Securities and Exchange Commission v. Cash Capital, LLC et al

Filing 69

ORDER Granting SEC's Motion for an Order to Show Cause Why Defendant Robert Wilson Should Not be Held in Contempt (ECF No. 54 ). Wilson shall file sworn accounting by 9/30/20. Wilson is to submit any memorandum in opposition by 10/14/2020. Order to Show Cause Hearing set for 10/28/2020 at 02:00 PM before Judge Cynthia Bashant. Signed by Judge Cynthia Bashant on 9/11/20. (All non-registered users served via U.S. Mail Service)(jmo)

Download PDF
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE SOUTHERN DISTRICT OF CALIFORNIA 10 11 SECURITIES AND EXCHANGE COMMISSION, Plaintiff, 12 13 14 15 v. CASH CAPITAL, LLC; AMERICA’S STRATEGIC ORE PROPERTIES, LLC; and ROBERT WILSON, Case No. 17-cv-01536-BAS-AGS ORDER GRANTING SEC’S MOTION FOR AN ORDER TO SHOW CAUSE WHY DEFENDANT ROBERT WILSON SHOULD NOT BE HELD IN CIVIL CONTEMPT (ECF No. 54) Defendants. 16 17 Before the Court is the Securities and Exchange Commission’s (“SEC”) Motion for 18 an Order to Show Cause Why Defendant Robert Wilson Should Not Be Held in Civil 19 Contempt (“Motion”). (ECF No. 54.) For the reasons stated below, the Court GRANTS 20 the SEC’s Motion. 21 This Motion is based on an underlying securities fraud case brought by the SEC 22 against Defendant in July 2017. (See Compl. ECF No. 1.) The SEC alleged that 23 Defendant defrauded unsophisticated investors by soliciting investments through an 24 unregistered offer and sale of securities in a purported mining property in Arizona (the 25 “Yuma King project”) and then misappropriated their money for his personal use. On 26 April 25, 2019, the Court entered a final consent judgment (“Final Judgment”) resolving 27 the claims of fraud and the unregistered offer and sale of securities. (Final J., ECF No. 28 51.) The deadline to pay the full amount owed under the Final Judgment was October 22, -117cv1536 1 2019. (Final J. § V (stating that Defendant was required to satisfy his obligation within 2 180 days.) This Court retained jurisdiction to enforce the Final Judgment. (Final J. § 3 VIII.) 4 The SEC files the instant Motion to hold Wilson in contempt, alleging that he has 5 not made any payments to satisfy his obligations under the Final Judgment. (Mem. of P. 6 & A. in supp. of Mot. (“Mem. of P. & A.”) at 6; see Decl. of Michael J. Roessner ¶ 4, ECF 7 No. 54-3.) The SEC alleges that Wilson has failed to comply with two provisions of the 8 Final Judgment: (1) an injunction that prohibits him from offering and selling securities 9 (the “Securities Injunction”); and (2) an order to disgorge $1,540,000, plus prejudgment 10 interest in the amount of $205,376.25 (the “Disgorgement Order”). 12 (Mem. of P. & A. 11 at 7–8.) 12 As to the first provision, the SEC alleges that after entering in the Final Judgment, 13 Wilson continued “to lull investor-victims” by sending emails implying that he intended 14 to sell or finance the Yuma property to repay investor funds and by promoting a new 15 investment scheme promising high returns on a “gold milling venture.” (Id. at 10–11; see 16 Ex. A to Decl. of Connie Page (“Page Decl.”), ECF No. 54-2; Ex. 3 to Decl. of Terry R. 17 Miller (“Miller Decl.”), ECF No. 54-9.) Further, the SEC alleges that Wilson continues 18 to make the same representations that were the subject of the initial fraud claims and 19 20 1 Defendant is permanently restrained and enjoined from directly or indirectly, including, but not limited to, through any entity owned or controlled by Defendant, participating in the issuance, purchase, offer, or sale of any security, provided, however, that such injunction shall not prevent Defendant from purchasing or selling securities listed on a national securities exchange for his[] own personal account. ... 