Case 2:09-cv-00104-LDG-GWF Document 95

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FREDERICK SANTACROCE, ESQ. SANTACROCE LAW OFFICES LTD. State Bar 5121 706 South Eighth St Las Vegas, NV 89101 (702) 598-1666 Email: Fasatty@yahoo.com

IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF NEVADA 8 * * * 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 /// /// /// /// COMES NOW, Defendant, Marco Glisson, by and through his attorney Frederick Santacroce, Esq., and files this Reply to Plaintiffs Opposition to Defendants Motion in Limine for Stay. /// vs. MARCO GLISSON, Defendant SECURITIES AND EXCHANGE COMMISSION, Plaintiff, ) ) ) ) ) ) ) ) ) ) ) ) Case No.: 2:09-cv-00104-LDG-GWF REPLY TO PLAINTIFFS OPPOSITION TO DEFENDANTS MOTION IN LIMINE FOR STAY

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This Motion is made based upon the pleadings, papers and Affidavits on file herein, the following Memorandum of Points & Authorities, and any argument of counsel to be entertained at the time of any hearing of this matter.

Dated: 12/10/2011 FREDERICK SANTACROCE, ESQ. /s/ Frederick Santacroce ____________________________________ FREDERICK SANTACROCE, Esq. Nevada Bar No. 5121 SANTACROCE LAW OFFICES, LTD 706 S. 8th St Las Vegas, Nevada 89101 Telephone: (702) 598-1666 Fax: (702) 385-1327 Attorney for Defendant

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TABLE OF CONTENTS PRELIMINARY STATEMENT.............................................................................................. 5 LEGAL ARGUMENT A STAY SHOULD BE GRANTED BECAUSE A PARALLEL CRIMINAL PROCEEDING IS IMPLICATED BY THIS CASE ....................................... 5

II. THE DEFENDANTS FIFTH AMENDMENT AND DUE PROCESS RIGHTS WILL BE VIOLATED IF A STAY IS NOT GRANTED....................

III. A STAY WOULD NOT SUBSTANTIALLY PREJUDICE THE PLAINTIFF.. 10 CONCLUSION...................................................................................................................... 11

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Other Authority: Cases:

TABLE OF AUTHORITIES

United States v. Kordel, 397 U.S. 1, 11 (1970)................................................... 6, 8 United States v. Robson, 477 F.2d 13 (9th Cir. 1973).......................................... 6 United States v. Stringer, 408 F.Supp 1083, 1087 (D.Or. 2006) ...................... Keating v. Office of Thrift Supervision, 45 F.3d at 324 (9th. Cir. 1995)........ 6, 7 8

United States v. Parrot, 248 F.Supp. 196 (D.D.C. 1965)...................................... 8 United States v. Rand, 308 F.Supp. 1231, 1237 (N.D. Ohio 1970)....................... 8, 9 McNabb v. United States, 318 U.S. 332 (1943)..................................................... 8 Smith v. Katzenbach, 351 F.2d 810, 811-13 (D.C. Cir. 1965) ............................. 9

United States v. Lipshitz 132 F.Supp. 519, 523 (E.D.N.Y. 1955)........................ 9 United States v. Guerrina, 112 F. Supp. 126, 128 (E.D. Pa. 1953)....................... 9

11 Lewis & Clark L. Rev.753 (2007)..................................................................... 19 20 21 22 23 24 25 26 27 28 4

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PRELIMINARY STATEMENT

Defendant Marco Glisson filed his Motion in Limine to Stay these civil proceeding pending the outcome of a parallel criminal investigation. Defendant relies on the facts as set forth in his Motion in Limine and further relies on the Legal Argument set forth therein. This reply will focus on First, the SECs Opposition that there is no overlap or parallel investigation implicated in this case; Second, the extent to which the Defendants Fifth Amendment rights are implicated if a Stay is not granted; and Third the SEC will not be prejudiced by a Stay.

LEGAL ARGUMENT A STAY SHOULD BE GRANTED BECAUSE A PARALLEL CRIMINAL PROCEEDING IS IMPLICATED BY THIS CASE The SEC argues that a stay should not be granted because there is no parallel criminal proceeding that is implicated by this case. However, attorney Robert Bretz (Defendants co-counsel) had several communications

19 20 21 22 23 24 25 26 27 28 5 Mr. Chu further told Mr. Bretz that the return of an indictment against Glisson was likely to be forthcoming in the very near future, and that Glisson should consider coming in to discuss the subject matter of the investigation as soon as possible. with Michael Chu who is an Assistant United States Attorney in Las Vegas in 2011. Mr. Chu told Mr. Bretz that there was a pending criminal investigation directed at Marco Glisson and his efforts to conceal assets that might otherwise be available to satisfy existing Federal tax obligations due and owing by Glisson.

