[DO NO T PUBLISH]

IN THE UN ITED STATES COURT OF APPEALS
FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __ No. 1 1- 14 90 8 Non -Arg um en t Ca le nd ar

__ __ __ __ __ __ __ __ __ __ __ __ D.C. Dock et No. 1 :0 2- cv -0 29 84 -ODE
SECURITIES & EXCHANGE COMM ISSI ON,
Pl ai nt iff -Ap pe ll ee,

ve rs us MERC HANT CAPITAL, L LC, et a l.,
Defen da nt s, STEVEN C. W YER, KURT V. BEASLEY , Defen da nt s- App el la nt s.

__ __ __ __ __ __ __ __ __ __ __ __ __ _ App eal fro m

th e Uni te d S ta te s Di st ric t Co ur t fo r th e Nor th ern Dis tri ct of Ge or gi a

__ __ __ __ __ __ __ __ __ __ __ __ __ __ (Au gu st 7, 2 01 2)
Befo re TJ OFLAT, JORDAN and KRAVITCH, Cir cu it Ju dg es
.

Case: 11-14908 Date Filed: 08/07/2012 Page: 1 of 9PER CURI AM:

Thi s cas e – a ci vi l en fo rcem en t a c t i o n br ou gh t by t he SEC ag ai ns t Mer ch an t Cap it al , LLC, St ev en W y er, an d Kur t Bea sl ey – is m ak in g it s fo ur th ap pe aran ce be fo re us
. Se e S.E.C. v. Mer ch an t Ca pi ta l LLC , 39 7 F.App ’x 59 3 (1 1t h Ci r. 20 10 ) (“ Mer ch an t III

”); S.E.C. v. Mer ch an t Ca

pi ta l, LLC , 31 1 F.App ’x 25 0 (1 1t h Ci r. 20 09 ) (“ Mer ch an t II

”); S.E.C. v. Mer ch an t Ca pi ta l, LLC , 40 0 F.Su pp .2d 13 36 , (N. D

. Ga.
20 05 ), re v’d in pa rt

, va ca te d i n p ar t, a nd

rema nd ed , 48 3 F .3d 74 7 (1 1t h C ir. 20 07 ) (“ Mer ch an t I

”).
In th is ap pe al , th e ap pe ll an ts ch al le ng e th e di st ric t co ur t’s or de r req ui rin g th em
to pa y di sg or ge m en t p lu s p reju dg m en t i nt eres t. Fin di ng no erro r, we affi rm
. 1
I
Bec au se ou r pr io r op in io ns se t ou t th e fact s an d pr oc ed ur al hi st or y in de ta il , we
pr ov id e on ly a b rie f su m

m ary. The SEC su ed th e de fen da nt s, al le gi ng vi ol at io ns of
th e reg is tra ti on an d an ti -fra ud pr ov is io ns of th e fed eral se cu rit ie s la ws. In Mer ch an t
I , whi ch was an ap pe al fo ll owi ng a be nc h tri al , we de te rm in ed th at th e RLLP in te res ts

I n the amende d notice of app ea l , M r. Wy er signe d as the authorized repr esenta tive of 1 Merc hant Capital. I t is well established, howeve r, that a business org anization cannot appea r pro se and must be repr esente d by counsel, not mere ly by a stockholder or office r. See Palazzo v. Gulf Oil Corp. , 764 F.2d 1381, 1385 (11th Cir. 1985). Be cause Mr. Wy er i s n o t an attorney , but mere ly a stockholder and office r of Merc hant Capital, a proper notice of appea l was never filed by Merc hant Capital. See id

. There fore , we do not have jurisdiction with respe ct to Merc hant Capital beca use “the timely filing of a notice of appea l in a civil case is a jurisdictional require ment.” Bowles v. Russell , 551 U.S. 205, 214 (2007).
2

Case: 11-14908 Date Filed: 08/07/2012 Page: 2 of 9were in ve st m en t co nt ract s su bjec t to th e fed eral se cu rit ie s la ws, whi ch th e de fen da nt s

vi ol at ed

. Se e Mer ch an t I , 48 3 F.3 d at 76 6. In Mer ch an t II , we he ld th at t h e d i s tri ct

co ur t erre d in fin di ng th at th e de fen da nt s di d no t act wit h sc ie nt er an d wer e no t

ne gl ig en t, an d in st ru ct ed th e di st ric t co ur t to or de r ap pr op ria te di sg or ge m en t fo r vi ol at i o n s of th e an ti -fra ud pr ov is io ns
. Se e Mer ch an t II , 31 1 F.App ’x at 25 2. In
Mer ch an t III

