Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
E-Smart, Execs Owe $23M In SEC's 'Epic Doorstop Of A Case'
Law360, New York (January 15, 2016, 5:20 PM ET) -- A federal judge imposed penalties of $23.3 million on smart-card maker e-Smart and others on Thursday in a sprawling U.S. Securities and Exchange Commission suit the judge called an "epic doorstop of a case."
http://www.law360.com/articles/747079/e-smart-execs-owe-23m-in-sec-s-epic-doorstop-of-a-case
E-Smart Execs Can't Shake SEC Fraud Suit Over ID Cards
Law360, New York (March 12, 2014, 6:40 PM ET) -- A Washington, D.C., federal judge on Wednesday refused to dismiss the U.S. Securities and Exchange Commission's suit alleging senior officers of e-Smart Technologies Inc. defrauded investors by lying about having the technology to uniquely identify users for access to bank accounts.
U.S. District Judge James E. Boasberg denied e-Smart CEO Mary Grace's and Chief Technology Officer Tamio Saito's separate motions to dismiss the suit, saying that whether or not the SEC had the facts of the case right, it had adequately pled each element of its...
To view the full article, take a free trial now.
Try Law360 for free for seven days
Already a subscriber? Click here to login
Case Information
Case Title
U.S. SECURITIES AND EXCHANGE COMMISSION v. E-SMART TECHNOLOGIES, INC. et al
Case Number
1:11-cv-00895
Court
District Of Columbia
Nature of Suit
Securities/Commodities
Judge
James E. Boasberg
Law360 Coverage
E-Smart Execs Can't Shake SEC Fraud Suit Over ID Cards
ID Co. Exec Sanctioned For Failure To Produce 'Smart Cards'
Date Filed
May 13, 2011
Sections
Securities
Technology
Companies Mentioned
e-Smart Technologies Inc.
Government Agencies Mentioned
Securities and Exchange Commission
Related Articles
ID Co. Exec Sanctioned For Failure To Produce 'Smart Cards'
© Copyright 2014, Portfolio Media, Inc. | Home | About | Contact Us | Site Map | Site Index | Jobs | Careers at Law360 | Mobile | Terms | Privacy Policy
Beta Tools: Track docs | Track attorneys | Track judges
Law360, New York (December 02, 2013, 8:09 PM ET) -- A D.C. federal judge on Monday sanctioned the CEO of e-Smart Technologies Inc., a purported producer of biometric identification cards, in a U.S. Securities and Exchange Commission securities fraud suit for defying orders to produce some of the so-called smart cards sought by the commission.
U.S. District Judge James E. Boasberg ruled that due to e-Smart head Mary Grace's failure to hand over the smart cards, she will be barred from asserting the smart cards in question contain unique biometric sensors, microprocessors and other features that...
Office of Administrative Law Judges Print This Page Text Size E-mail This Page
DOL Home > OALJ > Administrative Review Board > Barrett v. e-Smart, Technologies, Inc., ARB Nos. 11-088, 12-013, ALJ No. 2010-SOX-31 (ARB Apr. 25, 2013)
USDOL/OALJ Reporter
Barrett v. e-Smart, Technologies, Inc., ARB Nos. 11-088, 12-013, ALJ No. 2010-SOX-31 (ARB Apr. 25, 2013)
--------------------------------------------------------------------------------
U.S. Department of Labor Administrative Review Board
200 Constitution Avenue, N.W.
Washington, D.C. 20210
ARB CASE NOS. 11-088
12-013
ALJ CASE NO. 2010-SOX-031
DATE: April 25, 2013
In the Matter of:
RICHARD BARRETT,
COMPLAINANT,
v.
e-SMART, TECHNOLOGIES, INC.,
RESPONDENT.
BEFORE: THE ADMINISTRATIVE REVIEW BOARD
Appearances:
For the Complainant:
Patricia Douglass, Esq., Great Falls, Virginia
For the Respondent:
L. Anthony George, Esq., Michael R. MacPhail, Esq.; Holme Roberts & Owen, LLP; Denver, Colorado
Before: Paul M. Igasaki, Chief Administrative Appeals Judge; E. Cooper Brown, Deputy Chief Administrative Appeals Judge; and Joanne Royce, Administrative Appeals Judge
FINAL DECISION AND ORDER
This case arises under Section 806 of the Sarbanes-Oxley Act of 2002 (SOX), 18 U.S.C.A. § 1514A (Thomson Reuters 2009). Richard Barrett alleges that his former employer, e-Smart Technologies, Inc. (e-Smart), constructively discharged him from employment because he reported his opposition to the dissemination of what he believed was a misleading Form 10-K annual report that was to be filed with the Securities and Exchange Commission (SEC). In a Decision and Order issued September 9, 2011 (D. & O.), the Administrative Law Judge (ALJ)
--------------------------------------------------------------------------------
[Page 2]
held that Barrett's internal complaint about the 10-K draft1 was protected activity and contributed to his constructive discharge. In a separate opinion, the ALJ awarded damages and attorney's fees (D. & O. Fees). e-Smart appealed both the ALJ's decision on the merits (ARB No. 11-088) and the ALJ's award of attorney's fees (ARB No. 12-013). We consolidated the appeals for purposes of Administrative Review Board (ARB or Board) review and decision. We find the ALJ's decisions to be thorough, in accordance with law, and well supported by detailed findings of fact. Having reviewed the evidentiary record as a whole, and upon consideration of the parties' briefs on appeal, we summarily affirm both decisions.
Background
e-Smart hired Barrett as a litigation consultant in November 2006. D. & O. at 5-6. Barrett's job was to collect technical evidence to support e-Smart's litigation position against former employees.2 As part of this review, he interviewed current and former employees of e-Smart and surveyed e-Smart's development of smart card technology. Id. at 6. While working as a consultant, Barrett observed the company's financial weakness and inability to pay its employees (including Barrett) in a timely fashion. Id. at 6-7; Hearing Transcript (Tr.) at 283-86.
On May 1, 2007, e-Smart Chief Executive Officer (CEO) and Chief Financial Officer (CFO), Mary Grace, hired Barrett as Chief Operating Officer (COO). D. & O. at 7. Under the agreement, Barrett's salary was $377,000 with a performance bonus of up to 150 percent of base pay in stock options and benefits.
While reviewing e-Smart's operations, Barrett implemented a restructuring of the engineers' salaries. He cut base pay and added performance pay. As a symbol of solidarity, he recommended the same system for his own pay. Under the plan, his new base pay was $245,000. Id. at 9. If the company met certain performance goals, the employees could earn back the difference. Id.
In early July 2007, Grace complimented Barrett on his performance as COO. Id. at 10. On July 30, 2007, Grace asked Barrett to rewrite a portion of e-Smart's 2006 annual 10-K filing with the SEC. Id. at 11. Barrett found many problems with the draft 10-K. He felt the draft contained significant misrepresentations regarding e-Smart's financial position as well as the status of the firm's technological development. On August 12, 2007, he made a series of edits. He disclosed e-Smart's operating loss accumulated since its founding. Barrett also made many edits to the 10-K draft concerning the status of the smart card technology, noting future development goals and toning down the prototype's capabilities. Id. at 12-13.
Because his changes were so significant, e-Smart management hesitated to incorporate them all at once. Id. at 14. Maranda Fritz, outside counsel, was worried that including all of this
--------------------------------------------------------------------------------
[Page 3]
information might make investors feel that past 10-Ks were untruthful. Grace was unwilling to incorporate Barrett's changes. Id. On August 15, 2007, Fritz recommended against disseminating the draft. Barrett responded that he wanted his name taken off the draft. On August 16, 2007, Fritz circulated another draft of the 10-K without many of Barrett's deletions and edits. Id.
Shortly thereafter, "Grace abruptly began a series of actions that led in two months' time to the end of Complainant's employment with e-Smart." Id. On August 22, 2007, Grace announced a staffing change in the parent company, IVI Smart, in which the COO of that company assumed all of Barrett's technology duties at e-Smart. Id. at 15. Just ten days earlier, Grace had assigned Barrett with the tasks that were now being assigned to another. Id. Over the next several weeks, Grace refused many of Barrett's calls and limited their communication to ministerial tasks. Id. at 16-19.
Prior to the 10-K revisions, Barrett had paid himself on the 1st and 15th of each month out of the company's operations account to which he had authorized access. Id. at 8. On August 22, 2007, Russo, e-Smart's in-house accountant, instructed Barrett to close the e-Smart account Barrett had been using to pay for salaries and expenses. Id. at 16. After Barrett closed the account, Grace and e-Smart had to pay Barrett out of another account. Barrett's September 1, 2007 paycheck was a few days late, and his September 15, 2007 check was several days late. Barrett did not receive an October 1 paycheck. Grace claimed this was due to error.
On October 4, 2007, Barrett e-mailed Grace and claimed that he felt he was being forced out of the company and asked for a meeting or further discussion on his separation from the company. Id. at 17. Grace responded with assurances of future communication. CX-23. Grace did not return the call as indicated. Barrett continued his reduced tasks. Barrett did not receive a paycheck on October 15, 2007. Id. at 19. On October 17, 2007, Barrett sent an e-mail to Grace entitled "Resignation" stating that she had constructively discharged him and identifying the factors establishing such discharge. Fritz responded that they were not accepting his resignation and denied the constructive discharge allegation. Fritz responded on Grace's behalf and informed Barrett that his checks were in the mail. Id. e-Smart never sent the checks. Id. at 20.
On January 15, 2008, Barrett mailed a complaint to OSHA, which it received on January 17, 2008. Id.; CX-33. OSHA investigated Barrett's complaint and concluded on February 26, 2010, that e-Smart violated SOX's whistleblower protection provisions. CX-34. OSHA ordered reinstatement, back wages, and a bonus. e-Smart requested a hearing before the Office of Administrative Law Judges. The ALJ assigned to the case held a four-day hearing and ruled in Barrett's favor. The ALJ found that Barrett engaged in protected activity and that the protected activity contributed to his constructive discharge. The ALJ further held that e-Smart failed to prove that it would have constructively discharged Barrett absent Barrett's protected activity. The ALJ awarded damages and attorney's fees. e-Smart appealed to the ARB.
