NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

U.S. SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff-Appellee, 

 v. 

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

WANG, 

Defendant-Appellant.

No. 21-56090

D.C. No. 

SACV 16-00974-CJC (AGRx)

MEMORANDUM*

Appeal from the United States District Court

for the Central District of California

Cormac J. Carney, District Judge, Presiding

Submitted August 22, 2022**

Pasadena, California

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

Judge.

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

except as provided by Ninth Circuit Rule 36-3.

** The Panel unanimously concludes that this case is suitable for 

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

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

the Middle District of Florida, sitting by designation.

FILED

AUG 24 2022

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2 21-56090

Charles Liu and Xin Wang (husband and wife) appeal the district court’s 

judgment of disgorgement. Xin Wang also appeals the district court’s denial of her 

motion to dismiss for lack of jurisdiction due to extraterritorial conduct. We have 

jurisdiction under 28 U.S.C. § 1291 and we affirm.

This appeal arises from the SEC’s civil action against Appellants Charles 

Liu (“Liu”) and Xin Wang (“Wang”) for violating Section 17(a)(2) of the 

Securities Act of 1933. Appellants solicited nearly $27 million from foreign 

investors to develop a cancer treatment center under the EB-5 immigration 

program. Each investor was required to put up at least a $500,000 “Capital 

Contribution” and a $45,000 “Administrative Fee.” The Private Offering 

Memorandum (“POM”) given to investors stated that the Capital Contribution 

would be used for construction costs, equipment purchases, and other items needed 

to build and operate the cancer treatment center. The POM also stated that 

“Offering Expenses, including legal, accounting and administration expenses, and 

commissions and fees related to this Offering,” would be paid from the 

Administrative Fee, not the Capital Contribution.

Despite these commitments and disclaimers, Liu diverted most of the Capital 

Contributions to marketing companies, salaries for himself and Wang, and 

personal bank accounts and withdrawals. The district court granted summary 

judgment for the SEC and ordered Appellants to disgorge the entirety of the 
3 21-56090

investors’ contributions, SEC v. Liu, 262 F. Supp. 3d 957 (C.D. Cal. 2017), and 

this Court affirmed, SEC v. Liu, 754 F. App’x 505 (9th Cir. 2018).

The Supreme Court granted Appellants’ petition for certiorari and took up 

the issue of whether disgorgement is a permissible remedy in securities fraud 

cases. While the Supreme Court answered that question in the affirmative, it 

overturned the disgorgement award and remanded with instructions to recalculate 

disgorgement after deducting legitimate expenses. See Liu v. SEC, 140 S. Ct. 1936 

(2020). On remand, the district court ordered Appellants to disgorge 

$20,871,758.81, jointly and severally, and Appellants now appeal that judgment.

This Court reviews de novo whether a district court has complied with a 

mandate on remand. Cassett v. Stewart, 406 F.3d 614, 620 (9th Cir. 2005). This 

Court reviews a district court’s imposition of a disgorgement award for abuse of 

discretion. SEC v. Feng, 935 F.3d 721, 737 (9th Cir. 2019). And this Court reviews 

the district court’s findings of fact for clear error, viewing the evidence in the light 

most favorable to the prevailing party. SEC v. Rubera, 350 F.3d 1084, 1093–94 

(9th Cir. 2003).

The Supreme Court held that “courts must deduct legitimate expenses before 

ordering disgorgement under [15 U.S.C.] § 78u(d)(5).” Liu, 140 S. Ct. at 1950. A 

district court must therefore ascertain “whether expenses are legitimate or whether 

they are merely wrongful gains under another name.” Id. (citation and quotation
4 21-56090

marks omitted). Although the Supreme Court declined to offer specific guidance, it 

noted that some of Appellants’ expenses “arguably have value independent of 

fueling a fraudulent scheme,” such as expenses directed towards “lease payments 

and cancer-treatment equipment.” Id.

“The SEC ‘bears the ultimate burden of persuasion that its disgorgement 

figure reasonably approximates the amount of unjust enrichment.’” SEC v. 

