Securities and Exchange Commission v. Minuskin

• Court: District Court, S.D. California
• Decided: September 10, 2025
• Docket: 3:22-cv-00483
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 SECURITIES AND EXCHANGE Case No.: 22-cv-483-RSH-AHG COMMISSION, 12

Plaintiff, 13 ORDER (1) GRANTING v. PLAINTIFF’S MOTION FOR 14 REMEDIES AGAINST DEFENDANT THOMAS F. CASEY, 15 THOMAS F. CASEY AND (2) Defendant. DENYING DEFENDANT’S MOTION 16 FOR RECONSIDERATION 17

18 [ECF Nos. 152, 154] 19 20 Pending before the Court are motions by the Parties following the jury trial in this 21 case: (1) a motion for plaintiff Securities and Exchange Commission (the “SEC”) for 22 remedies against defendant Thomas F. Casey, and (2) Casey’s motion for reconsideration. 23 ECF Nos. 152, 154. The Court finds the motions suitable for disposition without further 24 hearing. As set forth below, the SEC’s motion is granted and Casey’s motion is denied. 25 I. BACKGROUND 26 On April 8, 2022, plaintiff Securities and Exchange Commission (the “SEC”) filed 27 this action against Minuskin, Stoll, Golden Genesis, Dennis R. DiRicco, and Thomas F. 28 1 Casey alleging violations of the Securities Act of 1933 (“Securities Act”), Securities 2 Exchange Act of 1934 (“Exchange Act”), and Rule10b-5 thereunder. ECF No. 1. 3 Defendants Minuskin and Stoll failed to appear in the action, and on July 29, 2022, 4 the Clerk of Court entered default against them. ECF No. 15. The SEC has moved for 5 default judgment against them. ECF No. 153. 6 On April 28, 2022, the Court entered a bifurcated consent judgment against 7 defendant DiRicco. ECF Nos. 3, 6. The judgment included a permanent injunction. ECF 8 No. 6. Thereafter, following a hearing, on February 28, 2025 the Court entered final 9 judgment against DiRicco that also included: (1) disgorgement of $183,298, (2) 10 prejudgment interest on disgorgement in the amount of $66,979.47, and (3) a civil penalty 11 in the amount of $300,000. ECF No. 113. 12 Defendants Casey and Golden Genesis, both represented by the same law firm, filed 13 an answer to the Complaint. ECF No. 24. On March 25, 2024, following briefing and 14 argument, the Court granted summary judgment in favor of the SEC, and against Casey 15 and Golden Genesis, on the SEC’s claim for violations of Sections 5(a) and 5(c) of the 16 Securities Act (Claim Seven of the Complaint), which prohibits the sale of securities unless 17 a registration statement is in effect. ECF No. 55. The Court’s order also determined, as a 18 threshold matter, that the promissory notes at issue in the case were “securities.” Id. at 7- 19 13. 20 The law firm representing Casey and Golden Genesis later moved to withdraw from 21 the representation. On January 29, 2024, the Court granted the motion to withdraw, and set 22 a deadline for Golden Genesis to make an appearance through new counsel. ECF No. 84. 23 No attorney thereafter appeared for Casey or Golden Genesis. Accordingly, on February 24 19, 2025, the Court struck the answer of Golden Genesis, and entered default against the 25 company. ECF Nos. 96, 97. 26 Casey proceeded to a jury trial pro se on the SEC’s claims for (1) violation of Section 27 10(b) of the Exchange Act and Rule 10b-5 (Claim One of the Complaint); and (2) violation 28 of Section 17(a) of the Securities Act (Claim Three of the Complaint). 1 The evidence at trial reflected that Casey was the Chairman and CEO of Golden 2 Genesis, a company that described itself as engaged in the business of collecting blood 3 plasma from young donors for transfusion into older adults as an anti-aging treatment. 4 Between April 2016 and August 2019, Golden Genesis raised approximately $10,385,000 5 from a total of 238 investors through the issuance of promissory notes, with the assistance 6 of a company called Retire Happy that promoted investment in Golden Genesis to its retiree 7 clients. See Ex. 190 (summary chart of investments). Golden Genesis privately agreed to 8 pay Retire Happy a 12% commission based on the gross amount of money that Retire 9 Happy raised from its clients. See Ex. 8A (Retire Happy-Golden Genesis consulting 10 agreement). In April 2016, at the outset of the partnership between Golden Genesis and 11 Retire Happy, Casey drafted and sent to Retire Happy a sales brochure that described the 12 promissory note offering. Ex. 10 (Golden Genesis brochure). The sales brochure stated that 13 the notes would be issued for two years and yield 10% interest, payable on the last day of 14 every month. The sales brochure further provided that the notes were to be secured by a 15 UCC-1 financing statement “on all assets of Golden Genesis.” Id. at 7. 