, we rev ers ed th e di st ric t co ur t’ s or de r of no di sg or ge m en t, an d rem an de d
th e cas e fo r fu rth er pr oc eed in gs be fo re a di ffer en t jud ge to de te rm in e th e am ou nt of
di sg or ge m en t. Se e Mer ch an t II I , 39 7 F .App ’x at 5 95 -9 6.
On rem an d, th e di st ric t cou rt hel d a st at us co nf eren ce rega rd in g th e m at te r of
di sg or ge m en t, an d di rect ed b o t h s i d es to fil e pr op os ed fin di ng s of fact an d

co nc lu si on s of la w. Afte r co ns id eri ng th e pa rti es ’ s u b miss io ns an d ad op ti ng th e 2
SEC’s pr op os ed fin di ng s of fact an d co nc lu si on s of la w, th e d i s t ric t co ur t or de red
Mer ch an t Cap it al to di sg or ge $5 ,22 7,2 73 pl us pr ejud gm en t in te res t in th e am ou nt of $3 ,00 4,6 73 , f

or a to ta l of $8 ,23 1,9 46 ; or de red Mr. Wy er t o d is go rg e $ 73 9,6 41 pl us
p r e ju d g men t in te res t in th e am ou nt of $4 25 ,15 1, fo r a to ta l of $1 ,16 4,7 92 ; a n d

or de red Mr. Bea sl ey to di sg or ge $2 68 ,00 0 pl us pr ejud gm en t in t e r e s t in th e am ou nt of $1 54 ,04 8, fo r a t ot al of $ 42 2,0 48

. 3

As noted ea

rlier, ther e had pr eviously been a bench tr ial. 2 The appellants proposed signi f ic a n tl y lo w e r d is g o r g e me n t a

mo u n ts of $25,000 for Merc hant 3 Capital, $3,000 for Mr. Wy er, and $1,000 for Mr. Be asley , which amounted to half of the previously 3 Case: 11-14908 Date Filed: 08/07/2012 Page: 3 of 9II

W e rev ie w a di st ric t co ur t’s de te rm in at io n co n c e r n i ng th e am ou nt of
di sg or ge m en t fo r ab us e of di sc ret io n. Se e S

. E. C. v. W ar re n , 53 4 F.3 d 13 68 , 13 69 (1 1t h Ci r. 20 08 ). W e al so re v i e w a d is tri ct co ur t’s de ci si on to award pr ejud gm en t
in te res t fo r ab us e of di sc ret io n. Se e W er ne r Ent er

s., In c. v. W

es tw in d Mar it ime In t’l

, In c. , 55 4 F.3 d 13 19 , 13 28 (1 1t h Ci r. 20 09 ). The ab us e of di sc ret io n st an da rd gi ve s a di st ric t co ur t a ran ge of ch oi ce, so lo ng as th at ch oi ce do es no t co ns ti tu te a cl ear erro r of jud gm en t. Se e, e.g
. , Uni te d St at es v. Lo pe z , 64 9 F.3 d 12 22 , 12 36 (1 1t h Ci r. 20 11 ).
II I
The ap pe ll an ts arg ue th at th e di st ri c t c o u r t ab us ed it s di sc ret io n in or de rin g th em to di sg or ge th e am ou nt s st at ed ab ov e an d in or de rin g th em to pa y pr ejud gm en t
in te res t. We di sa gr ee, an d a ffi rm
. A
To th e ex te nt th at th e ap pe ll an ts arg ue th at th e di sg or ge m en t am ou nt s or de red
b y th e di st ric t co ur t are in co ns is te nt ba se d on th e la w o f th e cas e do ct rin e, t h e y a r e in co rrec t. The am ou nt of th e ap pe ll an ts ’ il l-g ot te n ga in s was ne ve r de ci de d, ex pl ic it ly

or by n eces sa ry im

pl ic at io n, in an y of th e pr io r ap pe al s in th is cas e. Se e S ch ia vo ex

re l. Sc hi nd le r v. Sc hi av o , 40 3 F.3 d 12 89 , 12 91 (1 1t h Ci r. 20 05 ) (“ The [ la w-o f-t he

order ed civil pena lties.
4

Case: 11-14908 Date Filed: 08/07/2012 Page: 4 of 9cas e do ct rin e] op erat es to pr ecl ud e co ur ts fro m rev is it in g is su es t h a t w e r e de ci de d

ex pl ic it ly or by ne ces sa ry im pl ic at io n in a pr io r ap pe al .”). In de ed , in Mer ch an t II we in st ru ct ed th e di st ric t co ur t to de te rm in e th e ap pr op ria te di sg or ge m en t fo r vi ol at io ns of th e an ti -fra ud pr ov is io ns
. Se e Mer ch an t II , 31 1 F.App ’x at 25 2. And in Mer ch an t
III , th ou gh we rev ers ed th e d i s t r i ct co ur t’s de ci si on to or de r no di sg or ge m en t, we

ex pr es se d no vi ew on th e co r r e c t a mo u nt of di sg or ge m en t. Se e Mer ch an t III , 39 7 F.App ’x at 5 96

