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1ited States District Court

IN THE UNITED STATES DISTRICT COURT SOllthern District of Texas
FOR THE SOUTHERN DISTIUCT OF TEXAS fILED
HOUSTON DIVISION MAY 2 1 2009
U.S. COMMODITY FUTURES
;,;,ll:"y
!i';;~>~"') :~,
Clerk of Court
TRADING COMMISS}:ON, §
§
Plaintiff, §
§ FILED UNDER SEAL
v. §
§ Civn Action No.
§
PRIVATEFX GLOBAL ONE LTD., SA; ,,§
36 HOLDINGS LTD.; ROBERT D. WATSON( ~\
and DANIEL J. PETROSKI, §)
§
r-
\
Sealed
lluhlic and unofficial staff access
Defendants. § ! to this instrument arc
1 proflibite,cl P-y tJ.lt>lwt order.
--------------------------------§ ;...".......-c¥'t.-...... lll:"fIt, :

ORDER GRANTING PLAINTIFF'S EX PARTE EMERGENCY MOTION FOR

STATUTORY RESTRAINING ORDER,

APPOINTMENT OF RECEIVER, EXPEDITED DISCOVERY,

PRELIMINARY INJUNCTION, AND OTHER EQUITABLE RELIEF

This matter came before the Court for hearing on May 21, 2009 on plaintiff

Commodity Futures Trading Commission's (CFTC) Ex Parte Emergency Motion for a

Statutory Restraining Order, Appointment of Receiver, Expedited Discovery, Preliminary

Injunction, and Other Equitable Relief (Motion). The Court, having considered the

Motion, the memorandum in support thereof, and all other evidence presented by

plaintiff, and having heard the arguments of plaintiffs counsel, finds that:

1. This Court has jurisdiction over the parties and over the subject matter of

this action pursuant to Section 6c ofthe Commodity Exchange Act (Act), 7 U.S.C. § 13a­

1 (2006), and Section 2(c)(2) of the Act, as amended by the Food, Conservation, and

Energy Act of2008, Pub. L. No. 110-246, Title XIII (the CFTC Reauthorization Act
(CRA), §§ 13101-13204, 122 Stat. 1651 (effective June 18,2008), to be codified at

7 U.S.C. § 2(c)(2).

2. Venue lies properly within this District pursuant to Section 6c(e) of the

Act, 7 U.S.C. § 13a-l(e).

3. There is good cause to believe that defendants PrivateFX Global One Ltd.,

SA (Global One); 36 Holdings Ltd. (36 Holdings); Robert D. Watson (Watson); and

Daniel J. Petroski (Petroski) (collectively, Defendants) have engaged, are engaging, and

are about to engage in acts and practices constituting violations of the Act, as amended,

to be codified at 7 U.S.C. §§ 1, et seq.

4. There is good cause to believe that immediate and irreparable damageto

the Court's ability to grant effective final relief for investors in the form of monetary

redress will occur from the sale, transfer, assignment, or other disposition by Defendants

of assets or records unless Defendants and are immediately restrained and enjoined by

Order of the Court.

5. Good cause exists for the freezing of assets owned, controlled, managed,

or held by, on behalf of, or for the benefit of Defendants and for entry of an order

prohibiting Defendants, their agents, servants, employees, assigns, attorneys, and persons

in active concert or participation with Defendants, including any successor thereof, from

destroying records and/or denying CFTC representatives access to inspect and copy

records to ensure that CFTC representatives have immediate and complete access to those

books records.

6. Good cause exists for the appointment of a Receiver to take control of all

assets owned, controlled, managed or held by, on behalf of, or for the benefit of

Defendants (Defendants' Assets) in order to preserve assets, investigate and determine

investor claims, determine unlawful proceeds retained by Defendants and amounts due to

investors as a result of Defendants alleged violations, and distribute remaining funds

under the Court's supervision.

7. Good cause exists for the CFTC to conduct expedited discovery in order to

determine the full extent of Defendants' alleged wrongdoing, locate Defendants other

investors, identify investors' funds and other of Defendants' Assets, and clarify the

source of various funds.

8. Weighing the equities and considering the CFTC's likelihood of success in

its claims for relief, the issuance ofa statutory restraining order is in the public interest.

I.

