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Case 2:15-cv-02451-CJB-SS Document 71 Filed 07/21/15 Page 1 of 1
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF LOUISIANA
SECURITIES AND EXCHANGE COMMISSION * CIVIL ACTION
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Vée St. 1S
RONALD LEE BLACKBURN, NUMBER 15–245.1 ANDREW V, REID, BRUCE A. GWYN, * MICHAEL A. MULSHINE,
LEE C. SCHLESINGER, SAMUEL E. * WHITLEY AND TREATY ENERGY & SECTION J(1) CORPORATION ?
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RULE 56 MOTION FOR SUMMARY JUDGMENT
BY RONALD LEE BLACKBURN, ANDREW V. REID, BRUCE A. GWYN AND MIHCHAEL A, MULSHINE
Ronald Lee Blackburn, Andrew V. Reid, Bruce A. Gwyn and
Michael A. Mulshine move for summary judgment dismissing the
complaint filed by the Securities and Exchange Commission on the
Case 2:15-cv-02451-CJB-SS Document 71-1 Filed 07/21/15 Page 1 of 26
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF LOUISIANA
SECURITIES AND EXCHANGE COMMISSION CIVIL ACTION
V??"S118
ANDREW V. REID, BRUCE A. GWYN, MICHAEL A. MULSHINE, LEE C., SCHLESINGER, SAMUEL E. WHITLEY AND TFEATY ENERGY CORPORATION
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RONALD LEE BLACKBURN, * NUMBER 15-2451
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* SECTION J(1)
MEMORANDUM IN SUPPORT OF RULE 56 MOTION FOR SUMMARY JUDGMENT HY RONALD T.EE BLACKBURN, ANDREW V. REID BRUCE A, GWYN AND MICHAEL A, MULSHHNE
For reasons that follow, the complaint filed by the Securities and Exchange Commission should be dismissed pursuant to Rule 56 of the
Federal Rules of Civil Procedure.
I. PREAMBLE
This securities fraud claim by the SEC is not about violations of
the 1933 and 1934 Securities Acts. It is about the abuse of the SEC's
investigative functions and the failure of the SEC to disassociate itself from persons who were knowingly abusing its process. As established
below, the SEC filed this action at the behest of certain Treaty Energy
(“TECO”) malcontents who lost the same fraud case in Highground v. Blackburn, filed November 4, 2009 in St Tammany Parish, Exhibit A.
Case 2:15-cv-02451-CJB-SS Document 71-1 Filed 07/21/15 Page 2 of 26
The TECO malcontents were David Hallin, Pamela Hallin and
Ronda Hyatt (“the Hallin-plaintiffs”). A total of thirteen actions were
brought by the Hallin-plaintiffs against Blackburn and others regarding
fraud involving TECO stock, all unsuccessful. The November 2009
lawsuit which began the litany of attacks against Blackburn was
ultimately referred to the bankruptcy court and tried over six days
from January to June, 2011. After two years of acrimony and months
of briefing the allegations of fraud involving TECO stock, a judgment
dismissing Hallin's claims was rendered:
“The plaintiffs have simply not given the court any basis to find that they suffered any damages other than the unpaid promissory notes as a result of Blackburn and Carolyn Alonzo’s actions.” -
Judge Brown's ruling infuriated the Hallin-plaintiffs, whose
campaign of calumny and slander against Blackburn, Reid, Gwyn,
Mulshine and Treaty was set back by the judgment of dismissal. A key
target of the calumny and slander campaign was Samantha Cox (“Cox”),
a junior staff attorney at the Fort Worth SEC Enforcement office, who
was urged to take action on the same “schemes” rejected by the
bankruptcy court, the district court and the court of appeals whenever
and however the claim presented",
l Civil Action 10:00848, Adversary Case 10:01042; Adversary Case 100.1043; Civil Action 11-01498; Adversary Case 12-01003: Civil Action 12-01047. Civil Action 12-01815; Civil Action 12-02028; Civil Action 12-02642; Bankruptcy Petition 13-11238; and Court of Appeals Docket 13-30248 and Civil Action 15()()594,
the Hallin-plaintiffs blindly accepted information surreptitiously
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The filing of this lawsuit by the SEC violated principles against
the use of SEC's investigative powers to further private interests, SEC
v. Wheeling-Pittsburgh Steel, 482 F.Supp. 555, 565 (W.D.Pa.1979) to-wit:
In our view, the Commission owes a duty to the public, who are its clients, to disassociate itself from persons who are knowingly abusing its process. While we do not suggest that the agency has adopted the motives of third-parties, the totality of the circumstances here presented creates the appearance of a partnership between the Commission and these persons. Wittingly or not, the ISEC) has permitted, and at times encouraged, the abuse of its investigative function. This court will not compound the gross i lack of judgment by sanctioning such abuse.
