NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff-Appellee, 

 v. 

CHARLES C. LIU, XIN WANG a/k/a LISA 

WANG, 

Defendants-Appellants,

and 

PACIFIC PROTON THERAPY 

REGIONAL CENTER LLC; et al.,

Defendants.

No. 20-56374

D.C. No. 

8:16-cv-00974-CJC-AGR

MEMORANDUM*

Appeal from the United States District Court

for the Central District of California

Cormac J. Carney, District Judge, Presiding

Submitted March 10, 2021**

Pasadena, California

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

** The panel unanimously concludes this case is suitable for decision 

without oral argument. See Fed. R. App. P. 34(a)(2).

FILED

MAR 12 2021

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2 

Before: WATFORD and OWENS, Circuit Judges, and PRESNELL,*** District 

Judge.

Charles Liu and Xin Wang (together, “Appellants”) appeal the district 

court’s entry of an asset freeze preliminary injunction. We have jurisdiction under 

28 U.S.C. § 1292(a)(1) and affirm the district court’s decision.

This case involves a violation of Section 17(a)(2) of the Securities Act of 

1933. Appellants raised approximately $27 million from Chinese investors to fund 

the construction of a California cancer treatment center. Early in the case, the 

district court entered a preliminary injunction that froze Appellants’ assets pending 

final disposition. The district court later entered summary judgment for the SEC 

and found that Appellants misappropriated most of the money they raised. It 

ordered Appellants to disgorge the entire amount raised from investors less the 

amount remaining in the corporate accounts. Appellants appealed that decision—

first to this court, which affirmed the judgment, and then to the Supreme Court. 

The Supreme Court vacated the district court’s judgment, held that any 

disgorgement award must not exceed a wrongdoer’s net profits, and remanded the 

case to this court. See Liu v. SEC, 140 S. Ct. 1936, 1940 (2020). We then remanded 

*** The Honorable Gregory A. Presnell, United States District Judge for 

the Middle District of Florida, sitting by designation.
3 

the case to the district court for proceedings consistent with the Supreme Court’s 

opinion.

After remand, the district court continued the preliminary injunction that 

froze all of Appellants’ assets pending its decision on the proper amount of net 

profits to disgorge and the extent of joint and several liability. Appellants now 

challenge that renewed asset freeze.

We review a district court’s grant of a preliminary injunction for abuse of 

discretion. Does 1-5 v. Chandler, 83 F.3d 1150, 1152 (9th Cir. 1996). We must 

uphold a trial court’s decision to grant a preliminary injunction “unless the court 

incorrectly applied the law, relied on clearly erroneous factual findings, or 

otherwise abused its discretion.” Id. (citation omitted). To freeze a party’s assets, 

the requesting party must establish the normal preliminary injunction elements: “1) 

irreparable injury, 2) probable success on the merits, 3) a balance of hardships that 

tips in the movant's favor, and 4) that a preliminary injunction is in the public 

interest.” F.T.C. v. Evans Prod. Co., 775 F.2d 1084, 1088 (9th Cir. 1985) (citation 

omitted).1

1 Appellants challenge only the second prong—likelihood of success on the merits. 

The other prongs are clearly met under the circumstances of this case. Indeed, 

Appellants do not contest the district court’s finding that if the freeze did not exist, 

they would expatriate their assets.
4 

Appellants argue that the district court abused its discretion in granting the 

injunction because the SEC did not show a likelihood of success in proving that net 

profits exist. But the district court was not required to make that finding.2 To obtain 

a preliminary injunction, a party must show “probable success on the merits” of the 

case, not its entitlement to a specific remedy.

3

Id. Here, the district court correctly

found that the SEC is likely to prevail on the merits because liability had already 

been established as law of the case. Neither the Supreme Court nor this court 

disturbed the district court’s finding that Appellants committed securities fraud. 

That is sufficient. 

Appellants also contend that the district court should have calculated an 

amount of net profits disgorgement before entering the asset freeze. But asset 

2 Appellants similarly argue that the district court erred in not finding that the SEC 

is likely to prove that Appellants should be held jointly-and-severally liable for any 

net profits. Like with net profits, the district court was not required to make this 

granular finding of fact in order to issue the injunction. 

