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SEC v. Cooper, et al..
Defendant’s Notice of Motion and Motion to Stay
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JOHN D. KIRBY
CA Bar No. 149496
The Executive Complex
1010 Second Avenue, Suite 2400
San Diego, CA 92101
Tel: (619) 557-0100
Fax: (619) 557-0123
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
(HONORABLE CYNTHIA A. BASHANT)
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
JACOB KEITH COOPER,
Defendant.
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Case No.: 15-CV-00226-BAS-DHB DEFENDANTS’ NOTICE OF MOTION AND MOTION TO STAY Date: TBD Time: TBD Judge: Hon. CYNTHIA A. BASHANT Courtroom: 4B HEARING/ORAL ARGUMENT REQUESTED
Case 3:15-cv-00226-BAS-DHB Document 173 Filed 08/28/17 PageID.4061 Page 1 of 2
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SEC v. Cooper, et al..
Defendant’s Notice of Motion and Motion to Stay
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TO PLAINTIFF AND TO THEIR ATTORNEYS OF RECORD:
PLEASE TAKE NOTICE that Defendant Jacob Keith Cooper through his counsel
John D. Kirby does move the Court for an order to stay the above-entitled action due to the
state criminal case filed in the Superior Court of the County of San Diego against him. The
Motion is made on the grounds that a criminal complaint has been filed in the Superior
Court by the District Attorney’s Office of the County of San Diego, and is now pending
against him. This matter will require Mr. Cooper to assert their Fifth Amendment rights in
this case.
This Motion is based upon this Notice of Motion and Motion to Stay, the
accompanying Memorandum of Points and Authorities, all pleadings and papers on file in
this action, and upon such other matters as may be presented to the Court at the time of the
hearing.
Respectfully submitted,
Dated: August 28, 2017 BY: /s/ John D. Kirby
JOHN D. KIRBY
Case 3:15-cv-00226-BAS-DHB Document 173 Filed 08/28/17 PageID.4062 Page 2 of 2
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SEC v Cooper
Defendants Memorandum of Points and Authorities in Support of Motion to Stay
15CV00226-BAS-DHB
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JOHN D. KIRBY CA Bar No. 149496 The Executive Complex 1010 Second Avenue, Suite 2400 San Diego, CA 92101 Tel (619)557-0100 Fax (619)557-0123
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF CALIFORNIA
(HONORABLE CYNTHIA A. BASHANT)
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs. JACOB KEITH COOPER,
Defendant,
) ) ) ) ) ) ) ) ) )
Case No.: 15-CV-00226-BAS-DHB DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY Date: TBD Time: TBD Judge: Hon. Cynthia A. Bashant Courtroom: 4B HEARING/ORAL ARGUMENT REQUESTED
Defendant Jacob Keith Cooper through his attorney John D. Kirby respectfully
submits this Memorandum of Points and Authorities in Support of his Motion to Stay the
above-entitled action.
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SEC v Cooper
Defendants Memorandum of Points and Authorities in Support of Motion to Stay
15CV00226-BAS-DHB
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STATEMENT OF FACTS
The Court should stay this case to protect Defendant’s Fifth Amendment rights
based upon the newly filed criminal state case closely related to this matter. In this case,
Plaintiff Securities and Exchange Commission (“SEC”) alleges that Mr. Cooper engaged in
fraudulent conduct by (1) Using investor funds, in the form of a loan, to fund an escrow
obligation in the context of an administrative proceeding also brought by the SEC, and (2)
misappropriated investor funds for what the SEC characterizes as inappropriate
administrative fees. These actions allegedly occurred between 2009 and 2014. (See
generally, Compl.) Thus, Plaintiff has brought suit alleging violations of Federal law. (See
generally, Compl.). This action was filed on February 3, 2015.
On March 15, 2017, almost two years after the complaint in this matter was filed, the
District Attorney’s Office for San Diego County filed a criminal complaint against Mr.
Cooper, as well as two individuals who also had roles at Defendant’s Total Wealth
Management (See generally Criminal Complaint CD 251154 (attached as Exhibit A)).
