SEC v. Complete Bus. Sols. Grp., Inc.
SEC v. Complete Bus. Sols. Grp., Inc.
2023 WL 3844966 (S.D. Fla. 2023)
June 6, 2023
Ruiz II, Rodolfo A., United States District Judge
Summary
The Court found Defendant Joseph Cole Barleta in contempt for his repeated failure to comply with the Court's Order Granting Receiver's Motion to Compel. The Receiver requested documents from Cole related to ten categories of assets, and the Court ordered Cole to comply with the Order and the Receiver's requests for production within ten days or face a daily coercive fine. Additionally, the Court awarded the Receiver all reasonable expenses incurred in making its Motion and pursuing this discovery, including email correspondence between the parties.
Additional Decisions
SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
COMPLETE BUSINESS SOLUTIONS GROUP, INC. d/b/a Par Funding, et al., Defendants
v.
COMPLETE BUSINESS SOLUTIONS GROUP, INC. d/b/a Par Funding, et al., Defendants
CASE NO. 20-CV-81205-RAR
United States District Court, S.D. Florida
Signed June 06, 2023
Counsel
Alise Meredith Johnson, Linda Salup-Schmidt, Amie Riggle Berlin, United States Securities and Exchange Commission, Miami, FL, Martin F. Healey, U.S. Securities and Exchange Commission Boston Regional Office, Boston, MA, Michael J. Roessner, United States Securities and Exchange Commission, Division of Enforcement, Washington, DC, for Plaintiff.Allison Beth Kernisky, Daniel I. Small, Holland & Knight LLP, Miami, FL, Chad M. Vanderhoef, Holland, Knight LLP, Tampa, FL, for Defendants Retirement Evolution Group, LLC, Retirement Evolution Income Fund LLC, RE Income Fund 2, LLC, John Gissas.
James Miller Kaplan, Noah Elliot Snyder, Kaplan Zeena LLP, Miami, FL, Joel Hirschhorn, GrayRobinson, Miami, FL, Alan S. Futerfas, Pro Hac Vice, New York, NY, Alejandro Oscar Soto, Fridman Fels & Soto, PLLC, Coral Gables, FL, Daniel Scott Fridman, Fridman Fels & Soto, PLLC, Coral Gabes, FL, David Lawrence Ferguson, The Kopelowitz & Ostrow Firm PA, Fort Lauderdale, FL, for Defendant Lisa McElhone.
Alejandro Oscar Soto, Fridman Fels & Soto, PLLC, Coral Gables, FL, Andre G. Raikhelson, Law Offices of Andre G. Raikhelson, LLC, Boca Raton, FL, Bettina Schein, Pro Hac Vice, Law Offices of Bettina Schein, New York, NY, Daniel Scott Fridman, Fridman Fels & Soto, PLLC, Coral Gabes, FL, David Lawrence Ferguson, The Kopelowitz & Ostrow Firm PA, Fort Lauderdale, FL, Joel Hirschhorn, GrayRobinson, Miami, FL, for Defendant Joseph Cole Barleta.
Daniel Scott Fridman, Fridman Fels & Soto, PLLC, Coral Gabes, FL, James Miller Kaplan, Kaplan Zeena LLP, Miami, FL, Joel Hirschhorn, GrayRobinson, Miami, FL, Alexis Fields, Seth David Haimovitch, David Lawrence Ferguson, Joshua Robert Levine, Kopelowitz Ostrow Ferguson Weiselberg Gilbert, Fort Lauderdale, FL, for Defendant Joseph W. LaForte.
Daniel Lawrence Rashbaum, Jeffrey Eldridge Marcus, Jason Mays, Brandon Scott Floch, Marcus Neiman Rashbaum & Pineiro LLP, Miami, FL, Alejandro Oscar Soto, Fridman Fels & Soto, PLLC, Coral Gables, FL, for Defendant Perry S. Abbonizio.
Alejandro Paz, Akerman LLP, Miami, FL, Brian Paul Miller, King & Spalding, Miami, FL, William Gregg Wolk, Eaton & Wolk PL, Miami, FL, George Bochetto, Pro Hac Vice, Bochetto & Lentz, Philadelphia, PA, for Defendant Dean J. Vagnozzi.
Elroy M. John, Jr., Florida Justice Law Firm, PLLC, Fort Lauderdale, FL, Zachary Paul Hyman, Millennial Law, Fort Lauderdale, FL, for Defendant Michael C. Furman.
Alejandro Oscar Soto, Daniel Scott Fridman, Fridman Fels & Soto, PLLC, Coral Gables, FL, Joel Hirschhorn, GrayRobinson, Miami, FL, for Defendants L.M.E. 2017 Family Trust, The LME 2017 Family Trust.
Damian George Waldman, Law Offices of Damian G. Waldman, P.A., Clearwater, FL, for Defendant Wilmington Savings Fund Society, FSB, not in its individual capacity but solely as Trustee for Invictus Residential Pooler Trust 3A.
