sec opp glisson's motion for stay show_temp

8/3/2019 SEC Opp Glisson's Motion for Stay Show_temp

http://slidepdf.com/reader/full/sec-opp-glissons-motion-for-stay-showtemp 1/11

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JOHN B. BULGOZDY, Cal Bar No. 219897E-mail: [email protected] J. VAN HAVERMAAT, Cal. Bar No. 175761E-mail: [email protected]

Attorney for Plaintiff Securities and Exchange CommissionRosalind R. Tyson, Regional DirectorMichele Wein Layne, Associate Regional DirectorJohn W. Berry, Regional Trial Counsel5670 Wilshire Boulevard, 11th FloorLos Angeles, California 90036Telephone: (323) 965-3998Facsimile: (323) 965-3908

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

SECURITIES AND EXCHANGECOMMISSION,

Plaintiff,

vs.

MARCO GLISSON,

Defendant

Case No. 2:09-cv-00104-LDG-GWF

PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S OPPOSITION TO DEFENDANT GLISSON’S MOTION FOR STAY

Case 2:09-cv-00104-LDG-GWF Document 90 Filed 11/30/11 of 9



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I. INTRODUCTION

Defendant Marco Glisson’s (“Glisson”) Motion for Stay lacks merit andshould be denied because there is no parallel criminal proceeding that is implicated

by this case. By Glisson’s own admission, the criminal investigation that is the

basis of his motion “is said to focus, not on the broker/dealer activities alleged by

[the Commission] in this case, but on a prior, unrelated tax obligation of Glisson

and his alleged efforts to avoid payment thereof by reducing the visibility of his

assets . . . .” (Defendant Glisson’s Motion for Stay at page 21, lines 11-12

(emphasis added)). By Glisson’s own admission, the criminal investigation

involves Glisson’s prior tax obligations and his efforts to evade payment of his

taxes, and is not a parallel criminal investigation of the same conduct that is the

subject of the Commission’s civil enforcement action for violation of the federal

securities laws. Glisson provides no support for the proposition that a defendant in

a civil action should be able to stay such proceedings, for an indefinite period,

because of an unrelated criminal investigation. To the contrary, the authority cited

by Glisson shows that a stay is not appropriate in this case – even if the criminal

proceedings involved a parallel investigation, and the motion for stay should be

denied.

Earlier in these proceedings, in opposing plaintiff Securities and Exchange

Commission’s (“Commission”) efforts to obtain discovery of Glisson’s 2010

activities in CMKM securities, Glisson informed the Court: “Glisson would like to

go to trial as soon as possible.” (Glisson’s Opposition to Commission’s Renewed

Motion to Further Extend Additional Discovery Period or to Clarify (Docket No.

54), at page 7, lines 23-24.) The Court should honor Glisson’s request to “go to

trial as soon as possible,” and deny the motion for stay.




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II. LEGAL ARGUMENT

A.

A Defendant in a Civil Action is Not Entitled to a Stay of Discovery Even When Criminal Charges Have Been Filed

The Supreme Court has held that a defendant is not entitled to a stay of civil

litigation merely because criminal charges are pending against him. It is well

established that parallel civil and criminal proceedings can be brought and pursued

against the same defendant “simultaneously or successively.” See Standard Sanitary

Mfg. Co. v. United States, 226 U.S. 20, 52, 33 S. Ct. 9, 16 (1912). “In the absence of

substantial prejudice to the rights of the parties involved, such parallel proceedings

are unobjectionable.” SEC v. Dresser Industries, Inc., 628 F.2d 1368, 1374 (D.C.

Cir. 1980). “The Constitution does not ordinarily require a stay of civil proceedings

pending the outcome of criminal proceedings.” Keating v. OTS, 45 F.3d 322, 324

(9th Cir. 1995); accord FSLIC v. Molinaro, 889 F.2d 899, 902 (9th Cir. 1989).

In Keating, the Ninth Circuit rejected Charles Keating’s argument that

overlapping civil and criminal proceedings entitled him to a stay of the civil

proceedings. In affirming an administrative law judge’s refusal to stay the Office of

Thrift Supervision’s civil case against Keating, the Ninth Circuit ruled that “[a]

defendant has no absolute right not to be forced to choose between testifying in a

civil matter and asserting his Fifth Amendment privilege. Not only is it permissible

to conduct a civil proceeding at the same time as a related criminal proceeding, even

if that necessitates invocation of the Fifth Amendment privilege, but it is even

permissible for the trier of fact to draw adverse inferences from the invocation of the

Fifth Amendment in a civil proceeding.” Keating, 45 F.3d at 326 (citing Baxter v.

Palmigiano, 425 U.S. 308, 318, 96 S. Ct. 1551, 1557, 47 L.Ed.2d 810 (1976)).

In FSLIC v. Molinaro, defendant argued that the FBI was investigating the

same activities that caused the FSLIC to file a civil action against him. The Ninth




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Circuit upheld the district court’s denial of Molinaro’s motion to stay the civil

proceeding, holding that while “a district court may stay civil proceedings pendingthe outcome of parallel criminal proceedings, such action is not required by the

Constitution” and the decision to stay should be made “in light of the particular

circumstances and competing interests involved in the case.” Molinaro, 889 F.2d

at 902 (citations omitted).

