United States Securities and Exchange Commission
Litigation Release No. 17798 / October 23, 2002
Securities and Exchange Commission v. Keith Greenberg and Coyote Consulting and Financial Services, LLP, 00-9109-CIV-HURLEY/LYNCH (S.D. Fla. filed Dec. 20, 2000)
District Court Enters Final Judgment Ordering Keith Greenberg to Pay Disgorgement and Interest of $5.8 Million
Amount Is in Addition to Civil Money Penalty of $100,000
The Securities and Exchange Commission ("Commission") announced today that on October 4, 2002, the Honorable Daniel T.K. Hurley, United States District Judge for the Southern District of Florida, entered a final judgment imposing, jointly and severally, disgorgement of $3,828,000, together with prejudgment interest thereon of $1,987,346, against Keith Greenberg ("Greenberg") and Coyote Consulting and Financial Services, LLP ("Coyote"). The disgorgement amount was based on fees received for Coyote acting, through Greenberg, as a broker although not registered as such with the Commission. The Court also imposed a civil money penalty of $100,000 against Greenberg and a civil money penalty of $500,000 against Coyote.
Greenberg was a co-founder of U.S. Diagnostic, Inc. ("USDL"), a company that operates outpatient diagnostic imaging centers and has its headquarters in West Palm Beach, Florida. In a complaint filed in December 2000, the Commission alleged that Greenberg prepared or directed the preparation of numerous public statements by USDL which identified him as an officer of the company, but which fraudulently failed to disclose his criminal conviction and his injunction in previous litigation with the Commission. The Commission's complaint additionally alleged that Coyote, through Greenberg, acted as a broker without registering with the Commission. Coyote is a Florida limited liability company owned by a Greenberg family trust and Greenberg's wife, and controlled by Greenberg.
On March 11, 2002, the Commission filed a motion requesting a default judgment against Greenberg and Coyote and requesting the imposition of disgorgement and civil penalties against the defendants. On April 4, 2002, the U.S. District Court for the Southern District of Florida entered a final judgment of permanent injunction by default against Greenberg and Coyote permanently enjoining Greenberg from violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rule 10b-5, and from aiding and abetting violations of Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13 and permanently enjoining Coyote from violating Section 15(a) of the Exchange Act. The final judgment also barred Greenberg from acting as an officer or director of any public company and barred Coyote from acting as an unregistered broker or dealer. The District Court also held Greenberg and Coyote liable for civil penalties and jointly and severally liable for disgorgement. On June 4, 2002, the Court ordered an evidentiary hearing to determine the appropriate disgorgement and civil penalty amounts. In August 2002, following the evidentiary hearing, U.S. Magistrate Judge Frank J. Lynch, Jr. filed a report recommending that Greenberg and Coyote be held jointly and severally liable for $3,828,000 in disgorgement and $1,987,346 in prejudgment interest, that a maximum third-tier civil penalty of $100,000 be imposed on Greenberg, and that a maximum third-tier civil penalty of $500,000 be imposed on Coyote. U.S. District Judge Hurley adopted the recommending report in its entirety.
See Securities Act Rel. No. 7928 (Dec. 20, 2000); Litigation Rel. No. 16836 (Dec. 20, 2000); Litigation Rel. No. 17483 (April 23, 2002).