Wolfson v. Securities and Exchange Commission

• Court: District Court, District of Columbia
• Decided: February 3, 2009
• Docket: Civil Action No. 2009-0194
• Status: Published

Opinion

FILED FEB - 3 2009 UNITED STATES DISTRICT COURT NANCY MAYER WHITTINGTON ClERK FOR THE DISTRICT OF COLUMBIA U.S. DlSlRICT COURT'

ALLEN WOLFSON,

Plaintiff, v. Civil Action No. 09 0194 SECURITIES AND EXCHANGE COMMISSION, et al.,

Defendants.

MEMORANDUM OPINION

This matter is before the Court on consideration of plaintiffs application to proceed in

forma pauperis and pro se complaint. The Court will grant the application, and will dismiss the

complaint.

In 2003, the Securities and Exchange Commission brought a civil fraud action against

plaintiff s son, David Wolfson, and others, who were charged "with violating the federal

securities laws by fraudulently raising funds from investors." Sec. & Exch. Comm 'n v. Wolfson,

No. 2:03CV914 TS, 2008 WL 893002, at *1 (D. Utah Mar. 28, 2008), aff'd sub nom. In re Sec.

& Exch. Comm 'n, No. 08-4073, 2008 WL 4566384 (10th Cir. Oct. 08, 2008), petition for cert.

filed, (U.S. Nov. 28, 2008) (No. 08-7583). "A receiver was appointed and given broad powers to

preserve, take control of, and liquidate the defendants' property for the benefit ofthe defrauded

investors." Id. Plaintiff was not a party to this SEC action. CompI. at 3. David Wolfson

"agreed to settle with the SEC," and "[p Jart of the settlement agreement was that David Wolfson

would disgorge all of his interest in the assets listed in the settlement agreement." Id. According

to plaintiff, assets belonging to him, not to David Wolfson, were among the assets over which the

1 receiver took control. Compi. at 3. Rather, plaintiff purported only to grant his son power of

attorney "in order to manage plaintiffs assets while he was in prison in New York." Id.

Plaintiff alleges that defendants violated his "Fifth Amendment Right To Due Process as

guaranteed by the Constitution of the United States of America," presumably by depriving him of

property without compensation. Compi. at 3.1. He demands compensation "of 160 million

dollars or as much as one billion dollars or the return of all his properties ... plus court costs,

legal fees and punitive damages." Id. at 4.

The Court will dismiss the complaint with prejudice because it fails to state a claim upon

which relief can be granted. Plaintiffs success turns on his ability to prove that he owned assets

included in the receivership. However, "[t]he district judge in the underlying SEC enforcement

action, after analyzing Plaintiffs claim and reviewing the evidence in the record, determined that

the assets at issue were properly included in the receivership because they were assets under the

control and ownership of David Wolfson," who in tum used those assets "as a conduit for money

stolen from investors." Wolfton v. United States, Nos. []2:06-CV-421, 2:06-CV-422, 2:06-CV-

435, 2:06-CV-966, 2:06-CV-994, 2:07-CV-219, 2008 WL 4919262, at *2 (D. Utah Nov. 17,

2008) (citations omitted). Plaintiffs "allegations concerning the purported improper seizure and

sale of the Assets in the SEC Action do not plausibly support legal claims for relief." Id.

(citations and internal punctuation omitted).

The issue of plaintiffs ownership of the assets included in the receivership has been

resolved, and the doctrine of collateral estoppel (issue preclusion) bars relitigation of the issue in

this court. See Ashe v. Swenson, 397 U.S. 436,443-44 (1970); Yamaha Corp. ofAm. v. United

States, 961 F.2d 245,254 (D.C. Cir. 1992), cert. denied, 506 U.S. 1078 (1993).

2 An Order consistent with this Memorandum is issued separately on this same date.