SECURITIES AND EXCHANGE COMMISSION Washington, D.C. SECURITIES EXCHANGE ACT OF 1934 Rel. No. 39629 / February 9, 1998 Admin. Proc. File No. 3-8998 ___________________________________ : In the Matter of : : WILLIAM F. LINCOLN : : ___________________________________: OPINION OF THE COMMISSION BROKER-DEALER PROCEEDINGS Ground for Remedial Action Respondent was convicted in 1995 of securities fraud, conspiracy to commit securities fraud, and interstate transportation of monies obtained by fraud. Held, it is in the public interest to bar respondent from participation in any offering of a penny stock, and from association with a broker, a dealer, or a member of a national securities exchange or of a registered securities association. APPEARANCES: William F. Lincoln, pro se. Edward G. Sullivan and Betty M. Terry, for the Division of Enforcement. Appeal Filed: January 28, 1997 Last Brief Filed: May 5, 1997 I. William F. Lincoln, a former principal, director, and president of First Alliance Securities, Inc. ("First Alliance"), a now-defunct broker- dealer, appeals from the decision of an administrative law judge. The law judge determined that, on the basis of Lincoln's conviction for securities fraud, conspiracy to commit securities fraud, and interstate transportation of monies obtained by fraud, the public interest requires that Lincoln be barred from (i) participation in any offering of a penny stock and (ii) association with a broker, a dealer, or a member of a national securities exchange or of a registered securities association. Our findings are based on an independent review of the record, except for those findings not challenged on review. II. Lincoln began his career in the securities industry in March 1987. Between 1987 and 1989, Lincoln was associated with several securities firms. In January 1989, Lincoln and Calvin L. Word formed Word, Lincoln & Co. Inc. ("Word Lincoln"). Lincoln was president and a director of Word Lincoln. Shortly thereafter, Word Lincoln acquired First Alliance. Lincoln thereafter served as a director, principal, and an officer of First Alliance. In 1993, Lincoln was indicted for his participation in a conspiracy to commit securities fraud. <(1)> On August 21, 1995, Lincoln was convicted of one count of conspiracy to commit securities fraud, two counts of securities fraud, and two counts of interstate transportation of monies taken by fraud. Judgment was entered and sentence imposed on November 20, 1995. <(2)> The indictment alleged that Lincoln and other conspirators engaged in a widespread conspiracy to perpetrate a fraud on First Alliance customers. <(3)> Lincoln and others made material misstatements to customers, including misstatements regarding the liquidity, suitability, and level of risk of the securities, currently available market prices for the securities, the likelihood that the securities would be listed on a stock exchange, and the operations, financial condition, and prospects of the issuers. They also omitted to provide the customers with material information. They failed to disclose, among other things, that First Alliance insiders had interests in the securities the firm was promoting, that the firm was manipulating the price of the stocks, and that the prices that the customers paid included undisclosed excessive markups. The defendants and other conspirators also engaged in a variety of sales practice violations. Among other things, they effected unauthorized trades, employed high-pressure telephone sales techniques, and charged customers arbitrary prices. They also refused to <(1)> Criminal Indictment, United States v. William F. Lincoln, 1:93-CR-506 (N.D. Ga. filed Nov. 22, 1993). <(2)> Judgment in a Criminal Case, United States v. William F. Lincoln, 1:93-CR-506-01-GET (N.D. Ga. Nov. 20, 1995). <(3)> Criminal Indictment, United States v. William F. Lincoln, 1:93-CR-506 (N.D. Ga. filed November 22, 1993). We here adopt the allegations set forth in the criminal indictment that served as the basis of the general guilty verdict against Lincoln. See Wolfson v. Baker, 623 F.2d 1074, 1078-79 (5th Cir. 1980), cert. denied 450 U.S. 966 (1981) (issues alleged in the indictment that are essential to the verdict must be regarded as having been determined by the judgment); Alexander V. Stein, Investment Advisers Act Rel. No. 1497 (June 8, 1995), 59 SEC Docket 1493, 1494 and 1501 (finding the allegations in the indictment that led to the conviction of Mr. Stein demonstrate that