Court Opinion

ID: 4664072
Source: CourtListenerOpinion
Date Created: 2021-03-02 16:00:46.834541+00
Date Added: 2024-06-11T08:02:33.496167
License: Public Domain

USCA11 Case: 20-11017    Date Filed: 03/02/2021   Page: 1 of 7

                                                     [DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                             No. 20-11017
                         Non-Argument Calendar
                       ________________________

                D.C. Docket No. 1:15-cv-00538-ALB-SRW

UNITED STATES COMMODITY FUTURES TRADING COMMISSION,

                                                     Plaintiff-Appellee,

                                  versus

HUSAM TAYEH,

                                                     Defendant-Appellant.

                       ________________________

                Appeal from the United States District Court
                    for the Middle District of Alabama
                      ________________________

                              (March 2, 2021)

Before JILL PRYOR, LUCK, and ANDERSON, Circuit Judges.

PER CURIAM:
          USCA11 Case: 20-11017       Date Filed: 03/02/2021    Page: 2 of 7

      Husam Tayeh (“Tayeh”), proceeding pro se, appeals the district court’s final

judgment in favor of the United States Commodity Futures Trading Commission

(the “CFTC”) in its civil action based on violations of the Commodity Exchange

Act 1 (“CEA”). Specifically, he appeals the district court’s calculation of the

disgorgement amount. He also appeals the district court’s order releasing a pallet

of currency held by the FBI to the CFTC as an offset against the final judgment.

                                          I.

      On appeal, Tayeh argues that the district court abused its discretion when,

after a bench trial, it failed to deduct his legitimate business expenses from the

amount of disgorgement.

      We liberally interpret briefs filed by pro se litigants; however, issues the pro

se litigant fails to brief on appeal are deemed abandoned and are not considered.

Timson v. Sampson, 518 F.3d 870, 874 (11th Cir. 2008). Furthermore, a pro se

litigant also abandons a claim on appeal “when he makes only passing references

to it, or raises it in a perfunctory manner without supporting arguments and

authority.” Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678, 680-81 (11th Cir.

2014).

      We review a district court’s calculation of disgorgement for abuse of

discretion. SEC v. Levin, 849 F.3d 995, 1001 (11th Cir. 2017). The CEA

1
      Commodity Exchange Act, 7 U.S.C. §§ 1-27f (2018).
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authorizes the CFTC to seek, and district courts to impose, equitable remedies

when a defendant is found to have committed a violation of any of its provisions,

including the “disgorgement of gains received in connection with such violation.”

7 U.S.C. § 13a-1(d)(3)(B). Disgorgement is an equitable remedy intended to

prevent unjust enrichment from ill-gotten gains and must not be used punitively.

CFTC v. Sidoti, 178 F.3d 1132, 1138 (11th Cir. 1999). The CFTC has the burden

to produce a reasonable approximation of a defendant’s ill-gotten gains to sustain a

disgorgement amount. Id.

      Once the CFTC meets this burden, “[t]he burden then shifts to the defendant

to demonstrate that [the CFTC’s] estimate is not a reasonable approximation.”

SEC v. Calvo, 378 F.3d 1211, 1217 (11th Cir. 2004). “Exactitude is not a

requirement; so long as the measure of disgorgement is reasonable, any risk of

uncertainty should fall on the wrongdoer whose illegal conduct created that

uncertainty.” Id. (internal quotation marks omitted) (alteration adopted). We have

held that:

      where a defendant’s record-keeping or lack thereof has so obscured
      matters that calculating the exact amount of illicit gains cannot be
      accomplished without incurring inordinate expense, it is well within
      the district court’s discretion to rule that the amount of disgorgement
      will be the more readily measurable proceeds received from the
      unlawful transactions.

Id. at 1218 (citing CFTC v. Am. Bd. of Trade, Inc., 803 F.2d 1242, 1252 (2d Cir.

1986)). Concerning the issue of deducting business expenses from a disgorgement
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calculation, we have held that “defendants in a disgorgement action are not entitled

to deduct costs associated with committing their illegal acts.” FTC v. Wash. Data

Res., Inc., 704 F.3d 1323, 1325 (11th Cir. 2013) (internal quotation marks

omitted).