--------------------------------------------------------------------------------
[Page 4]
Jurisdiction and Standard of Review
The Secretary of Labor has delegated to the Board her authority to issue final agency decisions under the SOX. Secretary's Order No. 2-2012 (Delegation of Authority and Assignment of Responsibility to the Administrative Review Board), 77 Fed. Reg. 69378 (Nov. 16, 2012). The Board reviews an ALJ's factual findings to determine whether they are supported by substantial evidence.3 The ALJ's legal conclusions are reviewed de novo.4 The Board generally defers to an ALJ's credibility determinations, unless they are "inherently incredible or patently unreasonable."5
Discussion
SOX Section 1514A(a) provides whistleblower protection for employees of publicly traded companies who report certain acts that they reasonably believe to be unlawful. 18 U.S.C.A. § 1514A(a). To prevail in a SOX proceeding, an employee must prove by a preponderance of the evidence that he: "(1) engaged in activity or conduct that the SOX protects; (2) the respondent took an unfavorable personnel action against . . . him; and (3) the protected activity was a contributing factor in the adverse personnel action." Sylvester v. Parexel Int'l, ARB No. 07-123, ALJ Nos. 2007-SOX-039, -042; slip op. at 10 (ARB May 25, 2011). If the employee proves these elements, the employer may avoid liability if it can prove "by clear and convincing evidence" that it "would have taken the same unfavorable personnel action in the absence of the [protected] behavior." 29 C.F.R. § 1980.104(c) (2009); see also Harp v. Charter Commc'ns, Inc., 558 F.3d 722, 723 (7th Cir. 2009).
--------------------------------------------------------------------------------
[Page 5]
1. Timeliness of Barrett's Complaint with OSHA
When this case arose, an employee alleging retaliation under SOX was required to file his or her complaint with OSHA "not later than 90 days after the date on which the violation occurred."6 The OSHA regulations specified at the time that:
[w]ithin 90 days after an alleged violation of the Act occurs (i.e., when the discriminatory decision has been both made and communicated to the complainant) an employee who believes that he or she has been discriminated against in violation of the Act may file . . . a complaint alleging discrimination . . . .
29 C.F.R. § 1980.103(d).
The ALJ found that constructive discharge occurred on October 20, 2007, or on October 17, 2007, at the earliest. D. & O. at 22. To determine the timeliness of Barrett's complaint, the ALJ obtained the envelope from OSHA in which Barrett had mailed his complaint, which showed a postmark date of January 15.7 Based on the January 15th date, the ALJ found that Barrett timely filed his complaint because the regulations implementing SOX designate the postmark date as the filing date with OSHA when the complaint is submitted by mail. Id. at 22. See 29 C.F.R. § 1980.103(d).
On appeal, e-Smart argues that Barrett's complaint was not timely filed because the substantial evidence of record does not support the ALJ's finding of constructive discharge on October 17 or October 20 and that, to the extent Barrett was constructively discharged (which e-Smart contends is not the case), the "triggering event" that began the running of the 90-day period for the constructive discharge claim occurred on or before October 15. Additionally, e-Smart contends that the appropriate filing date for the OSHA complaint was January 17, 2008, the date OSHA received Barrett's complaint.
--------------------------------------------------------------------------------
[Page 6]
Upon review of the evidentiary record, we conclude that the substantial evidence of record supports the ALJ's finding that Barrett's constructive discharge occurred on October 17, 2007. Furthermore, as a matter of law the ALJ was correct in relying upon the January 15, 2008 mailing postmark date as the date upon which Barrett filed his OSHA complaint. Barrett's complaint was thus filed within the ninety-day period required at the time under SOX for filing a whistleblower complaint. Accordingly, we hold that Barrett's complaint was timely filed with OSHA.
2. Protected Activity
The ALJ held that Barrett engaged in protected activity because he reported misstatements and omissions in the 10-K draft that he reasonably believed would mislead investors by distorting the company's current capabilities. D. & O. at 23-30.
On appeal, e-Smart claims that the ALJ erred in finding that Barrett engaged in protected activity. Pet. for Rev. at 5. According to e-Smart, the ALJ's finding that Barrett had an objectively reasonable belief is not supported by substantial evidence. In support, e-Smart gives several reasons why Barrett's reporting was not reasonable. Pet. for Rev. at 5, 6-8. e-Smart further claims that Mr. Saito was the one with the technical ability to evaluate the smart card technology for purposes of the 10-K. e-Smart claims that Barrett had only been working at e-Smart for ninety days but others such as Saito had much more experience working with the e-Smart technology. e-Smart Br. at 9-10.
e-Smart further claims that Barrett's complaints about the 10-K were not protected because they raised concerns about future SOX violations. According to e-Smart, a SOX complainant's beliefs must involve an actual violation occurring at the time the employee raises the concern. Pet. for Rev. at 6.
As to e-Smart's factual objections, we hold that the ALJ's finding of protected activity is supported by substantial evidence. Furthermore, contrary to e-Smart's position, reporting an actual violation is not required. A complainant can engage in protected activity when he reports a belief of a violation that is about to occur or is in the stages of occurring. Sylvester, ARB No. 07-123, slip op. at 16. We find, as did the ALJ, that Barrett engaged in protected activity.8
--------------------------------------------------------------------------------
[Page 7]
3. Change of Job Duties and Constructive Discharge
Barrett alleged that he suffered several adverse actions including removal of job duties, alienation, and loss of pay. Barrett argued that this amounted to constructive discharge. Barrett also complains of post-discharge retaliation. D. & O. at 20.
The ALJ conducted a thorough analysis of the applicable law and based his finding of constructive discharge on a wide pattern of aggravating events. Id. at 30-37. The ALJ held that several incidents including removal of job duties and failure to reinstate salary alone would not be sufficient to create conditions supporting constructive discharge. But taken together with the failure to pay Barrett timely in September and not at all for the month of October, e-Smart's actions demonstrate a "wider pattern of aggravating factors" which satisfy the constructive-discharge standard. Id. at 32-37.
e-Smart states that all of the events constituting constructive discharge occurred before October 15 and that his complaint was filed more than ninety days thereafter. e-Smart contends that the ALJ erred because a party alleging constructive discharge cannot rely on events that occurred more than ninety days prior to filing the complaint. Pet. for Rev. at 9. e-Smart claims there are several reasons why Barrett did not receive his pay besides constructive discharge: those relating to e-Smart's lack of money and bad working conditions. Pet. for Rev. at 11-12. Further, e-Smart claims that failure to pay alone does not constitute constructive discharge. Pet. for Rev. at 10; e-Smart Br. at 18.
We conclude that the ALJ correctly held that non-discrete conduct outside the statute of limitations can be relied upon when the earlier conduct only became actionable once other conduct occurring within the limitations period occurred. Cf. Nat'l R.R. Pass. Corp. v. Morgan, 536 U.S. 101 (2002).
We affirm the ALJ's finding that e-Smart constructively discharged Barrett. See Brown v. Lockheed Martin Corp., ARB No. 10-050, ALJ No. 2008-SOX-049, slip op. at 10 (ARB Feb. 28, 2011); Wallace v. City of San Diego, 479 F.3d 616 (9th Cir. 2007).
4. Causation
The ALJ held that e-Smart's adverse actions followed closely on his reporting concerns about the 10-K draft.
On appeal, e-Smart claims that the ALJ applied the wrong causation standard. According to e-Smart, the ALJ applied the prima facie inference rather than a standard of proof. Pet. for Rev. at 13-14. In addition, e-Smart argues that the ALJ erred in finding the failure to pay Barrett a factor in establishing retaliatory constructive discharge because other critical workers also were not getting paid. Pet. for Rev. at 12; e-Smart Br. at 18-19; CX-22.
--------------------------------------------------------------------------------
[Page 8]
We find that the ALJ's findings of facts are supported by substantial evidence. Within a week of his protected activity, Grace began removing his duties and alienating him. Within a couple more weeks, e-Smart began delaying and withholding payment of wages.
We also conclude that the ALJ correctly applied SOX's "contributing factor" causation standard. While the ALJ may have been loose with the language by incorporating OSHA's prima-facie-case framework,9 the standard that the ALJ actually applied satisfied that required to prove causation before an ALJ.10 It is clear that the ALJ applied a "contributing factor" standard of proof and not merely an inference of causation. The ALJ, for example, did not find that temporal proximity alone satisfied causation. The ALJ held that temporal proximity in conjunction with e-Smart's pretext and behavior with other technology employees shows "that [Barrett's] protected activity was a contributing factor in e-Smart's actions against [him]." D. & O. at 39.
5. Clear and Convincing Affirmative Defense
The ALJ also held that e-Smart failed to show that it would have constructively discharged Barrett in the absence of his protected activity concerning the 10-K filing. The ALJ reasoned that e-Smart put forth weak evidence and failed to call witnesses with first-hand knowledge. e-Smart did not call Grace, Fritz, or Russo – the key e-Smart players with personal knowledge of the relationship between Barrett, e-Smart, and Grace. Id.
On appeal, e-Smart argues that the ALJ improperly drew an adverse inference from e-Smart's failure to offer evidence from the persons most knowledgeable about Barrett's circumstances. Pet. for Rev. at 14-15. The ALJ did not err in drawing a negative inference from Respondent's failure to call critical witnesses within its control. See Underwriters Labs., Inc. v. NLRB, 147 F.3d 1048, 1054 (9th Cir. 1998) ("[W]hen a party fails to call a witness who may reasonably be assumed to be favorably disposed to the party, an adverse inference may be drawn regarding any factual question on which the witness is likely to have knowledge.").
In any event, independently of any adverse inferences, the ALJ found that e-Smart's evidence fell short of its burden of proving by clear and convincing evidence that it would have taken the adverse actions against Barrett absent his protected activity. The ALJ explained at length why e-Smart's justifications for its adverse actions were lacking in credibility and otherwise insufficient to sustain its burden of showing that it would have taken adverse action in the absence of Barrett's protected activity. D. & O. at 39-42. We uphold those findings.
--------------------------------------------------------------------------------
[Page 9]
6. Damages
The ALJ awarded back pay and interest in the amount of $1,223,626.15, based on Barrett's entitlement to an annual salary of $377,000. The ALJ also awarded Barrett the option rights to buy 10 million shares of e-Smart common stock with the ability to exercise those options as if his last day of employment were the date of the ALJ's Order, September 9, 2011.11 Id. at 45.
On appeal, e-Smart claims that the ALJ erred in awarding back pay at the higher rate of pay and that Barrett had no contractual or statutory right to the annual rate of $377,000. Pet. for Rev. at 16. e-Smart states that the pay reduction was a discrete discriminatory act that Barrett is barred from challenging because he failed to timely challenge it. Pet. for Rev. at 17. This is a mischaracterization of the issue. The pay reduction was not alleged as a discrete discriminatory act – it was simply a circumstance relevant to determining sufficient damages. The period of ninety days is not relevant for purposes of determining damages for victims of a hostile work environment (or constructive discharge). SOX's make-whole remedy applies to the proven damages for actionable incidents incurred following the protected activity. See Nat'l R.R. Pass. Corp. v. Morgan, 536 U.S. 101, 119 (2002) ("timeliness requirement does not dictate the amount of recoverable damages"). The protected activity took place in mid-August. Following this protected activity, a series of escalating non-discrete adverse events occurred, eventually resulting in a cause of action on or around October 17, 2007. When e-Smart took away his duties in retaliation for his internal reports concerning the 10-K draft, it took away Barrett's ability to earn the full salary for which he was initially hired. The ALJ did not err in using Barrett's original salary of $377,000 to effectuate the requisite "make whole" remedy. 18 U.S.C.A. § 1514A(c)(1).
