U.S. Securities and Exchange Commission v. Cell>Point, LLC et al

Filing 196

ORDER by Chief Judge Philip A. Brimmer on 1/17/2023, re: 129 Defendant Cell Theranostics, Ltd.'s Motion to Modify Preliminary Injunction is DENIED. (jtorr, )

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Philip A. Brimmer
Civil Action No. 21-cv-01574-PAB-KLM
UNITED STATES SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
CELL>POINT, LLC,
CELL THERANOSTICS, LTD.,
CELL THERANOSTICS, INC.,
GREG RUSSELL COLIP, and,
TERRY ALLEN COLIP,
Defendants.
ORDER
This matter is before the Court on defendant Cell Theranostics, Ltd.’s Motion to
Modify Preliminary Injunction [Docket No. 129]. Defendant Cell Theranostics, Ltd.
seeks an order pursuant to Fed. R. Civ. P. 65 modifying the Court’s previous injunction
binding Cell Theranostics, Ltd. from violating Section 10(b) of the “Exchange Act,” 15
U.S.C. § 78j(b) and Section 17(a) of the “Securities Act,” 15 U.S.C. § 77q(a) Id. at 2,
¶ 6.
I. BACKGROUND
On June 10, 2021, the SEC filed this lawsuit against defendants Cell>Point, LLC
(“Cell>Point”), Greg Colip, and Terry Colip, bringing claims against all defendants for
fraud under Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. § 78j(b), against
the individual defendants for aiding and abetting violations of the Exchange Act, against

