Source: https://caselaw.findlaw.com/us-2nd-circuit/1651053.html
Timestamp: 2020-08-06 02:23:52
Document Index: 611418900

Matched Legal Cases: ['§ 10', '§ 13', '§ 17', '§ 20', '§ 77', '§ 21', '§ 78', '§ 455', '§ 455', '§ 455', '§ 2533', '§ 77', '§ 78', '§ 77', '§ 78', '§ 77', '§ 78']

Before JACOBS, Chief Judge, KEARSE and CARNEY, Circuit Judges. Susan S. McDonald, Senior Litigation Counsel, Securities and Exchange Commission, Washington, D.C. (Mark D. Cahn, General Counsel, Michael A. Conley, Deputy General Counsel, Jacob H. Stillman, Solicitor, Securities and Exchange Commission, Washington, D.C., on the brief), for Plaintiff–Appellee. Jeffrey B. Coopersmith, Seattle, Washington (John A. Goldmark, Davis Wright Tremaine, Seattle, Washington; Katherine A. Heaton, DLA Piper, Seattle, Washington, on the brief), for Defendant–Appellant.
This is a civil enforcement action brought by the SEC against defendant Symbol Technologies, Inc. (“Symbol”), a supplier of mobile information systems using handheld electronic devices for barcode and other data capture technology, and various officers and employees of Symbol, alleging that the defendants engaged in fraudulent and manipulative practices in violation of, inter alia, § 10(b) of the Exchange Act and Rule 10b–5 thereunder, § 13(b)(5) of the Exchange Act and § 17(a) of the Securities Act, and various rules promulgated under the latter sections. The complaint's well-pleaded allegations as to Razmilovic's liability, which, in light of his default, are deemed admitted, see Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir.1992), cert. denied, 506 U.S. 1080 (1993), include the following.
Razmilovic was Symbol's president and chief operating officer (“COO”) from 1995 through June 2000, its President and Chief Executive Officer (“CEO”) from July 2000 until February 2002, and a member of its board of directors from 1995 to February 2002. “From at least 1998 until as recently as February 2003,” Razmilovic and others “engaged in a wide array of fraudulent accounting practices and other misconduct that had a cumulative net impact of over $230 million on Symbol's reported revenue and over $530 million on its reported pre-tax earnings.” (Complaint ¶ 1.) That conduct included entering into artificial swap transactions and other fraudulent schemes, publishing false reports of earnings, issuing fraudulent press releases, and filing false reports or registration statements with the SEC. (See, e.g., id. ¶¶ 44–48, 143.) Razmilovic regularly authorized changes to quarterly reports in order to conform Symbol's reported results to management's prior forecasts. For example, on one occasion, management's prediction was matched by making fraudulent adjustments, authorized by Razmilovic, that made a $2.5 million quarterly loss appear to be a $13.4 million gain. (See Complaint ¶ 40(f).) The frauds are described in greater detail in the district court's Memorandum of Decision dated September 30, 2011, and reported at 822 F.Supp.2d 234 (“September 2011 Opinion”), familiarity with which is assumed.
Razmilovic received bonuses and other compensation directly related to Symbol's performance. He also profited from the frauds because they artificially inflated Symbol's stock price, and he had received as compensation for his employment thousands of Symbol stock options that he was able to exercise at prices well below the inflated market price and to sell at that market price. In the present action, commenced in June 2004, the SEC sought—and largely won—a judgment that would, inter alia, enjoin Razmilovic from further violations of the securities laws, bar him from again serving as an officer or director of any public company, require him to disgorge all executive compensation he had received from Symbol from 1998 onward and all profits from his securities violations, plus prejudgment interest on those sums, and order him to pay penalties authorized by the 1933 and 1934 Acts. As to the relief ordered by the district court, only the monetary awards are at issue on this appeal.
