Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-00665/USCOURTS-caed-2_09-cv-00665-118/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff, 

v. 

ANTHONY VASSALLO, KENNETH 

KENITZER, and EQUITY 

INVESTMENT MANAGEMENT AND 

TRAINING, INC., 

Defendants. 

No. CIV. S-09-0665 LKK/DAD 

ORDER 

This matter came on for argument today on the Receiver’s unopposed motion for an order of disgorgement against defendant 

Anthony Vassallo. This court will not issue an order that is 

outside of its authority, even if the motion seeking the order is 

un-opposed, and even if the order appears to the Receiver to be 

necessary to bring Vassallo to full justice. Accordingly, the 

Receiver shall, within fourteen (14) days of the date of this 

order, file a brief not to exceed twenty (20) pages, addressing 

Case 2:09-cv-00665-JAM-KJN Document 485 Filed 11/06/13 Page 1 of 3
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the following issues:1

1. Would a disgorgement order against Vassallo in this 

civil securities fraud case conflict with the restitution order 

issued in the criminal case against him for mail and wire fraud 

and money laundering? 

2. Can the receiver use the court’s summary procedure to 

seek disgorgement against Vassallo on the grounds that he 

violated the federal securities laws, notwithstanding SEC v. 

Ross: 

In sum, given that the Receiver alleged that 

Bustos himself had violated the securities 

laws ... the Receiver could not style Bustos as 

a nominal defendant or employ summary 

proceedings against him. 

504 F.3d 1130, 1144 (9th Cir. 2007) (emphasis added). The court 

notes that in all of the Receiver’s prior requests for 

disgorgement, the allegations were solely that the recipient of 

the funds had received assets of defendant Equity Investment 

Management and Trading, Inc. (“EIMT”), and had no legitimate 

claim to them. The court further notes that while counsel at 

oral argument asserted that the government concurs in the motion, 

there is nothing in the motion papers asserting this, or 

explaining why the Securities and Exchange Commission has not 

sought, or at least joined in this motion for, disgorgement. 

3. What evidence is now before the court showing that the 

$43 million sought to be disgorged are assets of EIMT to which 

Vassallo has no legitimate claim, rather than being assets of the 

 

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 If the Securities and Exchange Commission or Vassallo wish to 

submit briefs on these issues, they may do so, with the same 

constraints, without seeking leave of this court. 

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defrauded investors? The court notes that the order appointing 

the Receiver authorizes him to marshal the assets of EIMT, not to 

directly marshal the assets of defrauded investors. 

4. How does the collateral estoppel discussed in Richey v. 

IRS, 9 F.3d 1407 (9th Cir. 1997), apply here, where this civil 

case involves fraud in the offer and sale of “securities” and 

fraud by an “investment adviser” (each of which is an essential 

element of its respective claim), and the criminal case involves 

mail and wire fraud, and money laundering? The court notes that 

the criminal indictment does not appear to allege that Vassallo 

was engaged in the fraudulent offer or sale of securities, or 

that he was an investment adviser, nor does Vassallo’s conviction 

include those elements. 

IT IS SO ORDERED. 

DATED: November 4, 2013. 

Case 2:09-cv-00665-JAM-KJN Document 485 Filed 11/06/13 Page 3 of 3