Securities and Exchange Commission v. Rubera et al

Filing 904

Opinion and Order. The Receiver has five business days from today to make satisfactory arrangements with Rimple to return $43,799.65 the Receiver acknowledges is owed to Rimple. (Please access entire document by number hyperlink for complete review and details of Opinion and Order.) Ordered by Judge Owen M. Panner. (dkj)

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UNITED STATES DISTRICT COURT DISTRICT OF OREGON IN RE ALPHA TEL COM , I N C . , e t a l . CV O l - 1 2 8 3 - P A
O P I N I O N AND ORDER

PANNER, J . R e c e i v e r Thomas L e n n o n , a c t i n g t h r o u g h h i s a t t o r n e y s (hereafter, the Receiver), executed upon a judgment against Kevin Rimple and obtained $43,799.65. T h a t j U d g m e n t l a t e r was r e v e r s e d

on appeal because the Receiver failed to obtain jurisdiction over Rimple and others . . Following issuance of the mandate, Rimple repeatedly asked the Receiver to return the funds collected from Rimple under authority of the now-vacated judgment. See, e.g., docket # 876.

The R e c e i v e r , t h r o u g h h i s a t t o r n e y s , s t e a d f a s t l y r e f u s e d t o r e t u r n t h e money. A f t e r t h i s court i n t e r c e d e d (# 877), the

Receiver f i l e d a response (# 878):

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OPINION AND ORDER

By l e t t e r o f A p r i l 1 7 , 2 0 0 9 , Mr. K e v i n R i m p l e h a s requested the Receiver to pay $43,829.65 which the Receiver collected pursuant to the Court's March 3 1 , 2005 D i s g o r g e m e n t O r d e r . T h e r e i s n o l e g a l o r equitable basis for the Receiver to return these f u n d s t o Mr. R i m p l e . . . . The d e c i s i o n by t h e Ninth Circuit Court of Appeals in the Securities a n d E x c h a n g e C o m m i s s i o n v . R o s s , 504 F . 3 d 1 1 3 0 ( 9 t h C i r . 2 0 0 7 ) was r e c e i v e d w e l l o v e r o n e y e a r f o l l o w i n g t h e c o l l e c t i o n o f t h e j u d g m e n t f r o m Mr. R i m p l e . N e i t h e r Mr. R i m p l e n o r a n y o f t h e o t h e r defendants obtained a stay pending the outcome of the appeal. "In the absence of a stay or injunction pending appeal, the prevailing party may a c t u p o n a D i s t r i c t C o u r t ' s o r d e r o r judgment." Goelz & Watts, Rutter Group Practice Guide: Federal Ninth Circuit c i v i l Appellate P r a c t i c e , § § 6 : 3 1 5 , 6 : 3 1 7 . 1 , 6 - 5 5 ( 2 0 0 9 ) . As s u c h , t h e r e i s n o l e g a l b a s i s f o r Mr. R i m p l e ' s current request for the Receiver to return funds properly collected by the Receiver, pursuant to the original rUling of the Court. Id. at 6-55, § 6:317. T h e r e f o r e , t h e R e c e i v e r h a s r e j e c t e d Mr. R i m p l e ' s request for the return of funds. Instead the R e c e i v e r h a s i n c l u d e d f u n d s c o l l e c t e d f r o m Mr. Rimple and others in the amounts which are presently set aside for distribution to the i n v e s t o r s . [1]

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That these funds are set aside for "distribution to the i n v e s t o r s " i s a q u e s t i o n a b l e d e s c r i p t i o n . The R e c e i v e r a n d h i s attorneys have filed applications for fees and costs that, i f g r a n t e d , would consume a s u b s t a n t i a l p a r t o f t h e l i m i t e d funds s t i l l h e l d b y t h e R e c e i v e r . The c o u r t u l t i m a t e l y w i l l d e c i d e what additional amounts, i f any, the Receiver and his attorneys are entitled to recover for their services in this matter. 2OPINION AND ORDER

Rimple, n o t e a s i l y d i s s u a d e d , c o n t i n u e d t o s e e k r e t u r n o f the funds.
(# 8 8 2 ) .

