FI L ED U.S. COURT OF APPEAL S EL EVENTH CI RCUI T APR 9, 2010 J OHN L EY CL ERK [DO NOT PUBLISH]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __ No. 0 9- 13 90 8 Non -Arg um en t Ca le nd ar

__ __ __ __ __ __ __ __ __ __ __ __ D.C. Dock et No. 0 6- 20 97 5- CV-PC H

SECURITIES AND EXCHANGE COMMIS SION,

Pl ai nt iff -Ap pe ll ee,

ve rs us
JOHN P. UTSICK,

Defen da nt -Ap pe ll an t.

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

th e Uni te d S ta te s Di st ric t Co ur t fo r th e So ut he rn Dis tri ct of F lo rid a

__ __ __ __ __ __ __ __ __ __ __ __ (Ap ril 9, 2 01 0)

Befo re TJ OFLAT, W ILSON an d C OX, Circ ui t J ud ge s.

PER CURI AM:

Jo hn P. Uts ic k so ld se cu rit ie s an d ran en te rta i n men t ve nt ur es th ro ug h hi s

who ll y -o wne d co m

pa ni es , W or ld wid e Ent ert ai nm en t, In c. an d Ent ert ai nm en t Gro upFu nd
, In c. The Secu rit ie s an d Exc ha ng e Co m m is si on (SEC) fil ed a ci vi l en fo rcem en t

act io n ag ai ns t Uts ic k, hi s two co m pa ni es , an d ot he r de fen da nt s. The SEC’ s co m pl ai nt

al le ge d, in pa rt, t h a t Uts ic k an d hi s co m pa ni es vi ol at ed th e Secu rit ie s Act, th e

Exc ha ng e Act, an d ru le s pr o mu l g a te d th ereu nd er by se ll in g un reg is te red se cu rit ie s

an d de frau di ng in ve st or s. (R.1 -1 .) Uts ic k an d hi s co m pa ni es co ns en te d to th e en try

of a jud gm en t, whi ch in cl ud ed a pe rm an en t in jun ct io n an d ot he r rel ie f ba rri ng fu rth er

vi ol at io ns of th e Secu rit ie s Ac t a n d th e Exc ha ng e Act, or de rin g th at Uts ic k pa y

di sg or ge m en t, pr ejud gm en t in te res t, an d a ci vi l pe na lt y , an d pr ov id in g fo r an as se t

free ze to rem ai n in effe ct un ti l en try of a fin al jud gm en t. (R.1 -5 .) In th e co ns en t fo r

an in jun ct io n, Uts ic k ne it he r ad m it te d no r de ni ed th e al le ga ti on s of th e co m pl ai nt , bu t

he ag reed th at fo r pu rp os es of an y p r o c e e d i n g to de te rm in e th e am ou nt s of

di sg or ge m en t an d ci vi l pe na lt y th at he wou ld be pr ecl ud ed fro m arg ui ng th at he di d

no t v io la te th e fed eral sec ur it ie s l aws as a ll eg ed in th e co m pl ai nt . ( Id

. at 4-5 .)

The co ur t en te red a jud gm en t, whi ch in cl ud ed a pe rm an en t in jun ct io n,

ap po in te d a rece iv er to m an ag e an d co nt ro l th e two co m pa ni es , an d en te red a free ze

of Uts ic k’s pe rs on al as se ts

. The as se t free ze ex cl ud ed co st s fo r li vi ng ex pe ns es an d

at to rn ey s’ fee s

. The SEC an d Uts ic k di d no t reac h ag reem en t as to th e am ou nt of

di sg or ge m en t, p reju dg m en t i nt eres t, o r ci vi l p en al ty, an d pu rs ua nt to a pr ov is io n i n

th e co ns en t fo r an in

jun ct io n, th e SEC fil ed a m ot io n fo r fin al jud gm en t to de ci de th e

2i s s u e s

. Afte r an ev id en ti ary he ari ng , th e di st ric t co ur t en te red a fin al jud gm e n t

ag ai ns t Uts ic k or de rin g di sg or ge m en t in th e am ou nt of $4 ,03 5,4 79 .31 , pr ejud gm en t

in te res t of $9 21 ,70 8.8 4, an d a ci vi l pe na lt y of $1 20 ,00 0. (R.1 4- 54 5.) In th is ap pe al
,

