Respondents Brief — Martin A. Armstrong, Petitioner v. Securities and Exchange Commission, et al.

No. 19-392

IN THE

Supreme Court of the United States

____________________

MARTIN A. ARMSTRONG,

Petitioner,

v.

SECURITIES AND EXCHANGE COMMISSION, UNITED STATES

COMMODITY FUTURES TRADING COMMISSION, TANCRED

SCHIAVONI, IN HIS CAPACITY AS TEMPORARY RECEIVER,

AND THE UNITED STATES OF AMERICA,

Respondents.

____________________

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

____________________

BRIEF IN OPPOSITION OF TEMPORARY

RECEIVER TANCRED SCHIAVONI

____________________

TANCRED SCHIAVONI

O’MELVENY & MYERS LLP

Times Square Tower

7 Times Square

New York, N.Y. 10036

(212) 326-2000

JONATHAN D. HACKER

(Counsel of Record)

jhacker@omm.com

ANNA O. MOHAN*

O’MELVENY & MYERS LLP

1625 Eye Street, N.W.

Washington, D.C. 20006

(202) 383-5300

*Admitted only in Virginia;

supervised by principals of the firm

Counsel for Temporary Receiver Tancred Schiavoni

i

QUESTION PRESENTED

Whether certiorari should be granted to address

two questions that:

• are irrelevant to the facts of the case as is conclusively established by factual findings affirmed on

appeal;

• were not properly preserved in the proceedings

below; and

• implicate no judicial conflict at all, much less a

conflict among federal circuit courts or state courts of

last resort.

ii

CORRECTION TO LIST OF PARTIES

The caption on the cover of the petition for a writ

of certiorari incorrectly identifies the respondent receiver as Alan M. Cohen. On July 16, 2019, the district court granted Cohen’s motion to withdraw as receiver and appointed Tancred Schiavoni as substitute

receiver. Order at 10, SEC v. PEIL, No. 99-cv-9667

(S.D.N.Y. July 16, 2019), ECF No. 533. The caption

of this brief has been corrected to identify Schiavoni

as receiver. The receiver has been a party to all proceedings below, including in the court of appeals,

where he briefed and argued the appeal.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED ........................................ i

CORRECTION TO LIST OF PARTIES ................... ii

INTRODUCTION ..................................................... 1

STATEMENT OF THE CASE .................................. 2

A. Initiation Of Parallel Enforcement

Proceedings And Asset Freeze .................... 3

B. Administration Of The Receivership

And Interim Distribution ............................ 4

C. Guilty Plea And Settlement With

Agencies ....................................................... 6

D. Final Distribution And Settlement

With Receiver Waiving Petitioner’s

Claims To Receivership Assets ................... 7

E. Petitioner’s Access To Storage Lockers ...... 9

F.

The Decisions Below .................................. 10

REASONS FOR DENYING THE PETITION........ 12

I.

THIS CASE DOES NOT RAISE EITHER

OF THE QUESTIONS PRESENTED ............. 12

II. NEITHER QUESTION PRESENTED

WAS PROPERLY PRESERVED BELOW ...... 17

III. THERE IS NO RELEVANT JUDICIAL

CONFLICT ON EITHER QUESTION

PRESENTED ................................................... 20

iv

TABLE OF CONTENTS

(continued)

Page

IV. DISTRIBUTION OF RECEIVERSHIP

ASSETS WOULD NOT REMEDY THE

SIXTH AMENDMENT CLAIM

PETITIONER ASSERTS ................................. 24

CONCLUSION ........................................................ 25

v

TABLE OF AUTHORITIES

Page(s)

CASES

Armstrong v. Guccione,

470 F.3d 89 (2d Cir. 2006) ............................... 5, 6

CBOCS West, Inc. v. Humphries,

553 U.S. 442 (2008)............................................ 16

CFTC v. Walsh,

2010 WL 882875 (S.D.N.Y. Mar. 9,

2010) ................................................................... 22

Clingman v. Beaver,

544 U.S. 581 (2005)............................................ 18

Estate of Lott v. O’Neill,

165 A.3d 1099 (Vt. 2017) ..............................21, 23

Exxon Co. v. Sofec, Inc.,

517 U.S. 830 (1996)............................................ 16

FTC v. Johnson,

2015 WL 8751693 (D. Nev. Dec. 14,

2015) ................................................................... 22

Luis v. United States,

136 S. Ct. 1083 (2016)........................................ 13

SEC v. McGinn,

2012 WL 1142516 (N.D.N.Y. Apr. 4,

2012) ................................................................... 22

SEC v. PEIL,

84 F. Supp. 2d 443 (S.D.N.Y. 2000) .................... 4

United States v. Bonventre,

720 F.3d 126 (2d Cir. 2013) ............................... 22

vi

TABLE OF AUTHORITIES

(continued)

Page(s)

