Securities and Exchange Commission v. North Star Finance LLC et al
MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 11/8/2017. (c/m and c/e/m (CH) 11/9/2017 tds, Deputy Clerk) Modified on 11/9/2017 (tds, Deputy Clerk).
IN THE UNITED STATES I)lSTRICT~fu'MTCr
FOR THE DISTRICT OF MARYLAND
SECURITIES AND EXCHANGE
lUll llG~- q A or I \
NORTH STAR FINANCE, LLC, et :11.,
Case No.: G.JII-15-1339
This is a civil enl(lrCement
against Capital Source Funding.
or the Securitics
action brought by PlaintirrSecurities
Act and Exchangc
Actl arising rrom an allegcdly
and attach cd Order address the !(lliowing Motions:
Motion for Approval
ECF No. 275: Martin's
Set! IS U.S.C.
as to Dclendants
LLC. ECF No. 270 (construcd
t(lr an Ordcr Rcquiring
Motion to Recusc. ECI' No. 325: Martin's
Motion I(lr an Order Modifying
of Lcgal Fees and Expcnscs.
lOCI' No. 328: Martin's
Motion to Support Request !(If Funds l(lr Council [sicl and Expcrt Witncsscs.
No. 333; Martin's
SEC's Motion !()r Judgmcnt
or Defense I'unds. lOCI' No. 326: Martin's
thc Freezing of Asscts I(lr Payments
IOcr NO.1. This Memorandum
LLC and Capital Source Lcnding.
Motion t(lr Dcrault Judgment):
LLC. Capital Sourcc Lcnding. LLC (thc
M ichacl K. Martin and a numbcr or other Defendants .. I(l('
Capital Source Funding.
* 77a and
* 78a el sect.
Chaptcr 7. lOCI' No. 345: and
Thc SEC initiated this civil cnforccmcnt
that the Dcfcndants
took part in an "invcstmcnt
victims of thcir schcmc to "invcst"
did not exist. and thc substantial
ECF No. I. Thc SEC allcgcs
scam known as a 'primc bank' Ii-aud" to dcli'aud
Put briclly. thc SEC allcgcs that Dclendants
Id ~ 4. Thc SEC claims that Defendants
action on May 11.20 IS. against a numbcr of
Martin and thc Capital Sourcc Dcfcndants.
victims of ncarly $5 million. Id
Bk 7 for Chronic Illness. ECF No. 346. No
See Loc. R. 105.6 (D. Md. 2016).
hcaring is ncccssary.
rclatcd to intcrnational
banks; thcsc sccuritics.
did not matcrializc.
violated and aided and abcllcd violations
Act Section I O(b) and Rulc 1Ob-5. id at 19.~ thc Sccuritics
Act Scction 5. iii. at 20-21. and thc Sccuritics
17(a). iii. at
15(a). iii. at 22-
A number of motions tilcd by the SEC and Martin are currcntly
which the Court addresscs
bclow in turn.
The SEC asks thc Court to grant an "cntry of Iinaljudgmcnts
Capital Source Funding.
pending before the Courl.
and civil penalties as to defendants
Capital Source Lending. LLC and
at I. On February 3.2017.
the Court granted thc
SEC's Motion for Entry of Delimit against the Capital Source Defendants.
ECF No. 253. As the
Court noted at the time. the Capital Source Dcfendants'
:! Pin cites to documents tiled on the Court's electronic filing system (CM/ECF)
by that system.
refer to the page numbers generated
on March I. 2016. ECF No. 252 at 5. Pursuant to Loc. R. 101(2)(b). the Court ordered
Defendants to show cause as to why default should not be entered against them within 30 days.
whieh they did not: therelore. the Court granted the SECs Motion. !d.
In its Motion for Default Judgment. the SEC argues that its Complaint pleads sunieient
facts which. accepted as true. constitute a legitimate cause of action. ECF No. 270 at 7. The SEC
provides the Court with additional ani davits and documentary evidence. which it argues are
sufficient for the Court to enter damages against the Capital Source Defendants. Id at II. While
the Capital Source Defendants did not respond to the SECs Motion. on April 12.2017. Martin
tiled an Opposition in which he asks for "a 90 day stay so that we can bring on an expericnced
attorney familiar with the SEC and thc experience in knowing correctly how these private deals
are set up'" ECF No. 273 at I. Although the Court did not grant the stay. seven months have
passed since Martin tiled his Opposition and the Capital Source Defendants are still not
As sueh. the Court sees no reason to further delay consideration of the SECs
Motion for Defimlt Judgment.
"A defendant's default does not automatically entitle the plaintiff to entry ofa de/ilult
judgment: rather. that decision is leli to the discretion of the court'" Edue. Credil Mgml. Corp.
Oplil11ul11Weldil1g. 285 F.R.D. 371. 373 (D. Md. 2(12). Generally. "Itlhe Fourth Circuit has a
'strong policy' that 'cases be decided on their merits .... Choice lIolels Il71el'll. 111('.I'. Sawl11l1ah
Slwkli Carp .. No. DKC-I 1-0438. 2011 WI. 5118328 at *2 (D. Md. Oet. 25. 2011) (eiting Ulliled
Shlles \'. Sharf('/' Equip. Co .. II F.3d 450. 453 (4th Cir. 1993 )). although "delilult judgment may
.; In his Opposition.
Martin also made a number of substantive arguments regarding the Capital Source Defendants'
the Court revie\ved
notes that. as a non-lawyer.
cannot represent the
Capital Source Defendants pru se. See ECF No. 183 at I 11.1 (where Martin tiled a response to a motion directed at
the Capital Source Lending ("'CSL"). the Court explained that "because he is not nn
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