i'm we believe that there's a woefully inadequate record for summary judgment in this case there are a myriad of material issues affect other three hundred eighty partners in various of the joint venture partnerships that issued the s e c obtained statements from two diametrically opposed to those two are the fifteen affidavit submitted by my clients which are referred to for this is a case where the presumption that a partnership is a partnership a strong presumption under williamson and yes from the fifth circuit is turned on its head here with the goggles on that this is a security everything like a domino effect follows from that declarations in the case those two are far outweighed by the evidence presented by the provision defendants and in the in the lower court as you're well aware that william yaz case create a strong presumption that a partnership is exactly that and we believe that when this case is ultimately tried which we hope occurs we can demonstrate that these operated as partnerships operate and we don't believe that the f c c bared any very much less the heavy burden of proof required under the williamson and  which is essentially whether these wealthy sophisticated business owners can make or are capable of making an intelligent business decision taking to the illogical extreme of what the f c c proposes before you in this case if two people wanted to open an ice cream store and knew nothing about how to make ice well respected companies experts in their field and they and mr president and his entities put together projects well sites they've selected all right and you're your notion i understand your position about there's you move for summary judgment on the basis of what surely it couldn't have been based of you move or summary judgment based on what the legal proposition that the investors were not security correct ok and not on a factual basis your to judgment as a matter of law because of the whole investment is that it correct that the partners in our mind had extraordinary powers with a sixty percent vote of the partners they could replace that this case was not a crime for summary judgment or reasons you irradiate did look to see there are bunch of these cases where these issues have been raised the same to me most of them were and it's clearly warranted in my client's favor we had as i mentioned twenty six affidavits all saying one thing that the confidential information memorandum in this case is like a phone book of information i get it but my guess of met if that's true then why would it be proper for the district court to view the credibility of all that in the summer generate context the same thing you propose happening the other way i mean you know it seems to me somehow that still would have been a matter of all investors everybody else involved so why would the process be you follow me so much easier if you got three hundred and some investors totally reliant on two out of the three hundred eighty participants and so but but i would be thrilled if your honor says a pox on both your houses let's go try the case because that's what should happen not even a deposition was taken in this case and my client has been excoriated if you said it because i was going to ask that what the state of the summary judgment record is i know you're out of time but i was go how many depositions were taken in this case by anybody none zero we in this case is at its infancy and we're ready to go try  they're right on it but it's just for my eyes a little oddly koster that it's got all this stuff you both say is there yet you know no depositions i mean even in an important case you know to enter a judgment for fourteen million dollars in punitive sanctions and science fraud and see enter on this record it is it makes us all guilty all right well i appreciate it as a sorry me to take you away from the core elements but you lead with some of judgment was inappropriate that was your leading line and so i had some questions on that and i appreciate that you know i do want to say one thing if he is jumping out of his chair i'm late to the game i was not involved in the court in the case in front of judge king cade to my understanding nobody in this case has been under cross examination nobody ok all right thank you sir you for it brought a little bit of were the promoter here in this case some of the defendants as well they get swept up in this thing in my brief time i've got five minutes so much i to be brief talk about three topics when i want to call them meaningful dissent t is going to be one of these things is not like the other and the third one is going to be go boldly where no one else has gone so the first one is the meaningful dissent in the s c c versus k line k h l o in case the judge jones wrote a decision and she wrote this news gets to the point you were just talking about mr hilberg finally i find it troubling that kaylan into j m never had a chance to present their case orally before the district court here in this case what happened the case was almost two and a half years old it had been set for trial twice it was bumping up against a trial setting the trial of the district judge move the hearing move the trial date and then granted summary judgment none of the center judge should make grand in the first place but there was never a hearing i attended after the summary judgment was granted i got higher i attended the only hearing that the court ever had it was on damages supposedly no evidence was even put on it lasted thirty or forty minutes and then out came the final judgment i we had moved for reconsideration and did everything in front of judge can katie denied all that stuff which he had the right to do but we said he got it wrong but there was never a deposition never a trial never a hearing with evidence nothing out shoots a summary judgment and what saget to that gets to the notion that surveillance you trial was judging a bottom always talks about has been speaking about for years that the trial judges are just wiping