SEC v. Kokesh

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT December 6, 2019
_________________________________
Elisabeth A. Shumaker
Clerk of Court
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff - Appellee,
v. No. 19-2000
(D.C. No. 1:09-CV-01021-SMV-LAM)
CHARLES R. KOKESH, (D.N.M.)
Defendant - Appellant.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before LUCERO, O’BRIEN, and CARSON, Circuit Judges.
_________________________________
Charles Kokesh appeals from the district court’s amended final judgment in
favor of the Securities and Exchange Commission (“SEC”). Exercising jurisdiction
under 28 U.S.C. § 1291, we affirm.
I
After a jury found Kokesh guilty of violating securities laws, the district court
entered a judgment in favor of the SEC permanently enjoining him from future
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
violations of securities laws and ordering a civil penalty of $2.4 million,
disgorgement of $34.9 million, and $18.1 million in prejudgment interest. The
district court recognized that 28 U.S.C. § 2462 establishes a five-year limitations
period “for the enforcement of any civil fine, penalty, or forfeiture . . . from the date
when the claim first accrued.” Id. It limited the civil penalty amount accordingly but
held § 2462 does not apply to the injunction or the disgorgement order.
Kokesh appealed. See SEC v. Kokesh, 834 F.3d 1158 (10th Cir. 2016)
(“Kokesh I”), rev’d, 137 S. Ct. 1635 (2017). He argued that § 2462 barred the
injunction and the disgorgement order because the claims first accrued more than five
years before the SEC brought the action. Id. at 1162. He also contended the district
court erred in excluding evidence of attorney and accountant participation in the
transactions, which he claimed would have shown that he lacked knowledge of any
misconduct. Id. We rejected both arguments. Agreeing with the district court, we
held that neither the injunction nor the disgorgement order was subject to § 2462. Id.
at 1162-67. We further held that the evidentiary issue was waived due to inadequate
briefing. Id. at 1167-68.
Kokesh sought review from the Supreme Court, presenting a single question:
“Does the five-year statute of limitations in 28 U.S.C. § 2462 apply to claims for
‘disgorgement’?” Petition for Writ of Certiorari at i, Kokesh v. SEC, 137 S. Ct. 1635(2017) (No. 16-529). The Supreme Court granted review and held that SEC
disgorgement is a penalty subject to § 2462. Kokesh, 137 S. Ct. at 1639, 1642, 1645.
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On remand, the SEC requested that this court order disgorgement of
$5,004,773, representing the amounts Kokesh converted within the limitations
period. See SEC v. Kokesh, 884 F.3d 979, 981 (10th Cir. 2018) (“Kokesh II”). In
response, Kokesh contended that the SEC’s claims first accrued more than five years
before it filed the action, rendering the entire action time-barred. Id. We held that
Kokesh’s “misappropriations of funds . . . are properly viewed as discrete violations,
. . . with each unlawful taking being actionable for five years after its occurrence.”
Id. at 984-85. We therefore reversed the district court’s judgment and remanded with
instructions to enter an order requiring disgorgement of $5,004,773. Id. at 985.
Before the district court, the SEC requested the court enter an award of
prejudgment interest in addition to the disgorgement Kokesh II had ordered. Kokesh
objected, asserting that the district court should reject any relief other than an order
of disgorgement of $5,004,773. The district court determined that Kokesh II did not
preclude an award of prejudgment interest. It entered an amended final judgment in
favor of the SEC enjoining Kokesh from future violations of the securities laws and
ordering him to pay a civil penalty of $2,354,593, disgorgement totaling $5,004,773,
and prejudgment interest in the amount of $2,646,466.25. Kokesh now appeals from
that amended final judgment.
II
Because Kokesh proceeds pro se in this appeal, we liberally construe his
filings. Walters v. Wal-Mart Stores, Inc., 703 F.3d 1167, 1173 (10th Cir. 2013). But
we do not “assume the role of advocate and make his arguments for him.” Id.
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(quotation omitted). Moreover, our liberal construction does not extend to filings in
the earlier proceedings because he was previously represented by counsel. Celli v.
Shoell, 40 F.3d 324, 327 (10th Cir. 1994).
A
Kokesh argues that § 2462 is jurisdictional and precludes this action in its
entirety. We declined to address this issue in Kokesh I. 834 F.3d at 1167. We do
the same in this appeal.
