Securities and Exchange Commission v. Cope et al

Filing 295

MEMORANDUM OPINION AND ORDER: Angelique de Maison (de Maison) brings this motion for reconsideration of the Courts December 23, 2016 Memorandum Opinion and Order awarding de Maison $25,000 as compensation for facilitating the sale of four of her properties (the December 23 Opinion). Specifically, the motion seeks the award of an additional $75,000. For the reasons set forth below, de Maisons motion for reconsideration is denied. (Signed by Judge Denise L. Cote on 2/8/2017) (gr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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SECURITIES AND EXCHANGE COMMISSION,
:
:
Plaintiff,
:
:
-v:
:
JASON COPE, IZAK ZIRK DE MAISON (F/K/A):
IZAK ZIRK ENGELBRECHT), GREGORY
:
GOLDSTEIN, STEPHEN WILSHINSKY, TALMAN :
HARRIS, WILLIAM SCHOLANDER, JACK
:
TAGLIAFERRO, VICTOR ALFAYA, JUSTIN
:
ESPOSITO, KONA JONES BARBERA, LOUIS
:
MASTROMATTEO, ANGELIQUE DE MAISON,
:
TRISH MALONE, KIERNAN T. KUHN, PETER
:
VOUTSAS, RONALD LOSHIN, GEPCO, LTD.,
:
SUNATCO LTD., SUPRAFIN LTD.,
:
WORLDBRIDGE PARTNERS, TRAVERSE
:
INTERNATIONAL, and SMALL CAP RESOURCE :
CORP.,
:
:
Defendants,
:
And
:
:
ANGELIQUE DE MAISON,
:
:
Relief Defendant.
:
-------------------------------------- X

14cv7575 (DLC)
MEMORANDUM OPINION
AND ORDER

APPEARANCES:
For Angelique de Maison:
Jeffrey B. Coopersmith
Lauren Rainwater
Davis Wright Tremaine LLP
1201 Third Avenue, Suite 2200
Seattle, Washington 98101
For the Securities and Exchange Commission:
Howard A. Fischer
John O. Enright
Securities & Exchange Commission - New York Regional Office
Brookfield Place, 200 Vesey Street
New York, New York 10281

DENISE COTE, District Judge:
Angelique de Maison (“de Maison”) brings this motion for
reconsideration of the Court’s December 23, 2016 Memorandum
Opinion and Order awarding de Maison $25,000 as compensation for
facilitating the sale of four of her properties (“the December
23 Opinion”).

Specifically, the motion seeks the award of an

additional $75,000.

For the reasons set forth below, de

Maison’s motion for reconsideration is denied.
BACKGROUND
General familiarity with the facts of this case is
presumed, and are therefore summarized here only briefly.

In

September 2014, the SEC filed a complaint against de Maison and
others for violating various provisions of the Securities Act of
1933 and the Securities Exchange Act of 1934.1

On October 22,

2014, the Court entered a preliminary injunction order freezing
de Maison’s assets (the “Freeze Order”).

While the Freeze Order

was in place, de Maison entered into two stipulations with the
SEC allowing her to complete the contracted sale of several of
her properties.

At the time the Court issued its December 23

Opinion, the proceeds from the sale of de Maison’s properties
amounted to $612,551.64.
On December 23, 2015, the Court so ordered a Consent

An amended complaint was filed on June 15, 2015, in which de
Maison was named a relief defendant.
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between de Maison and the SEC (the “Consent”).

Pursuant to the

terms of the Consent, de Maison agreed to eventually pay
disgorgement of her ill-gotten gains, in addition to a civil
penalty.

The SEC has not yet moved for disgorgement and

penalties, but has previously submitted -- and de Maison has not
contested -- that it is “more likely than not that either
disgorgement or penalties -- not to mention a combination of
disgorgement and penalties -- would be greater than the amount
of liquid assets subject to the freeze.”
Ms. de Maison filed a motion for relief from the Freeze
Order on November 1, 2016 (the “November 1 motion for relief”).
The motion sought: (1) $93,478.65 to cover incurred, as well as
future, attorneys’ fees; and (2) $100,000 to cover de Maison’s
living expenses.

The December 23 Opinion granted the request

for attorneys’ fees in its entirety and granted de Maison
$25,000 as compensation for her real estate efforts.
Ms. de Maison filed the present motion for reconsideration
on January 6.

The motion for reconsideration became fully

submitted on January 30.
DISCUSSION
The standard for granting a motion for reconsideration is
“strict.”

Analytical Surveys, Inc. v. Tonga Partners, L.P., 684

F.3d 36, 52 (2d Cir. 2012) (citation omitted) (discussing a

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motion under Rule 59(e), Fed. R. Civ. P.).2

“[R]econsideration

will generally be denied unless the moving party can point to
controlling decisions or data that the court overlooked.”
(citation omitted).

Id.

“A motion for reconsideration should be

granted only when the defendant identifies an intervening change
of controlling law, the availability of new evidence, or the
need to correct a clear error or prevent manifest injustice.”
Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable
Tr., 729 F.3d 99, 104 (2d Cir. 2013) (citation omitted).

It is

“not a vehicle for relitigating old issues, presenting the case
under new theories, securing a rehearing on the merits, or
otherwise taking a second bite at the apple.”

Analytical

Surveys, 684 F.3d at 52 (citation omitted).
Ms. de Maison’s motion for reconsideration does not
identify an intervening change of controlling law, nor does it
present previously unavailable evidence.