. It is tru e th at in Mer ch an t III we ex pl ic it ly affi rm ed th e di st ric t co ur t’s de ci si on

as to th e ci vi l mo n e t a r y pe na lt ie s. Se e id

. at 59 5. Bu t ha d we de ci de d th at th e ci vi l

m on et ary pe na lt ie s or de red by th e di st ric t were an ap pr op ria te pr ox y fo r th e am ou nt of th e de fen da nt s’ il l-g ot te n ga in s, we wou ld no t h a ve rev ers ed an d rem an de d th e

m at te r to th e di st ric t co ur t fo r a pr op er de te rm in at io n of di sg or ge m en t. Se e id

. at 59 5-
96

. In de ed , di sg or ge m en t an d ci vi l pe na lt ie s de al wit h di ffer en t co nc ern s. Se e S.E.C.

v. Bro wn , 65 8 F.3d 85 8, 86 1 (8t h Cir. 20 11 ) (rec og ni zi ng th at Co ng res s ad de d ci vi l
pe na lt ie s in 19 90 be cau se di sg or ge m en t – by on ly req ui rin g th e ret ur n of wro ng fu ll y ob ta in ed fu nd s – di d no t res ul t in an y act ua l eco no m ic pe na lt y or fin an ci al
di si nc en ti ve to en ga ge in se cu rit ie s frau d) ; W ar re n , 53 4 F.3 d at 13 69 -7 0 (aff irming
di st ric t co ur t’s or de r req ui rin g di sg or ge m en t of $6 .4 m il li on an d c i v i l p en al ty of $7 5,0 00 ).

5

Case: 11-14908 Date Filed: 08/07/2012 Page: 5 of 9B

The ap pe ll an ts al so arg ue th at th ei r res pe ct iv e am ou nt s of di sg or ge m en t were

no t reas on ab le ap pr ox im at io ns of th ei r un jus t en ric hm en t. The y sa y th at th e am ou nt s

or de red d is go rg ed are ap pr ox im at io ns of th e sa la rie s th ey rece iv ed fro m Mer ch an t Cap it al , and do no t t ak e in to acco un t t he am ou nt of i nc om e ta xe s pa id , t he fact th at th e sa la rie s were co m

m en su rat e wit h th ei r le ve ls of ex pe rie nc e an d so ph is ti cat io n, or th e co m pl ex it y of Mer ch an t Cap it al ’s bu si ne ss
. The y al so co nt en d th at , be cau se th ei r

sa la rie s wer e m od es t an d re as on ab le , th ey were l eg it im at el y

earn ed

.

“ Th e SEC is en ti tl ed to di sg or ge m en t up on pr od uc in g a reas on ab le
ap p r o x i mati on of a de fen da nt ’s il l-g ot te n ga in s.” S.E.C. v. Ca lv o , 37 8 F.3 d 12 11 , 12 17 (1 1t h Ci r
. 2 0 04 ) (ci ta ti on s om it te d)

. Onc e th e SEC pr od uc es a reas on ab le
ap pr ox im at io n th e b u r d e n sh ift s to th e de fen da nt s to de m on st rat e th at th e SEC’s

es ti m at e is no t a reas on ab le on e. Se e id

. Si gn ifi can tl y , ex act it ud e is no t req ui red

. Se e id

. As lo ng a s t h e S EC ’s es ti m at e is reas on ab le , an y ris k of erro r fal ls on th e

wro ng do er wh os e il le ga l co nd uc t cr eat ed th e u nc ert ai nt y
. Se e id

. W e reject th e arg um en t th at th e di st ric t co ur t was req ui red to ta ke in to acco un t th e am ou nt of in co m e ta xe s pa id

. Se e Don ne ll v. Ko wel l , 53 3 F.3 d 76 2, 77 9 (9 th Ci r. 20 08 ) (d ecl in in g to al lo w go o d fai th in ve st or s in a Po nz i sc he m e to of fs et

6 Case: 11-14908 Date Filed: 08/07/2012 Page: 6 of 9di sg or ge m en t by am ou nt s pa id in fed eral in co m e ta xe s)

. Se e al so Bro wn , 65 8 F.3 d at
86 1 (“ th e ov erwh el m in g weig ht of au th or it y ho ld s t ha t s ecu rit ie s l aw vi ol at or s m ay

no t of fs et th ei r di sg or ge m en t li ab il it y wit h bu si ne ss ex pe ns es ”) (ci ta ti on an d in te rn al
qu ot at io n m ark s om it te d) ; W ar re n , 53 4 F.3 d a t 13 70 n.2 (“ A co nt rary ru le [p ro hi bi ti ng di sg or ge m en t l i a b i li ty in ex ces s of th e vi ol at or ’s ab il it y to pa y ] wou ld
al lo w co n art is ts to es cap e li ab il it y by sp en di ng th ei r i l l

