Sec. & Exch. Comm'n v. Uboh

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SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. UBONG UBOH A/K/A NEDI SHUPO, FRANK GOLDMAN, JONATHAN GOLDMAN, AND NINO, Defendant.

No. 21-cv-02049(KAM)(CLP)

United States District Court, E.D. New York

June 4, 2024

MEMORANDUM & ORDER

KIYO A. MATSUMOTO, UNITED STATES DISTRICT JUDGE

In this civil action, commenced on April 15, 2021, the Securities and Exchange Commission (“SEC”) alleges that defendants Ubong Uboh (“Mr. Uboh”) and Tyler Crockett (“Mr. Crockett”) participated in fraudulent schemes in violation of federal securities laws. (ECF No. 1, Compl.) The conduct alleged in the SEC's complaint also formed the basis for criminal charges against Mr. Uboh in a parallel proceeding before this Court United States v. Ubong Uboh, 21-CR-00146 (KAM) (E.D.N.Y.). Presently before the Court is Mr. Uboh's pro se “Motion to Dismiss re: SEC's Final Judgment with Prejudice.” (ECF No. 24, Def. Mem.)

For the following reasons, Mr. Uboh's motion is respectfully DENIED.

Background

I. Factual Background

The facts and procedural history necessary to determine the instant motion, based on the record, the complaint, and consent is set forth as follows:

The SEC's complaint alleged, among other things, that Mr Uboh violated Sections 17(a)(1), (2), and (3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(1), (2), and (3)]; Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)]; and Rules 10b-5(a), (b), and (c) thereunder [17 C.F.R. §§ 240.10b-5(a), (b), and (c)]. (ECF No. 1, Compl. ¶ 5.) The complaint alleged that Mr. Uboh and Mr. Crockett made fraudulent representations from a Miami call room soliciting investors-many of whom were senior citizens-to purchase shares of microcap issuers. (Id. ¶¶ 1,3.) The complaint further alleged that Mr. Uboh and Mr. Crockett misappropriated another investor's funds in connection with a private offering. (Id. ¶ 4.)

Mr. Uboh and Mr. Crockett persuaded investors to purchase shares of microcap issuers while Garrett O'Rourke, who managed the call room, dumped millions of dollars' worth of the microcap issuers' shares. (Id. ¶¶ 1, 13.) Mr. Uboh and Mr. Crockett materially misrepresented the microcap issuers' future prospects and their relationships with well-known financial institutions. (Id. ¶ 2.) The microcap issuers in fact had no relationships with such financial institutions, and many had limited or no revenues or profits. (Id.)

Mr. Uboh and Mr. Crockett also falsely represented to potential investors an investment opportunity to purchase private shares of a purported technology company. (Id. ¶ 4.) After Mr. Uboh and Mr. Crockett falsely represented this company's industry partnerships and growth prospects, one individual invested $500,000 in the company's private placement; Mr. Uboh and Mr. Crockett then misappropriated these funds. (Id.)

II. Procedural Background

On April 15, 2021, the SEC filed its complaint against Mr. Uboh and Mr. Crockett alleging securities law violations. (ECF No. 1, Compl.) On the same day, an indictment against Mr. Uboh was unsealed for conduct arising out of substantially similar circumstances in United States v. Ubong Uboh, 21-CR-00146 (KAM) (E.D.N.Y.) (the “Criminal Action”). (See Criminal Action, ECF No. 1, Indictment; Criminal Action, ECF No. 3, Order to Unseal.) On September 20, 2021, the United States moved to intervene and to stay the civil proceeding, given the parallel criminal case. (ECF No. 19, Mot. to Intervene and Stay.) On September 22, 2021, the Court granted both motions.

On August 4, 2022, Mr. Uboh pleaded guilty to conspiracy to commit securities fraud and conspiracy to commit mail and wire fraud. (Criminal Action, ECF No. 35, Plea.) On January 27, 2023, this Court entered a judgment sentencing Mr. Uboh to 60 months incarceration and ordering him to pay $3,741,263.96 in restitution; Mr. Uboh also consented to the entry of a forfeiture judgment of $446,702. (Criminal Action, ECF No. 53, Judgment.)

