UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event
reported) February 24,
2010
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CHINA
LOGISTICS GROUP, INC.
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(Exact
name of registrant as specified in its
charter)
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Florida
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0-31497
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65-1001686
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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23F.
Gutai Beach Building No. 969, Zhongshan Road (South), Shanghai,
China
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200011
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code
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(562)
408-3888
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N/A
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(Former
name or former address, if changed since last
report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[ ] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[ ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
On
October 19, 2009, the Court in this case entered a Default Judgment of Permanent
Injunction and Other Relief against Mr. Aubel. The default judgment enjoins Mr.
Aubel from violating Sections 5(a), and 5(c) of the Securities Act of 1933, and
Sections 10(b), 13(d), and 16(a) of the Securities Exchange Act of 1934, and
Rules 10b-5, 13d-1, and 16a-3, thereunder. In addition, the default judgment
also bars Mr. Aubel from participating in any offering of a Penny Stock,
pursuant to Section 21(d) of the Securities Exchange Act of 1934.
As
previously disclosed, the Company cooperated with the SEC in this lawsuit and
while current management assumed control of the Company following the events
that gave rise to the lawsuit, the Company consented to the entry of a Permanent
Injunction and Other Relief to resolve the liability aspects of the complaint in
February 2009. The injunction also provides that the Court will
determine whether it is appropriate to order disgorgement and, if so, the amount
of the disgorgement.
On
February 24, 2010 the SEC filed a motion and memorandum of law to set
disgorgement and civil penalty amounts as to the Company and Messrs. Harrell and
Aubel. The SEC’s motion alleges that as a result of a fraudulent
arrangement between the Company and Mr. Aubel, he was permitted to convert his
loans to the Company’s common stock at $0.01 per share which allowed the Company
to benefit by writing off $930,000 in debt it owed to Mr. Aubel. The
SEC seeks disgorgement from the Company of $931,000 representing the principal
amount of the loans converted plus prejudgment interest in the amount of
$147,489.77 for a total disgorgement obligation of $1,078,489.77. The
SEC’s motion also seeks disgorgement and prejudgment interest from Mr. Aubel of
$6,012,244.30 and civil penalties of $130,000 against Mr. Harrell and $250,000
against Mr. Aubel.
Management
intends to object to the SEC’s motion as to disgorgement against the Company.
However, litigation is subject to inherent uncertainties and an unfavorable
ruling against it imposing disgorgement of $1,078,489.77 could occur. Were an
unfavorable ruling to occur, it would have a material adverse impact on the
business and results of operations of the Company and its ability to continue as
a going concern.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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CHINA
LOGISTICS GROUP, INC.
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Date: March
3, 2010
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By:
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/s/ Wei Chen
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Wei
Chen,
CEO
and President
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