Court Opinion

ID: 2668042
Source: CourtListenerOpinion
Date Created: 2014-04-04 14:41:15.298807+00
Date Added: 2024-06-11T12:13:58.818762
License: Public Domain

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

SECURITIES ANI) EXCHANGE )
CoMMISSIoN, )
)
Plainrifr, )
)
v. ) civil A¢¢ion No. 239-1854 (RCL)
)
PAUL A. BILZERIAN, er al. ) F l L E §
)
Defendants ) MAY l l 2009
) NANCY MAYER WH|TT|NGTON, CLERK
U.S. DlSTRlCT COURT

MEMORANDUM OPINION

Now before the Court are the motions of movants Ernest B. Haire [901] and National
Gold Exchange, Mark Yaffe, and Alan Yaffe [896] for an order holding the defendant, Paul A.
Bilzerian, and those acting in concert with him in civil contempt for failure to comply with the
Court’s order on July l9, 2001, prohibiting Bilzerian from commencing any proceeding in any
court without permission of this Court. Also before the Court are various other motions that
have spawned out of the orders to show cause. Upon consideration of the motions, and the
responses by Bilzerian and those alleged to have acted in concert with him, the Court finds that
Paul Bilzerian, David E. Hammer, and the Puma Foundation plaintiffs (the Puma Foundation,
Bicoastal Holding Company, and Overseas Holdings Limited Partnership) are in civil contempt
of this Court’s order. The movants have not shown by clear and convincing evidence that any

other party is in contempt of this Court’s 2001 order.

I. BACKGROUND

Paul Bilzerian was convicted in the United States District Court for the Southern District
of New York of numerous violations of federal securities laws. On September 27, 1989, he was
sentenced to four years in prison (later reduced to 20 months), fined $l .5 million dollars, and
ordered to perform 250 hours of community service. S.E.C. v. Bz`lzerian, 29 F.3d 689, 691 (D.C.
Cir. 1994). The same conduct that led to Bilzerian’s convictions for securities fraud later served
as the basis for the SEC’s civil action against him in the United States District Court for the
District of Columbia. In the civil action, Judge Stanley S. Harris entered orders in 1993
enjoining Bilzerian from future securities violations and disgorging $33,140,787, and those
orders were affirmed by the Court of Appeals in l994. Id.

Following entry of those judgments, Bilzerian, and those acting in concert with him,
evaded enforcement of the judgments and continued filing frivolous lawsuits in an effort to
undermine the judgments. In 2000, Judge Harris found Bilzerian in contempt of the 1993
judgments and appointed a receiver to collect Bilzerian’s assets to effectuate the judgment.
(Order [185], December 22, 2000.) Judge Harris also incarcerated Bilzerian for noncompliance
with Court orders. S.E.C. v. Bilzerian, l3l F. Supp. 2d 10, 18 (D.D.C. 200l). When Bilzerian
continued to evade the orders and judgments entered against him, this Court held that Bilzerian
was in contempt of the receivership order on July 19, 200l. (Order [416], July 19, 2001 .) The
Court also enjoined Bilzerian from commencing any proceedings in any court without permission
of this Court, in the July l9, 2001 Order, which provided that:

". . . it is further ORDERED that Defendant Paul A. Bilzerian, his agents,

servants, employees and attomeys, and those persons in active concert or

participation with them, who receive actual notice of this Order by personal

service or otherwise, are prohibited from filing or causing the filing of any
complaint, proceeding or motion in the United States Bankruptcy Court for the

Middle District of Florida, or from commencing or otherwise causing the

commencement of any proceedings in any court, other than in this Court or in

appeals of this Court’s Orders to the United States Court of Appeals for the

District of Columbia, without prior application to and approval of this Court . . ."

'l`he Court of Appeals affirmed this Court’s entry of an injunction barring Bilzerian from
"commencing any proceeding in any court." S.E.C. v. Bilzerian, 75 Fed. Appx. 3, 4 (D.C. Cir.
2003).

The current procedural posture arises from motions filed by movants Emest B. Haire and
National Gold Exchange, Mark Yaffe, and Alan Yaffe, alleging that Bilzerian is yet again in
contempt of court orders, this time the orders that prohibit him or anyone acting in concert with
him from commencing any proceeding in any court.