DEFINITIONS

For purposes of this Order, the following definitions apply:

9. The term "document" is synonymous in meaning and equal in scope to the

usage of the term in Federal Rule of Civil Procedure (FRCP) 34(a), and includes, but is

not limited to, writings, drawings, graphs, charts, photographs, audio and video

recordings, computer records, and other data compilations from which information can be

obtained and translated, if necessary, through detection devices into reasonably usable

form. A draft or non-identical copy is a separate document within the meaning of the

term.

10. "Assets" mean any legal or equitable interest in, right to, or claim to, any

real or personal property, whether individually or jointly, direct or indirect control, and

wherever located~ including, but not limited to: chattels, goods, instruments, equipment,

fixtures, general intangibles, effects, leaseholds, mail or other deliveries, inventory,

checks, notes, accounts (including, but not limited to, bank accounts and accounts at

financial institutions), credits, receivables, lines of credit, contracts including spot and

futures or options contracts, insurance policies, and all cash, wherever located.

11. "Defendants" shall mean and refer to not only Global One, 36 Holdings,

Watson, and Petroski but also to any d/b/a, successor, affiliate, subsidiary or other entity

owned, controlled, managed or held by, on behalf of, or for the benefit of Global One, 36

Holdings, Watson, and Petroski.

II.

ORDER APPOINTING RECEIVER

IT IS FURTHER ORDERED that:

12. ~fttd 1... T.., 10.,. .ttt' is appointed as Receiver, with the

full powers of an equity receiver, including, but not limited to, full power over all funds,

assets, collateral, premises (whether owned, leased, occupied, or otherwise controlled),

choses in action, books, records, papers, and other property belonging to, being managed

by, or in the possession of or control of Defendants or any of their subsidiaries and

affiliates. The Court makes this appointment of a Receiver after having duly considered

the qualifications and experience of said Receiver and determining said Receiver

qualified. The Receiver shall be the agent of this Court in acting as Receiver under this

Order. The Receiver is immediately authorized, empowered, and directed:

A. to have access to and to collect and take custody, control, possession, and

charge of all funds, assets, collateral, premises (whether owned, leased,

occupied or otherwise controlled), choses in action, books, records,

 papers, and other real or personal property, wherever located, of or

managed by Defendants, and their subsidiaries and affiliates, including but

not limited to, the property at 17403 W Copper Lakes Drive, Houston,

Texas 77095; 3 Brentwood Court, Sugar Land, Texas 77479; 2115

Wedgefield Place, Sugar Land, Texas 77479; 1 Sugar Creek Center, Suite

800, Sugar Land, Texas 77478; 14019 SW Freeway No 301-447, Sugar

Land, Texas 77478;

B. to have control of, and to be added as the sole authorized signatory for, all

accounts of the entities in receivership, including all accounts at any bank,

title company, escrow agent, financial institution or brokerage firm

(including any futures commission merchant) which has possession,

custody or control of any assets or funds of Defendants and their

subsidiaries and affiliates, or which maintains accounts over which

Defendants, their subsidiaries and affiliates, and/or any of their employees

or agents have signatory authority;

C. to conduct such investigation and discovery as may be necessary to locate

and account for all ofthe assets of or managed by Defendants, and their

subsidiaries and affiliates; locate Defendants' investors; identify investors'

funds; and clarify the sources of various funds, and to engage and employ

attorneys, accountants, and other persons to assist in such investigation

and discovery;

D. to take such action as is necessary and appropriate to preserve and take

control of and to prevent the dissipation, concealment, or disposition of

 any assets of or managed by Defendants and their subsidiaries and

affiliates;

E. to make an accounting, as soon as practicable, to this Court, the CFTC,

and any interested government agencies, including the Securities and

Exchange Commission, of the assets and financial condition of

Defendants, and to file the accounting with the Court and deliver copies

thereof to all parties;

F. to make such payments and disbursements from the funds and assets taken

into custody, control, and possession or thereafter received by him, and to

incur, or authorize the making of, such agreements as may be necessary

and advisable in discharging his duties as Receiver;

G. to employ attorneys, accountants and others to investigate and, where

appropriate, to institute, pursue, and prosecute all claims and causes of

action of whatever kind and nature which may now or hereafter exist as a

result of the activities of present or past employees or agents of

Defendants and their subsidiaries and affiliates; and

H. to have access to and monitor all mail, electronic mail, and videophone of

the entities in receivership in order to review such mail and e-mail which

he deems relates to their business and the discharging of his duties as

Receiver.

