Free Brief in Support of Motion - District Court of Colorado - Colorado

Case 1:03-cv-01973-PSF-MJW

Document 209-5

Filed 05/16/2006

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Case 1:03-cv-01973-PSF-MJW

Document 209-5

Filed 05/16/2006

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Not Reported in F.Supp. Not Reported in F.Supp., 1987 WL 9415 (S.D.N.Y.) (Cite as: 1987 WL 9415 (S.D.N.Y.))

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Only the Westlaw citation is currently available.

United States District Court, S.D. New York. SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Guieseppe B. TOME, Paolo Mario Leati, Lombardfin S.p.A., Transatlantic Financial Co., S.A., Nayarit Investments, S.A., Finvest Underwriters and Dealers Corp., Certain Purchasers of the Common Stock and Call Options for the Common Stock of St. Joe Minerals Corporation, and Banca Della Svizzera Italiana, Defendants. Ex Rel: SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Judgment Creditor, v. LOMBARDFIN S.p.A., Defendant-Judgment Debtor. No. 81 Civ. 1836 (MP). April 3, 1987. Securities and Exchange Commission New York City by Kathleen Warwick, Anne C. Flannery, Robert B. Blackburn, Joseph G. Mari, Peter G.A. Safirstein, for plaintiff-judgment creditor. White & Case, New York City by Paul J. Bschorr, Robert M. Kelly, Barbara Shea for Lombardfin, S.p.A defendant-judgment debtor. OPINION MILTON POLLACK, Senior District Judge. *1 The Securities and Exchange Commission ("SEC"), plaintiff, seeks an Order of this Court staying the judgment against defendant Lombardfin, S.p.A. and compelling Lombardfin to post a supersedeas bond. Alternatively, the SEC seeks an Order compelling Lombardfin to answer interrogatories which the SEC has served upon it and to which Lombardfin has objected. For the reasons stated below, the SEC's request for a stay and the posting of a bond is denied. Plaintiff's request as to the interrogatories, as hereby modified, is granted. BACKGROUND Lombardfin is an Italian securities company, through

which Paolo Mario Leati traded on inside information provided by Guiseppe B. Tome. Lombardfin, along with several co-defendants was found liable for violations of federal securities laws in an Opinion of this Court dated June 3, 1986. [FN1] The Court found Lombardfin jointly and severally liable with several co-defendants for $1,995,368.30. The SEC, in attempting to execute on that judgment, served Lombardfin's attorneys on January 16, 1987 with interrogatories seeking information about Lombardfin's assets and financial condition. Lombardfin responded to the interrogatories on February 24, 1987 with a set of general and specific objections, but no answers. [FN2] THE GOVERNMENT'S MOTION First, the SEC seeks an Order of the Court for a stay of the judgment, and compelling Lombardfin to post a supersedeas bond. However, Rule 62(d) of the Federal Rules of Civil Procedure states that it is the appellant who is required to post a bond if it seeks a stay of the judgment. Here, appellant Lombardfin seeks no stay of the judgment. Consequently, Rule 62(d) provides no grounds for the Court to order appellee to post a bond. The SEC urges that the bond be required as a sanction for Lombardfin's failure to answer the interrogatories served upon it. While sanctions are appropriate when proper interrogatories are not answered, the Court has found that several of Lombardfin's objections to the SEC interrogatories are well founded. Sanctions will not be ordered at this time. Second, the SEC urges the Court to compel Lombardfin to answer the post-judgment interrogatories which the SEC has directed against it. Initially, the Court notes that the right of the SEC to serve, and receive answers, to interrogatories in enforcing a judgment is clearly laid out in Rule 69(a) of the Federal Rules. [FN3] Rule 69 was intended to provide an effective and efficient means of securing the execution of judgments. [FN4] The scope of such post-judgment discovery is broad, [FN5] encompassing the post-judgment creditor's privilege to seek discovery of past financial payments which could lead to the discovery of concealed or fraudulently transferred assets. [FN6] Parties are free to employ all means of discovery allowable under the Federal Rules, including, of course, interrogatories. [FN7]

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Case 1:03-cv-01973-PSF-MJW

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Filed 05/16/2006

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Not Reported in F.Supp. Not Reported in F.Supp., 1987 WL 9415 (S.D.N.Y.) (Cite as: 1987 WL 9415 (S.D.N.Y.))