On December 10, the SEC moved pursuant to Fed.R.Civ.P. 37(b)(2)(A)(vi) for entry of a default judgment against Razmilovic as a sanction for his refusal to obey the court's order to appear for his deposition. Razmilovic opposed the motion. He acknowledged that his violation of the court order “may result in some form of sanction” but argued that a default judgment was drastic, the “harshest of sanctions,” and was not warranted because “lesser, effective sanctions may be imposed.” (Razmilovic Memorandum of Law in Opposition to Motion for Sanctions (“Razmilovic Sanctions Memorandum”) at 4–5.) Razmilovic proposed, for example, that he instead be barred from disputing certain facts or asserting certain defenses, or be required to appear for his deposition in Sweden and to pay for the expenses of the deposition. (See id. at 5–6.) Razmilovic also argued that a default judgment would be improper because, in his view, the Supreme Court, in Degen v. United States, 517 U.S. 820 (1996), had “rejected automatic disentitlement” of fugitives in civil cases. (Razmilovic Sanctions Memorandum at 9.) He argued that imposing a default “as the sanction for the sole discovery transgression of failing to attend an in-person deposition in the United States as ordered would be the same as automatic disentitlement.” (Id.)
Quoting from its October 2009 Order, the district court also pointed out that Razmilovic had been “specifically warned” that if he failed to comply with that order “ ‘to appear in person for a deposition on or before October 22, 2009,’ “ he could be subject to sanctions, “ ‘including a default judgment.’ “ (Id. at 5.) The court noted that Razmilovic himself, in opposition to the SEC's Rule 37 motion, “admits that he should be sanctioned” (id. at 3), and it rejected his request for a sanction less severe than the entry of a default. The court found that Razmilovic's proposal that the court should simply order him to have his deposition taken in Sweden—given that this was what Razmilovic had proposed all along—could hardly be considered a “sanction” at all. (Id.)
O'Neal identified three statistically significant events which publicly disclosed or suggested that Symbol's profitability had previously been overstated and which were followed by declines in Symbol's share price. O'Neal opined that as a result of Razmilovic's prior frauds, Symbol's share price, prior to the first of these events, had been inflated by a total of $11.54. Martin, in contrast, found eleven statistically significant events—only one of which was among the three identified by O'Neal—and she opined that much of the stock price movement following the events she cited was attributable to industry trends. She thus calculated that the frauds had inflated Symbol's share price by a total of only $3.42.
As to the SEC's request that Razmilovic be required to disgorge his profits from transactions in Symbol stock, measured simply by the difference between his sales price and his purchase price, the district court again disagreed. It ruled that his unlawful gains from the stock transactions should be measured by the “amount by which the value of Symbol's stock was inflated as a result of the fraud.” Id. at 261. In determining the amount of that inflation, the court credited the calculation by the SEC's expert, O'Neal, over that of Razmilovic's expert, Martin. The court noted that Martin lacked “prior experience with disgorgement cases involving the exercise of stock options,” that she failed to base her opinions on economic literature, and that she failed to follow her own described procedures. Id. at 262–63. The court concluded that the frauds in which Razmilovic participated had inflated Symbol's stock price by $11.54 per share. See id. at 261–66. On that basis, the court calculated that with respect to Razmilovic's stock transactions—including his exercise of stock options by selling fraudulently inflated shares to Symbol to fund the exercise of options having far lower prices; “zero-cost collar” transactions (i.e., offsetting put and call options), that Razmilovic entered into while fraudulently representing to the other party that he had no material, non-public information concerning Symbol; and his sales of Symbol stock on the open market while its price was inflated—Razmilovic's fraudulent gains totaled $33,869,975.20.
Finally, as discussed in Part II.C.2. below, the district court imposed a statutory penalty pursuant to § 20(d) of the Securities Act, 15 U.S.C. § 77t(d)(l), and § 21(d) of the Exchange Act, 15 U.S.C. § 78u(d)(3)(A), to the extent of one-half the amount of Razmilovic's disgorgeable pecuniary gain, or $20,876,811.52. See 822 F.Supp.2d at 279–82. In the proposed judgment submitted by the SEC and entered by the court, however, the penalty figure was $2 million higher, $22,876,811.52.
Fed.R.Civ.P. 37(b)(2)(A). Clearly, the most severe of these sanctions for a disobedient plaintiff is the dismissal of his action; the most severe for a disobedient defendant is the imposition of a default. “[D]ismissal or default” should be ordered “only when the district judge has considered lesser alternatives.” Southern New England Telephone Co. v. Global NAPs Inc., 624 F.3d 123, 144 (2d Cir.2010)(“SNET ”). No sanction should be imposed without giving the disobedient party notice of the particular sanction sought and an opportunity to be heard in opposition to its imposition. See, e.g., Reilly v. NatWest Markets Group Inc., 181 F.3d 253, 270 (2d Cir.1999), cert. denied, 528 U.S. 1119 (2000); United States Freight Co. v. Penn Central Transportation Co., 716 F.2d 954, 955 (2d Cir.1983) ( “U.S.Freight ”).
