a limited liability partnership · 2005-09-21 · global telelink services, inc., global contact...

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TROUTMAN SANDERS LLP Harris B. Winsberg [email protected] A T T O R N E Y S A T L A W A LIMITED LIABILITY PARTNERSHIP BANK OF AMERICA PLAZA 600 PEACHTREE STREET, N.E. - SUITE 5200 ATLANTA, GEORGIA 30308-2216 www.troutmansanders.com TELEPHONE: 404-885-3000 FACSIMILE’ 404-885-3900 Direct Dial: Direct Fax: June 20,2001 ( 1’ Danna Hazeiwood (j .-I6 Revenue Cabinet 3. “/ fl Commonwealth of Kentucky 0: g Y 8’7 497@ P. 0. Box 181 Frankfort, KY 40601 RE: Global Telelink Services, Inc. and Global Contact Corporation (collectivl “Receivership Estates”) Dear Ms. Hazelwood: This firm represents Lloyd T. Whitaker in his capacity as Receiver (the ‘‘Receive Receivership Estates. Enclosed please find the Order of Preliminary Injunction and Otl entered on March 9,2001 by the United States District Court for the Northern District o (the “Order”). If you have any further questions or need any additional information, plear hesitate to contact me. Harris Bryan Winsberg HBW:ys cc: Lloyd T. Whitaker, Receiver Robert G. Brunton, Esq. 0702722 04-805-3348 04-962-671 9 ly, the ,”) of the er Relief Georgia ; do not

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Page 1: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

TROUTMAN SANDERS LLP

Harris B. Winsberg [email protected]

A T T O R N E Y S A T L A W A L I M I T E D L I A B I L I T Y P A R T N E R S H I P

B A N K O F A M E R I C A P L A Z A

6 0 0 P E A C H T R E E S T R E E T , N . E . - S U I T E 5 2 0 0

A T L A N T A , G E O R G I A 3 0 3 0 8 - 2 2 1 6

w w w . t r o u t m a n s a n d e r s . c o m

T E L E P H O N E : 4 0 4 - 8 8 5 - 3 0 0 0

F A C S I M I L E ’ 4 0 4 - 8 8 5 - 3 9 0 0

Direct Dial: Direct Fax:

June 20,2001

( 1 ’

Danna Hazeiwood (j .- I6

Revenue Cabinet 3. “/

f l

Commonwealth of Kentucky 0: g Y

8’7 4 9 7 @

P. 0. Box 181 Frankfort, KY 40601

RE: Global Telelink Services, Inc. and Global Contact Corporation (collectivl “Receivership Estates”)

Dear Ms. Hazelwood:

This firm represents Lloyd T. Whitaker in his capacity as Receiver (the ‘‘Receive Receivership Estates. Enclosed please find the Order of Preliminary Injunction and Otl entered on March 9,2001 by the United States District Court for the Northern District o (the “Order”).

If you have any further questions or need any additional information, plear hesitate to contact me.

Harris Bryan Winsberg HBW:ys cc: Lloyd T. Whitaker, Receiver

Robert G. Brunton, Esq.

0702722

04-805-3348 04-962-671 9

ly, the

,”) of the er Relief ’ Georgia

; do not

Page 2: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

.

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF

ATLANTA DIVISION

SECURITIES AND EXCHANGE CoavMISSION,

Plaint i f f ,

V.

GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111,

Defendants.

C M L ACTION B 1 01-CV-0632

ORDER OF PRELIMINARY INJUNCTION AND OTHER RELIE

Plaintiff , Securities and Exchange Commission (ttCod having filed its complaint in this matter against defendant

Telelink Services, Inc. ("GTS") , Global Contact Cox

("Global Contact") and Robert Smith I11 ("Smith") , injunctive and other relief, and said defendants having e

general appearance, admitted the jurisdiction of this co

them and over the subject matter of this action, waived

findings of fact and conclusions of law pursuant to Rules 5

of the Federal Rules of Civil Procedure with respect to tk

granted in this order, and without admitting or denying an

allegations of the complaint having consented to the entrq

?

ssion") , j Global

>oration

seeking

itered a

.rt over

ntry of

? and 65

5 relief

r of the

of this

Page 3: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

I.