Platforms Wireless Int’l Corp., 617 F.3d 1072, 1096 (9th Cir. 2010) (quoting SEC 

v. First City Fin. Corp., 890 F.2d 1215, 1232 (D.C. Cir. 1989)). Once the SEC 

meets its burden and provides a reasonable approximation of a defendant’s illgotten gains, the burden shifts to the defendant to “demonstrate that the 

disgorgement figure was not a reasonable approximation.” Id. (quoting First City 

Fin., 890 F.2d at 1232). In the context of the Supreme Court’s mandate, this 

standard necessarily required the SEC to provide a reasonable approximation of the

legitimate expenses, if any, that should be deducted from the $27,000,000 paid by 

the investors.

In making its calculation, the district court deducted $2,210,701 in 

administrative expenses,

1 $3,105,809 in construction, design, equipment, and other 

related payments, and $234,899.19 which was left in Appellants’ corporate bank 

1 This figure represents the total amount of administrative fees collected from the 

investors. 
5 21-56090

accounts. After deducting those costs, the district court ordered Appellants to 

disgorge the remaining $20,871,758.81 of investor contributions. The district court 

declined to deduct any other claimed expenses because those represented 

Appellants’ pecuniary gains or were used to further the fraudulent scheme.

To sum things up, this iteration of the case requires us to decide the proper 

method of calculating disgorgement as an equitable remedy in an SEC enforcement 

action.

In framing the issue, the Supreme Court used the term “net profits” to cabin 

the wrongful gains obtained by Appellants. From an accounting standpoint, this 

term is a misnomer in the context of this case.

2 Net profits connote the result of 

deducting expenses from the revenues of an ongoing business enterprise. See Jae 

K. Shim & Joel G. Siegel, Dictionary of Accounting Terms, 312–13 (Barron’s, 5th 

ed. 2010). Of course, the net profits of a business can be the subject of 

disgorgement in the appropriate case. But here, there were no revenues and no 

profit, because Appellants stole the investment capital necessary to build the 

cancer treatment facility. Indeed, Appellants make this very argument: No net 

profit, thus no disgorgement. Clearly, this outcome would not produce an equitable 

remedy for Appellants’ fraud.

2 The Supreme Court noted in its opinion that disgorgement, as an equitable 

remedy, has “gone by different names,” but “whatever the name, has been a 

mainstay of equity courts.” Liu, 140 S. Ct. at 1942–43.
6 21-56090

In its opinion, the Supreme Court noted the foundational principle that it 

would be inequitable for a wrongdoer to gain from his own wrong. The Court also 

noted that “when the entire profit of a business or undertaking results from the 

wrongful activity . . . the defendant will not be allowed to diminish the show of 

profits by putting in unconscionable claims for personal services or other 

inequitable deductions.”3 Liu, 140 S. Ct. at 1945 (citation and quotation marks

omitted). While the district court ultimately opted to deduct certain expenses in

deference to the Supreme Court’s concerns, it expressed doubt as to whether 

Appellants were entitled to any deductions. But no party appeals those deductions, 

so we decline to address them further.

With this framework in mind, we find no error with the district court’s 

factual findings as to the illegitimate expenses or with the district court’s 

disgorgement award. Appellants spent nearly $11 million on payments to 

marketing companies4and professional service providers. Those payments far 

exceeded the total amount of administrative fees collected and violated the terms 

of the POM.

5 Appellants also paid themselves $6,858,092 as salaries and withdrew

3 When used in the context of this case, the term “profit” necessarily refers to the 

investors’ payments.

4 Evidence also shows that Wang was a high-level official at one of the marketing 

companies that was paid several million dollars from investor funds. See Liu, 262 

F. Supp. 3d at 964.

5 These payments fell within the definition of “Offering Expenses” which, 

according to the POM, could only be paid from the administrative fees.
7 21-56090

an additional $2,367,167 from the project’s corporate accounts for personal 

expenses like car and school tuition payments and other recreational activities.