Specifically, Haire alleges that the following lawsuits are in violation of this Court’s
order: Bilzerian v. Haire, Case No. 08-09l49 in the Thirteenth Circuit Court in Hillsborough
County, Florida; Jack Rabbit Limo Service v. Haire, Case No. 06-007700 in the Thirteenth
Circuit Court in Hillsborough County, Florida; Puma Foundation et al. v. Haire, Case No. 06-
009816 in the Thirteenth Circuit Court in Hillsborough County, Florida; as well as a
miscellaneous action filed against Haire for failing to appear for a deposition related to this case,
Case No. 08-mc-212 in the Middle District of Florida. Movants National Gold Exchange, Mark
Yaffe, and Alan Yaffe have separately alleged that the lawsuit of Caligula Corporation v.
National Gold Exchange Inc., et al., Case No. 07-CA-0l7763 in the Thirteenth Circuit Court in
Hillsborough County, Florida, as well as Bilzerian’s counterclaims and crossclaims in that action,

violate this Court’s order.

After reviewing the filings by Haire, National Gold Exchange, Mark Yaffe, and Alan

Yaffe, this Court entered orders to show cause as to why Bilzerian should not be held in
contempt, as well as those who were alleged to have been acting in concert with Bilzerian: Terri
L. Steffen, Overseas Holdings Limited Partnership, Jack Rabbit Limo Service, lnc., Puma
Foundation, Bicoastal Holding Company, David E. Hammer, Esq., Robert Bleakley, Esq., and
the Caligula Corporation. (Orders [913], [914].) The parties have now responded to the orders to
show cause, and the Court finds that Bilzerian, David E. Hammer, and the Puma Foundation

plaintiffs are in contempt for the reasons set forth below.

II. DISCUSSION

A. Applicable Law

The power to punish parties for contempt is inherent in all courts, and its existence is
essential to its ability to enforce judgments and orders. Broderick v. Donaldson, 437 F.3d l226,
1234 (D.C. Cir. 2006). Civil contempt, unlike the punitive remedy of criminal contempt, is
designed to coerce compliance with a court order or to compensate a complainant for losses
sustained. In re Fcmm`e Mae Securities Litigatz`on, 552 F.3d 8l4, 823 (D.C. Cir. 2009). Civil
contempt "will lie only if the putative contemnor has violated an order that is clear and
unambiguous, and the violation must be proved by clear and convincing evidence." Broderz`ck,
437 F.3d at l234. Clear and convincing evidence in the context of civil contempt means "a
quantum of proof adequate to demonstrate to a ‘reasonable certainty’ that a violation has
occurred." Levz`n v. Tiber Holding Corp., 277 F.3d 243, 250 (2d Cir. 2002).

Additionally, non-parties may be held in civil contempt where they are successors in

interest to a party bound by an order or "aiders and abettors" to a violation of the order by a party

thereto. See Regal Km`twear Co. v. NL.R.B., 324 U.S. 9, 13-14 (1945). This principle is codified
in F ederal Rule of Civil Procedure 65(d)(2), which states that every order granting an injunction
binds the parties, the parties’ officers, agents, servants, employees, and attorneys, and other
persons who are in active concert or participation with the parties’ or their agents-provided that
they have actual notice of the order.

B. Analysis

1. Paul Bilzerian

With respect to Paul Bilzerian, the movants have met their burden of showing that he is in
civil contempt of this Court’s 2001 order. Paul Bilzerian is subject to a clear and unambiguous
order, and the movants have shown that he has violated that order by clear and convincing
evidence.

The meaning of the 2001 order is clear. Paul Bilzerian is prohibited "from filing or
causing the filing of any complaint, proceeding or motion in the United States Bankruptcy Court
for the Middle District of Florida, or from commencing or otherwise causing the commencement
of any proceedings in any court." Indeed, Bilzerian has shown that he is well-aware of the
meaning of the Court’s order. (See, e.g., Paul Bilzerian’s Motion for Perrnission to File Motions
[888] at 2 ("On July 5, 2001 and July 19, 2001, this Court entered ex parte injunctions, that
permanently enjoined me from commencing any proceeding in any court.").) The United States
Court of Appeals for the District of Columbia Circuit has affirmed both orders. S.E.C. v.
Bilzerian, 75 Fed. Appx. 3 (D.C. Cir. 2003).

