Constantinos

Opinion

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 * * *

4 IN RE JURO SYSTEM, INC., Case No. 3:25-CV-00275-MMD-CLB

5 ORDER DENYING MOTION TO QUASH SUBPOENAS AND MOTION TO STRIKE 6 [ECF Nos. 1, 9] 7

8 Pending before the Court is Cosimo and Clarissa Constantinos’s (collectively 9 “Petitioners”) motion to quash subpoenas. (ECF No. 1.) On May 21, 2025, the Securities 10 Exchange Commission (“SEC”) issued subpoenas to US Bank NA and Wells Fargo Bank 11 NA to obtain Petitioners’ personal banking records. (Id.) The motion to quash was filed 12 pursuant to 12 U.S.C. § 3410(a). On June 30, 2025, pursuant to 12 U.S.C. § 3410(b), the 13 Court ordered the SEC to file a response, (ECF No. 6), which SEC filed on July 14, 2025, 14 (ECF No. 8). On July 16, 2025, Petitioners filed their reply to the motion to quash in which 15 they also move to strike the SEC’s response.1 (ECF No. 9.) For the reasons discussed 16 below, Petitioners’ motion to quash subpoenas and motion to strike are denied. 17 I. FACTUAL BACKGROUND2 AND PROCEDURAL HISTORY 18 Petitioners have been associated with Juro System, Inc. (“Juro System”) since 19 December 2021. (ECF No. 8 at 6.) According to public filings, Cosimo Constantinos 20 served multiple roles at the company including “President, Director, CEO, Chairman of 21

22 1 12 U.S.C. § 3410 does not state whether Petitioners are permitted to file a reply to the SEC’s response. Nonetheless, the Court will accept the reply and construes their pro 23 se filings liberally. See Johnston v. Hartman, No. 3:23-CV-00521-MMD-CLB, 2025 WL 1293546, at *1 (D. Nev. May 5, 2025) (“It is well established that district courts have the 24 inherent power to control their dockets and manage their affairs; this includes the power 25 to strike or deny motions to streamline motion practice and promote judicial efficiency.”); Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en banc) (“Presumably unskilled in 26 the law, the pro se litigant is far more prone to making errors in pleading than the person who benefits from the representation of counsel.”). 27 2 The background facts are taken from the SEC's opposition, which are verified as 1 the Board, Treasurer, CFO, Secretary, and/or General Counsel of Juro.” (Id.) Clarissa 2 Constantinos is listed as an “inside shareholder.” (Id.) The SEC asserts Juro System was 3 soliciting and receiving investor money but has “not repaid its investors or issued 4 dividends despite the fact some investors have requested repayment.” (Id.) Juro System 5 accepted investments through multiple mechanisms including the “transfer [of] qualified 6 retirement funds to a self-directed IRA maintained by a specific custodian (the ‘Self- 7 Directed IRA Company’) that then transferred those funds to Juro” or by directly writing a 8 check to Juro which was “deposited into an unrelated business account (‘Business 9 Account A’).” (Id. at 7.) The SEC asserts that “investor funds were transferred to the 10 [Petitioners’ personal] accounts at the two banks to which the SEC issued the 11 subpoenas.” (Id.) 12 Juro System was dissolved in September 2023. (ECF Nos. 1 at 24, 8 at 7.) 13 However, “at least three checks were deposited into Business Account A for the benefit 14 of Juro.” (ECF No. 8 at 7.) According to the SEC, “the investors understood that Juro 15 would repay them their initial investment with interest. When those investors requested 16 repayment, Juro paid nothing.” (Id.) 17 On December 11, 2023, the SEC issued a formal order of investigation of Juro 18 System for alleged violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 19 1933 and Sections 10(b) and 17A(c) of the Securities Exchange Act of 1934. (Id. at 5.) 