. Today's action demonstrates our ongoing commitment to investor
protection."
David Nelson, Director of the SEC's Miami Regional Office, added, "The federal securities
laws include important safeguards designed to protect investor assets from misuse by
broker-dealers. We will take swift action to protect investors when misconduct occurs that
puts their money at risk."
The SEC's complaint alleges that the defendants' fraud began earlier this year, when North
American Clearing began experiencing severe financial problems. To ease its financial
difficulties, North American Clearing secured a bank loan using customer securities as
collateral. To comply with the federal securities laws and remain in operation, North
American Clearing increased its reserves in an account it maintained for the benefit of
customers, which limited funds available to North American Clearing to meet its daily
operating expenses.
According to the SEC's complaint, on several occasions in March and April 2008, North
American Clearing improperly sold customer money market funds as a means of temporarily
freeing up funds that it then used to pay for daily operating expenses. The SEC's complaint
also alleges that on May 13, 2008, the defendants manipulated North American Clearing's
processing system to overstate net customer money market purchases. This enabled North
American Clearing to illegally withdraw more than $3 million from the reserves it was
required to maintain for the benefit of customers.
The SEC's complaint, filed in the United States District Court for the Middle District of Florida
in Orlando, seeks preliminary and permanent injunctions, disgorgement of ill-gotten gains
against North American Clearing and Goble, and civil penalties against all defendants. The
SEC's complaint alleges that the defendants violated the antifraud, customer protection and
books and records provisions of the Securities Exchange Act of 1934.
On May 27, 2008, the Honorable Gregory A. Presnell granted the SEC's ex parte motion for
emergency relief, entering a temporary restraining order against the defendants and
freezing North American Clearing's assets. The order also provides for a sworn accounting
from North American Clearing and preservation of its records. The Court further appointed
Peter J. Anderson, an attorney in the law firm of Sutherland Asbill & Brennan LLP of Atlanta,
Ga., as a receiver over North American Clearing. Among other things, the receiver is
responsible for marshaling and safeguarding assets held by North American Clearing. A
show cause hearing has been set for June 6, 2008, to determine whether the emergency
asset freeze and other relief should remain in effect.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority
(FINRA) in this matter.
###
David Nelson
Regional Director, SEC's Miami Regional Office
(305) 982-6332
Glenn S. Gordon
Associate Regional Director (Enforcement), SEC's Miami Regional Office
(305) 982-6360
Eric Busto
Assistant Regional Director (Enforcement), SEC's Miami Regional Office
(305) 982-6362
http://www.sec.gov/news/press/2008/2008‐97.htm

Case 6:10-cv-00408-ACC-DAB Document 1-16
OJS 44 (Rev. 12/07) CIVIL COVER SHEETFiled 03/16/10 Page 1 of 2
The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided
by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating
the civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)
I. (a) PLAINTIFFS DEFENDANTS

FINANCIAL INDUSTRY ASSOCIATION, G&G HOLDINGS, INC., SECURITIES AND EXCHANGE COMMISSION,
RICHARD GOBLE, THE GOBLE FIRST REVOCABLE TRUST FINANCIAL INDUSTRY REGULATORY AUTHORITY,
MAY(b) 13,County
1999of Residence of First Listed Plaintiff Seminole County INC. of
County (FINRA),
Residence THE
of FirstDEPOSITORY
Listed Defendant TRUSTDistrictAND
of Columbia
(EXCEPT IN U.S. PLAINTIFF CASES) CLEARING CORPORATION (DTCC),
(IN U.S. PLAINTIFF MARY
CASES ONLY)
SHAPIRO,
NOTE: INGRACE VOGEL, LARRY
LAND CONDEMNATION THOMPSON,
CASES, USE THE LOCATION OF THE
TIMOTHY LAND WARD, BRUCE BLATMAN, GEORGE
INVOLVED.
FRANCESCHINI, and SAM LUQUE, JR.,

