04/07/2010 36 RESPONSE to Motion re 35 MOTION to Stay by James N. Turek filed by Securities And Exchange Commission. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Gegenheimer, Nancy) (Entered: 04/07/2010)
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Extract:
However, it should be pointed out that the SEC did not seek any emergency relief in this case to stop an ongoing fraud. The corporate entities that were part of the fraudulent scheme have been delisted pursuant to proceedings brought by the SEC under the Securities Exchange Act of 1934 Section 12(j), 15 U.S.C. §78(l). ]In these proceedings the Commission has revoked the registration of the securities of Plasticon International Inc., and TelcoBlue Inc. for failure to comply with the provisions of the Securities Exchange Act. Copies of the Commission’s orders revoking these registrations are attached hereto as Exhibit A and Exhibit B. As a result of these revocations, there is no imminent threat to the public, this action is to address past wrongs.
The one area of prejudice to the SEC is that delay impedes the ability to have witnesses testify before their memories fade, “[w]itnesses relocate, memories fade, and persons allegedly aggrieved are unable to seek vindication or redress for indefinite periods of time.” Fidelity Nat’l Title Ins. Co., 980 F.Supp. at 1024. However, the SEC believes that, in this case, much of the liability will be proven through documentary evidence. Moreover, through its investigation, the Commission has almost fully developed the record.
[...]
The SEC does not dispute that the issues in the criminal matter are substantially similar to the issues in this civil matter. However, there is no indictment yet and no indication of when there might be one. Mr. Turek previously asserted the Fifth Amendment during investigatory testimony, but in this civil matter Mr. Turek is pro se. He will be required to defend motions and the trial without the assistance of counsel while a criminal matter is underway.
7. Whether the Defendant has been indicted.
As discussed above, Mr. Turek has not yet been indicted. This is the single most compelling factor in denying a motion to stay. Nonetheless, the case law demonstrates that this fact is not absolutely determinative. The Court may, in its discretion decide to grant or deny a stay of civil proceedings, postpone civil discovery or impose protective orders and conditions when the interests of justice seem to require such actions. SEC v. Dresser industries, Inc. at 1375. The court must make such determinations in the light of the particular circumstances of the case. Id. If delay of the noncriminal proceeding would not seriously injure the public interest, a court may be justified in deferring it. Id. Walsh Sec. v. Cristo Prop. Mgmt., supra, (although no indictments have been returned, this action presents a strong case for a stay.); Silver v. McCamey, 221 F. 2d 873, 874-875 (D.C. Cir. 1955). Most of the cases discussed above, while directly on point as to the law, are not factually identical. In SEC v. Dresser Industries, Inc., supra, defendants were all represented by counsel and one defendant was a corporate entity. The question was whether they had to obey an SEC subpoena duces tecum while a parallel criminal investigation was ongoing, not whether they had to defend themselves against dispositive motions and/or at trial while pro se and while a criminal investigation was ongoing. In SEC v. Healthsouth Corporation, supra, at 1316 the court stated: “Because of the ongoing criminal investigation, defendant Scrushy has been placed in the precarious position of either waiving his Fifth Amendment rights and defending himself in the matter before this court, or asserting the privilege and probably losing this civil proceeding. While such a choice may not be unconstitutional, this court may still exercise its discretion to stay this case in the interest of justice.”
CONCLUSION
Because Mr. Turek is pro se and did not cite any authority in his Motion, the SEC has attempted to inform the Court of the most relevant case law on the issues raised in the Motion to assist the Court in exercising its discretion. The SEC is available to attend a hearing on this matter in the District Court in Lexington if it would assist the Court.
Dated: April 7, 2010 |
