Ussec v. Premier Holding Corporation

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 23, 2022
• Docket: 21-55249
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 23 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

U.S. SECURITIES & EXCHANGE No. 21-55249 COMMISSION, D.C. No. Plaintiff-Appellee, 8:18-cv-00813-CJC-KES

v. MEMORANDUM* PREMIER HOLDING CORPORATION; RANDALL LETCAVAGE,

Defendants-Appellants,

and

JOSEPH GREENBLATT,

Defendant.

Appeal from the United States District Court for the Central District of California Cormac J. Carney, District Judge, Presiding

Argued and Submitted February 9, 2022 San Francisco, California

Before: HURWITZ and VANDYKE, Circuit Judges, and ERICKSEN,** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Joan N. Ericksen, United States District Judge for the District of Minnesota, sitting by designation. Defendants Randall Letcavage and Premier Holding Corporation appeal a

summary judgment entered in favor of the Securities and Exchange Commission and

the district court’s subsequent imposition of civil remedies. We have jurisdiction

under 28 U.S.C. § 1291, and affirm.

We review a summary judgment de novo, with all facts and inferences being

drawn in favor of the non-moving party. See Slayman v. FedEx Ground Package

Sys., Inc., 765 F.3d 1033, 1041 (9th Cir. 2014). Evidentiary rulings made in

connection with a summary judgment, including orders precluding evidence, are

reviewed for abuse of discretion. See Nationwide Life Ins. Co. v. Richards, 541 F.3d

903, 909 (9th Cir. 2008). A district court’s determination of appropriate remedies is

also reviewed for abuse of discretion. See SEC v. Platforms Wireless Int’l Corp.,

617 F.3d 1072, 1096 (9th Cir. 2010); SEC v. First Pac. Bancorp, 142 F.3d 1186,

1190 (9th Cir. 1998).

1. Letcavage challenges the district court’s preclusion order that

prevented him from introducing certain evidence in opposition to the SEC’s motion

for summary judgment. The district court’s order was based on Letcavage’s failure

to meaningfully answer the SEC’s questions during depositions and his blanket

invocation of the Fifth Amendment during the enforcement proceeding. Even when

a defendant is entitled to invoke the Fifth Amendment in a civil proceeding, “a

district court has discretion in its response to a party’s invocation of the Fifth.” SEC

2 v. Colello, 139 F.3d 674, 677 (9th Cir. 1998). Here, Letcavage refused to

meaningfully answer any questions about the WePower note, the TPC assets, or his

employment agreement—the three central issues of this case. Therefore, the district

court’s preclusion order was a reasonable response to Letcavage’s decision and not

an abuse of discretion.

2. Defendants challenge the district court’s finding of scienter, which here

“refers to a mental state embracing intent to deceive, manipulate, or defraud.” Ernst

& Ernst v. Hochfelder, 425 U.S. 185, 193 n.12 (1976). The district court did not

abuse its discretion in making this determination. The district court can infer scienter

based on a defendant’s invocation of the Fifth Amendment when “independent

evidence exists of the fact to which the party refuses to answer.” Doe ex rel. Rudy-

Glanzer v. Glanzer, 232 F.3d 1258, 1264 (9th Cir. 2000). The SEC offered ample

independent evidence to justify an adverse inference of scienter in this case,

including numerous public and private statements by Letcavage.

3. Finally, Defendants challenge the district court’s imposition of

injunctive1 and monetary remedies. The district court properly analyzed the relevant

factors, including Letcavage’s repeated violations of security laws and lack of any

admission of wrongdoing, when crafting its injunctive remedies, and we find no

1 These included a permanent injunction against Defendants from committing future securities violations and a 5-year bar preventing Letcavage from being an officer- director or trading in penny stocks.

3 abuse of discretion. See SEC v. Murphy, 626 F.2d 633, 655 (9th Cir. 1980); First

Pac. Bancorp, 142 F.3d at 1193. The district court’s disgorgement order was

likewise proper. Defendants object to the district court’s disgorgement calculation,

but Defendants bear the burden of proving “that the disgorgement figure was not a

reasonable approximation.” Platforms Wireless, 617 F.3d at 1096 (citation omitted).

Because Defendants failed to meet their burden of proving that any of the purported

business expenses were actually incurred or were “legitimate,” Liu v. SEC, 140 S.

Ct. 1936, 1950 (2020), we find no abuse of discretion.

AFFIRMED.