Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 1 of 11 Page ID #:6325 1 2 3 4 5 6 7 8 DONALD W. SEARLES (Cal. Bar No. 135705) Email: searlesd@sec.gov DOUGLAS M. MILLER (Cal. Bar No. 240398) Email: millerdou@sec.gov PETER DEL GRECO (Cal. Bar No. 164925) E-mail: delgrecop@sec.gov Attorneys for Plaintiff Securities and Exchange Commission Michele Wein Layne, Regional Director John W. Berry, Associate Regional Director 444 S. Flower Street, Suite 900 Los Angeles, California 90071 Telephone: (323) 965-3998 Facsimile: (213) 443-1904 9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 Western Division 12 13 SECURITIES AND EXCHANGE COMMISSION, 14 Plaintiff, 15 16 vs. Defendants. 18 19 21 PLAINTIFF SECURITIES AND EXCHANGE COMISSION’S SUPPLEMENTAL MEMORANDUM ON MONETARY RELIEF STEVE CHEN, et al., 17 20 Case No. CV15-07425 RGK (PLA) I. Trial Date: January 10, 2017 Time: 9:00 a.m. Ctrm: 850 Judge: Hon. R. Gary Klausner INTRODUCTION This action, brought by the Securities and Exchange Commission (“SEC”) 22 against defendant Steve Chen (“Chen”) and his related entities in September 2015, 23 concerns a massive pyramid scheme that defrauded myriad investors. On December 24 8, 2016, the Court granted the SEC’s motion for summary judgment against Chen, 25 finding him liable on all of the claims asserted against him. 26 On December 19, 2016, the Court held a final pretrial conference to determine 27 whether any triable issues of fact remained for the current January 10, 2017 trial date. 28 After hearing from counsel, the Court found that the only triable issue remaining with 1 Case No. CV15-07425 RGK (PLA) Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 2 of 11 Page ID #:6326 1 respect to Chen was the SEC’s request for monetary relief (i.e., the amount of 2 disgorgement, prejudgment interest, and/or penalty Chen should pay). One question 3 remained, however, on that issue – whether Chen was entitled to a jury trial on the 4 amount of monetary relief or whether the Court could make that determination. So, 5 at the pretrial conference, the Court gave the SEC the opportunity to submit this 6 memorandum to address that question. 7 In short, the law in the Ninth Circuit and elsewhere is clear that the issue of 8 monetary relief in SEC enforcement actions is to be determined by the court, not a 9 jury. The SEC generally seeks two forms of monetary relief in its actions, and this 10 case is no different. One form of relief is disgorgement, which is an equitable form 11 of relief calling for the defendant to return his ill-gotten gains from his fraud. 12 Because it is equitable, by definition, it is to be determined by a court. The other 13 form of relief comes in the form of civil monetary penalties. Both the statutory basis 14 for this form of relief, and the case law addressing that relief, make clear that the 15 penalty determination is also made by the court, not a jury. Therefore, this Court 16 should determine the amount of disgorgement, prejudgment interest, and civil penalty 17 to be imposed against Chen for his fraud. A jury does not decide these issues, and so 18 there are no triable issues remaining in this case for a jury to hear. 1 19 II. BACKGROUND 20 The SEC commenced this action against Chen on September 28, 2015. In its 21 complaint, the SEC alleged that he violated the registration and antifraud provisions 22 of the federal securities laws by orchestrating a pyramid scheme that lured investors 23 to invest in US Fine Investment Arts, Inc. (“USFIA”) by falsely claiming, among 24 25 26 27 28 1 As stated during the final pretrial conference, the SEC and counsel for the courtappointed Receiver anticipate entering consents and final judgments as to liability and injunctive relief for all of the defendant entities in this action before the January 10, 2017 trial date and, once that is completed, will seek a continuance of the trial date to allow sufficient time to reach an agreement on monetary relief as to those defendants. 