Keersten Lee Heskin, The Heskin Martinez Law Group, Suite 1500, FL, for Defendant Michael Joseph Foti The Heskin Martinez Law Group 390 N. Orange Avenue Suite 1550 Orlando, 15 32801 United Sta 407-403-5990.
James David Silver, Kelley Kronenberg, Fort Lauderdale, FL, Katie Brinson Hinton, Jennis Morse Etlinger, Tampa, FL, for Defendants 19 Country Drive, LLC, Michelle Scaramellino.
Ruiz II, Rodolfo A., United States District Judge
ORDER HOLDING DEFENDANT JOSEPH COLE BARLETA IN CONTEMPT OF COURT
*1 THIS CAUSE comes before the Court upon the contempt proceedings initiated by the Court's Order to Show Cause, [ECF No. 1553]. The Receiver filed a Motion for an Order to Show Cause Why Defendant Joseph Cole Barleta Should Not Be Held in Contempt (“Motion”) on April 24, 2023. [ECF No. 1552]. The Court granted the Receiver's Motion and set the matter for an evidentiary hearing on June 5, 2023. [ECF No. 1553]. Defendant Joseph Cole Barleta filed a Response to the Order to Show Cause on April 26, 2023, [ECF No. 1554], and the Receiver filed a Reply on May 1, 2023, [ECF No. 1560]. The Reply included email correspondence between the parties regarding repeated requests over the course of more than a year for production of the documents in question. [ECF No. 1560–1]. The Court having reviewed the operative filings, the relevant caselaw, and with the benefit of an evidentiary hearing, it is hereby
ORDERED AND ADJUDGED that Defendant Joseph Cole Barleta is in CONTEMPT for repeated failure to comply with this Court's Order Granting Receiver's Motion to Compel (“Order”), [ECF No. 1222], as further explained herein.
LEGAL STANDARD
“Courts have the inherent power to enforce compliance with their lawful orders by the exercise of contempt powers.” Campos v. Chavam Enters., Inc., No. 15-14370, 2021 WL 1178548, at *2 (S.D. Fla. Feb. 16, 2021) (citing Citronelle-Mobile Gathering, Inc. v. Watkins, 943 F.2d 1297, 1301 (11th Cir. 1991)), report and recommendation adopted, 2021 WL 1177485 (S.D. Fla. Mar. 29, 2021) (citing 28 U.S.C. § 636(e)). “On a contempt motion, the movant bears the initial burden of proving, by clear and convincing evidence, the defendant's noncompliance with a court order.” Thomas v. Blue Cross Blue Shield Ass'n, 594 F.3d 813, 821 (11th Cir. 2010). “This requires proving that (1) the allegedly violated order was valid and lawful; (2) the order was clear and unambiguous; and (3) the alleged violator had the ability to comply with the order.” SEC v. Greenberg, 105 F. Supp. 3d 1342, 1345 (S.D. Fla. 2015) (quoting Ga. Power Co. v. NLRB., 484 F.3d 1288, 1291 (11th Cir. 2007)). “To meet the initial burden for a finding of civil contempt, a moving party need only show that defendant failed to comply with the court's order.” Van De Velde NV v. Felder, No. 15-24096, 2017 WL 8895345, at *2 (S.D. Fla. May 25, 2017), report and recommendation adopted, 2017 WL 8895340 (S.D. Fla. June 16, 2017) (citing United States v. Rylander, 460 U.S. 752, 755 (1983)).
“[T]o avoid contempt, a defendant must show that he or she either did not violate the court order as alleged or that she was ‘excused’ from complying with such order.” Id. A defendant may only be excused from compliance upon a showing that “despite all reasonable efforts to comply with the court's order, compliance was impossible.” Brother v. BFP Invs., Ltd., No. 03-60129, 2010 WL 2978077, at *2 (S.D. Fla. June 1, 2010). The Eleventh Circuit “construe[s] this requirement strictly.” Combs v. Ryan's Coal Co., Inc., 785 F.2d 970, 984 (11th Cir. 1986). Even if the efforts made by a defendant are “substantial, diligent, or in good faith” the fact that a defendant did not make “all reasonable efforts” to comply with the order, establishes that the defendant has failed to rebut the showing of contempt. United States v. Hayes, 722 F.2d 723, 726 (11th Cir. 1984) (internal quotation marks omitted).
