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MICHAEL A. PIAZZA, Cal. Bar No. 235881 E-mail: [email protected] MOLLY M. WHITE, Cal. Bar No. 171448 E-mail: [email protected] JESSICA RIGLEY MARREN, Cal. Bar No. 208074 E-mail: [email protected] SAM S. PUATHASNANON, Cal. Bar No. 198430 E-mail: [email protected] Attorneys for Plaintiff Securities and Exchange Commission Randall R. Lee, Regional Director Michele Wein Layne, Associate Regional Director 5670 Wilshire Boulevard, 11th Floor Los Angeles, California 90036 Telephone: (323) 965-3998 Facsimile: (323) 965-3908 UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. SECURITY TRUST COMPANY, N.A., et al., Defendants. Pursuant to the Court's Order dated April 11, 2006, the parties hereby submit the following status report and request for trial schedule. I. Status Report Plaintiff Securities and Exchange Commission ("Commission") filed this action on November 25, 2003. On May 6, 2004, upon motions by intervenor New York Attorney General ("NYAG") and defendants Seeger and Kenyon, this action was stayed. On September 20, 2005, the stay was lifted. To date, the defendants have not responded to the complaint, and no discovery has been conducted. The status of the case as to the three remaining defendants is as follows:
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Case No.: CV-03-2323-PHX-JWS JOINT STATUS REPORT
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A.
Nicole McDermott
As previously discussed, the Commission concluded a partial settlement with Ms. McDermott pursuant to which, without admitting or denying the allegations in the Complaint, Ms. McDermott consented to the entry of a final judgment of permanent injunction entered by this Court on February 23, 2004. With respect to the penalty the parties have negotiated a resolution that the staff is prepared to recommend to the Commission for approval. (See Declaration of Jessica Rigley Marren ("Marren Dec.") ¶ 2.) If approved, the settlement will resolve the case against Ms. McDermott. The Commission estimates that it may take up to 60 days for the Commission to approve or reject the staff's recommendation. B. William A. Kenyon
As previously discussed, pursuant to his August 30, 2005 guilty plea, Mr. Kenyon paid restitution of $50,000, which was deposited into the Distribution Fund on January 20, 2006. The Commission staff and Mr. Kenyon have continued to discuss settlement. The Commission believes the parties may soon reach an agreement in principle that the staff can recommend to the Commission for approval. (Marren Dec. ¶ 3.) C. Grant D. Seeger
As previously discussed, pursuant to his August 30, 2005 guilty plea, Mr. Seeger paid restitution of $50,000, which was deposited into the Distribution Fund on January 20, 2006. The Commission staff received Mr. Seeger's sworn financial statements on March 27, 2006. Since then, the staff has reviewed the financial statements and told Mr. Seeger's counsel of record that the sworn financial statements raise questions that need to be addressed before settlement. Mr. Seeger's counsel has not responded to the staff's inquiries regarding the financial statements. At this point, settlement discussions with Mr. Seeger have stalled. The Commission's efforts to negotiate a settlement with Mr. Seeger have been
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frustrated by his attorney's failure to discuss Mr. Seeger's financial statements, her representation that she does not represent Mr. Seeger in this action, and by her refusal to provide Commission counsel with Mr. Seeger's contact information. (See Marren Dec. ¶ 5.) Susan Necheles, counsel of record for Mr. Seeger, has claimed that Mr. Seeger represents himself pro se in this litigation. Ms. Necheles, however, was admitted to this Court pro hac vice, has filed documents on behalf of Mr. Seeger (most recently signing a joint status report on his behalf on or about March 31, 2006), and has never filed a motion to withdraw as attorney of record for Mr. Seeger. Although the Commission has identified Mr. Seeger as "pro se" in the Joint Status Reports, it is the Commission's position that until Ms. Necheles files a motion to withdraw as counsel for Mr. Seeger, and that motion is granted, Ms. Necheles is still attorney of record for Mr. Seeger. As such, Ms. Necheles has an obligation to represent her client and facilitate settlement discussions with her client. If Ms. Necheles no longer wishes to represent Mr. Seeger in this action, Ms. Necheles should formally withdraw as Mr. Seeger's counsel and provide Commission counsel with Mr. Seeger's contact information, so Commission counsel can contact him directly.1 II. Request For Trial Schedule Because the Commission has been unable to reach a settlement in principle with Defendant Seeger, and because the Commission's efforts to settle the case have been frustrated by Mr. Seeger's counsel, the Commission asks the Court to set a date by which Mr. Seeger must file his responsive pleading, if any, as well as
1 The California Code of Ethics dictates that counsel cannot directly contact an adverse party who is represented by counsel. Rule 2-100 states: "a member [of the Bar] shall not communicate directly or indirectly about the subject of the representation with a party the member knows to be represented by another lawyer in the mater, unless the member has the consent of the other lawyer." Thus, until Ms. Necheles formally withdraws as Mr. Seeger's counsel of record, or consents to Commission counsel contacting Mr. Seeger, Commission counsel cannot contact Mr. Seeger.