ORDERED that, until further order of this Court, def

GTS, Global Contact and Smith, their agents, servants, emp

attorneys and those persons in active concert or participati

them, in connection with the purchase or sale or in the o

sale of securities, by use of any means or instrumentalil

interstate commerce or any means or instruments of transpo

or communication in interstate commerce, or by the mails

facility of any national securities exchange, be, and they

are, until further order of this Court, restrained from, d

or indirectly:

employing any device, scheme or artifice to defrau

engaging in any act practice or course of b

which operates or would operate as a fraud or

upon any person;

obtaining money or property by means of any

statement of a material fact, or omitting to :

material fact necessary in order to make the sta

made, in the light of the circumstances under whi

were made, not misleading; or

making any untrue statement of a material f

omitting to state a material fact necessary in o

make the statements made, in light of the circun

2

tndants

.oyees,

)n with

fer or

ies of

:tation

or any

hereby

.rectly

1;

isiness

deceit

untrue

tate a

Iements

:h they

x t or

:der to

stances - --

Page 4: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

I

77q(a) , Section 10 (b) of the Securities Exchange Act of U.S.C. 78j (b), and Rule 10b 5 , 17 C.F.R. 240.10b-5, there

I1 . IT IS E'URTHER ORDERED that defendant GTS, Global

Smith, their officers, agents, servants, employees,

persons in active concert or participation with them

actual notice of this Order by personal service or ot

and they hereby are, until further order of this Cour

and enjoined from, directly or indirectly:

(1) making use of any means or instruments of

or communication in interstate commerce o

to sell any securities in the form

contracts, or any other security, through

prospectus or otherwise, unless and until

statement is in effect with the C o d s s

securities;

(2) carrying securities in the form of inves

or any other security, or causing th

through the mails or in interstate c

instruments of transportation, for the purpose

or delivery after sale, unless and

statement is in effect with the C

3

Page 5: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

(3) making use of any means or instruments of transpo tation f or communication in interstate commerce or of t

to offer to sell or offer to buy, through th

medium of any prospectus or otherwise, any in

securities, in the form of investment contract

other security, unless and until a re

statement is filed with the Commission as

security, or while a registration statement

the Commission as to such security is the s

refusal order or stop order or (prior to t

date of the registration statement)

proceeding or examination under Seccion 8

Securities Act of 1933 ("Securities Act"),

77h,

in violation of Sections 5(a) and 5(c) of the Securi

U.S.C. §§ 77e(a) and 77e(c). Provided, however, tha

the foregoing portion of this Order shall apply to an

transaction which is exempt from, or otherwise not s

provisions of Section 5 of the Securities Act, 15 U.S

111.

I T IS E'URTHER ORDERED that, pending further order

court, the assets of defendant G T S , Global Contact and S

officers, agents, servants, employees, attorneys, any

4

Page 6: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

financial institution holding any assets of the defendants

persons in active concert or participation with them,

permitted by any trustee, receiver or special fis

appointed by this Court, be, and hereby are, restrain

directly and indirectly, transferring, setting off,

changing, selling, pledging, assigning, liquidating or

disposing of or withdrawing any assets and property

controlled by, or in the possession of defendant G

Contact and Smith, except that Smith may withdraw $5,00

fo r four months from his personal assets for pers

expenses. Smith, upon appropriate notice to plaintiff,

modificat5oll of t h i s asset freeze.

Iv.

