Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_04-cv-02093/USCOURTS-casd-3_04-cv-02093-4/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 7:6(b) Federal Commodity Exchange Regulation

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1 04cv2093 J (NLS)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

COMMODITY FUTURES TRADING

COMMISSION,

Plaintiff,

v.

WHITE PINE TRUST CORPORATION,

a California corporation; RICHARD

MATTHEWS, an individual; and

STEPHAN BAERE, an individual,

Defendants,

LUCIA MATTHEWS, an individual,

Relief Defendant.

 

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Civil No. 04cv2093 J (NLS)

ORDER DENYING DEFENDANT’S

MOTION TO REMOVE

RECEIVERSHIP [Doc. No. 194.]

Before the Court is Defendant Stephan Baere’s (“Defendant”) Motion to Remove

Receivership as to Defendant Baere. [Doc. No. 194.] Plaintiff has filed an Opposition to the

Motion for Summary Judgment (“Opposition”), and Defendant has filed a Reply to the

Opposition (“Reply”). [Doc. Nos. 203, 205.] The Court has determined that the issues

presented herein are appropriate for decision without oral argument. See S.D. Cal. Civ. R.

7.1(d)(1). For the reasons discussed herein, the Court DENIES Defendant’s Motion to Remove

Receivership.

Case 3:04-cv-02093-J-NLS Document 238 Filed 04/13/07 Page 1 of 4
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1

 While Plaintiff has failed to provide the Court with the deposition transcript to which it

cites, Defendant does not rebut that such a statement was made or that the house still constitutes

a recoverable asset. 

2 04cv2093 J (NLS)

Discussion

Defendant argues that “after twenty months, over a million dollars in Receiver fees,

depositions of both Mr. and Mrs. Baere, a physical inspection of the Baere residence, [sic] a

freeze on all Baere assets and accounts and exhaustive investigation, the fact is that Baere has

and had no ‘assets,’ obtained lawfully or unlawfully from White Pine Trust and/or Richard

Matthews, other than those fully and voluntarily disclosed in connection with the hearing on

Preliminary Injunction.” (Def.’s Mem. Supp. Mot. at 2.) Plaintiff argues that “the purpose of

the receivership has not concluded, and that Baere’s perceived ‘intrusion’ by the Receiver is

outweighed [by] the need to maintain the status quo until the litigation is concluded.” (Pl.’s

Opp’n at 1.) For the reasons discussed below, the Court DENIES Plaintiff’s Motion to Remove

Receivership as to Defendant Baere. 

As an initial matter, the purpose and rationale for maintaining the Receivership have not

ceased. The Court has entered summary judgment against Defendant Baere for fraud, and as a

consequence, ordered relief in the form of restitution and disgorgement, as well as civil

monetary penalties. (See Order Granting Mot. for Summ. J. Against Def. Baere.) Additionally,

Plaintiff claims that Defendant Baere “testified that his residence currently has a $553,000

mortgage, but ‘was appraised at $790,000.’ ”1

 (Pl.’s Opp’n at 2.) Pursuant to the Preliminary

Injunction Order in which the Receiver was appointed, the Receiver is charged with

“[p]reserv[ing], hold[ing] and manag[ing] all receivership assets, and perform[ing] all acts

necessary to preserve the value of those assets, in order to prevent any loss, damage or injury to

customers or clients, and “prevent[ing] the withdrawal or misapplication of funds entrusted to

the defendants, and otherwise protect[ing] the interests of customers or clients.” (Nov. 2, 2004,

Order of Prelim. Inj. at 6.) Accordingly, the Court FINDS that termination of the Receivership

at this juncture would be inappropriate. 

Defendant also argues that the Receivership has been a substantial burden and that such

an “intrusive measure” is no longer necessary. Defendant states that the “reporting

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3 04cv2093 J (NLS)

requirements, permission necessity, depositions, [sic] inspections all have added to the difficulty

experienced by an out of work household . . . .” (Def.’s Mem. Supp. Mot. at 2.) Defendant also

states that in addition to his reporting requirements, “the assembly, transmission, permission

[sic] requesting and continuing scrutiny occasioned by this unnecessary and unwarranted

receivership, [sic] it takes time from his young family, [sic] more uncompensated attorney time

and work and more explaining in the community.” (Def.’s Reply at 4.) While Defendant lists

numerous actions that seem at least typical of a receivership, Defendant fails to state with any

specificity the reasons why the Receivership has become such an intrusion. For example, the

declaration of Defendant’s attorney states that the “Receivership and the attendant damage to his

ability to obtain employment and the time spent complying with the constraints of the

Receivership order are burdensome . . . .” (Sept. 18, 2006, Metzger Decl. at 2.) However,

Defendant fails to show how or in what specific way the Receivership has damaged his ability to

obtain employment. Accordingly, the Court FINDS that Defendant has not shown that the

Receivership has become so intrusive as to warrant termination. 

Defendant also makes the serious allegation that Plaintiff has a “calculated intent to

deprive Baere of the means to defend himself.” (Def.’s Reply at 2.) Defendant cites to an e-mail

allegedly sent from CFTC Attorney James Holl to Kenton Johnson, an employee of the

Receiver, which states “I’m fine with the granting of living expenses, but not attorney’s fees.” 

Def.’s Reply, Ex. 1-1.) However, Defendant does not state that such deprivation of attorney’s

fees actually occurred. In fact, in a reply to the above email, Linda Chandler, another Receiver

employee, states that “Kent is going to give you a call about the attorney’s fees. I don’t think

Baere is requesting any right now.” (See id.) The Court considers allegations of interference

with the attorney client relationship of the opposing party as extremely serious. However,

Defendant has not shown that he has been unable to pay for legal representation or that he has

applied for and been denied funds for the payment of attorney’s fees. The Court, thus, DENIES

Defendant’s Motion to remove the receivership on the basis of interference with Defendant’s

ability to secure legal representation. 

//

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4 04cv2093 J (NLS)

Conclusion

For the reasons set forth above, the Court DENIES WITHOUT PREJUDICE

Defendant’s Motion to Remove Receivership.

IT IS SO ORDERED.

DATED: April 13, 2007

HON. NAPOLEON A. JONES, JR.

United States District Judge

cc: Magistrate Judge Stormes

 All Counsel of Record

Case 3:04-cv-02093-J-NLS Document 238 Filed 04/13/07 Page 4 of 4