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all defendants for fraud in the offer or sale of securities under Section 17(a) of the
Securities Act, 15 U.S.C. § 77q(a), and against the individual defendants for aiding and
abetting violations of the Securities Act. Docket No. 1 at 38-42, ¶¶ 156-170.
On November 24, 2021, the SEC filed a motion seeking a preliminary injunction
against defendants. Docket No. 45 at 13. The Court held a hearing on the SEC’s
motion on January 25, 2022. Docket No. 89. The Court found that Cell>Point is a
biotech company that is developing a radiopharmaceutical compound for clinical
oncology. Docket No. 93 at 2-3. Defendant Greg Colip is the chief executive officer
and a managing member of Cell>Point and defendant Terry Colip is the chief financial
officer of Cell>Point. Id. Defendants Cell Theranostics, Inc. and Cell Theranostics, Ltd.
are subsidiaries of Cell>Point. Id. at 3.
On February 14, 2022, the Court entered a preliminary injunction enjoining
defendants from violating securities laws. Id. at 19-22. The Court found that Terry
Colip made material misstatements to two Cell>Point investors in June 2021 in violation
of the Securities Act and the Exchange Act. Id. at 15-17. The Court ordered that
defendant Cell>Point, L.L.C. and its subsidiaries, including, but not limited
to, Cell Theranostics, Inc. and Cell Theranostics, Ltd.; defendant Terry A.
Colip; and defendant Greg R. Colip (collectively, “Defendants”) . . . are
enjoined from, directly or indirectly, in connection with the purchase or
sale of any security, by the use of any means or instrumentality of
interstate commerce, or of the mails, or of any facility of any national
securities exchange: A. Employing any device, scheme, or artifice to
defraud; B. Making any untrue statement of a material fact or omitting to
state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not
misleading; or C. Engaging in any act, practice, or course of business
which operates or would operate as a fraud or deceit upon any person in
violation of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and
Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.
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Id. at 20. The Court also found that defendants Cell Theranostics, Inc. and Cell
Theranostics, Ltd. were subsidiaries of Cell>Point, LLC and enjoined both entities from
violating Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a). Id. at 20-21.
On May 16, 2022, the SEC filed a motion to amend seeking to add Cell
Theranostics, Ltd. and Cell Theranostics, Inc. as defendants. Docket No. 119. On July
18, 2022, Judge Mix granted the SEC’s motion. Docket No. 139 at 9. On July 18,
2022, the SEC filed an amended complaint naming Cell Theranostics, Inc. and Cell
Theranostics, Ltd. as defendants. See Docket No. 140.
II. LEGAL STANDARD
Rule 65 states an injunction may bind “the parties; [] the parties officers, agents,
servants, employees, and attorneys, and [] other persons who are in active concert or
participation with anyone” already bound. Fed. R. Civ. P. 65(d)(2). An injunction may
be modified when its prospective application is no longer equitable. Verlo v. Martinez,
820 F.3d 1113, 1126 n.4 (10th Cir. 2016) (quoting Horne v. Flores, 557 U.S. 433, 447
(2009)). Under Fed. R. Civ. P. 60(b)(5), the party moving to modify the injunction bears
the burden of establishing changed circumstances that warrant relief. Id. “[W]here a
modification of an injunctive decree is sought the court should determine whether the
changes are so important that dangers, once substantial, have become attenuated to a
shadow, and it must be shown that the moving party is exposed to severe hardships of
extreme and unexpected nature.” Ridley v. Phillips Petroleum Co., 427 F.2d 19, 22
(10th Cir. 1970) (internal quotations omitted).
III. ANALYSIS
Cell Theranostics, Ltd. argues that it should no longer be bound by the Court’s
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injunction because it is no longer a subsidiary of Cell>Point, LLC and has a separate
board of directors and separate management. Docket No. 129 at 1, ¶ 3. Cell
Theranostics, Ltd. also claims that it is no longer controlled by Greg or Terry Colip. Id.
at 2, ¶ 4. As a result, Cell Theranostics, Ltd. argues that it no longer fits under any of
the categories enumerated in Fed. R. Civ. P. 65(d)(2) and it can no longer be bound by
the Court’s injunction. Id. at 2, ¶¶ 5-6.
On July 13, 2022, the Court held Greg Colip and Terry Colip in contempt of the
Court’s preliminary injunction order. Docket No. 138 at 17. As part of the contempt
hearing, the Court found that on February 22, 2022 Terry Colip solicited a loan for
Cell>Point, LLC from Jordan Bonicelli in violation of the Court’s preliminary injunction
order. Id. at 4, 15. On May 3, 2022, Terry Colip emailed Michael Ricks, the president of
Cell Theranostics, Ltd., and instructed him to persuade Mr. Bonicelli that an initial public
offering of Cell Theranostics, Ltd. was imminent. Id. at 5. The Court found that an initial
public offering was not imminent. Id. at 16. Additionally, the Court found that on March
16, 2022 Terry Colip obtained a loan from Wayne Wong in violation of the Court’s order
by making misrepresentations on the imminence of an initial public offering for Cell
Theranostics, Ltd. Id.
Greg Colip, Terry Colip, and Cell>Point, LLC have been held in contempt for a
second time. Docket No. 195 at 16. In the contempt order, the Court found that on
August 29, 2022 Terry Colip held a meeting with investors in Cell>Point, LLC to discuss,
among other things, “the financial well-being of Cell Theranostics.” Id. at 7. On
December 5, 2022, in connection with the second contempt hearing, Greg Colip filed a
pleading as an attorney for Cell Theranostics, Ltd. in this case. Docket No. 189 at 3.
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Moreover, at the December 6, 2022 contempt hearing, Greg Colip appeared as an
attorney for Cell Theranostics, Ltd.
Although Cell Theranostics, Ltd. claims it is now a separate entity from Cell>Point,
LLC and is not controlled by Terry or Greg Colip, Docket No. 129 at 1-2 ¶¶ 3-4, Cell
Theranostics, Ltd. has not met its burden of demonstrating changed circumstances that
require modifying the Court’s preliminary injunction because it has not shown the
company is not controlled, or at least still being manipulated, by the Colips.
Even if Cell Theranostics, Ltd. could demonstrate it is no longer connected to or a
subsidiary of any of the other defendants, it can still be bound by the Court’s injunction
under Rule 65. The amended complaint names Cell Theranostics, Ltd. as a defendant,
Docket No. 140 at 1, and Rule 65(d) allows named parties to be bound by injunctions.
The reason that the Court required Cell Theranostics, Ltd. to comply with the
preliminary injunction is still relevant today. As Cell Theranostics, Ltd. does not provide
any other changed circumstances warranting relief to meet its burden for modifying an
injunction, the Court will deny its motion.
IV. CONCLUSION
It is
ORDERED that defendant Cell Theranostics, Ltd.’s Motion to Modify Preliminary
Injunction [Docket No. 129] is DENIED.
DATED January 17, 2023.
BY THE COURT:
____________________________
Philip A. Brimmer
Chief United States District Judge
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