IT IS mTRTHER ORDERED that, pending further or

court, defendants GTS, Global Contact and Smith, the

agents, employees, servants, attorneys, and all perso

concert or participation with them, and each o

restrained and enjoined from destroying, transferring

rendering illegible all books, records, papers, ledge

statements and other documents employed in any of SUC

business, which reflect the business activities of th

or which reflect the transactions described in the

5

Page 7: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

from the date of this order, will file with this Court a

serve the Commission with a sworn accounting listing th

received by defendant Smith in connection with the tram

described in the Commission's complaint, and listing the

current disposition of such funds, including the name and

of all third parties receiving any of such funds from the dc

Smith, and the name of any third parties holding any of suc

on behalf of the defendant.

V I .

IT IS FURTHER ORDERED that Lloyd T. Whitaker

hereby is appointed as Receiver, without bond, for the est

GTS and Global Contact unless and until the Court

otherwise. The estates for which Whitaker is hereby ap

Receiver are hereinafter referred to as the "Receiver Esta

VII.

IT IS FURTHER ORDERED that the Receiver shall hz

possess all powers and rights to efficiently administ

manage the Receiver Estate, including but not limited

power:

A. to take custody, control and possession of i

-- --_- __ __ _ _ - ¶I

.a. ?ils,-p r ~ p e x & y , - + x e r n i s t z s ~ w F ? s . ~ t h - or in the possession or under the direct or i

control of the Receiver Estate, to manage, c

6

Id will

funds

nctions

use or

iddress

:endant

i funds

38 and

.tes of

orders

lointed

e .

re and

!r and

-0 the

L1 the

Pta uf

.direct

ntrol,

---

Page 8: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

operate and maintain the Receiver Estate,

income, earnings, rents and profits of the F

Estate, with full power to sue for and c

recover, receive and take into possession all

chattels, rights, credits, monies, effects,

books and records of accounts and other papers;

B. to sell, rent, lease or otherwise hypothec

dispose of the assets of the Receiver Estate;

C. to pursue, resist and defend all suits, actions,

and demands which may now be pending or which

brought by or asserted against the Receiver Esta

D. to make such payments and disbursements from th

so taken into his custody, control and posses

thereafter received, and to incur such expenses

be necessary or advisable in the ordinary co

business in discharging his duties as Receiver;

E. to open bank accounts in the name of the Rece

behalf of the Receiver Estate;

F. to engage and employ others (without Court apx

including but not limited to consultants, att

accountants, experts and employees of a firm c

the Receiver, to assist him in his duties, excc

any payment to such others for their services 5

- C1 - --- - lqpzet -koxinlr+-aaarr>Tmk--- - -.

7

o use

ceiver

lllect,

goods , lands,

te or

claims

nay be

e;

funds

ion or

as may

rse of

ver on

,oval) , mneys,

ned by

t that

.all be

- -____ ._ - - ~

Page 9: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

G.

H.

I.

IT

to take any action which could be taken 1:

officers, directors, partners and trustees c

Receiver Estate;

to suspend, terminate or grant a leave of abse

any employees of the Receiver Estate except as pr

in paragraph XXVI; and

to take such other action as may be approved b

Court.

VIII.

IS F’URTHER ORDERED that no person holding or claimi

pos,tion of any sort with the Receiver Estate shall posse

authority to act by or on behalf of any of the Receiver

except as authorized by the Receiver. With respect to the

freeze set forth herein, the Receiver shall be authorize

not required, to administer, manage, and direct the marsh

disbursement and/or transfer of monies or other assets h

third parties that are subject to the freeze. The Receive

in the reasonable exercise of his discretion, authori:

release, use or segregation of proceeds held by third part

he believes such action is necessary to preserve the Re

Estate. IX . IT IS EWRTHER ORDERED that no shareholders, officc

directors of the corporations that make up the Receiver

shall exercise any of their rights or powers with respect

by order of the Court.

a

r the

i the

ce to

wided

this

‘g any

s any

:state

asset

t but

ding;

Id by

may I

: the

es if

:eiver

r s or

:state

.o the

m r

Page 10: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

X.