In the case at bar, the SEC abandoned its mission statement to (i)
protect investors, (ii) maintain fair, orderly and efficient markets and
(iii) facilitate capital formation. Rather, the SEC associated itself with
provided by former TECO malcontents under monikers tolbowieknife,
iunk Hustler, Smacktap, the dead cat bouncer, againstallodds and
others.
For the reasons that follow, this court should likewise “...not
compound the [SEC's] lack of judgment by sanctioning [its] abuse...”in
these specious proceedings”.
2 In our pleadings below, we will refer to the Treaty malcontents who
provided the SEC false information as the tdbowieknife bloggers,
~
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II, SUMMARY JUDGMENT STANDARD
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure,
summary judgment “...shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on file, together
with affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a
matter of law...”. The materiality of facts is determined by the
substantive law’s identification of facts that are critical versus facts
that are irrelevant, Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986), A fact is material if it “might affect the outcome of the suit under the
governing law”, Id. If the dispositive issue is one on which the
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Case 2:15-cv-02451-CJB-SS Document 71-1 Filed O7/21/15 Page 5 of 26
sufficient to permit a reasonable trier of fact to find for the nonmoving party, Smith v. Amedisys, 298 F.3d 434, 440 (5* Cir.2002).
III. STATEMIENT OF THE CASE
On November 20, 2009, David Hallin and twelve other Treaty
Energy shareholders filed suit in St. Tammany Parish against
Blackburn, Treaty Energy and three other defendants. The gravamen
of the Hallin-plaintiffs' complaint was that Treaty, a penny stock
company with no regulatory oversight, was engaging in schemes to
spread false information in order to generate high volume and thereby
pump the stock price up, only to dump it quickly and let the stock
“...slide back toward oblivion...”, Id, at 7.
In hallmark language permeating the SEC complaint, the Hallin
plaintiffs depicted the alleged “pump and dump” scheme as being
orchestrated by Blackburn, "|8. At every opportunity, the Hailin
plaintiffs personalized all causes of action as against Blackburn, "" 15
20. At 21, the Hallin-plaintiffs pled that they had been victimized in
a “bait and switch” scheme orchestrated by the Alonzos “...and their
cohort Ronald L. Blackburn...”. Claiming unjust enrichment, the
Hallin-plaintiffs sought divestiture of all Treaty stock allegedly
“controlled” by the Alonzos and Blackburn...”, “28.
In their prayer for relief, the Hallin-plaintiffs claimed over
THREE MILLION ($3,000,000) DOLLARS in damages. After almost
three years, all fraud claims were rejected and the hate-campaign
against these same defendants accelerated through the medium of
Investor HUB as to which the most prolific basher was tdbowieknife.
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Cox turned out to be the epitome of a regulator-turned-advocate
“...creating the appearance of a partnership between the Commission
and the tdbowieknife bloggers....”, as loathed by the court in SEC v.
Wheeling. The manifestation of the SEC's enthusiasm at taking up the
causes which the Hallin-plaintiffs lost over-and-over-and-over came
minutes after this lawsuit was filed on December 15, 2014 in an e-mail
chain between Cox and two Immigration and Customs Enforcement
agents (Augusta Feremec and Javier “Danny” Esqueda), Exhibit B:
2:18 PM Augusta and Danny, I just wanted you to know that we filed our complaint against Treaty Energy Corporation and certain individuals associated with the company, including Bruce Gwyn, today,
2:22 PM Thanks Samanthal I’m happy to see you were able to move forward as to take some action. I wish we would have had the support of the US Attorney’s Office here to file criminal charges at the same time, though p e r h ap s s o me th i ng will b e forthcoming in your area now that you have dome the heavy lifting.