As a result, Bilzerian’s arguments that he did not believe that the injunction still applied

to him because he has already satisfied the disgorgement judgment and because the order is

ambiguous are completely without merit. Moreover, those arguments have already been rejected
by this Court and the Court of Appeals. Bilzerian, 75 Fed. Appx. at 4 (D.C. Cir. 2003) (stating
that Bilzerian’s argument that he has satisfied a disgorgement judgment as a matter of law is
without merit).

Not only is the meaning of the order clear, but it is also clear that Bilzerian has violated
the order. He has filed at least one original lawsuit, one counterclaim, and one motion for a party
to be held in contempt in his own name.l Those lawsuits, and any other lawsuits that Bilzerian
has filed, are in direct and clear violation of this Court’s order.

ln addition to the lawsuits, motions, and claims filed in his own name, Bilzerian is in
contempt for filing suit in the Puma Foundation, et al2 v. Ernest B. Haire litigation. Although
Bilzerian denies active participation in the suit, on the civil cover sheet that says "Signature of
Attorney or Party Initiating Action," Paul Bilzerian signed the form, with the words, "Paul A.
Bilzerian for David Hammer." (Docket [924-4] at 12.) In other words, Bilzerian himself literally

filed the Puma Foundation lawsuit, belying his claim that he is not in contempt for his conduct in

‘Bz`lzerian v. Haz`re, Case No. 08-09149 in the Thirteenth Circuit, Hillsborough County,
Florida, Complaint filed as Exhibit C to Haire’s Motion for an Order to Show Cause [90l-2] at
18 ; Paul A. Bilzerian’s Answer To Amended Third-Party Complaint, Affirmative Defenses,
Counterclaim Against National Gold Exchange, lnc., and Crossclaim Against Mark Yaffe and
Alan Yaffe, filed on April 21, 2008 in Thirteenth Circuit, Hillsborough County Florida,
Complaint filed as attachment to Yaffe’s memorandum in support of an order to show cause
[900-2]; Motion for Contempt, Case No. 08-mc-212 in the Middle District of Florida, filed as
[904] at 3-10.

ZThe Puma Foundatz`on suit is a two-count case by Puma, Bicoastal, and Overseas
Holdings Limited Partnership (the Puma Foundation plaintiffs) against Haire. (Puma
Foundation’s Response [928] at 5.) Although the Court issued orders to show cause as to each
entity, both Haire and the respondents have treated the respondents interchangeably. lt is unclear
to the Court how they differ in any meaningful way for purposes of this litigation. See infra at
12-14.

the Puma Foundation litigation. Bilzerian admits that he filed the lawsuit, but asserts that he was
merely serving as a runner for Hammer. Even if this claim were true, Paul Bilzerian is to play no
role in the commencing of a lawsuit. Accordingly, by filing the Puma Founa'atz`on lawsuit he
was in contempt of this Court’s 2001 order.

The evidence indicates, however, that Bilzerian was not merely a runner for Hammer but
is a driving force behind the Puma litigation. He sent an e-mail to Haire’s counsel just before the
Puma Founa'atz`on lawsuit was filed, in which he states that Terri Steffen (Bilzerian’s wife and
the nominal owner of Puma) "will be forced to file various papers including a new action against
Ernie. . ." He also states that he has "advised [Steffen’s] attorneys that, contrary to conclusions
that they have drawn from the court record, l do not believe you intended that Ernie would
violate all our understandings with respect to the OHLP litigation." (Ex. D to Haire’s Mot. [901-
2] at 25.) Bilzerian-as someone who was threatening litigation, advising the plaintiffs’
attorneys, and referring to "our" understandings in the litigation-was exercising control over the
litigation in an effort to cause a lawsuit to be commenced, which he ultimately filed in violation
of this Court’s order.