United States v. Feathers,

2016 WL 7337518 (N.D. Cal. Dec.

19, 2016) ........................................................22, 23

United States v. Hopkins,

920 F.3d 690 (10th Cir. 2019)............................ 25

United States v. Johnston,

268 U.S. 220 (1925)............................................ 16

United States v. Monsanto,

491 U.S. 600 (1989).......................................13, 14

United States v. Stitt,

139 S. Ct. 399 (2018).......................................... 18

United States v. Williams,

504 U.S. 36 (1992).............................................. 18

1

INTRODUCTION

Both Questions Presented in the petition for certiorari rest on the same twin premises, viz., the frozen

and seized assets at issue were owned by petitioner

and untainted by any criminal offenses. Both premises are unambiguously false. Factual findings controlling at this stage—but almost entirely unmentioned by petitioner—conclusively establish that the

assets were neither owned by petitioner nor untainted. Rather, the assets at issue belonged to corporations in which petitioner possessed no ownership

interest, and they were directly connected to the

fraudulent schemes in which those corporations participated. This case accordingly presents no question

as to whether the freezing of these assets denied petitioner’s claimed right to counsel of choice, nor

whether the failure to “return” the assets to petitioner

denied him due process.

The foregoing facts are by themselves reason

enough to deny the petition. But there are other reasons, too. Many others:

•

Petitioner argues that under the Sixth Amendment, he was entitled to a distribution of receivership assets for use in his criminal case,

but in the proceedings below, petitioner both

forfeited and explicitly waived any claims to receivership assets;

•

Petitioner never asserted, in the proceedings

below, any Fifth Amendment due process objection to the disbursement of the assets under

control of the receivership;

2

•

Petitioner nevertheless was afforded, and

availed himself of, an opportunity in 2017 to

visit lockers where certain physical assets were

stored to obtain any genuinely personal items;

•

Petitioner does not even purport to identify a

circuit conflict on the waived and non-presented question whether the receiver violated

due process by failing to “return” some of the

assets in the receivership;

•

The alleged conflict petitioner does identify

does not actually exist, and the cases he relies

on are not decisions of federal courts of appeal

or state courts of last resort; and

•

The only remedy petitioner seeks on his Sixth

Amendment claim is a distribution of receivership assets, but providing him those assets

would not remedy the alleged failure to allow

him his counsel of choice in the now-completed

criminal case.

For these reasons and for others identified by the

Government, the petition should be denied.

STATEMENT OF THE CASE

More than twenty years ago, petitioner engaged in

a scheme to use two different corporations to sell hundreds of millions of dollars in fraudulent promissory

notes to investors. To avoid detection of his scheme,

petitioner ensured that he was not listed as a shareholder of the corporations and that none of the corporations’ assets were titled in his name.

In 1999, petitioner was both criminally indicted

and civilly sued by the Government in connection

3

with this fraudulent scheme. The relevant aspects of

these parallel enforcement proceedings are described

below.

A. Initiation Of Parallel Enforcement Proceedings And Asset Freeze

On September 13, 1999, the U.S. Attorney’s Office

for the Southern District of New York obtained a warrant to arrest petitioner. He was subsequently criminally indicted for securities fraud, wire fraud, and

conspiracy to commit those crimes in connection with

his scheme to sell fraudulent promissory notes. See

Sealed Indictment, United States v. Armstrong, No.

99-cr-997 (S.D.N.Y. Sept. 29, 1999), ECF No. 5.

The same day the arrest warrant was issued, the

Securities and Exchange Commission (“SEC”) and the

Commodity Futures Trading Commission (“CFTC”)

filed separate civil suits against both petitioner and

the two corporations he used to perpetrate his fraud—

Princeton Economics International Ltd. (“PEIL”) and

Princeton Global Management Ltd. (“PGM”). See

Complaint, SEC v. PEIL, No. 99-cv-9667 (S.D.N.Y.

Sept. 13, 1999), ECF No. 1; Complaint, CFTC v. PGM,

No. 99-cv-9669 (S.D.N.Y. Sept. 13, 1999), ECF No. 1.

Immediately after filing those suits, the SEC and

CFTC moved to freeze the defendants’ assets and to

establish a receivership to manage the assets owned

by the corporate defendants. The district court

granted the motions and entered a temporary restraining order (later converted to a preliminary injunction), appointing Alan Cohen as receiver and giving him the authority to marshal the assets and property belonging to the corporate defendants and their

4

subsidiaries. See SEC v. PEIL, 84 F. Supp. 2d 443,

443 (S.D.N.Y. 2000). Cohen was succeeded by appointment of respondent Tancred Schiavoni on

July 16, 2019. See supra at ii.

B. Administration Of The Receivership

And Interim Distribution

Pursuant to the district court’s order, the receiver

began to collect the corporate defendants’ assets.

First, the receiver took control of the corporate defendants’ bank and brokerage accounts. C.A. Suppl.

App. SA-42. 1 All but one of those accounts were held

in the name of the corporate defendants and their

subsidiaries or affiliates—not petitioner. Id. 2 And petitioner was not a shareholder in any of those corporations. Id. at SA-29. Thus, petitioner—neither an

account holder nor even a shareholder in the account

holders—had no ownership interest in the bank and

brokerage accounts placed in the receivership.

In addition to these cash assets, the receiver also

took possession of several of the corporate defendants’

non-cash assets, including, among others, a beach

1 “C.A. Suppl. App.” refers to supplemental appendices filed

by the receiver in this appeal. See Supplemental Appendix, SEC

v. PEIL, No. 17-3572 (2d Cir. Oct. 10, 2018), ECF Nos. 134-136.

