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[DO NOT PUBLISH]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). 2 USCA11 Case: 20-11017 Date Filed: 03/02/2021 Page: 3 of 7
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 3 USCA11 Case: 20-11017 Date Filed: 03/02/2021 Page: 4 of 7
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. 4 USCA11 Case: 20-11017 Date Filed: 03/02/2021 Page: 5 of 7
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
Free access — add to your briefcase to read the full text and ask questions with AI
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). 2 USCA11 Case: 20-11017 Date Filed: 03/02/2021 Page: 3 of 7
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 3 USCA11 Case: 20-11017 Date Filed: 03/02/2021 Page: 4 of 7
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. 4 USCA11 Case: 20-11017 Date Filed: 03/02/2021 Page: 5 of 7
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 5 USCA11 Case: 20-11017 Date Filed: 03/02/2021 Page: 6 of 7
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)).
6 USCA11 Case: 20-11017 Date Filed: 03/02/2021 Page: 7 of 7
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.