Despite the clear and convincing evidence of Bilzerian’s contempt, he makes numerous
arguments in an attempt to again evade this Court’s order. First, he argues that the motions for
an order to show cause should be stricken from the record and that the order should be vacated
because the motions were not served on him. Indeed, it appears that the movants originally
served their motions for an order to show cause to Bilzerian at the wrong address. Nevertheless,
Bilzerian has now had months to respond to the motions and the order to show cause (and has

done so); he is no longer prejudiced by the original improper service.

Next, Bilzerian argues that movants Yaffe should not have been permitted to intervene
because they do not have standing and therefore the orders to show cause should be vacated.
First, the orders to show cause issued from this Court, not from the intervenors; this Court can
initiate orders to show cause under its own inherent authority, and, as a result, whether or not the
decision to allow the Yaffe movants was correct, Bilzerian cannot escape the order to show
cause. The Yaffe movants can intervene under Federal Rule of Civil Procedure 24(b)(l)(B),
however, because they have claims that share a common question of law or fact with the main
action-the main action prohibits Bilzerian from commencing proceedings without permission of
this Court, and the Yaffe movants claim that Bilzerian has in fact commenced proceedings.

Bilzerian next contends that he is entitled to court-appointed counsel before he can be
found in contempt. While many Circuits have held that a party is entitled to counsel when a civil
contempt proceeding may result in incarceration, the Court is not required to appoint counsel
absent a showing of indigency. See, e.g., United States v. Ana'erson, 400 F. Supp. 2d 32, 35
(D.D.C. 2005); United States v. Bobart Travel Agency, lnc., 699 F.2d 618, 620 (2d Cir. 1983).
Bilzerian both does not currently face incarceration for his civil contempt and has also made no
showing of indigency-he is not entitled to appointed counsel.

Bilzerian argues that with respect to his own claims in the Caligula litigation, he did not
violate the 2001 order because his own claims are mandatory counterclaims filed in response to a
third-party complaint against Bilzerian. Bilzerian has no authority for his argument, and, as
explained above, the Court’s order is clear and ambiguous-Bilzerian was aware that he was not
to commence any proceeding in any Court without this Court’s permission; there is no exception

for counterclaims or crossclaims.

In the alternative, Bilzerian asks the Court’s permission to file his various claims. Of
course, even if Bilzerian’s claims had merit, the claims would belong to the receiver, not to him
personally. As a result, the Court will deny Bilzerian’s requests to pursue his actions.3

2. David E. Hammer

The movants have also shown by clear and convincing evidence that David Hammer is in
contempt of this Court’s order. Hammer admits that he received actual notice of the order
against Bilzerian in December 2006. (Docket [927] at l 1.) Yet Hammer apparently served Haire
with initial process in the case Bilzerian v. Haire, Case No. 08-CA-009149 (Hammer’s Response
[927] at 3), served as Bilzerian’s attorney when Bilzerian filed for Haire’s subpoena to issue in
another case, and served Haire with the actual subpoena in that matter. (See [904] at 3 (subpoena
signed by David Hammer as the attomey of record for Bilzerian); [904] at 5 (Bilzerian’s motion
for contempt stating that the subpoena was signed by Mr. Hammer and that Hammer served the
subpoena upon Haire); [904] at 16 (Hammer’s declaration in which he states that he served the
subpoena on Haire)).

Hammer’s arguments for why he should not be held in contempt range from meritless to
preposterous. For example, Hammer argues that he should not be held in contempt because he
"reasonably relied on Bilzerian’s interpretation" of the 2001 order. (Docket [927] at 14.)
Reliance on Bilzerian’s interpretation-given that Bilzerian is not an attorney, has been

convicted of securities f`raud, and has a 33 million dollar judgment entered against him in a civil

3This includes Bilzerian’s motion [978] to enjoin Douglas Menchise from filing lawsuits
against him or in the altemative for permission to defend himself. Although Bilzerian does have
the right to defend himself (by filing an answer), he does not have permission to file any
crossclaims or counterclaims in that action or any other action without permission of this Court.
In addition, the 2001 order gives him no authority to enjoin others from filing suit against him.

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action by the SEC-is probably per se unreasonable. In addition, however, Hammer was not
required to nor could he rely on Bilzerian’s interpretation because by his own admission he had
actual notice of the order itself in December 2006 and therefore cannot resort to Bilzerian’s
unorthodox interpretations as an excuse for his contemptuous conduct.