20 The investigation is premised on information known to the SEC tending to show that Juro 21 System, and those affiliated with it, may have made false statements of material fact, and 22 omitted or failed to disclose material facts regarding the nature of Juro System and related 23 entities, the value of the company’s assets, and the use of investor funds. (Id. at 6.) 24 In May 2025, Cosimo Constantino filed a Notice of Exempt Offering of Securities 25 for another Juro entity, Juro Financial Inc. (Id. at 8.) Juro Financial Inc. is a holding 26 company for several Juro entities and “is actively offering investors the opportunity to 27 purchase shares of Juro Financial Inc.” stock. (Id.) 1 On May 21, 2025, the SEC issued subpoenas to US Bank NA and Wells Fargo 2 Bank NA to obtain the Petitioners’ personal financial records. (Id.) The SEC states it 3 “issued the subpoenas to obtain information about how much money the Juro entities 4 raised and how they used that money as well as to identify other potential investors and 5 other bank accounts.” (Id. at 9.) The SEC states it “[has] reason to believe that money 6 related to transactions they are investigating has been deposited into the [Petitioners’ 7 personal] accounts . . . .” (Id. at 5.) 8 On May 27, 2025, Petitioners filed their motion to quash subpoenas pursuant to 9 the Right to Financial Privacy Act (“RFPA”). (ECF No. 1.) On June 30, 2025, the Court 10 found Petitioners’ motion to be procedurally proper under 12 U.S.C. § 3410(a) and 11 ordered the SEC to file a sworn response to Petitioners’ motion. (ECF No. 6.) On July 14, 12 2025, the SEC filed its verified response. (ECF No. 8.) On July 16, 2025, Petitioners filed 13 their reply with a motion to strike the SEC’s response. (ECF No. 9.) 14 II. LEGAL STANDARDS 15 Under the RFPA, 12 U.S.C. § 3401 et seq., a financial institution may disclose a 16 customer's financial records if such records are properly requested by a governmental 17 authority via an administrative or judicial subpoena. The RFPA was enacted by Congress 18 in response to the Supreme Court's ruling in United States v. Miller, 425 U.S. 435 (1976), 19 which held that bank customers had no Fourth Amendment right to privacy for financial 20 information held by financial institutions. See, e.g., In re Blunden, 896 F. Supp. 996, 999 21 (C.D. Cal. 1995). The RFPA requires federal government agencies to provide banking 22 customers with notice and an opportunity to object before a bank can disclose personal 23 financial information to the federal government agency. See 12 U.S.C. §§ 3401-3402. 24 The RFPA permits challenges by customers of financial institutions to government 25 subpoenas. See 12 U.S.C. § 3410(a). Challenges brought under the RFPA proceed in 26 two steps. See S.E.C. v. Jerry T. O'Brien, Inc., 467 U.S. 735, 745 (1984) (noting that “[a] 27 customer's ability to challenge a subpoena [under the RFPA] is cabined by strict 1 First, the Court analyzes whether the movant complied with the procedural 2 requirements for seeking relief as established in 12 U.S.C. § 3410(a). This section 3 establishes the timing requirements for seeking relief, the service requirements of the 4 request for relief, and the manner in which a challenge is made. See id. The motion must 5 include an affidavit or sworn statement stating that:(1) the applicant is a customer of the 6 financial institution from which financial records pertaining to him have been sought, and 7 (2) the applicant's reasons for believing that the financial records sought are not relevant 8 to a legitimate law enforcement inquiry or that there has otherwise not been substantial 9 compliance with this law. Id. After this initial inquiry is completed, the Court must then 10 order the Government to file a sworn response. See 12 U.S.C. § 3410(b). 