In this criminal complaint, the People allege that Mr. Cooper, along with his co-defendants,
made multiple misstatements in connection to the sales of securities to the investors in
Total Wealth Management and its investment vehicles. Based upon discovery, and
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SEC v Cooper
Defendants Memorandum of Points and Authorities in Support of Motion to Stay
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repeated statements from the Deputy District Attorney handling the criminal case, both the
loan taken by Mr. Cooper and the administrative fees at issue here will be part of the
People’s alleged proof at trial. The Deputy District Attorney has even stated in court that
the $150,000 loan may form the basis of a separate state embezzlement charge that may be
added to the current complaint.
Because the gravamen of the civil complaint in this matter and the most recently
filed state complaint are so similar, this the Court should stay this civil case until the
criminal matter is resolved.
Mr. Cooper would note that this motion is not intended to stay action on, and
specifically excludes the current “Joint Motion of Plaintiff, Securities and Exchange
Commission, Receiver, Thomas A. Seaman, and Defendant Jacob Cooper, for Order
Approving Settlement,” and the anticipated briefing regarding disposition of the Jacko
Settlement Funds. Mr. Cooper requests a stay of all other proceedings in this matter.
///
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///
///
///
Case 3:15-cv-00226-BAS-DHB Document 173-1 Filed 08/28/17 PageID.4065 Page 3 of 10
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SEC v Cooper
Defendants Memorandum of Points and Authorities in Support of Motion to Stay
15CV00226-BAS-DHB
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ARGUMENT
The Court should grant this motion to protect Defendant’s Fifth Amendment rights
against self-incrimination in the newly filed state criminal matter. The government may
bring parallel civil and criminal proceedings against the same defendant either
"simultaneously or successively." Standard Sanitary Manufacturing Co. v. United States,
226 U.S. 20, 52 (1912). However, courts possess inherent authority to stay civil
proceedings, postpone civil discovery, or impose protective orders when justice requires.
United States v. Kordel, 397 U.S. 1, 12 n.27 (1970); SEC v. Dresser Indus. Inc., 628 F.2d
1368, 1375 (D.C. Cir. 1980).
Indeed, the regulation of a stay, unlike the question of dismissal, is one that falls
squarely within the discretion of the district court. See Landis v. North American Co., 299
U.S. 248, 254 (1936) (“the power to stay proceedings is incidental to the power inherent in
every court to control the disposition of causes on its docket with economy of time and
effort for itself, for counsel, and for litigants.”). Such discretion is appropriately used when
the resolution of another matter will have a direct impact on the issues before the court. See
Hoeun Yong v. INS, 208 F.3d 1116, 1119-20 (9th Cir. 2000) ("A trial court may, with
propriety, find it is efficient for its own docket and the fairest course of the parties to enter
a stay of an action before it, pending resolution of independent proceedings which bear
upon the case. This rule applies whether the separate proceedings are judicial,
administrative, or arbitral in character, and does not require that the issues in such
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SEC v Cooper
Defendants Memorandum of Points and Authorities in Support of Motion to Stay
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proceeding are necessarily controlling of the action before the court.") (citing Leyya v.
Certified Grocers of California. Ltd., 593 F.2d 857, 863-64 (9th Cir. 1979)). Thus, a court
may decide to stay civil proceedings in the face of criminal proceedings even though "such
action is not required by the Constitution." Federal Savings and Loan Insurance Corp. v.
Molinaro, 889 F.2d 899, 902 (9th Cir. 1989); Dresser, 628 F.2d at 1375.
I. DEFENDANT IS ENTITLED TO EXERCISE HIS FIFTH AMENDMENT
RIGHTS TO PROTECT HIMSELF IN THE CRIMINAL CASE.