7. Attorney's Fees
The ALJ awarded attorney's fees and costs. e-Smart appeals the ALJ's award of attorney's fees. As noted above, we consolidated the attorney's fees appeal with the merits appeal.
Barrett requested the award of attorney's fees based on an hourly rate of $250.00 per hour. The ALJ applied the Laffey Matrix and awarded Barrett's counsel, Patricia Douglass, Esq., fees and costs in the amount of $94,708.65. Barrett also sought fees in the amount of $32,218.85 for work performed by two other law firms for this case. D. & O. Fees at 1. The ALJ awarded $2,250 in fees to Lisa E. Aguiar, Esq. The ALJ denied fees to the Shartsis Friese law firm. D. & O. Fees at 10.
On appeal, e-Smart claims that Douglass should be denied fees that Barrett has not actually paid. Thus, e-Smart claims that the fees award should be capped at $10,000, which
--------------------------------------------------------------------------------
[Page 10]
corresponds to the amount that Barrett actually paid "out of pocket." e-Smart Fees Br. at 3. e-Smart claims that Douglass failed to present any satisfactory evidence of the prevailing rate in San Francisco for legal services on a SOX whistleblower claim or to show that Douglass had any experience working on SOX whistleblower claims. e-Smart claims that the Ninth Circuit has been critical of using the Laffey Matrix in a market 3,000 miles away from D.C. e-Smart claims that the ALJ erred in awarding the amount of $250 for the entire billing period because Douglass charged only $200 for the first ten months of representation. e-Smart Fees Br. at 4. e-Smart also claims that Douglass's billing invoices are vague and the amount of the award should be reduced to $47,694.50 for the work described with specificity. e-Smart Fees Br. at 5.
Douglass responds that her fee is much less than the rate corresponding to San Francisco. Douglass noted that the San Francisco market has a 35% premium as compared with a 24% premium for the D.C. market (on which the Laffey Matrix is based). Douglass Fee Br. at 2 n.3. Douglass claims that the Supreme Court has not required specific expertise on a particular statute and has considered general expertise on complex litigation sufficient. Douglass Fee Br. at 3. Douglass claimed that the ALJ parsed the fee petition and determined that the claimed work was reasonable and described with reasonable specificity.
We find the ALJ's fee award supported and reasonable. We reject e-Smart's claim that fees should match costs or the rates actually billed to the clients. To the contrary, the hourly rate is determined by reference "to the prevailing market rates in the relevant community." Blum v. Stenson, 465 U.S. 886, 895 (1984) (rejecting an argument that attorney's fees for nonprofit legal service organizations should be based on cost); Missouri v. Jenkins by Agyei, 491 U.S. 274, 286 (1989). Here, the ALJ found that the forum community was San Francisco. Further, we do not find any lack of specificity in Douglass's billing that requires reducing the hours billed. In Pillow v. Bechtel Constr. Inc., ARB No. 97-040; ALJ No. 1987-ERA-035 (ARB Sept. 11, 1997), we reduced the total hours for lack of specificity. We do not find the same degree of lack of specificity in this case.
8. The Respondent's additional grounds for appeal
e-Smart claims that it should be granted a new hearing based on trial counsel's incompetence. Pet. for Rev. at 17-18. At the hearing, Barrett entered notations on his copy of exhibits and testified from the exhibits with the notations. e-Smart's former attorney failed to promptly identify this conflict to the judge. e-Smart claims that the ALJ erred in refusing to reopen the record and that it failed to get a full deposition in discovery. We review the ALJ's holdings concerning the depositions and the notations under the abuse-of-discretion standard. We feel that the ALJ adequately handled any prejudice concerning the notations on the exhibits. We also find that the ALJ seemed fair in attempting to facilitate the additional deposition of Saito and the inclusion of the full deposition in the record. The ALJ did not abuse his discretion.
--------------------------------------------------------------------------------
[Page 11]
Conclusion
The ALJ held that e-Smart violated SOX's employee protection provisions when it retaliated against Barrett for engaging in protected activity, and accordingly awarded damages and attorney's fees. We find that the ALJ's factual findings are supported by substantial evidence and that his legal conclusions, except where otherwise noted, are in accordance with applicable law. We thus affirm the ALJ's Decision and Order issued September 9, 2011, awarding Barrett damages. We also affirm the ALJ's Order of November 3, 2011, awarding attorney's fees.
As the prevailing party, Barrett is also entitled to costs, including reasonable attorney's fees, for legal services performed before the ARB. Barrett's attorney shall have 30 days from receipt of this Final Decision and Order in which to file a fully supported attorney's fee petition with the ARB, with simultaneous service on opposing counsel. Thereafter, e-Smart shall have 30 days from their receipt of the fee petition to file a response.
SO ORDERED.
JOANNE ROYCE
Administrative Appeals Judge
PAUL M. IGASAKI
Chief Administrative Appeals Judge
E. COOPER BROWN
Deputy Chief Administrative Appeals Judge
[ENDNOTES]
1 Because e-Smart is a small business, the ALJ noted that the form was 10-KSB. As the ALJ referred to the filing as 10-K, and the parties do not object, we too will refer to the filing as the 10-K.
2 D. & O. at 6. e-Smart was suing its former founders for alleged theft of trade secrets.
3 29 C.F.R. § 1979.110(b). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Clean Harbors Envtl. Servs., Inc. v. Herman, 146 F.3d 12, 21 (1st Cir. 1998) (quoting Richardson v. Perales, 402 U.S. 389, 401 (1971)).
4 Rooks v. Planet Airways, Inc., ARB No. 04-092, ALJ No. 2003-AIR-035, slip op. at 4 (ARB June 29, 2006) (citing Mehan v. Delta Air Lines, ARB No. 03-070, ALJ No. 2003-AIR-004, slip op. at 2 (ARB Feb. 24, 2005); Negron v. Vieques Air Links, Inc., ARB No. 04-021, ALJ No. 2003-AIR-010, slip op. at 4 (ARB Dec. 30, 2004)).
5 Mizusawa v. United Parcel Serv., ARB No. 11-009, ALJ No. 2010-AIR-011, slip op. at 3 (ARB June 15, 2012).
6 18 U.S.C.A. § 1514A(b)(2)(D). Sections 922(c) of the Dodd-Frank Act, P.L. 111-203 (July 21, 2010), amended Section 806 of SOX, 18 U.S.C.A. § 1514A, to lengthen the time for filing a complaint to 180 days.
7 CX-33; CX-144. e-Smart claims that it was error for the ALJ to ask OSHA for the postmarked envelope and that Barrett himself should have entered this into evidence. Pet. for Rev. at 5. The ALJ ruled that there was nothing prejudicial about requesting and admitting the envelope into evidence. D. & O. at 3 n.4. e-Smart claims that the ALJ's advocacy deprived e-Smart of the ability to cross-examine Barrett on the postmarked envelope. Pet. for Rev. at 5. Nothing prevented the Respondent from cross-examining Barrett regarding when he mailed the letter, and we agree with the ALJ that introducing the envelope into evidence did not prejudice the Respondent. Furthermore, the postmarked envelope was a matter of public record of which the ALJ could have taken official notice. 29 C.F.R. § 18.201.
8 The ALJ harmlessly erred in using the "definitively and specifically" test. D. & O. at 25. An employee only needs to show a reasonable belief of a violation to engage in protected activity. Sylvester, ARB No. 07-123, slip op. at 17; Wiest v. Lynch, 710 F.3d 121 (3d Cir. 2013) (giving the ARB's adjudication Chevron deference, citing United States v. Mead Corp. 533 U.S. 218 (2001)). Furthermore, an employee complainant does not need to allege elements of anti-fraud laws such as materiality or scienter. Sylvester, ARB No. 07-123, slip op. at 21.
9 See 29 C.F.R. § 1980.104(e).
10 See Kester v. Carolina Power & Light Co, ARB No. 02-007, ALJ No. 2000-ERA-031, slip op. at 5-8 (ARB Sept. 30, 2003) ("[W]e continue to discourage the unnecessary discussion of whether or not a whistleblower has established a prima facie case when a case has been fully tried.").
11 We deem the Respondent to have waived any objection to the option rights award as it did not challenge this award on appeal. The ALJ's ruling on this matter is final. 29 C.F.R. § 1980.110(a).
Freedom of Information Act | Privacy & Security Statement | Disclaimers | Customer Survey | Important Web Site Notices U.S. Department of Labor, Office of Administrative Law Judges | 800 K St., NW, Washington, DC 20001
www.oalj.dol.gov/ | Telephone: 202-693-7300 | TTY: 1-877-889-5627 | Contact OALJ
According to their June 3 press release,Fingerprint Cards of Sweden's biometric technology will be incorporated in Microsoft's windows 8.1. What's happened to e-Smart's biometric technology? Did the technology fail to withstand the rigors of testing and real world usage?
Looks like the e-Smart Korea website (emartkorea.com)is no longer available. Does anyone know what's going on? The SEC litigation has been quiet and there's been no announcements regarding the pilot programs, etc. Hate to give up.
Looks like they aren't able to settle with the SEC. It's doubtful they'll get very far with a new company without resolving this big issue. I still can't fathom why a nifty biometric card like this isn't already adopted worldwide. For starters, airport security would be far less painful--going through airports won't be such a chore. People might actually look forward to traveling again. Not to mention its usefulness and non-intrusivness as an ID card in every transaction that requires one. There's no longer such a thing as going through life without producing an ID card -- so why not make it a simpler and more efficient process?
The website no longer lists the U.S. office address, nor the U.S. phone number. Could they be out of business in the U.S. entirely?
This is something I read about re Steve Jobs:
"... Steve Jobs got rich in the past decade. But he didn't so at the expense of his shareholders. In fact, they grew rich along with him. And Apple didn't prosper at the expense of partners."
The telephone of e-Smart's New York headquartrs is once again "temporarily disconnected," which leads one to conclude they're doing absolutely no business in the U.S. Another interesting tidbit: the salaries listed for the executive officers of e-Smart (meaning Mary Grace and Tamio Saito) are higher than the sslaries for Microsofts' chief executives. No wonder e-Smart's in the sad state it's in.
The telephone of e-Smart's New York headquartrs is once again (temporarily disconnected), which leads one to conclude they're doing absolutely no business in the U.S. Another interesting tidbit: the salaries listed for the executive officers of e-Smart (meaning Mary Grace and Tamio Saito) are higher than the sslaries for Microsofts' chief executives. No wonder e-Smart's in the poor house.
