and just a few housekeeping matters judge gold is is appearing by video he is actually our presiding judge in this case but because i'm physically in front of you i'm going to call the matters and i'll just per side for purposes of this court hearing so i will call the matters as they are listed on the calendar and beside each of your designations you have a time amount and generally speaking i will keep you to the time if you are the that means the time that you're given is the full time including any time you wish to reserve for rebuttal it's your responsibility as the appellant to keep track of the time but i'm looking right at the clock so if when you approach the podium you tell me that you want to aspirational reserve some time for rebuttal i will try to remind you when you get to that particular point however i'm sure as you can understand when the clock runs out if you're answering a question of one of the judges please finish feel free to finish answering the question and if any of my colleagues have additional questions and i take you over time please even if it's a hard question you can't say all the times up and run back to your chair you have to answer the questions because we want to have all our questions answered to decide the case i know that a few of you have indicated that you want to split time and so when i call the case before we start the clock running all clarify how we'll handle that at the podium so if the st matter on calendar for today is eric swallow versus both tables but i think it was indicated to me that counsel for the defendants want to split their time ok and so that's and and trailor andrea austin and maureen here in ten and you have ten minutes total so you each want five minutes is that correct counsel for the appellant or is just one person arguing and ok great one of the things that i want to explain when you split time i see it sometimes that the person that goes nd starts getting very stressed out thinking because you only have ten minutes total and if you're studying five and five are right if you are the st person arguing if you've used the time i'll going to stop you so that your other person gets five minutes time so don't worry if you're the nd person i'll handle it you'll get your five minutes if we are asking the  person additional questions don't be concerned because i won't let that cut into the nd person's time any time we're asking additional questions that's on my clock not on your clock so we can go ahead and proceed and began good morning my name is william cohen and i'm here on behalf of plan of appellant eric swallow with me at counsel table is john houston scott we're grateful for the opportunity to present oral argument to the court this morning and i'd like you say that after you're done after we ask you all the questions that yourself that you're still having as much fun well we'll see i would like to reserve two minutes f you if i may go ahead thank you so this morning i want to discuss events that took place after the dismissal of this complaint but before i do that i want to talk about you know our pennington immunity and prosecutorial functions for example the conspiracy into which he entered months prior to the accusation is not a prosecutorial function at most it could be characterized as an investigative  then during the course of the accusation being pursued after it was filed i would respectfully invite the court's attention to exhibit ten exhibit ten is a so called letter of landmark to be more prosecutors don't always do what the other parties want them to do right so it's got to be more than not doing what you want someone to do if you're alleging that if so what functions are you saying we're outside the dismissed or does the prosecutor did the prosecutor know the people before it started well he certainly knew them once he started conspiring with them to extract almost fourteen million dollars from are collected through fines and penalties go to a fund a fund that is maintained exclusively for the maintenance of the commission and the bureau for their operation right but that's not an international fund that's not a building a fund that's going to the prosecutors bank account the prosecutors not a shareholder right well actually the prosecutors and the commissioners who purport to do a due to create this impartially were not really impartial and that's why we submitted to this court on september the th under rule twenty a j of the federals of appellate procedure supplemental authority from the th circuit this of th circuit found a structural fatal flaw to the method by which vaile in fines were extracted from defendants in those cases settled right and in this in this particular they were part of what program was prosecuting the law in artie's saddled and and mr mr swallow your client went through the administrative proceedings and i don't think that there's any doubt at the end that he ended up having to pay a bigger bigger fines and if there were there was more involved it's not unlike co defendants and i think if you probably hang around later we probably have some cases where there can be many co defendants some played out before trial some are cooperators and testify at trials or whatever and people get different i'm specifically addressing none prosecutorial functions determining who and under what terms mr swallow will sell his shares to that's not a prosecutorial function at most it's a bureau function and it was extortion furthermore the conspiracy involved allowing the lane artie's who are guilty of the same alleged misconduct here is mr swallow and the point of this was and i was going to get to this later both get to it now in response to your honor's question we learned in may of this year because the california auditor published a report that the bureau and the commission are currently enjoying a ninety million dollars surplus in a fund exclusively for their benefit that's why the cases particularly pertinent here furthermore speaking of non prosecutorial functions there is exhibit thirty it goes into a screw sheeting detail about the interference with mr parks attempt to buy mr swallow shares again this has nothing to do with a prosecutorial function at most it might be a bureau function at some point but it was no part of the accusation and couldn't have been addressed in the accusation it has nothing to do with prosecuting period furthermore on august the th two thousand and seventeen mr torrance in an e mail to mr swallow's attorney mr of a keeley saying under no circumstances will the bureau of the commission ever allow mr swallow to receive to force eric swallow to sell his shares for twenty nine million dollars which is about twenty percent of their actual fair market value and about half of the distress value with his extraordinary going on the forcing him to sell because of the impending accusation but this this staffed of the three million dollars is supposedly excused by the fact that mr swallow can't be paid the money because he doesn't have a license but an exhibit ten dollars mr thornton authorized payments for forty months after mr swallows license was gone at five hundred thousand dollars a month so that excuse is not only not valid it's fraudulent mistress mr horner knew perfectly well that there was no prohibition on those payments being whether you have an agreement from the deputy attorney general but you look at the events that have taken place after the revocation and see those couldn't possibly be prosecutorial functions and yet there's m pay for mr swallow shares that the we have to evaluate this case for cutting into your rebuttal time that i think we have to evaluate your case what was before the district court correct well the the the case say oh the statute that says we can only get twenty thousand dollars per violation that the actually the police provided the court with the decision on the writ which held that  construction of the bureau in the commission was absurd saying that they could collect almost fourteen million dollars when the maximum fine was only four