2 Case No. CV15-07425 RGK (PLA) Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 3 of 11 Page ID #:6327 1 other things, that USFIA was conducting a pre-IPO offering of its shares, which Chen 2 claimed were backed by $50 billion in assets, including vast amber mines located in 3 the Dominican Republic, and by promising investors that when the actual IPO took 4 place in the near future all pre-IPO investors were guaranteed to make at least sixty- 5 four (64) times their initial investment. (Dkt. No. 3.) On December 8, 2016, the Court granted the SEC’s motion for summary 6 7 judgment as to liability and injunctive relief on all of the SEC’s claims. The Court 8 found that Chen: (1) ran USFIA as a fraudulent pyramid scheme; (2) sold investors 9 securities, whether characterized as investment contracts or pyramid scheme 10 transactions, which were not registered with the SEC; (3) those sales were made 11 though interstate commerce; (4) defrauded investors by failing to advise them that 12 the pyramid scheme was destined to collapse; (5) made five material 13 misrepresentations to investors in connection with the sale of the securities; (6) 14 misused investor funds to fund a lifestyle that included multiple million-dollar 15 mansions and luxury automobiles for him and his family; (7) acted with a high degree 16 of scienter; (8) orchestrated the pyramid scheme over many years; and (9) showed no 17 recognition of wrongdoing and no assurance against future violations. (Dkt. No. 18 167.) 19 III. ARGUMENT 20 A. 21 The Court, not a jury, should determine the amount of disgorgement Chen is The Court Determines the Disgorgement Amount 22 ordered to pay. As the Ninth Circuit has made clear, disgorgement is a remedy 23 available to the SEC in its enforcement actions: “[A] district court has broad equity powers to order the disgorgement of ill- 24 25 gotten gains obtained through violation of the securities laws. Disgorgement is 26 designed to deprive a wrongdoer of unjust enrichment, and to deter others from 27 violating 28 SEC v. Platforms Wireless Int’l Corp., 617 F.3d 1072, 1096 (9th Cir. 2010), quoting securities laws by making violations unprofitable.” 3 Case No. CV15-07425 RGK (PLA) Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 4 of 11 Page ID #:6328 1 SEC v. First Pacific Bancorp, 142 F.3d 1186, 1191 (9th Cir. 1998); see also SEC v. 2 Rind, 991 F.2d 1486, 1493 (9th Cir. 1993) (disgorgement is an available and 3 appropriate equitable remedy for violations of the securities laws). By preventing 4 unjust enrichment, disgorgement eliminates the incentive for violating the law. Id. at 5 1491, 1493; see also JT Wallenbrock & Assoc., 440 F.3d 1109, 1113 (9th Cir. 2006); 6 First Pacific Bancorp, 142 F.3d at 1191. “The amount of disgorgement should 7 include all gains flowing from the illegal activities.” Platforms Wireless, 617 F.3d at 8 1096, quoting JT Wallenbrock, 440 F.3d at 1114; see also SEC v. Cross Fin. Servs., 9 Inc., 908 F. Supp. 718, 734 (C.D. Cal. 1995). Importantly, disgorgement is a form of equitable relief. Disgorgement is not a 10 11 form of damages, which are designed to compensate fraud victims. Rather, 12 disgorgement forces a defendant to surrender his unjust enrichment. See Rind, 991 13 F.2d at 1493. Therefore, as the Ninth Circuit explained in Rind, “the fact that 14 disgorgement involves a claim for money does not detract from its equitable nature: 15 in such an action, ‘the court is not awarding damages to which plaintiff is legally 16 entitled but is exercising the chancellor's discretion to prevent unjust enrichment.’” 