he willfully engaged in a scheme to defraud clients). ======END OF PAGE 2====== execute customer sell orders and to honor customer requests for the proceeds. Lincoln, among other things, purchased shares of stock in issuers that the firm was offering and selling to the public and resold them to the firm at a substantial personal profit. He also participated directly in the transportation of funds in interstate commerce, knowing that the funds had been stolen, converted, or taken by fraud. Additionally, Lincoln fraudulently solicited a customer by falsely representing that he was disabled and required a wheelchair. Following his conviction, the trial judge sentenced Lincoln to six and one-half years imprisonment and three years of supervised release. Additionally, the judge ordered Lincoln to make restitution of $2.5 million to his victims. III. This administrative proceeding was instituted on May 6, 1996. A hearing was held on June 27, 1996, at the Federal Correctional Institution at Jesup, Georgia, where Lincoln is serving his sentence. Lincoln does not deny that he was convicted of the various securities-related crimes. However, he objects to this proceeding on several grounds. A. Lincoln attacks the validity of his conviction. Lincoln asserts that he is a victim of an extortion plot involving the National Association of Securities Dealers, Inc. ("NASD") and this Commission (including those "up close to the president"). <(4)> He states to us: Because [I] refused to come up with the cash [I] was singled out and prosecuted, for actions done in ignorance under the noses of 3 sets of regulators. [I am] widely hated and the people opposed to [me] will go to any length (fraud-suborn perjury) to get [me]!!! As part of this conspiracy, Lincoln asserts that the United States Attorney used perjured and incredible testimony. Lincoln further claims that he and First Alliance were singled out for prosecution when other firms engaged in the same conduct on a greater scale but were not prosecuted. <(5)> <(4)> According to Lincoln, First Alliance was shut down by the state of Georgia because penny stock broker-dealers such as his firm were in competition with the state lotteries. Lincoln further asserts that the judge who heard his criminal case was biased against him because the judge was an active stock speculator. <(5)> He argues that the criminal case was organized against him because he sued the NASD, complained to the Attorney General, and refused to bribe Commission employees. He also asserts that his complaints to (continued...) ======END OF PAGE 3====== Additionally, Lincoln contends that the actions that led to his indictment were caused by the NASD's and this Commission's failures to provide Lincoln knowledge or training. <(6)> Asserting that he never intended to defraud his customers, Lincoln argues: I was only running a broker-dealer a few short months. You all [the Commission and the NASD] failed to come in there and train me. You all failed to do anything to help me to do what I was to do out there with the public. He also argues that he was entitled to a securities lawyer to defend him at his criminal trial. These objections, however, are inappropriate for this forum. A criminal conviction cannot be collaterally attacked in an administrative proceeding. <(7)> This prohibition extends to issues relating to the validity of the conviction, including the credibility of the evidence presented at trial and any defenses to the criminal charge. Thus, Lincoln is collaterally estopped from attacking here the merits of the criminal proceeding againsthim, including the exercise of prosecutorial discretion, <(8)> <(5)>(...continued) Federal officials resulted in an investigation of the NASD. <(6)> Lincoln also claims that our staff permitted the Firm to continue to operate after the staff was aware of problems with First Alliance in order to allow the Firm to underwrite an offering for an issuer represented by a former member of our staff. There is nothing in the record to support this and Lincoln's other allegations against the staff. <(7)> See Elliot v. SEC, 36 F.3d 86, 87 (11th Cir. 1994). Cf. Blinder, Robinson & Co. v. SEC, 837 F.2d 1099, 1108 (D.C. Cir. 1988), cert. denied, 488 U.S. 869 (1989) (holding that issues that could have been adjudicated in a prior injunctive proceeding held in a District Court cannot be litigated in a later administrative proceeding); Benjamin G. Sprecher, Securities Exchange Act Rel. No. 38485 (Apr. 8, 1997), 64 SEC Docket 720, 729; Alexander V. Stein, Investment Advisers Act Rel. No. 1497 (June 8, 1995), 59 SEC Docket 1493, 1501. <(8)> To the extent Lincoln objects to this proceeding on the basis of selective prosecution, his argument is without merit. To establish a claims of selective prosecution, Lincoln would have to demonstrate that this proceeding was instituted based upon improper considerations such as race, religion, or the desire to prevent the (continued...) ======END OF PAGE 4====== the credibility of the evidence against him, and the denial of his request for appointment of a defense attorney who specializes in securities law. B. Lincoln argues that this action is premature because he has filed an appeal of his conviction as well as a petition of habeas corpus. He claims that this Commission should wait until the United States Court of Appeals for the Eleventh Circuit has ruled on the "legality of the underlying conviction itself." However, a conviction is a final decision for the purpose of attaching liability. <(9)> "Once the judgment of conviction [i]s entered, respondent [i]s no longer entitled to the presumption of innocence, and he stands convicted until such time as the conviction is reversed or set aside." <(10)> Therefore, nothing "prevents a bar to be entered if a criminal conviction is on appeal." <(11)> C. Lincoln argues that this proceeding is time barred. Lincoln notes that, under Section 2462 of Title 28 of the United States Code, an agency is required to bring "an action, suit, or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise" within five years. Lincoln argues that, because the acts underlying his conviction occurred more than five years before the institution of this proceeding, this action is time-barred. <(8)>(...continued) exercise of a constitutionally-protected right. See Michael Markowski, 51 S.E.C. 553, 559 n.23 (1993), aff'd, 34 F.3d 99 2d Cir. 1994); United States v. Huff, 959 F.2d 731, 735 (8th Cir.), cert. denied, 506 U.S. 855 (1992); C.E. Carlson, Inc. v. SEC, 859 F.2d 1429, 1437 (10th Cir. 1988); Baltimore Gas & Elec. Co. v. Heintz, 760 F.2d 1408, 1419 (4th Cir.), cert. denied, 474 U.S. 847 (1985). We find no evidence of such considerations here. <(9)> Paul M. Kaufman, 44 S.E.C. 374, 376 (1970) (a conviction is a final judgment with respect to the disqualification of a lawyer to practice before the Commission). <(10)> Id. <(11)> Elliot v. SEC, 36 F.3d 86, 87 (11th Cir. 1994). This proceeding was instituted solely on the basis of Lincoln's criminal conviction. If that conviction is reversed on appeal and his status as an associated person of a broker-dealer, we would set aside this proceeding. Cf. Jimmy Dale Swink, Securities Exchange Act Rel. No. 36042 (Aug. 1, 1995), 59 SEC Docket 2877 (granting application to vacate sanction where settlement provided for vacatur in the event the respondent's conviction was reversed). ======END OF PAGE 5====== Section 2462, however, states that its limitation does not apply if a different period is "otherwise provided by Act of Congress." Section 15(b)(6)(A)(ii) of the Exchange Act authorizes this Commission to take action if an associated person "has been convicted within ten years . . . ." Because the Congress has authorized us to commence a proceeding to determine whether a convicted person's association is in the public interest up to ten years from the date of conviction, Section 2462 is not applicable to this proceeding. Even if Section 2462 applied here, however, this action would not be time-barred. Section 15(b)(6)(A)(ii) of the Exchange Act authorizes us to proceed against Lincoln on the basis of his conviction. <(12)> The order instituting this proceeding charges the fact of the conviction, not the underlying conduct. Thus, for the purposes of Section 2462, it is the date of Lincoln's conviction, not the conduct underlying the conviction, which is relevant. We issued the order instituting this proceeding on May 6, 1996, five-and-a-half months after the November 20, 1995 judgment was entered against Lincoln. D. Lincoln asserts that this proceeding violates his Sixth Amendment right to counsel. <(13)> In general, however, the Sixth Amendment does not entitle a respondent in an administrative proceeding to the appointment of counsel. <(14)> <(12)> See Russell G. Koch, Securities Exchange Act Rel. No. 38658 (May 20, 1997), 64 SEC Docket 1616, 1620-21 (holding that, since a cause of action does not accrue under