Hammer also-while acknowledging that he served as Bilzerian’s "process
server"-denies that he has ever represented Bilzerian. Even if Hammer has never represented
Bilzerian as an attomey, which is a dubious claim given that Hammer signed as an attomey on
the subpoena summons that was served on Haire, he at the very least functioned as Bilzerian’s
process server, despite the fact that he knew Bilzerian was prohibited from commencing any
proceedings in any court without first getting permission from this Court. Of course, the
movants accuse Hammer of being more extensively involved in Bilzerian’s litigious schemes,
which Hammer denies. Whether Hammer was in fact more extensively involved or not,
however, is irrelevant, as he was in civil contempt from the moment he served as Bilzerian’s
agent in his lawsuits despite his actual knowledge of the order. (See Order [416], July 19, 2001
(barring "Paul A. Bilzerian, his agents, servants, employees and attorneys, and those persons in
active concert or participation with them" from commencing proceedings in any Court other than
this one).)

Hammer next argues that this Court lacks personal jurisdiction over him. This argument
is also without merit. "Nonparties who reside outside the territorial jurisdiction of a district court
may be subject to that court’s jurisdiction if, with actual notice of the court’s order, they actively
aid and abet a party in violating that order. This is so despite the absence of other contacts iwth

the forum." S.E.C. v. Homa, 514 F.3d 661, 674 (7th Cir. 2008) (citing Wajj”enschmidt v.

10

MacKay, 763 F.2d 711, 714 (5th Cir. 1985)). This principle makes sense because "the injunctive
mandate of a federal court runs nationwide, and the issuing court has the authority to deal with
defiance of its order regardless of where that defiance occurs." Homa, 514 F.3d at 674.

Hammer also argues that he is entitled to a hearing, citing In re Oliver, 333 U.S. 257, 275
(1948). In re Gliver dealt with criminal contempt, however, in which greater procedural
protections are afforded the accused. With respect to civil contempt, the requirements are that
the accused have notice and an opportunity to be heard. Int’l Ur¢ion, United Mine W0rkers of
Am. v. Bagwell, 512 U.S. 821, 826 (1994); Pigfora’ v. Veneman, 307 F. Supp. 2d 51, 56 (D.D.C.
2004) (Friedman, J.). Hammer was given both notice and an opportunity to be heard; he has
been provided the necessary procedural protections.

3. Jack Rabbit Limo Service, Inc.

Movant Ernest Haire has also alleged that Jack Rabbit Limo Service, lnc., is in contempt
of this Court’s order. Indeed, it appears that Jack Rabbit Limo Service was in contempt of this
Court’s order. However, the Honorable Judge Martha J. Cook, in the Thirteenth Circuit,
Hillsborough County, Florida, dismissed the Jack Rabbit suit. (See Docket [951] at 14.) ln a
written opinion, Judge Cook stated that Jack Rabbit was Bilzerian’s company and that he was
represented in litigation by David E. Hammer. (Id. at 9.) Judge Cook also observed, citing her
own observations and that of another judge on the court, that Bilzerian and Hammer’s conduct in
the litigation was "egregious" (id.), that they engaged in "sanctionable misconduct" (id.), that l\/Ir.
Hammer had engaged in "sandbagging, disrupting discovery, and walking down a road that
would get him in a lot of trouble" (id. at l2), that Mr. Hammer’s behavior was "clearly unethical”

(id. at 10), and that Mr. Hammer’s personal conduct was so poor that a judge was inclined to

11

order him to attend "peer review or some sort of remedial training" (id. at 12.). Judge Cook felt
that Bilzerian and Hammer’s conduct was so outrageous that it warranted the particularly
extraordinary remedy of dismissing the Jack Rabbit lawsuit.

Accordingly, because civil contempt is designed to compel compliance with a Court order
or to compensate a complainant for losses sustained", the civil contempt proceeding is now moot
as to Jack Rabbit.