11 Once the Government files its sworn response as ordered, the Court proceeds to 12 the second step of the process. At this stage, the RFPA “narrowly constrains the range 13 of decisions which the Court may make with regard to motions to quash.” Blunden, 896 14 F. Supp. at 999 (citing Collins v. Commodity Futures Trading Comm., 737 F. Supp. 1467, 15 1478 (N.D. Ill. 1990)). There are only three relevant questions for the court to consider, 16 whether: (1) “the law enforcement inquiry is legitimate;” (2) there is a “reasonable belief 17 that the records sought are relevant to [the law enforcement] inquiry;” and (3) “there has 18 not been substantial compliance with the provisions of” the RFPA. 12 U.S.C. § 3410(c); 19 see Arthur v. United States Sec. & Exch. Comm'n, No. 2:20-CV-00158-GMN-NJK, 2020 20 WL 4498468, at *3 (D. Nev. May 20, 2020). “‘The ultimate burden of showing that the 21 records sought are relevant to a legitimate law enforcement inquiry is on the 22 government.’” In re Blunden, 896 F. Supp. at 999 (quoting Collins, 737 F. Supp. at 1480). 23 When this two-step process is followed, “a court presented with such a challenge 24 is required to rule upon it within seven days of the Government’s response.” Jerry T. 25 O'Brien, Inc., 467 U.S. at 746 (citing 12 U.S.C. § 3410(b)). In ruling on the motion, the 26 Court may rely on the parties' sworn statements and any additional proceedings the Court 27 finds appropriate. See 12 U.S.C. § 3410(b). “A declaration of a government official 1 enforcement inquiry is legitimate, and records are relevant.” Tabet v. U.S. S.E.C., No. 12- 2 CV-1596-IEG-DHB, 2012 WL 3205581, at *1 (S.D. Cal. Aug. 6, 2012) (cleaned up) 3 (quoting Rosiere v. U.S. S.E.C., No. 2:09-CV-01975-JCM-PAL, 2010 WL 489526, at *3 4 (D. Nev. Feb. 5, 2010)). 5 “A court ruling denying a motion or application under this section shall not be 6 deemed a final order and no interlocutory appeal may be taken therefrom by the 7 customer.” 12 U.S.C. § 3410(b). A Petitioner “cannot appeal an adverse determination 8 until the Government has completed its investigation.” Jerry T. O'Brien, Inc., 467 U.S. at 9 746 (citing 12 U.S.C. § 3410(b)). 10 III. DISCUSSION 11 On June 30, 2025, the Court found Petitioners’ motion to quash to be procedurally 12 proper pursuant to 12 U.S.C. § 3410(a) and ordered the SEC to file a sworn response to 13 the Petitioners’ motion. (ECF No. 6.) On July 14, 2025, the SEC filed its verified response. 14 (ECF No. 8.) The Court first addresses the motion to quash and then the motion to strike. 15 A. Motion to Quash Subpoenas pursuant to 12 U.S.C. § 3410 16 1. Legitimate Law Enforcement Inquiry 17 An administrative agency with statutory authority to engage in investigative and 18 accusatory duties may “investigate merely on suspicion that the law is being violated, or 19 even just because it wants assurance that it is not.” U.S. v. Morton Salt Co., 338 U.S. 20 632, 642 (1950); see Dawson v. U.S. Dep't of Veterans Affs., 2022 WL 891110, at *1 21 (S.D. Cal. Mar. 24, 2022) (an administrative agency with statutory authority to engage in 22 investigative and accusatory duties may “investigate merely on suspicion that the law is 23 being violated, or even just because it wants assurance that it is not.”). “When 24 investigative and accusatory duties are delegated by statute to an administrative body, it, 25 too, may take steps to inform itself as to whether there is probable violation of the law.” 26 Morton Salt Co., 338 U.S. at 642. “[T]he question is . . . whether the government has a 27 reasonable belief . . . .” Echavarria v. Dep't of Defense, 2023 WL 3872173, at *1 (E.D. 1 investigate.’” Id. (quoting Feiner v. U.S. S.E.C., 914 F. Supp. 2d 474, 478 (S.D.N.Y. 2 2012)); see Tabet, 2012 WL 3205581, at *1. “An investigation is legitimate if it is one the 3 agency is authorized to make and is not being conducted solely for an improper purpose 4 such as political harassment or intimidation or otherwise in bad faith.” Pennington v. 5 Donovan, 574 F. Supp. 708, 709 (S.D. Tex. 1983). 