(c) Attorney’s (Firm Name, Address, and Telephone Number) Attorneys (If Known)
Philip Bartlett, Esq., The Bartlett Law Firm, P.A., 230 East Marks Unknown
Street, Orlando, FL 32803
II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES(Place an “X” in One Box for Plaintiff
(For Diversity Cases Only) and One Box for Defendant)
’ 1 U.S. Government ’ 3 Federal Question PTF DEF PTF DEF
Plaintiff (U.S. Government Not a Party) Citizen of This State ’ 1 ’ 1 Incorporated or Principal Place ’ 4 ’ 4
of Business In This State
’ 2 U.S. Government ’ 4 Diversity Citizen of Another State ’ 2 ’ 2 Incorporated and Principal Place ’ 5 ’ 5
Defendant of Business In Another State
(Indicate Citizenship of Parties in Item III)
Citizen or Subject of a ’ 3 ’ 3 Foreign Nation ’ 6 ’ 6
Foreign Country
IV. NATURE OF SUIT (Place an “X” in One Box Only)
CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES
’ 110 Insurance PERSONAL INJURY PERSONAL INJURY ’ 610 Agriculture ’ 422 Appeal 28 USC 158 ’ 400 State Reapportionment
’ 120 Marine ’ 310 Airplane ’ 362 Personal Injury - ’ 620 Other Food & Drug ’ 423 Withdrawal ’ 410 Antitrust
’ 130 Miller Act ’ 315 Airplane Product Med. Malpractice ’ 625 Drug Related Seizure 28 USC 157 ’ 430 Banks and Banking
’ 140 Negotiable Instrument Liability ’ 365 Personal Injury - of Property 21 USC 881 ’ 450 Commerce
’ 150 Recovery of Overpayment ’ 320 Assault, Libel & Product Liability ’ 630 Liquor Laws PROPERTY RIGHTS ’ 460 Deportation
& Enforcement of Judgment Slander ’ 368 Asbestos Personal ’ 640 R.R. & Truck ’ 820 Copyrights ’ 470 Racketeer Influenced and
’ 151 Medicare Act ’ 330 Federal Employers’ Injury Product ’ 650 Airline Regs. ’ 830 Patent Corrupt Organizations
’ 152 Recovery of Defaulted Liability Liability ’ 660 Occupational ’ 840 Trademark ’ 480 Consumer Credit
Student Loans ’ 340 Marine PERSONAL PROPERTY Safety/Health ’ 490 Cable/Sat TV
(Excl. Veterans) ’ 345 Marine Product ’ 370 Other Fraud ’ 690 Other ’ 810 Selective Service
’ 153 Recovery of Overpayment Liability ’ 371 Truth in Lending LABOR SOCIAL SECURITY ’ 850 Securities/Commodities/
of Veteran’s Benefits ’ 350 Motor Vehicle ’ 380 Other Personal ’ 710 Fair Labor Standards ’ 861 HIA (1395ff) Exchange
’ 160 Stockholders’ Suits ’ 355 Motor Vehicle Property Damage Act ’ 862 Black Lung (923) ’ 875 Customer Challenge
’ 190 Other Contract Product Liability ’ 385 Property Damage ’ 720 Labor/Mgmt. Relations ’ 863 DIWC/DIWW (405(g)) 12 USC 3410
’ 195 Contract Product Liability ’ 360 Other Personal Product Liability ’ 730 Labor/Mgmt.Reporting ’ 864 SSID Title XVI ’ 890 Other Statutory Actions
’ 196 Franchise Injury & Disclosure Act ’ 865 RSI (405(g)) ’ 891 Agricultural Acts
REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS ’ 740 Railway Labor Act FEDERAL TAX SUITS ’ 892 Economic Stabilization Act
’ 210 Land Condemnation ’ 441 Voting ’ 510 Motions to Vacate ’ 790 Other Labor Litigation ’ 870 Taxes (U.S. Plaintiff ’ 893 Environmental Matters
’ 220 Foreclosure ’ 442 Employment Sentence ’ 791 Empl. Ret. Inc. or Defendant) ’ 894 Energy Allocation Act
’ 230 Rent Lease & Ejectment ’ 443 Housing/ Habeas Corpus: Security Act ’ 871 IRS—Third Party ’ 895 Freedom of Information
’ 240 Torts to Land Accommodations ’ 530 General 26 USC 7609 Act
’ 245 Tort Product Liability ’ 444 Welfare ’ 535 Death Penalty IMMIGRATION ’ 900Appeal of Fee Determination
’ 290 All Other Real Property ’ 445 Amer. w/Disabilities - ’ 540 Mandamus & Other ’ 462 Naturalization Application Under Equal Access
Employment ’ 550 Civil Rights ’ 463 Habeas Corpus - to Justice
’ 446 Amer. w/Disabilities - ’ 555 Prison Condition Alien Detainee ’ 950 Constitutionality of
Other ’ 465 Other Immigration State Statutes
’ 440 Other Civil Rights Actions
V. ORIGIN (Place an “X” in One Box Only) Appeal to District

