The opinion
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
SECURITIES AND EXCHANGE ) Case No. 1:20-cv-00469
COMMISSION, )
) Judge J. Philip Calabrese
Plaintiff, )
) Magistrate Judge
v. ) Jennifer Dowdell Armstrong
)
CHRISTOPHER BONGIORNO, )
et al., )
)
Defendants. )
)
OPINION AND ORDER
Plaintiff the Securities and Exchange Commission moves for partial summary
judgment as to liability in this civil enforcement action against Defendant
Christopher Bongiorno. (ECF No. 61.) For the reasons that follow, the Court
GRANTS Plaintiff’s motion.
STATEMENT OF FACTS
In 2015, Defendant Jason Allan Arthur introduced Mr. Bongiorno to Paul
Spivak, CEO of the company U.S. Lighting Group. (ECF No. 61-2, PageID #479.)
Thereafter, Mr. Arthur, Mr. Bongiorno, and others contracted with USLG to solicit
investors for the company. (Id.) Mr. Bongiorno introduced himself to Spivak as John
Powers. (Id.) Using this alias, Mr. Bongiorno solicited investors to purchase USLG
common stock, telling them the stock was a “good deal” because the company was
poised to do “very well.” (ECF No. 61-2, Page ID #590, #629 & #656; id., PageID
#668–69, #671–73 & #675–76.) Bank records reflect that these investments earned
Mr. Bongiorno over $400,000 in commission payments. (ECF No. 61-3, ¶ 8, PageID
#737; see also id., PageID #740–62.) Mr. Bongiorno was not a licensed broker or
dealer with the Commission, nor was he associated with a licensed broker or dealer.
(ECF No. 53, ¶ 3, PageID #389.) He did not tell the investors he solicited that he
earned a forty to fifty percent commission on their investments. (ECF No. 61-2,
PageID #668–69, #671–73 & #675–76.)
Also using the alias John Powers, Mr. Bongiorno solicited investments in
Petroteq Energy, Inc. that earned him approximately $1,800,000 in commission
payments. (Id., PageID #671–73 & #675–76; ECF No. 61-3, ¶ 9, PageID #738.) As
with USLG, Mr. Bongiorno made a commission of approximately forty percent on the
investments he solicited but did not share that information with investors. (ECF No.
61-2, PageID #680–84; id., Page ID #671–73 & #675–76.) Further, some of the
investments were deposited in a shell company that Mr. Bongiorno controlled. (ECF
No. 61-3, ¶ 10, PageID #738.)
Mr. Bongiorno invoiced USLG and Petroteq to obtain his commission
payments. (ECF No. 61-2, PageID #589, #654 & #687.) Those invoices reflected
services for “marketing” and “telecommunication,” not commission payments on
investments. (Id., PageID #589 & #687.) At least one former USLG employee
testified that these invoices intentionally concealed the nature of the company’s
payments to Mr. Bongiorno. (Id., PageID #589.)
The summary-judgment record establishes the foregoing facts. During his
testimony as part of the SEC’s investigation of this and related matters,
Mr. Bongiorno declined to answer questions concerning his involvement in these
solicitations, instead invoking the Fifth Amendment protection against self-
incrimination. (See generally ECF No. 61-2, PageID #695–706.) For example, when
investigators asked whether Mr. Bongiorno solicited investors to purchase USLG or
Petroteq stock, Mr. Bongiorno invoked his Fifth Amendment rights. (Id., PageID
#696.) He also declined to answer interrogatories and requests for admission the SEC
served on him in connection with this matter, instead invoking his Fifth Amendment
rights. (See id., PageID #721–724 & #727–32.) Additionally, the Commission
propounded requests for admission that Mr. Bongiorno used the alias John Powers to
solicit investors, and that John Powers was the name of at least one legitimate
registered broker. (Id., PageID #730–31.) In response, Mr. Bongiorno invoked his
Fifth Amendment rights. (Id.)
STATEMENT OF THE CASE
On February 28, 2020, Plaintiff the Securities and Exchange Commission filed
this lawsuit alleging that Defendants violated several federal securities laws. (ECF
No. 1.) Plaintiff seeks an order enjoining Defendants from violating federal securities
laws and from soliciting any person or entity to purchase or sell securities. (Id.) The
Commission also seeks disgorgement and civil penalties. (Id.) Plaintiff amended on
October 28, 2020. (ECF No. 24.) The amended complaint adds factual allegations
but asserts the same claims and seeks the same remedies as the original complaint.