Defendant is entitled to exercise his Fifth Amendment privilege in conjunction with
the newly filed criminal proceeding. See, Mitchell v. United States, 526 U.S. 314, 327
(1999) (“To say that [a criminal defendant] had no right to remain silent but instead could
be compelled to cooperate in the deprivation of her liberty would ignore the Fifth
Amendment privilege at the precise stage where, from her point of view, it was most
important.”) In Mitchel, the Supreme Court was faced with a criminal defendant who had
pleaded guilty to a crime, but attempted to exercise her Fifth Amendment rights at the
sentencing hearing. Id. at 318-19. The district court determined that she was not entitled
to exercise her Fifth Amendment right and considered her refusal to testify at the hearing in
determining her sentence, and the court of appeals affirmed. Id. at 319
The Supreme Court, however, reversed the decision. Id. at 317. The Court based its
determination on two factors. First, it determined that the defendant did not waive her Fifth
Amendment rights by pleading guilty. Id. at 322 (“There is no convincing reason why the
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SEC v Cooper
Defendants Memorandum of Points and Authorities in Support of Motion to Stay
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narrow inquiry at the plea colloquy should entail such an extensive waiver of the
privilege.”). Second, the Court held that the entry of the guilty plea did not terminate the
criminal proceeding. Id. at 326 (“To maintain that sentencing proceedings are not part of
‘any criminal case’ is contrary to the law and to common sense.”) Thus, the Court
reversed the trial court and held that a criminal defendant is entitled to exercise her Fifth
Amendment rights in a sentencing hearing. Id. at 330. Accordingly, Mr. Cooper is entitled
to exercise his Fifth Amendment rights in this case.
When a court is asked to stay civil proceedings during the pendency of a related
criminal action, the decision must be made in light of the particular circumstances and
competing interests involved in the case. Molinaro, 889 F.2d at 902; Keating v. Office of
Thrift Supervision, 45 F.3d 322, 324 (9th Cir. 1994). In making this determination, courts
in the Ninth Circuit generally consider the following factors:
1) the interest of the plaintiffs in proceeding expeditiously with this litigation or any
particular aspect of it, and the potential prejudice to plaintiffs of a delay;
2) the burden which any particular aspect of the proceedings may impose on
defendants;
3) the convenience of the court in the management of its cases, and the efficient use
of judicial resources;
4) the interests of persons not parties to the civil litigation; and
5) the interest of the public in the pending civil and criminal litigation.
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SEC v Cooper
Defendants Memorandum of Points and Authorities in Support of Motion to Stay
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Molinaro, 889 F.2d at 902-03; Keating, 45 F.3d at 325. Since it is the most important
factor in this case, the Court will address the burden on defendant before analyzing the
remaining factors. Here, as all of these factors weigh in favor of a stay, the Court should
grant this Motion.
A. The Burden on the Criminal Defendant Weighs Heavily in Favor of
Staying the Proceedings
The burden of prosecuting two matters concurrently is tremendous.1 When assessing
the burden on the defendant, courts generally have considered (1) whether an indictment
has been returned; (2) the degree the civil and criminal proceedings overlap; and (3) the
extent the defendant's Fifth Amendment rights are implicated. See Keating, 45 F.3d at 325-
26. There is also a very real concern that allowing the civil case to proceed could "expose
the basis of the defense to the prosecution in advance of criminal trial, or otherwise
prejudice the case." See Dresser, 628 F.2d at 1376.
Here, due to the extensive overlap between the two cases, a stay is in order.
Defendant’s pleadings and discovery will be available for use in the criminal matter, in
violation of their Fifth Amendment rights. Thus, it would place an unfair burden on
Defendant if he is required to respond to any further pleadings while this newly filed
Criminal Matter is pending. Furthermore, given the contentious nature of this case, it can
be expected that Plaintiff have or will contact the prosecuting agency in an effort to apply
1 As referenced in a prior pleading, Defendant is also currently appeal the administrative law judge’s finding to the Ninth
Circuit.
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SEC v Cooper
Defendants Memorandum of Points and Authorities in Support of Motion to Stay
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extra pressure against Defendant to resolve the instant case.2 Accordingly, Defendants face
a tremendous burden in prosecuting the instant case while the Criminal Matter is pending.
