Sec. & Exch. Comm'n v. Complete Bus. Solutions Grp., Inc.

608 F.Supp.3d 1231

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,

v.COMPLETE BUSINESS SOLUTIONS GROUP, INC. d/b/a Par Funding, et al., Defendants.

CASE NO. 20-CIV-81205-RAR

United States District Court, S.D. Florida.

Signed June 16, 2022

Alise Meredith Johnson, Linda Salup-Schmidt, Robert Kent Levenson, Amie Riggle Berlin, United States Securities and Exchange Commission, Miami, FL, Martin F. Healey, US Securities and Exchange Commission Boston Regional Office, Boston, MA, for Plaintiff.

Allison Beth Kernisky, Daniel I. Small, Holland & Knight LLP, Miami, FL, Chad M. Vanderhoef, Holland, Knight LLP, Tampa, FL, for Defendants Retirement Evolution Group, LLC, Retirement Evolution Income Fund LLC, RE Income Fund 2, LLC, John Gissas.

James Miller Kaplan, Noah Elliot Snyder, Kaplan Zeena LLP, Miami, FL, Joel Hirschhorn, GrayRobinson, Miami, FL, Alan S. Futerfas, Pro Hac Vice, New York, NY, Michael F. Bachner, Pro Hac Vice, Bachner & Herskovits, New York, NY, Alejandro Oscar Soto, Daniel Scott Fridman, Fridman Fels & Soto, PLLC, Coral Gables, FL, David Lawrence Ferguson, The Kopelowitz & Ostrow Firm PA, Fort Lauderdale, FL, for Defendant Lisa McElhone.

Alejandro Oscar Soto, Fridman Fels & Soto, PLLC, Coral Gables, FL, Andre G. Raikhelson, Law Offices of Andre G. Raikhelson, LLC, Boca Raton, FL, Bettina Schein, Pro Hac Vice, Law Offices of Bettina Schein, New York, NY, Daniel Scott Fridman, Fridman Fels & Soto, PLLC, Coral Gabes, FL, David Lawrence Ferguson, The Kopelowitz & Ostrow Firm PA, Fort Lauderdale, FL, Joel Hirschhorn, GrayRobinson, Miami, FL, for Defendant Joseph Cole Barleta.

Daniel Scott Fridman, Fridman Fels & Soto, PLLC, Coral Gabes, FL, Alejandro Oscar Soto, Fridman Fels & Soto, PLLC, Coral Gables, FL, Alexis Fields, Seth David Haimovitch, Joshua Robert Levine, Kopelowitz Ostrow Ferguson Weiselberg Gilbert, Fort Lauderdale, FL, David Lawrence Ferguson, The Kopelowitz & Ostrow Firm PA, Fort Lauderdale, FL, Joel Hirschhorn, GrayRobinson, Miami, FL, for Defendant Joseph W. LaForte.

Daniel Lawrence Rashbaum, Jeffrey Eldridge Marcus, Jason Mays, Brandon Scott Floch, Marcus Neiman Rashbaum & Pineiro LLP, Miami, FL, Alejandro Oscar Soto, Fridman Fels & Soto, PLLC, Coral Gables, FL, for Defendant Perry S. Abbonizio.

Alejandro Paz, Akerman LLP, Miami, FL, Brian Paul Miller, King & Spalding, Miami, FL, William Gregg Wolk, Eaton & Wolk PL, Miami, FL, George Bochetto, Pro Hac Vice, Bochetto & Lentz, Philadelphia, PA, for Defendant Dean J. Vagnozzi.

Elroy M. John, Jr., Florida Justice Law Firm, PLLC, Fort Lauderdale, FL, Zachary Paul Hyman, Millennial Law, Ft. Lauderdale, FL, for Defendant Michael C. Furman.

Alejandro Oscar Soto, Fridman Fels & Soto, PLLC, Coral Gables, FL, Daniel Scott Fridman, Fridman Fels & Soto, PLLC, Coral Gabes, FL, Joel Hirschhorn, GrayRobinson, Miami, FL, for Defendants L.M.E. 2017 Family Trust, The LME 2017 Family Trust.

Damian George Waldman, Law Offices of Damian G. Waldman, P.A., Clearwater, FL, for Defendant Wilmington Savings Fund Society, FSB, not in its individual capacity but solely as Trustee for Invictus Residential Pooler Trust 3A.