16 The SEC advanced several theories of fraud at trial. The SEC argued that the 17 statements in the brochure were false in that Casey never filed a UCC-1 statement, and 18 never intended to file one. The SEC also argued that the brochure failed to disclose the 19 12% commission that Golden Genesis was paying Retire Happy out of the gross investment 20 proceeds, and also failed to disclose the criminal history of Golden Genesis’s CFO Dennis 21 DiRicco or the past regulatory actions taken by the SEC against DiRicco and against Casey 22 himself. Finally, the SEC argued that the issuance of promissory notes amounted to a 23 scheme to defraud by paying the investors the promised 10% interest payments by using 24 amounts raised from other investors. Of the over $10 million collected from investors, 25 approximately $2.1 million was used to make interest payments to investors. See Exs. 190, 26 192 (summary chart of amounts returned to investors). The retirees lost the rest of their 27 investments in Golden Genesis; in late 2018, the company became unable to make 28 payments to any of its investors. Ex. 268 (November 2018 email from Casey). During the 1 relevant time period, Casey paid himself, his girlfriend, and her son salaries totaling 2 approximately $1.3 million. See Ex. 198 (chart reflecting payroll amounts). 3 Casey argued at trial that he never intended the statements in the sales brochure to 4 be provided to investors. He further contended that he had no need to file a UCC-1 as stated 5 in the sales brochure, because he maintained that the trust company used for holding the 6 promissory notes, Provident Trust, had volunteered beginning in 2016 to secure those notes 7 with a UCC-1 on its own assets instead of the assets of Golden Genesis. However, in an 8 email from January 2018 seeking to raise additional funds from Retire Happy investors, 9 Casey again told Retire Happy that the notes “are secured by … a UCC-1 on all assets of 10 GG, including equipment, receivables, and bank accounts.” Ex. 125. 11 On June 24, 2025, the jury returned a verdict finding Casey liable on both of the 12 SEC’s fraud claims against Casey. ECF No. 150. 13 On August 14, 2025, the SEC filed its present motion seeking injunctive and 14 monetary relief against Casey. ECF No. 152. That motion is fully briefed. ECF Nos. 158, 15 159. 16 On August 15, 2025, Casey filed his present motion seeking the following alternative 17 forms of relief: (1) reconsideration of the Court’s March 25, 2024 summary judgment order 18 determining that the promissory notes at issue in this case were “securities” subject to the 19 federal securities laws; (2) a new trial; or (3) certification of an interlocutory appeal of the 20 Court’s March 25, 2024 order. ECF No. 154 at 1. 21 II. CASEY’S MOTION 22 The Court, in its order of March 25, 2024 granting in part the SEC’s motion for 23 summary judgment, determined that the promissory notes were securities under Reves v. 24 Ernst & Young, 494 U.S. 56 (1990). ECF No. 55 at 7-13. Casey seeks reconsideration of 25 this order. 26 Casey has previously moved for reconsideration of this same order, and in the 27 alternative, for certification of an interlocutory appeal. ECF Nos. 93, 102, 115. At a hearing 28 on April 3, 2025, the Court denied both forms of relief. ECF No. 131. 1 The Court again denies Casey’s request for reconsideration. The purpose of the trial 2 was not to determine whether the Golden Genesis promissory notes were securities; that 3 question had already been determined by the Court. However, the evidence at trial was 4 fully consistent with the Court’s prior analysis in its March 25, 2024 order, ECF No. 55 at 5 7-13, as well as with the Court’s oral ruling on April 3, 2025 denying Casey’s first motion 6 to reconsider. Although Casey’s motion refers in general terms to the trial evidence, the 7 motion is a reprisal of arguments he has already made and that the Court has previously 8 rejected. 9 Casey’s motion does not set forth a basis for seeking a new trial other than his 10 contention that the notes were not securities. This request for a new trial is denied. 11 The Court also, again, denies Casey’s request for certification of an interlocutory 12 appeal. With the filing of this order and the entry of judgment, Casey is entitled to appeal 13 the final judgment against him without need for certification. 14 III. THE SEC’S MOTION 15 The SEC seeks three forms of relief against Casey, following the jury verdict against 16 Casey: (1) a permanent injunction against committing future violations of the securities 17 laws; (2) an officer and director bar; and (3) civil monetary penalties. ECF No. 152-1 at 1. 18 Casey’s opposition brief asserts that these remedies are not appropriate because he did not 19 violate the securities laws, the promissory notes at issue not being securities.1 20 A. Injunctive Relief 21 Both the Securities Act and the Exchange Act authorize injunctions. 15 U.S.C. §§ 22 77t, 78u. To obtain a permanent injunction, the SEC must demonstrate that: (1) the SEC 23 has succeeded on the merits; (2) irreparable harm will likely result in the absence of the 24 injunction; (3) the balance of equities tips in the SEC’s favor; and (4) the injunction is in 25