IT IS E'URTHER ORDERED that defendants GTS and

Contact, as well as their agents, servants, employees, att

any persons acting for or on behalf of the Receiver Esta

any persons receiving notice of this order by personal ser

otherwise, are hereby restrained and enjoined from dis

transferring, exchanging, assigning or in any way convey:

property or assets of the Receiver Estate and frc

transaction of any business of the Receiver Estate excel

the written approval of the Receiver.

XI.

IT IS FURTHER ORDERED that, defendants GTS and

Contact, as well as their agents, servants, employees, attr

any persons acting for or on behalf of the Receiver Estal

any persons receiving notice of this order by personal ser

otherwise, having possession of the property, business,

records, accounts or assets of the Receiver Estate are

directed to deliver the same to the Receiver, his agents

employees.

XII.

IT IS FURTHER ORDERED that the defendants, their

servants, employees, nominees, attorneys and entities unde.

direct or indirect control shall cooperate with and assj

Receiver and shall take no action, directly or indirect

the performance of his duties.

9

Global

rneys,

e, and

ice or

osing,

2g any

n the

: with

Global

rneys,

3, and

ice or

booksf

hereby

and/or

gents,

their

;t the

- Y f to

Page 11: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

XIII.

IT IS FURTHER ORDERED that any brokerage insti

financial institution, bank, savings and loan, mutual f

any other person, partnership, or corporation maintair

having custody or control of any brokerage or deposit acc

other assets of any of the Receiver Estate or under

control, and that receives actual notice of this O X

personal service, facsimile transmission or otherwise

within three ( 3 ) business days of receipt of that noticc

with the Court and serve on the Receiver and counsel ;

commission a certified statement setting forth, with res]

each such account or other asset, the balance in the accl

description of the assets as of the close of business on t

of receipt of the notice.

XIV .

IT IS FURTHER ORDERED that the Receiver shall perj

accounting of the defendants' securities offerings as out1

the Commission's complaint including but not limited

defendants' solicitation, receipt, disposition and use

proceeds from such offerings.

xv.

IT IS FWRTHER ORDERED that the Receiver shall have th

to compel, including by subpoena, the appearance and testi

all persons and the production of the originals of any r -- ,-kk-e-*-a- ~~~~~ - __

€%js%s-+y-

of any person, in performing his duties hereunder.

10

ution,

id, or

ng or

int or

their

er by

shall,

file

lr the

!Ct to

mt or

3 date

rm an

led in

3 the

f the

power

m y of

:ords, .- __ .

The

Page 12: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

Receiver's authority under this paragraph shall not be co

to require the waiver by any person of any validly a

privilege.

XVI . IT IS FURTHER ORDERED that, on fift-en (15) days

notice from the Receiver, defendant Smith shall make

available for deposition at a mutually agreeable time anc

and shall produce to the Receiver the originals of any rec

his custody, possession or control relating to the fi

affairs, from November 1998 through the present, (

defendants GTS and Global Contact. This paragraph shall

construed to require the waiver by any person of any

asserted privilege.

XVII.

IT IS FLTRTHER ORDERED that the Receiver may investig

defendants, current and former employees of the Receiver

and related parties in connection with discovering add

information as it relates to activities of the Receiver E

The Receiver shall have the authority to investigate re

such related parties and employees prior to filii

litigation, and shall have the express authority to

consumer reports in the course of any such investigation.

XVIII.

IT IS FVRTHER ORDERED that the Receiver and any . . - -_ .- . . -

engaged o r empl-GGa357hit- Receiver, are entitiea io rea

11

strued

serted

ritten

imself

place

rds in

ancial

E the

not be

alidly

te the

state,

tional c

tate.

arding

J any

order

person

Page 13: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

compensation from the assets o

the prior approval of the Court.

