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Securities and Exchange Commission v. Bilzerian

August 12, 2009

SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF,
v.
PAUL A. BILZERIAN, ET AL. DEFENDANTS



The opinion of the court was delivered by: Royce C. Lamberth Chief Judge

MEMORANDUM OPINION

Now before the Court are the motions of David E. Hammer for reconsideration [992], amended by docket entry [1000], a motion [995] for a hearing, and a motion [1002] for clarification. Paul Bilzerian and the Puma Foundation have filed motions to stay ([994], [997], [1043]) pending appeal. Paul Bilzerian has also filed a motion [1036] to pursue limited discovery. Ernest B. Haire, a periodic target of Bilzerian's lawsuits, has also filed a motion [998] for reconsideration. The National Gold Exchange movants ("NGE movants") have filed a bill of costs and expenses [990] for costs incurred in bringing show cause proceedings against Bilzerian.

I. BACKGROUND

Paul Bilzerian has been convicted of securities fraud, found liable for a multi-million dollar judgment in an SEC civil action, and been found in contempt multiple times for violations of court orders. (Mem. Op. [987] at 2.) Even after his conduct resulted in a period of incarceration, Bilzerian steadfastly refused to abide court orders and cease his vexatious litigation in efforts to frustrate the Court's receivership that was put in place in an attempt to collect the civil judgment from Bilzerian. As a result, this Court entered an injunction in 2001, barring Bilzerian from "commencing any proceeding in any court" without prior permission of this court. (Order [416], July 19, 2001) (affirmed by SEC v. Bilzerian, 75 Fed. Appx. 3, 4 (D.C. Cir. 2003)). His latest run-in with this Court results from that injunction. On May 11, 2009, this Court found Bilzerian in civil contempt for violation of that injunction and ordered him to purge his contempt by dismissing the offending lawsuits and by paying the attorneys' fees of the NGE movants, who brought show cause proceedings against him. The Court also found that David E. Hammer, an attorney who assists Bilzerian in his lawsuits, and the Puma Foundation, Bicoastal Holding Company, and Overseas Holdings Limited Partnership (the Puma Foundation plaintiffs) in civil contempt as agents and instrumentalities of Bilzerian.*fn1

II. DISCUSSION

A. Applicable Law

Applicable civil contempt law was discussed by the Court in its original opinion. The only law cited by the parties in their motions for reconsideration and stay that will warrant additional discussion is the case of Food Lion, Inc., v. United Food and Commercial Workers International Union, 103 F.3d 1007, 1019--20 (D.C. Cir. 1997). In Food Lion, the D.C. Circuit affirmed this Court's finding that a party was in civil contempt for failing to search and produce documents during a ten-day period specified in the Court's order. The Court of Appeals affirmed despite the fact that there was no "separate evidentiary hearing on the contempt issue." Id. The Court of Appeals stated that although a hearing is required if there is a "genuine issue of material fact," in that case the acknowledged "failure [to search] alone justified the contempt order . . . ." Id.

B. Analysis

1. Paul Bilzerian

Bilzerian has filed a motion to stay the Court's May 11, 2009 order pending appeal.*fn2 In this Circuit, four factors must be considered when determining whether a stay pending appeal is warranted: (1) the likelihood that the party seeking the stay will prevail on the merits of the appeal; (2) the likelihood that the moving party will be irreparably harmed absent a stay; (3) the prospect that others will be harmed if the Court grants a stay; and (4) the public interest in granting the stay. United States v. Phillip Morris, Inc., 314 F.3d 612, 617 (D.C. Cir. 2003). After evaluating those factors, it is clear that the May 11, 2009 order should not be stayed pending appeal.

As for the likelihood of success on the merits of his appeal, Bilzerian has not made convincing arguments. Instead, he merely rehashes meritless arguments that were rejected by this Court in its original opinion. Those arguments do not warrant additional discussion. The only argument that warrants any additional discussion is Bilzerian's claim that the Court erred in denying a hearing because there are genuine issues of material fact in dispute.

The Court rejects Bilzerian's argument because the Court found him in civil contempt on the basis of undisputed evidence. Paul Bilzerian has filed at least one original lawsuit, one counterclaim and cross claim, and one miscellaneous action in his own name that were not approved by this Court-there is no argument that this violates the 2001 injunction. (Mem. Op. [987] at 6.) Moreover, as to the propriety of the injunction itself, which Bilzerian continues to dispute, the D.C. Circuit has already affirmed this Court's imposition of an injunction barring Bilzerian from "commencing any proceeding in any court." S.E.C. v. Bilzerian, 75 Fed. Appx. 3, 4 (D.C. Cir. 2003). Bilzerian is extremely unlikely to prevail given another chance in the Circuit.

Similarly, with regard to the Puma Foundation lawsuit, for which Bilzerian was also held in civil contempt, the civil cover sheet states "Signature of Attorney or Party Initiating Action," with the words "Paul A. Bilzerian for David Hammer" signed by Bilzerian. (Docket [924-4] at 12.) In other words, Bilzerian himself literally filed the Puma Foundation lawsuit. This conduct, which is admitted by Bilzerian, is sufficient for a contempt finding. In fact, the Court cannot contemplate any better evidence that would indicate Bilzerian's participation in the Puma Foundation lawsuit than the appearance of his name on the civil cover sheet as the person who filed the suit. Much like the Court in Food Lion, this Court found Bilzerian in civil contempt on the basis of undisputed evidence.

The additional findings by the Court, which indicate that Bilzerian did not merely file the lawsuit but was actually a driving force behind the Puma litigation-while convincing to the Court-are not necessary for a finding of civil contempt.No matter how vehemently Bilzerian disputes the extent of his involvement in the Puma Litigation, the fact remains that he admittedly commenced the lawsuit. His signature on the civil cover sheet (and his admission that he filed the suit) made no hearing necessary. Indeed, Paul Bilzerian has drained this Court's and other courts' resources throughout the country for years in an effort to frustrate the receivership-the Court will not grant him unnecessary hearings. Given that Bilzerian ...


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