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Based on Mr. Bretz conversations with Mr. Chu and with staff attorneys for the SEC in this case, he believes that the pending criminal investigation was instituted as a result of a referral by and/or assistance from the SEC including without limitation the SECs having provided the Justice Department with investigative and deposition testimony and documents obtained by the SEC during the course of this civil injunctive action. (See Declaration of Robert Bretz attached to Defendants Motion in Limine for Stay) The SEC has never disclosed, to the Defendant, whether a parallel investigation is being conducted. The SEC has a duty to inform the Defendant whether there was a pending parallel criminal investigation. United States v. Kordel, 397 U.S. 1, 11 (1970); see also United States v. Robson, 477 F.2d 13 (9th Cir. 1973).

The SEC argues that since no indictment has been returned by any state or federal authorities that a Stay is not necessary. The SEC further argues that Glissons Fifth Amendment rights are not threatened. The SEC is mistaken on both counts, as the following case law illustrates. In United States v. Stringer, 408 F.Supp 1083, 1087 (D.Or. 2006) the court determined that the criminal investigation commenced when the USAO communicated the high potential for prosecution to the SEC and identified specific targets of the investigation. Id.

In the instant case the SEC petitioned this court, and obtained permission to, reopen discovery so that they could question the Defendant about his 2010 activities, even though this 2010" time period was not pled nor alleged in the Complaint.

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During the course of the Defendants 2010 deposition, the defense raised the issue of parallel criminal proceedings with the SEC. The defense was told to ask the USAs office in Las Vegas, which the defense did. (See affidavit of Robert Bretz Esq., attached to Defendants Motion in Limine.) The instant situation is eerily similar to the facts in Stringer, 408 F.Supp at 1087. In Stringer the Defendants attorney specifically asked whether the SEC was working in conjunction with any other department of the United States, such as the U.S. Attorneys Office in any jurisdiction, or the Department of Justice. The SEC referred the defendant to the routine use of section of form 1662, which advises that information obtained in the civil investigation can be used in a criminal prosecution. The SEC attorney further stated that it was the agencys policy not to respond to questions like that, but instead, to direct [a defendant] to other

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 submit a Declaration stating certain matters such as (1) when the SEC first learned of a criminal investigation, (2) did the SEC make a referral that was the basis for the criminal investigation, (3) did the SEC provide discovery in the civil case to the USA including the deposition in order to continue the successful discovery being obtained by the SEC. Id. at 1087-88, Had Stringer been made aware of a parallel criminal investigation he would have elected to invoke his Fifth Amendment privilege. Thus the Defendants due process rights were violated. Defendant, asks that before deciding this Motion, this court should require the SEC to agencies...mentioned. Id. The defense attorney then specifically asked which U.S. Attorneys office he should contact for that information and was told that it was a matter up to [his] discretion. Id. This query took place right before Stringer was to testify before the SEC. The District Court concluded that the government was deliberately hiding the criminal investigation

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testimony obtained in the extended discovery period permitted by the Court, (4) what the SEC knows to be the scope of the criminal investigation, (5) whether (and who) any member of the SEC has participated in the criminal investigation and (6) the SECs knowledge of the status of the criminal investigation or subsequent indictment if one has already been returned. Only when the SEC answers these questions can this court evaluate the extent to which the Defendants Fifth Amendment rights have been impacted and whether a Stay should be granted. Keating v. Office of Thrift Supervision, 45 F.3d at 324 (9th. Cir. 1995) Further, the SEC suggests that by Glissons own admission, the criminal investigation involves Glissons prior tax obligations and his efforts to evade payment of his taxes, and is not a parallel criminal investigation of the same conduct that is the subject of the Commissions civil enforcement action for violation of the federal securities laws.

14 15 16 17 18 19 20 information from the individual the SEC engages in a form of deception that infringes upon the 21 22 23 24 25 26 27 28 8 II. THE DEFENDANTS FIFTH AMENDMENT AND DUE PROCESS RIGHTS WILL BE VIOLATED IF A STAY IS NOT GRANTED In United States v. Parrot, 248 F.Supp. 196 (D.D.C. 1965) the court said The danger of prejudice flowing from testimony out of a defendants mouth at a civil proceeding is even more acute when he is aware of the pending criminal charge. In this situation, the defendant is fundamental right to due process of law. 408 F.Supp 2d 1083(D.Or. 2006) Glisson simply does not know the extent and scope of any criminal investigation because, despite repeated requests the SEC has never divulged the extent and scope of any criminal investigation. The SEC has a duty to divulge that information. When the SEC is aware that federal prosecutors have identified an individual for potential criminal prosecution and keeps that

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placed in a trap. As such, it is a violation of due process for the government, either as an administrative agency or as the prosecution, to induce testimony when the criminal liability is concurrently contemplated outside of an individuals knowledge. United States v. Rand, 308 F.Supp. 1231, 1237 (N.D. Ohio 1970)(citing McNabb v. United States, 318 U.S. 332 (1943)