these cases off the court with the twelve emotions summary judgment motions this case screams out for a trial which is there are a lot of facts here and there are a lot of facts that relate to whether or not this this this joint venture this partnership was a security or not my client was just a promoter which gives to my second point which is one of these things is not like the other my client was a promoter there is that in the record is that my client properly vetted those people that he then turned over to the parviz unit group to see if they wanted to invest that's what's in the record the two affidavits that mr gilbert mentioned those two af don't even mention my client's not a not a word my clients don't my clients don't even know what in yet summary judgments founded but the question i have for years is how are we going to distinguish the difference between the promoter who as the case law says if you look at neuilly is the strong presumption we've got to figure out the test and this is from the william commercials tucker it's in footno fourteen the test rather is what character the instrument is given in commerce by the terms of the offer the plan of distribution in the economic inducements held out to the prospect in the enforcement of an access is this is not inappropriate that the promoters offerings be judged as what they were represented to be which to me which in that citing the f c c vs howry case from how many promoters were there like we'd weed my client had people that worked for him that called folks and stuff like that but none of those folks got sued you're representing only your call and those of i do not represent they didn't get sued and blueness was represented by different lawyer at the trial court level and i don't know what happened on appeal but so what i'm saying is in order for the promoter the guy like my client he's got to be you have to look at with what he's promoting it looks like a joint venture he promoted as a joint venture he thinks it's a joint venture that's the evidence it's unfair to use post investor post sign your post promoting activity to say that it was a security he was selling i don't want to use the word was not fair because that's not standard but there has to be a standard for someone like my client that's different from what happened later on with the joint venture the look back after seeing what happed transpired to say oh no that's a security is not a joint venture good morning may please courts benjamin better for the securities and exchange commission and with me today is jennifer rates from our fort worth regional office i would start by saying i full heartedly agree with mr cox that investment schemes that are offered to the general public should be treated as what they are as what they are offered to be and the joint venture interests offered and sold by the defendants in this case are investing contracts under the analysis employed by the supreme court joiner and how the cases when looking at this it's useful to think about these cases in three steps first how was the investment offered second who was it offered to and third what were the economic realities of the investments being offered and here when you look at what happened they were offering investment caught trucks there is no dispute here at all that this these these investment schemes were offered in a nationwide called c companies mr gonzales in particular worked for m arrest which was mr provisions company which got shut down for failure to cooperate with an investigation by the texas securities regulator so this is a nationwide long term cold calling campaign they also don't dispute that they ended up with three hundred home cold calling mean someone automatically violates the second prong of lawyers well you know i think the cold calling has some relevance to both the first and second pro williams and when you look at williamson itself in the discussion of the first prong the court points out that if you end up with a sales regime in which you are trying to sell what are purported partnership interests to a broad cross section of the general public nationwide and then you end up with purchasers nationwide what you have is you have an investment structure that more resembles that of a limited partnership or a shareholder because the votes of this dispersed partnership really don't add up to the same thing as sort of a tight knit five six person general partnership like you had issue at issue in the new use case and it's also relevant i think to the second williamson factor because i focus is on the capability or the ability of  investors themselves to effectively manage and if you have you know inexperienced members of the general public who aren't themselves skilled in the business of oil and gas are in the business of oil and gas drilling they're unlikely to be able to effectively manage their investment so it's both a problem of dilution of the power of voting on of the first prong which leaves you with an investment where they have no effective power in the structure of it and with the second prong the inability to effectively manage but even if cold calling is the method error but on the presumption that cold calling leads to an experience people investing what i supposed to be looking at the actual investors themselves if you want to look at each individual investors could be some relevant information however if we need to recall that this is an offering fraud why fraud is in this that this is an offering violation so it's an unlawful offering of securities whether an offering exists doesn't necessarily hinge on true ultimately purchase the offer so we do have a section five finding here and that is a strict liability offen so i would like to address a couple things that came up earlier i know chief steward had several questions about the record there is in fact evidence in the record on every single one of the tried to interested issues in this case on page six of our brief there's a footnote footnote three evidence and what