Lombardfin urges that this Court should refrain from ordering it to answer the interrogatories of the postjudgment creditor while the underlying issue of this Court's finding of Lombardfin's liability is on appeal. However, the district court's power to act in aid of execution of its judgment is not impaired by the filing of an appeal. [FN8] Lombardfin has explicitly declined to ask for a stay of this Court's judgment. [FN9] The effect of their failure to seek a stay is that the prevailing party may treat the judgment of the court as final. [FN10] Lombardfin's position is not strengthened because its objection is jurisdictional rather than substantive. [FN11] *2 In summary, the right of the SEC to obtain a full picture of Lombardfin's assets, as an aid in executing this Court's judgment against Lombardfin, is clear. Lombardfin must answer any interrogatories properly directed at this goal. Lombardfin has objected that the SEC's interrogatories are "unbelievably burdensome, extraordinarily overbroad and grossly improper." [FN12] This hyperbole aside, the Court has examined the SEC's requests to see if they comport with the permissible purposes of Rule 69 postjudgment interrogatories. Annexed to this Opinion is a modified version of the SEC's requests, which eliminates those items which are overbroad or irrelevant. The excluded or modified interrogatories have been eliminated without prejudice to further interrogation for good cause shown after receipt by the SEC of the responses to those interrogatories now allowed. No inference shall be drawn that interrogatories which are similar to the excluded items may not hereafter be addressed to the judgment debtor, subject to the further order of the Court. It is ordered that the judgment creditor shall respond to the interrogatories, as modified by the court on the annexed exhibit, on or before April 15, 1987 by noon of that day. APPENDIX UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK SECURITIES AND EXCHANGE COMMISSION, Plaintiff, --against-GIUSEPPE B. TOME, PAOLO MARIO LEATI, LOMBARDFIN S.p.A., TRANSATLANTIC FINANCIAL

CO., S.A., NAYARIT INVESTMENTS, S.A., FINVEST UNDERWRITERS AND DEALERS CORP., CERTAIN PURCHASERS OF THE COMMON STOCK AND CALL OPTIONS FOR THE COMMON STOCK OF ST. JOE MINERALS CORPORATION, AND BANCA DELLA SVIZZERA ITALIANA, Defendants. 81 Civil 1836 (MP) INTERROGATORIES OF PLAINTIFF SECURITIES AND EXCHANGE COMMISSION TO DEFENDANT LOMBARDFIN, S.p.A. Plaintiff Securities and Exchange Commission (the "Commission") hereby propounds to Defendant Lombardfin S.p.A. ("Lombardfin") the following interrogatories, to be answered separately and fully in writing under oath within 30 days in accordance with Rule 33(a) of the Federal Rules of Civil Procedure. INTERROGATORY # 1 A. State the name and address of each business entity in which Lombardfin has a greater than 2% actual or contingent equity interest. B. State the name, all addresses and the interest of each partner or other person who has had any equity or economic interest in Lombardfin. If the person who has had such an interest is not an individual, identify each person who has any equity or economic interest in such person. INTERROGATORY # 2 INTERROGATORY # 3 State all assets with a current value greater than $5,000.00 (sums expressed in dollars herein are defined to include any foreign currency equivalent) in which Lombardfin and its affiliates have had any direct or indirect beneficial interest from August 1, 1985 to the present. Set forth for each its nature, cost, current value, location, and identify all other persons with a direct or indirect beneficial interest in each asset. *3 INTERROGATORY # 4 INTERROGATORY # 4 INTERROGATORY # 5 INTERROGATORY # 6

© 2006 Thomson/West. No Claim to Orig. U.S. Govt. Works.

Case 1:03-cv-01973-PSF-MJW

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Filed 05/16/2006

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Not Reported in F.Supp. Not Reported in F.Supp., 1987 WL 9415 (S.D.N.Y.) (Cite as: 1987 WL 9415 (S.D.N.Y.))

INTERROGATORY # 7 INTERROGATORY # 8 INTERROGATORY # 9 INTERROGATORY # 10 INTERROGATORY # 11 INTERROGATORY # 12 INTERROGATORY # 13 Identify all accounts receivable, notes receivable, mortgages, liens, leases, royalties, or pledges of personalty held by Lombardfin and its affiliates, whether in their name or in the name of another; state their value, and where the evidences of ownership are located. [INTERROGATORY # 14]

State the dates and amounts of any mortgages, deeds of trust, or other liens outstanding against any properties owned by Lombardfin and its affiliates. State the mortgagee, the name and address of the mortgagee, trustee, or lienor, the remaining term, the unpaid balance, and the specific property affected. INTERROGATORY # 24 INTERROGATORY # 25 Identify all other legally enforceable obligations owed by Lombardfin and its affiliates, and state to whom, and in what amounts. INTERROGATORY # 26 INTERROGATORY # 27 INTERROGATORY # 28 INTERROGATORY # 28 INTERROGATORY # 29