17 Id. Therefore, a jury does not decide the amount of disgorgement to be awarded in 18 SEC actions. See id. (no right to a jury trial in SEC action seeking injunctive and 19 disgorgement relief).2 20 21 22 23 24 25 26 27 28 2 The SEC will also request that Chen be ordered to pay prejudgment interest on whatever disgorgement amount the Court imposes. Disgorgement normally includes prejudgment interest to insure that wrongdoers do not profit from their illegal conduct. See SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1105 (2d Cir. 1972); Cross Fin. Services, 908 F. Supp. at 734; see also Platforms Wireless, 617 F.3d at 1099 (affirming calculation of prejudgment based on the rate of interest used by the Internal Revenue Service for the underpayment of federal income tax as set forth in 26 U.S.C. § 6621(a)(2)). In addition, the SEC anticipates it will request that Chen and the defendant entities be held joint and severally liable for whatever disgorgement amount the Court imposes. Joint and several liability is appropriate when co-defendants “collaborate or have a close relationship in engaging in the violations of the securities laws.” See Platforms Wireless, 617 F.3d at 1098. 4 Case No. CV15-07425 RGK (PLA) Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 5 of 11 Page ID #:6329 1 B. 2 The Court also determines the amount of penalties to be awarded in an SEC 3 enforcement action. Under Section 20(d)(2)(A) of the Securities Act of 1933 and 4 Section 21(d)(3)(B) of the Securities Exchange Act of 1934, the amount of any civil 5 penalty “shall be determined by the court in light of the facts and circumstances.” 15 6 U.S.C. §§ 77t(d)(2)(A), 78u(d)(3)(B), 80b-9(e)(1). In other words, the Court 7 “decide[s], consistent with the jury’s finding of liability, not only what equitable 8 relief to impose, but also the amount of civil penalty.” SEC v. Lipson, 278 F.3d 656 9 (7th Cir. 2002); see also Tull v. United States, 481 U.S. 412, 427 (1987) (holding that The Court Determines the Penalty Amount 10 there is only a right to a jury trial on the issue of liability and the “assignment of the 11 determination of the amount of civil penalties to trial judges … does not infringe on 12 the constitutional right to a jury trial. Since Congress itself may fix the civil 13 penalties, it may delegate that determination to trial judges.”); United States v. Duffy, 14 550 F.2d 533, 534 (9th Cir. 1977) (finding that assessment of civil penalties is for the 15 judge to decide rather than the jury); SEC v. Capital Solutions Monthly Income Fund, 16 L.P., 2016 U.S. App. LEXIS 4697 *20 (8th Cir. 2016) (rejecting a defendant’s 17 challenge to the verdict form and holding that the defendant, “was not entitled to have 18 the jury decide the remedies”). 19 C. The Standards for the Court’s Determination of Disgorgement and 20 Penalties 21 1. Disgorgement 22 When a district court is calculating disgorgement in offering fraud cases in 23 SEC actions, there are three important principles. First, the disgorgement amount 24 should be the “total proceeds” raised by the defendants in the offering, including 25 offering proceeds received by entities owned or controlled by the defendants, minus 26 amounts defendants returned to investors. See SEC v. Platform Wireless Int’l Corp., 27 617 F.3d at 1096 (“total proceeds . . . [is] a reasonable approximation of the profits 28 obtained from [defendants’] unlawful sales.”); SEC v. Manor Nursing Ctrs., Inc., 458 5 Case No. CV15-07425 RGK (PLA) Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 6 of 11 Page ID #:6330 1 F.2d 1082, 1104 (2d Cir. 1972) (“We hold that it was appropriate for the district court 2 to order [defendants] to disgorge the proceeds received in connection with the 3 [securities] offering.”); SEC v. Interlink Data Network of Los Angeles, Inc., No. 93 4 3073 R, 1993 U.S. Dist. LEXIS 20163 at *53-54 (C.D. Cal. Nov. 15, 1993) (ordering 5 disgorgement of gross amount received from fraudulent securities