2 Only one account was purported to be denominated in pe-

titioner’s name, and petitioner was invited to claim some or all

of the funds in that account. C.A. Suppl. App. SA-42 n.59. In

settling with the CFTC and receiver, petitioner explicitly agreed

in the Consent Order he signed to convey the balance of this alleged 401(k) account, which was funded by monies diverted from

noteholder accounts, to the receivership. See Consent Judgment

at 8-9, 14, CFTC v. PGM, No. 99-cv-9669 (S.D.N.Y. June 24,

2008), ECF No. 110.

5

house and multiple storage facilities. Id. at SA-50-56.

Like the bank and brokerage accounts, these noncash assets belonged to the corporate defendants and

their subsidiaries, not petitioner: the deed for the

beach house was issued in the name of one of the corporate defendants, id. at SA-51, and the storage facilities were leased in the name of one of the subsidiaries, id. at SA-55. 3

In 2001, the receiver filed a report with several

volumes of exhibits, documenting these efforts to collect the corporate defendants’ assets and providing an

inventory of the assets collected to that point. Id. at

SA-388-406. The report also used expert forensic accounting techniques to trace all of the assets held in

the receivership to the investors petitioner had defrauded—the Princeton noteholders. Id. at SA-412433.

After submitting the report, the receiver began to

negotiate with the defrauded investors and was ultimately able to broker a global settlement with them

on behalf of the corporate defendants. To effectuate

that settlement, the receiver moved in 2003 for authorization for an interim distribution of approximately $56 million of the corporate funds held in the

receivership. Id. at SA-5, SA-13.

3 The receiver also attempted to collect from petitioner ap-

proximately $15 million worth of rare coins, gold bullion bars

and coins, and various antiquities—all purchased with corporate

funds. Petitioner refused to produce these items after being ordered to do so, resulting in a lengthy incarceration for civil contempt. See Armstrong v. Guccione, 470 F.3d 89, 94-96 (2d Cir.

2006).

6

The district court held three separate hearings on

the receiver’s motion. Id. at SA-6. Although petitioner, along with his counsel, attended each hearing,

he never asserted a claim to, or introduced evidence

of, his personal ownership interest in the funds held

in the receivership. Id. at SA-8.

On January 12, 2004, the district court entered an

order authorizing the interim distribution. Id. at SA5-12. The court noted that, despite being given the

opportunity to do so, petitioner had not asserted a personal claim to the funds. Id. at SA-8. Nor had anyone

claiming to be a shareholder of the corporate defendants objected to the receiver’s motion. Id. Accordingly, the court approved the interim distribution,

finding that the funds distributed were “the exclusive

property of the Princeton Noteholders.” Id.

C. Guilty Plea And Settlement With Agencies

Two years after the interim distribution, on August 17, 2006, petitioner pleaded guilty to conspiracy

to commit securities, commodities, and wire fraud

pursuant to an agreement with the Government. See

Armstrong v. Guccione, 470 F.3d 89, 96 (2d Cir. 2006).

On April 10, 2007, the district court sentenced him to

60 months’ incarceration and three years’ supervised

release and ordered him to pay $80 million in restitution. See Final Judgment, United States v. Armstrong, No. 99-cr-997 (S.D.N.Y. Apr. 10, 2007), ECF

No. 150. With that sentence, petitioner would be released from prison in 2012 and would complete his

term of supervision in 2015.

7

Shortly after petitioner entered a guilty plea in his

criminal case, he settled his civil cases with the SEC

and CFTC. In June and July of 2008, the parties entered into, and the court approved, consent judgments

memorializing their settlement agreements. See Consent Judgment, CFTC v. PGM, No. 99-cv-9669

(S.D.N.Y. June 24, 2008), ECF No. 110 (“CFTC Consent Judgment”); Consent Judgment, SEC v. PEIL,

No. 99-cv-9667 (S.D.N.Y. July 22, 2008), ECF No. 435

(“SEC Consent Judgment”). As part of both agreements, petitioner explicitly waived his right to appeal.

CFTC Consent Judgment at 2, 4; SEC Consent Judgment at 4. He also agreed not to “hinder or delay the

actions of the receiver to seek and obtain approval of

a plan of distribution.” CFTC Consent Judgment at

4; SEC Consent Judgment at 6. And in the CFTC

Consent Judgment, petitioner expressly agreed that

the judgment would “release[] any and all claims, demands, rights and causes of action … that [petitioner]

in any capacity may now have or hereafter acquire

against ... the Court-appointed Receiver.” CFTC Consent Judgment at 2.

D. Final Distribution And Settlement With

Receiver Waiving Petitioner’s Claims

To Receivership Assets

On March 12, 2007, the receiver submitted a second report, again attaching several volumes of appendices in support. C.A. Suppl. App. SA-18-132. This

report, like the 2001 report, traced the assets held in

the receivership to the Princeton noteholders. Id. at

SA-56-62. It also provided an even more comprehensive inventory of the non-cash assets held in the receivership, including the items in the beach house and

8

the storage lockers. Id. at SA-41-56, SA-112-114, SA121-132.

