Case 8:03-cv-03317-PJM Document 545 Filed 01/16/07 Page 1 of 6

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF MARYLAND

____________________________________
)
FEDERAL TRADE COMMISSION, )
)
Plaintiff, )
)
v. ) Case No. PJM 03-3317
)
AMERIDEBT, INC., et al., )
)
Defendants. )
____________________________________)

THE FEDERAL TRADE COMMISSION’S OPPOSITION TO

DEFENDANT ANDRIS PUKKE AND NON-PARTY PETER BAKER’S
MEMORANDUM OF LAW REGARDING JURY TRIAL

The Federal Trade Commission (“FTC” or “Commission”) joins the Receiver in

opposing Defendant Andris Pukke and Non-Party Peter Baker’s Memorandum of Law

Regarding Jury Trial (“Jury Trial Memorandum,” DE # 543). In their Jury Trial Memorandum,

Defendant Andris Pukke (“Pukke”) and non-party Peter Baker (“Baker”) argue that they are

entitled to a jury trial to determine whether they have hidden Pukke’s assets in contempt of this

Court’s orders. Pukke and Baker’s logic would require a jury trial whenever a contemnor

conspires with a third party to hide assets. This argument contradicts well-established legal

precedent holding that there is no right to a jury trial in civil contempt cases.

I. FACTUAL BACKGROUND

Pukke and Baker have violated two of the Court’s orders: the Preliminary Injunction

Order with Asset Freeze, Appointment of a Receiver, Repatriation of Assets, and Other

Equitable Relief (“Preliminary Injunction Order,” DE #122) and the Stipulated Final Judgment

and Permanent Injunction as to Defendants Debtworks, Inc. and Andris Pukke (“Stipulated Final

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Judgment,” DE # 473). Despite the plain language in these orders requiring that Pukke turn over

all his assets to the Receiver, Pukke, with Baker’s assistance, has hidden nearly $40 million.

A. The Court’s Previous Orders

On April 20, 2005, this Court issued its Preliminary Injunction Order, including

provisions appointing a Receiver and requiring Pukke and other persons served with the order to

turn over all Receivership Property immediately to the Receiver. The Preliminary Injunction

Order defines “Receivership Property” as any assets, wherever located, that are owned,

controlled or held by or for the benefit of Pukke. Id. at Definition K.

Subsequently, on May 16, 2006, the Court entered the Stipulated Final Judgment which

includes a turnover provision requiring Pukke “to take any actions necessary to effect the

assignment, waiver, release, discharge, and disclaimer to the Commission of his right, title,

interest, and claims in, to or against the assets constituting Receivership Property . . . .”

Stipulated Final Judgment § III.B.3. Further, the Stipulated Final Judgment mandates that “to

the extent they are not inconsistent with this Order, all powers granted to the Receiver pursuant

to the [Preliminary Injunction Order] shall remain in full force and effect.” Id. at § IX.

B. Hidden Assets

As set forth in previous pleadings, including the Receiver’s Application for Order to

Show Cause as to Why Andris Pukke and Peter Baker Should Not Be Held in Contempt and for

Related Relief (“Receiver’s Application,” DE # 525), Pukke has hidden several assets totaling

nearly $40 million. These assets include a $6.45 million parcel of real estate located in Laguna

Beach, California and foreign bank accounts.

As noted in the Receiver’s Application, Pukke enlisted Baker’s aid in purchasing the

Laguna Beach mansion for Pukke’s benefit and with Pukke’s money. Specifically, Pukke and

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his girlfriend Angela Chittenden visited the Laguna Beach mansion prior to its date of purchase,

and Chittenden signed the original offer to purchase the property. After the property was

purchased, Pukke engaged an architect to remodel the property, and he and Chittenden met with

the architect. Yet Pukke and Baker deny that the property was purchased for Pukke’s benefit.

Further, $2.1 million of the purchase price came from Sportingbet Plc stock, which Pukke owned

at the time he was ordered to turn over his assets. Although Baker claims that he received the

stock in 2002, he was not listed on the Shareholder Register of Sportingbet Plc until May 11,

2005, after this Court ordered Pukke to turn over his assets.

Pukke also has attempted to hide accounts at Hansabanka, a bank located in Latvia,

including an account ending in the numbers 5390. Pukke stated that he owned the 5390 account

in a sworn financial statement dated February 12, 2004 that he signed in connection with a loan

application. However, when faced with losing the $12 million that was in the account, Pukke

chose to disavow his previous sworn statement that he owns the account.

