United States Securities and Exchange Commission v. Ahmed et al

Filing 2116

ORDER denying Relief Defendants' Motion for Leave to File a Consolidated Sur-Reply 2078 . Signed by Judge Janet Bond Arterton on 12/7/2021. (Canevari, D.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
IFTIKAR AHMED,
Defendant, and
Civil No. 3:15cv675 (JBA)
IFTIKAR ALI AHMED SOLE PROP; I-CUBED
DOMAINS, LLC; SHALINI AHMED; SHALINI AHMED December 7, 2021
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 RELIEF DEFENDANTS’ MOTION FOR LEAVE TO FILE A
CONSOLIDATED SUR-REPLY
On June 16, 2021, the Court redetermined Defendant Iftikar Ahmed’s disgorgement
obligation after remand by the Second Circuit. In its ruling, the Court directed the Receiver
to submit a proposed liquidation schedule “upon which all Parties may comment.”
(Redetermination of Def.’s Disgorgement Obligation [Doc. # 1997] at 13.) Plaintiff Securities
and Exchange Commission (“SEC”) filed its response to the Receiver’s Proposed Plan of
Liquidation on July 29, 2021 [Doc. # 2037] and Defendant and Relief Defendants filed their
responses on August 16, 2021 [Docs. ## 2064, 2065]. Relief Defendants then filed a response
to the SEC’s response [Docs. # 2074]. On August 30, 2021, Receiver filed a consolidated brief,

replying to the responses filed by the Relief Defendants, Defendant, and Daniel G. Johnson1
[Doc. # 2071]. The SEC also filed a consolidated reply brief, responding to the Defendant’s
and Relief Defendants’ oppositions [Doc. # 2075]. Relief Defendants now seek to file a
consolidated sur-reply to the SEC and Receiver’s consolidated reply briefs [Doc. # 2078].
Relief Defendants claim that the SEC and Receiver’s reply briefs contain “factual
misstatements and issues raised for the first time” which warrant a sur-reply. (Mot. for Leave
to File a Consolidated Sur-Reply (“Relief Defs.’ Mot.”) [Doc. # 2078] at 1.) They seek to
address five points—President Biden’s proposed tax plan, the use of Second Circuit
precedent, the contention that their briefs in opposition call for reconsideration, the
potential interest and gains calculation of the judgment, and the creation of a reserve. (Id. at
1-2.) The SEC opposes, noting that “neither the SEC nor the Receiver raised new arguments
that would warrant a sur-reply, but rather properly responded to Defendant’s and Relief
Defendants’ arguments.” (SEC’s Opp’n to Relief Defs.’ Mot. for Leave to File a Consolidated
Sur-Reply (“SEC’s Opp’n”) [Doc. # 2068] at 3.)
Local Rule 7(d) governs the filing of sur-replies and a court may grant permission to
file a sur-reply in its discretion if good cause is shown. D. Conn L. Civ. R. 7(d). “[L]eave to file
a sur-reply should be denied where the moving party ‘previously had ample opportunity to
address’ the opposing party’s arguments.” Williams v. City of Hartford, 3:15CV00933(AWT),
2017 WL 11448094, at *5 (D. Conn. June 26, 2017) (quoting Tnaib v. Document Techs., LLC,
450 F. Supp. 2d 87, 89 n.3 (D.D.C. 2006)).
The Court concludes that Relief Defendants have failed to demonstrate good cause to
file a sur-reply brief and addresses their arguments seriatim. Relief Defendants first take
issue with the Receiver’s characterization of President Biden’s proposed tax plan, which they
contend may be retroactive to April 2021. (Relief Defs.’ Mot. at 1.) The Receiver raised this
Daniel G. Johnson is the trustee of the Iftikar A. Ahmed Family Trust and custodian of the
Uniform Transfer to Minors Act Accounts and filed a response to the Receiver’s Liquidation
Plan on August 16, 2021 [Doc. # 2063].
1

2

proposed tax plan, which may almost double the applicable increased capital gains rate, in
response to the Defendant’s argument that a pre-liquidation tax analysis would benefit the
estate, which the Receiver asserts would cause delay and expose the Estate to the increased
capital gains rate. (Receiver’s Consolidated Reply [Doc. # 2071] at 7-8.) In his reply brief,
however, the Receiver recognized that this proposed tax plan may be retroactive. (Id. at 8
n.8.) Next, Relief Defendants claim that SEC improperly stated that “Second Circuit decisions
do not require payment of taxes or pre-liquidation tax analysis when they do,” citing SEC v.
S&P Nat’l Corp., 360 F.2d 741, 752 (2d Cir. 1966). This same case was cited in Relief
Defendants’ Opposition and Relief Defendants previously had “ample opportunity to
address” this argument. Williams, 2017 WL 11448094, at *5 (internal citations omitted).
Both points were addressed in the briefing already before the Court, and as such, sur-reply
briefing on these issues is unnecessary.2
Relief Defendants then argue that a sur-reply is necessary to address the SEC’s
argument that the Relief Defendants’ opposition functions as a motion for reconsideration.
While a reply brief cannot raise new arguments, it can address arguments made in an
opposition. See In re Loveria by Loveria v. Portadam, Inc., No. 3:09-cv-1214, 2010 WL
11541909, at * (N.D.N.Y. June 09, 2010). The SEC’s characterization of Relief Defendants’
arguments as a motion for reconsideration is not a new argument, but a response to
arguments made in the Relief Defendants’ opposition. This, accordingly, is not a proper basis
for a sur-reply.
Finally, Relief Defendants argue that a sur-reply is warranted to address the impact
of the appellate ruling on the interest and gains calculation and address funds that should be

2 Relief Defendants also assert that the SEC and Receiver “misstate [their] position regarding

timing of and when certain assets should be liquidated” and argue that it is their “right and
obligation to correct [such] misstatements.” (Relief Defs.’ Response to SEC’s Opp’n to Relief
Defs.’ Mot. for Leave to File a Consolidated Sur-Reply (“Relief Defs.’ Reply”) [Doc. # 2088] at
5.) But as their position is articulated in their original opposition, sur-reply briefing on any
misstatements is unwarranted.
3

covered by a “reserve.” (SEC’s Opp’n at 4 (citing Relief Defs.’ Obj. at 12, 24, 37).) Both issues
were raised by Relief Defendants in their opposition. (Relief Defs.’ Opp’n to Receiver’s
Proposed Plan of Liquidation [Doc. # 2064] at 24 (“Any discussion of the interest and gains
methodology must await appellate ruling”), 37 (“Any such reserve should include all
expenses including [Relief Defendant counsel payments, Defendant counsel payments, living
expenses and children’s education, and any emergency payments].”). As Relief Defendants
have already briefed these arguments, they have failed to demonstrate good cause to file a
sur-reply.3
For the foregoing reasons, Relief Defendants’ Motion for Leave to File a Consolidated
Sur-Reply [Doc. # 2078] is DENIED.
IT IS SO ORDERED.
___________________/s/__________________________
Janet Bond Arterton, U.S.D.J.
Dated at New Haven, Connecticut this 7th day of December 2021.

Relief Defendants also state that they “had to correct the SEC’s wild aspersions and
ludicrous statements, such as the Court is ‘funding Ms. Ahmed’s opulent lifestyle.’” (Relief
Defs.’ Reply at 5.) Even this statement responds to arguments raised by the Relief Defendants
in their opposition and does not require sur-reply briefing.
3

4