describing the 25 privilege against self-incrimination as applying to corporate officers’ testimony
How later courts described this case
- describing the 25 privilege against self-incrimination as applying to corporate officers’ testimony
- granting stay where criminal trial was scheduled and stay was likely 14 to last only three to four months
- repeating that where a business is a sole 26 proprietorship a party must be given an opportunity to show an act of production would 27 entail testimonial self-incrimination
Written by the judges who cited it.
The opinion
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8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
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11 SECURITIES AND EXCHANGE Case No.: 3:20-CV-1650-DMS (MSB)
COMMISSION,
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ORDER DENYING MOTION TO
13 STAY PROCEEDINGS
Plaintiff,
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v.
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MARK J. BOUCHER and STRATEGIC
16 WEALTH ADVISOR GROUP
SERVICES, INC.,
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Defendant.
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Pending before the Court is a Motion by Defendants Mark J. Boucher and Strategic
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Wealth Advisor Group Services, Inc. (“SWAG”) to stay proceedings in the instant case
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pending the resolution of criminal proceedings in United States of America v. Mark J.
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Boucher, 3:21-CR-2872-BAS. For the following reasons, the motion to stay is denied.
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I.
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BACKGROUND
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This case arises out of an alleged fraudulent scheme by a professional investment
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advisor, Defendant Boucher, and his investment advisory firm, Defendant SWAG, to
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misappropriate over $2 million from three clients. (See Compl., ECF No. 1, at ¶¶ 4–12.)
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1 On August 25, 2020, the Securities and Exchange Commission (“SEC”) filed a civil
2 complaint charging Defendants with violating several antifraud provisions under the
3 Securities Act of 1933 and the Securities Exchange Act of 1934. (See Compl., ECF No.
4 1.) Defendants filed an answer on November 9, 2020. (ECF No. 5.) On December 28,
5 2020, the United States, through the U.S. Attorney’s Office for the Southern District of
6 California (USAO), moved to intervene and to stay proceedings. (ECF No. 15.) The Court
7 granted the former and denied the latter motion, both of which were opposed by the
8 Defendants. (ECF No. 16.) The parties then conducted discovery, overseen by Judge
9 Michael S. Berg. (See ECF No. 13.) Defendant Mark J. Boucher was criminally indicted
10 on October 5, 2021, based on the same factual allegations as in the instant case. (ECF No.
11 33 at 3.)
12 Plaintiff SEC filed for summary judgment on October 6, 2021. (ECF No. 32.) On
13 October 18, 2021, Defendants filed the instant motion to stay, which Plaintiff SEC
14 opposed. (ECF Nos. 33, 35.)
15 II.
16 LEGAL STANDARD
17 A court has broad discretion to stay proceedings as part of the inherent power to
18 control its docket. Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). “While a district court
19 may stay civil proceedings pending the outcome of parallel criminal proceedings, such
20 action is not required by the Constitution.” Fed. Sav. & Loan Ins. Corp. v. Molinaro, 889
21 F.2d 899, 902 (9th Cir. 1989) (citing Securities & Exchange Comm'n v. Dresser Indus.,
22 628 F.2d 1368, 1375 (D.C.Cir.), cert. denied, 449 U.S. 993 (1980)). Indeed, “In the
23 absence of substantial prejudice to the rights of the parties involved, such parallel
24 proceedings are unobjectionable under our jurisprudence.” Dresser, 628 F.2d at 1374.
25 However, a court may exercise its discretion to stay civil proceedings when the
26 interests of justice require such action. Keating v. Office of Thrift Supervision, 45 F.3d
27 322, 324 (9th Cir.1995). In so deciding, a court should consider the circumstances and
28 interests involved in the case, especially “the extent to which the defendant's fifth
1 amendment rights are implicated.” Id. (quoting Molinaro, 889 F.2d at 902). The court
2 should additionally consider:
3 (1) the interest of the plaintiffs in proceeding expeditiously with this litigation
or any particular aspect of it, and the potential prejudice to plaintiffs of a
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delay; (2) the burden which any particular aspect of the proceedings may
5 impose on defendants; (3) the convenience of the court in the management of
its cases, and the efficient use of judicial resources; (4) the interests of persons
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not parties to the civil litigation; and (5) the interest of the public in the
7 pending civil and criminal litigation.
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Id. at 325 (citing Molinaro, 889 F.2d at 902, 903).
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III.