offering); 3 Second, the burden on the SEC in establishing the disgorgement amount is not 6 7 high. The SEC need only present evidence of a “reasonable approximation” of the 8 defendant’s ill-gotten gains. See Platforms Wireless, 617 F.3d at 1096; JT 9 Wallenbrock, 440 F.3d at 1113-14. Once such evidence has been presented by the 10 SEC, the burden shifts to the defendant to “demonstrate that the disgorgement figure 11 was not a reasonable approximation.” Platforms Wireless, 617 F.3d at 1096, quoting 12 SEC v. First City Financial Corp., Ltd., 890 F.2d 1215, 1232 (D.C. Cir. 1989). This 13 burden, as the Ninth Circuit explained, is rightfully placed on the wrongdoer: We place this burden on the defendants because information is not “obtainable 14 15 at negligible cost.” The defendants are more likely than the SEC to have access 16 to evidence [demonstrating that the SEC’s approximation is not reasonable]. . . . 17 [W]e conclude that “the risk of uncertainty should fall on the wrongdoer whose 18 illegal conduct created that uncertainty.” 19 20 21 22 23 24 25 26 27 28 3 See also SEC v. Robinson, 2002 WL 1552049 *9 (S.D.N.Y. Jul. 16, 2002) (“[I]t is appropriate to order disgorgement of the entire (gross) proceeds received in connection with the offering.”); SEC v. Rosenfeld, 2001 WL 118612, *2 (S.D.N.Y. Jan. 9, 2001) (“[O]nce the Commission shows the existence of a fraudulent scheme . . . the burden shifts to the defendant to ‘demonstrat[e] that he received less than the full amount allegedly misappropriated and sought to be disgorged.”); SEC v. Sahley, 1994 WL 9682, *1 (S.D.N.Y. Jan. 10, 1994) (granting the SEC’s motion for summary judgment and ordering disgorgement of entire $950,000 raised in the offering fraud; SEC v. Watermark Financial, 2012 WL 501450 (W.D.N.Y. Feb. 12, 2012) (setting disgorgement at $5.2 million, “the total amount still owed [to investors].”); SEC v. Pittsford Capital Income Partners, L.L.C., 2007 WL 2455124, *16 (W.D.N.Y. Aug. 23, 2007) (agreeing with the Commission’s calculation and setting disgorgement at $11.7 million; i.e., the total amount raised in the fraudulent offering minus the amount of funds returned to investors), aff’d in part, SEC v. Pittsford Capital Income Partners, L.L.C. 305 Fed. Appx. 694 (2d Cir. 2008) (unpublished disposition). 6 Case No. CV15-07425 RGK (PLA) Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 7 of 11 Page ID #:6331 1 2 Id., quoting First City Financial Corp., 890 F.2d at 1231-32. This shifting burden on the defendant is important here. As the SEC 3 previously pointed out in its motion in limine (Dkt. No. 148), Chen should be barred 4 from offering any affirmative evidence contesting the SEC’s disgorgement figure, as 5 calculated by the court-appointed receiver, based on the fact that he asserted his Fifth 6 Amendment right against self-incrimination in refusing to comply with the Court- 7 ordered accounting (Dkt. No. 17), and continued to assert his Fifth Amendment rights 8 in response to every substantive question at his deposition. See e.g. SEC v. Benson, 9 657 F.Supp. 1122, 1129 (S.D.N.Y. 1987) (precluding defendant from offering 10 evidence in support of positions on which he declined to furnish disclosure on the 11 basis of Fifth Amendment); SEC v. Cymaticolor Corp., 106 F.R.D. 545 (S.D.N.Y. 12 1985) (granting total preclusion order that prevented defendant from offering into 13 evidence any matter relating to the factual bases for his denials and defenses as to 14 which he had asserted his Fifth Amendment rights); SEC v. Cassano, No. 99 Civ. 15 3822(LAK) 2000 WL 777930 *1 (S.D.N.Y. 2000) (same); SEC v. Interlink Data 16 Network of Los Angeles, Inc., Civ. A. No. 93-3073-R, 1993 WL 603274 *8 n.97 17 (C.D. Cal. 1993) (“In those instances in which a party asserts the Fifth Amendment 18 across-the-board in civil litigation to prevent an opponent from obtaining any 19 discovery at all of evidence of the facts at issue and of the position of the party 20 invoking the privilege on those facts, the injustice of allowing that party to put on 21 evidence at a hearing or trial on the same facts is especially manifest.”). 