Based on this report, on June 20, 2008, the receiver moved for an order authorizing a final plan of

distribution for the assets remaining in the receivership. Id. at SA-133-136. The court set a hearing date

and a “bar” date—a date before which any claims or

objections to the plan would need to be filed, or else

waived. Id. at SA-143-144, SA-188.

Petitioner’s counsel filed only a single claim before

the bar date—a claim for attorneys’ fees on their own

behalf and for unspecified personal property on petitioner’s behalf. Id. at SA-190-237. Shortly thereafter,

petitioner, his counsel, and the receiver entered into

a stipulated settlement agreement. As part of that

settlement, the receiver agreed to pay $900,000 of petitioner’s attorneys’ fees. Id. at SA-256. In exchange,

petitioner and his counsel agreed that they would

withdraw the claim, id., and that their right to submit

arguments or evidence in support of claims for fees

and allegedly personal property would be “extinguished with prejudice,” id. at SA-257. Petitioner

filed no other claim prior to the bar date.

On September 29, 2008, the district court held a

hearing on the final distribution plan at which interested parties were permitted to present evidence and

object to the plan. Id. at SA-265. Petitioner did not

object to the plan or offer any evidence suggesting the

assets to be distributed were his own.

The next day, on September 30, 2008, the court issued an order authorizing the final distribution plan.

The court noted that no claims had been filed (without

being withdrawn) prior to the bar date and found that

9

the assets in the receivership “represent[ed] property

originally taken from the Princeton Noteholders or

[were] the product of property originally taken from

the Princeton Noteholders.” 4 Accordingly, the court

approved the final distribution plan and authorized

the receiver to take any action necessary to implement the plan. Id. at SA-257. The court made clear

that any future claims against the receiver or the receivership property were “forever barred, estopped,

and permanently enjoined.” Id. at SA-270.

E. Petitioner’s Access To Storage Lockers

In 2017, the receiver, having distributed most of

the assets pursuant to the district court’s order, arranged for petitioner to inspect the contents remaining in the corporate defendants’ storage lockers in

New Jersey and Pennsylvania. Pet. App. 4. Even

though petitioner had waived his rights to any assets

remaining in the receivership, petitioner was invited

to claim any items from the storage lockers that he

alleged were personal, i.e., not acquired with corporate funds. C.A. App. A234. 5 Petitioner visited the

lockers on two different occasions and thanked the receiver for permitting him to “take whatever [he]

want[ed].” Id. at A253. Following his visits, petitioner requested that the remaining contents of the

lockers be shipped to Florida. See id. The receiver

refused, and petitioner made no further attempts to

4 This finding—contained in the final plan of distribution,

C.A. Suppl. App. SA-293—was expressly adopted by the court in

its order approving the distribution, id. at SA-269.

5 “C.A. App.” refers to the appendix petitioner filed in this

appeal. See Appendix, SEC v. PEIL, No. 17-3572 (2d Cir. July

11, 2018), ECF Nos. 105-106.

10

identify any allegedly personal property contained in

the storage lockers.

F. The Decisions Below

Shortly after permitting petitioner to access the

storage lockers, the receiver moved to wind up the receivership and to be discharged. Petitioner objected

to the receiver’s motion, arguing that the nearly 17year-old freeze of corporate assets in the civil case had

violated his Sixth Amendment rights by denying him

counsel of choice in his criminal case. He also asserted that the receiver had yet to return some unidentified personal property of his. He did not, however, contend that this alleged failure to return his

personal property violated his due process rights under the Fifth Amendment. See Opposition to Motion

to Authorize Case Closure, SEC v. PEIL, No. 99-cv9667 (S.D.N.Y. Aug. 31, 2017), ECF No. 490.

The district court granted the receiver’s motion

over petitioner’s objections. Pet. App. 10-13. Petitioner’s Sixth Amendment claim, the court reasoned,

amounted to a challenge to the final distribution plan

because judgment had long ago been entered in petitioner’s criminal case. But petitioner had waived his

right to make any such challenge by failing to object

to the plan prior to its 2008 approval. Pet. App. 12.

Moreover, the court found no basis in the record for

petitioner’s assertion that the receiver had failed to

return his personal property. Pet. App. 12.

Petitioner appealed the district court’s order, and

the receiver and the Government moved to dismiss

the appeal. They argued that to the extent petitioner

11

sought, as part of his Sixth Amendment claim, to challenge his criminal conviction and sentence, that challenge was not appropriate in the civil case. See Receiver’s Motion to Dismiss, SEC v. PEIL, No. 17-3572

(2d Cir. Dec. 20, 2017), ECF No. 30. If, on the other

hand, petitioner was simply seeking funds from the

receiver, then he had waived any such challenge by

failing to object to the final distribution plan and by

waiving his right to appeal in the civil cases. Id. at

18-25.

On April 11, 2018, the court of appeals dismissed

the appeal in part. The court declared four of petitioner’s arguments to be frivolous, dismissed them

from the appeal, Pet. App. 8-9, and later imposed

sanctions barring petitioner from filing further appeals without leave of court, see Sanctions Order, SEC

v. PEIL, No. 17-3572 (2d Cir. July 31, 2019), ECF No.