hundred and thirty thousand dollars those matters the validity of the revocation whether due process was be taking five minutes of time and miss austin on behalf of mr torn ground will have the remaining five that we should save questions about mr tangram or your your co counsel yes that ok go ahead thank you very much this is a simple shareholder dispute regarding distributions and the actions of officers and directors of properly belongs in state court where in fact it's now pending before the santa clara superior court prosecution started out against your clients as well as mr solve the economic that is correct the accusation to get in may of two thousand and fourteen and it named mr swallow mr and mrs lin already as well as garden city the entity and my understanding is that if you just compare what mr swallow ended up what what ended up with him and what ended up with there it's quite  additional payments made to recoup the administrative costs that were borne by the bureau as part of the prosecution and that was a stipulation that was reached in negotiations with the bureau but as with all items reflecting licensure was ultimately within the province of the commission and had to be approved by the commission so any settlement that mr targaryen was involved in the settlement correct mr representing the state yes was the negotiating party on their behalf but any settlement has to alternately be approved by the commission that is correct because the settlement was following up on an accusation that was seeking to terminate the licensure of all of the parties that were accused mr swallow elin artes as well as garden cities own enterprise license and so for that to be settled including with the conditions that were imposed on the licens by statute that's exclusively the province of the commission  actually it appears that mr swallow went to another was prepared to sell the shares to another buyer and that didn't happen and exercise some first right of refusal or st right of whatever you call that it is undisputed that from two thousand and eight there was a contract between the an r t s and mr swallow that provided each of the shareholders a right of st refusal mr swallow entered into a contract with mr park that triggered that right of st refusal and he did that in april of two thousand and fifteen long before his administrative hearing even began long before there was any  belief or allegation on his part that there was some ongoing conspiracy entering into that contract with mr park then triggered the leonardi his rights under the buy sell agreement again from two thousand and eight far outside any conspiracy period and with that was for fifty five million excuse me was that for fifty five million is agreement with mr park was for fifty five million the buy sell agreement gave them the right to buy the shares for the same price that mr swallow completed both of those arbitrations were reduced to judgment they are no final and binding upon mr swallow he did not lose his shares as a result of any vast conspiracy he sold his shares pursu binding final judgment after a full and complete arbitration on the rights of the one artist to purchase so you have you're getting down to the last of your time is there thirty seconds you want to wrap up  thirty seconds quickly take up the tax issue since that's the one that's unique to the law and already so it is undisputed that garden city is a subchapter s corporation and as such it's a pass through entity whether or not mr swallow gets paid anything his tax obligations remain the same and that is undisputed in the law it's stated in the complaint and so all the artists have been doing all this garden city has been doing is reporting as a subchapter s company and in order for mr swallow to meet the obligations of particularized pleading under rule nine b he would have to do a lot more including explain why with the impact of the emergency order limiting payments to mr swallow that was binding on garden city how there could possibly be a willfully false filing by a subchapter s entity thank you thank you absolutely mr swallow has has asserted a number of conspiracy theories here that are all cloaked and in hyper boil and when you look at the actual allegations there are very few facts to them specifically i would address five issues that were raised by mr swallow as outside the scope of which were meeting with with potential witnesses namely deborah swallow and mr roberts who was mr swallow's former i t individual those types of and did he know either of the parties before this started did he does he have any financial interest other than that the state does have a fund where people where they have to new deputy to the attorney general's office prosecuting these actions so that that that there is there are no facts to support any assertion that there  counsel and mr swallow's counsel regarding both before during and after mandatory settlement agreement so all of the communications with regard to what would happen with the property with the shares took place in the context of settlement discussions and that was not a decision that that  decided at the settlement it would seem to me that because the grade to a certain amount that they did not go forward to the same hearing mr swallow one or two is that correct correct so that ended essential y there that resolved the prosecutor essentially said ok if you are willing to pay x y and s and do and you can't then i'll recommend that you keep your license or whatever but it ultimately has to be approved they could have done the same thing as mr follows and said hey we just want to go to a hearing we want to roll the dice and we want to find out and and then ultimately what the commissioner makes the final decision they're correct absolutely but he would be the prosecutor in those proceedings absolutely yes so he would if i mean he was the prosecutor in that in the initial so he was prosecuting the martys as well exactly and but they elected to settle whereas mr specious allegations that have been brought against deputy chairman who is a government attorney simply prosecuting an action that is allowed for by statute is the exact reason why absolute immunity needs to exist all this settlement that we're talking about allowed the lunardi is to keep their license mr swallow tried to keep his license but was told by mr turner no no you're going to have to give up your license and sell your shares don't think you can talk about a disproportionate here this is not a disproportion this is different from a firecracker in a nuclear weapon these folks over here agreed to throw mr swallow under the bus to help the commission collect fifteen million dollars when the maximum amount they could have collected was several one hundred thousand dollars they collected about thirty times the maximum and did what a superior court judge called absurdly construe a statute by saying that fines that are limited to twenty thousand dollars are limited but penalties are unlimited even though that flies in the face of the statute is absurd but the llyn artie's agreed to because they were in a position not only to keep their license but repay seventy five million dollars windfall while the commission and the bureau reaped a fifteen million dollars windfall all at mr solace expense and counsel talked about this park purchase so the leonardo's had come up with the forty two million dollars that they were trying to borrow but they couldn't do that ultimately they ran out of time they tried to force mr swallow to pledge his real estate so they could get a loan and on may the and seventeen the arbitrator said no mistress follows him to pledge his real estate so that can buy his shares as a result some people named tierney had come into the situation and they ended up buying sixty percent of mr because of this thirty million dollars and council said oh this can be resolved in state court no it can't section seven thousand four hundred and thirty four is title twenty six dollars and the tax questions can only be resolved in a federal court so th