26 27 1 Casey’s opposition brief was untimely filed on September 4, 2025, six days after the due date. ECF Nos. 146, 159. However, it relies on the same arguments as Casey’s timely 28 1 the public interest. See Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 32 (2008); cf. 2 Starbucks v. McKinney, 602 U.S. 339, 345 (2024) (“For preliminary injunctions, the four 3 criteria identified in Winter encompass the relevant equitable principles.”). Casey’s 4 opposition brief does not address or challenge the SEC’s analysis of these factors. 5 Here, the SEC has succeeded on the merits, having obtained summary judgment 6 against Casey on Claim Seven of the Complaint, and a jury verdict against Casey on Claims 7 One and Three of the Complaint. This satisfies the first Winter factor. 8 In determining the likelihood of irreparable harm absent an injunction, the Court 9 considers the likelihood of future violations by the defendant. SEC v. Murphy, 626 F.2d 10 633, 655 (9th Cir. 1980). Courts assess the totality of the circumstances, considering factors 11 such as (1) the degree of scienter involved; (2) the isolated or recurrent nature of the 12 infraction; (3) the defendant’s recognition of the wrongful nature of his or her conduct; (4) 13 the likelihood, because of defendant’s professional occupation, that future violations might 14 occur; and (5) the sincerity of his or her assurances against future violations. Id. Those 15 factors favor a finding of irreparable harm here. The evidence at trial reflected a fraudulent 16 course of conduct by Casey lasting several years in which he knowingly profited from 17 misrepresentations made to retirees. Far from recognizing any wrongful conduct, or 18 providing assurances against future violations, Casey has repeatedly and consistently 19 derided the SEC and portrayed himself as an innocent businessman who is the victim of 20 government overreach. Remarkably, Casey went so far as to offer to sell plasma at a 21 discount to victims during his cross-examination of them—effectively soliciting elderly 22 investors who had already lost hundreds of thousands of dollars to give him even more 23 money. Casey thus continues to hold himself out as the principal of Golden Genesis and 24 continues to solicit funds on behalf of the company, demonstrating a likelihood of future 25 violations. The second Winter factor favors an injunction. 26 The balance of the equities and the public interest also favor an injunction here, 27 based on the need to protect investors. See, e.g., SEC v. Ballout, No. 24-81170-CV, 2025 28 U.S. Dist. LEXIS 110864, at *10 (S.D. Fla. June 11, 2025). This includes retirees of 1 advanced age. The Court concludes that the limited injunction sought by the SEC is 2 warranted here. 3 B. Officer and Director Bar 4 In applicable proceedings, “the court may prohibit, conditionally or unconditionally, 5 and permanently or for such period of time as it shall determine, any person who violated 6 section [17(a)(1)] of this title from acting as an officer or director of any issuer that has a 7 class of securities registered ... or that is required to file reports ... if the person’s conduct 8 demonstrates unfitness to serve as an officer or director of any such issuer.” 15 U.S.C. § 9 77t(e); see also 15 U.S.C. § 78u(d)(2) (same for Section 10(b) of the Exchange Act). The 10 Court also has authority to impose an officer and director bar under its inherent equitable 11 powers. SEC v. Gault, 751 F. App’x 974, 980 (9th Cir. 2018). 12 In determining whether to order such a bar, the Court may consider the following 13 nonexclusive factors: (1) the “egregiousness” of the underlying securities law violation; 14 (2) the defendant’s “repeat offender” status; (3) the defendant’s “role” or position when he 15 engaged in the fraud; (4) the defendant’s degree of scienter; (5) the defendant’s economic 16 stake in the violation; and (6) the likelihood that misconduct will recur. SEC v. First Pacific 17 Bancorp, 142 F.3d 1186, 1193 (9th Cir. 1998) (quoting SEC v. Patel, 61 F.3d 137, 141 (2d 18 Cir. 1995)). Casey’s opposition does not address or challenge the SEC’s analysis of these 19 factors. 