216. 6 The court allowed petitioner to proceed only in

challenging the receiver’s alleged failure to return petitioner’s personal property. Pet. App. 8-9. Petitioner

briefed that challenge, arguing that the receiver’s alleged failure to return his personal property violated

the terms of the consent judgments. As in the district

court, however, petitioner never argued that the receiver had violated his Fifth Amendment due process

6 Years before, petitioner had attempted to appeal his own

settlement with the SEC and CFTC and to recuse all the judges

of the Southern District of New York. The court of appeals issued orders rejecting those challenges as frivolous and warning

petitioner that further frivolous appeals would result in sanctions. Order, CFTC v. PGM, No. 08-cv-5899 (2d Cir. Apr. 10,

2009); Order, SEC v. PEIL, No. 08-cv-5902 (2d Cir. Apr. 10,

2009). The sanctions order in this appeal followed from that

prior order.

12

rights. See Appellant’s Brief, SEC v. PEIL, No. 173572 (2d Cir. July 11, 2018), ECF No. 107.

On April 23, 2019, the court of appeals affirmed,

holding that the district court did not abuse its discretion in authorizing case closure over petitioner’s objection. Pet. App. 5. According to the court of appeals,

the district court “reasonably found that the receiver

gave [petitioner] an adequate opportunity to reclaim

any personal possessions by giving [him] and his son

unrestricted access to take whatever they wanted

from the storage lockers, not limiting the time they

spent doing so, and refusing only [petitioner’s] demand to have the whole lot shipped to [him] in Florida, which would have caused further delay, expense,

and risk to the assets.” Pet. App. 5 (internal quotations omitted).

REASONS FOR DENYING THE PETITION

I.

THIS CASE DOES NOT RAISE EITHER OF

THE QUESTIONS PRESENTED

Petitioner presents two questions for review: (1)

“whether the constitutional right to counsel of choice

extends to cases where a criminal defendant’s assets

are frozen as part of a parallel civil enforcement action” and (2) “whether the failure to return untainted

personal property to a defendant violates the constitutional guarantee of due process.” Pet. i. Both questions depend on the twin premises that the assets

held in the receivership were owned by the “criminal

defendant[]” and were “untainted.” Because neither

premise is true here, neither Question Presented

bears any relevance to this case.

13

Petitioner’s first question seeks an extension of the

holding in Luis v. United States, 136 S. Ct. 1083

(2016), “that the pretrial restraint of legitimate, untainted assets needed to retain counsel of choice violates the Sixth Amendment.” Id. at 1088 (plurality

opinion). According to petitioner, that rule should apply not only where the defendant’s untainted assets

are frozen in his criminal proceeding, but also where

they are frozen in a parallel civil proceeding.

The rule announced in Luis, however, depends on

two essential factual predicates: the assets must be

“untainted” and must “belong[] to the defendant, pure

and simple.” Id. at 1090. In holding that the Government violated the defendant’s Sixth Amendment

right to counsel of her choice by freezing her untainted assets, the Luis plurality distinguished

United States v. Monsanto, 491 U.S. 600 (1989), which

upheld a pretrial asset restraint. Luis, 136 S. Ct. at

1087-88 (plurality opinion) (citing Monsanto, 491 U.S.

at 614). According to the plurality, Monsanto was distinguishable because the property there was

“tainted,” i.e., “the Government had probable cause to

believe [the property] was the proceeds of, or traceable to a crime.” Id. at 1091-92. And because “title to

those tainted assets” vested in the Government “as of

the time of the crime,” the defendants “consequently

had to concede that the disputed property was in an

important sense the Government’s”—not the defendants’—“at the time the court imposed the restrictions.” Id. Unlike in Monsanto, the plurality explained, a Sixth Amendment violation occurred in

Luis because the property there was “untainted” and

“belong[ed] to the defendant, pure and simple.” Id. at

14

1090. Accordingly, whether it extends to civil proceedings or not, the Luis rule applies only where the

assets at issue are both untainted and owned by the

defendant.

The same is true for the rule petitioner seeks in

his second Question Presented, which asks whether

“the failure to return untainted personal property to

a defendant violates the constitutional guarantee of

due process.” Pet i. By its terms, the question requires the property at issue to be the “untainted personal property” of the defendant. Petitioner himself

never suggests that the seizure of tainted property

not belonging to him would in any way implicate due

process concerns. Nor could he: this Court already

held in Monsanto that a pretrial restraint of tainted

assets does not constitute a Fifth Amendment due

process violation. See 491 U.S. at 614-16.

Both Questions Presented thus require the same

two predicate facts: the assets at issue must (1) belong to petitioner and (2) be untainted. Neither fact

is true here.

To start, the assets held in the receivership never

belonged to petitioner. In the several multi-volume

reports filed with the court, the receiver described in

detail all of the assets that he seized and transferred

to the receivership. C.A. Suppl. App. SA-41-56 (2007

report describing assets seized); id. at SA-388-406

(2001 report describing same). The cash assets, including bank and brokerage accounts, all were “denominated in the names of the [corporate defendants]

and their subsidiaries and affiliates.” Id. at SA-42.