We review a district court's imposition of sanctions for abuse of discretion. See, e.g., National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642 (1976) (“NHL ”); Agiwal v. Mid Island Mortgage Corp., 555 F.3d 298, 302 (2d Cir.2009) (“Agiwal ”); U.S. Freight, 716 F.2d at 955; Sieck v. Russo, 869 F.2d 131, 134 (2d Cir.1989) (“Sieck ”).
SNET, 624 F.3d at 144 (quoting Agiwal 555 F.3d at 302).
Sieck, 869 F.2d at 134 (quoting NHL, 427 U.S. at 643); see also NHL, 427 U.S. at 640, 642 (extreme sanction of dismissal of complaint justified where failure to comply with court's order was due to plaintiffs' willfulness and bad faith); Agiwal, 555 F.3d at 302 (“dismissal with prejudice is a harsh remedy to be used only in extreme situations, and then only when a court finds willfulness, bad faith, or ․ fault by the non-compliant litigant” (internal quotation marks omitted)); id. (“[w]hether a litigant was at fault or acted willfully or in bad faith are questions of fact”).
An abuse of discretion may consist of an erroneous view of the law, a clearly erroneous assessment of the facts, or a decision that cannot be located within the range of permissible decisions. See, e.g., Agiwal, 555 F.3d at 302 n.2; Sims v. Blot, 534 F.3d 117, 132 (2d Cir.2008). “A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990) (reviewing sanction imposed pursuant to Fed.R.Civ.P. 11). But in the absence of such an error, “[t]he question, of course, is not whether [the reviewing court] would as an original matter have [imposed the sanction in question]; it is whether the District Court abused its discretion in so doing.” NHL, 427 U.S. at 642; see, e.g., SNET, 624 F.3d at 143.
The fugitive disentitlement doctrine allows an appellate court to, inter alia, “dismiss the appeal of a defendant who is a fugitive from justice during the pendency of his appeal.” Ortega–Rodriguez v. United States, 507 U.S. 234, 239 (1993). The Degen Court held that this doctrine does not authorize the district court to “strike the filings of a claimant in a forfeiture suit” and enter judgment against him merely “for failing to appear in a related criminal prosecution,” 517 U.S. at 821, “or otherwise ․ resisting[the] related criminal prosecution,” id. at 823.
In the present case, however, as described in Part I.A. above, the court rejected Razmilovic's Degen argument because the SEC did not seek—and the court did not enter—sanctions under the fugitive disentitlement doctrine (see Conf. Tr. 3). Rather, the court entered the default against Razmilovic on the express basis that he had willfully disobeyed the October 2009 Order. (See id. at 3, 4–5.)
[O]f course, [the fugitive's] absence entitles him to no advantage. If his unwillingness to appear in person results in noncompliance with a legitimate order of the court respecting pleading, discovery, the presentation of evidence, or other matters, he will be exposed to the same sanctions as any other uncooperative party. A federal court has at its disposal an array of means to enforce its orders, including dismissal in an appropriate case. Again, its powers include those furnished by federal rule, see, e.g., Fed. Rules Civ. Proc. 37, 41(b); National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639 (1976) (per curiam)․
A judge is required to recuse herself from “any proceeding in which h[er] impartiality might reasonably be questioned.” 28 U.S.C. § 455(a). The standard for disqualification under 28 U.S.C. § 455(a) is “an objective” one, ISC Holding AG v. Nobel Biocare Finance AG, 688 F.3d 98, 107 (2d Cir.2012) (“ISC Holding ”)(internal quotation marks omitted); the question is whether an objective and disinterested observer, knowing and understanding all of the facts and circumstances, could reasonably question the court's impartiality, see, e.g., id.; In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1313 (2d Cir.1988), reh'g denied en banc, 869 F.2d 116 (2d Cir.), cert. denied, 490 U.S. 1102 (1989).