22 Indeed, because Chen’s ability to challenge the SEC’s evidence with respect to 23 the issue of monetary relief is so limited, the SEC respectfully submits that a trial or 24 evidentiary hearing before the Court is not even necessary. Instead, the Court should 25 reinstate the provision of its summary judgment order that provided “the amounts of 26 the disgorgement and civil penalty” would be decided “upon motion of the 27 Commission.” (Dkt. No. 168, p. 3.) This would be consistent with the Court’s 28 previous ruling in this case, its rulings in other cases, and Ninth Circuit precedent. 7 Case No. CV15-07425 RGK (PLA) Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 8 of 11 Page ID #:6332 1 (Dkt. No. 167, p. 4.) (Chen may not discharge his burden by “merely attack[ing] or 2 discredit[ing] the movant’s evidence.”) (citing Nat’l Union Fire Ins. Co. v. Argonaut 3 Ins. Co., 701 F.2d 95, 97 (9th Cir. 1983); see also, SEC v. Colello, 139 F.3d 674, 678 4 (9th Cir. 1998) (affirming grant of summary judgment, ordering defendant to 5 disgorge over $2.6 million, where defendant had asserted Fifth Amendment 6 privilege); SEC v. Coldicutt, CV 13-01865-RGK (VBKx), 2014 WL 12561072, *6-8 7 (C.D. Cal. 2014); SEC v. LADP Acquisition, Inc., CV 10–6835 RGK (JCGx), 2011 8 WL 3861581 *1-2 (C.D. Cal. 2010). 9 2. Penalties 10 Finally, as for the Court’s determination of the penalty amount, district courts 11 (and not juries) generally apply the factors set forth in SEC v. Murphy, 626 F.2d 633 12 (9th Cir. 1980). These factors are also used to establish the need for injunctive relief, 13 and are used in penalty determinations because civil penalties, like permanent 14 injunctions, are imposed to deter the wrongdoer from similar conduct in the future. 15 See, e.g., SEC v. Wilde, No. SACV 11-0315 (DOC (AJWx), 2012 WL 6621747, *15- 16 16 (C.D. Cal. Dec. 17, 2012); SEC v. Abacus Int’l Holding Corp., No. C 99–02191, 17 2001 WL 940913, at *5 (N.D. Cal. Aug.11, 2001). The Murphy factors are: (i) the 18 degree of scienter involved; (ii) the isolated or recurrent nature of the infraction; (iii) 19 the defendant’s recognition of the wrongful nature of his conduct; (iv) the likelihood, 20 because of the defendant’s professional occupation, that future violations might 21 occur; and (v) the sincerity of his assurances against future violations. See Murphy, 22 626 F.2d at 655; see also CMKM Diamonds, 635 F. Supp. 2d at 1192. 23 The Securities Act and the Exchange Act provide that penalties should be 24 assessed according to a three-tier system. See 15 U.S.C. §§ 77t(d)(2), 78u(d)(3)(B), 25 80b-9(e)(2). First-tier penalties may be imposed for any violation of any Act. See id. 26 §§ 77t(d)(2)(A), 78u(d)(3)(B)(i), 80b-9(e)(2)(A). Second-tier penalties apply to 27 violations that “involved fraud, deceit, manipulation or deliberate or reckless 28 disregard of a regulatory requirement.” Id. §§ 77t(d)(2)(B), 78u(d)(3)(B)(ii), 80b8 Case No. CV15-07425 RGK (PLA) Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 9 of 11 Page ID #:6333 1 9(e)(2)(B). Third-tier penalties apply to violations that (i) involve “fraud, deceit, 2 manipulation, or reckless disregard of a regulatory requirement” and (ii) “directly or 3 indirectly resulted in substantial losses or created a significant risk of substantial 4 losses to other persons.” Id. §§ 77t(d)(2)(C), 78u(d)(3)(B)(iii), 80b-9(e)(2)(C). Each 5 tier provides that a penalty cannot exceed the greater of either a specific statutory 6 amount, or “the gross amount of pecuniary gain to such defendant as the result of the 7 