“None of [those accounts] were denominated in the

15

name of [petitioner] or family members of [petitioner].” Id. Similarly, the non-cash assets—including the storage lockers and beach house—“all were

purchased with funds from corporate accounts,” not

from any of petitioner’s personal accounts. Id.

Petitioner has no basis for claiming the corporate

defendants’ assets as his own: as the receiver reported to the district court, petitioner never claimed

to be a shareholder of those corporations nor did he

claim to have any interest in them. See id. at SA-29.

He accordingly has no personal ownership interest in

the assets. 7

In addition to being owned by other entities, all of

the assets held in the receivership were tainted—that

is, traceable to the proceeds of the criminal offense.

As part of his efforts, the receiver sought to authorize

two distributions of the assets he held—one interim

and one final. Each time, the receiver submitted

multi-volume reports in support of his proposed plans

of distribution. Those reports used expert forensic accounting techniques to trace all of the assets held in

the receivership to the investors who were the victims

of the promissory note fraud. See id. at SA-18-132 (report prior to final distribution); id. at SA-373-439 (report prior to interim distribution). In approving the

interim distribution, the district court explicitly found

that the funds distributed were “the exclusive property of the Princeton Noteholders.” Id. at SA-8. And

again in 2008, the district court approved the final

7 Indeed, an essential element of petitioner’s fraud was to

separate himself from the companies where assets were deposited.

16

distribution, finding that the assets in the receivership “represent[ed] property originally taken from the

Princeton Noteholders or [were] the product of property originally taken from the Princeton Noteholders.” Id. at SA-269, SA-293. Petitioner asserted no

objection at the time to these findings.

The foregoing factual conclusions—all amply supported by the evidence and affirmed by the court of

appeals—are of course binding at this stage of the proceeding. See Exxon Co. v. Sofec, Inc., 517 U.S. 830,

841 (1996); United States v. Johnston, 268 U.S. 220,

227 (1925). And they flatly contradict the factual assertions on which petitioner rests his case for certiorari. According to petitioner’s account, the receiver

seized untainted assets belonging to him, auctioned

off that untainted personal property, used the proceeds to make the distributions to the noteholders,

and failed to return personal property that was not

auctioned off. See, e.g., Pet. 9, 14, 24, 28. Nothing in

that account is accurate. It is enough that petitioner

fails to cite any evidence supporting it, see CBOCS

West, Inc. v. Humphries, 553 U.S. 442, 461 n.2 (2008)

(rejecting claim because “respondent cites no record

evidence”), but the more serious problem is that the

controlling factual findings establish the opposite:

the only assets seized by the receiver were owned by

corporate entities distinct from petitioner and the

seized assets were all connected to the criminal offenses.

In an effort to escape the overwhelming record

against him, petitioner complains that he “had no recourse to protest” these findings and that “objections

17

to the asset freeze fell on deaf ears in the civil actions.” Pet. 26. Not so. Petitioner was afforded several opportunities to protest both the interim and final distributions of assets within his civil case. There

were at least three hearings prior to the interim distribution and one before the final distribution—all attended by petitioner and his counsel—at which the

district court permitted interested parties to object to

the receiver’s findings or to assert claims to the assets. C.A. Suppl. App. SA-6 (interim distribution); id.

at SA-265 (final distribution). Prior to the final distribution, the court set a bar date, making clear that

any claim not filed in advance of that date would be

waived. Id. at SA-143-144, SA-188. Petitioner did not

avail himself of these opportunities to rebut the receiver’s extensive evidence tracing the assets to the

defrauded noteholders. And the one time petitioner

did assert a claim to the receivership assets (through

his counsel prior to the final distribution), he withdrew that claim before the bar date and agreed explicitly to waive any such claim in the future. Id. at SA256-257.

*

*

*

In sum, both of petitioner’s Questions Presented

require that the assets held in the receivership be

owned by petitioner and be untainted. Because neither fact is true here, the Questions Presented are irrelevant to this case. The petition should be denied.

II. NEITHER QUESTION PRESENTED WAS

PROPERLY PRESERVED BELOW

In addition to being irrelevant on the facts of this

case, the issues petitioner raises were not properly

18

preserved in the proceedings below and hence are forfeited here. See United States v. Stitt, 139 S. Ct. 399,

407 (2018) (this Court is “a court of review, not of first

view”); Clingman v. Beaver, 544 U.S. 581, 598 (2005)

(“We ordinarily do not consider claims neither raised

nor decided below.”); United States v. Williams, 504

U.S. 36, 41 (1992) (declining to address issue “not

pressed or passed upon below”).

At no point in any proceeding below did petitioner

argue that the receiver violated his Fifth Amendment

due process rights by failing to “return” property to

him. Petitioner instead focused solely on the consent

judgments, contending that the receiver’s conduct violated those orders. The courts below rightly rejected

that argument, and petitioner does not repeat it here.

The new Fifth Amendment Due Process Clause argument he does make is forfeited.