6

These payments represent Appellants’ ill-gotten gains and are in no way legitimate

business expenses.

Appellants also made a $3 million payment to Mevion Medical Systems, 

Inc., for a proton therapy machine, even though they had already paid Optivus 

Proton Beam Therapy, Inc., $368,100 for the same type of equipment. The district 

court determined that this was done to cut out Liu’s business partner, Dr. John 

Thropay, in order to prevent the exposure of Liu’s fraudulent activities. This 

finding is supported by the factual record, and we agree that Liu should not be able 

to deduct this payment. Accordingly, we affirm the district court’s final 

disgorgement award.

Next, Appellants argue that the district court erred in holding them jointly 

and severally liable for the disgorgement award because Wang was minimally 

involved in the EB-5 scheme. Generally, courts may not impose disgorgement on 

defendants for profits “which have accrued to another, and in which they have no 

participation.” Liu, 140 S. Ct. at 1949 (quoting Belknap v. Schild, 161 U.S. 10, 25–

26 (1896)). But the common law does “permit liability for partners engaged in 

6 For example, bank transaction records reveal that an ATM withdrawal was made

in the amount of $56,173 from the Pacific Proton Therapy Regional Center bank 

account at “Caesar Palace Las Vegas.”
8 21-56090

concerted wrongdoing.” Id. Wang played an integral role in the EB-5 scheme by 

promoting the proton therapy project and soliciting investors. The evidence also 

shows that Wang was the “Vice President of Marketing” for Beverly Proton 

Center, that she signed a salary agreement for her work in that position, and that

she was an officer of one of the marketing companies to which Liu diverted

substantial investor funds, Liu, 262 F. Supp. 3d at 963–64. We see no error with 

these factual findings, nor with the district court’s decision to hold Liu and Wang 

jointly and severally liable.7

Last, we address the district court’s denial of Wang’s motion to dismiss. The 

district court determined that Wang’s conduct was sufficient to subject her to the 

SEC’s jurisdiction. We affirm the denial, albeit on a different ground from that 

relied upon by the district court. This panel considered Wang’s extraterritoriality 

argument on her initial appeal. We rejected that argument as waived and affirmed 

her liability. See Liu, 754 F. App’x at 508. Wang did not appeal this ruling and the 

Supreme Court did not disturb her liability when it remanded this case.8

The SEC contends that under the rule of mandate, the district court could not 

7 The Supreme Court acknowledged that these facts could very well support the 

imposition of joint-and-several liability. See Liu, 140 S. Ct. at 1949. The Court also 

noted that that Appellants did not “suggest that their finances were not comingled, 

or that one spouse did not enjoy the fruits of the scheme, or that other 

circumstances would render a joint-and-several disgorgement order unjust.” Id.

8

Indeed, we recently held that Appellants’ “liability had already been established 

as law of the case.” SEC v. Liu, 851 F. App’x 665, 668 (9th Cir. 2021).
9 21-56090

disturb Wang’s liability and was therefore required to deny her motion to dismiss.9

We agree. “[I]n both civil and criminal cases, . . . a district court is limited by this 

court’s remand in situations where the scope of the remand is clear.” United States 

v. Thrasher, 483 F.3d 977, 982 (9th Cir. 2007) (quoting Mendez-Gutierrez v. 

Gonzales, 444 F.3d 1168, 1172 (9th Cir. 2006)). Because the scope of the remand 

in this case was restricted to the recalculation of the disgorgement award, the 

district court could not venture beyond that issue to address Wang’s liability. 

Therefore, we affirm the denial of Wang’s motion to dismiss.

AFFIRMED.

9 Wang contends that the SEC waived this argument by failing to raise it before the 

district court below. In this Circuit, the rule of mandate “limit[s] the district court’s 

authority on remand,” and is therefore “jurisdictional” in nature. See Thrasher, 483 

F.3d at 982 (quotation marks omitted). This argument may therefore be considered 

for the first time on appeal.