Just a reminder of the wicked and greedy ways of Mary Grace and her cohorts: A shareholder owning 50,000 shares of e-Smart stocks prior to July 2005 would have ended up with 62.5 shares by October 2009. There was a reverse stock split of 1 for 40 in Oct. 2005 and then another reverse stock split of 1 for 20 in July 2009. Meanwhile the preferred A shares of Mary Grace underwent no reverse splits and instead was assigned a valuation of 65.1918 post-reverse split common shares for each preferred share. If that isn't gauging and robbing common shareholders to enrich herself (and others on her team), than what is?
Googling, it looks like e-Smart also lost its malpractice claims against its former counsel, Maranda Fritz, some time ago. There's a little blurb in law.com that Hinshaw & Culbertson (representing Maranda Fritz) was trying to retrieve legal costs from e-Smart back in April this year.
You're right, of course. The failure to file financial reports with the SEC, the two reverse stock splits that completely wiped out shareholder value and the dishonest press release on the Samsung deal, etc., are more than enough to show her total disregard of shareholders other than herself and other management. In the case of of the civil contempt charge, however, the case, as presented, seemed very weak. Note how it was mentioned that the United States Attorney's Office declined to bring a criminal contempt charge. Obviously, the US Attorney's Office didn't see much of a case. What's mystifying is that that one particalr Fidelica card should be so vital; couldn't Drizin and Gardiner just produce another one? Obviously, if a card with such advanced technology were to be manufactured, at least more than a few would have been made. What's the big deal about replacing it with another idential card unless they aren't able to? This is pure conjecture, of course, but could the particular biosensor in that missing Fidelica card be stolen from e-Smart and that's why a second similar Fidelica card could not be produced? All of this is just guessing because none of us have any knowledge of what's going on with e-Smart since their news blackout. But, in view of the fact that industrial espionage might have been at play, Mary Grace's protective stance is understandable and laudable. That, however, doesn't mean that she's qualified to be the top manager of a publicly-traded company. Unfortunately, she is the major shareholder and holds total voting control. She is, in fact, e-Smart, whether we like it or not.
Three cheers for Mary Grace! On reading the memorandum and order re civil contempt, it appears Drizin and Gardiner produced a Fidelica biometric card to disprove e-Smart's prior art claim. The belief on e-Smart's side was that the technology contained in that Fidelica card was stolen from e-Smart and I tend to agree. Fidelica Microsystem operates as a subsidiary of Petters Worldwide Group, whose founder has been found guilty of a Ponzi Scheme and is now serving time. Whether Mary Grace took the card or not we'll never know; there's no material proof (video tape or witness) and she may very well be innocent. I like the fact that she fought tooth and nail to protect e-Smart's technology. If only she would fight half as hard for e-Smart's shareholders.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
----oo0oo----
E-SMART TECHNOLOGIES, INC., a
Nevada Corporation, and IVI
SMART TECHNOLOGIES INC., a
Delaware Corporation,
Plaintiffs,
v.
WAYNE DRIZIN, MICHAEL GARDINER,
ELECTRONIC PLASTICS CORPORATION,
and A CARD COMPANY,
Defendants.
_______________________________/
NO. CIV. 3:06-05528 MHP
MEMORANDUM AND ORDER RE: CIVIL
CONTEMPT
----oo0oo----
Plaintiffs e-Smart Technologies, Inc. (“e-Smart”) and
IVI Smart Technologies Inc.1 initiated this action in 2006
against defendants Wayne Drizin, Michael Gardiner, Electronic
1 Although IVI Smart Technologies Inc. is affiliated with
e-Smart and did not have independent representatives at the
settlement conference, the Order to Show Cause giving rise to the
civil contempt hearing was limited to e-Smart and its
representatives, thus the court’s decision is limited to e-Smart.
Plastics Corporation, and A Card Company, alleging that
defendants stole trade secrets in plaintiffs’ biometric smart
cards.2 In the fifth settlement conference held in this matter,
a smart card Gardiner brought to the settlement conference
disappeared, resulting in civil contempt charges against e-Smart
and four of its representatives.
I. Factual and Procedural Background
The settlement conference at issue was held on August
12, 2010, before Magistrate Judge Zimmerman and lasted the entire
day. The attendees at the settlement conference included Mary
Grace (e-Smart’s Chief Executive Officer), Tamio Saito (e-Smart’s
Chief Technology Officer), Marcello Soliven (e-Smart’s Director
of Wireless Research and Development), Ananth Krishnan (research
engineer for e-Smart) (referred to collectively as “e-Smart
representatives”), Christopher Lilly (plaintiffs’ counsel),
Drizin, Gardiner, and Magistrate Judge Zimmerman’s student
extern. When the settlement conference began, the attendees were
seated around the conference table in Magistrate Judge
Zimmerman’s library. Upon concluding that a joint session would
not be productive, Magistrate Judge Zimmerman broke the parties
up, bringing Gardiner and Drizin into his personal chambers and
having plaintiffs’ counsel and representatives remain in the
library.
2 Put simply, the biometric smart cards at issue in this
dispute are credit-card-sized cards used for identification
purposes that have the capability of reading and confirming the
user’s fingerprint. Although plaintiffs and other companies have
allegedly been producing these cards for quite some time, not a
single card has been sold in the United States, according to
Drizin.
When Gardiner and Drizin were alone with Magistrate
Judge Zimmerman in his chambers, Gardiner produced a biometric
smart card that had a picture of George Washington on it and was
manufactured by Fidelica, a company that is not involved in this
lawsuit. According to Gardiner, the Fidelica card was a
significant piece of evidence because it contained the very trade
secrets that defendants had allegedly stolen from plaintiffs and
thus provided evidence that e-Smart’s card did not contain trade
secrets. Magistrate Judge Zimmerman took the Fidelica card to e-
Smart’s representatives in the library, explained defendants’
position about the card’s value in the settlement process, and
showed the representatives the card. Grace and Saito examined
the card, and the last time Magistrate Judge Zimmerman saw the
card, it was in Saito’s hand. At the end of the settlement
conference, Gardiner indicated that the card had not been
returned to him, at which time he accompanied Magistrate Judge
Zimmerman to the library and Magistrate Judge Zimmerman
instructed everyone present to search their personal effects for
the card.
Magistrate Judge Zimmerman attempted to have a marshal
come search the attendees for the card; however, the United
States Marshal’s Office persuaded him not to conduct a search
because the female marshal who would need to search Grace had
left for the day and could take about one hour to return.
Magistrate Judge Zimmerman thus concluded the conference and
requested the parties to search for the card again that evening.
The following day, Magistrate Judge Zimmerman issued a sealed
order requiring the e-Smart representatives to make every effort
to locate the card and allowing them to return it anonymously to
the court by August 20, 2010. (Docket No. 324.)
When the Fidelica card was not returned by August 20,
2010, Magistrate Judge Zimmerman certified his version of the
facts pursuant to 28 U.S.C. § 636(e) to Judge Patel as
constituting civil contempt, stating that he “has reason to
believe e-Smart, through one or more of its representatives,
still has the missing card, or disposed of it, to prevent it from
being used as evidence by defendants.” (Docket No. 328.) Judge
Patel subsequently issued an Order to Show Cause against e-Smart
and its representatives, requiring them to “show cause why you
should not be adjudged guilty of criminal and/or liable for civil
contempt and this action be dismissed with prejudice.” (Docket
No. 329.) E-Smart responded to the Order to Show Cause and
included declarations by its representatives denying that they
took the Fidelica card and giving their version of the events
leading up to the disappearance of the card. After the United
States Attorney’s Office declined to initiate criminal contempt
charges, Judge Patel appointed Stephen E. Taylor and Jonathan A.
Patchen of the Taylor & Company Law Offices, LLP, to prosecute
the civil contempt charges.
Because Magistrate Judge Zimmerman would serve as a key
witness in the civil contempt hearing, the undersigned, a judge
from outside of the district, was assigned to preside over the
contempt hearing. After conducting a four-day evidentiary
hearing, the court finds e-Smart in civil contempt. This
Memorandum constitutes the court’s findings of fact and
conclusions of law.
II. Discussion
A court’s power of contempt is regarded as an
“inherent” power that is “necessary to the exercise of all
others.” Int’l Union, United Mine Workers of Am. v. Bagwell, 512
U.S. 821, 831 (1994). “A district court has the power to adjudge
in civil contempt any person who [] disobeys a specific and
definite order of the court.” Gifford v. Heckler, 741 F.2d 263,
265 (9th Cir. 1984). “Intent is not an issue in civil contempt
proceedings. The sole question is whether a party complied with
the district court’s order.” Donovan v. Mazzola, 716 F.2d 1226,
1240 (9th Cir. 1983) (internal citations omitted).
“Judicial sanctions in civil contempt proceedings may,
in a proper case, be employed for either or both of two purposes;
to coerce the defendant into compliance with the court’s order,
and to compensate the complainant for losses sustained.” United
States v. United Mine Workers of Am., 330 U.S. 258, 303-04
(1947); accord United States v. Bright, 596 F.3d 683, 695-96 (9th
Cir. 2010) (“Civil contempt is characterized by the court’s
desire to compel obedience to a court order or to compensate the
contemnor’s adversary for the injuries which result from the
noncompliance.” (quoting Falstaff Brewing Corp. v. Miller Brewing
Co., 702 F.2d 770, 778 (9th Cir. 1983))) (internal quotation
marks omitted).
“The standard for finding a party in civil contempt is
well settled: The moving party has the burden of showing by clear
and convincing evidence that the contemnors violated a specific
and definite order of the court.” In re Bennett, 298 F.3d 1059,
1069 (9th Cir. 2002). The clear and convincing evidence standard
requires the moving party to “place in the ultimate factfinder an
abiding conviction that the truth of its factual contentions are
‘highly probable.’” Colorado v. New Mexico, 467 U.S. 310, 316
(1984). Factual contentions are highly probable if the evidence
offered in support of them “instantly tilt[s] the evidentiary
scales in the affirmative when weighed against the evidence [the
non-moving party] offered in opposition.” Id.
A. Determining Who Took the Fidelica Card
Based on the evidence presented at the hearing, the
court finds, by clear and convincing evidence, that the Fidelica
card was taken by one of the e-Smart representatives at the
conference because only they had the opportunity to take the
card. Further, of the e-Smart representatives, the court is
convinced Mary Grace took the card based on her lack of credible
and consistent testimony about the events that day and the
evidence revealing her motive to take it.3
Magistrate Judge Zimmerman credibly testified4 that,
after Gardiner produced the e-Smart card in his chambers, he went
to the library without Gardiner or Drizin to show the e-Smart
representatives the Fidelica card. After giving the card to the
e-Smart representatives, Magistrate Judge Zimmerman testified
that he last saw the card in Saito’s hand and the e-Smart
3 As credibility was a central issue at the hearing, the
character of the e-Smart representatives, Gardiner, and Drizin
was relevant and considered by the court. The court did not,
however, consider or rely on any of the exhibits defendants
submitted after Grace’s testimony, which are filed as Docket
Numbers 368 to 374.