Petitioner also failed to preserve his Sixth Amendment argument that Luis applies in civil enforcement

proceedings, which is fundamentally a claim that he

was entitled to a distribution of the receivership’s assets for use in defending his criminal case. As the

courts below found, petitioner both forfeited and affirmatively waived that argument. Pet. App. 8, 12.

First, petitioner failed to assert any objection to

the final distribution plan before it was approved in

2008. Pet. App. 12. As described above, supra at 7-8,

when the receiver proposed a final plan for distribution of assets, the district court set a bar date, before

which any claims to the receivership assets would

need to be filed, or else waived. C.A. Suppl. App. 143144, SA-188. Petitioner (through his counsel) withdrew the only claim that he filed before the bar date

19

and so waived any future claims he may otherwise

have had. Id. at SA-267.

Second, even beyond that forfeiture, petitioner

also explicitly agreed in settlement agreements with

the SEC, CFTC, and the receiver that he would forgo

any further claims to the receivership assets. Pet.

App. 8. In his agreements with the SEC and CFTC,

petitioner waived his right to appeal and agreed not

to “hinder or delay” the receiver’s attempts to distribute the remaining assets. CFTC Consent Judgment

at 2, 4; SEC Consent Judgment at 4, 6. He also explicitly agreed in the CFTC Consent Judgment to “release[] any and all claims, demands, rights and causes

of action … that [he] in any capacity may now have or

hereafter acquire against ... the Court-appointed Receiver.” CFTC Consent Judgment at 2.

Petitioner then entered into a settlement agreement with the receiver himself. There, in exchange

for $900,000 in attorneys’ fees, petitioner agreed that

his right to submit arguments or evidence in support

of claims for attorneys’ fees and any alleged personal

property would be “extinguished with prejudice.”

C.A. Suppl. App. SA-257; see Pet. App. 4.

Finally, despite petitioner’s affirmative waiver of

any remaining claims to the assets held in the receivership, the receiver still arranged for petitioner to inspect the lockers and invited him to claim anything

personal to him. C.A. App. A239-41. Petitioner was

given unrestricted access to the storage lockers for

whatever amount of time he needed and was permitted, as petitioner acknowledged, to “take whatever

[he] want[ed],” id. at A253. The receiver refused pe-

20

titioner only when he demanded that the entire contents of the lockers be shipped to Florida. See id. According to petitioner, allowing him repeated access to

the lockers and opportunities to remove whatever he

wanted from those lockers was not enough: the receiver also was required to provide petitioner with a

“comprehensive inventory of all assets seized pursuant to the 1999 freeze order and subsequent injunction.” Pet. 29. But, contrary to petitioner’s assertion,

the receiver actually did provide him two inventories:

the receiver furnished him with detailed lists of property in the 2001 interim report and again in the final

report in 2007. C.A. Suppl. App. SA-41-56, SA-112114, SA-121-132, SA-388-406.

Petitioner thus triply waived any claim that he

was entitled to a distribution of receivership assets

under the Sixth Amendment. The courts below correctly denied petitioner a fourth bite at the apple.

III. THERE IS NO RELEVANT JUDICIAL CONFLICT ON EITHER QUESTION PRESENTED

In addition to being irrelevant and unpreserved,

neither Question Presented implicates a conflict

among courts of appeals or state courts of last resort.

On the due process question, petitioner does not even

purport to identify a judicial conflict of any kind. As

to the question whether Luis applies in parallel civil

enforcement proceedings, petitioner asserts that the

decision below deepens an existing conflict among

courts. Pet. 22-25. It does not.

As an initial matter, as described above, because

petitioner both forfeited and affirmatively waived his

21

rights to challenge the distribution of receivership assets, neither court below addressed the merits of the

question whether his lack of access to those assets violated his Sixth Amendment rights. Given the absence of an opinion addressing the merits, petitioner

cites a 2003 unpublished order in petitioner’s criminal case in support of his theory that this civil case

deepened an existing conflict among lower courts.

Pet. 24 (citing Order, United States v. Armstrong, No.

99-cr-997 (S.D.N.Y. June 20, 2003), ECF No. 82).

That order—taken from a completely different case—

has little bearing here, and petitioner in any event

mischaracterizes it. Nowhere in that order does the

district court discuss the application of Luis or Monsanto in civil enforcement proceedings, let alone announce a holding in conflict with other courts. Instead, that order rejects petitioner’s request for a stay

in his civil case, explaining that “the motion for a stay

should be made in the case in which the order sought

to be stayed was entered, not in the present criminal

case.” Order at 1, United States v. Armstrong, No. 99cr-997 (June 20, 2003), ECF No. 82.

Leaving that irrelevant order aside, the remaining

cases cited by petitioner do not establish any judicial

conflict, much less a conflict meriting review. Petitioner relies almost entirely on district court decisions, citing only one decision from a state court of last

resort—Estate of Lott v. O’Neill, 165 A.3d 1099 (Vt.

2017)—with a holding on the merits of the Sixth

Amendment question petitioner seeks to raise. 8 Disagreement mainly involving district court decisions is

8 Petitioner cites one court of appeals merely observing that

“[d]istrict courts in this circuit have found that a defendant may

22

normally no basis for certiorari, and here there is not

even disagreement.

