U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20347 / October 25, 2007
SEC v. Spear & Jackson, Inc., et al., Case No. 04-CIV-80354 (S.D. Fla.)
Defendant Kermit Silva Held in Contempt for Failing to Pay Disgorgement as Ordered in the Final Judgment of Permanent Injunction Against Him
The Securities and Exchange Commission announced that on October 23, 2007, the Honorable Linnea R. Johnson, United States Magistrate Judge for the Southern District of Florida, entered an order of civil contempt against Defendant Kermit Silva for failing to make payments pursuant to a September 29, 2005 judgment against him.
Following evidentiary hearings on August 27 and October 15, 2007, the Court found Silva in contempt and ordered him to make monthly payments of $2,000 to the Spear & Jackson Distribution Fund, representing 50 percent of his gross monthly income. The judge also ordered Silva to pay 50 percent of any other compensation or income he receives from any other source to the Distribution Fund. Silva must continue these payments until he satisfies the remaining $206,259 in disgorgement and prejudgment interest. Judge Johnson also ordered Silva to use 25 percent of his gross monthly income to pay his attorneys' fees; once he pays those fees, he must remit 75 percent of his gross monthly income to the Distribution Fund.
The contempt order made factual findings that Silva had failed to diligently pursue employment for almost two years after the judgment was entered against him, and had used money relatives gave him on luxury and discretionary expenses such as travel, expensive meals, and numerous retail purchases instead of paying any money towards the judgment.
Silva had consented to entry of a Final Judgment enjoining him from future violations of Sections 5(a), 5(c), 17(a)(2), 17(a)(3) and 17(b) of the Securities Act of 1933 and Section 15(a)(1) of the Securities Exchange Act of 1934, which was entered on September 29, 2005. The judgment ordered Silva to pay $336,307 in disgorgement, plus prejudgment interest of $23,952, and a $60,000 civil penalty, and barred him from participating in any offering of a penny stock for a period of three years. The judgment allowed Silva to make the payments in three installments. Silva made the first installment payment of $100,000, but made only part of the second payment due on March 29, 2006, and none of the third and final payment due on September 29, 2006. To date, Silva has paid approximately $154,000 of the judgment.
Silva was one of several defendants the Commission sued in connection with the manipulation of the stock of Spear & Jackson, a Boca Raton-based tool maker, engineered by Spear & Jackson's former chief executive officer, Dennis Crowley. The Commission also obtained consent judgments against Crowley and the other defendants, which has resulted in them paying almost $7 million in disgorgement, prejudgment interest, and civil penalties, which, pursuant to the Fair Fund provisions of the Sarbanes-Oxley Act of 2002, have been placed in the Spear & Jackson Distribution Fund for return to defrauded investors.
For more information on earlier actions in this case, see Litigation Release No. 18668 (April 16, 2004), Litigation Release No. 19072 (February 10, 2005), and Litigation Release No. 19415 (October 5, 2005).