4 The court finds Magistrate Judge Zimmerman’s testimony
credible on all material issues and accepts his testimony as the
most accurate account of the relevant events.
representatives testified that the card was placed on the library
table when they finished examining it. Thus, it is undisputed
that the card remained in the library after Magistrate Judge
Zimmerman showed it to the e-Smart representatives. Although
there is conflicting testimony about when and for how long
Gardiner and Drizin returned to the library during the remainder
of the settlement discussions, all of the parties agree that
every time Gardiner and Drizin returned to the library, they were
accompanied by Magistrate Judge Zimmerman. The e-Smart
representatives were thus the only individuals left in the
library alone with the card and therefore the only individuals
who had the opportunity to take the card outside the presence of
Magistrate Judge Zimmerman.
E-Smart has attempted to suggest that, even though only
its representatives had access to the card in the library,
Gardiner and Drizin snuck into the library to take the card after
the e-Smart representatives left for lunch. In their
declarations and at the hearing, the e-Smart representatives
state that the Fidelica card was on the conference table in the
library when they left for lunch and gone when they returned from
lunch. Significantly, however, this explanation was never
mentioned to Magistrate Judge Zimmerman when everyone was looking
for the card at the close of the settlement conference and was
raised for the first time in the declarations. Magistrate Judge
Zimmerman’s judicial assistant also credibly testified that she
escorted Gardiner and Drizin out of chambers during the lunch
break, which would have precluded them from sneaking into the
library to take the Fidelica card.
E-Smart has also tried to suggest that, based primarily
on their prior felony convictions, Gardiner’s and Drizin’s
character makes it just as likely that they took the card. While
the court did not find Drizin to be a credible witness and finds
him, like Grace, to display the typical characteristics of a conartist,
none of the evidence creates a plausible scenario under
which Drizin had the motive or opportunity to take the Fidelica
card.
As for Gardiner, not only did he lack the opportunity
to take the Fidelica card, but the court finds it is even less
plausible that he would take the very card he brought to the
settlement conference in the hopes of getting plaintiffs in
trouble. Although Gardiner has been convicted of a felony, the
court does not believe his prior misconduct paints him to be of
as bad character as e-Smart suggests. While he was convicted for
fraud, his sentence included only a $10,000.00 fine and three
years probation and he cooperated with the government. The court
has the impression that Gardiner tends to be gullible to
fraudulent schemes, and the court therefore is inclined to
believe that he was himself a victim as well as a perpetrator in
that case.
The only other individuals who had access to the
library were Magistrate Judge Zimmerman’s staff, which included
his judicial assistant and a student extern who accompanied him
for part of the settlement conference. The record is devoid of
any evidence suggesting even a remote possibility that these
individuals took the e-Smart card.
Accordingly, the e-Smart representatives were the only
individuals with the opportunity to take the card and, of the e-
Smart representatives, the evidence persuades the court that
Grace was the one who took the card. In contrast to Magistrate
Judge Zimmerman’s credible testimony about what occurred when he
originally introduced the card, Grace’s testimony about the
events was amorphous and appeared to develop as she testified.
For example, when questioned about the technology on the Fidelica
card, Grace capriciously interjected that she actually asked
Magistrate Judge Zimmerman to hold onto the card:
I said, why in the world would he [(Gardiner)]--in fact,
I said to the Judge, I said, “Judge would you hold this
card? Would you hold this card with the special master
in the court, so” . . . “we can prove this is stolen, our
stolen technology. Not just on the ID Smart cards, but
now on the Fidelica cards that they had the audacity to
bring into court.”
(Apr. 20, 2011, Tr. 59:2-9.) Not only was this answer--along
with a majority of Grace’s testimony--non-responsive to the
actual question, Grace’s testimony that she asked Magistrate
Judge Zimmerman to hold onto the Fidelica card was not
corroborated by any other witness and was absent from her
original declaration filed in response to Judge Patel’s Order to
Show Cause.
Grace also testified that, when the Fidelica card was
presented, Gardiner indicated that he knew the technology on it
5 Magistrate Judge Zimmerman’s testimony about contacting
the Marshal’s Office indicates his law clerk was in chambers
later that day. Nothing in the testimony suggests--nor can this
court surmise--any reason why the law clerk, or any other court
employee, would have taken the card.
was stolen from e-Smart and that he had previously prepared an
affidavit to that effect. Similar to her new testimony about
asking Magistrate Judge Zimmerman to hold onto the card, any
suggestion that Gardiner had prepared such an affidavit is absent
from any of the e-Smart representatives’ declarations. Although
Grace testified that some of the testimony missing from her
declaration was in her notes and that e-Smart’s attorney failed
to include it, she neither produced her notes nor denied that she
reviewed her declaration before signing it. As this declaration
was prepared in response to the Order to Show Cause, the
importance of her account of what happened was clear. The
absence of such significant testimony from her declaration and
her addition of it for the first time at the hearing leaves the
court firmly convinced that Grace is developing an ever-changing
story to cover up for her misconduct in taking the Fidelica card.
With respect to her motive to take the card, the court
finds it highly probable that Grace was simply taking back what
she, in her way of perceiving things, believed belonged to e-
Smart. Magistrate Judge Zimmerman testified that when he
initially presented the card to the e-Smart representatives,
Grace “sort of did a -- like, a double-take, you know,” giving
him the impression that she thought defendants had “found
something.” (Apr. 7, 2011, Tr. 57:2-4.) Grace also testified
that the Fidelica card had e-Smart’s “stolen technology,” (Apr.
20, 2011, Tr. 49:9), and told Magistrate Judge Zimmerman that
Fidelica “was another company that has stolen our trade secrets.”
(Apr. 7, 2011, Tr. 57:9-10.) Grace further testified that she
believed the Fidelica card Gardiner produced at the settlement
conference “was stolen from us, from e-Smart, and brought into
the conference.” (Apr. 20, 2011, Tr. 66:4-7.) Grace’s reaction
to the card and purported belief that it was stolen from e-Smart
and contained e-Smart’s stolen technology, along with her
demeanor throughout her testimony and obvious animosity toward
Gardiner and Drizin,6 convinces the court that Grace felt
justified in simply taking back what she asserted belonged to her
company.
Grace’s testimony and demeanor also persuade the court
that she has skated through her various ventures as a flim-flam
6 Throughout her testimony, Grace constantly tried to
slip in negative comments about Gardiner and Drizin, making her
disdain for them anything but discreet. The following is one
example:
[MR. PATCHEN]: My question is: If the Fidelica card was
not using the trade secrets of e-Smart, then you would
have no objection to Mr. Gardiner producing a card that
was like Fidelica.
A: I can’t answer that question. Because, like Mr.
Satio explained, I’m not qualified to answer what card
has what on it.
I would have to ask experts if this card in any way
-- it has been derived from our technology, has been --
these are all ex-employees. These people -- have you
ever seen their entire background?
Q: My question for you, Ms. Grace --
A: Okay. Their entire background that we’re -- it
includes owning a brothel by -- there was a book written
last year called “The Man who Took America to War” that
said he --
THE COURT: Don’t get into it --
THE WITNESS: -- laundered money for the Mafia, and he
--
MR. PATCHEN: Your honor, move to strike.
THE WITNESS: I mean, these people are -- he’s
defrauded so many of our investors and shareholders that
we can bring in here that he would --
THE COURT: Wait, don’t --
THE WITNESS: He would guarantee them he would give
them triple their money back. And then -- . . . .
(Apr. 20, 2011, Tr. 62:10-23.)
artist who fabricates information in an attempt to extort a
profit. For example, when asked why e-Smart had not filed its
required “10-K” Securities and Exchange Commission filings since
2007, Grace first evaded the question and, when the court
repeated the question, she could not give a consistent or clear
answer:
Well, we filed it -- we have not filed it, on the advice
of counsel. And, we will be preparing it. But, we are
looking at different reorganization -- I mean,
restructuring of the company. And on advice of counsel,
we will do it. We have -- you know, we have informed our
attorneys. I -- I act on advice of counsel, but -- and,
it will be. I mean, we are in the process of trying to
get the 10-Ks filed.
(Id. at 92-93:5.) Grace also repeatedly evaded questions by
resorting to an explanation that e-Smart has six hundred
shareholders and her utmost concern is for those shareholders.
The court was unpersuaded, however, that e-Smart is anything more
than a sham company or that Grace’s concern for its shareholders
extends beyond the financial gain they bring her.
Based on her demeanor testifying and conduct during the
settlement process of this case, the court is also convinced that
Grace views the judicial process as a mere tool to conduct
business rather than an avenue to resolve disputes. Magistrate
Judge Zimmerman, who spent more hours attempting to settle this
case than in any other case, testified that he was under the
impression that Grace was not negotiating in good faith during
the settlement process. When discussing a separate case against
Gardiner and Drizin with a colleague, Grace’s comment about her
strategy also reflects her use of litigation as an improper
business tool: “I believe if we can put the pressure of a second
lawsuit on both Gardiner and Drizin, that we can resolve both
suits exponentially [sic].” (Defs.’ Ex. Y.)
The testimony of the other e-Smart representatives does
not create any reason to doubt that Grace took the card. The
court did not find Soliven to be a credible witness and does not
believe his testimony that Gardiner and Drizin left belongings
close to the card and, after the e-Smart representatives returned
from lunch, that the card and belongings on the table were gone.
Krishnan did not appear to have an independent recollection of
the details of what occurred that day and appeared to simply
agree with the general story advanced by his colleagues. Lastly,
based on his defensive and argumentative demeanor throughout his
testimony, the court finds it highly probable that, even though
he did not take the Fidelica card, Saito would not disclose the
fact that Grace took it if he was privy to that information.
Accordingly, when contrasted to the lack of any
plausible scenario under which another individual took the
Fidelica card, the evidence establishing that Grace had the
opportunity and motive to take the card, along with her lack of
credibility as witness, convinces the court that it is highly
probable that Grace took the Fidelica card on August 12, 2010.
B. Determining Whether Civil Contempt Occured
Having found that Grace took the Fidelica card, the
next question is whether the Special Prosecutor proved, by clear
and convincing evidence, that her conduct “violated a specific
and definite order of the court.” In re Bennett, 298 F.3d at
1069. Relying on United States v. McGainey, 37 F.3d 682 (D.C.
Cir. 1992), the Special Prosecutor argues that e-Smart can be
held in civil contempt if Grace obstructed the administration of
justice even if her conduct did not violate a specific court
order.