21 22 23 24 Defendant is liable jointly and severally with Defendants Cash Capital, LLC and America’s Strategic Ore Properties, LLC for disgorgement of $1,540,000, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $205,376.25. 25 26 27 Specifically, the Securities Injunction and Disgorgement Order state, respectively: (Final J. §§ IV, V.) The SEC does not seek a contempt finding for Wilson’s failure to pay a civil penalty of $184,767 also imposed by the Final Judgment that Wilson has yet to pay. 2 28 -217cv1536 1 misleads investors about the contents and meaning of the Complaint and Final Judgment 2 in this action. (Id. at 11; see Ex. B to Page Decl.; Exs. 2, 4–8 to Miller Decl., ECF Nos. 3 54-8, 54-10 through 54-14.) As to the second, the SEC claims that Wilson has failed to 4 disgorge any of the amount ordered in the Final Judgment. (Id. at 11.) The SEC 5 investigated Wilson’s ability to pay and found that he has spent $450,000 since January 6 1, 2019. (Id.; see Ex. 2 to Roessner Decl., ECF No. 54-5.) 7 As the SEC points out, Wilson’s responses to the Motion do not dispute the 8 allegations in the Motion. Rather, Wilson requests continuances to pay the amount due 9 under the Final Judgment. He alleges that his ability to pay “was based entirely upon [his] 10 buyers’ financial capability and future stability outlook,” which has purportedly dried up 11 due to the COVID-19 pandemic. (See Opp’n & Decl. of Robert W. Wilson to OSC § 4– 12 5, ECF No. 67.) He further represents that he has “absolutely no ability to pay the $1.7 13 million at this time.” (Id. § 7.) However, he offers no response to the SEC’s claims about 14 his violations of the Final Judgment and about the evidence undermining his claimed 15 inability to pay. 16 As such, the Court finds it appropriate to ORDER Wilson to show cause why he 17 should not be held in contempt for violation of the Securities Injunction and for failure to 18 comply with the Disgorgement Order. The Court further ORDERS the following: 19 (1) Wilson is to submit any memorandum in opposition by October 14, 2020. 20 (2) A show cause hearing is set for October 28, 2020 at 2:00 PM. Wilson will 21 have the opportunity at this hearing to show cause why he should not be held 22 in civil contempt and to address appropriate sanctions for contempt, including 23 but not limited to disgorgement of all funds obtained in violation of the 24 Securities Injunction. 25 (3) To understand the full scope of Wilson’s offer of securities and his ability to 26 disgorge any amounts ordered to be disgorged, order Wilson shall file, by 27 September 30, 2020, a sworn accounting of: 28 -317cv1536 1 a. Each account, including safe deposit boxes, with any bank, financial 2 institution or brokerage firm, maintained in the names of Robert Wilson 3 or any entity he controls, or the names of any subsidiary, affiliate, or 4 agent, in which they have direct or indirect control or beneficial interest, 5 and the current value and makeup of that account; 6 b. All investments, securities, funds, real estate, and other assets held in the 7 names of Robert Wilson or any entity that he controls, or in the names 8 of any subsidiary, affiliate, or agent or under their direct or indirect 9 control, stating a description, a value, and location of such assets; and 10 c. Every transaction in which the ownership, direction, or control of any 11 funds or other assets of any kind of have been transferred, directly or 12 indirectly, to or from Robert Wilson or any entity he controls since April 13 25, 2019. 14 (4) The parties may engage in expedited discovery under Federal Rules of Civil 15 Procedure 30, 33, 34, 36, and 45 into Wilson’s offer and sale of investments 16 since the date of the Final Judgment and his ability to pay amounts owed under 17 the Disgorgement Order. 18 IT IS SO ORDERED. 19 20 DATED: September 11, 2020 21 22 23 24 25 26 27 28 -417cv1536

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?