In upholding the constitutionality of parallel proceedings, the Supreme Court in United States v. Kordel, 397 U.S. 1, 12 (1970) cited three cases in support of the caveat that the Court was not dealing with the case where the government had failed to inform the defendant in a civil proceeding that it was contemplating his criminal prosecution . Id. Each case involved a joint investigation by the IRS and the DOJ, during which the defendant voluntarily provided the government with the information at issue, unaware that the government agent requesting and receiving the information was acting in pursuit of criminal, as opposed to purely civil, charges. In each case, the court suppressed the illegally obtained evidence because the defendants constitutional rights were violated by the governments deception. (See Smith v. Katzenbach, 351 F.2d 810, 811-13 (D.C. Cir. 1965) United States v. Lipshitz 132 F.Supp. 519, 523 (E.D.N.Y. 1955); and United States v. Guerrina, 112 F. Supp. 126, 128 (E.D. Pa. 1953); See also 11 Lewis & Clark L. Rev.753 (2007) In the instant case Glisson submitted himself to two depositions without invoking his Fifth Amendment privilege. Glisson cooperated in the civil discovery process unaware that a criminal investigation may have been initiated, despite repeated request of the SEC to divulge such information. It is not surprising that the Supreme Court noted in United States v. Rand, 308 F.Supp. 1231, 1237 (N.D. Ohio 1979) that when a defendant is aware of the possibility of a criminal

26 27 28 9 proceeding, he is caught in the horns of a dilemma. He may either testify against himself in the

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civil proceedings or be held in contempt. The danger is even greater in a situation where the defendant is unaware of pending criminal action. Id. A Stay in the instant case is warranted in order to protect Glissons Fifth Amendment privilege and Due Process rights until such time as the criminal investigation and potential prosecution is concluded.

III. A STAY WOULD NOT SUBSTANTIALLY PREJUDICE THE PLAINTIFF

Insincerely, the SEC argues that the staying of this action would potentially prejudice the SECs prosecution of this matter. The SECs disingenuous argument is totally undermined and refuted by the facts in this case. The SECs Complaint alleges illegal activity between the time periods of 2005 to 2007. While the SEC sought, and obtained permission from this court to reopen discovery for the purpose of inquiring into the Defendants 2010 activities and with the expectation of amending the Complaint to include the 2010" time period, the SEC never amended their Complaint to include any other time period other than those alleged in the Complaint. (See Plaintiffs Motion to Re-Open Discovery) For the SEC to now argue facts about the 2010" time period in opposition to a Stay is at the very least disingenuous. The SEC suggests in their Opposition to the Stay, that they would be prejudiced by a Stay because at any time, without the courts or the Commissions knowledge, Glisson could resume his illegal activities in CMKM securities to the detriment of innocent investors who are duped into believing CMKM securities have some value. The SEC made a similar argument in its Motion for Summary Judgment, which among other things, sought Preliminary Injunction. The Court did not accept the SECs argument at that time and denied the SECs Motion for

26 27 28 10 Summary Judgment in its entirety.

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The SECs argument that it would be prejudiced by a Stay is further undermined by the fact that the SEC never alleged fraudulent conduct by Glisson in their Complaint and the SEC never amended their Complaint to include such allegations. Further, the SECs argument is specious because they know even if Glisson were inclined to resume activities in CMKM securities, it would be impossible because the stock is de-registered and incapable of being transferred. When the court weighs the interest in preserving the Defendants Due Process and Fifth Amendment privilege against the lack of prejudice to the Plaintiff, the Court must err on the side of preserving a defendants constitutional privileges and should issue a Stay of these proceedings.

CONCLUSION Based on the foregoing, it is respectfully requested that Defendant Marco Glissons Motion to Stay this action until after the completion of the criminal proceedings be granted.

DATED this 10th day of December, 2011.

FREDERICK SANTACROCE, ESQ. /s/ Frederick Santacroce ____________________________________ FREDERICK SANTACROCE, Esq. Nevada Bar No. 5121 SANTACROCE LAW OFFICES, LTD 706 S. 8th St Las Vegas, Nevada 89101 Telephone: (702) 598-1666 Fax: (702) 385-1327 Attorney for Defendant

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CERTIFICATE OF SERVICE I hereby certify that this document was filed through the ECF system and has been sent electronically to the registered participants as identified on the Notice of Electronic Filing (NEF) on December 12, 2011 and paper copies sent to those indicated as non-registered. FREDERICK SANTACROCE, ESQ. /s/ Frederick Santacroce ____________________________________ FREDERICK SANTACROCE, Esq. Nevada Bar No. 5121 SANTACROCE LAW OFFICES, LTD 706 S. 8th St Las Vegas, Nevada 89101 Telephone: (702) 598-1666 Fax: (702) 385-1327 Attorney for Defendant

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