STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

Keith A. Ketterling, OSB No. 913368

Email: kketterling@stollberne.com

Timothy S. DeJong, OSB No. 940662

Email: tdejong@stollberne.com

Jacob S. Gill, OSB No. 033238

Email: jgill@stollberne.com

Nadia H. Dahab, OSB No. 125630

Email:ndahab@stollberne.com

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 SW Oak Street, Suite 500

Portland, Oregon 97204

Telephone: (503) 227-1600

Facsimile: (503) 227-6840

Steve W. Berman (admitted pro hac vice)

Email: steve@hbsslaw.com

Karl P. Barth (admitted pro hac vice)

Email: karlb@hbsslaw.com

Catherine Y.N. Gannon (admitted pro hac vice)

Email: catherineg@hbsslaw.com

Dawn Cornelius (admitted pro hac vice)

Email: dawn@hbsslaw.com

HAGENS BERMAN SOBOL SHAPIRO LLP

1918 Eighth Avenue, Suite 3300

Seattle, Washington 98101

Telephone: (206) 623-7292

Facsimile: (206) 623-0594

Attorneys For Plaintiffs

[Additional Counsel of Record Listed on Signature Page]

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

PORTLAND DIVISION

LAWRENCE P. CIUFFITELLI, for himself 

and as Trustee of CIUFFITELLI 

REVOCABLE TRUST; GREG and ANGELA 

JULIEN; JAMES and SUSAN 

MACDONALD, as Co-Trustees of the 

MACDONALD FAMILY TRUST; R.F. 

MACDONALD CO.; ANDREW NOWAK, 

for himself and as Trustee of the ANDREW 

NOWAK REVOCABLE LIVING TRUST 

U/A 2/20/2002; WILLIAM RAMSTEIN; and

Case No. 3:16-cv-00580-AC

PLAINTIFFS’ MEMORANDUM IN 

OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS 

PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

ORAL ARGUMENT REQUESTED

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 1 of 10
PAGE 1 - PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

GREG WARRICK, for himself and, with 

SUSAN WARRICK, as Co-Trustees of the 

WARRICK FAMILY TRUST, individually 

and on behalf of all others similarly situated,

Plaintiffs,

v.

DELOITTE & TOUCHE LLP; 

EISNERAMPER LLP; SIDLEY AUSTIN 

LLP; TONKON TORP LLP; TD 

AMERITRADE, INC.; and INTEGRITY 

BANK & TRUST,

Defendants.

I. INTRODUCTION

Sidley’s second motion to dismiss [ECF No. 272] seeks to dismiss only part of plaintiffs’ 

claims. Sidley contends that plaintiffs have not adequately alleged Sidley’s participation or 

material aid in the sale of any securities other than ACOF Interests. Sidley also contends that 

plaintiffs cannot recover based on securities they did not purchase. Sidley’s motion should be 

denied.

Plaintiffs do, in fact, allege Sidley’s participation and material aid in the sale of securities 

other than ACOF Interests. Sidley is able to make this argument only by disregarding the 

specific allegations of paragraph 192 of the Second Amended Complaint. Therein, plaintiffs 

allege that Sidley prepared a legal opinion dated April 5, 2013, confirming ACF’s compliance 

with the Investment Company Act of 1940. Plaintiffs allege that this legal opinion was required 

by Aequitas’ auditors and that Aequitas would not have been able to sell any securities without 

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 2 of 10
PAGE 2 - PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

Sidley’s legal opinion. See SAC ¶192(d). These allegations are sufficient to allege Sidley’s 

participation and material aid in all sales of the various securities after April 5, 2013.

The Court previously deferred ruling on defendants’ arguments that plaintiffs cannot 

recover based on securities they did not purchase for class certification. No plaintiff seeks 

personally to recover based on securities not purchased by that plaintiff. To the extent no 

plaintiff purchased a particular security, plaintiffs assert claims in a representative capacity on 

behalf of those purchasers. Sidley identifies no basis for this Court to reconsider its prior 

decision to postpone ruling on this issue, and this motion should be denied.