Section 15(b)(6)(A)(iii) until a final judgment is entered, the date of the conduct underlying an injunction is not relevant for statute of limitations purposes); Timothy Mobley, Securities Exchange Act Rel. No. 36689 (Jan. 5, 1996), 61 SEC Docket 42, 45 (proceeding under Section 15(b)(6)(A)(iii) is based on the existence of an injunction, not the actions giving rise to the injunction). <(13)> Lincoln also asserts that his defense was hampered because he did not have access to certain unspecified documents. It appears, however, that these documents may relate to the merits of his criminal conviction, and, if so, they would not be relevant here since he is estopped from contesting the merits of that conviction. <(14)> See Feeney v. SEC, 564 F.2d 260, 262 (8th Cir. 1977), cert. denied 435 U.S. 969 (1978); Boruski v. SEC, 340 F.2d 991, 992 (2d Cir.), cert. denied, 381 U.S. 943, 944 (1965). Throughout this proceeding, Lincoln mounted a vigorous defense, raising, among other things, the issues addressed here. ======END OF PAGE 6====== Lincoln suggests, however, that we should depart from this general rule because this is a "criminally related action." Lincoln argues that, under Massiah v. United States, 377 U.S. 201 (1964), the Sixth Amendment requires that he be represented by a lawyer at all times after his criminal indictment. Lincoln suggests that, because evidence gathered during this proceeding somehow might be used against him if his conviction is overturned and his criminal case remanded for retrial, we are required under Massiah to provide him with counsel for this hearing. Massiah, however, involved the use of a defendant's incriminating statements at trial where such statements were surreptitiously procured in the absence of counsel after the defendant was indicted. The Supreme Court stated in Massiah that its holding was limited to a determination that these particular statements could not be used as evidence against the defendant at his criminal trial. <(15)> Massiah does not discuss the right to counsel in an administrative proceeding arising from a conviction. <(16)> Even if the court of appeals were to grant Lincoln's request for a retrial and evidence introduced in this proceeding were found to be relevant to the retrial, it does not follow that Lincoln has a Sixth Amendment right to an attorney for this proceeding. This proceeding is neither a criminal prosecution nor criminal investigation. <(17)> The only sense in which this action is "criminally related" is that Section 15(b) of the Exchange Act allows Lincoln's felony convictions to serve as a basis to sanction him. Should Lincoln prevail in his appeal of his criminal conviction and that case is retried, he may move to suppress evidence as he deems appropriate at his retrial. E. 1. Lincoln claims that this action constitutes a violation of the Double Jeopardy Clause of the Fifth Amendment. Lincoln argues that, since he already has been convicted criminally, this proceeding constitutes a <(15)> Massiah, 377 U.S. at 207. The Court found that the prosecution's use at trial of these incriminating statements, obtained by a secret tape recorder placed in a car after Massiah's indictment, violated Massiah's Sixth Amendment right to counsel. <(16)> Id. at 207. In Massiah, the Court specifically found that in many cases post-indictment aural surveillance of a defendant without counsel is constitutional. Id. at 206-07. <(17)> We note that the Division of Enforcement's case here consisted of the introduction of certified copies of the indictment, judgment, and certain minute orders from the criminal proceeding; certified copies of Commission Forms B-D for First Alliance and its predecessor; and a certified copy of an NASD disciplinary opinion discussed infra. ======END OF PAGE 7====== second prosecution and/or punishment for the same underlying activity. In Hudson v. United States, No. 96-976, 1997 U.S. Lexis 7497 (Dec. 10, 1997), however, the Supreme Court held that a civil remedy is not "punishment" for purposes of the Double Jeopardy Clause. In Hudson, the Office of the Comptroller of the Currency imposed monetary penalties and barred the petitioners from participation in the affairs of any banking institution. Petitioners subsequently were indicted for essentially the same conduct and sought dismissal of the indictment under the Double Jeopardy Clause. The Supreme Court held that the Double Jeopardy Clause protects "only against multiple criminal