’ 1 Original ’ 2 Removed from ’ 3 Remanded from ’ 4 Reinstated or ’ 5 Transferred from
another district ’ 6 Multidistrict ’ 7 Judge from
Magistrate
Proceeding State Court Appellate Court Reopened Litigation
(specify) Judgment
Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):
28 U.S.C. 1332
VI. CAUSE OF ACTION Brief description of cause:
Interference with Business Relations, Abuse of Process, Defamation
VII. REQUESTED IN ’ CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint:
COMPLAINT: UNDER F.R.C.P. 23 100,000,000.00 JURY DEMAND: ’ Yes ’ No
VIII. RELATED CASE(S)
(See instructions):
IF ANY JUDGE DOCKET NUMBER
DATE SIGNATURE OF ATTORNEY OF RECORD

03/16/2010 /s/ Philip Bartlett, Esq.
FOR OFFICE USE ONLY
RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE
Print Save As... Export as FDF Retrieve FDF File Reset

JS 44 Reverse (Rev. 12/07)
INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44
Authority For Civil Cover Sheet

The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required
by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use
of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint
filed. The attorney filing a case should complete the form as follows:
I. (a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only
the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving
both name and title.
(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time
of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases,
the county of residence of the “defendant” is the location of the tract of land involved.)
(c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting
in this section “(see attachment)”.
II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.C.P., which requires that jurisdictions be shown in pleadings. Place an “X” in one
of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below.
United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here.
United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an “X” in this box.
Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the
Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box
1 or 2 should be marked.
Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the
different parties must be checked. (See Section III below; federal question actions take precedence over diversity cases.)
III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this section
for each principal party.
IV. Nature of Suit. Place an “X” in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient
to enable the deputy clerk or the statistical clerks in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select
the most definitive.
V. Origin. Place an “X” in one of the seven boxes.
Original Proceedings. (1) Cases which originate in the United States district courts.
Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petition
for removal is granted, check this box.
Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date.
Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date.
Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict
litigation transfers.
Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this box
is checked, do not check (5) above.
Appeal to District Judge from Magistrate Judgment. (7) Check this box for an appeal from a magistrate judge’s decision.
VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes
unless diversity. Example: U.S. Civil Statute: 47 USC 553
Brief Description: Unauthorized reception of cable service
VII. Requested in Complaint. Class Action. Place an “X” in this box if you are filing a class action under Rule 23, F.R.Cv.P.
Demand. In this space enter the dollar amount (in thousands of dollars) being demanded or indicate other demand such as a preliminary injunction.
Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.
VIII. Related Cases. This section of the JS 44 is used to reference related pending cases if any. If there are related pending cases, insert the docket numbers
and the corresponding judge names for such cases.
Date and Attorney Signature. Date and sign the civil cover sheet.

