I. The Magistrate Judge Correctly Found That Metter Should Be Jointly and Severally Liable For All Proceeds Of The Spongetech Fraud .............................................................2
II. The Magistrate Judge Correctly Found That $52.4 Million Is A Reasonable Approximation Of The Proceeds Of The Spongetech Fraud, And That Metter Did Not Offer Evidence To Limit His Joint And Several Liability ...................................................8
III. The Magistrate Judge’s Imposition of a $6.13 Million Civil Penalty Should Be Adopted. ...........................................................................................................10
Another relevant SEC Litigation Release, dated today, causes me an even greater problem with Paul Kisslinger's Response to Metter's Opposition. My question is, did Kisslinger provide Judge Levy with enough information to render a decision in the best interest of the victimized shareholders?
My opinion is that he did not, and that the Commission is continuing to hide their failures to protect the investing public by abusing the judicial system.
Kisslinger's Response to Metter's Opposition relies in part onSEC v. Contorinis, 743 F.3d 296, 301, 307 (2d Cir. 2014, and is quoted on page 10 of Kisslinger's Response, as follows.
"[U]njust enrichment may also be prevented by requiring the violator to disgorge unjust enrichment he has procured for the third party. As our case law indicated (and as our opinion here confirms), when third parties have benefitted from illegal activity, it is possible to seek disgorgement from the violator, even if that violator never controlled the funds. The logic of this … is that to fail to impose disgorgement on such violators would allow them to unjustly enrich their affiliates….[it] serves disgorgement’s core remedial function of preventing unjust enrichment."
Judge Levy, I'm here to tell you that Kisslinger has NO INTEREST in preventing unjust enrichment to criminals, at shareholders' expense. The relevant SEC Litigation Release (http://www.sec.gov/litigation/litreleases/2015/lr23348.htm), dated today, is proof of that, and concerns Mr. Pawel Dynkowski, who was partnered with Mr. Gerard D'Amaro. Mr. D'Amaro testified as to issues regarding SpongeTech, and he also received several stock issuances of SpongeTech shares, as I detailed in a previous submission to Judge Bernstein.
Kisslinger was then the lead attorney in the case regarding Dynkowski and D'Amaro, and he has shown no interest in preventing their unjust enrichment at shareholders' expense. The SpongeTech stock distribution network was clearly defined, yet Kisslinger has made no effort to disgorge any of them of their ill-gotten gains. The only Regulator who HAS filed charges was the Investment Industry Regulatory Organization of Canada.
3 Courts in the Second Circuit also do not hesitate to award joint and several disgorgement awards based on allegations in an SEC complaint following entry of consent judgments such as the Metter Judgment . See SEC v. Universal Express, Inc., 438 Fed.Appx. 23, 26 (2d Cir. 2011) (upholding joint and several disgorgement award against participant in pump and dump scheme over defendant’s objection that he did not control distribution of funds); SEC v. Juno Mother Earth Asset Management, LLC, No. 11 Civ. 01778, 2014 WL 1325912, *3 (S.D.N.Y Mar. 31, 2014) (finding defendants jointly and severally liable for misappropriating funds from hedge fund); Simone, 2013 WL 4495664, at *2 (“With respect to the question of joint and several liability, I have little difficulty concluding that the complaint alleges collusive action sufficient to impose joint and several liability on the defendants.”) As outlined below, however, the SEC is not relying solely on allegations in the Complaint, but on evidence demonstrating Metter’s participation in the entire scheme
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