B. A Stay Will Not Prejudice Plaintiff SEC
There is no prejudice to the Plaintiff SEC arising from the potential delay. If the
criminal proceedings terminate in results favorable to Plaintiff, they will undoubtedly
attempt to utilize those proceedings to bolster their case here. Moreover, by setting
periodic status conferences, the Court will be able to keep control over the proceedings by
permitting the Court to recalendar all pending matters quickly, and thus protect the
Plaintiff’s interest in this litigation. In this way, a stay would prevent this case from
languishing on the calendar, so that the Plaintiff would be entitled to receive its day in
court once the criminal matter is resolved. Accordingly, there will be no prejudice to the
Plaintiff from a stay.
C. The Convenience of the Court Weighs in Favor of Granting Defendant’s
Stay Request
Granting the stay will conserve judicial resources. Plaintiff SEC has filed a motion
for summary judgment in this matter. By granting this stay, the Court will be able to defer
ruling on that motion until after the criminal matters have resolved. Thus, granting the stay
will conserve judicial resources.
//
2 With reference to the posited cooperation between the civil and criminal authorities, the SEC deposed Defendant for a second
time less than two weeks before the criminal case was files.
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SEC v Cooper
Defendants Memorandum of Points and Authorities in Support of Motion to Stay
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D. The Interests of Persons Not Parties to this Litigation and the
Public are in Favor of a Stay
Granting the stay will not harm third parties. There will be no trial or other
evidentiary hearings that will adversely impact the rights and availability of potential
witnesses. Additionally, with this action stayed, the Criminal Matter can receive priority
from all potential witnesses, without fear of intervention of this action. Thus, granting the
stay will not adversely impact persons not parties to this action.
Moreover, granting the stay will not harm the public’s interest in the litigation.
There has not yet been any indication that the public has taken any interest in this case, and
given the garden-variety sort of allegations in the Complaint, it is not likely that such an
interest will manifest. Further, the public’s general interest in the prompt resolution of
judicial proceedings will be vindicated in the parallel Criminal Matters, because those
claims are brought on the public’s behalf.
In sum, the Court should grant this Motion and continue the case to allow for the
resolution of the Criminal Matter. On the one hand, Mr. Cooper’s own interests do not
parallel any public interest in this matter. On the other hand, Mr. Cooper is in the situation
of defending against two matters, with the possibility that the prosecution in the Criminal
Matter would gain an unfair advantage from the civil proceedings. Further, the Court will
benefit from the stay by reducing the number of potential issues for dispute. Finally, third
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SEC v Cooper
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parties—including the public at large—will not be harmed by the stay. Accordingly, the
Court should grant the requested stay.
CONCLUSION
For the reasons set forth herein, Defendant respectfully requests this Court to order
the above-entitled action to be stayed until the Criminal Matter is resolved.
Respectfully submitted,
Dated: August 28, 2017 BY: /s/ John D. Kirby
JOHN D. KIRBY
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SEC v Cooper
15-CV-00226-BAS-DHB
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JOHN D. KIRBY CA Bar No. 149496 The Executive Complex 1010 Second Avenue, Suite 2400 San Diego, CA 92101 Tel (619)557-0100 Fax (619)557-0123
THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF CALIFORNIA
(HONORABLE CYNTHIA A. BASHANT)
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
JACOB KEITH COOPER,
Defendant,
) ) ) ) ) ) ) ) ) )
Case No. 15-CV-00226-BAS-DHB PROOF OF SERVICE
I, the undersigned, hereby declare as follows:
1. I am over 18 years of age, a resident of the County of San Diego, State of
California, counsel for the Defendant and that my address is 1010 Second
Avenue, Suite 2400, San Diego, CA 92101;
2. That today I served Defendants’ Memorandum of Points and Authorities in Support of Motion to Stay Notice of Motion to stay and Exhibit A, on opposing counsel by causing to be delivered by efile to office of the clerk to the; and that I emailed a copy to defendant.
I declare under penalty of perjury that the foregoing is true and correct.
Dated: August 28, 2017 /s/John D. Kirby
JOHN D. KIRBY
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