«SECURITIES AND EXCHANGE COMMISSION, : : Plaintiff, : : vs. : Civil Action No. : 3:08-CV-0499-N W FINANCIAL GROUP, LLC, : ADLEY H. ABDULWAHAB a/k/a ...»
preclusion order should be entered to bar his subsequent use of evidence." SEC v. Grossman, 121 F.R.D. 207, 210 (S.D.N.Y. 1987) citing SEC v. Cymaticolor, 106 F.R.D. 545, 549-550 (S.D.N.Y. 1985); SEC v. Benson, [1984-1985 Transfer Binder] Fed. Sec. L. Rep. 92,001 (S.D.N.Y. 1985). See also Goodman v. DeAzoulay, 539 F. Supp. 10, 16 (E.D. Pa. 1981) (noting a similar unreported ruling in that case). In SEC v. Benson, 657 F. Supp. 1122 (S.D.N.Y. 1987), the court held that summary judgment in favor of the Commission was appropriate where the defendant had asserted his Fifth Amendment rights to prevent discovery. The court specifically held that the defendant was precluded from offering any evidence "disputing the plaintiff's evidence or supporting his own denials." 657 F. Supp. at 1129. See also In Re Edmond, 934 F.2d 1304, 1308-09 (4th Cir. 1991); United States v. Parcels of Land, 903 F.2d 36, 43 (1st Cir. 1990) (courts precluded parties from presenting evidence in opposition to a summary judgment motion after the parties had previously hidden their evidence behind a Fifth Amendment claim).
The preclusion doctrine is based on preventing unfairness and undue prejudice which would otherwise result from an assertion of the Fifth Amendment to block discovery. See SEC v. Benson, 657 F. Supp. at 1129. An order of preclusion is appropriate even if the same factual information is available through other sources, since the defendant might still gain an unfair surprise by concealing his theories or use of the evidence. SEC v. Cymaticolor, 106 F.R.D. at 549-50.
Although the Defendants are precluded by the Interlocutory Judgment from challenging the allegations in the Commission’s Complaint, the Commission submits that the Court should go further. Defendants have used their privilege against self-incrimination in this case to prevent discovery by the Commission of their purported defenses and the evidentiary bases for their purported defenses. The Commission does not dispute the Defendants’ right to do so, but their
this late stage. There is ample authority for the issuance of a preclusion order under the circumstances presented. In the interests of fairness, and the orderly conduct of this litigation, the Commission requests that Defendants be precluded from offering evidence in response to the Commission’s summary judgment motion.
VII. CONCLUSION For the reasons set forth above, the Commission requests that the Court grant Plaintiff’s summary judgment motion and enter a final judgment against the Defendants.
Dated and signed on the 16th day of January, 2009.
I hereby certify that on this 16TH of January, 2009, I electronically filed the foregoing Plaintiff’s Memorandum in Support of Motion for Summary Judgment Against Defendants with the Clerk of the Court for the Northern District of Texas, Dallas Division, by using the CM/ECF system which will send a notice of electronic filing to the following CM/ECF participants.
Jeffrey B. Norris, Counsel for Securities and Exchange Commission Vernon Jones, Receiver John Teakell, Counsel for Defendants Stephen Komie, Counsel for Defendants John S. Brannon, Counsel for Receiver Mitchell E. Ayer, Counsel for Receiver Randy West Williams, Counsel for Receiver
s/ Jeffrey B. Norris Jeffrey B. Norris