Uts ic k do es no t co nt es t li ab il it y fo r vi ol at in g th e se cu rit ie s la ws; rat he r, he ch al le ng es

th ree ru li ng s of th e di st ric t co ur t rel at ed to it s or de r de te rm in in g th e am ou nt s o f

di sg or ge m en t, pr ejud gm en t in te res t, an d th e ci vi l pe na lt y

. W e co nc lu de th at Uts ic k’s

arg um en ts are wi th ou t m eri t, an d we a ffi rm

.
Fi rs t, Uts ic k co nt en ds th at th e co ur t ab us ed it s di sc ret io n in de nyin g hi s m ot io n

to req ui re W or ld wid e, on e of hi s co m pa ni es in rece iv ers hi p, to ad va nc e hi s at to rn ey s’

fees

. Afte r de pl et in g hi s pe rs on al as se ts , Uts ic k req ue st ed th at th e rece iv er au th or iz e

W or ld wid e to ad va nc e fu tu re le ga l ex pe ns es

. The rece iv er reject ed th is req ue st , an d

Uts ic k m ov ed th e co ur t to li ft a st ay ag ai ns t li ti ga ti on rel at in g to th e c o mp a n i e s so

th at he co ul d pe t i t i o n th e Ch an cery Co ur t fo r th e St at e of Dela ware to se ek th e

a d v a n c e s

. (R.4 -1 32 .) Rat he r th an li ft th e st ay , th e di st ric t co ur t de ci de d th e is su e
(R.6 -1 90 ), an d i t h el d t ha t Ut si ck was n ot en ti tl ed to th e ad va nc es

. (R.6 -2 11 at 3.)

Afte r rev ie w of th e reco rd
, we co nc lu de th at th e co ur t di d no t ab us e it s di sc ret io n in

de cl in in g to li ft th e st ay ag ai ns t li ti ga ti on to pe rm it Uts ic k to pe ti ti on th e Ch an cery

Co ur t fo r th e St at e of Dela ware. W e al so co nc lu d e th at be cau se Uts ic k fai le d to

pr ov id e an ad eq ua te un de rta ki ng to gu aran te e rei m bu rs em en t to th e rece iv ers hi p

3es ta te if it were ul ti m at el y de te rm in ed th at he was no t en ti tl ed to be in de m ni fie d, th e

co ur t di d no t ab us e it s di sc ret io n in de nyin g Uts ic k’s req ue st fo r ad va nc es

. And
, we

ag ree wit h th e co ur t’s well -rea so ne d an al y si s co nc lu di n g th at Uts ic k do es no t ha ve

a co ns ti tu ti on al rig ht to ad va nc es fro m W or ld wid e to pa y fo r hi s le ga l ex pe ns es

. ( Id

.

at 2-3 .)

Seco nd
, Uts ic k c o n t e n d s th at th e co ur t ab us ed it s di sc ret io n by im po si ng

sa nc ti on s fo r hi s fai lu re to ap pe ar fo r a de po si ti on

. Pri or to th e he ari ng to de te rm in e

th e am ou nt s of di sg or ge m en t, pr ejud gm en t in te res t, an d ci vi l pe na lt y , th e co ur t se t a

sc he du le fo r m

ut ua l di sc ov ery. Bu t, Uts ic k refu se d to ap pe ar fo r hi s de po si ti on

be cau se he ha d rel oc at ed to Braz il an d fe a red arre st sh ou ld he ret ur n to th e Uni te d

