SEC v. Curtis ( 2011 )

09-2782-cv
SEC v. Curtis
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL
RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY
ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Daniel Patrick Moynihan
United States Courthouse, 500 Pearl Street, in the City of New
York, on the 19th day of August, two thousand eleven.
PRESENT: RALPH K. WINTER,
BARRINGTON D. PARKER,
DENNY CHIN,
Circuit Judges.
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SECURITIES AND EXCHANGE COMMISSION,
Plaintiff-Appellee,
-v.- 09-2782-cv
PHILLIP J. MILLIGAN,
Defendant-Appellant,
GRANT R. CURTIS, LEO MANGAN, TIMOTHY H.
MASLEY, JAMES W. NEAREN, RAIMOND IRNI,
PEDRO DIBRITO GOMEZ, DONALD E. KESSLER,
DAVID R. BEHANNA, ANDREA VARSI,
JONATHAN D. LYONS, KENNETH A. ORR,
LILLIAN M. VINCI, ANN MARIE NOEL,
MICHAEL V. LIPKIN, JOSHUA S. SHAINBERG,
ROBERT L. SHATLES,
Defendants.
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FOR PLAINTIFF-APPELLEE: Mark D. Cahn, General
Counsel; Jacob H. Stillman,
Solicitor; Mark Pennington,
Assistant General Counsel;
Catherine A. Broderick,
Counsel to the Assistant General
Counsel, Securities and Exchange
Commission, Washington, D.C.
FOR DEFENDANT-APPELLANT: Phillip J. Milligan, pro se, New
York, New York.
Appeal from a judgment of the United States District
Court for the Eastern District of New York (Gershon, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the district court is AFFIRMED.
Defendant-Appellant Phillip J. Milligan, pro se,
appeals from the district court's final judgment and injunction
granting Plaintiff-Appellee Securities and Exchange Commission
(the "SEC") summary judgment and various forms of relief, in
connection with Milligan’s violations of Section 17(a) of the
Securities Act of 1933, 15 U.S.C. § 77q(a); Section 10(b) of the
Securities Exchange Act of 1934, 15 U.S.C. § 78j(b); and Rule
10b-5, 17 C.F.R. § 240.10b-5. We assume the parties’ familiarity
with the facts, proceedings below, and issues on appeal.
We review an order granting summary judgment de novo
and ask whether the district court properly concluded that there
were no genuine issues of material fact and that the moving party
was entitled to judgment as a matter of law. See Miller v.
Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003). In
determining whether there are genuine issues of material fact, we
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are "required to resolve all ambiguities and draw all permissible
factual inferences in favor of the party against whom summary
judgment is sought." Terry v. Ashcroft, 336 F.3d 128, 137 (2d
Cir. 2003) (internal quotation marks omitted). "[C]onclusory
statements or mere allegations [are] not sufficient to defeat a
summary judgment motion." Davis v. New York, 316 F.3d 93, 100
(2d Cir. 2002).
This Court reviews the imposition of disgorgement,
civil penalties, and prejudgment interest for an abuse of
discretion. See SEC v. AbsoluteFuture.com, 393 F.3d 94, 96 (2d
Cir. 2004) (per curiam) (disgorgement); SEC v. Kern, 425 F.3d
143, 153-54 (2d Cir. 2005) (civil penalties); New England Ins.
Co. v. Healthcare Underwriters Mut. Ins. Co., 352 F.3d 599, 602-
03 (2d Cir. 2003) (prejudgment interest). "A district court has
abused its discretion if it based its ruling on an erroneous view
of the law or on a clearly erroneous assessment of the evidence,
or rendered a decision that cannot be located within the range of
permissible decisions." See In re Sims, 534 F.3d 117, 132 (2d
Cir. 2008) (citation, brackets, and internal quotation marks
omitted).
With respect to the district court’s grant of summary
judgment, we affirm the district court’s judgment for
substantially the reasons stated by the magistrate judge
(Pohorelsky, M.J.) in his thorough and well-reasoned June 5, 2007
report and recommendation. See SEC v. Milligan, No. 99-CV-7357
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(E.D.N.Y. June 5, 2007) (Pohorelsky, M.J.), ECF No. 272, adopted
by SEC v. Milligan, No. 99-CV-7357 (E.D.N.Y. Oct. 2, 2007)
(Gershon, J.), ECF No. 278.
With respect to disgorgement, the record shows that the
magistrate judge conducted an evidentiary hearing, considered the
parties’ arguments and submissions, and evaluated Milligan’s
credibility before concluding that (1) the SEC had met its burden
of demonstrating that $93,600 was an appropriate amount to be
disgorged and (2) Milligan failed to demonstrate his receipt of a
lesser amount. SEC v. Milligan, 2009 WL 1162633, at *1-4
(E.D.N.Y. April 29, 2009); see SEC v. Patel, 61 F.3d 137, 139-40
(2d Cir. 1995) (holding that disgorgement "need only be a
reasonable approximation of profits causally connected to the
violation," and that any "risk of uncertainty in calculating
disgorgement should fall on the wrongdoer whose illegal conduct
created that uncertainty" (brackets and internal quotation marks
omitted)).
With respect to prejudgment interest, the
magistrate judge, in accordance with SEC v. First Jersey
Securities, Inc., 101 F.3d 1450, 1476 (1996), considered the
requisite factors before recommending the imposition of a
prejudgment interest award, noting specifically the remedial
goals of the statutes that Milligan had violated and his refusal
to accept responsibility for his unlawful conduct.
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Regarding the imposition of civil penalties, the record
shows that, in reaching his decision to recommend third-tier
civil penalties, the magistrate judge considered appropriate
factors, such as Milligan’s financial status and the substantial
risk of loss to his customers, as well as his participation in
the fraudulent scheme, "persistent denial of responsibility" for
such participation, and "blatant attempts to deceive the court in
seeking to escape the consequences of his actions." Milligan,
No. 99-CV-7357, slip op. at 17-18 (E.D.N.Y. June 5, 2007); see
SEC v. Haligiannis, 470 F. Supp. 2d 373, 386 (S.D.N.Y. 2007) ("In
determining whether civil penalties should be imposed, and the
amount of the fine, courts look to a number of factors, including
(1) the egregiousness of the defendant's conduct; (2) the degree
of the defendant's scienter; (3) whether the defendant's conduct
created substantial losses or the risk of substantial losses to
other persons; (4) whether the defendant's conduct was isolated
or recurrent; and (5) whether the penalty should be reduced due
to the defendant's demonstrated current and future financial
condition.").
The magistrate judge balanced the requisite factors and
considered the statutory requirements before recommending these
forms of relief, and there is no indication that his
recommendation, or the district court’s subsequent adoption of
it, was based "on an erroneous view of the law or on a clearly
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erroneous assessment of the evidence," or that the decisions
reached "cannot be located within the range of permissible
decisions." See Sims, 534 F.3d at 132 (internal quotation marks
omitted).
We have considered Milligan’s other arguments on appeal
and have found them to be without merit. Accordingly, the
judgment of the district court is hereby AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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