Securities and Exchange Commission v. Fujinaga et al

Filing 346

ORDER Denying Defendant Edwin Yoshihiro Fujinaga's 295 Motion to Stay. Signed by Judge James C. Mahan on 07/26/2016. (Copies have been distributed pursuant to the NEF - NEV)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff(s),

Case No. 2:13-CV-1658 JCM (CWH)
ORDER

v.

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EDWIN YOSHIHIRO FUJINAGA and MRI
INTERNATIONAL, INC., et al.,

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Defendant(s).

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Presently before the court is defendant Edwin Fujinaga’s (“Fujinaga”) motion to stay the

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sale of his residence located at 9009 Greensboro Lane, Las Vegas, Nevada, pending the conclusion

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of his civil and criminal proceedings. (ECF No. 295). The SEC filed a response, (ECF No. 296),

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and Fujinaga subsequently replied. (ECF No. 297).

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I.

Background

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The court and parties are familiar with the circumstances of this case, which arises from a

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Ponzi scheme perpetrated by Fujinaga and his co-defendants. Fujinaga collected hundreds of

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millions of dollars for purported investments in medical accounts receivable. (ECF No. 118).

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Fujinaga then used these funds to repay earlier investments as well as for his own personal

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expenses. (Id.). By May 2013, Fujinaga had entirely depleted the invested funds. (Id.).

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On January 27, 2015, the court entered final judgment, holding defendants jointly and

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severally liable for the disgorgement of proceeds in the amount of $442,229,611.70 and

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prejudgment interest in the amount of $102,129,752.38. (ECF No. 188). The court also held

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defendants liable for civil money penalties of $20,000,000.00 each. (Id.). Finally, the court

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permanently enjoined defendants from any further securities violations. (Id.).

James C. Mahan
U.S. District Judge

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On February 4, 2015, the SEC filed a motion to certify the court’s judgment as final,

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pursuant to Federal Rule of Civil Procedure 54(b). (ECF No. 191). Defendants did not file a

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response, and the court granted the motion on February 25, 2015. (ECF No. 195).

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On March 9, 2015, defendants filed a motion to reconsider. (ECF No. 196). The SEC filed

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a response, (ECF No. 198), and defendants filed a reply. (ECF No. 204). On April 20, 2015, the

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court denied the motion. (ECF No. 210). On May 20, 2015, defendants filed a notice of appeal.

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(ECF No. 227). Thereafter, defendants filed a motion to stay execution of judgment pending appeal

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(ECF No. 236), which the court denied. (ECF No. 252).
Fujinaga then filed the instant motion to stay the sale of his residence pending the

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conclusion of his civil and criminal proceedings. (ECF No. 295).
II.

Legal Standard

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While a notice of appeal generally divests the district court over jurisdiction over matters

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being appealed, “[t]he district court retains jurisdiction during the pendency of an appeal to act to

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preserve the status quo.” Natural Res. Def. Council, Inc. v. Sw. Marine, Inc., 242 F.3d 1163, 1166

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(9th Cir. 2001). Federal Rule of Appellate Procedure 8(a) provides that “[a] party must ordinarily

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move first in the district court for . . . a stay of the judgment or order of a district court pending

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appeal . . . .” FED. R. APP. P. 8(a)(1)(A).

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Federal Rule of Civil Procedure 62(d) allows a district court to stay execution of a judgment

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pending appeal. FED. R. CIV. P. 62(d). “The standard for evaluating stays pending appeal is similar

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to that employed by district courts in deciding whether to grant a preliminary injunction.” Lopez

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v. Heckler, 713 F.2d 1432, 1435 (9th Cir. 1983). See also Nev. Airlines, Inc. v. Bond, 622 F.2d

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1017, 1018 n.3 (9th Cir. 1980).

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In the Ninth Circuit, there are two tests to determine whether the issuance of a preliminary

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injunction is necessary. See Lopez, 713 F.2d at 1435. Under the first test, a moving party must

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show a probability of success on the merits and the possibility of irreparable injury. Id. See also

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Miss Universe, Inc. v. Flesher, 605 F.2d 1130, 1134 (9th Cir. 1979). Under the second test, a

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moving party must show “that serious legal questions are raised and that the balance of hardships

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tips sharply in its favor.” Id.

James C. Mahan
U.S. District Judge

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III.

Discussion

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In granting the SEC’s motion for summary judgment, the court found that the SEC

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produced sufficient evidence to demonstrate liability. Accordingly, the court concluded that

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summary judgment was proper, as there was no genuine issue of material fact. (ECF No. 156). The

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court reinforced that conclusion when it denied Fujinaga’s motion to reconsider, (ECF No. 196),

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noting that Fujinaga was given more than sufficient opportunity to refute the SEC’s arguments,

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yet consistently failed to do so. (ECF No. 210).

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In yet another attempt to achieve a different outcome, Fujinaga filed a motion to stay the

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execution of judgment pending appeal, (ECF No. 236), the standard for which requires defendants

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to show a probability of success on the merits and the possibility of irreparable injury. See Lopez,

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713 F.2d at 1435. The court, finding for the second time that Fujinaga was unlikely to succeed on

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the merits of his appeal, denied that motion. (ECF No. 252).

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Presently, Fujinaga makes yet another similar request to his motion to stay execution of

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judgment by asking the court to stay only the sale of his residence. (ECF No. 295). Fujinaga argues

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that his ability to be of assistance in gathering evidence for his criminal case will be significantly

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impaired should his family be required to vacate its residence. (ECF No. 295 at 3–4). He further

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argues that this impairment will compromise his ability to defend himself, and that no one will be

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harmed or prejudiced by allowing Fujinaga and his family to continue to stay at their residence.

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(Id.).

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The court is unpersuaded by Fujinaga’s argument. As the SEC correctly notes, there is no

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legitimate reason why Fujinaga would need to reside in a 7,400 square foot mansion in order to be

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of assistance or gather and organize evidence for his criminal case. (ECF No. 296 at 2 n. 1).

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Nevertheless, these arguments are inapposite under the standards for a motion to stay the execution

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of a judgment pending appeal. In the instant motion, Fujinaga carries the burden of demonstrating

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probability of success on the merits and the possibility of irreparable injury. He has failed to do

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either.

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This court has found, on numerous occasions, that Fujinaga is unlikely to be successful on

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appeal. See (ECF Nos. 188, 210, 252). Furthermore, Fujinaga has put forth no argument

James C. Mahan
U.S. District Judge

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demonstrating the possibility of irreparable injury should his motion be denied. Accordingly, the

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court will deny Fujinaga’s instant motion to stay the sale of his residence pending appeal.

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IV.

Conclusion

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Fujinaga’s motion to

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stay the sale of his residential property located at 9009 Greensboro Lane, Las Vegas, Nevada,

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pending the conclusion of his civil and criminal proceedings, (ECF No. 295), be, and the same

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hereby is, DENIED.

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DATED July 26, 2016.

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__________________________________________
_____________________________
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UNITED STATES DISTRICT JUDGE
UN ED
UNITED
ED
JUD

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James C. Mahan
U.S. District Judge

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