Whether § 2462 is jurisdictional matters only if all of the SEC’s claims first
accrued before October 27, 2004, the undisputed date on which the five-year
limitations period began to run. If any of the SEC’s claims are timely, then § 2462
would not bar the action in its entirety, even if it were jurisdictional. Kokesh’s
jurisdictional argument thus rests upon his argument that Kokesh II erred in holding
that some of the SEC’s claims are timely.
Kokesh II held that each act of misappropriation should be considered
separately and that the SEC has five years to bring a claim as to a particular act. 884
F.3d at 984-85. Because we held that not all of the SEC’s claims were time-barred,
we directed the district court to enter judgment for the SEC on the timely claims. Id.
at 985.
Kokesh II is the law of the case. “The law of the case doctrine provides that
when a court decides upon a rule of law, that decision should continue to govern the
same issues in subsequent stages in the same case.” Dobbs v. Anthem Blue Cross &
Blue Shield, 600 F.3d 1275, 1279 (10th Cir. 2010) (quotation omitted). “[T]he
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decision of the appellate court establishes the law of the case and ordinarily will be
followed by both the trial court on remand and the appellate court in any subsequent
appeal.” Id. at 1280 (quotation omitted). There are three “exceptionally narrow
circumstances” in which we depart from the law of the case: “(1) when the evidence
in a subsequent trial is substantially different; (2) when controlling authority has
subsequently made a contrary decision of the law applicable to such issues; or (3)
when the decision was clearly erroneous and would work a manifest injustice.”
United States v. Alvarez, 142 F.3d 1243, 1247 (10th Cir. 1998).
The first two exceptions do not apply in this case. To the extent that Kokesh
argues Kokesh II was “clearly erroneous and would work a manifest injustice,” he
faces a “formidable task.” Id. He has not given us any reason to believe the
exception applies. During the remand proceedings, rather than challenging Kokesh II
by contesting timeliness or the SEC’s calculations, Kokesh conceded the district
court should enter the disgorgement order and instead focused on the SEC’s new
request for prejudgment interest.
Because Kokesh’s arguments about the accrual of the SEC’s claims are barred
by the law of the case, any decision as to whether § 2462 is jurisdictional would be
advisory.
B
Kokesh also argues the district court erred by excluding evidence of attorneys’
and accountants’ participation in the transactions held to be illegal. He raised this
argument in Kokesh I, but we held the argument waived due to inadequate briefing
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and affirmed the exclusion of the evidence. 834 F.3d at 1167-68. Because Kokesh
failed to challenge that portion of Kokesh I before the Supreme Court, he has
abandoned the issue. We decline to resurrect it on appeal. See Mason v. Okla. Tpk.
Auth., 182 F.3d 1212, 1214 (10th Cir. 1999) (explaining that issues properly before
the court are limited by the scope of the party’s prior appeal, and that issues waived
earlier in a proceeding may not be revived on remand); Martinez v. Roscoe, 100 F.3d
121, 123 (10th Cir. 1996) (“[A] legal decision made at one stage of litigation,
unchallenged in a subsequent appeal when the opportunity to do so existed, becomes
the law of the case for future stages of the same litigation, and the parties are deemed
to have waived the right to challenge that decision at a later time.” (quotation
omitted)).
C
In his reply brief, Kokesh also challenges the permanent injunction and the
civil penalty order. But arguments raised for the first time in a reply brief are
waived. See CEEG (Shanghai) Solar Sci. & Tech. Co. v. LUMOS LLC, 829 F.3d
1201, 1208 (10th Cir. 2016). Moreover, Kokesh has not previously challenged the
civil penalty, and he did not appeal the portion of Kokesh I regarding the injunction
to the Supreme Court.
III
Kokesh did not raise on appeal the objections he made before the district court
on remand from Kokesh II, thereby abandoning those contentions. See Bronson v.
Swensen, 500 F.3d 1099, 1104 (10th Cir. 2007). Having addressed in Kokesh II and
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the unappealed portion of Kokesh I the arguments that Kokesh did make in his
opening brief, we decline to entertain them again. The decision of the district court
is AFFIRMED.
Entered for the Court
Carlos F. Lucero
Circuit Judge
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