According to petitioner, Lott and a decision from

the Northern District of California—United States v.

Feathers, 2016 WL 7337518 (N.D. Cal. Dec. 19,

2016)—have held that Luis does not apply to parallel

civil proceedings, ostensibly in conflict with several

other district court decisions applying Luis in civil

cases. Pet. 23-25 (citing FTC v. Johnson, 2015 WL

8751693 (D. Nev. Dec. 14, 2015); SEC v. McGinn,

2012 WL 1142516 (N.D.N.Y. Apr. 4, 2012); CFTC v.

Walsh, 2010 WL 882875 (S.D.N.Y. Mar. 9, 2010)). But

Feathers and Lott did not adopt a categorical rule at

odds with the other cases petitioner cites. They instead declined to apply Luis for procedural reasons

specific to their circumstances.

In Feathers, the district court declined even to address the merits of the defendant’s Sixth Amendment

claim. The court entered summary judgment for the

Government in a civil case against the defendant,

finding that the defendant had committed civil fraud

and that he had no ownership interest in the funds

held in the receivership. 2016 WL 7337518, at *6-7.

The defendant appealed that ruling in his civil case,

and while the civil appeal was pending, moved in his

criminal case for the release of the same receivership

funds. Id. at *7. The court in the criminal case held

also have the right to a Monsanto-like hearing in the civil context.” Pet. 25 (quoting United States v. Bonventre, 720 F.3d 126,

130 (2d Cir. 2013)). The Bonventre court did not endorse the

lower courts’ equivocal expressions of that principle; it simply

assumed the principle exists and considered how it applies.

23

that it did not have jurisdiction to consider the defendant’s motion. Id. The valid notice of appeal in

the civil case, the court reasoned, divested the court

of jurisdiction to reconsider the issues resolved in that

case and pending on appeal—namely, whether the defendant had an ownership interest in the funds held

in the receivership. Id. Accordingly, the court concluded that it lacked jurisdiction and declined to address the merits of the criminal defendant’s Sixth

Amendment claim, without ever stating or implying

that Luis cannot apply in a civil enforcement proceeding.

Lott is similarly tied to the specific facts of that

case. In Lott, a private plaintiff brought a civil wrongful death action against a defendant while a criminal

case against that same defendant was pending. 165

A.3d at 1101. The civil plaintiff obtained an attachment freezing the defendant’s assets, including funds

the defendant had set aside for her criminal defense.

Id. The defendant challenged the attachment, arguing that it ran afoul of Luis. Id. The court rejected

the defendant’s challenge, but not because Luis was

categorically inapplicable in civil proceedings. The

court instead held that Luis does not apply where—

as in Lott—a private plaintiff, rather than the Government, had initiated and prosecuted the parallel

civil proceeding. That holding does not conflict in any

way with the cases petitioner identifies, all of which

involve civil enforcement proceedings initiated by the

Government. Pet. 24-25 (citing cases initiated by the

CFTC, FTC, SEC, and DOJ).

Neither Question Presented, in short, implicates a

judicial conflict requiring resolution by this Court.

24

IV. DISTRIBUTION OF RECEIVERSHIP ASSETS WOULD NOT REMEDY THE SIXTH

AMENDMENT CLAIM PETITIONER ASSERTS

The only relief petitioner seeks on his Sixth

Amendment claim is a distribution of assets from the

receivership. That relief, however, does not and cannot remedy the injury he asserts, i.e., the alleged deprivation of his right to counsel in his criminal case.

Petitioner pleaded guilty in his criminal case in 2007,

was released from custody in 2012, and finished his

term of supervised release in 2015. Given that petitioner is no longer in custody and has already served

his entire sentence, the only way to remedy any deprivation of petitioner’s right to counsel at this point

would be for petitioner to attempt to withdraw his

guilty plea and vacate his conviction.

But petitioner does not seek that remedy here. He

instead attempts to claw back funds the receiver has

already distributed to the defrauded investors. Even

assuming that petitioner would have used those assets to pay for counsel in his criminal case while that

case was ongoing, he cannot possibly do so now given

that he finished serving his criminal sentence more

than four years ago. 9

9 Moreover, any attempt by petitioner to seek the appropri-

ate remedy—withdrawal of his guilty plea—would require this

Court to determine whether Luis, which was decided in 2016,

applies retroactively to petitioner’s criminal conviction, which

became final long before that. That question was not considered

below and has been fully addressed by only one court of appeals,

25

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted,

TANCRED SCHIAVONI

O’MELVENY & MYERS LLP

Times Square Tower

7 Times Square,

New York, N.Y. 10036

(212) 326-2000

JONATHAN D. HACKER

(Counsel of Record)

jhacker@omm.com

ANNA O. MOHAN*

O’MELVENY & MYERS LLP

1625 Eye Street, N.W.

Washington, D.C. 20006

(202) 383-5300

*Admitted only in Virginia;

supervised by principals of the firm

Counsel for Receiver Tancred Schiavoni

February 2020

which concluded that Luis did not warrant retroactive application. See United States v. Hopkins, 920 F.3d 690, 701 (10th Cir.

2019).