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U.S. Securities and Exchange Commission

Before the

Securities Exchange Act of 1934
Release No. 51130 / February 3, 2005

Admin. Proc. File No. 3-11573

In the Matter of






By letter dated November 10, 2004, Harold F. Harris requests that the November 3, 2004 Order Making Findings and Imposing Remedial Sanctions by Default entered against him and Ronald E. Crews (together, Respondents) be stayed because Respondents' counsel failed to effectively represent them in these proceedings. We have reviewed Respondents' request.1 We deem their request to be a motion to set aside default under Rule of Practice 155(b) and remand it to the law judge for consideration.2

An Order Instituting Proceedings ("OIP") was filed against Respondents on August 3, 2004 and served on them via certified mail. Respondents secured counsel to represent them in these proceedings, and on August 27, 2004, that attorney requested an extension of time to familiarize himself with the case and file an answer. The law judge granted that request on August 31, 2004, setting a new filing deadline of September 10, 2004. On that day, Respondents' attorney filed a request for another extension, citing the spate of hurricanes in Respondents' home state of Florida as a cause of delay, and the law judge granted the request during a telephonic prehearing conference on September 14, 2004. Respondents' answer was then due September 21, 2004, and a hearing was scheduled for October 19, 2004; the law judge also set deadlines for document inspection, exchanges of witness and evidence lists, and receipt of prehearing briefs.

The record demonstrates that Respondents' attorney thereafter failed to participate meaningfully in these proceedings. Respondents' counsel was scheduled to review the Commission's files on September 30, 2004, but he rescheduled once and then cancelled the second appointment. Counsel never reviewed the Commission's files and never submitted an answer to the OIP despite securing two extensions of time. In a prehearing telephone conference on October 13, 2004, Respondents' attorney apparently claimed he was unable to confer with his clients in time to file an answer. The law judge postponed the hearing date to give the Division of Enforcement time to file a motion for default, which the Division submitted shortly thereafter, on October 15, 2004. The law judge issued an order on October 19, 2004 requiring Respondents to show cause why they should not be held in default. Respondents' counsel never replied. The Division therefore renewed its motion for default judgment on November 3, 2004, which the law judge granted that same day in an order barring both Respondents from participating in an offering of penny stock.

Respondent Harris contends in his November 10 letter that Respondents were assured by their attorney that he was actively pursuing the case and that he had filed an answer and made other submissions to the Commission on their behalf. Harris states that neither he nor Crews was ever aware of the law judge's order to show cause and that Respondents were surprised by the default judgment entered against them. The record supports Respondents' contentions in that all of the Division's filings were served on Respondents' counsel, but not on Respondents themselves. Similarly, the law judge's order to show cause was served on Respondents' attorney, but not on Respondents.3 According to Harris' letter, Respondents took an active interest in their case and made repeated inquiries to their attorney on the status of their defense. The letter further states that the November 3, 2004 default order against them was the first notice they received that their case was being mishandled by their attorney, and states that they promptly requested relief from the law judge via letter.

Respondents currently are defending themselves pro se. We find it appropriate to treat Harris' November 10, 2004 letter as a motion to set aside the default order instituted against Respondents, pursuant to Rule 155(b).

Accordingly, IT IS ORDERED that consideration of Respondent's November 10, 2004 letter be and is REMANDED to the administrative law judge for consideration as a motion to set aside default.4

By the Commission.

Jonathan G. Katz


A motion to set aside a default shall be made within a reasonable time, state the reasons for the failure to appeal or defend, and specify the nature of the proposed defense in the proceeding. In order to prevent injustice and on such conditions as may be appropriate, the hearing officer, at any time prior to the filing of the initial decision, or the Commission, at any time, may for good cause shown set aside a default.


Modified: 02/03/2005