To be disqualifying under § 455, “ ‘[t]he alleged bias and prejudice ․ must stem from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge has learned from his participation in the case.’ “ In re International Business Machines Corp., 618 F.2d 923, 927 (2d Cir.1980) (quoting United States v. Grinnell Corp., 384 U.S. 563, 583 (1966) (emphasis ours)).
Liteky v. United States, 510 U.S. 540, 555 (1994). Accordingly, recusal is not warranted where the only challenged conduct “consist[s] of judicial rulings, routine trial administration efforts, and ordinary admonishments ․ to counsel and to witnesses,” where the conduct occurs during judicial proceedings, and where the judge “neither (1) relie[s] upon knowledge acquired outside such proceedings nor (2) display[s] deep-seated and unequivocal antagonism that would render fair judgment impossible.” Id. at 556.
A district judge's decision not to recuse herself from a proceeding is reviewed under an abuse-of-discretion standard. See, e.g., ISC Holding, 688 F.3d at 107; Diamondstone v. Macaluso, 148 F.3d 113, 120 (2dCir.1998). It is “rare” for “a district judge's denial of amotion to recuse” to be “disturbed by an appellate court.” ISC Holding, 688 F.3d at 107 (internal quotation marks omitted). We see no abuse of discretion here.
The court found that Razmilovic's refusal to comply with the court's order was willful—a finding he does not suggest was in any way erroneous or inaccurate. As discussed in Part II.A. above, the entry of a default based on that willful choice was well within the proper bounds of the court's discretion.
We note that Razmilovic complains that he “moved in essence for a directed verdict [and] the Court sua sponte invited the SEC to reopen its remedies case to cure th[e] defect” (Coopersmith Decl. ¶ 4 (emphasis added); see id. ¶ 22 (Razmilovic made “a motion effectively for a directed verdict after a party has rested”))—as if such a motion itself precluded any further presentation of evidence by the SEC. But when a party moves for a “directed verdict” (known since 1991 as a “judgment as a matter of law”) in a jury trial, it must do so—with specificity as to the alleged evidentiary deficiency—before the case is submitted to the jury, see Fed.R.Civ.P. 50(a)(2); both the timing requirement and the specificity requirement are designed “to assure the responding party an opportunity to cure any deficiency in that party's proof,” Piesco v. Koch, 12 F.3d 332, 340 (2d Cir.1993) (internal quotation marks omitted); see, e.g., Lore v. City of Syracuse, 670 F.3d 127, 152–53 (2d Cir.2012); 9B C. Wright & A. Miller, Federal Practice and Procedure § 2533, at 494–507 (3d ed.1998). While the standards for assessing such motions under Rule 50 do not govern motions for judgment in a case tried to the court without a jury, it should be beyond cavil that the court, in a proceeding in which it will rule on proposed equitable remedies, has no less authority than it has in a case to be decided by a jury to allow a party to attempt to cure an alleged deficiency in its proof before the matter is submitted to the decisionmaker.
“Once the district court has found federal securities law violations, it has broad equitable power to fashion appropriate remedies, including ordering that culpable defendants disgorge their profits.” SEC v. First Jersey Securities, Inc., 101 F.3d 1450, 1474 (2d Cir.1996) (“First Jersey ”). cert. denied, 522 U.S. 812 (1997). Disgorgement “is a method of forcing a defendant to give up the amount by which he was unjustly enriched.” SEC v. Commonwealth Chemical Securities, Inc., 574 F.2d 90, 102 (2d Cir.1978). Thus, in order to establish a proper disgorgement amount, “the party seeking disgorgement must distinguish between the legally and illegally derived profits,” CFTC v. British American Commodity Options Corp., 788 F.2d 92, 93 (2d Cir.), cert. denied, 479 U.S. 853 (1986), so that disgorgement is ordered only with respect to those that were illegally derived.
SEC v. First City Financial Corp., 890 F.2d 1215, 1231 (D.C.Cir.1989) ( “First City ”). Given these difficulties, “[s]o long as the measure of disgorgement is reasonable, any risk of uncertainty should fall on the wrongdoer whose illegal conduct created that uncertainty.” Warde, 151 F.3d at 50 (internal quotation marks omitted); see, e.g., First Jersey, 101 F.3d at 1475; Patel, 61 F.3d at 140.