ANALYSIS
*2 Defendant Joseph Cole Barleta has demonstrated severe disdain for the Court's orders, thereby meriting a finding of contempt. Pursuant to the Amended Order Appointing Receiver [ECF No. 141] (“Amended Appointment Order”), the Receiver has the power to take custody, control, and possession of all Receiver Property and records relevant thereto. Am. Appointment Order ¶ 7(B). Additionally, “the Receiver is authorized to take immediate possession of all assets, bank accounts or other financial accounts, books and records and all other documents or instruments relating to the Receivership Entities,” and “all persons and entities having control, custody or possession of any Receivership Property hereby directed to turn such property over to the Receiver.” Id. ¶ 15. The Receiver's appointment in this case was made pursuant to the Court's general equitable powers and relevant securities laws. See, e.g., SEC v. First Fin. Grp. of Tex., 645 F.2d 429, 438 (5th Cir. 1981); see also Section 22(a) of the Securities Act of 1933, 15 U.S.C. § 77v(a), and Section 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa. The Amended Appointment Order specifically provides the Receiver with the power to serve on behalf of the estates of the Receivership Entities “until further order of this Court.” Am. Appointment Order ¶ 2. No orders limiting the Receiver's powers or terminating the Receivership have been entered. Therefore, Cole's repeated refusal to produce documents pursuant to the Amended Appointment Order amounts to nothing more than a delay tactic and demonstrates contempt of this Court.
The email exhibits attached to the Receiver's Reply illustrate how diligently, patiently, yet doggedly the Receiver has attempted to obtain the documents in question for over a year. Reply [ECF No. 1560–1] Ex. 1 at 2–27. After serving Cole with several requests for documents, the Receiver had to motion this Court to compel Cole's compliance, which the Court granted. See Order [ECF No. 1222]. When Cole continued to flout that Order, the Receiver signaled to the Court during the April 17, 2023 Status Conference that it had no choice left but to move to hold Cole in contempt for failure to comply with Court orders. See [ECF No. 1547].[1] Counsel for Cole, Andre G. Raikhelson, previewed for the Court what his arguments against producing the documents would be, which largely mirrored the arguments he advanced in his Response. Id. The Court informed Mr. Raikhelson at that time, in no uncertain terms, that it would look unfavorably upon his arguments that the Receiver's powers did not extend “past the final judgment,” Resp. at 4, and urged Mr. Raikhelson to convince his client to comply with the Receiver's requests and the Court's Order. See [ECF No. 1547]. Cole continued to flout the Order and the Receiver motioned to hold Cole in contempt.
During the Show Cause hearing held on June 5, 2023, the Court reaffirmed that the Amended Appointment Order is valid, unchanged, and lawful. See [ECF No. 1583]. Cole was unable to demonstrate any inability to comply with the Court's Order. Id. Every attempt Cole has made to challenge the lawfulness of the Order has failed. See Mot. ¶¶ 1–13. The Order was also clear, definite, and unambiguous. Ga. Power Co., 484 F.3d at 1291. It identified ten categories of assets in which Cole may have a personal or business interest and required document production relevant to those categories from 2016 to present. See Reply at 8. Lastly, Cole admitted that he had every ability to comply with this Order when asked in open court. [ECF No. 1583]. So, although Cole may have been unwilling to comply, he is not unable. See id. Cole, through his counsel Mr. Raikhelson, blatantly “violated a specific and definite order of the court,” by which he was bound. See FTC v. Affordable Media, LLC, 179 F.3d 1228, 1239 (9th Cir. 1999). As such, finding Cole in contempt under these circumstances is proper.
CONCLUSION
For the reasons stated herein, it is ORDERED AND ADJUDGED as follows:
1. Defendant Joseph Cole Barleta is held in CONTEMPT for violating the Court's Order [ECF No. 1222]. Cole will have ten (10) days to comply in full with the Order [ECF No. 1222] and the Receiver's requests for production. Cole's compliance shall include producing all requested documents from 2016 through the date of this Order. Should Cole fail to comply within ten (10) days of the date of this Order, the Receiver shall notify the Court, and the Court will consider imposing a daily coercive fine until full compliance has been achieved.
*3 2. A federal court has the inherent power to sanction a party. Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1223 (11th Cir. 2017). Moreover, Fed. R. Civ. P. 37(a)(5)(A) commands courts to award reasonable attorneys’ fees and costs to a party prevailing on a motion for an order compelling discovery. The Court, having given Cole an opportunity to be heard, awards the Receiver all “reasonable expenses incurred” in making its Motion, [ECF No. 1552], and pursuing this discovery for over a year. Fed. R. Civ. P. 37(a)(5)(A). The Court having scrutinized the 82.39 hours of billing records submitted by the Receiver in connection with pursuing this discovery request for over a year and litigating the Motion finds the time spent and hourly rate requested reasonable. See Receiver's Notice of Filing Time Records [ECF No. 1584]. Accordingly, Defendant Joseph Cole Barleta is INSTRUCTED to pay the Receiver $28,874.50 in attorneys’ fees and costs on or before July 6, 2023.
DONE AND ORDERED in Miami, Florida, this 6th day of June, 2023.
Footnotes
By this point, the United States Court of Appeals for the Eleventh Circuit had also denied Cole's Motion to Stay. Mot. at 4; Reply at 6.