violation.” Id. §§ 77t(d)(2), 78u(d)(3)(B), 80b-9(e)(2). Here, the Court’s findings on summary judgment will likely play a key role in 8 9 determining the appropriate penalty level and amount. By way of example, the Court 10 found that Chen (1) ran USFIA as a fraudulent pyramid scheme; (2) defrauded 11 investors by failing to advise them that the pyramid scheme was destined to collapse; 12 (3) made five material misrepresentations to investors in connection with the sale of 13 the securities; (4) misused investor funds to fund a lifestyle that included multiple 14 million-dollar mansions and luxury automobiles for him and his family; (5) acted 15 with a high degree of scienter; (6) orchestrated the pyramid scheme over many years; 16 and (7) showed no recognition of wrongdoing and no assurance against future 17 violations. (Dkt. No. 167.) These now undisputed facts all weigh in favor of sizable 18 penalties. 19 IV. 20 CONCLUSION Based on the foregoing, the SEC respectfully submits that it is the Court, not a 21 jury, who should decide the issue of monetary relief in this case, namely, whether 22 Chen should be ordered to pay a disgorgement amount plus prejudgment interest and 23 a civil penalty. 24 25 26 27 28 Dated: December 21, 2016 /s/ Douglas M. Miller DOUGLAS M. MILLER Attorney for Plaintiff Securities and Exchange Commission 9 Case No. CV15-07425 RGK (PLA) Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 10 of 11 Page ID #:6334 PROOF OF SERVICE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 444 S. Flower Street, Suite 900, Los Angeles, California 90071 Telephone No. (323) 965-3998; Facsimile No. (213) 443-1904. On December 21, 2016, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMISSION’S SUPPLEMENTAL MEMORANDUM ON MONETARY RELIEF on all the parties to this action addressed as stated on the attached service list: ☐ OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency’s practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. ☐ PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. ☐ EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid. ☐ HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. ☐ UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (“UPS”) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ☐ ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. ☒ E-FILING: By causing the document to be electronically filed via the Court’s CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. ☐ FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. Date: December 21, 2016 /s/ Amanda C. Liston Amanda C. Liston 27 28 1 Case 2:15-cv-07425-RGK-PLA Document 173 Filed 12/21/16 Page 11 of 11 Page ID #:6335 1 2 3 SEC v. Steve Chen, USFIA, Inc., et al United States District Court – Central District of California Western Division Case No. CV 15-07425 (RGK)(GJSx) LA-4482 4 5 SERVICE LIST 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Jeremy Matz (served via ECF) Kimberly Miller (served via ECF) Marc E. Masters IB (served via ECF) Fanxi Wang (served via ECF) Paul Chan (served via ECF) 1875 Century Park East 23rd Floor Los Angeles, CA 90067-2561 Email:jdm@birdmarella.com kmiller@birdmarella.com mmasters@birdmarella.com fxw@birdmarella.com pchan@birdmarella.com Attorneys for Steve Chen David Zaro, Esq. (served via ECF) Ted Fates (served via ECF) Tim Hsu (served via ECF) Allen Matkins Leck Gamble Mallory & Natsis LLP 865 S. Figueroa St., Suite 2800 Los Angeles, CA 90017-2543 Email: dzaro@allenmatkins.com tfates@allenmatkins.com thsu@allenmatkins.com Attorney for Receiver Thomas Seaman over Entity Defendants Thomas A. Zaccaro (served via ECF) Jenifer Doan (served via ECF) Paul Hastings LLP th 515 S. Flower St., 25 Floor Los Angeles, CA 90071 Email: thomaszaccaro@paulhastings.com jeniferdoan@paulhastings.com Attorney for Non-Parties Jennifer Li Zhao and Ally Investors 26 27 28 2