II. LEGAL ANALYSIS

This Court has the authority to enforce its previous orders in civil contempt proceedings

without a jury trial. Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 827,

114 S.Ct. 2552, 2557, 129 L.Ed.2d 642, 651 (1994) (“[C]ivil contempt sanctions, or those

penalties designed to compel future compliance with a court order, are considered to be coercive

and avoidable through obedience, and thus may be imposed in an ordinary civil proceeding upon

notice and an opportunity to be heard. Neither a jury trial nor proof beyond a reasonable doubt

is required.”); Richmond Black Police Officers Ass’n v. City of Richmond, Virginia, 548 F.2d

123, 128 n. 5 (4th Cir. 1977) (“The right to a trial by jury is not constitutionally required in cases

involving civil contempt.”) (citing Shillitani v. United States, 384 U.S. 364, 370-71, 86 S.Ct.

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1531, 16 L.Ed.2d 622 (1966) (further citation omitted). Pukke and Baker try to divert the

Court’s attention from this long-standing legal principle regarding the Court’s inherent powers.

Pukke argues that it is his “constitutional right” to a jury trial. Jury Trial Memorandum at 6.

Pukke, however, cites no authority for the proposition that there exists such a right in civil

contempt cases.

Pukke also tries to mislead the Court by arguing that the Receiver should be alleging

fraud rather than seeking contempt citations and sanctions, thereby arguably triggering the right

to a jury trial. Many acts of contempt, particularly the egregious ones, involve fraud. The

suggestion that the fraudulent nature of Pukke and Baker’s activities somehow eviscerates the

Court’s authority to enforce its previous orders through a traditional civil contempt proceeding is

absurd.

Further, the fact that Baker knew he was aiding Pukke in violating the Court’s orders puts

Baker in contempt as well. Pursuant to Fed. R. Civ. P. 65(d), injunctions are binding “upon the

parties to the action, their officers, agents, servants, employees, and attorneys, and upon those

persons in active concert or participation with them who receive actual notice of the order by

personal service or otherwise.” Id. This Court, in the exercise of its equitable powers, may hold

non-parties with actual notice of an order in contempt of the order when they “act in concert with

named parties to frustrate an injunctive decree or to avoid compliance with it.” Equal

Employment Opportunity Comm’n v. Int’l Longshoremen’s Ass’n, 541 F.2d 1062, 1063-64 (4th

Cir. 1976).

Baker knowingly has helped Pukke defy this Court’s orders. The facts that Pukke makes

the remodeling decisions on the Laguna Beach mansion and that $2.1 million of the purchase

price came from Pukke’s assets indicate that Pukke actually owns the mansion, and Baker

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purchased it on Pukke’s behalf to hide it from the Receiver, and ultimately, from financially-

distressed consumers. Baker’s continued retention of the mansion for Pukke’s benefit despite

his knowledge that Pukke has been ordered to turn over assets he owns or controls violates this

Court’s previous orders. Indeed, without Baker’s assistance, Pukke likely would not have been

successful in concealing Receivership assets for as long as he did. This Court has the authority

to give its previous orders meaning by finding Baker in contempt and ordering that he purge that

contempt by returning the assets he helped Pukke hide from the public.

Regardless of how much Pukke and Baker try to conflate the issues, ordering the

contemnors to comply with the Court’s orders by relinquishing assets pursuant to a civil

contempt proceeding does not require a jury trial. This Court has the authority to order

contemnors to compensate the Receiver, and ultimately consumers, “for losses sustained as a

result of the contumacy.” In re Gen. Motors Corp., 61 F.3d 256, 258 (4th Cir. 1995); see also

Canterbury Belts Ltd. v. Lane Walker Rudkin, Ltd., No. 81 Civ. 0093 (CSH), 1990 WL 106846

(S.D.N.Y. July 23, 1990) (finding non-parties in contempt and referring decision on amount of

damages for contempt to a magistrate judge). In the instant action, the contumacious conduct

involved hiding assets owned or controlled by Pukke, so the appropriate contempt remedy is

straightforward: the contemnors should be required to return those hidden assets.

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III. CONCLUSION

For the foregoing reasons, the FTC opposes Pukke and Bakers’ Jury Trial Memorandum.

Dated: January 16, 2007 Respectfully submitted,

FEDERAL TRADE COMMISSION

William Blumenthal
General Counsel

/s/ Malini Mithal

MALINI MITHAL
600 Pennsylvania Ave., NW
Mail Drop NJ-2122
Washington, DC 20580
(202) 326-2972 (telephone)
(202) 326-2558 (facsimile)
mmithal1@ftc.gov

Local Counsel
JEANNE M. CROUSE (#05329)
Federal Trade Commission
600 Pennsylvania Ave., N.W.
Mail Stop NJ-2122
Washington, D.C. 20580
(202) 326-3312 (telephone)
(202) 326-2558 (facsimile)
jcrouse@ftc.gov