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DISCUSSION
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The Court first considers how Defendant Boucher’s Fifth Amendment privilege is
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impacted by the instant case, and then considers the remaining Keating factors.
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A. Implication of Fifth Amendment Rights
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“A defendant has no absolute right not to be forced to choose between testifying in
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a civil matter and asserting his Fifth Amendment privilege.” Keating, 45 F.3d at 326.
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While the extent to which a defendant's Fifth Amendment rights are implicated is a
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“significant factor” to be considered, it is still “only one consideration to be weighed
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against others.” Id. That the trier of fact in a civil case can draw an adverse inference
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when a party invokes the Fifth Amendment is not enough alone to compel a stay. Id.
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Further, “a stay is not warranted where a defendant's Fifth Amendment rights can be
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protected through less drastic means, such as asserting the privilege on a question-by-
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question basis.” ESG Cap. Partners LP v. Stratos, 22 F. Supp. 3d 1042, 1045–46 (C.D.
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Cal. 2014) (internal quotation and citation omitted). Nonetheless, one of “the strongest
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case[s] for deferring civil proceedings until after completion of criminal proceedings is
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where a party under indictment for a serious offense is required to defend a civil or
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administrative action involving the same matter.” Dresser, 628 F.2d at 1375–76.
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1 Here, the civil and criminal proceedings involve the same alleged conduct, thus
2 certainly implicating Defendant Boucher’s Fifth Amendment rights.1 However,
3 Defendants previously argued against a stay, stating it would effectively shut down their
4 ability to conduct discovery. (ECF No. 16 at 5–6.) Now that they have benefited from
5 discovery,2 Defendants argue that proceeding with this case will unfairly burden them.
6 Defendants here cannot have it both ways, asserting that they must have access to discovery
7 but not be subjected to portions of the trial process that might raise self-incrimination
8 concerns. This is especially true here, as much of the impact on Defendant Boucher’s Fifth
9 Amendment rights has already been felt. Defendant Boucher asserted his Fifth
10 Amendment privilege not only “on a question-by-question basis,” Stratos, 22 F. Supp. 3d
11 at 1046, but as to his entire noticed deposition, for which he failed to appear and asserted
12 his privilege via his attorney. (ECF No. 35 at 3.) Defendant Boucher has thus already
13 begun choosing “between testifying in [this] civil matter and asserting his Fifth
14 Amendment privilege.” Keating, 45 F.3d at 326.
15 Defendants argue the landscape has changed entirely now that Defendant Boucher
16 has been indicted, which renders Defendants unable to adequately oppose Plaintiff’s
17 summary judgment motion “without waiving” Mr. Boucher’s Fifth Amendment privilege.
18 (ECF No. 36 at 2; see also ECF No. 33 at 6–7.) However, Plaintiff argues Defendants have
19 been aware of likely charges since at least December 2020 (ECF No. 15), and indeed
20 Defendant Boucher has invoked his Fifth Amendment privilege several times ahead of the
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23 1 Defendant Boucher can invoke his Fifth Amendment rights, both in his individual
capacity and in some instances as a principal speaking on behalf of defendant entity
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SWAG. See Curcio v. United States, 354 U.S. 118, 123– 25 (1957) (describing the
25 privilege against self-incrimination as applying to corporate officers’ testimony); Braswell
v. United States, 487 U.S. 99, 104 (1988) (repeating that where a business is a sole
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proprietorship a party must be given an opportunity to show an act of production would
27 entail testimonial self-incrimination).
2 Defendants have taken multiple depositions and received Plaintiff SEC’s investigative
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1 indictment and can continue to do so. (ECF No. 35 at 3.) In short, while Defendant
2 Boucher’s Fifth Amendment rights are implicated, this impact is not newly arising and is
3 not significant enough alone to require a stay.
4 B. Remaining Keating Factors
5 1. Plaintiff’s Interest
6 Plaintiff SEC has an interest in the timely resolution of this case. “Certainly, as the
7 agency responsible for enforcement of the securities laws, the SEC must be able to respond
8 quickly to securities violations and seek prompt judicial redress.” S.E.C. v. Alexander, No.
9 10-CV-04535-LHK, 2010 WL 5388000, at *4 (N.D. Cal. Dec. 22, 2010). This interest is
10 somewhat mitigated as the pending criminal case arises from the same facts and may
11 vindicate similar enforcement and deterrence goals. (ECF No. 15 at 2.) Further, Plaintiff
12 has identified no particular prejudice that would flow from a delay in this case.
