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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TEXAS

SHERMAN DIVISION

SECURITIES AND EXCHANGE 

COMMISSION

v.

GOPALA KRISHNAN, ET AL.

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CIVIL NO. 4:23-CV-885-SDJ

 

MEMORANDUM OPINION AND ORDER

Before the Court is the Receiver’s Amended Motion for Approval of Retention 

of Professionals. (Dkt. #115). For the following reasons, the motion is granted.

I.

The SEC brought this securities fraud civil enforcement action under seal, 

(Dkt. #1), and promptly filed an Emergency Ex Parte Motion for Temporary 

Restraining Order, Preliminary Injunction, Asset Freeze, and Other Ancillary 

Emergency Relief, (Dkt. #4). After conducting an ex parte hearing, the Court granted 

the SEC’s motion in part and issued a Temporary Restraining Order and Orders: 

(1) Freezing Assets; (2) Prohibiting the Destruction of Documents; (3) Granting 

Expedited Discovery; (4) Requiring Sworn Accountings; (5) Permitting Alternative 

Means of Service, and (6) Setting Hearing Date on Plaintiff’s Motion for Preliminary 

Injunction (“TRO”). (Dkt. #16).

The Court subsequently held a hearing on the SEC’s motion for a preliminary 

injunction. However, instead of presenting argument or evidence, the parties 

informed the Court that they had reached an agreement regarding entry of an 

injunction. That same day, the Court entered the parties’ Agreed Preliminary 

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Injunction and Order Extending Asset Freeze and Other Ancillary Relief as to 

Defendants (“Agreed Preliminary Injunction”), wherein Defendants agreed to a 

number of injunctive provisions and an asset freeze, although they specifically did 

not admit any “allegations made in the SEC’s Complaint and TRO Application.” 

(Dkt. #49).

Upon the SEC’s motion, the Court then appointed a receiver “for the purposes 

of marshaling and preserving all [relevant] assets of Defendants.” (Dkt. #91 at 10). 

The Court granted the Receiver “all powers, authorities, rights, and privileges 

heretofore possessed by the officers, directors, managers, and general and limited 

partners of the Receivership Defendants.” (Dkt. #91 at 11). The Court enumerated 

the Receiver’s powers and duties, which include the following:

To use reasonable efforts to determine the nature, location, and value of 

all property interests of the Receivership Defendants, including, but not 

limited to, monies, funds, securities, credits, effects, goods, chattels, 

lands, premises, leases, claims, rights, and other assets, together with 

all rents, profits, dividends, interest, or other income attributable 

thereto . . .;

To take custody, control, and possession of all Receivership Property and 

records relevant thereto from the Receivership Defendants . . .;

To manage, control, operate, and maintain the Receivership Estates and 

hold in his possession, custody, and control all Receivership Property

. . .; [and]

To engage and employ persons in his discretion to assist him in carrying 

out his duties and responsibilities hereunder, including, but not limited 

to, accountants, attorneys, securities traders, registered 

representatives, financial or business advisers, liquidating agents, real 

estate agents, forensic experts, brokers, traders, or auctioneers[.]

(Dkt. #91 at 12–13); see also (Dkt. #91 at 29) (“[T]he Receiver is authorized to 

solicit persons and entities (‘Retained Personnel’) to assist him in carrying out the 

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duties and responsibilities described in this Order. The Receiver shall not engage any 

Retained Personnel without first obtaining an Order of the Court authorizing such 

engagement.”).

The TRO, (Dkt. #16), Agreed Preliminary Injunction, (Dkt. #49), Omnibus 

Order—including the Receivership Order, (Dkt. #91), and the Order on Receivership 

Defendants’ Motion for Relief from Paragraphs 9, 10, and 11 of the Omnibus Order, 

(Dkt. #112), are currently on appeal at the Fifth Circuit. (Dkt. #117). Defendants have 

not moved to stay the receivership.

Pursuant to the Receivership Order, the Receiver requests authorization to 

appoint the following entities: (1) CliftonLarsonAllen LLP, an accounting firm; 

(2) Weaver & Tidwell, L.L.P., a financial services and accounting firm with expertise 

in forensic accounting and financial investigative services; (3) Elite Discovery, an 

eDiscovery and managed services support company specializing in collection and 

forensic preservation of digital data and data management; and (4) Gray Reed 

Advisory, a professional advisory firm that provides support services. (Dkt. #115). 

Defendants oppose the Receiver’s motion, contending that the Court lacks jurisdiction 

to permit the Receiver to hire professionals while the Receivership Order is on appeal. 

(Dkt. #134). Defendants also argue that the burdens and expenses of hiring these 

professionals outweigh the benefit to the estate. (Dkt. #120).

II.

An appeal “divests the district court of jurisdiction ‘over those aspects of the 

case on appeal.’” In re Fort Worth Chamber of Com., 100 F.4th 528, 532–33 (5th Cir. 