In McGainey, the appellate court upheld McGainey’s
conviction for criminal contempt after he made a threatening
gesture in the galley of a courtroom during a criminal trial.
Id. at 685-86. His conviction for criminal contempt, however,
was based on 18 U.S.C. § 401(1), which empowers the court to hold
an individual in criminal contempt for “[m]isbehavior . . . in
its presence or so near thereto as to obstruct the administration
of justice.” 18 U.S.C. § 401(1); see also McGainey, 37 F.3d at
684 (identifying the elements of criminal contempt as
“misbehavior of a person, in or near to the presence of the
court, which obstructs the administration of justice, and which
is committed with the required degree of criminal intent”). For
a criminal contempt conviction under § 401, courts have held that
“[w]illfulness is an essential element.” United States v.
Laurins, 857 F.2d 529, 534 (9th Cir. 1988).
At first blush, McGainey appears easily distinguishable
as it dealt with criminal, not civil, contempt and § 401 governs
criminal, not civil, contempt. The Ninth Circuit, however, has
repeatedly stated that § 401, although appearing in the criminal
code, applies equally to civil contempt. See United States v.
Powers, 629 F.2d 619, 624 (9th Cir. 1980) (“Title 18 U.S.C. §§
401 and 402 provide federal courts statutory authority to punish
contemptuous actions. Section 401 applies to both criminal and
civil contempt and contains no limitation on the power of the
district court to impose fine or imprisonment for a violation.”);
United States v. Miller, 588 F.2d 1256, 1262 (9th Cir. 1978)
(same); cf. Britton v. Co-op Banking Grp., 916 F.2d 1405, 1409
n.4 (9th Cir. 1990) (noting that a district court may impose
civil contempt pursuant to 18 U.S.C. § 401(3), which provides for
criminal contempt for “[d]isobedience or resistance to [the
court’s] lawful writ, process, order, rule, decree, or
command”).7
Despite indicating that § 401 provides authority for
civil and criminal contempt, the Ninth Circuit has never held
that obstruction of justice, without the violation of a specific
court order, is sufficient to give rise to civil contempt. If
the issue were to be properly raised before the Ninth Circuit,
this court doubts that the Ninth Circuit would continue to rely
on § 401 for civil contempt. Limiting application of § 401 to
criminal contempt and relying on caselaw for the standards
governing the court’s inherent civil contempt power is also
consistent with the Supreme Court’s criminal and civil contempt
decisions. See, e.g., Hutto v. Finney, 437 U.S. 678, 690-91
(1978) (citing § 401 as authority for criminal contempt and a
7 Presumably, if § 401 could be relied on for civil
contempt, the caselaw requiring the requisite level of intent for
criminal contempt under § 401 would not apply to civil contempt.
See McComb v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949)
(“Civil as distinguished from criminal contempt is a sanction to
enforce compliance with an order of the court or to compensate
for losses or damages sustained by reason of noncompliance.
Since the purpose is remedial, it matters not with what intent
the defendant did the prohibited act.”); Perry v. O’Donnell, 759
F.2d 702, 705 (9th Cir. 1985) (“Although willfulness is a
necessary element of criminal contempt, we find it significant
that civil contempt may be established even though the failure to
comply with the court order was unintentional.”); United States
v. Asay, 614 F.2d 655, 661 (9th Cir. 1980) (“Willfulness is not
an element of civil contempt.”).
prior Supreme Court decision as authority for civil contempt);
Bagwell, 512 U.S. 821 (omitting any reference to § 401 in its
lengthy discussion of civil contempt).
Relying on subsection 401(1) to find civil contempt
absent a court order would also conflict with the unequivocal and
long-standing precedent requiring disobedience of a court order
for civil contempt. See Gifford, 741 F.2d at 265; In re Bennett,
298 F.3d at 1069; see also Labor/Comty. Strategy Ctr. v. L.A.
Cnty. Metro. Transp. Auth., 564 F.3d 1115, 1123 (9th Cir. 2009)
(“For issuance of a contempt order against MTA to be proper, BRU
must establish (1) that [the contemnor] violated the court order,
(2) beyond substantial compliance, (3) not based on a good faith
and reasonable interpretation of the order, (4) by clear and
convincing evidence.”) (internal quotation marks omitted); Gates
v. Shinn, 98 F.3d 463, 472 (9th Cir. 1996) (“Civil contempt is
appropriate only when a party fails to comply with a court order
that is both specific and definite.”) (internal quotation marks
omitted).
Not only does the precedent in this circuit state that
civil contempt cannot occur absent disobedience of an order from
the court, none of the parties cited and this court was unable to
find a single Ninth Circuit case in which a party has been
adjudged in civil contempt absent a court order. In an effort to
be thorough, this court conducted a Westlaw search for every
published Ninth Circuit decision that used the term “civil
contempt.” The search revealed 298 cases and the court’s review
of each of those cases confirmed that the Ninth Circuit has never
addressed, in a published opinion, a district court’s
adjudication of civil contempt absent disobedience of a court
order giving rise to the contempt.8
Accordingly, in light of the clear precedent in this
circuit and the absence of a single Ninth Circuit decision in
which a contemnor was found in civil contempt absent disobedience
of a court order, the court concludes that an individual can be
found in civil contempt only for violation of a specific and
definite court order, not for the obstruction of justice in the
absence of a court order.
Because e-Smart cannot be held in civil contempt absent
one of its representative’s disobedience of a specific and
definite order of the court, the court must determine whether
Grace’s conduct violated a court order. None of the parties
contend that Magistrate Judge Zimmerman issued an order
prohibiting taking the card, and thus Grace’s theft of the card
did not constitute civil contempt. When the Fidelica card was
initially missing at the close of the settlement conference,
Magistrate Judge Zimmerman instructed the parties to “conduct a
really good search” because he “want[ed] the card found.” (Apr.
7, 2011, Tr. 67:6-10.) Although it was clear that Magistrate
Judge Zimmerman wanted the missing card returned immediately, his
instructions to the e-Smart representatives did not clearly
8 The brevity of four per curiam decisions prevents the
court from determining whether an order gave rise to the civil
contempts at issue in the appeals, but nothing suggests that
orders were not issued in each of the cases. See Hughes v.
Sharp, 476 F.2d 975 (9th Cir. 1973); Olsen v. United States, 446
F.2d 912 (9th Cir. 1971); Matter of Bowden, 444 F.2d 546 (9th
Cir. 1971); Bd. of Governors of the Fed. Reserve Sys. v.
Transamerica Corp. & Bank of Am., Nat’l Trust & Sav. Ass’n, 184
F.2d 326 (9th Cir. 1950).
constitute an order from the court. Most tellingly, Magistrate
Judge Zimmerman used the verb “jawbone” to describe his efforts
to have the card returned, which included telling the e-Smart
representatives that searches would be performed. See
Dictionary.com, http://dictionary.reference.com/browse/jawbone
(defining the informal use of jawbone as “to attempt to influence
or pressure by persuasion rather than by the exertion of force or
one’s authority, as in urging voluntary compliance with economic
guidelines”) (last accessed May 12, 2011). Because Magistrate
Judge Zimmerman did not clearly order the card returned the day
of the settlement conference, Grace’s refusal to return the card
at the settlement conference cannot amount to civil contempt.
On the day after the settlement conference, however,
Magistrate Judge Zimmerman issued a clear, unequivocal, and
specific order to the e-Smart representatives. The sealed Order
stated:
IT IS HEREBY ORDERED that everyone who participated in
yesterday’s settlement conference shall make every effort
to locate the missing smart card (with a picture of
George Washington on it) and return it to the Court. It
may be returned anonymously by sending it to [chambers].
. . . Counsel for plaintiff is ORDERED to serve a copy of
this Order on every one of plaintiff’s representatives
and to file a declaration of service. If the card is not
returned by August 20, 2010, I will turn the matter over
to the FBI to investigate or certify the facts to Judge
Patel to determine if there has been spoliation of
evidence.
(Docket No. 324.) Grace does not deny receiving notice of this
order and, other than denying that she originally stole the
Fidelica card, Grace does not defend on the grounds that she
could not comply with Magistrate Judge Zimmerman’s Order.9
Accordingly, after stealing the e-Smart card during the
settlement conference, Grace was in contempt of court when she
failed to return it by August 20, 2010, in violation of the
August 13, 2010, Order.
C. Determination of the Appropriate Remedy
As the adjudication of civil contempt concludes the
need for Magistrate Judge Zimmerman to serve as a witness to the
events at the settlement conference on August 12, 2010, the
conflict resulting from Judge Patel or another judge in the
Northern District presiding over the civil contempt hearing no
longer exists. Accordingly, the court will defer to Judge Patel
to determine whether the appropriate remedy is dismissal with
prejudice, as suggested in the Order to Show Cause, or some
lesser sanction, such as one of the alternatives the Special
Prosecutor suggested in his memorandum of April 20, 2011. (See
9 It could be hypothesized that Grace was unable to
return the card because she had destroyed or discarded it. See
generally United States v. Rylander, 460 U.S. 752, 757 (1983)
(“In a civil contempt proceeding . . . , a defendant may assert a
present inability to comply with the order in question. . . . It
is settled, however, that in raising this defense, the defendant
has a burden of production.”). But see Falstaff Brewing Corp. v.
Miller Brewing Co., 702 F.2d 770, 782 n.7 (9th Cir. 1983) (“This
court, in dicta, has asserted that self-induced inability [to
comply] is not a defense to a charge of compensatory civil
contempt.”) (citing United States v. Asay, 614 F.2d 655, 660 (9th
Cir. 1980)). Even assuming inability to comply could serve as a
defense in this case, none of the evidence before the court
suggests that Grace would have discarded or destroyed the card
before Magistrate Judge Zimmerman issued his Order. To the
contrary, the court finds it highly probable that, after
successfully stealing what she believed belonged to her, Grace
would have held on to the card. Moreover, even if Grace
discarded the card, the Order--issued less than twenty-four hours
after she could have discarded it--unequivocally ordered her to
“make every effort to locate the missing card.” (Docket No.
324.)
Docket No. 363 (suggesting that appropriate remedies could be
ordering “reimbursement of Defendants[’] costs associated with
retaining and preparing [an] expert” to testify about the
technology on the Fidelica card, “a preclusion order, a shift of
the burdens of production and/or persuasion, or an order
requiring payment for Defendants’ costs to locate and subpoena
production of a replacement Fidelica card”).)
NOW, THEREFORE plaintiff e-Smart Technologies, Inc., is
hereby adjudged in civil contempt of the court’s Order of August
13, 2010. (Docket No. 324.) This matter is hereby referred back
to Judge Patel for all further proceedings, including
determination of the appropriate remedy to enforce this Order.
IT IS SO ORDERED.
