Part 4: 07/15/2008 Doc 339
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V.
The SEC’s Assertions In Its Second Submission
The SEC is plainly wrong in its assertion that Altomare has failed to demonstrate categorically and in detail that it is financially impossible for him to pay any further amount towards the disgorgement judgment. Based upon the published decisions of the Second Circuit, and other courts, Altomare has met his burden.[24]
[24] The mischief worked by the Second Circuit’s standard which an alleged condemner must satisfy (“categorical and detailed showing of financial impossibility”) if interpreted literally and not subject to a “reasonableness” qualifier would violate due process and be fundamentally unfair because it requires a contemptor to prove a negative which is impossible to do.
He and his wife have made very substantial and expensive effort to establish his inability to pay. To date he has produced or filed for record, or both, in excess of TWO THOUSAND FIVE HUNDRED SIXTY (2,560) pages of documents, mostly financial and financial related. Most of the production was not even requested by the SEC in its first request for production and are not addressed, requested or referred to in the SEC’s statement (affidavit) of financial condition. (DX-49). Although incarcerated, Altomare has been compelled by the Commission to chase an ever shifting line in the sand attempting to satiate what now appears to be an insatiable appetite for documents and questions reaching further and further back in time when the critical question—and finding of fact that must be made by the Court—is current ability to pay. Altomare has not stood mute. He has not asserted a privilege against self-incrimination. During a day long deposition in extremely difficult circumstances and uncomfortable environment and after 58 days of incarceration under extreme conditions reserved for gross disciplinary infractions by non-compliant prisoners,[25] Altomare calmly, compliantly and responsively provided the best answers his memory allowed to almost 100 transactions involving 46 exhibits, most of which occurred more than 2 years ago.
[25] Without belaboring the point, the Court is requested to take judicial notice of the procedures emplaced at MCC, Park Row, New York for the treatment of inmates confined to the Special Housing Unit (“SHU”) wherein inmates are required to be maintained in single occupant, small cells, are only moved in “irons,” and handcuffed behind their backs, provided extremely limited access to telephone and fewer family visits than non-SHU inmates. No exceptions are made for civil contempt confines placed in the SHU for their safety, as is the case with Altomare.
Immediately after the deposition Altomare directed counsel to investigate and ferret supporting documents to explain the large dollar transactions which he anticipated could be better answered by the Rose law firm and by his wife’s resort to insurance and other documents.[26]
[26] Those better answers and additional documents were also immediately delivered to SEC counsel. For example, see DX-40 through DX-46 and DX-48.
Each of the SEC’s unfounded or irrelevant assertions are addressed separately next.
1. “And has instead responded only if and when confronted
with information obtained by the SEC…”
Initially, all of the SEC’s questions regarding ownership of assets, liabilities and requests for documents were limited to the period commencing January 1, 2007, except for federal income and gift tax returns and financial statements. (DX-49, III. E, F and G). Only securities, commodities, bank and other financial institution account statements were requested and were limited to the preceding 12 months. The items of deposit, withdrawal, credit, etc., showing to and from whom or which were first alluded to by the Court during the May 7, 2008 conference with counsel, greatly expanding the scope of inquiry and documentation. As a result of the Court’s announcement at conference, I arranged with Mrs. Altomare to obtain all items of deposit and withdrawal for the year 2007 at a cost in excess of $3,000.00. One week later, for the first time, SEC counsel requested all items of deposit, withdrawal, etc. dating back to January, 2006. As rapidly as Wachovia Bank could provide those documents those belatedly requested 2006 items were produced at a cost in excess of an additional $3,000.00.[27] Documents totaling 527 pages were voluntarily produced and placed in evidence during the February 4, 2008 evidentiary hearing. In all over TWO THOUSAND FIVE HUNDRED SIXTY (2,560) numbered pages and more than a dozen unnumbered pages of documents have been produced, most through Altomare’s initiative. Altomare testified in response to SEC’s and the Court’s questions during that hearing and again during the June 26, 2008 deposition.
[27] Wachovia Bank’s inexplicable delay in delivering the 2006 items was referenced in the first motion for relief.
2. “Altomare has not generated an accounting of the funds he obtained from Universal Express…”
Contrary to the SEC’s assertion, Altomare has accounted for every penny disbursed from the USXP account to him, his wife, and any third party on behalf of Altomare. All amounts were timely and properly booked as a debit against his loan account or his accrued salary account with the corporation during its more than 12 years since emerging from Chapter 11 bankruptcy proceedings. The SEC prepared and filed schedules of disbursements to Altomare, his wife, and Mr. Gunderson covering December 29, 2005 to August 24, 2007. (PX-14, PX-6, PX-8 and PX-10, respectively).
All wire transfers for Altomare’s benefit have been evidenced by wire transfer documents and on the USXP bank account monthly statements. The SEC and the Receiver have been in exclusive possession of the USXP bank records, including all transaction items, since September 7, 2007.
Altomare also has accounted for all disbursements from all existing Altomare accounts have been evidenced by source documents which include, of course, the name of the payee, the date and the amount of the transaction settled with the disbursement.
3. “…and has not completed the financial statement affidavit provided to him by the SEC.”
With all due respect, the Commission’s comments on this topic ignore the obvious. To begin with, the financial statement (DX-49) is limited to the period of January 1, 2007 forward except for federal income and gift tax returns and financial statements, all of which were produced as early as the February 4, 2008 hearing. The auto leases, property ownership records, mortgage encumbrances on the properties, mechanic’s liens on the Toscano condominium property by the equipment vendors/installers, credit card histories, bank records, both monthly statements and all transaction items, and more than a dozen miscellaneous other records covering a substantially larger period of time predating January 1, 2007, have been produced. Much of the foregoing was the subject of questions put to Altomare at both the February 4, 2008 hearing and the June 26, 2008 deposition. The SEC is possessed with the answers and supporting documents covering every subject in its financial statement (DX-49), both for all of 2007 and all of 2006 and the first half of 2008.
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07/15/2008 339 RESPONSE in Opposition re: 191 MOTION for Sanctions and Entry of Contempt against Universal Express, Altomare and Gunderson. Response to Plaintiff's Second Submission on Issue of Contempt and Second Motion for Relief from Contempt. Document filed by Richard A. Altomare. (Tifford, Arthur) (Entered: 07/15/2008) |
