Securities and Exchange Commission v. Boock et al

Filing 197

MEMORANDUM OPINION AND ORDER: re: 181 MOTION. The SEC's March 1, 2013 motion for judgment on the pleadings, or in the alternative for summary judgment, as to relief defendant Alena Dubinsky is granted. So Ordered (Signed by Judge Denise L. Cote on 9/9/2013) Copies Mailed By Chambers. (js)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------------X
:
SECURITIES AND EXCHANGE COMMISSION,
:
Plaintiff,
:
:
-v:
:
IRWIN BOOCK, STANTON B.J. DEFREITAS,
:
NICOLETTE D. LOISEL, ROGER L. SHOSS and :
JASON C. WONG,
:
Defendants,
:
:
and
:
:
BIRTE BOOCK, 1621533 ONTARIO, INC., and :
ALENA DUBINSKY,
:
Relief Defendants. :
:
----------------------------------------X

09 Civ. 8261 (DLC)
MEMORANDUM OPINION
AND ORDER

APPEARANCES:
For the plaintiff:
Paul W. Kisslinger
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
For relief defendant Alena Dubinsky:
Alena Dubinsky, Pro Se
65 Hunt Ave.
Richmond Hill, ON
L4C4H1
DENISE COTE, District Judge:
Before the Court is plaintiff Securities and Exchange
Commission’s (“SEC”) March 1, 2013 motion for judgment on the
pleadings or, in the alternative, for summary judgment as to

relief defendant Alena Dubinsky.

For the following reasons, the

SEC’s motion is granted.

BACKGROUND
The facts of this case are detailed in two previous
Opinions and will not be repeated at length here.

See SEC v.

Boock, No. 09 Civ. 8261 (DLC), 2011 WL 3792819 (S.D.N.Y. Aug.
25, 2011) (the “Summary Judgment Opinion”); 2012 WL 3133638
(Aug. 2, 2012) (the “Relief Opinion”).

In essence, this case

involves a securities fraud scheme in which the five defendants
hijacked defunct or inactive corporations, issued unregistered
stock, and sold the securities in violation of the antifraud and
registration requirements of the federal securities laws.

On

March 26, 2010, the Court entered a default as to defendants
Boock and DeFreitas.

In the Summary Judgment Opinion of August

25, 2011, the Court granted in part the SEC’s summary judgment
motion as to Wong, and in the Relief Opinion of August 2, 2012,
the Court granted the SEC’s motion for judgments as to Boock,
DeFreitas, and Wong, imposing injunctions, disgorgement, and
civil penalties.

This action is stayed as to Shoss and Loisel

pending the outcome of criminal proceedings against them.
On August 30, 2012, the SEC requested permission to amend
its complaint to add Dubinsky as a relief defendant.

The Court

granted permission in an Order of September 4, and on October

2

17, the SEC filed its Amended Complaint.

The Amended Complaint

alleges that Dubinsky was a nominee of Boock, Wong, and
DeFreitas (the “Toronto Defendants”) and that she opened
brokerage accounts in Toronto that were used to receive and
liquidate hundreds of millions of shares in six of the companies
at issue.

These shares were issued in Dubinsky’s name and

transferred into her brokerage accounts before being sold,
generating approximately $1,050,000 in proceeds, currently
frozen by order of the Ontario Superior Court in two HSBC
accounts. 1

The Amended Complaint alleges that these funds are

the illegal proceeds of the Toronto portion of the scheme and
are subject to disgorgement.

These facts are to some degree

disputed by Dubinsky, as will be explained below.
On November 5, 2012, Dubinsky, acting pro se, filed a onepage “motion in opposition to complaint,” which the Court will
construe as her answer.

On March 1, 2013, the SEC filed the

instant motion for judgment on the pleadings, or in the
alternative for summary judgment.

In an Order of March 5, the

Court set a briefing schedule, under which Dubinsky was required
to file her opposition to the SEC’s motion by March 29.