II. LEGAL STANDARDS FOR NON-SELLER LIABILITY

The Oregon Securities Law is to be “liberally construed to afford the greatest possible 

protection to the public.” Adamson v. Lang, 236 Or. 511, 516 (1964) (en banc). This Court 

previously set forth the standards for non-seller liability at pages 53–59 of its Amended Findings 

& Recommendations [Dkt. No. 242] (“F&R”). “A non-seller’s liability depends on the 

importance of their conduct – whether participation or aid – to the sale.” F&R at 53. In order for 

such liability to arise, the non-seller’s conduct “must have a causal relationship with the 

transaction,” and “must reflect some ‘knowledge, judgment’ or other specialized skills particular 

to the non-seller.” Id. (citations omitted). A “causal relationship”

1

arises where the non-seller 

engages in conduct which “contribute[s] to the completion and consummation of the transaction” 

or “enable[es] a seller to continue its securities business.” F&R at 54–55 (citations and quotation 

marks omitted). “The causal relationship may exist even if the interaction is a routine part of a 

professional’s work with sellers of securities. The interaction must enable an unlawful securities 

 

1 As used by plaintiffs, the phrase “causal relationship” has the meaning set forth herein.

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 3 of 10
PAGE 3 - PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

transaction, that it may be attenuated from the transaction is not determinative.” Id. at 58–59 

(citations omitted). 

III. PLAINTIFFS ALLEGE SIDLEY’S PARTICIPATION AND MATERIAL AID

A. Sidley Does Not Contest Plaintiffs’ Allegations of Sidley’s Secondary 

Liability for ACOF’s Sales of Securities

Sidley does not challenge plaintiffs’ claim that Sidley participated and materially aided in 

sales of ACOF securities. See also F&R at 68 (on prior motion, “Sidley does not contest the 

possibility of participation or material aid in a sale through preparing offering documents for 

ACOF.”). The Court previously found that plaintiffs had not adequately alleged the untrue and 

misleading statements as to ACOF. Id. Plaintiffs have amended those allegations, and Sidley 

does not challenge plaintiffs’ amended allegations of untrue and misleading statements as to 

ACOF (or any other security). Thus, at a minimum, plaintiffs have stated a claim as to Sidley’s 

participation and material aid in sales of ACOF securities.

B. A Legal Opinion Authored By Sidley Enabled Aequitas to Continue to Sell 

Securities After April 5, 2013

Before filing the Second Amended Complaint, plaintiffs obtained a copy of an April 5, 

2013, legal opinion that Sidley provided on behalf of the Aequitas companies audited by 

EisnerAmper and, later, Deloitte. Plaintiffs allege that, by providing this legal opinion, Sidley 

participated and materially aided in all sales of Aequitas securities after the date of the opinion.

Sidley dismisses plaintiffs’ claim based upon the legal opinion as “far too distant from 

any securities sale to support a finding of secondary liability.” Sidley Motion at 15. The Court 

previously noted that the fact that a non-seller’s interactions with the seller “may be attenuated 

from the transaction is not determinative.” F&R at 59. Here, plaintiffs’ allegations satisfy the 

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 4 of 10
PAGE 4 - PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

two-part test set forth by the Court for determining liability for participation and material aid. 

The Sidley legal opinion has both a causal connection to subsequent sales of securities and 

reflects Sidley’s knowledge, judgment, and specialized skills. 

Plaintiffs allege Aequitas could not continue to sell securities without annual audits or 

without distributing annual audited financial statements to investors, and that the auditors 

required the Sidley legal opinion in order to issue clean audit opinions. SAC ¶¶189, 190, 192. 

Aequitas needed the stamp of legitimacy provided by a clean audit opinion from an established 

and reputable firm in order to attract, secure, and retain investors and their funds. SAC ¶¶189(b), 

190(b). Aequitas needed annual audits in order to comply with the Investment Advisers Act of 

1940, which allowed Aequitas to sell securities free of outside scrutiny. SAC ¶¶189(b), (f). The 

auditors’ working papers acknowledge that SEC rules required the distribution of audited 

financials and that the audited financials would be used by potential and current investors. SAC 

¶¶189(c), 190(e). Each year, each Aequitas fund delivered to its investors, who were deciding 

whether to invest or re-invest, the previous year’s audited financial statements. SAC ¶189(d).

Aequitas engaged Sidley to advise its captive SEC-registered investment advisor, 

Aequitas Investment Management (“AIM”), which existed for the sole purpose of acting as 

manager of and investment advisor to various Aequitas fundraising vehicles, including the 

Aequitas funds. SAC ¶¶27, 192(i). Sidley advised AIM with respect to its management and 

provision of investment advisory services to the Aequitas funds, including AIPF, AIOF, AIOFII, ACOF, AETC, and AEIF. SAC ¶192(i). SEC rules under the Investment Advisers Act

required AIM to ensure (i) the annual audit of each of these Aequitas funds by an independent 

PCAOB-inspected accounting firm, and (ii) the annual distribution to investors of the audited 

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 5 of 10
PAGE 5 - PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

financial statements of each of these Aequitas funds. SAC ¶¶189(b), (f); see also 17 C.F.R. § 

275.206(4)–2(b)(4). Indeed, the promise of audited financial statements featured prominently in 

AIM’s marketing and disclosure materials related to the Aequitas funds. For example, AIM’s

Form ADV, Part 2A,

2

emphasized, “Each year, each of our Funds delivers to its investors the 

previous year’s audited financial statements ... An independent accounting firm that is registered 

with and subject to inspection by the [PCAOB] audits our Funds’ annual financial statements.” 