4. Puma Foundation, Bicoastal Holding Company, and Overseas
Holdings Limited Partnership

Puma foundation, Bicoastal Holding Company, and Overseas Holdings Limited
Partnership-through Bilzerian-are also in contempt of the Court’s 2001 order. A case (Case
No. 06-CA-009816) was filed by those plaintiffs against Haire in the Thirteenth Circuit Court for
Hillsborough County, Florida. Puma claims that this case "was not brought by Bilzerian, his
agent, servant, employee, or attorney, or anyone in active concert or participation with them."
Docket [928] at 5-6. The civil cover sheet shows otherwise, however, as the suit was filed,
literally, by Paul Bilzerian.

Accordingly, his and Puma’s assertion that the 2001 order does not apply to the Puma
case is incorrect. Bilzerian is prohibited from filing any proceeding in any court-whether it be
in his own name or through other instrumentalities. Here, the fact that Bilzerian himself filed the

Puma suit shows that he is involved in the litigation, in violation of the 2001 order. Puma admits

"Complainant Emest B. Haire is not an attomey and was proceeding pro se in these show
cause proceedings and therefore is not entitled to attomeys’ fees for bringing his show cause
motion. See Kay v. Ehrler, 499 U.S. 432, 435 (1991); Ellipso, lnc., v. Mann, 583 F. Supp. 2d 1,
4 (D.D.C. 2008).

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that Bilzerian filed the lawsuit, but states that it was filed "at Hammer’s direction" and that
"Bilzerian’s role was that of a runner, not a principal in litigation." (Docket [928] at 6 n.3.)
While Bilzerian cannot serve any role in causing lawsuits to be commenced, including as a
runner, his claims that he was merely a runner are not credible given the e-mail that he sent just
before the Puma Foundation lawsuit was filed, see supra at 6. The Puma Founa’ation lawsuit
was directed and filed by Paul Bilzerian; therefore, the Puma Foundation plaintiffs, as
instrumentalities of Bilzerian are in contempt of this Court’s order.

1n addition, although the civil cover sheet signed by Bilzerian only mentions the "Puma
Foundation," the respondents have not shown that Bicoastal Holding Company and Overseas
Holdings Limited Partnership differ in any meaningful way from the Puma Foundation for
purposes of these proceedings, nor have they even tried to distinguish those entities. David E.
Hammer represents all of the clients (Hammer’s Response [926] at 7), all are referred to
interchangeably by Hammer and Bilzerian, all have filed responses that mirror each other, and all
clients were apparently influenced in commencing litigation by Bilzerian. (See Ex. D to Haire’s
Mot. [901-2] at 25, Paul Bilzerian’s e-mail referring to "our understandings" in the "OHLP
litigation.")

Bilzerian, Hammer, and the Puma Foundation plaintiffs argue that this Court should
allow the Puma Foundation suit to continue because it has nothing to do with the receivership
estate and because the consent agreement that the receiver entered into with these entities
specifically contemplated the retention of a $100,000 claim against Haire. The Court’s
injunction, however, requires Bilzerian to request permission before commencing any proceeding

in any court, whether related to the receivership or not. The purpose of the injunction is so that

13

the Court can ensure that Bilzerian, his agents, and instrumentalities are not using litigation to
frustrate the receivership estate or the orders of this Court. Because Bilzerian commenced the
Puma Foundation lawsuit in 2006, without getting permission from this Court, he violated the
injunction. Moreover, because the Puma Founa’ation plaintiffs have not provided any proof that
the suit is limited to the claims that were specifically retained in the consent agreement with the
receiver, the Court cannot adequately evaluate whether the claims are limited to a $100,000
claim against Haire or whether the claims are overbroad and extend to other areas in an effort to
accumulate assets and shield them from the receiver. Accordingly, Bilzerian, Hammer, and the
Puma Founa’ation plaintiffs will be ordered to dismiss the Puma Foundation suit.
5. Caligula Corporation

The movants have not shown by clear and convincing evidence that Caligula Corporation
is in violation of the 2001 order. Caligula Corporation has filed suit against National Gold
Exchange, lnc., Mark Yaffe, and Alan Yaffe in state court in Florida. (Case No. 07-cv-17763,
Complaint filed as [896-9].) Of course, if Caligula is controlled directly or indirectly by Paul
Bilzerian or if Caligula is aiding and abetting in Bilzerian’s violations, both Bilzerian and
Caligula are in violation of the order. Indeed, Bilzerian does appear to have some involvement in
Caligula. He claims to have "spen[t] hundreds of hours of [his[ time to assist Caligula . . . in an
effort to raise capital" for National Gold Exchange. (See Bilzerian’s Counterclaim at 5, [900-2].)
The movants also assert that at various times prior to the filing of the Caligula lawsuit Bilzerian
represented that the was the sole principal of Caligula Corporation and that he acted with full and
complete authority to direct its operations and decisions. (Docket [896-5] at 10.)