Although I accept Razmilovic's contention that the proper measure of disgorgement in this case is the amount by which the value of Symbol's stock was inflated as a result of the fraud, I nonetheless rej ect his expert's calculation of the value of that inflation.
Martin's opinions, and particularly her calculations of the amount by which the value of Symbol shares were inflated during the fraud period and the amount Razmilovic is liable to disgorge, are entitled to little or no weight because, inter alia, in addition to her omission of two (2) statistically relevant dates,[ ] (a) she is not qualified to testify as to the amount Razmilovic is liable to disgorge from his stock transactions insofar as she testified during her deposition that she has no prior experience with disgorgement cases involving the exercise of stock options and that she did not literally know how the [stock exercise] transaction occur [red] in this case ․; (b) she did not base her opinion upon economic literature ․ and used an earnings response model unsupported by accepted econometric principles; and (c) she did not follow her own procedures in this case, e.g., she compared the performance of Symbol stock against only one (1) index, as opposed to two (2) or more․ In sum, although Martin properly utilized an event study methodology, she did not apply that methodology reliably to the facts of this case.
Further, perceived gaps, inconsistencies, or errors in the reasoning leading to an expert's opinion are matters that properly go to the weight of the evidence; and the weight of the evidence is a matter to be argued to the trier of fact, not a basis for reversal on appeal, see, e.g., Anderson v. Bessemer City, 470 U.S. 564, 573–74 (1985); Schwartz v. Capital Liquidators, Inc., 984 F.2d 53, 54 (2d Cir.1993). Although the court's reliance on a clearly erroneous finding of fact would constitute an abuse of discretion, we see no such findings here, for the factfinder's choice between competing views of the facts or events cannot be clearly erroneous. See Anderson, 470 U.S. at 574.
Razmilovic's argument with respect to his stock options—that he should not have been required to disgorge “paper” profits, i.e., profits from price increases of shares he did not sell—finds no support even from his own expert, as Razmilovic used the fraudulently appreciated value of those shares to fund his exercise of the stock options. The district court noted that
Razmilovic's other challenge to the order that he pay $27,260,953 .99 in prejudgment interest may have somewhat greater merit. The district court ruled that Razmilovic was “liable to pay prejudgment interest on the entire amount of his ill-gotten gains for the entire period from the time of his unlawful gains to the entry of judgment.” 822 F.Supp.2d at 278; see id. n.72 (setting various starting dates—the earliest being February 1, 2002—for interest calculations with respect to different components of the $41,753,623 .04 disgorgement amount). Razmilovic contended that he should not be liable for prejudgment interest because the United States government had caused some $17.4 million of his funds in Swiss bank accounts to be frozen in 2004, and he had been denied access to those funds since that time. The district court rejected that contention, stating (1) that there was “no evidence ․ that all of [Razmilovic's] assets have been frozen by the government since 2004,” (2) that there was no evidence that Razmilovic had attempted to access the frozen funds to pay living expenses, and (3) that the total disgorgement ordered was well in excess of the total amount of frozen funds. Id. at 278 (emphasis in original). Although the district court's third rationale justifies an award of prejudgment interest on at least the amount by which the disgorgement sum exceeds the frozen $17.4 million, the remainder of the court's reasoning appears flawed. And there is uncertainty with respect to the frozen funds that neither side has addressed on appeal or, apparently, in the district court.