6 Petitioners assert the two accounts subpoenaed by the SEC are “strictly personal 7 in nature with no connection to securities transactions or any business activities of JURO 8 SYSTEM INC.” (ECF No. 1 at 4-5, 6-7.) In response, the SEC argues it is conducting a 9 legitimate law enforcement investigation. (ECF No. 8 at 6-7.) SEC asserts the 10 investigation is pursuant to the Formal Order that was issued on December 11, 2023 11 regarding information the SEC received pertaining to potential violations by Petitioners 12 and Juro System for “ma[king] false statements of material fact or [failing] to disclose 13 material facts concerning, among other things, the use of investor funds.” (Id. at 5-6.) The 14 SEC further asserts “Juro has not repaid its investors either their principal amount or the 15 dividends despite the fact that some investors requested repayment. The Staff also found 16 evidence tending to show that investor money was transferred to the accounts at the two 17 banks to which the SEC issued the subpoenas that Clarissa Constantinos is 18 challeng[ing].” (Id. at 2.) The SEC also asserts that while Juro System was dissolved, 19 Cosimo Constantinos operates Juro Financial Inc, “which is actively offering investors the 20 opportunity to purchase shares of Juro Financial Inc.” and “is the holding company for 21 several Juro entities.” (Id. at 4.) 22 Congress has authorized the SEC to investigate possible violations of the federal 23 securities laws. See Jerry T. O'Brien, Inc., 467 U.S. at 741 (“Congress has vested the 24 SEC with broad authority to conduct investigations into possible violations of the federal 25 securities laws and to demand production of evidence relevant to such investigations.”); 26 15 U.S.C. §§ 77t(a)-(c), 78u(a)-(b). Because the SEC here issued a Formal Order to 27 obtain information on whether Petitioners violated federal securities laws, a 1 12 U.S.C. § 3410(c); see Gutierrez v. U.S. SEC, No. 2:22-MC-0054-FMO-PVCX, 2022 2 WL 2101769, at *2 (C.D. Cal. Apr. 27, 2022). The SEC’s assertions that it has obtained 3 evidence which suggest Petitioners made an illegal security offering, made misleading 4 statements of material fact to investors, and unlawfully transferred investor funds into 5 personal accounts provide a proper basis to conduct a law enforcement inquiry that is 6 within the SEC’s investigative authority. See Jerry T. O'Brien, Inc., 467 U.S. at 741; 12 7 U.S.C. § 3410(c). As such, the Court is satisfied that the investigation into Juro System 8 and Petitioners by the SEC is a legitimate law enforcement inquiry. 9 2. Relevance of Information Sought 10 “[T]he RFPA requires only that financial information be relevant to a ‘legitimate law 11 enforcement inquiry,’ and not relevant in a narrow, evidentiary sense.” United States v. 12 Wilson, 571 F. Supp. 1417, 1420 (S.D.N.Y. 1983). “For purposes of an administrative 13 subpoena, the notion of relevancy is a broad one.” Sandsend Fin'l Consultants, Ltd. v. 14 Fed. Home loan Bank Bd., 878 F.2d 875, 882 (5th Cir. 1989). The subpoenaed 15 information is relevant if it “touches a matter under investigation.” Id. “This is not a high 16 burden: ‘Once a person’s connection to apparently illicit conduct has been shown, it is 17 relevant to know whether that person’s bank account contains evidence of such conduct.’” 18 Echavarria, 2023 WL 3872173, at *1 (quoting Feiner, 914 F. Supp. 2d at 478); see Han 19 v. SEC, 2019 WL 4543099, at *2 (C.D. Cal. July 10, 2019) (“[I]f the material sought by the 20 subpoena ‘touches on a matter under investigation, an administrative subpoena will 21 survive a challenge that the material is not relevant.’”). 22 The SEC asserts it has “reason to believe that money related to transactions they 23 are investigating has been deposited into the [Petitioner’s personal] accounts . . . .” (ECF 24 No. 8 at 5.) “[T]he phrase ‘reason to believe’ does not mean any reason, no matter how 25 theoretical or remote, while the phrase ‘legitimate law enforcement purpose’ is intended 26 to impose a standard lower than ‘probable cause.’” Hunt v. U. S. S.E.C., 520 F. Supp. 27 580, 603 (N.D. Tex. 1981). 