Rather, the motion is

a thinly veiled attempt to relitigate the Court’s entirely
discretionary award of compensation to de Maison for her real
estate work.
At base, de Maison believes that the Court’s December 23

Ms. de Maison brings this motion pursuant to S.D.N.Y. Local
Civil Rule 6.3, but does not specify the subsection of the
Federal Rules of Civil Procedure upon which her application
relies. Because de Maison’s application, if granted, would
constitute an alteration of the Court’s ruling, her motion is
construed as a motion pursuant to Rule 59(e), Fed. R. Civ. P.
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Opinion underestimated the value of her real estate efforts.
But for her cleanup and outreach work, de Maison maintains, her
properties “could not have been sold because there was no one
else who would or could have done this work.”

Ms. de Maison

also believes that she was not given adequate opportunity to
respond to the SEC’s compensation proposal.

Finally, de Maison

repeats her argument that it was inappropriate for the SEC to
propose a specific compensation figure in light of its prior
representations that it would take no position as to the amount
that should be released to de Maison.
Ms. de Maison’s arguments are unavailing.

First, de Maison

had an adequate opportunity to -- and, in fact, did -- respond
to the SEC’s compensation proposal.

In its opposition to de

Maison’s November 1 motion for relief, the SEC suggested that de
Maison be compensated $25,000 for her real estate efforts,
reasoning that “a reasonable proxy for compensation might be the
commissions that real estate brokers typically earn,” and that
“general practice in the real estate industry is that
compensation for real estate brokers ranges between 4-6%, with a
buying and selling agent splitting the commission.”

In her

reply, de Maison challenged the SEC’s $25,000 compensation
figure, arguing that brokers’ fees are calculated from the total
sales price of the property; accordingly, a four percent
commission rate applied to the total combined purchase price of
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$2,067,500 would be $82,700 -- not $25,000.

Her reply also

highlighted the work she had done to facilitate the property
sales, suggesting that a real estate commission may not be the
most appropriate proxy for compensation since her work went
“well above and beyond the normal responsibilities of a real
estate agent.”
Ms. de Maison’s reply failed to address the SEC’s
observation that buying and selling agents generally tend to
split a commission.

This omission was raised by the SEC in a

December 20 letter to the Court.3

In the December 20 letter, the

SEC noted that “the record does not reflect whether any other
real estate professional received some compensation in
connection with these sales, which would have bearing on the
reasonableness of Ms. de Maison’s request for compensation.”
Ms. de Maison now argues that the SEC “raised the issue of
compensation to other real estate professionals late and
inappropriately in response to the Court’s order of December
16.”

But as the record shows, the SEC first raised this issue

in its opposition to de Maison’s November 1 motion for relief.

In light of certain assertions in de Maison’s reply brief, the
Court issued an order on December 16 requesting that the SEC
respond to the following two questions: “(1) Does the SEC agree
that 4% of the sales price of the relevant properties is
$82,700? (2) What representations were made by Howard Fischer to
counsel for de Maison on July 12 regarding the SEC’s official
position on de Maison’s motion?”
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Ultimately, it was de Maison who bore the burden of establishing
her entitlement to an award under all potential theories and
formulae for recovery.
Even if it were appropriate to take into consideration de
Maison’s factual assertions at this stage of the proceedings,
her motion for reconsideration would still be denied.

Ms. de

Maison’s motion asserts that “for the four property sales, only
one broker or agent was compensated instead of two,” and that
with respect to the sale of at least two of her properties, Rick
Marlin, a real estate broker, “received a commission of 7% as
the listing broker.”

These newly asserted facts cut against de

Maison’s request for additional compensation, since they confirm
that the pool of funds available to defrauded investors has
already been depleted to pay other real estate agents’
commissions.

Increasing de Maison’s award would only further

deplete the funds available to the defrauded investors as a
result of these property sales.

Where, as here, there are

insufficient funds to satisfy a disgorgement remedy, awarding de
Maison additional compensation would not be in the defrauded
investors’ interest.

See SEC v. Stein, 07cv3125, 2009 WL

1181061 at *1 (S.D.N.Y. Apr. 30, 2009) (“To persuade a court to
unfreeze assets, the defendant must establish that . . . there
are sufficient funds to satisfy any disgorgement remedy that
might be ordered in the event a violation is established at
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trial.”); SEC v. Grossman, 887 F. Supp. 649, 661 (S.D.N.Y.
1995), aff’d sub nom. SEC v. Estate of Hirshberg, 101 F.3d 109
(2d Cir. 1996) (holding that to succeed on a motion to unfreeze
assets, an applicant “must establish that such a modification is
in the interest of the defrauded investors”).
Finally, de Maison argues that it was inappropriate for the
SEC to propose a specific compensation figure and that, “to the
extent that [the] Court based its decision to allow only $25,000
to be released to Ms. de Maison on the SEC’s argument . . . the
Court should reconsider its ruling and award a greater amount.”
The Court has already addressed this issue in connection with
the November 1 motion for relief.

Moreover, the December 23

Opinion took into consideration several factors beyond just the
SEC’s proposed compensation figure, including case law that
disfavors lifting a freeze order when there are insufficient
funds to satisfy a disgorgement remedy.
CONCLUSION
Ms. de Maison’s January 6 motion for reconsideration is
denied.
Dated:

New York, New York
February 8, 2017
__________________________________
DENISE COTE
United States District Judge

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