       In its recent decision, Liu v. SEC, the Supreme Court granted certiorari to

determine “whether § 78u(d)(5) [of the Securities Exchange Act of 1934]

authorized the SEC to seek disgorgement beyond a defendant’s net profits from

wrongdoing.” 140 S. Ct. 1936, 1942 (2020). The Liu Court held that, under

principles of equity, the SEC was precluded from recovering a defendant’s gross

profits and could only recover net profits which accounted for and deducted

legitimate business expenses. Id. at 1949-50 (noting that some of the defendant’s

ill-gotten gains went toward lease payments and cancer-treatment equipment which

“arguably have value independent of fueling a fraudulent scheme”).

       Although the district court decision in this case was issued shortly before the

Supreme Court issued its decision in Lui, 2 the district court foresaw the ruling in

Lui:

       [T]he Court concludes that the legal issue of whether a disgorgement
       amount must account for legitimate business expenses is ultimately
       irrelevant to the disposition of this case. This is so because, even
       if the law allowed a court to account for a defendant’s business
       expenses when ordering disgorgement, there would need to be
       evidence of a defendant’s expenses before a court could account

2
       The impact of the Lui decision on this case has been briefed to this Court.
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      for them. . . .

             Here, Tayeh failed to provide any credible evidence that would
      allow the Court to consider reducing the stipulated total gain amount
      with his legitimate business expenses. As noted above, Tayeh’s
      testimony was not credible. Not to belabor the point, but Tayeh
      provided only hazy and uncertain estimates of how much he spent on
      legitimate business transactions. Tayeh testified that he was “not very
      good at recordkeeping or managing stuff.” (Doc. 218 at 78). He
      claimed to have had multiple employees, but he could not recall filing
      any employee-employer tax forms and did not testify about how much
      he paid them. (Doc. 218 at 96). The CFTC introduced evidence that
      Tayeh personally withdrew millions in cash from bank accounts and
      direct-transferred millions more to high-end jewelers. (Doc. 218 at
      55–57). Tayeh testified that he used this cash and jewelry to trade for
      Iraqi dinar in Jordan and Vietnamese dong in Hong Kong. (Doc. 218
      at 76). But Tayeh provided nothing—no travel records, government
      documents, shipping receipts, witness testimony, passport stamps,
      etc.—to corroborate his testimony about using untraceable cash and
      jewelry to purchase large amounts of currency overseas.

Dist. Ct. Op., Doc. 227 at 10-11.

      Here, the district court did not abuse its discretion when it set the

disgorgement amount equal to the stipulated gain of the defendants because the

CFTC had provided a reasonable approximation of the defendants’s ill-gotten

gains based on expert testimony and the records provided by the defendants. See

Sidoti, 178 F.3d at 1138. Moreover, Tayeh failed to meet his burden of proving

that the disgorgement amount was unreasonable. See Calvo, 378 F.3d at 1217.

Significantly, he failed to provide concrete and credible evidence to demonstrate

the amount of money spent on any of the alleged business expenses or whether any

of the business expenses were legitimate, and he obscured any reasonable
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calculation of legitimate expenses due to his inadequate recordkeeping.

Accordingly, we affirm the district court’s determination of the disgorgement

amount.

                                          II.

      Tayeh argues that the district court erred when it ordered the release of the

foreign currency held by the FBI to the CFTC because the compromise settlement

from the related civil forfeiture action, United States v. One Parcel of Property,

No. 1:16-cv-831-SRW (M.D. Ala. 2017), dictated that the United States would

neither initiate nor seek judicial forfeiture proceedings and the currency had been

released pursuant to the resolution of that matter.

      We review a district court’s grant of equitable monetary relief for abuse of

discretion. Wash. Data Res., Inc., 704 F.3d at 1325. We review a district court’s

construction of a settlement agreement de novo. See Schwartz v. Florida Bd. of

Regents, 807 F.2d 901, 905 (11th Cir. 1987). A settlement agreement is a contract

and is governed by principles of general contract law, thus, we give the terms of a

settlement agreement their “plain and ordinary meaning.” See id. The government

has the same common law right of offset as any other creditor and may “apply the

unappropriated moneys of his debtor, in his hands, in extinguishment of the debts

due him.” Capuano v. United States, 955 F.2d 1427, 1429 (11th Cir. 1992)

(quoting United States v. Munsey Tr. Co., 332 U.S. 234, 239 (1947)).

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      Here, the district court did not err when it ordered that the $2.5 million in

foreign currency be released to the CFTC as an offset against the final judgment in

this case because nothing in the record demonstrates that the United States or the

CFTC sought or initiated judicial forfeiture proceedings. The CFTC was entitled

to and sought release of the currency to offset the amount that Tayeh was liable to

the agency under the final judgment. Id.

      For the foregoing reasons, the judgment of the district court is affirmed.

      AFFIRMED.

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