DATED: May 18, 2011
The big question is: does the company have a viable commercial product and if it does, how far along is it? Without 10-Ks and 10-Qs and with the company's persistent disregard of its reporting obligations, and no newsletters, there's no way to tell what's going on. Our main concern should be to find out if there's a future left for this stock -- we've all made major investments, I'm sure. I used to think there might be hope despite the mismanagement because their touted technology seemed to fit the bill for efficiency, non-intrusiveness and security. But, now it's difficult to believe the product even exists.
Hurrah for the SEC! It took them a while, but good job! What I'm wondering now is if there really is commercial product out there?
Question: If Saito and Grace are barred from being officers of a publicly traded company, who's running e-Smart? Aren't they, after all, the de-facto owners (considering how they set up the company)?
SEC Charges e-Smart Technologies and Senior Executives with Securities Fraud
On May 13, 2011, the Securities and Exchange Commission filed a civil action in the United States District Court for the District of Columbia against e-Smart Technologies, Inc. (e-Smart) and related individuals and entities, charging them with securities fraud and other violations of the federal securities laws. The Commission alleges, among other things, that e-Smart, its Chief Executive Officer, Mary A. Grace (Grace), and its Chief Technology Officer, Tamio Saito (Saito), each violated the anti-fraud provisions of the federal securities laws by making materially fraudulent statements to the public in e-Smart’s 2006 annual report filed with the Commission on Oct. 24, 2007. In that filing, Grace and Saito falsely represented that e-Smart’s product—a multi-functional biometric identification verification system (also known as a “smart card”)—had certain technical capabilities that it did not actually possess and was ready for immediate deployment, when in fact it was not. The complaint further alleges that e-Smart and its CEO Grace issued a fraudulent press release on Feb. 26, 2008, claiming that e-Smart had executed a contract with a well-known South Korean company for the sale of twenty million e-Smart “smart cards.” In actuality, the executed supply contract did not include any obligation on the part of the South Korean company to purchase even a single “smart card.”
Additionally, the complaint alleges that from approximately early 2005 through 2007, e-Smart, Grace, two related companies, IVI Smart Technologies, Inc. (n/k/a e-Smart Technologies International, Inc.) (IVI) and Intermarket Ventures, Inc. (Intermarket), and three stock promoters acting as unregistered broker-dealers, Kenneth A. Wolkoff (Wolkoff), George Sobol (Sobol), and Robert J. Rowen (Rowen), each violated the registration requirements of the Securities Act of 1933 (Securities Act) through unregistered stock offerings of approximately four hundred million shares of e-Smart stock, which generated tens of millions of dollars in ill-gotten gains.
The Commission’s complaint also alleges that e-Smart failed to make required periodic reports, failed to keep and maintain accurate books and records and failed to devise and maintain effective internal accounting controls. The complaint alleges that Grace aided and abetted these violations. The complaint further alleges that Grace and Saito violated the ownership reporting requirements for officers of a public company by failing to file reports of ownership and changes of ownership with the Commission, and that Grace violated the certification requirements for a principal officer of a public company by certifying false SEC filings.
The complaint further alleges that e-Smart violated Sections 5(a) and (c) of the Securities Act and Sections 10(b), 13(a), and 13(b)(2)(A) and (B) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. The complaint alleges that Grace violated Sections 5(a) and (c) of the Securities Act and Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5, 13a-14 and 16a-3 thereunder and that Grace aided and abetted violations of Section 13(a), 13(b)(2)(A) and (B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. The complaint alleges that IVI, Intermarket, Wolkoff, Sobol and Rowen violated Sections 5(a) and (c) of the Securities Act, and Wolkoff, Sobol and Rowen also violated Section 15(a) of the Exchange Act. Finally, the complaint alleges that Saito violated Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5 and 16a-3 thereunder.
In its complaint, the Commission seeks a final judgment permanently enjoining the defendants from future violations of the foregoing provisions, ordering each defendant to disgorge all ill-gotten gains, plus prejudgment interest, ordering each defendant to provide an accounting of all monies received, ordering each defendant to pay civil penalties, barring Grace, Saito, Wolkoff, Sobol and Rowen from engaging in any offering of a penny stock, and barring Grace and Saito from serving as an officer or director of a public company. [SEC v. e-Smart Technologies, Inc., et al., United States District Court for the District of Columbia, Civil Action No. 1:11-cv-00896-JEB] (LR-21976)
Miffed -- Do you have access to legal records? Frycook, I, too don't have access to Pacer. It would be interesting to know the exact details of SEC's litigation, although we all have have a fairly good idea. By the way, I called e-Smart's NY office last week and received a recording that the line was "temporarily disconnected." The company should have at least been responsible enough to inform its shareholders that it's going (gone) under. Frankly, all this time time I was holding on to the .01% chance that they were working on deals that might yet bear fruit but . . . I wonder if: (1) we've been duped intentionally?; (2) the science was good but the engineering wasn't good enough? (3) bad management sinks even the best of ships? or (4) they've lost their lead and now others have variants of the same technology that actually work commercially, something which they couldn't pull off.
Do you know if the contempt hearing actually took place on the 20th and are there any new developments on the legal front? How dead can this stock be?
Thanks. What's so amazing is that that they haven't resolved their problems with the SEC after all this time (just filing the missing 10-Qs and 10-Ks would have been a huge step forward)-- but that's too much to ask. The pressing question now is whether they're still in business or is the total news black-out because of something else? Best wishes.
Do you know if the contempt hearing took place? I wonder if all the other minority shareholders have dumped their shares at a great loss and moved on already? It's as though this company disappeared off the face of earth. I still think they had a great product that would have helped the world tremendously -- probably it wasn't reliable enough in actual use, just good in theory.
If anyone knows anything about what's going on with this company, would you kindly share? From what's available through Googling, it looks like this company is finished--there's been no news for such a long while and it hasn't even bothered to file financial reports with the SEC for several years. It's unbelievable that such a promising technology went nowhere. If this company is no longer operating, solid confirmation would provide closure so we can all put it behind us, however painful.
In addition, it appears there's no longer anyone working in the New York office since all calls are picked up by an answering machine. Since e-Smart hasn't made any financial reports to the SEC for several years, how long can it continue to do so without having its registration revoked by the SEC? All its past deals have come to nothing: the big Samsung project of over 20 million cards, the MyBi deal (by the way, MyBi has now been bought by Lotte), the China JV (of which nothing has been heard of for years), and the list goes on and on. The pilot programs that were initiated in 2008 and 2009, if successful, should have had resulted in new business by 2010 but nothing has been reported. All in all, this company is a total mystery. The only thing that's clear is that long-term shareholders who believed in its technology are left miserable.
...SmartMetric Announces Its Fingerprint Biometric Card Can Now Be Used to Hold Personal Medical Records Without Security Compromise
BAY HARBOR, FL--(Marketwire - 08/26/10) - SmartMetric, Inc. (OTC.BB:SMME - News) announced today that its fingerprint activated Biometric Data Card can be now used to provide the highest level of both security and portability for a person's medical history and full medical records.
Colin Hendrick, President and CEO, stated, "Once again our research and development team has pioneered another exciting breakthrough in our Biometric Data Card. We believe that nothing like this exists anywhere in the world today. We are currently in negotiations with several worldwide corporate entities regarding the rollout and commercialization of our breakthrough products. We will be updating our shareholders as soon as possible on the status of these talks, as well as our previously announced legal actions against Visa and MasterCard."
Unlike other portable solutions, the SmartMetric Data Card can store Gigabytes of medical information including full EKGs, complete CT and MRI digital images, and similar data making up an individual person's complete medical records. Storage of digital images, in particular, requires significant digital storage capacities. Unlike other systems that are severely limited in the amount of digital data that can be held in a portable solution, the SmartMetric Data Card is in fact a powerful digital computer with significant memory capacity sitting inside a Data Card the size of a standard Health Insurance Card. Most importantly, the SmartMetric solution provides the highest level of portable security for the patients information in that it can only be accessed after the patient touches the surface sensor on the Health Card triggering the Card to scan the persons fingerprint and matching it with their fingerprint pre-stored inside the card. Only after a finger print verification internally in the card is the data able to be accessed or viewed by a Doctor, Hospital or even an EMT's computer.
From Yahoo:
BAY HARBOR, FL--(Marketwire - 08/04/10) - SmartMetric, Inc. (OTC.BB:SMME - News) announces today that it has completed the research and development and successfully tested its latest prototype biometric card. The newest biometric card contains the feature of dual band radio transmission that enables both short and long range use which is activated only via the owner's fingerprint.
Colin Hendrick, President and CEO, stated, "Our latest biometric card utilizes the most state-of-the-art identity technology ever developed for this application. To commercialize this technology, we expect to announce shortly the establishment of an in house manufacturing facility where we will be capable of producing over a million biometric cards per month. Once operational, we will be targeting the traditional credit card markets serviced by banks worldwide as well as applications such as speed pass bio identity for approaching military bases, hospitals, work places, parking garages and office doors. All of these applications using our biometric fingerprint activated biometric cards that are in the size of a standard credit card. Furthermore, our biometric card will work with existing electronic security locks and readers so organizations will not have to retrofit existing doors and lock hardware. Given its size, robust features and superior identity protection, we believe our biometric card is the ID card of the future."
About SmartMetric, Inc.
SmartMetric, Inc. has developed a portable biometric identity and transaction card capable of storing a wide variety of personal information while protecting you against identity theft and fraud. It is one of the most advanced portable identity authentication solutions in the world today. The card contains a biometric fingerprint scanner and reader which only you can unlock and is smaller and thinner than a credit card. The SmartMetric card is ideal for a wide range of consumers, including Personal, Government and Corporate.
BAY HARBOR, FL--(Marketwire - 08/04/10) - SmartMetric, Inc. (OTC.BB:SMME - News) announces today that it has completed the research and development and successfully tested its latest prototype biometric card. The newest biometric card contains the feature of dual band radio transmission that enables both short and long range use which is activated only via the owner's fingerprint.
Colin Hendrick, President and CEO, stated, "Our latest biometric card utilizes the most state-of-the-art identity technology ever developed for this application. To commercialize this technology, we expect to announce shortly the establishment of an in house manufacturing facility where we will be capable of producing over a million biometric cards per month. Once operational, we will be targeting the traditional credit card markets serviced by banks worldwide as well as applications such as speed pass bio identity for approaching military bases, hospitals, work places, parking garages and office doors. All of these applications using our biometric fingerprint activated biometric cards that are in the size of a standard credit card. Furthermore, our biometric card will work with existing electronic security locks and readers so organizations will not have to retrofit existing doors and lock hardware. Given its size, robust features and superior identity protection, we believe our biometric card is the ID card of the future."
About SmartMetric, Inc.
