Court Opinion

ID: 9368797
Source: CourtListenerOpinion
Date Created: 2023-02-07 01:00:30.33892+00
Date Added: 2024-06-11T17:16:10.105828
License: Public Domain

Case: 21-20511         Document: 00516635934             Page: 1     Date Filed: 02/06/2023

              United States Court of Appeals
                   for the Fifth Circuit                                  United States Court of Appeals
                                                                                   Fifth Circuit

                                                                                 FILED
                                                                          February 6, 2023
                                        No. 21-20511
                                                                            Lyle W. Cayce
                                                                                 Clerk

   Securities and Exchange Commission,

                                                                      Plaintiff—Appellee,

                                             versus

   Frederick Alan Voight; Daystar Funding, L.P.; F.A.
   Voight & Associates, L.P., Relief Defendant; Rhine Partners,
   L.P., Relief Defendant; Topside Partners, L.P., Relief Defendant,

                                                                Defendants—Appellants.

                      Appeal from the United States District Court
                          for the Southern District of Texas
                               USDC No. 4:15-CV-2218

   Before Elrod, Haynes, and Willett, Circuit Judges.
   Per Curiam:*
          The Securities and Exchange Commission brought civil enforcement
   proceedings against Appellant Frederick Alan Voight for the latter’s role in
   Ponzi schemes that defrauded investors of tens of millions dollars. Voight
   challenges the legality of the remedies ordered by the district court, and the
   sufficiency of the process he received in connection with the district court’s

          *
              This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 21-20511      Document: 00516635934           Page: 2   Date Filed: 02/06/2023

                                     No. 21-20511

   consideration of the SEC’s remedies motion. But the issues he presents are
   either foreclosed by our recent decision in SEC v. Hallam, 42 F.4th 316 (5th
   Cir. 2022), or otherwise meritless.
          Among other things, the district court ordered Voight to pay disgorge-
   ment and pre-judgment interest on that award, enjoined him from participat-
   ing in the sale or issuance or securities except on his own behalf, froze assets
   belonging to several companies he controlled, and ordered that those assets
   be turned over to contribute towards the disgorgement award. Voight chal-
   lenges each of those remedies.
          First, the disgorgement award was lawful because it reasonably ap-
   proximated Voight’s unjust enrichment, in accordance with our precedent
   prior to the Supreme Court’s decision in Liu v. SEC, 140 S. Ct. 1936 (2020).
   See Hallam, 42 F.4th at 338, 341 (explaining that the relevant amendments to
   the Securities Act and Exchange Act ratified the pre-existing framework for
   calculating disgorgement). Second, the pre-judgment interest was permissi-
   ble because Voight consented to a disgorgement award with such interest in
   the agreed partial judgment and because, as we recently held, an award of
   legal disgorgement “may include interest.” Id. at 341. Third, as to the legal-
   conduct injunction and asset-freeze order, Voight failed to “address the dis-
   trict court’s analysis and explain how it erred,” and so failed to “adequately
   brief the arguments on appeal.” Id. at 327 (quoting Rollins v. Home Depot
   USA, 8 F.4th 393, 397 & n.1 (5th Cir. 2021)) (internal quotation marks omit-
   ted). Thus, those issues are forfeited.
          The district court also relied on a declaration made by the SEC’s fraud
   examiner to support the disgorgement award. Voight contends that this was
   error because the statements made in the declaration are irrelevant and hear-
   say. That issue is forfeited. Voight moved to exclude the declaration in the
   district court, and the motion was referred to the magistrate judge. The

                                          2
Case: 21-20511      Document: 00516635934            Page: 3    Date Filed: 02/06/2023

                                      No. 21-20511

   magistrate judge denied the motion, and Voight did not appeal that motion
   to the district judge, as is required to preserve such an objection. See 28
   U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). He forfeited this issue by failing
   to do so. See, e.g., Singletary v. BRX, Inc., 828 F.2d 1135, 1137 (5th Cir. 1987);
   Lee v. Plantation of Louisiana, LLC, 454 F. App’x 358, 359–60 (5th Cir. 2011).
   And even if he did not, Voight forfeited any argument that the magistrate
   judge’s order constitutes plain error by failing to adequately brief the issue
   on appeal. See, e.g., Garcia v. Orta, 47 F.4th 343, 349 n.1 (5th Cir. 2022);
   United States v. O’Neal, 742 F. App’x 836, 845 (5th Cir. 2018).
          Finally, in considering the SEC’s remedies motion, the district court
   denied a motion by Voight to take the deposition of the SEC’s fraud examiner
   and (over Voight’s objection) declined to hold an evidentiary hearing. Voight
   argues that those decisions constitute an abuse of discretion and denied him
   due process. As to the discovery motion, Voight fails to present anything that
   overcomes the “great deference” we afford discovery rulings. United States
   v. Mora, 994 F.2d 1129, 1138 (5th Cir. 1993); see also SEC v. Team Resources,
   Inc., 942 F.3d 272, 278 (5th Cir. 2019), vacated on other grounds sub nom., Team
   Resources, Inc. v. SEC, 141 S. Ct. 186 (2020) (mem.).
          As to the evidentiary hearing, Voight argues that he was entitled to (a)
   cross-examine the SEC’s fraud examiner; and (b) introduce evidence contra-
   dicting the fraud-examiner’s assertions. As an initial matter, we note that, as
   in Hallam, Voight consented to have the remedies motion decided on the
   SEC’s motion—and that a district court is not required to hold a hearing on
   such a motion. See 42 F.4th at 324. Moreover, Voight’s objections to the
   fraud examiner’s testimony are the same as those he made when he moved
   to exclude the declaration. But he failed to appeal that decision. Voight
   therefore offers no other basis for eliciting testimony from the fraud examiner
   on cross examination other than to reiterate those rejected arguments. See
   Sahara Health Care, Inc. v. Azar, 975 F.3d 523, 531 (5th Cir. 2020) (cross

                                           3
Case: 21-20511      Document: 00516635934          Page: 4   Date Filed: 02/06/2023

                                    No. 21-20511

   examination was not required where defendant failed to identify sufficient
   need for it). And regarding would-be contradicting evidence, Voight fails to
   identify any such evidence, either in his opening brief or in his supplemental
   letter brief. As such, the district court did not err in concluding that Voight
   had “not identified any evidence that must be further developed at a hear-
   ing.” SEC v. Voight, No. 4:15-cv-2218, 2021 WL 5181062, at *3 n.14 (S.D.
   Tex. June 28, 2021); see Hallam, 42 F.4th at 323 (holding that the district
   court did not abuse its discretion in denying evidentiary hearing where de-
   fendant failed to identify any evidence “not already in the record” that would
   have affected the proceedings below).
                                        ***
          To summarize, Voight’s remedies issues are foreclosed by our recent
   decision in SEC v. Hallam, his evidentiary objections are forfeited, and his
   due-process objections lack merit. AFFIRMED.

                                         4