However, the 2001 order is concemed with Bilzerian’s involvement in litigation.

14

Movants have not provided any evidence with regard to Bilzerian’s involvement in the Caligula
litigation itself_they have only provided evidence that Bilzerian was involved with Caligula
prior to the litigation being commenced. Caligula states that the lawsuit itself was was filed by
Caligula--"not by Bilzerian, his agent, servant, employee, or attomey, or anyone in active
concert or participation with them." Docket [929] at 3. This statement is not rebutted with
evidence, only with the movants assertions that Caligula is "a corporation nominally formed by
[Bilzerian’s] wife and sons . . . as an effort to skirt the permanent injunction issued in this case . .
." Docket [896-5] at 6.
The documents provided by the movant show either Bilzerian’s wife Steffen or his sons
Adam or Dan Bilzerian as the President, Secretary, Treasurer, and registered agents of the
Caligula Corporation at various times. (Docket [896-5] at 9.) That certainly raises the suspicion
that Bilzerian is manipulating the Caligula litigation, given that he has previously "¢nmeshed his
wife, Terri Steffen, his family members, and his friends in attempts to shield and distribute assets
in such a way as to defeat [the receiver’s] attempt to require Bilzerian to satisfy the judgment
rendered against him for securities fraud." (April 5, 2002 Order [652] at 3.) ln addition,
Caligula’s attomey is David Hammer, the attomey who has previously aided Bilzerian in his
contemptuous conduct and has been sanctioned for his conduct by numerous courts in Florida.
Nevertheless, the mere assertion of the movants that Bilzerian is again using his family

members to control the litigation is not enough to hold Caligula in contempt or to hold Bilzerian
in contempt for allegedly directing the Caligula lawsuit. Any claims directed at Bilzerian’s
conduct as a consultant for Caligula or his fraudulent representations in that role would be

properly raised in a suit against Bilzerian but would not be appropriately addressed through

15

contempt proceedings, as the 2001 order is concemed with Bilzerian’s involvement in litigation.
Accordingly, because movants have not met the clear and convincing evidence standard, Caligula
cannot be held in contempt at this time.$
6. Terri L. Steffen

Likewise, there is no evidence_only allegations-that Bilzerian’s wife Terri Steffen is
aiding and abetting Bilzerian in violating this Court’s orders. Indeed, it appears that Steffen may
at least be complicit in Bilzerian’s contemptuous conduct by allowing him to control
corporations that are in her name. However, the movants have not presented any clear and
convincing evidence to hold her in civil contempt. The motion to hold her in contempt will be
denied, and her motion to appoint counsel is therefore moot.

7. Robert Bleakley

The movants have not shown that Bleakley was in contempt by clear and convincing
evidence. Bleakley did not enter his appearance in the Puma Case until seven months after it had
been filed ([933] at 4), and he did not receive notice of the 2001 order until July 3, 2008 (id. at
5). Upon receiving notice of the order, he inquired as to whether Bilzerian was a beneficial
owner in any of the Puma entities and was told that he was not. (Ia’. at 5.)

Even if Bleakley was in contempt of this Court’s order, the request for an order holding
him in contempt is now moot. Bleakley represented Puma, Bicoastal, and OHLP in the Puma

Case for approximately 13 months. (Bleakley’s Response [933] at 2.) However, Bleakley no

5The trial court in the Caligula litigation is in a better position to observe whether or not
Bilzerian is in fact actively participating in that suit. If a ruling of the court in Florida makes it
apparent that Bilzerian or his agents are in fact in control of the Caligula litigation, that could
give rise to clear and convincing evidence that Bilzerian is in contempt of an order of this Court.