In this case, no indictment has been returned by any state or federal

authorities, which undermines any argument for a stay. Id . at 903 (“case for

staying civil proceedings is ‘a far weaker one’ when ‘[n]o indictment has been

returned [, and] no Fifth Amendment privilege is threatened” (citing Dresser

Indus., 628 F.2d at 1376)). Courts generally decline to stay civil proceedings when

a related criminal matter is still in the investigatory stage. See, e.g., SEC v.

Treadway, No. 04-Civ-3464 WM JCF, 2005 WL 713826, at *3 (S.D.N.Y. Mar. 30,

2005); In re Worldcom, Inc. Sec. Litig., Nos. 02 Civ. 3288, 02 Civ. 4816, 2002 WL

31729501, at *4 (S.D.N.Y. Dec. 5, 2002).

B. The Factors to be Considered Militate Against a Stay in This Case

In Keating and Molinaro, the Ninth Circuit identified the factors that

generally should be considered when a stay is requested:

(1) the interest of the plaintiff in proceeding with the litigation or any

particular aspect of it, and the potential prejudice to the plaintiff of a delay;

(2) the burden which any particular aspect of the proceedings may impose

on defendants;

(3) the convenience of the court in the management of its cases, and the

efficient use of judicial resources;

(4) the interests of persons not parties to the civil litigation; and

(5) the interests of the public in the pending civil and criminal litigation.




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Molinaro, 889 F.2d at 903 (citations omitted). As described below, these factors

favor denying Glisson’s motion for a stay.1. A Stay Would Substantially Prejudice the Commission

The Commission has a strong and legally cognizable interest in timely

pursuing civil actions to obtain judgments of permanent injunction against

defendants, obtain orders that ill-gotten gains be disgorged, and seek the

imposition of civil penalties to punish wrongdoers for their violations of the federal

securities laws. See Molinaro, 889 F.2d at 903; FTC v. J.K. Publications, Inc., 99

F. Supp. 2d 1176, 1197 (C.D. Cal. 2000) (recognizing government agencies’ strong

interest in avoiding delay in civil enforcement proceedings).

The Commission brought this case in the public interest, to protect investors

from being sold deregistered securities in CMKM. The Commission deregistered

CMKM’s securities in 2005 because CMKM was delinquent in making mandatory

public filings concerning its operations, and the Commission’s order was made to

protect the investing public, the integrity of the markets, and the public interest.

Indeed, Glisson admitted that his existing CMKM holdings became worthless after

the shares were deregistered in 2005. Once CMKM securities were deregistered, all

trading in CMKM was halted on any national exchange, and by any registered

broker or dealer.

Glisson’s conduct in CMKM securities effectively circumvented the

Commission’s efforts to protect the public. Moreover, Glisson renewed his illegal

conduct in 2010 – in direct contravention of a sworn statement he made to the Court

in his successful effort to avoid summary judgment. Glisson lied to this Court that

he would never trade CMKM securities again. Glisson profited substantially from

his duplicity – realizing net proceeds in excess of $1.6 million for a few months of

activity in 2010. At any time, without the Court’s or the Commission’s knowledge,




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Glisson could resume his illegal activities in CMKM securities to the detriment of

innocent investors who are duped into believing CMKM securities have some value.A stay would prejudice the Commission and the public interest in full

disclosure in the securities markets, and the integrity of the markets.

2. Proceeding With This Action Will Not Impose an Undue

Burden on Defendant Because No Criminal Proceeding is

Pending

As previously noted, “[t]he case for staying civil proceedings is ‘a far

weaker one’ when ‘[n]o indictment has been returned . . .’” Molinaro, 889 F.2d at

903 (citing Dresser , 628 F.2d at 1376 (“‘stays will generally not be granted before

an indictment is issued’”)); SEC v. Brown, No. 06-1213, 2007 WL 4191998 (D.

Minn. Nov. 21, 2007) (finding no basis for stay even though defendant had

received a “target letter” from the U.S. Attorney’s Office).

Thus, courts routinely decline to stay civil proceedings when a related

criminal matter is still in the investigatory stage. See, e.g., SEC v. Treadway, No.

04-CIV-3463 WM JCF, 2005 WL 713826, at *3 (S.D.N.Y. Mar. 30, 2005); In re

Worldcom, Inc. Sec. Litig., Nos. 02 Civ. 3288, 02 Civ. 4816, 2002 WL 31729501,

at *4 (S.D.N.Y. Dec. 5, 2002); SEC v. Sandifur , No. C05-1631C, 2006 WL

1719920 (W.D. Wash. June 19, 2006); SEC v. Rivelli, No. Civ.A 05-CV-1039-

RPM, 2005 WL 2789317 (D. Col. Oct. 26, 2005).