On

March 26, Dubinsky filed a “motion to dismiss,” and on April 16,

1

The Amended Complaint explains that as of December 31, 2011,
approximately $1,016,000 remained in Dubinsky’s HSBC account
ending in 17J-B, and approximately $46,220 remained in
Dubinsky’s HSBC account ending in 17J-A.
3

the Court issued an Order indicating that this document would be
construed as Dubinsky’s opposition to the SEC’s motion.

On

April 9, the SEC filed its reply, and on April 23, Dubinsky
filed a “motion in opposition to plaintiff’s motion for summary
judgment.”

DISCUSSION
District courts may order disgorgement “against a person
who is not accused of wrongdoing in a securities enforcement
action where that person (1) has received ill-gotten funds; and
(2) does not have a legitimate claim to those funds.”
Cavanaugh, 155 F.3d 129, 136 (2d Cir. 1998).

SEC v.

In considering a

motion for judgment on the pleadings, a court must accept all
allegations in the non-moving party’s pleading as true and draw
all inferences in the non-moving party’s favor.

Miller v.

Wolpoff & Abramson, LLP, 321 F.3d 292, 300 (2d Cir. 2003).

On a

motion for summary judgment, the court must draw all factual
inferences in favor of the non-moving party and may grant
summary judgment “only if the moving party shows that there are
no genuine issues of material fact and that the moving party is
entitled to judgment as a matter of law.”

Id.

Under either standard, it is clear that judgment should be
entered for the SEC.

In none of her three filings (her “motion

in opposition to complaint,” “motion to dismiss,” and “motion in

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opposition to plaintiff’s motion for summary judgment”) does
Dubinsky contest the basic facts necessary to establish the
elements of disgorgement.

Rather, Dubinsky insists that she has

never met any of the Toronto Defendants and knew nothing about
the companies involved in the scheme.

Dubinsky maintains that

the shares were given to her by her fiancé, who in turn received
them from a business partner in Russia, Oleg Oskov.

In an

affidavit submitted by Dubinsky, Oskov explains that he received
the shares as payment for real estate he sold to Defreitas.
Dubinsky has also submitted several documents in both Russian
and English that purport to memorialize the real estate
transaction.

The SEC maintains that this real estate

transaction never occurred, and was fabricated by Boock.
Regardless of whether Dubinsky’s account is true, she does
not deny the key facts necessary to find that the assets at
issue are subject to disgorgement.

More specifically, Dubinsky

admits, both in her answer and in her opposition to the instant
motion, that she received the “shares in question” and deposited
them into brokerage accounts that she opened for that purpose.
Dubinsky also does not argue that she has a “legitimate claim”
to the funds, since even by her own account she simply received
them from her fiancé without paying any consideration for them.
See Cavanaugh, 155 F.3d at 137 (wife had no legitimate claim to
shares where she “gave no consideration for [them] and thus

5

received them as a gift”).

Thus, even accepting all allegations

in Dubinsky’s answer as true, the SEC is still entitled to
disgorgement of the approximately $1,050,000 that remains in
Dubinsky’s brokerage accounts.

Looking beyond the pleadings

does not change the outcome; as noted, none of the evidence
submitted by Dubinsky undermines the conclusion that she
received ill-gotten funds and has no legitimate claim to those
funds. 2

CONCLUSION
The SEC’s March 1, 2013 motion for judgment on the
pleadings, or in the alternative for summary judgment, as to
relief defendant Alena Dubinsky is granted.

SO ORDERED:
Dated:

New York, New York
September 9, 2013

____________________________
DENISE COTE
United States District Judge

2

Indeed, evidence submitted by the SEC in connection with its
motion for judgments against the Toronto Defendants (including
bank and brokerage records, share certificates, sworn testimony,
and declarations) established that the Toronto Defendants used
accounts in Dubinsky’s name to sell shares in the hijacked
companies. See Relief Opinion, 2012 WL 3133638 at *4.
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Copies mailed to:
Alena Dubinsky
65 Hunt Ave.
Richmond Hill, Ontario
L4C 4H1 CANADA
Irwin Boock
500 Hidden Trail
Toronto, Ontario
M2R 3R5 CANADA
Nicolette D. Loisel
2100 Tanglewilde St.
Unit 711
Houston, TX 77063
Roger Shoss
139 Haversham Drive
Houston, TX 77024-6240

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