1 Petitioners’ banking records are pertinent to the issues under investigation 2 because they will illuminate whether Petitioners unlawfully transferred investor funds into 3 the Petitioners’ personal accounts and whether Petitioners made proper disclosures to 4 the SEC. See Doe v. U.S. S.E.C., No. 22-MC-80301-LB, 2023 WL 2351653, at *8 (N.D. 5 Cal. Mar. 4, 2023). Such information has long been found to be within the broad scope of 6 relevant information pertinent to SEC investigations like this one. See, e.g., Echavarria, 7 2023 WL 3872173, at *1; Feiner, 914 F. Supp. 2d 474, 478 (S.D.N.Y. 2012) (“Once a 8 person’s connection to apparently illicit conduct has been shown, it is relevant to know 9 whether that person’s bank account contains evidence of such conduct. . . . The SEC’s 10 task is to follow the money.”); Karlis v. S.E.C., 613 F. Supp. 2d 150, 153 (D. Mass. 2009) 11 (finding a spouse’s personal banking records to be relevant as they “could potentially 12 assist [] in determining the amount of [Petitioner’s] allegedly ill-gotten gains, whether he 13 attempted to conceal them and whether others were involved in such conduct”); Dawar 14 v. Dep't of Hous. & Urban Dev., 820 F. Supp. 545, 547 (D. Kan. 1993) (noting that if the 15 subject of an investigation “did misappropriate funds, it is not unreasonable to 16 hypothesize that he may have deposited those funds in his wife's account”); In re U.S. 17 S.E.C. Priv. Investigation/Application of John Doe Re Certain Subpoenas, No. M8-85- 18 MBM, 1990 WL 119321, at *2 (S.D.N.Y. Aug. 10, 1990) (“By showing that [the customer] 19 has a connection to activity [the SEC] is charged to investigate, the SEC has shown 20 reason for a belief that the bank records it [is seeking contains] relevant information.”). 21 In reply, Petitioners assert the “subpoenas are overly broad, not narrowly tailored,” 22 and “vague” because the “SEC has not alleged–nor could it credibly assert–that any 23 investor wired funds directly into either of these accounts.” (ECF No. 9 at 3.) Petitioners 24 further assert that “[t]here is no evidence that any investor funds were ever deposited into 25 these personal accounts.” (Id.) But Petitioners’ argument falls short when considering that 26 the point of the whole of administrative subpoenas is for the agency is develop the 27 evidence through its investigation. See United States v. Clarke, 573 U.S. 248, 254 (2014) 1 only to inquire.”). At this stage of an SEC investigation, the SEC need not present 2 evidence of unlawful conduct and neither the Court nor the SEC is obligated to rely on 3 assertions by Petitioners that unlawful transactions or agreements between Juro System, 4 investors, or Petitioners did not take place. See SEC v. Felix Invs., LLC, No. 16-CV- 5 01386-EMC, 2023 WL 11897614, at *1 (N.D. Cal. Mar. 16, 2023) (internal citation and 6 quotation marks omitted) (“Inspection of third-party bank records is permissible when 7 inspection of the bank records . . . could lead to the discovery of concealed assets . . . .”); 8 Porrazzo v. U.S. SEC, 2018 WL 1598655, at *5 (D. Haw. Apr. 2, 2018) (“[T]he SEC is not 9 required to accept Movants’ statements without the opportunity to confirm them through 10 examination of the records referenced in the Contested Subpoenas.”). The SEC need 11 only show it has a reasonable basis to conduct a law enforcement inquiry and evidence 12 sought is relevant to the inquiry. See 12 U.S.C. § 3410(a)-(c); e.g., Blunden, 896 F.Supp. 13 at 1000 (declaration of government official attesting to commencement of investigation 14 following receipt of criminal report from bank sufficient to establish demonstrable reason 15 to believe law enforcement inquiry is legitimate, and records are relevant); Davidov v. 16 SEC, 415 F. Supp. 2d 386, 391 (S.D.N.Y. 2006) (“What need be shown is not probable 17 cause, but good reason to investigate.”). 