IT IS FURTHER ORDERED that:

13. Defendants, including any subsidiaries and affiliates, and their officers,

agents, servants, employees, and attorneys, shall, within 24 hours of the issuance ofthis

Order, caused to be prepared and delivered to the Receiver, a detailed and complete

schedule of all passwords and identification (lD) numbers for all websites, electronic

mail accounts, videophone accounts, and all accounts at any bank, financial institution, or

brokerage firm (including any introducing broker or futures commission merchant)

operated by or to which Defendants have access.

IT IS FURTHER ORDERED that:

14. Defendants, including any subsidiaries and affiliates, and their officers,

agents, servants, employees, and attorneys, shall, within 24 hours of the issuance of this

Order, caused to be prepared and delivered to the Receiver, a detailed and complete

schedule of all desktop computers, laptop computers, and/or personal digital assistants

(PDA) owned and/or used by them in connection with their business. In the case of

Defendants Watson and Petroski, they shall, within 24 hours of the issuance of this

Order, caused to be prepared and delivered to the Receiver, a detailed and complete

schedule of all desktop computers, laptop computers and/or personal digital assistants

(PDA) owned and/or used by them for any purpose. The schedules required by this

section shall include at a minimum the make, model, and description of each computer

and/or PDA, along with its location, the name of the person primarily assigned to use

computer and/or PDA, and all passwords necessary to access and use the software

contained on the computer and/or PDA. The Receiver shall be authorized to make an

electronic, digital, or hard copy of all of the data contained on the computer(s) and/or

PDA(s).

IT IS FURTHER ORDERED that:

 15. Defendants, including any subsidiaries and affiliates, and their officers,

agents, servants, employees, and attorneys, and any other persons who are in custody,

possession, or control of any assets, funds, collateral, books, records, papers, or other

property of or managed by any entities in receivership, shall forthwith give access and

control of such property to the Receiver and cooperate with and assist the Receiver and

shall take no action, directly or indirectly, to hinder, obstruct, or otherwise interfere with

the Receiver or his attorneys, accountants, employees, or agents, having access or gaining

control of such property, or in the conduct ofthe Receiver's duties or to interfere in any

manner, directly or indirectly, with the custody, possession, management, or control by

the Receiver of the assets, funds, collateral, books, records, premises, and choses in

action described above.

IT IS FURTHER ORDERED that:

16. No officer, agent, servant, employee, or attorney of Defendants shall take

any action or purport to take any action, in the name of or on behalf of Global One or 36

Holdings without the written consent of the Receiver or order of this Court.

IT IS FURTHER ORDERED that:

17. Defendants, and their subsidiaries and affiliates, shall pay the costs, fees,

and expenses ofthe Receiver incurred in connection with the performance of his duties

described in this Order, including the costs and expenses of those persons who may be

engaged or employed by the Receiver to assist him in carrying out his duties and

obligations. All applications for costs, fees, and expenses for services rendered in

connection with the receivership, other than routine and necessary business expenses in

conducting the receivership, such as salaries, rent, and any and all other reasonable

operating expenses, shall be made by application setting forth in reasonable detail the

nature of the services and shall be heard by the Court.

IT IS FURTHER ORDERED that:

18. No bond shall be required in connection with the appointment of the

Receiver. Except for an act of gross negligence, the Receiver shall not be liable for any

loss or damage incurred by Defendants, their officers, agents, servants, employees and

attorneys or any other person, by reason of any act performed or omitted to be performed

by the Receiver in connection with the discharge of his or her duties and responsibilities.

IT IS FURTHER ORDERED that:

19. Representatives of the CFTC and any other government agency, including

the Securities and Exchange Commission, are authorized to have continuing access to

inspect or copy any or all of the corporate books and records and other documents of

Defendants, including any subsidiaries and affiliates, and their officers, agents, servants,

employees, and attorneys, and continuing access to inspect their assets, funds, premises,

collateral, books, records, or other property, wherever located.

IT IS FURTHER ORDERED that:

20. Absent express permission and leave by this Court, during the pendency of

this receivership, all clients, investors, trust beneficiaries, note holders, creditors,

claimants, lessors, and all other persons or entities seeking relief of any kind from

Defendants' Assets (other than the present actions by the CFTC and the Securities and

Exchange Commission), in law or in equity, and all persons acting on behalf of any such

investor, trust beneficiary, note holder, creditor, claimant, lessor, consultant group, or

other person, including sheriffs, marshals, and all officers and deputies, and their

respective attorneys, servants, agents and employees, are, until further order ofthis Court,

hereby are restrained and enjoined from doing anything, directly or indirectly, to interfere

with the Receiver's performance of his or her duties and the administration of

Defendants' Assets. Accordingly, all such persons are enjoined from engaging in any

self-help, including set-offs, and from filing or prosecuting any actions or proceedings

which involve the Receiver or which affect Defendants' Assets, specifically including

any proceeding initiated pursuant to the United States Bankruptcy Code, except with

prior permission of this Court. Moreover, any such actions that are so authorized shall be

filed in this Court.

