U.S. Commodity Futures Trading Commission v. Altamont Global Partners, LLC et al

Filing 83

ORDER granting in part and denying in part 73 Motion ; granting in part and denying in part 77 Motion to modify. The asset freeze at Doc. 8 is modified as follows: of the $25,000.00 held in trust by defense counsel, $20,000.00 shal l remain subject to the freeze order and held in trust until otherwise ordered by this Court; the freeze is lifted with respect to the remaining $5,000.00, which may be used to offset the costs of representation by defense counsel. Signed by Judge Gregory A. Presnell on 6/12/2013. (NWH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
U.S. COMMODITY FUTURES TRADING
COMMISSION,
Plaintiff,
v.

Case No: 6:12-cv-1095-Orl-31TBS

ALTAMONT GLOBAL PARTNERS, LLC,
JOHN G. WILKINS, PHILIP LEON, PAUL
RANGEL,
Defendants.

ORDER
This cause comes before the Court on a Motion for Accounting and Recovery of Funds
(Doc. 73) filed by the Court appointed Receiver in this case, Mark Silverio; a Response (Doc. 77)
filed by Defendant, Paul Rangel (“Rangel”); and a Reply. (Doc. 80). Rangel also filed a Motion to
Modify the Asset Freeze (Doc. 77), to which Plaintiff, United States Commodity Futures Trading
Commission (“USCFTC”) responded (Doc. 81).
This suit was filed on July 16, 2012, asserting several claims for violation of, inter alia,
various antifraud provisions of the Commodity Exchange Act, 7 U.S.C. §§ 1, et. seq. The same
day, Plaintiff filed an ex parte motion for preliminary injunction to freeze Defendants’ assets.
(Doc. 5)—which was granted. (Doc. 8). Recently it came to the attention of the Receiver that
Defendant Rangel transferred $25,000.00 to his attorneys shorty before the Court ordered the asset
freeze. On April 17, 2013, the Receiver filed a motion for accounting and recovery of those funds.

(Doc. 73). Rangel opposes the Motion and seeks a modification of the freeze so he can pay his
attorneys. (Doc. 77).
I.

Standard

Pursuant to § 13 of the Federal Trade Commission Act, 15 U.S.C. § 53(b), a district court
has the authority to temporarily freeze personal assets as an incident to its express statutory
authority to issue a permanent injunction. F.T.C. v. U.S. Oil & Gas Corp., 748 F.2d 1431, 1432
(11th Cir. 1984) (per curiam); See also F.T.C. v. Gem Merchandising Corp., 87 F.3d 466, 469
(11th Cir. 1996). As a corollary to that authority, a court may also release or lower the amount of
assets frozen. See S.E.C. v. Duclaud Gonzalez de Castilla, 170 F. Supp. 2d 427, 429 (S.D.N.Y.
2001) (recognizing the authority of the court to freeze assets in the context of securities litigation).
A court may also, in its discretion, forbid or limit payment of living expenses or attorney fees out
of frozen assets. See United States v. Monsanto, 491 U.S. 600, 109 S. Ct. 2657, 105 L. Ed.2d 512
(1989); Caplan v. Drysdale, Chartered v. United States, 491 U.S. 617, 109 S. Ct. 2646, 105 L.
Ed.2d 528 (1989); Commodity Futures Trading Commission v. Noble Metals International, Inc.,
67 F.3d 766, 775 (9th Cir. 1995) (discussing the reasonableness of attorney fees in an action
brought by the FTC alleging deceptive trade practices against a seller of advertising specialty
items and its president). If the frozen assets fall short of the amount needed to compensate
consumers for their losses, however, a court is within its discretion to deny an application for
living expenses and attorney fees. See Noble Metals, 67 F.3d at 775. While parties generally may
spend their resources as they see fit to retain counsel, they may not use their victims’ assets to hire
counsel to help them retain the fruits of their violations. See generally S.E.C. v. Quinn, 997 F.2d
287, 289 (7th Cir. 1993). See also S.E.C. v. ETS Payphones, Inc., 408 F.3d 727, 734 (11th Cir.

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2005); F.T.C. v. RCA Credit Servs., LLC, 8:08-CV-2062-T27MAP, 2008 WL 5428039 (M.D. Fla.
Dec. 31, 2008).
II.

Discussion

Rangel’s potential liability in this case exceeds $800,000.00 according to the USCFTC, yet
only $317.62 of Rangel’s frozen assets are currently in the Receiver’s possession. Shortly before
this Court froze his assets, Rangel disposed of approximately $233,000.00 including the
$25,000.00 sent to his attorney (the “Retainer”). Releasing the entire $25,000.00 to defense
counsel at this point is premature given the discrepancy between the assets currently in possession
of the Receiver and Rangel’s potential liability. Some consideration must be given, however, to
Rangel’s interest in retaining counsel to defend him in this matter. It is therefore,
ORDERED that the Motions (Docs. 73 and 77) are GRANTED in part and DENIED in
part. The asset freeze at Doc. 8 is modified as follows: of the $25,000.00 held in trust by defense
counsel, $20,000.00 shall remain subject to the freeze order and held in trust until otherwise
ordered by this Court; the freeze is lifted with respect to the remaining $5,000, which may be used
to offset the costs of representation by defense counsel.
DONE and ORDERED in Orlando, Florida on June 12, 2013.

Copies furnished to:
Counsel of Record
Unrepresented Parties

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