13 However, as the criminal case has just begun and there is currently no trial date set,
14 Defendants would require a stay of unknown length. Generally, “A stay should not be
15 granted unless it appears likely the other proceedings will be concluded within a reasonable
16 time in relation to the urgency of the claims presented to the court.” Leyva v. Certified
17 Grocers of Cal., Ltd., 593 F.2d 857, 864 (9th Cir. 1979). As Plaintiff has already been
18 litigating this case for over a year, to pause for another year or more to seek redress for the
19 alleged violations impairs Plaintiff’s interest and thus weighs against granting a stay.
20 2. Burden on Defendants
21 In addition to the Fifth Amendment concerns, Defendants fairly argue there is a
22 substantial burden in defending against two cases at once. (ECF No. 33 at 6–7.) However,
23 the instant case has been ongoing for over a year, and “The Ninth Circuit has found that
24 where a defendant has had adequate time to prepare for a related civil trial, the burden on
25 the defendant is substantially diminished.” Stratos, 22 F. Supp. 3d at 1046 (citing Keating,
26 45 F.3d at 325). Further, Defendants were aware for months of the likely pending criminal
27 indictment and yet affirmatively opposed the stay that was sought by the USAO in this
28 case. (See ECF No. 16.) “The court is disinclined to grant defendants a stay simply because
1 the [government] decided to file charges before, and not after, the civil trial. To rule
2 otherwise would give defendants an unfair advantage by allowing them to use the shield of
3 the Fifth Amendment as a sword to delay the civil action.” IBM Corp. v. Brown, 857 F.
4 Supp. 1384, 1390 (C.D. Cal. 1994). As there is no date yet set for the criminal trial, there
5 are no scheduling conflicts or overlapping dates. The challenges Defendants face in
6 defending against two parallel actions were foreseeable and are manageable, particularly
7 where Defendants opposed a stay of the civil proceedings and actively sought and obtained
8 discovery, which will assist their defense in both the civil and criminal proceedings. Thus,
9 the burden on Defendants is not so great as to foreclose a stay.
10 3. Judicial Efficiency
11 In some instances of parallel proceedings, it is more efficient to have the criminal
12 case go forward while the civil action is stayed. See Bureerong v. Uvawas, 167 F.R.D. 83,
13 87 (C.D. Cal. 1996) (granting stay where criminal trial was scheduled and stay was likely
14 to last only three to four months). But where the parties are close to trial in the civil matter,
15 a delay would require much of the pre-trial “work to be redone later,” which thus favors
16 proceeding. Brown, 857 F. Supp. at 1392 (denying a motion to stay filed three weeks
17 before trial). Here, the parties have conducted substantial discovery in the civil case and
18 Plaintiff has filed a motion for summary judgment. There is no date set for the criminal
19 trial, while trial in this matter is set for March 14, 2022, just over four months from now.
20 Letting the instant case languish at such a late stage when the criminal case has just begun
21 is inefficient. “Staying a civil case until the resolution of a criminal case is inconvenient
22 for the court, especially where—like in [Defendants’] situation—there is no date set for the
23 criminal trial.” Stratos, 22 F. Supp. 3d at 1047. Thus, this factor weighs against granting
24 a stay.
25 4. Interests of Non-Parties and the Public
26 Plaintiffs note the interests of the non-party alleged victims, and the public generally,
27 in seeing this case resolved. (ECF No. 39 at 11.) Indeed, there is a “public interest in
28 expeditious civil litigation” in cases brought by “a federal agency entrusted with protecting
1 ||investors,” which is the position of Plaintiff SEC here. S.E.C. v. Alexander, No. 10-CV-
2 ||04535-LHK, 2010 WL 5388000, at *6 (N.D. Cal. Dec. 22, 2010) (noting “the Ninth Circuit
3 ||has recognized that delay of enforcement proceedings may be detrimental to public
4 ||confidence in an agency's enforcement scheme’) (citing Keating, 45 F.3d at 326). While
5 dispositive, these factors weigh against granting a stay.
6 IV.
7 CONCLUSION AND ORDER
8 For the reasons set out above, Defendants’ motion to stay this case pending
9 resolution of the criminal case is denied without prejudice.
10 IT IS SO ORDERED.
11 ||Dated: November 8, 2021
12 am bl
3 Hon. Dana M. Sabraw, Chief Judge
United States District Court
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