III.

ORDER AGAINST TRANSFER, DISSIPATION, AND DISPOSAL OF ASSETS

IT IS HEREBY ORDERED that:

21. Defendants, their agents, servants, employees, assigns, attorneys, and

persons in active concert or participation with them, including any successor thereof, and

persons in active concert or participation with them, who receive actual notice of this

Order by personal service or otherwise, are immediately restrained and enjoined from

directly or indirectly transferring, selling, alienating, liquidating, encumbering, pledging,

leasing, loaning, assigning, concealing, dissipating, converting, withdrawing, or

otherwise disposing of any of Defendants' Assets, wherever located, including

Defendants' Assets held outside the United States, except as provided in Section V of this

Order, or as otherwise ordered by the Court. The Assets affected by this paragraph shall

include both existing Assets and Assets acquired after the effective date of this Order.

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 22. Defendants are restrained and enjoined from directly or indirectly opening

or causing to be opened any safe deposit boxes titled in the name of, or subject to, access

by Defendants.

IV.

DIRECTIVES TO FINANCIAL INSTITUTIONS AND OTHERS

IT IS FURTHER ORDERED, pending further Order of this Court, that any

financial or brokerage institution, business entity, or person that holds or has held,

controls or has contro lled, or maintains or has maintained custody of any of Defendants'

Assets at any time since January 1,2006, shall:

23. Prohibit Defendants and all other persons from withdrawing, removing,

assigning, transferring, pledging, encumbering, disbursing, dissipating, converting,

selling, or otherwise disposing of Defendants' Assets, except as directed by further Order

of the Court;

24. Deny Defendants and all other persons access to any safe deposit box that

is: (a) owned, controlled, managed, or held by, on behalf of, or for the benefit of

Defendants, either individually or jointly; or (b) otherwise subject to access by

Defendants;

25. Provide counsel for the CFTC and Receiver, within five (5) business days

of receiving a copy of this Order, a statement setting forth: (a) the identification number

of each and every account or other asset owned, controlled, managed, or held by, on

behalf of, or for the benefit of Defendants, either individually or jointly; (b) the balance

of each such account, or a description of the nature and value of such asset as of the close

of business on the day on which this Order is served, and, ifthe account or other asset has

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been closed or removed, the date closed or removed, the total funds removed in order to

close the account, and the name of the person or entity to whom such account or other

asset was remitted; and (c) the identification of any safe deposit box that is owned

controlled, managed, or held by, on behalf of, or for the benefit of Defendants, either

individually or jointly, or is otherwise subject to access by Defendants; and

26. Upon request by the CFTC or the Receiver, promptly provide the CFTC

and the Receiver with copies of all records or other documentation pertaining to such

account or asset, including, but not limited to, originals or copies of account applications,

account statements, signature cards, checks, drafts, deposit tickets, transfers to and from

the accounts, all other debit and credit instruments or slips, currency transaction reports,

Internal Revenue Service Form 1099s, and safe deposit box logs.

v.
ACCOUNTING AND TRANSFER OF FUNDS AND DOCUMENTS

IT IS FURTHER ORDERED that within five (5) business days following the

service of this Order, Defendants shall:

27. Provide the CFTC and the Receiver with a full accounting of all

Defendants' Assets, inside and outside of the United States, from January 1,2006 to the

date ofthis Order;

28. Transfer to the territory of the United States, to the possession, custody,

and control of the Receiver, all of Defendants' Assets (other than real property) located

outside the United States; and

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 29. Provide the CFTC and Receiver access to all records of Defendants held

by financial institutions located within or outside the territorial United States by signing a

Consent to Release of Financial Records provided by the CFTC andlor the Receiver.

VI.

MAINTENANCE OF BUSINESS RECORDS

IT IS FURTHER ORDERED that:

30. Defendants and their agents, servants, employees, assigns, attorneys, and

persons in active concert or participation with Defendants, including any successor

thereof, and all other persons or entities who receive notice of this Order by personal

service or otherwise, are immediately restrained and enjoined from directly or indirectly

destroying, mutilating, erasing, altering, concealing or disposing of, in any manner,

directly or indirectly, any documents that relate to the business practices or business or

personal finances of Defendants and their subsidiaries or affiliates.