In the absence of an indictment, the Court has no way of knowing what

conduct a hypothetical future indictment might cover if one is ever issued. The U.S.

Attorney’s Office has not intervened to support defendants’ request for a stay. This

uncertainty about whether and when an indictment may or may not issue is why the

Ninth Circuit has held that the case for a stay in such circumstances is “far weaker”

than when there is an actual, pending indictment. Molinaro, 889 F.2d at 903.




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investors to wait in limbo for the Commission’s enforcement action to proceed,

based solely on speculation about some future indictment, is contrary to theinterests of these investors. Moreover, since Glisson has shown the ability and

propensity to resume his trafficking of deregistered CMKM securities at will, a

stay is contrary to the interests of investors who may be duped into buying

deregistered CMKM securities through Glisson’s market making activities. The

interests of the non-party investors weigh heavily against the requested stay.

5. The Public Interest Strongly Favors the Timely Prosecution

of This Action

The public interest does not favor a stay. The Commission brought this civil

enforcement action in the public interest. The Commission, which is statutorily

charged with the enforcement of the federal securities laws in the public interest,

has a strong interest in the timely prosecution and resolution of civil enforcement

proceedings. A stay would run counter to the public’s compelling interest in the

fair, efficient, effective, and swift enforcement of the federal securities laws. See

Keating, 45 F.3d at 325 (recognizing public interest favors timely resolution of

civil action and weighs against stay); Molinaro, 889 F.2d at 903 (same). Indeed, in

Keating, the Ninth Circuit held that the public’s interest in “a speedy resolution of

the controversy” outweighed Keating’s asserted interest in avoiding reliance upon

his Fifth Amendment rights, and that the compelling public “concern for efficient

administration would [be] unnecessarily impaired” by the imposition of a stay.

Keating, 45 F.3d at 325.

///

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///

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III. CONCLUSION

For the foregoing reasons, the defendants’ motion for a stay should bedenied in all respects.

Date: November 30, 2011 Respectfully submitted,

/s/ John B. Bulgozdy

John B. BulgozdyDavid J. Van HavermaatAttorney for Plaintiff Securities and Exchange Commission




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PROOF OF SERVICE

I am over the age of 18 years and not a party to this action. My business address is:

[X] U.S. SECURITIES AND EXCHANGE COMMISSION, 5670 WilshireBoulevard, 11th Floor, Los Angeles, California 90036-3648Telephone No. (323) 965-3998; Facsimile No. (323) 965-3908.

On November 30, 2011, I caused to be served the document entitled PLAINTIFF

SECURITIES AND EXCHANGE COMMISSION’S OPPOSITION TO

DEFENDANT GLISSON’S MOTION FOR STAY on all the parties to thisaction addressed as stated on the attached service list:

[ ] OFFICE MAIL: By placing in sealed envelope(s), which I placed forcollection and mailing today following ordinary business practices. I amreadily familiar with this agency’s practice for collection and processing of

correspondence for mailing; such correspondence would be deposited withthe U.S. Postal Service on the same day in the ordinary course of business.

[ ] PERSONAL DEPOSIT IN MAIL: By placing in sealedenvelope(s), which I personally deposited with the U.S. Postal Service.Each such envelope was deposited with the U.S. Postal Service at LosAngeles, California, with first class postage thereon fully prepaid.

[ ] EXPRESS U.S. MAIL: Each such envelope was deposited in afacility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postagepaid.

[ ] HAND DELIVERY: I caused to be hand delivered each such envelope tothe office of the addressee as stated on the attached service list.

[ ] UNITED PARCEL SERVICE: By placing in sealed envelope(s)designated by United Parcel Service (“UPS”) with delivery fees paid orprovided for, which I deposited in a facility regularly maintained by UPS ordelivered to a UPS courier, at Los Angeles, California.

[ ] ELECTRONIC MAIL: By transmitting the document by electronic mailto the electronic mail address as stated on the attached service list.

[X] E-FILING: By causing the document to be electronically filed via the

Court’s CM/ECF system, which effects electronic service on counsel whoare registered with the CM/ECF system.

[ ] FAX: By transmitting the document by facsimile transmission. Thetransmission was reported as complete and without error.

I declare under penalty of perjury that the foregoing is true and correct.

Date: November 30, 2011 /s/ John B. BulgozdyJohn B. Bulgozdy

Case 2:09-cv-00104-LDG-GWF Document 90-1 Filed 11/30/11 Page 1 of 2



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SEC v. MARCO GLISSONUnited States District Court - District of Nevada

Case No. 2:09-cv-00104-LDG-GWF(LA-3028)

SERVICE LIST

Frederick A. Santacroce, Esq.706 South Eighth StreetLas Vegas, NV 89101Email: [email protected]

Attorney for Marco Glisson

Robert H. Bretz, Esq.578 Washington Boulevard, Suite 843Marina del Rey, CA 90292Email: [email protected]

Attorney for Marco Glisson

Case 2:09-cv-00104-LDG-GWF Document 90-1 Filed 11/30/11 Page 2 of 2

sec opp glisson's motion for stay show_temp

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