punishments for the same offense." <(18)> The Court then sought to determine whether the sanctions at issue were civil or criminal. The Supreme Court stated that the first inquiry in determining whether a remedy was civil or criminal was whether the legislature expressed a preference "for one label or the other." The Court recognized that the banking provision authorizing debarment "contains no language explicitly denominating the sanction as civil." <(19)> The Court observed, however, that the power to debar was conferred upon the banking agencies. The Court found that granting to an administrative agency the power to impose this sanction was "prima facie evidence that Congress intended to provide for a civil sanction." <(20)> The Court recognized that a penalty denominated as civil might be so punitive in purpose or effect that it was transformed into a criminal penalty. The Court suggested that seven factors "provide useful guideposts" for this analysis. <(21)> However, the Court also stressed that "only the clearest proof" would suffice "to override legislative intent and transform a civil remedy into a <(18)> Id. at *11 (emphasis added). <(19)> Id. at *19. <(20)> Id. at *19-20. <(21)> The Court cited the following factors: (1) "whether the sanction involves an affirmative disability or restraint"; (2) "whether it has historically been regarded as a punishment"; (3) whether it comes into play only on a finding of scienter"; (4) "whether its operation will promote the traditional aims of punishment -- retribution and deterrence"; (5) "whether the behavior to which it applies is already a crime"; (6) "whether an alternative purpose to which it may rationally be connected is assignable for it"; and (7) "whether it appears excessive in relation to the alternative purpose assigned." Id. at *12-13 (quoting Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168-69 (1963)). ======END OF PAGE 8====== criminal penalty." <(22)> Using the identified factors, the Court determined that the banking sanctions were civil, and the Double Jeopardy Clause was not an obstacle to a criminal proceeding. In light of the analysis in Hudson, we conclude that a broker-dealer bar and a penny stock bar are civil in nature. As with the banking statutes at issue in Hudson, Congress granted this Commission the authority to impose such bars if required in the public interest. Hudson counsels that a grant of such authority to an administrative agency is "prima facie evidence" that these remedies are civil. We have considered the factors identified by the Court, which the Court has recognized are "certainly neither exhaustive nor dispositive" <(23)> and "may often point in differing directions." <(24)> Based on our consideration, we believe there is no indication, let alone "the clearest proof" required by Hudson, that these sanctions are criminal penalties. As the Supreme Court recognized in Hudson, debarment has not historically been viewed as punishment. <(25)> The Court further made clear that debarment is "certainly nothing approaching the `infamous punishment' of imprisonment." <(26)> We note that imposition of this sanction does not necessarily require scienter. Section 15(b)(6)(A)(iii) of the Exchange Act permits us to institute an administrative proceeding and impose, among other things, a broker-dealer or a penny stock bar upon a finding that the respondent has previously been enjoined from any violations of the securities laws or the rules thereunder or from acting in any capacity as a securities professional. <(27)> Even if imposition of this sanction <(22)> Hudson v. United States, 1997 U.S. Lexis at *13. <(23)> United States v. Ward, 448 U.S. 242, 249 (1980). <(24)> Kennedy v. Mendoza-Martinez, 372 U.S. at 169. <(25)> Thus, the Supreme Court observed that "'revocation of a privilege voluntarily granted,' such as debarment, 'is characteristically free of the punitive criminal element.", Hudson v. United States, 1997 U.S. Lexis at *18, citing Helvering v. Mitchell, 303 U.S. 391, 399, n. 2 (1938). <(26)> Hudson v. United States, 1997 U.S. Lexis at *21, quoting Flemming v. Nestor, 363 U.S. 603, 617 (1960). <(27)> We may also, as we have done here, sanction a respondent who is convicted of certain specified crimes. That authority is also not limited to those crimes that require scienter. Thus, we may impose a sanction under Section 15(b)(6)(A)(ii) if the respondent has been convicted of any misdemeanor (continued...) ======END OF PAGE 