form and what we have all of the offering documents for each of those joint ventures and we have cited that in footnote three on page six of our brief so you can see the exact place in the record and there were cross motions for summary judgment your honor there are and i believe i'm correct about the seventeen investor declarations so go to the heart of my mission question and that is i didn't do a full search but we did try to look you know at a number of these actions that have come up in the district court it's just that you may be right but it just seemed oddly postured you're relying on decorations you really don't affidavits you're around the papers not we depose gonzales and this person and based on what they say investors then there's somebody else who says yes there was there's e mails and so forth so it's just i have a hard time getting a roof fifty six head around  withstanding the force with which you make the points but just the sheer fact that there are three hundred and some whatever tears investors out there and and and and all of that of how even a summary judgment after some do seeing of evidence or deposition that might be one thing but it just seems odd so is it the core surety s t c and you do this is this generally you tied up on the iss offering security etc and that's how the summary judgment is part of the district court to make because nobody's disagreeing about williams and being the case law nobody is disputing what's applicable here but how the features of this case fit their well your honor there's actually i think more to the record then then might first appear because the commissions and foresman actions are you know your usual civil litigation we're actually doing stance of investigations before we file actions so in this record there are transcripts of investigation testimony and this is sworn testimony your honor it's effectively the same information or most of the data or the facts about the offering itself facts which are undisputed so far as i can tell come from that investigation testimony that's how we know they did the cold call it that's how we know the structures of the various companies and their relationship to mr pervasion so there is in fact extensive testimonial evidence in this record in addition to that there are all the offering documents which are the offering itself there's copies of the confidential information memorandum and  control and how words that control communications center i mean how does one get that just from the declarations well it did the question of control over the investor to shoes that just as one no communication and then there's some well here's some emails from some investors that they can so i'm just trying to get my head around not there your point doesn't have a literally but just in the context important to recall that the williamson factors of any one that any one of the three are satisfied it's not necessary for the commission to establish all three and the second i think this record is sufficient because it doesn't fact include  relevant offering documents which are probably the most relevant thing for the purposes of the first williamson chapters you look at the structure of the actual investment itself that was offered and sold to the general public and second it is in fact sworn testimony this this was investigative testimony so it's the equivalent of a deposition at the end of the day so we have heard on the record from mr provision mr balloonist and mr gonzales and in addition there are these investor declarations that are also in the record i i would be remiss if i didn't point out that these fifteen declarations that are cited extensively in the defendant's briefs were not in fact cited quite so extensively to the district court they in fact cited these precisely twice and they cited only the cover page of the exhibit itself so that really didn't give the district court much to grab on to understand what they thought these declarations established so that i think is another issue with their this appeal aren't terribly material to the question of whether they sold investment contracts so they're challenging sort of the credibility of mr already in his declaration because mr already says well i didn't actually know how to contact my fellow investors well what mr all race says is that mr purdie did not give him the information when he asked for it now that really isn't in dispute yes mr already did he had contact information for i believe the hill and he also raises some credibility issues i believe related to the trader's declaration because mr traver said his declaration that he didn't vote he didn't recall voting and there's evidence on the record that mr travers in fact returned ballots but the commission isn't  these these investors did in fact vote on certain things our position is those votes weren't even that meaningful at the end of the day when you look at the economic realities of the investment and the reason they were meaningful was by the time they were actually voting on anything which was usually a vote whether to proceed to completion or not the voting itself was sort of a sham in one way because if they didn't vote to complete the diff they didn't vote favor of completion and send in the money they lost their entire interest in the well they forfeited everything they had invested and they lost any hope of return in the future so kind of a hobson's choice as we explained in our police and then on top of the act that vote was taken on the basis of information that they wells but we would point out that mr park beachy and selected that subcontractor he selected those experts and he provided recommendations this is somewhat similar to the long case where the promoter or the manager really does control the flow of information we aren't saying that the information was false we're just saying that he did actually have control of the flow of information and we've in fact cited this information in our brief and if you look at it it's highly technical understanding  