3

In their reply brief, Appellants claim that the SEC advocates for a standard that 

would require only “the mere ‘possibility’ that funds will be needed to satisfy any 

equitable remedies ordered” to obtain injunctive relief, which according to 

Appellants contradicts Supreme Court case law. See Winter v. Nat. Res. Def. 

Council, 555 U.S. 7, 20 (2008). But Winter required a showing that “irreparable 

injury is likely in the absence of an injunction.” Johnson v. Couturier, 572 F.3d 

1067, 1081 (9th Cir. 2009) (emphasis added). It says nothing about likelihood of 

success on the merits. Winter, 555 U.S. at 24 (declining to address “the lower 

courts’ holding that plaintiffs have also established a likelihood of success on the 

merits”).
5 

freezes “prevent a defendant from dissipating assets in order to preserve the 

possibility of equitable remedies.” Republic of the Philippines v. Marcos, 862 F.2d 

1355, 1364 (9th Cir. 1988) (emphasis added). To require a party to show a 

reasonable likelihood of the amount of an equitable remedy to obtain an asset 

freeze would require showing a definitive entitlement to an equitable remedy and 

would run contrary to Marcos.

4 Any finding of an amount of equitable relief would 

be premature at this stage of the proceedings.

Appellants also argue that the district court lacked power to grant this

preliminary injunction to secure a penalty. Generally, a district court lacks 

authority “to issue a preliminary injunction preventing the defendant from 

transferring assets in which no lien or equitable interest is claimed.” Grupo 

Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 310, 333

(1999). However, that rule applies only to cases seeking exclusively legal damages. 

Johnson, 572 F.3d at 1083-84; see also In re Focus Media, Inc., 387 F.3d 1077, 

1084–85 (9th Cir. 2004). Here, the SEC seeks a disgorgement award, which is an 

equitable remedy, not a penalty. Liu, 140 S. Ct. at 1946 (rejecting proposition that 

“disgorgement is necessarily a penalty”). Although the SEC also seeks a monetary 

4 Regardless, there is clearly sufficient evidence in the record to establish the 

possibility that Appellants “earned” a substantial net profit from their fraudulent 

conduct.
6 

penalty alongside disgorgement, that request does not strip the district court of its 

ability to enter an asset freeze pending final judgment. The district court’s brief 

discussion of both civil penalties and disgorgement in its order continuing the 

freeze does not change this conclusion. If necessary, the district court can decide, 

in the first instance, whether any frozen assets that remain after satisfying a 

disgorgement judgment can be used to satisfy any monetary penalty. 

Finally, Appellants challenge the scope of the injunction. They claim that the 

injunction is overbroad because it freezes all their assets, not just the net profits 

that Appellants obtained. While “[a]n overbroad injunction is an abuse of 

discretion,” Boardman v. Pacific Seafood Grp., 822 F.3d 1011, 1024 (9th Cir. 

2016) (citation omitted), we see no basis in the record to alter the scope of the asset 

freeze. District courts enjoy “broad latitude” when determining the scope of an 

injunction. High Sierra Hikers Ass'n v. Blackwell, 390 F.3d 630, 641 (9th Cir.

2004) (citation omitted). Here, the district court did not breach that broad latitude, 

given Appellants’ history of expatriating assets and their refusal to provide an 

accounting—or any other information—that would enable the district court to 

tailor a narrower freeze. And, as is the case with their second argument, adopting 

Appellants’ position would require the district court to calculate an amount of 

disgorgement now, prior to any final judgment. Without that finding, it would be 

impossible to tailor this injunction solely to those assets that are net profits from 
7 

the use of investor funds, as Appellants request. But injunctions are merely “a 

device for preserving the status quo and preventing the irreparable loss of rights 

before judgment.” Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 

1422 (9th Cir. 1984). Nothing in our caselaw required the district court to make a 

finding as to the amount of equitable remedies prior to final judgment.

AFFIRMED.