SmartMetric, Inc. has developed a portable biometric identity and transaction card capable of storing a wide variety of personal information while protecting you against identity theft and fraud. It is one of the most advanced portable identity authentication solutions in the world today. The card contains a biometric fingerprint scanner and reader which only you can unlock and is smaller and thinner than a credit card. The SmartMetric card is ideal for a wide range of consumers, including Personal, Government and Corporate.
It looks like SmartMetric's fingerprint ID card is similar to e-Smart's SuperSmart card. http://www.smartmetric.com/news_releases.html#
Did e-Smart sell its proprietary technology?
Are there any other persons left on this board? Can anyone provide an update on this company? It seems to have disappeared into the sunset at a time when the biometrics industry is booming. Perhaps e-Smart couldn't overcome its SEC issues?
e-Smart's biometric card would be more efficient than anything L-1 Identity can come up with:
L-1 Identity Solutions and the World Bank Partner to Transform the Way Developing Countries Deliver Services to Citizens
STAMFORD, Conn.--(BUSINESS WIRE)Press Release Source: L-1 Identity Solutions, Inc. On Friday April 23, 2010, 12:01 pm EDT
--L-1 Identity Solutions, Inc. (NYSE: ID - News), a leading provider of identity solutions and services, today announced a collaborative relationship with the World Bank to improve the way governments in developing countries deliver services to citizens as part of the launch of the World Bank eTransform Initiative (ETI). A Memorandum of Understanding (MOU) between L-1 and the World Bank was signed as part of the launch of the initiative today at a World Bank Spring Meeting event attended by many developing country Ministers of Finance and Communications.
The World Bank’s ETI seeks to leverage Information and Communication Technology (ICT) to build a knowledge sharing network that helps governments of developing nations to leverage the best practices of practitioners like L-1 and others to improve the delivery of social and economic services. The knowledge sharing network will focus on areas such as electronic Identification (eID), e-Procurement, e-Health and e-Education; areas vital to promoting the participation of citizens in democratic processes, such as voting, and helping undocumented citizens get access to health and welfare programs. The World Bank has a long history of promoting similar initiatives and is currently funding 14 projects related to e-government and e-ID around the world.
“The speed and precision with which developing countries administer services is dependent upon many factors, not the least of which is the ability to verify the identities of those receiving services,” said Mohsen Khalil, Director of the World Bank’s Global Information and Communication Technologies Department. “L-1 brings valuable expertise in identity management to the initiative’s knowledge network. Together with L-1 and other vendors, we look forward to building systems that better administer critical government services and reduce identity-related fraud that can dramatically increase costs of social and economic programs and prevent aid from getting to those who need it most.”
L-1 is the only biometric technology provider to participate in this program today. As part of its commitment, L-1 will leverage its expertise in identity management, specifically civilian enrollment services, biometric technologies, and design and production of secure identity documents, to contribute to the knowledge network and offer best practices for program implementation. L-1 also will hold technical briefings with World Bank staff and government leaders on key issues related to identity management.
Robert V. LaPenta, Chairman, President and CEO of L-1 Identity Solutions added, “We recognized early on that this program aligned with the goals and objectives of our Company and that there was tremendous value in our participation. We believe that identity management solutions and services can make a significant contribution to society and undocumented citizens in developing countries, bringing them out of anonymity and helping establish their place and participation in society and affirming their rights to benefits they are entitled to receive as citizens.”
Does anybody know why there are so many listings of e-Smart contacts in Houston? Has the former director Van Maasdijk gained control? He's a director of SulphCo, based in Houston.
http://www.netprospex.com/company/executives/e-Smart?companyID=1788324
NetProspex
»
This is NetProspexAbout UsCustomersResourcesNews & PressFind ContactsTrade ContactsSales & SupportCreate Free AccountSign in
In partnership with
OTCBB:ESMT
e-Smart Technologies, Inc. Contacts
Home > Company List > e > e-Smart Technologies, Inc.
Company profilee-Smart Technologies, Inc. is a publicly-traded company headquartered in New York, NY. e-Smart Technologies, Inc. is a small organization by revenue operating in the Credit Cards & Transaction Processing industry. e-Smart Technologies, Inc. emails end with @sulphco.com.
Selected Contacts
Get selected contacts below.
Name Title Organization Location Info Veirified Accuracy
R...... S... Director Business Development e-Smart Technologies, Inc. Houston, TX 04/10/10 99%
L.... R... Chief Executive Officer e-Smart Technologies, Inc. Houston, TX 04/10/10 99%
J...... F....... Vice President Corporate Development e-Smart Technologies, Inc. Houston, TX 04/10/10 99%
W...... F...... Chief Accounting Officer e-Smart Technologies, Inc. Houston, TX 12/01/09 94%
F...... S........... Cheif Technology Officer e-Smart Technologies, Inc. Houston, TX 12/01/09 94%
P.... G........ President e-Smart Technologies, Inc. Sparks, NV 10/09/09 91%
M... G.... President and Chief Executive Officer e-Smart Technologies, Inc. New York, NY 01/28/10 87%
T.... S.... Chief Technical Officer and Senior Executive Vi... e-Smart Technologies, Inc. New York, NY 01/28/10 87%
D.... J...... Campaign Spokesperson e-Smart Technologies, Inc. New York, NY 01/13/10 86%
S...... F..... Chief Financial Officer / Vice President e-Smart Technologies, Inc. Houston, TX 05/11/09 84%
B.... S..... President e-Smart Technologies, Inc. Sparks, NV 09/12/08 72%
C... C....... Chief Operating Officer e-Smart Technologies, Inc. Houston, TX 09/12/08 72%
You're probably right. Based on their demonstration videos, it seemed they had an excellent product, even if it appeared not to work smoothly at times. Although there are lots of smart biometric ID products in the market, e-Smart seemed to offer the best solution. Perhaps the concept was good, but the execution was proven unreliable? Otherwise, why have they not been able to sell their technology on a massive scale when it's the best answer out there? By the way, if they don't make it now, then obviously they've failed because this is the moment when things are coming together worldwide for the biometric ID security industry. I'm still hoping for a good outcome but without any confidence at all. At this point, we might as well sink with the ship, if it comes to that, since our shares are practically worthless anyway after the two humongous reverse splits. It's good to see you're still checking the board from time to time.
OTI shares are on a tear today -- they've received $30 mil. on an e-ID pilot program which they've completed (China possibly?). Incidentally, its shares have almost tripled since I last posted about the company two months or so ago. The description in the news of the hardware and services they provided in the project are in many respects the kind ESTT hopes to sell. What's going on with ESTT?
According to Tamio Saito's blog "We Change the World," a presentation was made in India last year for its national biometric e-ID. Nothing has been mentioned on ESTT's websites about it, however. It was reported in the newspapers back in November or December last year, however, that Suprema has won the biometric fingerprinting portion of the project for the India national ID in a coastal region of the country. Was ESTT able to gain any kind of a foothold?
What's going on with ESTT? It's hard to believe that after all these years and with such an excellent product, and while other companies in the field are signing contracts and getting paid, ESTT has garnered nothing?
I saw on the MarketWatch site that ESTT has an ex-div date of 10/5 at $0.05 per share. Does anyone know what that's all about? http://www.marketwatch.com/investing/stock/estt
OTI has further role in Chinese e-passports:
HuaDa-ZhiBao and OTI Win Supply Contract for China's Ministry of Foreign Affairs Electronic Passport Chips
This Award is in Addition to the Inspection Equipment Award Reported Last Week
Press Release
Source: On Track Innovations Ltd.
On 8:19 am EST, Monday November 2, 2009
Buzz up! 0 Print.Companies:On Track Innovations Ltd.
ISELIN, N.J., Nov. 2, 2009 (GLOBE NEWSWIRE) -- On Track Innovations Ltd, (OTI) (Nasdaq:OTIV - News), a global leader in contactless microprocessor-based smart card solutions, for homeland security, payments, petroleum payments and other applications, today announced that its Chinese partner HuaDa-ZhiBao Electronic Systems Ltd is part of the winning bid to supply the Ministry of Foreign Affairs' (MFA) electronic passport booklet, and will be responsible for the supply of Integrated Circuit (IC) modules to be used in such. HuaDa-ZhiBao is OTI's Chinese local partner, providing a local Chinese product for the MFA program. HuaDa-ZhiBao and OTI have reached an overall profit sharing agreement in addition to product revenues. The Ministry of Foreign Affairs issues passports to diplomats and entry visas to China. The MFA issues about one (1) million passports annually. This award is in addition to the inspection equipment award reported last week.
China's MFA electronic passport is based on the International Civil Aviation Organization (ICAO) and ISO 14443 standards. Earlier this year, HuaDa-ZhiBao and OTI delivered initial quantities for this program, which successfully passed rigorous testing for product performance including security, durability, communications, personalization and more. The MFA is planning to start issuing electronic passport in 2010.
Oded Bashan, Chairman & CEO of OTI, said: "We are honored to be a part of the Chinese MFA electronic passport program. The cooperation with HuaDa-ZhiBao has proven to be successful, professional and positions us to provide best-in-class ID solutions to the Chinese government."
Mr. Bashan continued: "As we have indicated, in our view, the Chinese opportunity is comprised of a series of projects and initiatives which are governed by different governmental regulations and agencies. Each one of these initiatives is large, complex, sophisticated and involves the integration of multiple sub systems, and thus takes long time. In recent years OTI has been working with strong local partners in order to be able to establish local products which support the Chinese opportunity."
The Chinese government has chosen NXP's security chips for their e-passports. http://www.mis-asia.com/news/articles/china-launches-epassports-scheme
Not a peep from e-Smart -- presumably they haven't been chosen to play a part in the Chinese e-pasport rollout. Or have they?
Chinese Ministry of Foreign Affairs selects OTI and HuaDa-Zhi Bao to supply electronic passports: http://finance.yahoo.com/news/Chinas-Ministry-of-Foreign-pz-2290737069.html?x=0&.v=1
e-Smart gave a passport presentation in China several years ago.
Hmmm, paid-in capital of $100 million (that's from the 2007 10K I assume). How long can a company not file financial reports and still not receive disciplinary action fromt the SEC? Does anyone know? It's beginning to look more and more incontestable that the purpose of the reverse stick was just so the company could gain an additional 600+ million shares to sell privately.
It also looks like the leadership of e-Smart has totally abandoned its responsibility to give timely news to shareholderls. Also, I wonder if perhaps e-Smart was not able to resolve it's problems with the SEC? Otherwise, why would it still be blackballed by Pink Sheets?
taby -- You've been optimistic about the outcome of the reverse split. Now that it's happened, things seem to have gotten even uglier than before. Have you heard anything about what's going on, or perhaps have any kind of a hunch? Thanks.
Something smells fishy. After the post reverse split of 1 for 20, the stock now sells for $0.05, which means it would have been $0.0025 before the October 5, 2009 reverse split! If this isn't stock manipulation, I don't know what is.