SAC ¶190(d).

In addition to complying with the Investment Advisers Act, compliance with the 

Investment Company Act of 1940 was a material issue for Aequitas. SAC ¶192(d). As a result, 

the auditors required Aequitas to obtain legal opinions confirming Aequitas’ compliance with the 

Investment Company Act. Id. In response to a request from EisnerAmper, by Memorandum 

dated April 5, 2013, Sidley provided a written opinion and analysis confirming ACF’s

compliance. Id. Without the legal opinion, EisnerAmper would not have issued a clean audit 

opinion and Aequitas would not have been able to sell securities. Id. Similarly, in 2014, Sidley 

provided legal advice regarding compliance with the Investment Company Act that enabled 

Aequitas to obtain a clean audit opinion from Deloitte. SAC ¶192(e). These facts both 

demonstrate a causal connection to subsequent sales of securities and reflect the employment of 

 

2 The Form ADV, Part 2A, was part of the offering materials made available to prospective 

investors in the Aequitas funds. See, e.g., ECF No. 86-4 at 10 (“The Form ADV Part 2A and 

Part 2B of the Investment Advisor is available ... upon request.”) (ACOF PPM).

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 6 of 10
PAGE 6 - PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

Sidley’s knowledge, judgment, and specialized skills. See F&R at 54–59 (summarizing 

analogous precedent).3 

The significance and materiality of Sidley’s legal opinion and advice extended beyond 

ACF to all of the Aequitas funds. The audited financial statements of ACF were done on a 

consolidated basis and encompassed ACF as well as ACOF, AIPF, AIOF, AIOF-II, AEIF, and 

AMLF. SAC ¶32. More significant is the fact that the financial status of each of the Aequitas 

funds was inextricably linked to the financial status of ACF. SAC ¶¶32, 38(d), 43(d), 48(d), 

53(d), 58(d), 63(d). Consequently, any event materially impacting the financials of ACF—e.g., 

the requirement that ACF register as an investment company under the Investment Company 

Act—would necessarily have materially impacted each of the Aequitas funds. For example, 

registration under the Investment Company Act would have materially affected ACF’s ability to

(i) continue financing and providing the sole source of revenue for certain ACOF portfolio 

companies, (ii) repay its substantial indebtedness to AIPF, AIOF-II, AIOF, and AEIF, and (iii) 

make good on its guaranty of the obligations of AMLF. SAC ¶32. Such an event would also 

have impaired the ability of AIM to secure a clean audit of each of the Aequitas funds as 

required under SEC rules. 

C. Plaintiffs Allege Other Acts of Participation and Material Aid by Sidley

 

3

See also Adams v. Am. W. Secs., Inc., 265 Or. 514, 529 (1973) (transaction “would and 

could not have been completed or consummated without” lawyer’s services); Prince v. Brydon, 

307 Or. 146, 148 (1988) (sale could not have occurred without lawyer’s services); Ainslie v. 

Spolyar (Ainslie I), 144 Or. App. 134, 145 (1996) (interactions enabling a seller to continue its 

securities business constitutes material aid for any subsequent transactions); Cox v. Holcomb 

Family Ltd. P’Ship, No. 1308-12201, slip op. at 6-9 (Or. Cir. Ct. Dec. 14, 2010) (banks’ loans 

gave seller credibility and created illusion of financial strength).

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 7 of 10
PAGE 7 - PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

Plaintiffs allege that Sidley participated and materially aided in the sales of AIOF-II

securities in additional ways. SAC ¶192(f). Sidley’s legal advice enabled Aequitas to rely on an 

exemption from the Investment Company Act for sales to a maximum 99 investors. Aequitas 

employed a structure using Integrity as a “pass through” to many investors in connection with 

the sales of AIPF securities. However, Aequitas and Sidley learned that this structure did not, in 

fact, comply, and Aequitas reported its non-compliance to the SEC in July 2014 and proceeded 

to liquidate AIPF. During 2014, Sidley advised Aequitas how to create a structure that would 

allow Integrity to act as an aggregator of individual investors so that Aequitas could comply with 

the exemption, by employing Integrity Bank & Trust (“IBAT”), a general partnership, as 

nominee. AIOF-II was set up specifically for the purpose of retaining AIPF investor money in 

order to avoid a liquidity crisis, by having the investments in AIPF transfer over to AIOF-II. 