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2024). Accordingly, district courts are without jurisdiction to “alter the status of the 

case as it rests before the Court of Appeals,” and they may not take any action that 

would “essentially nullify the appeal and render [the Court of Appeals] unable to 

grant relief.” Id. at 533, 536 (cleaned up).

Here, the Receiver’s motion does not present these concerns. Permitting the 

Receiver to retain professionals would not change any aspect of the case on appeal, 

nor would it nullify the appeal or frustrate the Fifth Circuit’s ability to grant relief.

Instead, granting the requested relief would merely allow the Receiver to fulfill his 

continuing obligations pursuant to the Court’s order—which, even on appeal, is still 

fully enforceable. As Defendants acknowledge, “[t]he Receiver has the authority 

granted under [the Receivership Order] until it is stayed pending appeal by this Court 

or the Fifth Circuit or reversed.” (Dkt. #134 at 3). As the order has not been stayed, 

nor reversed, it is clear that the Receiver retains his authority.1

Defendants nonetheless argue that the Court lacks jurisdiction because the 

Receiver’s motion “seek[s] greater receiver powers than the Receiver has currently 

been given by the order under appeal. It is asking the Court to enlarge the authority 

1 As Defendants acknowledge, the “mere filing of a notice of appeal [does not] operate[]

as an automatic stay of the receivership order.” (Dkt. #134 at 2). The Fifth Circuit’s 

discussion in SEC v. Barton, 79 F.4th 573 (5th Cir. 2023), regarding the procedure for staying 

a receivership pending appeal supports that conclusion. In Barton, the defendant moved the 

Fifth Circuit for a partial stay of certain receivership activities pending appeal—after his 

previous motions to stay pending appeal were denied by the district court. Id. at 581. The 

Fifth Circuit explained that the motion complied with Federal Rule of Appellate Procedure 

8—even though it was not first presented to the district court—since it was “clear . . . that 

the district court would have denied this motion.” Id. Notably, the Fifth Circuit never 

stated—or even hinted—that the receivership was automatically stayed once the appeal was 

filed. If it were, then it would have been unnecessary for the defendant to move for a stay.

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of the Receiver, when the existence and proper scope of the Receiver’s authority is 

being challenged by a pending appeal.” (Dkt. #134 at 2). Not so. The Receiver is not 

seeking to expand his authority—only to exercise it. The Receivership Order

expressly authorizes the Receiver to retain professionals, subject to the Court’s 

approval. That is precisely what he is attempting to do here, and he has followed the 

proper steps for seeking approval. The Court thus finds that it has jurisdiction to 

consider the Receiver’s motion—and, more broadly, to provide the Receiver with the 

tools he needs to comply with the Court’s order appointing him. Therefore, the Court 

will consider the merits of the motion.

III.

As explained herein, see supra Part I, the Receivership Order expressly

authorizes the Receiver to “engage and employ persons in his discretion to assist him 

in carrying out his duties and responsibilities, . . . including . . . accountants . . ., 

financial or business advisers . . ., [or] forensic experts.” (Dkt. #91 at 13); see also 

(Dkt. #91 at 29) (“[T]he Receiver is authorized to solicit persons and entities 

(‘Retained Personnel’) to assist him in carrying out the duties and responsibilities 

described in this Order.”). The four entities the Receiver seeks to retain are clearly

the types of entities that the order authorizes the Receiver to hire as “Retained 

Personnel.” The Receiver contends that these professionals are “necessary for the 

efficient administration of the receivership estate and essential to the performance of 

his duties.” (Dkt. #122 at 2). The Court agrees. And, contrary to Defendants’

arguments, the retention of these professionals will enable the Receiver to comply 

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with his court-ordered obligations—not extend his powers. Indeed, the Receiver has 

shown that he will be unable to fulfill his charged duties without these professionals.

Therefore, the Court authorizes the Receiver to retain the proposed professionals. 

IV.

For the foregoing reasons, it is ORDERED that the Receiver’s Amended 

Motion for Approval of Retention of Professionals, (Dkt. #115), is GRANTED. The 

Receiver is hereby authorized to retain the services of (1) CliftonLarsonAllen LLP, 

(2) Weaver & Tidwell, L.L.P., (3) Elite Discovery, and (4) Gray Reed Advisory, for the 

purposes identified in the motion. 

It is further ORDERED that the Receiver’s initial Motion for Approval of 

Retention of Professionals, (Dkt. #113), is DENIED as moot.

It is further ORDERED that Defendants’ Unopposed Motion for Extension of 

Time to File Response to Receiver’s Amended Motion for Approval of Retention of 

Professionals, (Dkt. #119), is GRANTED. Defendants’ Response, (Dkt. #120), is 

deemed properly filed. 

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