16

longer represents any family member of Bilzerian or any entity controlled by a family member of
Bilzerian as he withdrew from the Puma Case in June 2008.6 Haire also claims that Bleakley is
involved in the Haircut Partners litigation-that claim is now moot as well, see infra.
8. Haircut Partners
This Court has not yet issued an order to show cause as to Haircut Partners, LLLP.
However, after the underlying order to show cause was issued, movant Douglas N. Menchise, the
bankruptcy trustee for the estate of Terri Steffen, and Emest Haire filed motions ([938], [970])
for an order to show cause as to why Haircut Partners, LLLP should not be held in contempt.
After the motion was filed, Judge Paskay with the United States Bankruptcy Court for the Middle
District of Florida dismissed Haircut Partners involuntary petition on March 11, 2009. ([980] at
14.) Judge Paskay held that the Haircut Partners petition was filed in bad faith, that Hammer’s
conduct was "typical and additional proof of Mr. Hammer’s litigious nature not only in the State
Court but in this Court" and therefore dismissed the Haircut Partners case.7 (Docket [980] at
12-13.) Accordingly, Haire and Menchise’s motions are now moot.
9. Tracy Hendershot
David Hammer has also filed a motion [942] for a declaration that 'l`racy Hendershot is

not in violation of the orders of this Court for bringing divorce proceedings against Haire.

°Even assuming that Bleakley could be held in contempt, Haire cannot recover attorneys’
fees for bringing these proceedings against Bleakley because he is a non-attorney proceeding pro
se.

7Judge Paskay also noted that Hammer misled the Bankruptcy Court for the Middle
District of Florida by telling the judge that the show cause proceedings in this Court against
Hammer had been concluded, when in fact they were still under advisement. (Judge Paskay’s
order [980] at 12, March 11, 2009.)

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Because no party has filed a motion for an order to show cause as to Hendershot, Hammer is
asking for this Court to issue an advisory opinion as to the Hendershot litigation. Of course, the
case or controversy requirement of Article 111 prohibits courts from issuing advisory opinions,
Munsell v. Department of Agriculture, 509 F.3d 572, 585 (D.C. Cir. 2007); accordingly,

Hammer’s motion as to Hendershot will be dismissed for lack of jurisdiction.

III. CONCLUSION

The relief the movants have requested is for Bilzerian to be ordered to dismiss all of his
lawsuits that have been commenced in violation of this Court’s order as well as for monetary
sanctions. Punitive monetary sanctions would be inappropriate because these are civil contempt
proceedings, and the only specific compensatory monetary sanctions requested by the movants
are for attorneys’ fees incurred in connection with these show cause proceedings.g

As a result, in the accompanying order, the Court has ordered Bilzerian to dismiss all
lawsuits that were filed in contempt of the 2001 order and for Bilzerian and Hammer to pay the
costs and expenses of movants National Gold Exchange, Mark Yaffe, and Alan Yaffe in bringing
show cause proceedings against them. With respect to Puma Foundation plaintiffs, even though
the Court found them in contempt as instrumentalities of Bilzerian and they will be ordered to
dismiss their lawsuit, Haire is not entitled to attorneys’ fees because he proceeded in the show
cause proceedings pro se. Accordingly, pursuant to the accompanying order, it will be

ORDERED that Paul Bilzerian dismiss all claims, counterclaims, crossclaims, and

8 (See [948-2] at 2, Yaffe movants’ proposed order asking for costs and expenses
"incurred by Movants in connection with this proceeding"; [960] at 5, Haire’s proposed order
asking for "monetary sanctions.")

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motions filed in his own name, other than those filed in this Court or in the United States Court
of Appeals for the District of Columbia Circuit, it will be further

ORDERED that the Puma Foundation plaintiffs (Puma Foundation, Bicoastal Holding
Company, and Overseas Holding Limited Partnership) dismiss the lawsuit of Puma Fourza'atior)
et al. v. Haire, Case No. 06-009816 in the Thirteenth Circuit Court in Hillsborough County,
Florida, it will be further

ORDERED that movants National Gold Exchange, Mark Yaffe, and Alan Yaffe file with
the Court their costs and expenses incurred in bringing show cause proceedings against Bilzerian
and Hammer within 15 days of this date.

SO ORDERED

QZ/M¢_   -'»F////oj’

Chief Judge Royce C. Lamberth Date

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