INTERROGATORY # 15 INTERROGATORY # 30 INTERROGATORY # 16 INTERROGATORY # 17 INTERROGATORY # 18 INTERROGATORY # 19 INTERROGATORY # 20 Identify all seats or memberships on any exchanges in which Lombardfin and its affiliates have had a direct or indirect beneficial interest from August 1, 1985 to the present. For each, state the current market value, and in what name it is held. INTERROGATORY # 21 INTERROGATORY # 22 Identify all suits or judgments pending against Lombardfin and its affiliates. State the full details, including the dates and amounts of recent payments thereon made by or on behalf of Lombardfin and its affiliates and whether assets of Lombardfin and its affiliates have been attached. INTERROGATORY # 23 Describe and state the ownership, nature, location and value of any asset held by anyone on behalf of Lombardfin and its affiliates not heretofore identified. INTERROGATORY # 31 State all money or other assets Lombardfin and its affiliates received from anyone since July 22, 1986, the date of the judgment herein, and what has happened to it. INTERROGATORY # 32 State all other sources of income or property, actual or potential, to Lombardfin and its affiliates which have not been disclosed in answer to previous interrogatories, and set forth the value or potential value thereof. INTERROGATORY # 33 INTERROGATORY # 34 Identify all property held by or on behalf of Lombardfin and its affiliates exceeding $5,000.00 in value that has been sold, transferred, or given away since entry of the judgment in this action and what

© 2006 Thomson/West. No Claim to Orig. U.S. Govt. Works.

Case 1:03-cv-01973-PSF-MJW

Document 209-5

Filed 05/16/2006

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Not Reported in F.Supp. Not Reported in F.Supp., 1987 WL 9415 (S.D.N.Y.) (Cite as: 1987 WL 9415 (S.D.N.Y.)) was the consideration received therefrom, if any. Give full details as to dates, names, addresses, consideration, who uses, who has possession, who receives the income therefrom, and who pays the taxes and insurance thereon in each instance. INTERROGATORY # 35 Identify each account at any bank, financial institution or service closed by or on behalf of Lombardfin and its affiliates from March 27, 1981 to the present. Give the name and address of the bank or other institution, identify all persons having a direct or indirect beneficial interest in the account, and state the monies, bonds and other assets withdrawn therefrom and their value. *4 INTERROGATORY # 36 INTERROGATORY # 37 Identify by name, phone number, address and affiliation, all persons with knowledge about the current financial condition, results of operations and location of assets of Lombardfin and its affiliates. Identify all persons who participated in the preparation of the answer to each of these interrogatories. Respectfully submitted, Kathleen A. Warwick Regional Administrator By /s/ Robert B. Blackburn Senior Trial Counsel FN1. See SEC v. Tome, 638 F.Supp. 596 (S.D.N.Y.1986). FN2. Lombardfin makes much of its argument that this Court has no jurisdiction over it, purportedly because Lombardfin did not receive proper notice before trial. This question is on appeal and has no bearing on the SEC's instant effort to collect on a validly entered judgment. Lombardfin appeared at the hearing on this motion for the limited purpose of opposing the motion. FN3. Rule 69(a) provides, in relevant part: "In aid of the judgment or execution, the judgment creditor or his successor in interest when that interest appears of record, may obtain discovery from any person, including the judgment debtor, in the manner provided in these rules or in the manner provided by © 2006 Thomson/West. No Claim to Orig. U.S. Govt. Works.

the practice of the state in which the district court is held." FN4. United States v. McWhirter, 376 F.2d 102, 106 (5th Cir.1967); Baker v. Limber, 647 F.2d 912, 920 (9th Cir.1981). FN5. Monticello Tobacco Co. v. American Tobacco Co., 12 F.R.D. 344, 344-45 (S.D.N.Y.), aff'd 197 F.2d 629 (2d Cir.), cert. denied, 344 U.S. 875 (1952). FN6. Id.; Magnaleasing, Inc. v. Staten Island Mall, 76 F.R.D. 559, 561 (S.D.N.Y.1977). FN7. See Castro v. United States, 104 F.R.D. 545, 552 (D.P.R.1985). FN8. International Paper Co. v. Whitson, 595 F.2d 559, 561-62 (10th Cir.1979); Sirloin Room, Inc. v. American Employers Ins. Co., 360 F.2d 160, 161 (5th Cir.1966); Printing & Paper Trades v. Cuneo Eastern Press, 72 F.R.D. 588, 590 (E.D.Pa 1976), aff'd 549 F.2d 796 (3rd Cir.1977). FN9. Memo in Opposition, at 26. FN10. National Service Industries, Inc. v. Vafla Corp., 694 F.2d 246, 249-250 (11th Cir.1982); American Grain Ass'n v. LeeVac Ltd., 630 F.2d 245, 247 (5th Cir.1980). FN11. National Service Industries, 694 F.2d at 249-250 (Appeals Court upheld District Court's imposition of sanctions against a judgment debtor who contested the Court's jurisdiction and repeatedly refused to answer post-judgment interrogatories.). FN12. Memo in Opposition, at 31. Not Reported in F.Supp., 1987 WL 9415 (S.D.N.Y.) END OF DOCUMENT