XIX . I T I S FURTHER ORDERED tha

but is not required, to file v

Title 11 of the United States

Receiver Estate. If a bankrup

shall become, and shall be

Estate as a debtor in possess

the powers and duties as pr

the Bankruptcy Code to the

entity. Thn ~ . p ~ o i v r a ~ sh

written notice of the Receiv

The parties may contest suc

xx.

IT I S mJRTI-IER ORDERED

file petitions under Title

of the Receiver Estate, sha

filing to file with the Ba

required to be filed with

that the Receiver will re

filing.

XXI . -_ - - - - - E M S - E V R T S R ~ R D *-hat-

creditors and other person

from defendants GTS and G

12 1

Page 14: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

behalf of any such creditors and other persons, ir

sheriffs, marshals, and all officers and deputies, ant

respective attorneys, servants, agents and employees, are

further order of this Court, hereby stayed and restrain

doing anything to interfere with the possession, recoy

management by the Receiver of the property and assets

controlled, belonging to, or in the possession of the F

Estate, or to interfere with the Receiver in any manner

the pendency of this proceeding.

XXII.

IT IS FURTHER ORDERED that the Receiver is author

Luruuiiiiicate with all such pe?rc~r?c 2s t h c E e c k L v = ~

appropriate to inform them of the status of this matter

financial condition of the Receiver Estate.

XXIII.

IT IS FURTHER ORDERED that the Receiver is author

record this Order with government offices and to serve thj

on any person as he deems appropriate in furtherance

responsibilities in this matter. Receiver shall notify

counsel of all persons so served,

XXIV.

IT IS FURTHER ORDERED that the Receiver shall

notify the Court and counsel for the Commission and Smith

. - -. - _ _ _ - ---f&-hre-ar- apparent - failwe --of the--defendan~~-~o-com~~- - ---_I___-

way with the terms of this Order. m.

13

luding

their

until

ci from

zry or

owned,

ceiver

during

zed to * - - _.. -

U C G A L L a

nd the

zed to

' Order

)f his

rnith' s

-amp t 1 y

of any

u n y

Page 15: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

IT IS FURTHER ORDERED that, except for an act oj

negligence, the Receiver and all persons engaged or empl

the Receiver shall not be liable for any loss or damage i

by the defendants, or any other person, by reason of i

performed or omitted to be performed by the them in con

with the discharge of their duties and responsibilities

matter.

XXVI . IT IS E'URTHER ORDERED that Smith may prepare a busine

to operate all or a part of the businesses of the Receiver

and may submit it to the Receiver. If the Receiver determin

it is in the best interest of the Receiver Estate, the Recei

permit Smith to operate segments of the GTS or Global

businesses, subject to the execution

agreement as to Smith's compensation.

of a mutually acc

If the Receiver dc

approve the business plan, in whole or ,n part, Smith may su

to the Court for approval, with notice to plaintiff E

Receiver. The funds to operate such business segments shall

be provided from the assets of the defendants as of the 1

this Order, or directly or indirectly from the investors

schemes described in the Commission's complaint, and provid

any persons advancing such funds be provided with a copy

commission's ccmplaint in this matter before advanc- g such

14

gross

icurred

ny act

iection

n this

s plan

Estate

s that

'er may

:ontact

ptable

3s not

Imit it

Id the

be not

ate of

in the

d that

Df the

funds - eht sr .

Page 16: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

determination before this Court.

__ __

15

Page 17: A LIMITED LIABILITY PARTNERSHIP · 2005-09-21 · GLOBAL TELELINK SERVICES, INC., GLOBAL CONTACT CORPORATION, and ROBERT SMITH 111, Defendants. CML ACTION B 1 01-CV-0632 ORDER OF

XXVII.

IT IS FURTHER ORDERED that t h i s Court w i l l r e ta in j u r i s

Over this matter and the defendants for a l l purposes and w i l

other and further re l ie f that t h i s Court deems appropriatl

the circumstances.

t h i s

of

16

i c t ion

order

under

c(

- day /

DGE

. .

1