(Id.)
On January 23, 2023, Plaintiff moved for partial summary judgment against
Mr. Arthur, to which he consented. (ECF No. 60; ECF No. 60-1.) The Court entered
that partial judgment, as amended, on February 7, 2023. (ECF No. 64.) The
judgment addressed only Mr. Arthur’s liability and injunctive relief against him. (Id.)
It left the question of disgorgement and civil penalties against Mr. Arthur and the
claims against Mr. Bongiorno to be decided. On January 25, 2023, Plaintiff filed a
partial motion for summary judgment as to Mr. Bongiorno’s liability for the securities
law violations asserted in the amended complaint. (ECF No. 61.) Mr. Bongiorno filed
a response to the motion in which he consented to the entry of judgment as to liability
against him and requested a hearing on the question of remedy. (ECF No. 66.)
Specifically, Mr. Bongiorno objects to any remedy that enjoins him from soliciting any
person or entity to purchase or sell securities. (ECF No. 66, ¶ 3, PageID #793.)
ANALYSIS
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary
judgment is appropriate “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). On a motion for summary judgment, the Court must view evidence in
the light most favorable to the non-moving party. Kirilenko-Ison v. Board of Educ. of
Danville Indep. Schs., 974 F.3d 652, 660 (6th Cir. 2020) (citing Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
On a motion for summary judgment, the moving party has the initial burden
of establishing that there are no genuine issues of material fact as to an essential
element of the claim or defense at issue. Street v. J.C. Bradford & Co., 886 F.2d 1472,
1479–80 & n.12 (6th Cir. 1989); Chappell v. City of Cleveland, 584 F. Supp. 2d 974,
988 (N.D. Ohio 2008). After discovery, summary judgment is appropriate if the
nonmoving party fails to establish “an element essential to that party’s case and upon
which that party will bear the burden of proof at trial.” Tokmenko v. MetroHealth
Sys., 488 F. Supp. 3d 571, 576 (N.D. Ohio 2020) (citing Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986)).
“The party seeking summary judgment has the initial burden of informing the
court of the basis for its motion” and identifying the portions of the record “which it
believes demonstrate the absence of a genuine issue of material fact.” Id. (citing
Celotex Corp., 477 U.S. at 322). Then, the nonmoving party must “set forth specific
facts showing there is a genuine issue for trial.” Id. (citing Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250 (1986)). “When the moving party has carried its burden under
Rule 56(c), its opponent must do more than show there is some metaphysical doubt
as to the material facts.” Matsushita Elec. Indus. Co., 475 U.S. at 586.
Defendant points to no facts in the record that create a genuine dispute of
material fact as to his liability for Claims I, II, and III. (ECF No. 66.) In fact, he
“consents to the entry of judgment as to the liability alleged” in the amended
complaint. (Id., ¶ 1, PageID #792.) And he admitted early on in this case that he was
not registered with the Commission as a broker or dealer or associated with someone
registered with the Commission as a broker or dealer. (ECF No. 53, ¶ 3, PageID
#389.) In addition, Mr. Bongiorno’s invocation of the Fifth Amendment permits the
Court to infer that his testimony would have been unfavorable to him. Baxter v.
Palmigiano, 425 U.S. 308, 319 (1976). Upon an independent review of the record, the
Court finds that summary judgment in favor of Plaintiff is appropriate as to Claims
I, and II.
Defendant opposes only “the relief sought by the SEC.” (d., § 3, PageID
#792-93.) Specifically, he opposes the Commission’s proposal that he be
“permanently restrain[ed] and enjoin[ed] . . . from directly or indirectly . . . soliciting
any person or entity to purchase or sell any security.” (Ud., PageID #793.) Consistent
with Mr. Bongiorno’s response to the Commission’s motion for a partial summary
judgment, the Court GRANTS Plaintiffs partial motion for summary judgment.
CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiff's motion for partial
summary judgment as to Mr. Bongiorno’s liability on Claims I, II, and III of the
amended complaint. By separate Order, the Court will schedule a status conference
to address Mr. Bongiorno’s request for a hearing and the balance of the case.
SO ORDERED.
Dated: April 10, 2023
J.Philip Calabrese”
United States District Judge
Northern District of Ohio