log is not something that someone without some textbook technical expertise can do as a typical matter i mean i look at the logs myself and i confess i wouldn't be able to decide whether to vote for completion or not so i think takes them as they are on the list yes but they're not subject to cross examination i mean we weren't there and as you know that's where the truth comes in many many times but affidavits indicate that they're tremendously well qualified sophisticated accredited investors all the way very educated run their own businesses capable of making business decisions and did they al both ways it's in the record these guys did and were very active that there were no contact among partners is a complete reversal mr o'grady himself ran a blog and he and all of the investors communicated very very frequently about all kinds of things related to the to the partnership security questionnaires that asked about education investing history experience what was done with  members of his group would then vet those candidates so this you put a good point on cold calling it is a ruse called calling is this bad buzz phrase but those are cold calls from a lead list said no what are they i mean for their application they're out they're not admitted so all of these are very carefully vetted and they're only allowed and if they're qualified and can make legitimate business decisions with respect to specifically with respect to the oil and gas partnerships and the fine fraud on this record is ridiculous and the last thing your honor back to your summary judgment point to the summary judgment should be granted in our favor because of the strong presumption extremely difficult factual burden and the heavy burden of proof that williamson and then i say is as he says burden that they have been overcome by two affidavit joint ventures here are investment contracts as a matter of law he says there's curiously he says that's not a factual issue in dispute but as a matter of law that's the way you know they've come out the back so all their facts related to that or the offerings themselves as he has articulated a matter of which the court could have and did made that determination the court put those glasses  the investors voted or not so he says that's not a disputed fact but he says the voting process was a sham is that absolutely not and let me give you an example completion of a well is the most important aspect of any project so while mr provision may have selected a location and they have selected an operator and they have gotten the thing under way and then you drill and then from all the studies he would ten from these super experts you make  determination each of the partners votes to complete the well and they vote and they pay more to complete the well so they're making a decision not only on paper but with their wallet to complete the well and they can take this information that they have to any expert they want to verify that they should or should not complete the welt there's absolutely no fire under their feet or yes they say frames this as a legal determination not one that is credited with facts and i don't want to mistake what you say but he says to the extent that they are factual differences they are not material to the course that we see here and so he says the investment offerings are the key documents that are in the record and which are sort of the turning point here while he s c c was entitled to judgment as a matter of law not these other factors because he said all we have to do is one on one fact that i state that generally the way you put it is to better close enough for government work h still the law it's in our brief and it says that this is a partnership and not a security that the very very important fact of this matter is that the biggest firm in the world baker and mckenzie and the biggest specialist in the world on securities not securities joel held drafted these sensors they're used all over the country they're there refined all over the country to make sure that they're not securities to so on paper you can't get to the conclusion that the f c c would love to get to and so the judge is just wrong grew as a matter of law but he didn't he moved on summary judgment on a dearth of record without substantial to present on and i mean it's an interesting case will go through the record and we'll get side it just as an aside we often ask you know about appellate deals and i no this wonderful stuff they develop below just hard to make it work an appellate argument so she brought it up but it's showing maine as he has it's just an observation i'm sure it's pretty oh no the side but that's right i just want to briefly address just one point that they the s e c says and we rely on everything else in our brief it in the thing there that we didn't get to talk about nobody wanted to do it is this notion of discord human and this is where it a double in for everybody it's a double punishment we know disgorgement is a penalty so i got my kind of paralyzed discordant a hundred thousand dollars and then penalize again under a tear one penalty so he's getting penalize twice here and no evidence whatsoever none as a court of my client we didn't run the joint venture and we know that but there's no evidence here there's no there's as you note there's no record of was the money stolen did the money go away who took it whose pockets it in where to go why isn't there receiver none of that is here there is there is no evidence at the money was stolen by anybody none  so we my client is just the promoter and at the time we're promoting it it looks like a joint venture he thinks it's a joint venture he promotes it as a joint venture he said all of the if it looks like a duck quacks like a duck and walks like a duck it's a duck my client thinks it's a joint venture while he's doing it and he shouldn't be stuck with what happens in the f c c even rights that they're not in their brief that they're not putting post activity on to my client so that's what