Since “[t]he primary purpose of disgorgement as a remedy for violation of the securities laws is to deprive violators of their ill-gotten gains, thereby effectuating the deterrence objectives of those laws,” First Jersey, 101 F.3d at 1474; see also SEC v. Palmisano, 135 F.3d 860, 865 (2d Cir.) (“Palmisano ”)(“ ‘deterrence may serve civil as well as criminal goals' “ (quoting Hudson v. United States, 522 U.S. 93, 105 (1997) (other internal quotation marks omitted))), cert. denied, 525 U.S. 1023 (1998), it is within the discretion of a court to award prejudgment interest on the disgorgement amount for the period during which a defendant had the use of his illegal profits, see, e.g., First Jersey, 101 F.3d at 1474–77. However, where, as here, the defendant has had some or all of his assets frozen at the behest of the government in connection with the enforcement action, an award of prejudgment interest relating to those funds would be inappropriate with respect to the period covered by the freeze order, for the defendant has already, for that period, been denied the use of those assets. In such a case, after a final order of disgorgement, the funds previously frozen would presumably be turned over to the government in complete or partial satisfaction of the disgorgement order, along with any interest that has accrued on them during the freeze period. In that circumstance, the remedial purpose of prejudgment interest would already have been served with respect to the period of the freeze; to require the defendant to pay prejudgment interest on the entire disgorgement amount including the earlier frozen amount would, for the freeze period, deprive him twice of interest on the portion of the disgorgement award that is satisfied by the frozen assets. Cf. Palmisano, 135 F.3d at 863 (noting the SEC's concession that a defendant should not be required to disgorge amounts that he paid as restitution to his victims as ordered in his criminal case, because a “[d]efendant is only required to give back the proceeds of his securities fraud once” (internal quotation marks omitted)).
The first and second facts cited by the district court, i.e., that Razmilovic apparently has assets other than those that were frozen and that he has had no need to use the frozen assets for his living expenses, did not take into account either the fact that Razmilovic has been denied the right to use the assets that were frozen or the fact that the disgorgement order was not designed to strip Razmilovic of “all” of his assets. “The [disgorgement] remedy consists of factfinding by a district court to determine the amount of money acquired through wrongdoing ․ and an order compelling the wrongdoer to pay that amount plus interest to the court․ Because the remedy is remedial rather than punitive, the court may not order disgorgement above this amount.” SEC v. Cavanagh, 445 F.3d 105, 116 & n.25 (2d Cir.2006). The very purpose of the trial in this case was to allow the court to distinguish Razmilovic's fraudulent gains from those that did not result from his frauds, and to order disgorgement of only the former.
Both the 1933 and 1934 Acts authorize three tiers of monetary penalties for statutory violations. See 15 U.S.C. § 77t(d); 15 U.S.C. § 78u(d)(3). Under each statute, a first-tier penalty may be imposed for any violation; a second-tier penalty may be imposed if the violation “involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement”; a third-tier penalty may be imposed when, in addition to meeting the requirements of the second tier, the “violation directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons,” 15 U.S.C. §§ 77t(d)(2)(A)-(C); 15 U.S.C. §§ 78u(d)(3)(B)(i)-(iii). Each tier provides that, for each violation, the amount of penalty “shall not exceed the greater of ” a specified monetary amount or the defendant's “gross amount of pecuniary gain”; the amounts specified for an individual defendant for the first, second, and third tiers, respectively, are $5,000, $50,000, and $100,000. 15 U.S.C. § 77t(d)(2) (emphasis added); 15 U.S.C. § 78u(d)(3)(B) (same). Since the amount of Razmilovic's disgorgeable gain was $41,753,623.04, the maximum civil penalty the court was allowed to impose on him was $41,753,623.04.
822 F.Supp.2d at 280–81 (emphasis added). The court concluded that a penalty of $20,876,811.52, equal to one-half the amount of Razmilovic's fraud-enabled pecuniary gains, was appropriate “to serve the punitive and deterrent purposes of the civil penalty statutes.” Id. at 282.
We conclude that the penalty of $20,876,811.52 was within the bounds of the district court's discretion. We rej ect Razmilovic's proportionality challenge because we see no other similarly situated codefendant.
The judgment, however, which was prepared by the SEC, stated the amount of the civil fine as $22,876,811.52, or $2 million greater than the amount ordered in the district court's opinion. Nothing in the record justified this increase; the SEC states that the discrepancy was an inadvertent clerical error (see SEC brief on appeal at 4 n.2). The judgment thus must be corrected to order that Razmilovic pay a civil penalty of $20,876,811.52.
We have considered all of Razmilovic's contentions on this appeal, and except as indicated above, have found them to be without merit. The judgment of the district court is vacated to the extent that it orders Razmilovic (a) to pay prejudgment interest in the amount of $27,260,953.99, and (b) to pay a civil penalty in the amount of $22,876,811.52 instead of $20,876,811.52, and in all other respects is affirmed. The matter is remanded for further proceedings in accordance with the foregoing to determine the appropriate amount of prejudgment interest Razmilovic is to pay and for correction of the penalty amount to $20,876,811.52.