20 These factors favor issuance of such a bar here. The evidence at trial, consistent with 21 the jury’s verdict, reflected that as the CEO and President of Golden Genesis, Casey 22 knowingly participated in a long-running fraud scheme that resulted in raising over $10 23 million for his company from 238 victims. Casey drafted the sales brochure containing the 24 misrepresentations and material omissions that were repeated to Retire Happy customers, 25 to Casey’s profit. His fraud was egregious and he is unrepentant. Casey is a “repeat 26 offender,” having been previously enjoined in 1998 from violating the securities laws. See 27 Ex. 104 (final judgment of permanent injunction). And as discussed above, the Court is 28 concerned about the likelihood of recurrence of misconduct. The Court concludes that 1 Casey’s conduct demonstrates his unfitness to serve as the officer or director of an issuer, 2 and that an officer and director bar is warranted. 3 C. Monetary Penalties 4 Under Section 20(d)(2)(A) of the Securities Act and Section 21(d)(3)(B) of the 5 Exchange Act, the amount of any civil penalty “shall be determined by the court in light of 6 the facts and circumstances.” 15 U.S.C. §§ 77t(d)(2)(A), 78u(d)(3)(B). Both statutes 7 provide for the imposition of penalties according to a statutory three-tier system. See 15 8 U.S.C. §§ 77t(d)(2), 78u(d)(3)(B). First-tier penalties may be imposed for any violation of 9 either Act. See id. §§ 77t(d)(2)(A), 78u(d)(3)(B)(i). Second-tier penalties apply to 10 violations that “involved fraud, deceit, manipulation or deliberate or reckless disregard of 11 a regulatory requirement.” Id. §§ 77t(d)(2)(B), 78u(d)(3)(B)(ii). Third-tier penalties apply 12 to violations that (i) involve “fraud, deceit, manipulation, or reckless disregard of a 13 regulatory requirement” and (ii) “directly or indirectly resulted in substantial losses or 14 created a significant risk of substantial losses to other persons.” Id. §§ 77t(d)(2)(C), 15 78u(d)(3)(B)(iii). 16 Each tier provides that a penalty cannot exceed the greater of either a specific 17 statutory amount, or “the gross amount of pecuniary gain to such defendant as the result of 18 the violation.” Id. §§ 77t(d)(2), 78u(d)(3)(B). For violations occurring from November 3, 19 2015 through the present, the maximum inflation-adjusted statutory penalty for natural 20 persons is $11,823 as to first-tier penalties; $118,225 as to second-tier penalties; and 21 $236,451 as to third-tier penalties. See 15 U.S.C. §§ 77t(d)(2), 78u(d)(3)(B); see also 22 Inflation Adjustments to the Civil Monetary Penalties Administered by the Securities and 23 Exchange Commission (as of January 15, 2025), available at 24 https://www.sec.gov/enforce/civil-penalties-inflation-adjustments (last visited Sept. 9, 25 2025). Because civil penalties, like permanent injunctions, are imposed to deter the 26 wrongdoer from future violations, in determining the amount of civil penalties courts 27 frequently apply the factors set forth in SEC v. Murphy, 626 F.2d 633, 655 (9th Cir. 1980), 28 set forth above, used to determine the likelihood of future violations in the context of 1 || injunctive relief. See, e.g., SEC v. Abacus Int’l Holding Corp., No. C 99-02191 TEH, 2001 2 ||U.S. Dist. LEXIS 12635, at *15 (N.D. Cal. Aug. 16, 2001). 3 Here, the SEC seeks imposition of (1) a tier-one penalty of $10,000 based on the 4 ||sale of unregistered securities, in connection with each of the 238 victims, totaling 5 $2,380,000; and (2) a single tier-three penalty in the statutory maximum amount of 6 $236,451 based on his commission of securities fraud that resulted in substantial losses to 7 ||investors. Casey’s opposition does not address or challenge the SEC’s analysis of civil 8 || penalties. 9 The Murphy factors, set forth and analyzed above, support the SEC’s request for 10 || total civil penalties of $2,616,451. This amount is a fraction of the over $10.3 million raised 11 || from investors or the over $8 million in unrecovered principal. Needless to say, it is far less 12 the principal and interest that were fraudulently promised to those investors. The SEC 13 |/represents that, if paid, the SEC will seek Court approval for a Fair Fund under Section 308 14 || of the Sarbanes-Oxley Act to distribute the payments to harmed investors. ECF No. 152-1 15 18. The Court concludes that the civil penalties requested by the SEC against Casey are 16 || warranted here. 17 || IV. CONCLUSION 18 For the foregoing reasons, Casey motion for reconsideration, for a new trial, or for 19 || certification of an interlocutory appeal [ECF No. 154] is DENIED. The SEC’s motion for 20 || remedies [ECF No. 152] is GRANTED. The Court will enter judgment as provided herein. 21 IT IS SO ORDERED. ‘ 22 ||Dated: September 10, 2025 [erbew 7 Hove 3 Hon. Robert S. Huie United States District Judge 24 25 26 27 28