2:28 PM I’d like nothing better to see Ithan] criminal authorities involved. The sad truth is that a civil action will do nothing to stop career criminals like Blackburn. I think we did manage to make some positive impact by charging the attorney though.
Case 2:15-cv-02451-CJB-SS Document 71-1 Filed 07/21/15 Page 7 of 26
Within an hour of the celebration at the SEC, the tabowieknife
bloggers were gloating:
3:33 PM Tol, you deserve a public “thank you” from those that said you were wrong. Kudos!!"
3:58 PM TD: looks like you wrote the comaint
(sic)*.
4:06 PM The SEC used information in thier (sic) investigation gathered by me. A lot of it from many of Treaty’s victims..."
This extraordinary level of delight over the destruction of a shareholder-base approximating 6000 is disturbing. The SEC’s willingness to help federal-courtroom losers find revenge in the
regulatory system is SHOCKING. In Wheeling, the court relied on
United States v. Fensterwald Center on Corporate Responsibility, 553
F.2d 231 (D.C.C. 1977), and United States v. Church of Scientology, 520
F.2d 818 (9" Cir. 1975) to
“...reflect the concern of the judiciary that an administrative agency pursue its statutory mandate in an independent and apolitical manner, with a modicum of sophistication and free from extraneous influences or other unworthy considerations.”
3 tdbouieknife to schnauser, Exhibit C.
4 dloggold to tdbowieknife, Exhibit D.
5 tdbowieknife to dloggold, Exhibit F.
—.
f
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IV, FILING THE SEC COMPLAINT WAS RECKLESS
At 11:55 AM on Monday, December 15, 2014, undersigned counsel e-mailed Samantha Cox, asking for a meeting in the next two days,
Exhibit F. No disclosure was made that the complaint at issue would
be filed within two hours of undersigned’s overture. It is now
abundantly clear that the SEC staff had “...bought in...” to the personal
vendetta from the Hallin-plaintiffs. By filing a complaint at the behest
of individuals with a personal agenda, the SEC destroyed Treaty
Energy and its hapless investors, The evidence that the SEC was
associating with persons abusing its process is manifest in the posts
immediately after the lawsuit was filed, gloating at what the SEC had
done:
?. Reid on the run and Blackburn dogging (sic) the
summons returned unexecuted.... Gwyn served : on his wife Dec 22*....Mullshine (sic) served December 20"....Schlesinger served on his wife | December 22”...Whitley served at his office Jan. 11*....nothing posted for Tesarski/Energy.
tdbouwiek.nife 1/30/2015 at 7:39:25 PM
Ll None of the scamming con-men that were served have filed an answer to the SEC charges....looks like this will be a very easy win for the SEC and I’m thinking with the lack of answers to the |
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tdbowiehnife 2/02/2015 at 7:17:09 PM
Schlesinger finally responds 3 weeks late and ask that the charges be dismissed against him because the SEC was not specific enough....Then he asks for an extension to file an answer and claims this was his second extension....Delay, delay, delay...
tdbowieknife 2/03/2015 at 11:07:23 AM
I wonder if the SEC and DOJ know Platon Petratos is staying at his dad’s house in Mississippi? With Reid and Blackburn on the run I would think they might want to keep an eye out on Petratos as well...
Schnauser 2/08/2015 at 8:36:38 PM]
Blackburn and Reid finally responded through their lawyer. Guess life on the run doesn’t suit them. Answers due February 11th.
tdbowiek.nife 2/8/2015 at 9:07:07 PM
Blackburn must think he is really smart, smarter than the SEC and the court system...Typical criminal sociopath...
tdbouwiehnife 2/10/2015 at 9:24:18 PM
Hey Tesarski... Getting those SEC filings done??? I’m sure the judge presiding over the fraud case filed by the SEC would be interested in seeing those...As would everybody else...
AI
