Securities and Exchange Comm. v. Lee Farka
UNPUBLISHED PER CURIAM OPINION filed. Motion disposition in opinion--denying Motion for abeyance (Local Rule 12(d)) [999281684-2] Originating case number: 1:10-cv-00667-LMB-TRJ Copies to all parties and the district court/agency. . Mailed to: Lee Bentley Farkas. [13-1757]
Pg: 1 of 9
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff – Appellee,
LEE BENTLEY FARKAS,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.
Leonie M. Brinkema,
District Judge. (1:10-cv-00667-LMB-TRJ)
January 31, 2014
February 11, 2014
Before MOTZ, DAVIS, and WYNN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Lee Bentley Farkas, Appellant Pro Se. Catherine Anne Broderick,
David Lisitza, UNITED STATES SECURITIES & EXCHANGE COMMISSION,
Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
Pg: 2 of 9
Lee Bentley Farkas was convicted in 2011 of one count
of conspiracy to commit bank, wire, and securities fraud; six
filed a civil enforcement action alleging that Farkas violated
the Securities Act of 1933, see 15 U.S.C. § 77q(a) (2012), the
78m(b)(2), (b)(5) (2012), and the Exchange Act Rules, see 17
C.F.R. §§ 240.10b-5, 240.12b-20, 240.13a-1, 240.13a-11, 240.13a13, 240.13b2-1 (2013).
The SEC sought, among other relief, a
violations of the securities laws and an order prohibiting him
registered securities or was required to make financial reports
to the SEC, or from serving in a senior management or control
institution or holding a position involving financial reporting
at a public company.
unsuccessful direct appeal of his conviction and sentence, see
Pg: 3 of 9
(unpublished), the SEC moved for summary judgment in the civil
action, arguing that, under the doctrine of collateral estoppel,
Farkas’ conviction conclusively established his violation of the
Following a response from Farkas, in which he raised certain
challenges to the application of collateral estoppel, the court
summary judgment as to all claims, and imposed all requested
Farkas appeals this order.
estoppel, a party must show that
(1) the issue or fact is identical to the one
previously litigated; (2) the issue or fact was
actually resolved in the prior proceeding; (3) the
issue or fact was critical and necessary to the
judgment in the prior proceeding; (4) the judgment in
the prior proceeding is final and valid; and (5) the
party to be foreclosed by the prior resolution of the
issue or fact had a full and fair opportunity to
litigate the issue or fact in the prior proceeding.
In re Microsoft Corp. Antitrust Litig., 355 F.3d 322, 326 (4th
collateral estoppel de novo, United States v. Fiel, 35 F.3d 997,
1005 (4th Cir. 1994), but we review all factual findings made in
Pg: 4 of 9
connection with that ruling for clear error, Sedlack v. Braswell
confine our review on appeal to the narrow issues Farkas raises
appellate review to issues raised in informal brief).
instructed on the definition of a “security” during his criminal
trial and therefore that the district court in this case erred
in relying on the jury’s finding that Farkas committed fraud in
connection with “securities.”
Because Farkas challenges this
jury instruction for the first time on appeal, and the district
court had no opportunity to pass on the merits of this issue, we
review it for plain error.
See United States v. Lynn, 592 F.3d
572, 577 (4th Cir. 2010).
The district court did not plainly err in concluding
that collateral estoppel barred relitigation of whether Farkas
committed fraud in connection with “securities.”
was actually and necessarily resolved in Farkas’ criminal trial.
At the close of the trial, the jury was instructed that, to
Additionally, Farkas’ indictment alleged that Farkas and his coconspirators
Pg: 5 of 9
participation interest pending resale to third-party investors.
These allegations similarly implicated the sale of securities.
See Zolfaghari v. Sheikholeslami, 943 F.2d 451, 455 (4th Cir.
interests in a managed pool of mortgage notes”).
securities fraud or conspiracy to commit securities fraud absent
such a finding.
Farkas’ argument that he lacked ample opportunity or
criminal proceedings is unavailing.
Farkas provides no reason
to suggest that he lacked an incentive to challenge the jury
Instead, he simply argues that the jury instruction was wrong.
Given that he could have, but did not, raise this objection at
trial, “[i]t is just this type of argument . . . that collateral
estoppel bars [him] from making.”
evidence the first time”).
Pignons S.A. de Mecanique v.
See also Astoria Fed. Sav. & Loan
Pg: 6 of 9
litigant deserves no rematch after a defeat fairly suffered, in
adversarial proceedings, on an issue identical in substance to
the one he subsequently seeks to raise.”); Liberty Mut. Ins. Co.
simply an assertion that the previous decision was wrong.”).
Farkas’ second argument regarding collateral estoppel
fares no better.
He contends that he did not have a full and
counsel’s ability to question two witnesses as to the precise
monetary amount of the fraud.
We have already rejected Farkas’
challenge to the court’s evidentiary ruling regarding one of
these witnesses, who Farkas sought to cross-examine to show that
his salary and costs “reduced the amount of TBW assets available
to pay its creditors.”
Farkas, 474 F. App’x at 357.
district court concluded, this inquiry was irrelevant to the
materiality of Farkas’ misstatements and omissions.
the record clearly belies Farkas’ assertion that his counsel was
prevented from questioning the second witness as to the amount
of collateral available to Colonial Bank.
Thus, Farkas fails to
establish error in the application of collateral estoppel.
Pg: 7 of 9
committed reversible error by failing to explain the findings
meaningful appellate review of that issue.
The SEC asserts that
the record is so clear as to make remand unnecessary.
with the SEC.
In moving for summary judgment, the SEC again relied
on facts addressed in Farkas’ criminal prosecution to support
its request for summary judgment as to the injunctive relief.
Farkas does not assert that injunctive relief is improper in his
case, and, importantly, he did not raise such an argument in
opposing the SEC’s motion for summary judgment in the district
Where a party “fails to properly support an assertion of
fact or fails to properly address another party’s assertion of
fact” in responding to a summary judgment motion, the court is
permitted to “consider the fact undisputed for purposes of the
undisputed -- show that the movant is entitled to it.”
facts identified by the SEC in support of injunctive relief, the
court was entitled to treat them as undisputed in considering
Pg: 8 of 9
findings in Farkas’ direct appeal, see Farkas, 474 F. App’x at
See, e.g., SEC v. Bankosky, 716 F.3d 45, 48
impose officer and director bar); SEC v. Pros Int’l, Inc., 994
F.2d 767, 769 (10th Cir. 1993) (addressing factors to consider
in evaluating likelihood of repetition of securities fraud, as
required for injunction); SEC v. Bonastia, 614 F.2d 908, 912 (3d
Cir. 1980) (listing factors to consider in imposing permanent
injunction); see also 15 U.S.C. § 78u(d)(5) (2012) (authorizing
district court, in action under securities laws, to impose “any
equitable relief that may be appropriate or necessary for the
benefit of investors”).
abeyance pending the resolution of his ongoing 28 U.S.C. § 2255
case, given the indisputable finality of his criminal judgment
and the extended delay that would likely result from such a
Pg: 9 of 9
judgment in the district court pursuant to Rule 60(b) of the
Federal Rules of Civil Procedure.
Accordingly, we deny Farkas’ motion for abeyance and
affirm the district court’s judgment.
We dispense with oral
argument because the facts and legal contentions are adequately
presented in the materials before this court and argument would
not aid in the decisional process.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?