VII.

INSPECTION AND COPYING OF BOOKS AND RECORDS

IT IS FURTHER ORDERED that:

31. Representatives of the CFTC and the Receiver shall immediately be

allowed to inspect the books, records, and other documents of Defendants and their

agents, including, but not limited to, electronically stored information, tape recordings,

and computer discs, wherever they may be situated and whether they are in the person of

Defendants or others, and to copy said documents, information and records, either on or

off Defendants' premises; and

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 32. Defendants, their agents, servants, employees, assigns, attorneys, and

persons in active concert or participation with Defendants, including any successor

thereof, who receive actual notice of this Order by personal service or otherwise,

including facsimile or other electronic transmission, shall cooperate fully with the CFTC

and/or the Receiver to locate and provide to representatives ofthe CFTC and/or the

Receiver all books and records of Defendants, wherever such books and records may be

situated.

VIII.

ORDER GRANTING EXPEDITED DISCOVERY

IT IS HEREBY ORDERED that:

33. The CFTC and Receiver may conduct expedited discovery, removing the

prohibition upon discovery before the early meeting of counsel pursuant to FRep 26(t),

in accordance with FRCP 26(d), and that the CFTC and Receiver may take depositions of

Defendants and non-parties subject to two calendar days notice pursuant to FRCP 30(a)

and 45-that notice may be given personally, by facsimile, or by electronic mail.

Further, more than ten depositions may be taken and, if necessary, any deposition may

last more than seven hours.

34. The CFTC and Receiver may conduct expedited discovery to enable the

CFTC to fulfill its statutory duties and protect investors from further loss or damage.

This expedited discovery will allow the CFTC and Receiver to determine the full extent

of Defendants' alleged wrongdoing (including, but not limited to, the possible

involvement of others), locate Defendants' other investors, identify investors' funds, and

other of Defendants' Assets, and clarify the sources of various funds.

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 IX.

BOND NOT REQUIRED OF PLAINTIFF

IT IS FURTHER ORDERED that:

35. The CFTC is an agency of the United States of America and, accordingly,

need not post a bond.

X.

ORDER TO SHOW CAUSE

IT IS FURTHER ORDERED that:

36. Defendants shall appear before this Court on the "' day of

_A1-=IJ-::l-j___---', 2009, at 2.:~ ,/!-.m., before the Honorable S;1ooor. J..41tc..

at the United States Courthouse for the Southern District of Texas, Houston, Texas"1!8
~~" '$ft..fft.,f e6ft,.~erc"'t.t.

granted to prohibit further violations ofthe Act and why the other relief requ

not be granted pending trial on the merits of this action.

37. Should any party wish to file a memorandum of or other papers in

opposition to Plaintiffs Ex Parte Motion for a Statutory

Injunction, and Other Equitable Relief, all papers s I be filed on or before

to the CFTC's Kansas City, Missouri

office no later than _ __ _ _ _ _ _ _ _ _ _, 2009. Any

e Court and delivered to opposing counsel no later than

_ _ _ _ _ _ _ _ _ _, 2009. Service of all papers

referenced in . paragraph shall be by electronic mail, overnight mail, facsimile, or

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 XI.

SERVICE

IT IS FURTHER ORDERED that:

38. Copies of this Order may be served by any means, including electronic

mail or facsimile transmission, upon any entity or person that may have possession,

custody, or control of any documents or Defendants' Assets that may be subject to any

provision of this Order, and, additionally, that Charles Marvine, Braden Perry,

Christopher Reed, Michael Loconte, Jill Warren, and Rick Glaser (among other

representatives of the CFTC), as well as representatives of the SEC, are specially

appointed by the Court to effect service. Further, service of the Summons, Complaint, or

other process may be effected by any CFTC representative, any SEC representative, the

Receiver or any of his representatives, any U.S. Marshal or deputy U.S. Marshal, or in

accordance with FRCP 4.

XII.

FORCE AND EFFECT

IT IS FURTHER ORDERED that this Order shall remain in full force and

effect until further order of this Court and that this Court retains jurisdiction of this matter

for all purposes.

IT IS SO ORDERED, at Houston, Texas, on the ~t day of May, 2009, at

j;tI''{J..m.

UN E STATES DISTRICT JUDGE

SOUTHERN DISTRICT OF TEXAS

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