9====== required a finding of scienter, however, that factor alone would not be sufficient to conclude this remedy is criminal. <(28)> The Supreme Court recognized that such bars may serve as deterrents, but it observed that deterrence can serve civil goals. The Court concluded that the deterrence provided by the sanctions in Hudson also served to maintain the stability of the banking industry. <(29)> The Supreme Court has previously recognized that, if a sanction is designed to protect the public from harm, the sanction is remedial in nature. <(30)> Sections 15(b) and 19(h) authorize us to impose sanctions only upon a finding that any such sanctions are in the public interest. We believe that the sanctions here serve the purpose of protecting investors and the integrity of the markets by preventing those convicted of crimes from acting in the capacity of a securities professional. <(31)> We also previously have found that a penny <(27)>(...continued) involving, among another things, the purchase or sale of a security or the conduct of business as a broker or dealer. <(28)> See, e.g., Hudson v. United States, 1997 U.S. Lexis at *22; United States v. Ward, 448 U.S. at 250. <(29)> Hudson v. United States, 1997 U.S. Lexis at *22-23. <(30)> De Veau v. Braisted, 363 U.S. 144, 160 (1960). <(31)> Courts have long recognized that sanctions such as bar orders, designed to protect the public from abuse, qualify as remedial rather than punitive for the purposes of the Double Jeopardy Clause. See U.S. v. Stoller, 78 F.3d 710, 723 (1st Cir. 1996) (FDIC ban on former CEO of bank from serving as an officer, director, counsel, or control person of any federally insured financial institution found remedial because its purpose was to protect banks from perpetrators of fraud); Bae v. Shalala, 44 F.3d 489, 496-97 (7th Cir. 1995) (holding that FDA ban barring respondent from participation in the generic drug industry was remedial because it was intended to protect the integrity of the generic drug approval process); U.S. v. Hudson, 14 F.3d 536, 541-42 (10th Cir. 1994) (OCC sanction barring subject from employment in the banking industry was remedial because it was designed to protect the banking industry from corruption); U.S. v. Furlett, 974 F.2d 839, 843 (7th Cir. 1992) (finding CFTC ban barring subject from any contract market remedial because its purpose was to ensure the integrity of the futures markets); U.S. v. Bizzell, 921 F.2d 263, 267 (10th Cir. (continued...) ======END OF PAGE 10====== stock bar served to restore confidence in the market by addressing unscrupulous market practices and participants in the penny stock market. <(32)> We believe these purposes defeat an assertion that these sanctions are criminal in nature. Lincoln has failed to make a showing that these sanctions are criminal. Thus, we conclude this proceeding is not barred by the Double Jeopardy Clause. <(33)> 2. Lincoln also asserts that he was previously punished by the NASD for the same activities that underlie the criminal conviction that is the predicate for our proceeding. In 1990, the NASD filed a complaint against Lincoln and First Alliance. Following a hearing, the NASD found that, at around the time Word Lincoln took over First Alliance, the firm, through Lincoln, had ceased maintaining required trading records. The NASD also found that Lincoln had materially overstated First Alliance's net capital in the firm's FOCUS Reports, representing that the firm had substantial net <(31)>(...continued) 1990) (holding HUD ban barring individuals from participating in any HUD housing programs remedial because its purpose was to purge government programs of corrupt influences and to prevent improper dissipation of public funds). Compare Johnson v. SEC, 87 F.3d 484, 491 (D.C. Cir. 1996) (distinguishing whether a sanction is remedial for purposes of the Double Jeopardy clause from its status of a penalty for purposes of the five- year statute of limitation contained in 28 U.S.C.  2462). <(32)> See Sprecher, 64 SEC Docket at 728. <(33)> Lincoln also contends that the imposition of a penny stock bar is prohibited by the Ex Post Facto Clause of the Constitution. The Ex Post Facto Clause prohibits application of a law retroactively that "inflicts a greater punishment, than the law annexed to the crime, when committed." Calder v. Bull, 3 U.S. (3 Dall.) 386, 390 (1798). This proceeding, however, was based on Lincoln's criminal conviction, which occurred after enactment of