United States Securities and Exchange Commission v. Ahmed et al

Filing 1771

ORDER denying 1139 Motion for Sanctions. Signed by Judge Janet Bond Arterton on 2/24/21.(McHugh, C.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION,
Civil No. 3:15cv675 (JBA)
Plaintiff,
v.
IFTIKAR AHMED,
February 24, 2021
Defendant, and
IFTIKAR ALI AHMED SOLE PROP; I-CUBED
DOMAINS, LLC; SHALINI AHMED; SHALINI AHMED
2014 GRANTOR RETAINED ANNUNITY TRUST;
DIYA HOLDINGS LLC; DIYA REAL HOLDINGS, LLC;
I.I. 1, a minor child, by and through his next friends
IFTIKAR and SHALINI AHMED, his parents; I.I. 2, a
minor child, by and through his next friends
IFTIKAR and SHALINI AHMED, his parents; and I.I.
3, a minor child, by and through his next friends
IFTIKAR and SHALINI AHMED, his parents,
Relief Defendants.
RULING DENYING DEFENDANT’S MOTION TO HOLD THE SEC IN CONTEMPT
Defendant moves this Court to hold the Securities and Exchange Committee (SEC) in
contempt for allegedly violating the “stay of litigation” portion of the Order Appointing
Receiver (Order). (Def.’s Mem. in Supp. of Def.’s Mot. to Find and Sanction the SEC for
Contempt of Court Order [Doc. # 1139] at 6-7.) In that Order, the Court imposed a stay of
litigation on “the following civil proceedings, excluding the instant enforcement action
including appeals, and related actions of the SEC,” and listed the types of proceedings that
should be stayed. (Order Appointing Receiver [Doc. # 1070] at 13.) Defendant argues that
continued discovery in the enforcement action brought against him in the U.S. District
Court for the District of Massachusetts, SEC v. Kanodia, et al., No. 1:15-cv-13042-ADB (D.
Mass.) (“Massachusetts Case”), violates that stay and requests that this Court sanction the
SEC for its continued action in that case. (Def.’s Mem. at 6-7.) The SEC opposes ([Doc.

Draft EYES_Feb24
#1153]), and the Receiver “does not view the Commission’s actions with respect to [the
Massachusetts Case] as in any way violative of the Order [], let alone contemptuous.”
(Statement of Receiver’s Position Regarding Def.’s Mot. [Doc. # 1156] at 2.)1 This Court
agrees.
The Massachusetts Case was filed on April 2, 2015, followed by the filing of this
enforcement action, also brought by the SEC, on May 6, 2015, and seeks redress for
unlawful securities transactions. The Court’s reference to “related actions of the SEC”
covered other SEC cases, like the Massachusetts Case, that were ongoing at the time of the
Order.
As set forth below, the following civil proceedings, excluding the instant
enforcement action including appeals, and related actions of the SEC are stayed until
further Order of this Court:
All civil legal proceedings or any nature, including, but not limited to,
bankruptcy proceedings, arbitration proceedings, foreclosure actions, default
proceedings, or other actions of any nature . . . (such proceedings are
hereinafter referred to as “Ancillary Proceedings”)
(Order at 13.) Ahmed claims that the absence of a comma after “the SEC” requires a
contrary interpretation. (Def.’s Mem. at 6-7.) His analysis is misplaced.
Defendant has already tried, and failed, to stay the Massachusetts Case in
accordance with his flawed interpretation of this Court’s Order. (See Pl.’s Notice of Asset
Freeze and Expected Appoint of Receiver in SEC v. Kanodia, et al. [Doc. # 1138] ¶ 3 n.2.)
Following argument on Defendant’s motion to stay, Judge Burroughs reasoned,
The way I read this is that it says, “The following civil proceedings”, and then it's a
list of civil proceedings that follow a colon. So I think anything before the colon is
meant to be excluded. I'm going to take that to mean that the instant enforcement
action and related actions of the SEC are excluded.

The Receiver states that the “asset freeze proposed in the [Massachusetts] Case would be subject and
subordinate in payment and priority” to liquidation in this case, and thus will not impact the ability of the
Receiver to satisfy the judgment of the Court from the Receivership Estate. (Id. at 2 (internal quotation
omitted).)
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Draft EYES_Feb24
(Ex. A to Pl.’s Opposition to Def.’s Mot. [Doc. # 1153-1] at 8.) Judge Burroughs correctly
construed this Order. Inasmuch as the Court’s enforcement order does not enumerate the
Massachusetts Case as one to be stayed, the SEC’s continuation with the Massachusetts case
does not violate any extant Court order, and Defendant’s motion for contempt fails. (See
Statement of Receiver at 2.)
For the foregoing reasons, Defendant’s motion to hold the SEC in contempt [Doc. #
1139] is DENIED.

IT IS SO ORDERED.
____________________/s/_______________________________
Janet Bond Arterton, U.S.D.J.
Dated at New Haven, Connecticut this 24th day of February 2021.

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