United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF'S
MOTION FOR ENTRY OF AMENDED FINAL JUDGMENT
STEPHAN M. VIDMAR UNITED STATES MAGISTRATE JUDGE.
MATTER is before the Court on remand from the Tenth Circuit
Court of Appeals and the Supreme Court of the United States.
Based on the orders of the higher courts, Plaintiff now moves
for an amended Final Judgment [Doc. 205]. Defendant responded
on September 25, 2018. [Doc. 207]. Plaintiff replied on
October 11, 2018. [Doc. 209]. The parties consented to have
the undersigned conduct all proceedings, including entry of
final judgment. [Doc. 46]. The Court has considered the
briefing, the relevant portions of the record, and the
relevant law. Being otherwise fully advised in the premises,
the Court will GRANT Plaintiff's Motion
and enter an amended Final Judgment as described herein.
1995 and 2009, Defendant misappropriated $34.9 million from
four business-development companies. Defendant then concealed
the misappropriations by filing false Forms 10-K and 10-Q
with the Securities and Exchange Commission. Plaintiff sued
Defendant in 2009 alleging violations of various securities
laws, including the Investment Company Act of 1940, the
Securities Exchange Act of 1934 (plus various Rules
thereunder), and the Investment Advisers Act of 1940. [Doc.
1]. After a five-day trial, a jury found that Defendant
violated the above Acts. The Court entered judgment against
Defendant on March 30, 2015, ordering him to pay $2, 354, 593
in civil penalties and to disgorge $34, 927, 329 plus
pre-judgment interest. [Doc. 185]. The Court also permanently
enjoined Defendant from violating the above securities laws.
appealed to the Tenth Circuit Court of Appeals on the grounds
that (1) the disgorgement and permanent injunction
represented civil fines, penalties, or forfeitures subject to
a five-year statute of limitations under 28 U.S.C. §
2462; and (2) the Court should not have excluded certain
evidence at trial. Appellant's Opening Br. to Tenth
Circuit 3. The Tenth Circuit affirmed. SEC v.
Kokesh, 834 F.3d 1158 (10th Cir. 2016).
then appealed to the Supreme Court, where the only issue he
presented was whether § 2462's five-year statute of
limitations applied to claims for disgorgement. Pet. for a
Writ of Cert. i. Ultimately, the Supreme Court held that
“[d]isgorgement in the securities-enforcement context
is a ‘penalty' within the meaning of § 2462,
and so disgorgement actions must be commenced within five
years of the date the claim accrues.” Kokesh v.
SEC, 137 S.Ct. 1635, 1639 (2017).
remand from the Supreme Court, Defendant urged the Tenth
Circuit to find that the entire action against him was
time-barred. His theory focused on when the SEC's claims
“accrued.” As Defendant saw it, the claims
against him for disgorgement (and other civil penalties)
“first accrued” when he began his fraudulent
schemes. Because the first occasions on which he engaged in
each type of misappropriation occurred as early as 1995 and
no later than 2001, Defendant argued that the entire action
was time-barred. Appellant's Suppl. Mem. Br. to Tenth
Circuit 1-2. Defendant argued in the alternative that if the
entire action were not barred, at least the claims for
disgorgement (and for other civil penalties) should be
time-barred on the same interpretation of when the claims
“first accrued.” Id. at 2.
Tenth Circuit was not persuaded. The court held that
Defendant's misappropriations of funds were properly
viewed as discrete violations. SEC v. Kokesh, 884
F.3d 979 (10th Cir. 2018). It found that Defendant had
converted $5, 004, 773 within the five-year limitations
period (i.e., after October 27, 2004), and it remanded the
case to this Court with instructions to enter an order
requiring Defendant to disgorge $5, 004, 773. Id. at
requests that the Court enter the following judgment: (1) $2,
354, 593 in civil penalties,  (2) permanent injunctions
prohibiting Defendant from disobeying various securities
laws, and (3) disgorgement of $5, 004, 773, plus $2, 646,
466.25 in pre-judgment interest thereon. [Doc. 205-2] at 1-2.
Plaintiff requests pre-judgment interest running from January
1, 2006 (the start date used to calculate the interest in the
Court's March 2015 judgment) through February 28, 2015
(the month before the jury's original verdict). [Doc.
205] at 6; [Doc. 205-1]. In response, Defendant first argues
that the Court can award Plaintiff nothing beyond $5, 004,
773 in disgorgement, because the Tenth Circuit's mandate
did not mention civil penalties, pre-judgment interest, or
injunctive relief. [Doc. 207] at 3. Defendant also argues
that Federal Rule of Appellate Procedure 37(b) prohibits the
Court from awarding pre-judgment interest because the Tenth
Circuit's mandate did not provide for interest.
Id. at 4-8. For the following reasons, the Court
disagrees with each of Defendant's arguments.
Defendant waived any issue not raised in his appeals to the
Tenth Circuit or the Supreme Court,
including the Court's imposition of civil penalties, the
injunction, and the award of pre-judgment interest on the
law-of-the-case doctrine requires that once a court decides
an issue in a case, its ruling binds further determination of
the same issue within the case. Huffman v. Saul Holdings
Ltd. P'ship, 262 F.3d 1128, 1132 (10th Cir. 2001).
When an appellate court remands a case, the doctrine provides
that “the decision of the appellate court establishes
the law of the case and ordinarily will be followed by . . .
the trial court on remand.” Rohrbaugh v. Celotex
Corp., 53 F.3d 1181, 1183 (10th Cir. 1995). The mandate
rule-a corollary to the law-of-the-case doctrine- provides
that a district court “must comply strictly with the
mandate rendered by the reviewing court.”
Huffman, 262 F.3d at 1132 (quoting Ute Indian
Tribe v. Utah, 114 F.3d 1513, 1521 (10th Cir. 1997)).
The mandate rule, however, still gives the district court
authority to rule on issues not explicitly mentioned in the
mandate if the appellate court did not expressly or impliedly
decide the issues. Cook v. Rockwell Int'l Corp.,
790 F.3d 1088, 1104 n.7 (10th Cir. 2015) (“[A]ny avenue
a court of appeals does not specifically foreclose remains
available on remand.”); United States v. West,
646 F.3d 745, 749 (10th Cir. 2011) (“[T]he scope of the
mandate on remand in the Tenth Circuit is carved out by
exclusion: unless the district court's discretion is
specifically cabined, it may exercise discretion on what may
be heard.”); Proctor & Gamble Co. v.
Haugen, 317 F.3d 1121, 1126 (10th Cir. 2003)
(“Although a district court is bound to follow the
mandate . . . ‘a district court on remand is free to
pass upon any issue which was not expressly or impliedly
disposed of on appeal.'” (quoting Newball v.
Offshore Logistics Int'l, 803 F.2d 821, 826 (5th
scope of a mandate depends on the arguments the appellate
court heard before writing its opinion; if a party waives or
abandons a challenge, a mandate's failure to expressly
mention the challenge does not bar the district court from
ruling on the issue. Estate of Cummings v. Cmty. Health
Sys., Inc., 881 F.3d 793, 801 (10th Cir. 2018). In
Estate of Cummings, the Tenth Circuit prohibited the
district court from revisiting the issue of personal
jurisdiction because the plaintiff voluntarily dismissed its
personal jurisdiction challenge on appeal. Id. at
796-801. The Tenth Circuit stated:
Failing to raise an argument on appeal, or abandoning an
issue that was initially raised, has the same consequences .
. . as an adverse appellate ruling on that issue. Thus, the
mandate rule applies not only to issues on which the higher
court has ruled but also “forecloses litigation of