the Securities Enforcement Remedies and Penny Stock Reform Act of 1990 ("Remedies Act"), which authorized the imposition of a penny stock bar. The Exchange Act provides that the conviction is an independent basis for the proceeding; the date of the underlying conduct is not relevant. In any event, the application of the Ex Post Facto Clause to a sanction depends on whether that sanction is remedial or punitive. See Sprecher, 64 SEC Docket at 727-29 (and cases cited therein). For the reasons discussed above, we conclude that the Ex Post Facto Clause does not prohibit the imposition of a penny stock bar on Lincoln. ======END OF PAGE 11====== capital when, in fact, it had negative net capital. The NASD further found that First Alliance, through Lincoln, had charged excessive and fraudulent prices in the retail sales of seven penny stocks. The NASD concluded that such mark-ups were fraudulent, excessive, and inconsistent with just and equitable principles of trade. Based on these violations, the NASD expelled First Alliance from membership in the NASD and barred Lincoln from association with any NASD member. The NASD also fined both First Alliance and Lincoln, and held them jointly and severally liable for restitution in the amount of $2.5 million of the violative markups charged to the firm's customers. Lincoln argues that, because the NASD (which he characterizes as a governmental entity) has sanctioned him, his criminal conviction was punishment for the same conduct and thereby subjected him to Double Jeopardy. We disagree with Lincoln. For the reasons discussed above, we believe that the NASD's remedies are civil for purposes of the Double Jeopardy Clause. Moreover, the Double Jeopardy Clause applies only to the government. For purposes of the Double Jeopardy Clause, the NASD is a private party and, "while [it] is a closely regulated corporation, it is not a governmental agency . . . ." <(34)> Moreover, we disagree with his assertion that the alleged violative conduct in both proceedings was identical. The NASD charged Lincoln with recordkeeping violations, net capital violations, and excessive markups that constituted violations of the NASD's Rules of Fair Practice. In his criminal case, he was charged with securities fraud, conspiracy to commit securities fraud and interstate transportation of monies obtained by fraud. While markups were an element of the conduct alleged, <(35)> the criminal case included a variety of additional allegations of misstatements and omissions of material facts and a variety of violative sales practices neither charged nor found by the NASD. Thus, we conclude that Lincoln was not "punished" for the same offense for which he was disciplined by the NASD. Moreover, this issue is more properly raised in Lincoln's criminal proceeding, and Lincoln can pursue it on appeal of his conviction. <(36)> <(34)> Jones v. SEC, 115 F.3d 1173, 1183 (4th Cir. 1997). <(35)> See text accompanying n.3 supra. <(36)> Lincoln argues that any sanction imposed here is duplicative of the NASD's disciplinary action against him and that, moreover, we had the ability to review that 1991 action. We have previously rejected this argument. The Exchange Act contemplates multi-level enforcement proceedings that permit Commission administrative and injunctive actions, as well as self- regulatory organization disciplinary proceedings and criminal actions. (continued...) ======END OF PAGE 12====== IV. Lincoln also challenges the sanctions imposed by the law judge. The selection of a remedy that is in the public interest involves consideration of many factors. These include the egregiousness of the respondent's conduct, the sincerity of respondent's assurances against future violations, the defendant's recognition of the wrongful nature of his conduct, and the likelihood that defendant's occupation will present opportunities for future violations. <(37)> There is little doubt that Lincoln's violations were egregious. Lincoln was an active participant and conspirator in an ongoing pattern of fraud. Over many months and in numerous transactions in penny stocks, Lincoln and his co-conspirators continued to violate the securities laws and other federal laws in their endeavor to defraud their customers. <(38)> There is, moreover, much evidence in the record to indicate that Lincoln would be a danger to investors were he permitted to reenter the securities industry. Despite prompting by the law judge, Lincoln made no assurances that