18 Accordingly, the SEC has adequately demonstrated the bank records sought by 19 the subpoena are relevant to a legitimate law enforcement inquiry. 20 3. Substantial Compliance with RFPA 21 Petitioners did not assert any arguments regarding the SEC’s failure to comply 22 with the RFPA. (See ECF Nos. 1, 8.) The SEC served the subpoenas on U.S. Bank and 23 Wells Fargo Bank on May 21, 2025. (ECF No. 8 at 1.) Petitioners acknowledge receipt 24 and notice of the subpoenas by the SEC on the same day. (ECF No. 1 at 1.) The Court 25 concludes that, in issuing the Subpoenas, the SEC has substantially complied with 26 RFPA's provisions. Because the SEC's law enforcement inquiry is legitimate, the records 27 sought by the subpoenas are relevant to that inquiry, and there are no concerns of failing 1 B. Petitioners’ Motion to Strike 2 In the reply brief to the SEC’s response, Petitioners move to strike the response 3 and impose sanctions because the signature block in the SEC’s response “is at best 4 misleading, and at worst, invalid.” (ECF No. 9 at 6.) Petitioners note that the response is 5 signed by the attorney of record, James M. McHale, but contains the “accompanying 6 name and credentials belong[ing] to Melinda Hardy.” (ECF No. 9 at 6.) Petitioners assert 7 the response should be stricken because Ms. Hardy “is not an attorney of record in this 8 case” and the response violates Fed. R. Civ. P. 11(a) and Local Rule IA 11-1. (Id.) 9 Petitioners’ motion to strike fails for several reasons and is therefore denied. 10 First, Rule 11(a) of the Rules of Civil Procedure requires that “[e]very pleading, 11 written motion, and other paper must be signed by at least one attorney of record in the 12 attorney's name . . . .” Fed. R. Civ. P. 11(a) only permits a Court to “strike an unsigned 13 paper . . . .” Mr. McHale, who is the attorney of record, did in fact sign the SEC’s response. 14 (See ECF No. 9 at 14.) The SEC’s response here is neither unsigned nor signed by an 15 attorney who is not the attorney of record. (See id.) 16 Second, it is routine, proper, and expected that filings on behalf of government 17 agencies list multiple attorneys as counsel for the agency and authors of a filing. The fact 18 that Fed. R. Civ. P. 11(a) states “at least one attorney” implies that it is acceptable under 19 the rules for more than one attorney to be listed as counsel for a party. See also Johnson 20 v. University College, 706 F.2d 1205, 1208 (11th Cir.1983) (“[T]he participation of more 21 than one attorney constituted a reasonable necessity, given the complexity of legal issues 22 and the breadth of factual evidence involved in this case”). Here, the filing lists both Ms. 23 Hardy’s and Mr. McHale’s names, address, email address, and telephone number. (See 24 ECF No. 8 at 15.) The Court has no reason to believe the SEC’s response is procedurally 25 defective, in violation of the federal rules of civil procedure or the local rules, or otherwise 26 in bad faith. 27 Accordingly, the Court denies Petitioners’ motion to strike the SEC’s response. 1| IV. CONCLUSION 2 The Court notes the parties made several arguments and cited to several cases not discussed above. The Court has reviewed these arguments and cases and 4) determines they do not warrant discussion as they do not affect the outcome of the 5 | issues before the Court. 6 IT IS THEREFORE ORDERED that Petitioners’ motion to quash subpoenas, (ECF No. 1), is DENIED. 8 IT IS FURTHER ORDERED that Petitioners’ motion to strike, (ECF No. 9), is 9| DENIED. 10 IT IS FURTHER ORDERED that the Clerk ENTER JUDGMENT and CLOSE THIS 11| CASE. 12 IT IS SO ORDERED. 13 DATED: July 18, 2025 . 14 15 UNITED STATES‘MAGISTRATE JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 28 44