- go tt en ga in s— an ab su rd

res ul t.”) . I ns of

ar as th e ap pe ll an ts arg ue th at th ei r sa la rie s were le gi ti m at el y earn ed
be cau se th ey were co m

m en su rat e wit h th ei r le ve l of ex pe rie nc e an d so p h i st ic at io n,

we are no t pe rs ua de d by th e arg um en t. W e kn ow of no au th or it y , an d th e ap pe ll an ts ci te no ne , whi ch ho ld s th at sa la rie s rece iv ed , if m od es t an d/ or reas on ab le , can no t be

co ns id ered il l-g ot te n ga in s. The pu rp os e of di sg or ge m en t is to de pr iv e th e wro ng do er of hi s il l-g ot te n ga in , se e S.E.C. v. Bla tt , 58 3 F.2 d 13 25 , 13 35 (5 th Ci r. 19 78 ), an d
th ere is no reas on why sa la rie s earn ed c a n n ot be us ed to de te rm in e di sg or ge m en t.
Here it is un di sp ut ed th at th e am ou nt of di sg or ge m en t or de r e d b y t he di st ric t co ur t

was a reas on ab le ap pr ox im at io n of th e sa la rie s rece iv ed by Mes sr s. W y er an d Bea sl ey fro m Mer ch an t Cap it al

. W e fin d no ab u s e o f di sc ret io n in th e di st ric t co ur t’s 4

I n their proposed finding s of fac t and co n cl u s i ons of law Messrs. Wy er and Be asley 4 confirme d that they wer e compensa ted a total of $900,000 and $268,000 respe ctively

. Wit h respe ct to Mr. Wy er, the district court ordered a lesser amount of $739,641 in disgor g ement based on a cler ical er ror in the SEC’s proposed f indings.
7 Case: 11-14908 Date Filed: 08/07/2012 Page: 7 of 9de te rm in at io n th at th e sa la rie s ob ta in ed by Mes sr s. Wy er an d B eas le y were d eri ve d
fro m th e fees ch arg ed to th e RLLPs an d wer e su bjec t t o di sg or ge m en t beca us e th ey

co ns ti tu te d il l-g ot te n ga in s res ul ti ng fro m th e ap pe ll an ts ’ vi ol at io ns of th e an ti -fra ud
pr ov is io ns
. C
Fi na ll y , th e ap pe ll an ts arg ue t h a t t he di st ric t co ur t ab us ed it s di sc ret io n in

or de rin g th em to pa y pr ejud gm en t in te res t on th e di sg or ge m en t am ou nt s. The y as se rt th at th e di st ric t co ur t of

fere d no su pp or t fo r it s award of pr ejud gm en t in te res t an d th at it wou ld be un fai r to ha ve th em pa y su ch in te res t on fu nd s earn ed al m os t a de cad e ag o wit h th e in te nt to op erat e th e pa rtn er s h i p s as vi ab le bu si ne ss es
. The di st ric t co ur t, ho wev er, di d no t ab us e it s di sc ret io n. W it ho ut pr ejud gm en t in te res t, t h e ap pe ll an ts

wou ld ha ve be ne fit te d fro m wha t in effe ct am ou nt ed to in te res t-f ree lo an s of th e il lgo tt en fu nd s. Se e S.E.C. v. Fir st Jer se y Se c., In c. , 10 1 F.3 d 14 50 , 14 76 (2 d Ci r. 19 96 ) (fi nd in g no ab us e of di sc ret io n in di st ric t co ur t’s or de r of pr ejud gm en t in te res t whe re de fen da nt s ha d us e of th ei r un la wfu l pr of it s fro m th e ti m e of th e th ei r un la wfu l ga in s
to th e en try of jud gm en t). Se e al so W il li am A. Gra ha m Co

. v. Hau gh ey , 64 6 F.3 d 13 8,
14 5 (3 d Ci r. 20 11 ) (“ Req ui rin g on ly th a t a lo si ng de fen da nt pa y ba ck th e pr in ci pa l

am ou nt of a wro ng fu ll y ob ta in ed su m pe rm it s h im

to ret ai n t he m on ey ’s ti m e v al ue

as a win df

al l i n t he for m

of a n i nt eres t-f

ree l oa n.” ).

8 Case: 11-14908 Date Filed: 08/07/2012 Page: 8 of 9IV

The di st ric t co ur t’s d is go rg em en t o rd er i s af fir m ed

. A F F I R M E D .

9 Case: 11-14908 Date Filed: 08/07/2012 Page: 9 of 9