On December 20, 2022, Mr. Uboh consented to a settlement which incorporated a proposed judgment in the instant action. (ECF No. 22-1, Executed Consent at 6.) On January 6, 2023, the SEC sought this Court's approval of the proposed judgment and Mr. Uboh's executed consent. (ECF No. 22-1, Executed Consent; ECF No. 22-2, Proposed Judgment.) On February 22, 2023, the Court so-ordered the Judgment, which incorporated Mr. Uboh's consent and its terms. (ECF No. 23, together, the Consent Judgment.) The Consent Judgment (1) permanently restrained and enjoined Mr. Uboh from violating Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934; and Rule 10b-5 thereunder; (2) permanently barred Mr. Uboh from participating in offerings of penny stock; and (3) ordered that, upon the SEC's motion, the Court would determine the appropriateness of ordering disgorgement and/or civil penalties, and if so, the amounts. (Id. ¶¶ 1-4.) Should the Court order disgorgement, Mr. Uboh consented to pay prejudgment interest. (Id. ¶ 3.)^[1] On September 26, 2023, the SEC wrote Mr. Uboh for his consent to resolve the open issues of disgorgement and civil penalties. (ECF No. 25, SEC Ltr. at 1.) The SEC sent Mr. Uboh a “proposed Consent and Final Judgment” and asked if “he would consent to a Proposed Final Judgment that sought to finalize the financial remedies in this case (by deeming disgorgement satisfied by the monetary relief ordered in the Criminal Case and not seeking a civil penalty) and incorporate the prior injunction and penny stock bar imposed in the Consent Judgment.” (ECF No. 26, SEC Mem. at 5; see also ECF No. 25, SEC Ltr. at 1.) Mr. Uboh did not respond to this communication, nor to the SEC's follow-up request on December 19, 2023. (ECF No. 25, SEC Ltr. at 1.) The SEC's December 19, 2023 follow-up notified Mr. Uboh that should the SEC not receive a response by February 1, 2024, it would request this Court to enter the “proposed Final Judgment” without his consent. (ECF No. 25, SEC Ltr. at 1.)

On January 25, 2024, Mr. Uboh, acting pro se, filed the instant “Motion to Dismiss re: SEC's Final Judgment with Prejudice” arguing that the SEC's “proposed Final Judgment and Consent Form” violates the constitutional prohibition against Double Jeopardy. (ECF No. 24, Def. Mot. ¶ 11.) The SEC filed its memorandum in opposition on March 13, 2024, arguing that Mr. Uboh lacked a basis for his motion and requesting the Court to set a schedule for the SEC to move for financial remedies as contemplated in the Consent Judgment. (ECF No. 26, SEC Mem. at 2.)

Legal Standard

I. Motion to Vacate

Although Mr. Uboh styles his motion as a “Motion to Dismiss,” the Court considers his motion as a Motion to Vacate the Judgment incorporating his Consent ordered on February 22, 2023, under Fed.R.Civ.P. 60(b). See Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994) (noting that a court must “read [the pro se litigant's] supporting papers liberally, and will interpret them to raise the strongest arguments that they suggest”).

Under Rule 60 (b), a court may grant relief from a final judgment in six circumstances. Regardless of which subsection a party invokes, Rule 60(b) requires courts to “strike[] a balance between serving the ends of justice and preserving the finality of judgments.” Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986) (collecting cases) . To strike this balance, Rule 60 (b) motions “should be broadly construed to do substantial justice, yet final judgments should not be lightly reopened.” Id. (citation and quotation removed).

Rule 60(b) relief, however, “is generally not favored.” United States v. Int'l Bhd. of Teamsters, 247 F.3d 370, 391 (2d Cir. 2001). Indeed, Rule 60(b) is “a mechanism for extraordinary judicial relief invoked only if the moving party demonstrates exceptional circumstances.” Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008) (quotations omitted); see also Miles v. N.Y.C. Transit Auth., 802 Fed.Appx. 658, 659 (2d Cir. 2020) (summary order). The decision whether to grant a Rule 60(b) motion falls to “the sound discretion of the district court[.]” Stevens v. Miller, 676 F.3d 62, 67 (2d Cir. 2012) (quotations omitted).

Although a pro se party's 60(b) motion should be construed liberally, see Burgos, 14 F.3d at 790, the litigant is “not relieved of his or her obligation to demonstrate extraordinary circumstances.” Sec. & Exch. Comm'n v. Cohen, 671 F.Supp.3d 319, 322 (E.D.N.Y. 2023) (internal citation omitted). A pro se litigant must still ultimately abide by the “substantive requirements of motion practice.” Spurgeon v. Lee, No. 11-CV-600 (KAM), 2019 WL 569115, at *2 (E.D.N.Y. Feb. 11, 2019) (cleaned up). The burden of proof “is on the party seeking relief from judgment.” Int'l Bhd. of Teamsters, 247 F.3d at 391.

Discussion

The crux of Mr. Uboh's argument is that the constitutional prohibition against Double Jeopardy invalidates any sanction which the SEC has sought or will seek, and to which he consented in the Consent Judgment entered by this Court on February 22, 2023. (See generally ECF No. 24, Def Mot.; ECF No. 23, Consent Judgment.) Because Mr. Uboh has “already been convicted of the violated federal laws and has thus began serving his imposed sentence which included 60 mos. of imprisonment as well as a judgment for restitution and forfeiture in the amount of $446,309.68,”^[2] he argues that the SEC may not further punish him through the “proposed sanctions.” (ECF No. 24, Def. Mot. ¶¶ 8, 11.) Mr. Uboh's motion also objects to the permanence of his consent to a penny stock bar as improper. (ECF No. 22-1, Executed Consent, ¶ 3.)

As explained below, both arguments fail to “demonstrate[] exceptional circumstances” necessary to warrant...