Litigation Release No. 22507 / October 12, 2012
Securities and Exchange Commission v. James L. Douglas a/k/a James L. Cooper, Case No. 82-cv-29 (N.D. Ohio)
Defendant James L. Douglas A/K/A James L. Cooper Held in Civil Contempt after Failing to Comply With Judgment
The Securities and Exchange Commission today announced that on August 20, 2012, the Honorable Jack Zouhary of the United States District Court for the Northern District of Ohio found James L. Douglas a/k/a James L. Cooper in civil contempt for failure to pay in full a judgment entered in 1983.
On January 18, 1982, the SEC filed a complaint against Douglas, alleging that he had raised more than $7.5 million by offering and selling unregistered oil and gas partnerships through false pretenses. Douglas subsequently settled. On August 26, 1983, the Court entered an Order Directing Ancillary Relief, ordering him to disgorge $200,000 within three years.
Douglas did not comply with the Court's payment schedule, paying only $121,975.29 of the $200,000 judgment, and leaving an unpaid balance of $78,024.71 plus post-judgment interest. Counsel for Douglas at the time reported that Douglas lacked the ability to pay, and that Douglas may have moved to Scotland.
Based on the non-payment, the SEC filed a motion for contempt on July 8, 1988. On August 8, 1988, the Court granted the SEC's motion, found Douglas in contempt, and issued a warrant for his arrest. The warrant was never executed because the U.S. Marshals could not locate Douglas. In 2010, the SEC learned that Douglas had returned to the U.S. and that his fortunes had changed. Douglas filed suit on behalf of his deceased wife's estate against several tobacco companies in Florida state court. In March, 2010, the jury awarded $2.5 million to the Estate of Charlotte M. Douglas, of which Douglas is the sole beneficiary. The verdict is currently on appeal to the Supreme Court of Florida.
On January 23, 2012, the SEC filed a Motion for a Rule to Show Cause and for an Order of Civil Contempt, requesting that the Court hold Douglas in contempt for a second time. The Court presided over four days of evidentiary hearings. On August 20, 2012, the Court granted the SEC's motion, holding Douglas in contempt for a second time. The Court ruled that "Defendant's lavish lifestyle apparently is over, but he has dodged his legal debt long enough, and it is high time for him to pay what he owes." See August 20, 2012 Memorandum Opinion and Order. The Court also ruled that, under 28 U.S.C. § 1961, Douglas must pay post-judgment interest at the statutory rate of 10.74% from the "date of the entry of the judgment" in 1983. "That rate may seem high by today's standards, but it is properly calculated. . . . And if [Douglas] finds the amount due unreasonable, it is the result of his own misconduct for avoiding payment for so long." See August 20, 2012 Memorandum Opinion and Order. Based on the SEC's calculation, the post-judgment interest now exceeds $1.7 million.
For additional information, please see Litigation Release Nos. 9578 (February 5, 1982), 10120 (September 13, 1983) and 11845 (August 24, 1988).