he will refrain from committing future acts of fraud. Lincoln also claims that, despite having worked in the securities industry for two years, he has essentially no knowledge of the securities laws. At times Lincoln denies having any knowledge of the firm's activity and blames Calvin L. Word, his former partner at Word Lincoln and vice president at First Alliance, for the firm's problems. <(39)> At <(36)>(...continued) We also have stated that a Commission-imposed bar order gives us the right to sue in court pursuant to Sections 21(d) or 21(e) of the Exchange Act and seek sanctions against a barred respondent who violates our order. Without a Commission bar, we would be limited to oversight of the NASD's actions with respect to persons subject to statutory disqualification. Howard F. Rubin, Securities Exchange Act Rel. No. 35179 (Dec. 30, 1994), 58 SEC Docket 1478, 1483-84. <(37)> See Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979), aff'd, 450 U.S. 91 (1981). <(38)> See Section II, supra. <(39)> "[M]y partner controlled the firm. But yeah, I mean I signed papers. I didn't know a lot of what was going on in that firm. I didn't -- wasn't aware of everything I was signing. The lawyers brought me stuff and said you sign it here. Calvin would be there with them. I'd go ahead and I'd sign some things." ======END OF PAGE 13====== other times, Lincoln claims to be aware of at least some of the fraudulent activity occurring at First Alliance. <(40)> Yet again, Lincoln appears to acknowledge some wrongdoing on his behalf, but blames the NASD and the Commission for not teaching him how to avoid breaking the law. Lincoln also is evasive regarding whether he intends ever to work in the securities business. At one point during the hearing Lincoln exclaims, "[l]eave me out of [the securities business] because I don't want nothing [sic] to do with it." Later, he adds, "And I would say to you that I am a Christian person. I am not going in a million -- in a million years I am not going to enter into securities stuff . . . ." On another occasion, however, Lincoln states that, "I would have to say that I might consider being a stock salesman for one of the firms. That's a possibility." Lincoln's felony conviction, evasiveness, and failure to demonstrate an understanding of his obligations under the federal securities laws warrant the inference that, if given the opportunity, Lincoln would commit further violations. The securities industry presents many opportunities for abuse, and, therefore, it is in the public interest to avoid permitting predatory individuals to expose investors to fraud. Many of the transactions that were the basis of the indictment filed against Lincoln involved low-priced stocks. For these reasons, the protection of public investors makes it appropriate to bar Lincoln from participation in any offering of penny stock and from association with a broker, a dealer, or a member of a national securities exchange or a registered securities association. An appropriate order will issue. <(41)> By the Commission (Chairman LEVITT and Commissioners JOHNSON, HUNT, CAREY, and UNGER). Jonathan G. Katz Secretary <(40)> "Did I knowingly break the law - - no. I fired people for drug use. I fired them for stock fraud, but you all never went on to investigate [a registered representative]. [That representative] cheated all these women in the Jesup garden group over here right near this prison. He cheated all these women there, you know, like I investigated it and fired him." <(41)> All the contentions advanced by the parties have been considered. They are rejected or sustained to the extent they are inconsistent or in accord with the views expressed herein. ======END OF PAGE 14====== ======END OF PAGE 15====== UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Rel. No. 39628 / February 9, 1998 Admin. Proc. File No. 3-8998 __________________________________________________ : In the Matter of : : William L. Lincoln : : __________________________________________________ ORDER IMPOSING REMEDIAL SANCTIONS On the basis of the Commission's opinion issued this day, it is ORDERED that William L. Lincoln be, and hereby is, barred from participation in any offering of penny stock, and it is further ORDERED that William L. Lincoln be, and hereby is, barred from being associated with any broker, dealer or member of a national securities exchange or a registered securities exchange. By the Commission. Jonathan G. Katz Secretary