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the remaining trial dates. At this juncture, Defendant Seeger has filed no responsive pleading, the parties have not yet held a Rule 26 meeting of counsel, and no discovery has been taken. On that basis, the Commission proposes the following schedule: Defendant's Responsive Pleading Due: Percipient Witness Discovery Cut-Off: Expert Witness Discovery Cut-Off: Dispositive Motion Cut-Off: Trial Date: June 2, 2006 March 30, 2007 April 30, 2007 May 25, 2007 July 30, 2007
DATED: May 1, 2006
/s/Jessica Rigley Marren MICHAEL A. PIAZZA SAM S. PUATHASNANON JESSICA RIGLEY MARREN Attorneys for Plaintiff Securities and Exchange Commission
DATED: May __, 2006 GRANT D. SEEGER Pro Se By Susan Necheles
DATED: May __, 2006 J. ALEX GRIMSLEY JACOB A. MASKOVICH Attorneys for Defendant William A. Kenyon
DATED: May 1, 2006
/s/ William M. Brodsky WILLIAM M. BRODSKY Attorney for Defendant Nicole McDermott
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Case 2:03-cv-02323-JWS
PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: [X] U.S. SECURITIES AND EXCHANGE COMMISSION, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036. Telephone: (323) 965-3998 Fax: (323) 965-3908 On May 1, 2006, I served the document entitled JOINT STATUS REPORT upon the parties to this action addressed as stated on the attached service list: [X] OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency's practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. [ ] PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid.
[ ]
[ ] [ ]
PERSONAL SERVICE: I caused to be personally delivered each such envelope by hand to the office of the addressee. FEDERAL EXPRESS: By placing in sealed envelope(s) designated by Federal Express with delivery fees paid or provided for, which I deposited in a facility regularly maintained by Federal Express or delivered to a Federal Express courier, at Los Angeles, California. FAX (BY AGREEMENT ONLY): By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. (Federal) I declare that I am employed in the office of a member of the bar of this Court, at whose direction the service was made. I declare under penalty of perjury that the foregoing is true and correct. /s/ Magnolia M. Marcelo MAGNOLIA M. MARCELO
[ ]
[X]
Date: May 1, 2006
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SEC v. Security Trust Company, et al. United States District Court - District of Arizona Case No. CV 03-2323 PHX JWS (LA-2781) SERVICE LIST Hugh H. Makens, Esq. Daniel R. Gravelyn, Esq. Warner Norcross & Judd LLP 900 Fifth Third Center 111 Lyon Street N.W. Grand Rapids, MI 49503 Attorney for Defendant Security Trust Company, N.A. Grant D. Seeger, Pro Se c/o Susan R. Necheles, Esq. Hafetz & Necheles 500 Fifth Avenue, 29th Floor New York, NY 10110 J. Alex Grimsley, Esq. Jacob A. Maskovich, Esq. Bryan Cave LLP Two N. Central Avenue, Suite 2200 Phoenix, AZ 85004-4406 Attorney for Defendant William Kenyon William M. Brodsky, Esq. Fox Horan & Camerini LLP 825 Third Avenue, 11th Floor New York, NY 10022 Attorneys for Defendant Nicole McDermott Ricardo E. Velez, Esq. Assistant Attorney General New York State Office of the Attorney General 120 Broadway New York, NY 10271 Attorneys for Intervenor
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