St at es

. The pa rti es fil ed a nu m be r of m ot io ns rel at ed t o Uts ic k’s un av ai la bi li ty fo r

di sc ov ery, an d th e co ur t at te m pt ed to acco m

m od at e Uts ic k by “ req ui rin g Pl ai nt iff to

pa y hi s ex pe ns es fo r de po si ti on in Mi am i, gr an ti ng two m on th s of ex te ns io ns fro m

t h e i n i t i a l di sc ov ery p eri od , f ul fil li ng hi s req ue st s to ha ve th e de po si ti on ta ke n in a

th ird co un try, an d en te rin g a pr ot ect iv e or de r th at hi s co un se l ag reed wou ld as su ag e

hi s co nc ern s reg ard in g arre st .” (R.1 2- 50 4 at 3.) Eve n so , Uts ic k fai le d to ap pe ar fo r

hi s de po si ti on

. The co ur t ul ti m at el y gr an te d a m o ti on by th e SEC fo r sa nc ti on s, in

whi ch it st ru ck Uts ic k’s pl ead in gs , or de red th at he pa y th e SEC’s at to rn ey s’ fees an d

co st s in cu rred in at te m

pt in g to ta ke hi s de po si ti on , an d or de red th at he no t be al lo wed

4to te st ify at th e he ari ng on th e SEC’s fin al jud gm en t m ot io n un le s s h e a p p ear fo r a

de po si ti on

.
A c ou rt’s au th or it y to im po se sa nc t i o ns fo r refu sa l to co m pl y wit h di sc ov ery

or de rs is br oa d. Rev ers ib le erro r ex is ts on ly whe re “ im po rta nt hi st or ic al fin di ng s are

cl earl y erro ne ou s or

—b y th e im

po si ti on of sa nc ti on s whi ch are no t ‘j us t’—t he re ha s

be en an ab us e o f di sc ret io n.” Ja ff e v. Gra nt , 79 3 F.2 d 11 82 , 1 18 9 (1 1t h Ci r. 19 86 )
(ci ta ti on an d qu ot at io n om it te d)

. Our rev ie w of th e reco rd rev eal s th at th e co ur t wen t

to gr eat le ng th s to acco m m od at e U t s ic k’s co nc ern s an d di d no t ab us e it s di sc ret io n

in san ct io ni ng Uts ic k fo r fai li ng to ap pe ar fo r hi s d ep os it io n.

Thi rd
, Uts ic k ch al le ng es th e am ou nt of th e di sg or ge m en t or de r. He arg ue s th at

th e co ur t’s fin di ng s th at cert ai n ex pe ns es were il l-g ot te n ga in s fro m hi s vi ol at io ns of

se cu rit ie s l aws were cl earl y erro ne ou s. “ The SEC is en ti tl ed to di sg or ge m en t u po n

pr od uc in g a reas on ab le ap pr ox im at io n of a de fen da nt ’s il l-g ot te n ga in s. The bu rd en

th en sh ift s to th e de fen da nt 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

ap pr ox im at io n.” S.E.C. v. Ca lv o , 37 8 F.3 d 1 2 1 1 , 1 21 7 (1 1t h Ci r. 20 04 ) (ci ta ti on s

om it te d)

.
The SEC pres en te d tes ti m on y of a fo ren si c acco un ta nt an d th e rece iv er, who

te st ifi ed th at a rev ie w of th e co m pa ni es ’ reco rd s rev eal ed th at t he co m pa ni es pa id

ov er $4 m il li on to Uts ic k or to th ird pa rti es on hi s be ha lf. (R.1 4- 54 1 at 10 .) And
, th e

5S EC p res en te d ev id en ce th at th e fu nd s pa id to Uts ic k cam e fro m in ve st or s. ( Id

. a t

21 .) Uts ic k ad m it te d fo r pu rp os es of th e di sg or ge m en t pr oc eed in gs th at he rai se d at

le as t $3 00 m il li on fro m in ve st or s an d vi ol at ed fed eral se cu rit ie s la ws in th e pr oc es s.
( Id

. at 5- 8.) And
, he di d no t pr es en t pe rs ua si ve ev id en ce sh owi ng th at th e pa y m en ts

were le gi ti m at e co m

pe ns at i o n a n d n o t th e il l-g ot te n ga in s of hi s il le ga l act iv it ie s.

The refo re, th e co ur t di d no t err in co nc lu di ng th at Uts i c k fai le d to sh ow th at th e

SEC’s es ti m at e was no t a reas on ab le ap pr ox im at io n of hi s il l-g ot te n ga in s a n d by

or de rin g h im

to pa y $4 ,03 5,4 79 .31 in di sg or ge m en t.

AFFIR MED.

6