The R e c e i v e r , t h r o u g h h i s a t t o r n e y s ,

c o n t i n u e d t o d e n y R i m p l e was e n t i t l e d t o r e t u r n o f t h e money: T h i s l e t t e r i s i n r e s p o n s e t o y o u r May 6 , 2 0 0 9 l e t t e r . Enclosed is a copy of the pleading filed with the Court in which I have described the basis
for the Receiver not returning funds collected or received from you i n connection with the judgment

for disgorgement entered by the District Court. In simple terms, since you and other appellants did not seek a stay of the collection of the judgment pending the outcome of the appeal, the R e c e i v e r was p r o p e r l y a c t i n g t o c o l l e c t t h e j u d g m e n t d u r i n g t h e p e n d e n c y o f t h e a p p e a l . The collection efforts directed toward you were consistent with the actions taken by the Receiver as to other appellants and sales agents during the pendency of the appeal. There i s no legal basis
for the return of money collected prior to the Appellate Court's overturning of the District Court judgment. As such, the Receiver i s not in a position to return money to you or other sales agents.

L e t t e r o f May 2 0 , 2 0 0 9 , f r o m D a v i d R. Z a r o ( # 8 9 1 , E x . A) (emphasis added). T h i s c o u r t o r d e r e d t h e R e c e i v e r t o a p p e a r i n p e r s o n a n d show c a u s e why t h e f u n d s s h o u l d n o t b e r e t u r n e d t o R i m p l e .
(#

892).

T h e R e c e i v e r t h e n f i l e d a memorandum ( # 8 9 9 ) a c k n o w l e d g i n g Rimple actually i s entitled to return of the funds. Receiver (or his attorneys) continued to dissemble: still, the

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OPINION AND ORDER

The R e c e i v e r t h u s d o e s n o t d i s p u t e Mr. R i m p l e ' s ability, in the abstract, to seek to recover the subject funds. However, as the Receiver m a i n t a i n e d i n p r i o r r e s p o n s e s t o Mr. R i m p l e ' s reimbursement request, the return of the subject funds is not proper at this time. s p e c i f i c a l l y , Mr. R i m p l e ' s w r i t t e n r e i m b u r s e m e n t requests to the Receiver were procedurally inappropriate. In order to recover the sUbject f u n d s , Mr. R i m p l e i s o b l i g a t e d t o f i l e a m o t i o n a n d s e c u r e a w r i t o f e x e c u t i o n . S e e T u m e l s o n , 2007 WL 1 2 2 8 6 1 6 a t * 1 ; F e d . R. c i v . P . 6 9 . F u r t h e r , a n d t o t h e e x t e n t t h a t Mr. R i m p l e , o r o t h e r s similarly situated, would claim a right to prejudgment interest, the law i s clear: the Court may n o t " p u n i s h [ t h e R e c e i v e r ] f o r e x e c u t i n g o n a valid judgment by imposing prejudgment interest." Id. For these reasons, the Receiver respectfully s u b m i t s t h a t w h i l e Mr. R i m p l e may e n j o y a n abstract right to the return of the sUbject funds, his efforts to date to recover the funds have been procedurally inappropriate, and the Receiver's election to retain the funds at this time has been proper. R e c e i v e r ' s R e s p o n s e (# 8 9 9 ) , p p . 3 - 4 . In the earlier documents this court has seen, the Receiver never claimed that Rimple's requests, though proper "in the abstract," were being rejected only because the requests were not in the proper form. Instead, the Receiver flatly denied that

Rimple had any right to the funds--"abstract" or otherwise--and essentially told Rimple to go away.

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O P I N I O N AND ORDER

This game w i l l e n d r i g h t now.

The R e c e i v e r h a s f i v e

b u s i n e s s d a y s f r o m t o d a y t o make s a t i s f a c t o r y a r r a n g e m e n t s w i t h R i m p l e t o r e t u r n $ 4 3 , 7 9 9 . 6 5 t h e R e c e i v e r a c k n o w l e d g e s i s owed t o Rimple. I T I S SO ORDERED. DATED t h i s day of June, 2009.

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Owen M. P a n n e r United States District Judge

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OPINION AND ORDER