Securities and Exchange Commission v. McDuffie et al

Filing 15

ORDER re: 1 the Security and Exchange Commission's Ex Parte Application for Order to Show Cause and for an Order Compelling Compliance with Administrative Subpoenas, by Magistrate Judge Michael E. Hegarty on 6/4/2012. (mehcd)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 12-cv-00723-REB-MEH
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
STANLEY MCDUFFIE, a/k/a Stanley Roberson, a/k/a Stanley Battle,
JOHN W. WILLIAMS, and
JILAPUHN, INC., d/b/a Her Majesty’s Credit Union,
Defendants.

ORDER

Michael E. Hegarty, United States Magistrate Judge.
Pending before the Court is the Security and Exchange Commission’s Ex Parte Application
for Order to Show Cause and for an Order Compelling Compliance with Administrative Subpoenas
[filed March 22, 2012; docket #1]. The Court held a hearing on the Application on June 1, 2012,
at 10:00 a.m., at which Respondent McDuffie appeared on behalf of himself and Jilapuhn, Inc.
Respondent Williams did not appear.1 With the exception of a misunderstanding regarding the
noticed deposition, Mr. McDuffie did not contest the validity of the subpoenas or the merits of the
Commission’s Application. However, Mr. McDuffie requested the hearing be moved to a later date
when his attorney could attend in person. The Court denied his request.

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At the hearing, the Court inquired as to whether the Commission sought sanctions for Mr.
Williams’ non-appearance. Counsel for the Commission asked the Court to first issue an order
compelling compliance with the subpoenas, and to reserve the possibility of sanctions for a later
date. Importantly, the Commission noted that it had not been able to confirm Mr. Williams’ receipt
of the Court’s May 9, 2012 Order to Show Cause [docket #12]. In consideration of this fact and in
accordance with the Commission’s request, the Court issues the present Order. However, the Court
cautions Respondents that further disregard of Court orders may result in contempt proceedings
pursuant to 28 U.S.C. § 636(e)(2).

Upon review of the Application and the Declaration of Danielle Voorhees [docket #4]
submitted therewith, I find that judicial enforcement of the Commission’s administrative subpoenas
is warranted because (1) the inquiry is conducted pursuant to a lawfully authorized, legitimate
purpose; (2) it is reasonably relevant to an investigation which the agency has authority to conduct;
and (3) all administrative prerequisites have been met. See Application to Enforce Administrative
Subpoenas Duces Tecum of SEC v. Knowles, 87 F.3d 413, 415 (10th Cir. 1996) (citing United States
v. Powell, 379 U.S. 48, 57-58 (1964)). Therefore, as discussed on the record, I hereby ORDER the
following:
Respondents Williams, McDuffie, and Jilapuhn, Inc. shall produce all documents described
in the administrative subpoenas issued by the Commission [dockets ##4-11, 4-12, 4-13, 4-15, 4-17]
on or before June 15, 2012.
Additionally, Respondents Williams and McDuffie shall appear at the Securities and
Exchange Commission’s Denver Regional Office, 1801 California Street, Suite 1500, Denver,
Colorado on June 22, 2012, at 8:30 a.m., to testify under oath regarding the matters identified in
the January 26, 2012 subpoenas previously served on the Respondents. (See dockets ##4-13, 4-15.)
Finally, the Securities and Exchange Commission shall use its best efforts to effect personal
service of this Order on all Respondents named in this action, and shall file proof of service with the
Court on or before June 8, 2012.
Dated at Denver, Colorado, this 4th day of June, 2012.
BY THE COURT:

Michael E. Hegarty
United States Magistrate Judge

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