These allegations also satisfy the two-part test for non-seller liability. Aequitas could not have 

sold the AIOF-II securities, both by selling to new investors and by rolling the AIPF investments 

into new AIOF-II securities, without Sidley’s specialized skills in structuring the transaction.

Sidley also provided legal advice to AMLF that enabled AMLF to sell securities through 

what Aequitas called the “Note Manufacturing Process.” SAC ¶192(g), (h). Plaintiffs allege that 

Sidley advised Aequitas that the notes were not securities and that Aequitas was not required to 

comply with the securities laws as to these notes. Based upon Sidley’s legal advice, Aequitas did 

not provide a PPM or other disclosures in connection with the sales of the notes. Sidley’s 

activities satisfy the two-part test, because Aequitas relied on Sidley’s specialized knowledge 

and advice in structuring the sales and to make the sales without risk disclosures. These services 

to AMLF provide an additional basis for Sidley’s liability.

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 8 of 10
PAGE 8 - PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

In summary, plaintiffs have stated actionable claims against Sidley for all sales of 

Aequitas securities after April 5, 2013, including all sales after that date of ACF Notes, AIPF 

Interests, ACOF Interests, AIOF-II Notes, AEIF Interests, and AMLF Notes. See SAC ¶¶33-67 

(alleging date ranges of sales of each class of securities).

IV. Sidley’s Standing Arguments Should Be Postponed for Class Certification

Sidley argues that plaintiffs lack standing to pursue, on behalf of other investors, claims 

for securities sold by ASFG, CP Lending I, or the Note Manufacturing Program, because 

plaintiffs did not purchase securities from those sellers. This Court previously “defer[red] any 

ruling on standing until its ruling on class certification.” F&R at 73. 

Furthermore, Sidley is not correct that no plaintiff alleges a purchase of securities in the 

Note Manufacturing Program. Sidley notes that plaintiffs allege “that the AMLF offering was 

‘part of the Aequitas “Note Manufacturing Program.”’” Sidley Motion at 5 (citing SAC ¶63). 

Plaintiffs Ciuffitelli, RFMC, and the MacDonalds allege purchases of AMLF securities. SAC 

¶¶196(c), 198(d), 199(c). 

CONCLUSION

Sidley’s second motion to dismiss should be denied. Plaintiffs have alleged substantial 

and plausible claims for Sidley’s liability as a participant and material aider.

DATED this 22nd day of November, 2017.

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

By: s/Timothy S. DeJong

Keith A. Ketterling, OSB No. 913368

Timothy S. DeJong, OSB No. 940662

Jacob S. Gill, OSB No. 033238

Nadia H. Dahab, OSB No. 125630

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 9 of 10
PAGE 9 - PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO SIDLEY AUSTIN 

LLP’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED 

COMPLAINT

STOLL STOLL BERNE LOKTING & SHLACHTER P.C.

209 S.W. OAK STREET, SUITE 500

PORTLAND, OREGON 97204

TEL. (503) 227-1600 FAX (503) 227-6840

209 SW Oak Street, Suite 500

Portland, OR 97204

Telephone: (503) 227-1600

Facsimile: (503) 227-6840

Email: kketterling@stollberne.com

tdejong@stollberne.com

jgill@stollberne.com

ndahab@stollberne.com

-AndSteve W. Berman (admitted pro hac vice)

Email: steve@hbsslaw.com

Karl P. Barth (admitted pro hac vice)

Email: karlb@hbsslaw.com

Catherine Y.N. Gannon (admitted pro hac vice)

Email: catherineg@hbsslaw.com

Dawn Cornelius (admitted pro hac vice)

Email: dawn@hbsslaw.com

HAGENS BERMAN SOBOL SHAPIRO LLP

1918 Eighth Avenue, Suite 3300

Seattle, WA 98101

Telephone: (206) 623-7292

Facsimile: (206) 623-0594

-AndRobert S. Banks, Jr., OSB No. 821862

Email: bbanks@SamuelsLaw.com

Darlene D. Pasieczny, OSB No. 124172

Email: darlenep@SamuelsLaw.com

SAMUELS YOELIN KANTOR LLP

Attorneys at Law

111 SW 5th Avenue, Suite 3800

Portland, OR 97204-3642

Telephone: (503) 226-2966

Facsimile: (503) 222-2937

Attorneys For Plaintiffs

Case 3:16-cv-00580-AC Document 288 Filed 11/22/17 Page 10 of 10