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Case 6:10-cv-00408-ACC-DAB Document 1 Filed 03/16/10 Page 1 of 34

IN THE FEDERAL DISTRICT COURT OF THE MIDDLE DISTRICT OF FLORIDA

FINANCIAL INDUSTRY ASSOCIATION,

JURY TRIAL DEMANDED

Plaintiffs FINANCIAL INDUSTRY ASSOCIATION, G&G HOLDINGS, INC.,

1. This is a complaint for damages exceeding the sum or value of seventy-five

pursuant to 28 U.S.C. § 1332.

Parties and Other Important Persons and Entities

2. Plaintiff G&G HOLDINGS CORPORATION, INC. (hereinafter referred to as

1385 W State Road 434, Suite 102, Longwood, FL 32750.

4. Plaintiff RICHARD GOBLE (hereinafter referred to as "Goble") is a natural

5. Plaintiff FINANCIAL INDUSTRY ASSOCIATION (hereinafter referred to as

Association of Securities Dealers (NASD) to the Financial Industry Regulatory Authority

of New York Case No.: 07-CV-2014 (JSR).

6. Defendant SECURITIES AND EXCHANGE COMMISSION (hereinafter

that had been taking place.

7. Defendant FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.

(hereinafter referred to as "FINRA") is a Delaware private nonprofit corporation with its

NACI prior to recommending SEC action at detriment to Plaintiffs.

8. Defendant DEPOSITORY TRUST AND CLEARING CORPORATION

but also threatened Goble with more severe sanctions.

other areas of law.

lawsuit, (hereinafter referred to as Sutherland Asbill) is a Georgia limited liability partnership

American Clearing, Inc.

11. Defendant MARY SHAPIRO (hereinafter referred to as "Shapiro") is the present

motion the intentional interference with Plaintiff's business operations.

12. Defendant GRACE VOGEL (hereinafter referred to as "Vogel") is the executive

Vogel was directing the FINRA investigators of NACI ("FINOPS").

13. Defendant LARRY THOMPSON (hereinafter referred to as "Thompson") is the

Anderson and Robert Gilbert.

promoting the filing of a fraudulent liquidation/bankruptcy action against NACI. He is

employees of the receivership.

17. ROBERT GILBERT (hereinafter referred to as "Gilbert"), while not presently a

warrant such drastic action.

18. Defendant GEORGE FRANCESCHINI (hereinafter referred to as "Franceschini")

that interfered with Plaintiffs' businesses.

19. Defendant TIMOTHY WARD (hereinafter referred to as "Ward) is a natural

under pressure from FINRA.

20. Defendant BRUCE BLATMAN (hereinafter referred to as "Blatman") is a natural

21. Defendant SAM LUQUE, JR. (hereinafter referred to as "Luque") is a natural

were used in the NACI fraudulent bankruptcy filing in July 2008.

PRELIMINARY BACKGROUND FACTS

southeastern United States.

Maloney Act of 1938 and the NASD charter of 1939.

FINRA that FIA was exposing.

Street firms' interests.

history of NASD (now FINRA).

small firms were having over policy and regulatory decisions.

(attached as Plaintiff's Exhibit "B").

to known as the "Financial Industry Regulatory Authority, Inc." or FINRA.

to the original possible maximum of twenty-four seats.

own regulation would be severely curtailed or would end altogether.

small firms in their quest to fairly regulate themselves.

and all of the other involved large firms.

incorporated as Exhibit "C".

as Plaintiff's Exhibit "D".

payout to the small firms for approving the merger.

activism of FIA and its allied organizations.

running many of the small firms into insolvency.

they were being deliberately targeted.

evidence to continue the investigation.

known late 2008 financial crisis.

covering up the activities of these firms for as long as possible.

of the following allegations take place.