James David Silver, Kelley Kronenberg, Fort Lauderdale, FL, Katie Brinson Hinton, Jennis Morse Etlinger, Tampa, FL, for Defendants 19 Country Drive, LLC, Michelle Scaramellino.

Retirement Evolution Group, LLC, Pro Se.

Retirement Evolution Income Fund LLC, Pro Se.

RE Income Fund 2, LLC, Pro Se.

John Gissas, Pro Se.

ORDER DENYING DEFENDANT MICHAEL C. FURMAN'S MOTION FOR NEW TRIAL

RODOLFO A. RUIZ II, UNITED STATES DISTRICT JUDGE

THIS CAUSE comes before the Court on Defendant Michael C. Furman's Motion for New Trial [ECF No. 1129] ("Motion"), filed on January 12, 2022. Plaintiff filed a Response in Opposition [ECF No. 1146] ("Response"), on February 9, 2022. Defendant filed a Reply in support of his Motion [ECF No. 1181] ("Reply") on March 10, 2022. Having reviewed all the pleadings, and being otherwise fully advised, it is

ORDERED AND ADJUDGED that the Motion is DENIED as set forth herein.

BACKGROUND

This case is an enforcement action brought by the Securities and Exchange Commission ("SEC") alleging seven counts of fraud against Defendant Michael C. Furman. [ECF No. 119] ("Am. Compl.") at 47–52. It was alleged that Furman, along with other Defendants in this case, issued, marketed, and sold unregistered, fraudulent securities to fund short-term loans to small businesses—known as "merchant cash advances." See Am. Compl. ¶ 1. The SEC avers that in addition to violating the federal securities laws by selling unregistered securities, Furman also made false or misleading statements and omissions concerning the Par Funding offering in violation of the antifraud provisions of the Securities Act of 1933 ("Securities Act") and the Securities Exchange Act of 1934 ("Exchange Act"). Id. at 29–50.

This matter went to trial on December 6, 2021. On December 15, 2021, the jury rendered its verdict, finding for the Government on all counts. [ECF No. 1101]. On January 12, 2022, Furman filed the instant Motion for New Trial on a wide range of grounds. See generally Mot.

LEGAL STANDARD

The decision to grant a new trial pursuant to Rule 59(a)(1)(A) of the Federal Rules of Civil Procedure is "committed to the discretion of the trial court." Peer v. Lewis , No. 06-60146, 2008 WL 2047978, at *3 (S.D. Fla. May 13, 2008) (citing Montgomery v. Noga , 168 F.3d 1282, 1296 (11th Cir. 1999) ). Rule 59(a)(1)(A) states that a court may grant a motion for new trial "for any reason for which a new trial has heretofore been granted in an action at law in federal court." When ruling on a Rule 59(a) motion for new trial, the trial judge must determine "if in his opinion, the verdict is against the clear weight of the evidence ... or will result in a miscarriage of justice." Ins. Co. of N.A. v. Valente , 933 F.2d 921, 923 (11th Cir. 1991) (quoting Hewitt v. B.F. Goodrich Co. , 732 F.2d 1554, 1556 (11th Cir. 1984) ).

Although no exhaustive list of reasons exists, a motion for new trial may be brought in several circumstances, including when "the verdict is against the weight of the evidence,[ ] damages are excessive, or [if], for other reasons, the trial was not fair to the [moving party]; and [a motion for new trial] may raise questions of law arising out of alleged substantial errors in admission or rejection of evidence or instructions to the jury." Alphamed Pharm. Corp. v. Arriva Pharm., Inc. , 432 F. Supp. 2d 1319, 1334 (S.D. Fla. 2006) (quoting Montgomery Ward & Co. v. Duncan , 311 U.S. 243, 251, 61 S.Ct. 189, 85 L.Ed. 147 (1940) ). In assessing evidentiary rulings already made by this Court, the question is whether the exclusion or admission of evidence affected Defendant's substantial rights. Perry v. State Farm Fire & Cas. Co. , 734 F.2d 1441, 1446 (11th Cir. 1984). "Error in the admission or exclusion of evidence is harmless if it does not affect the substantial rights of the parties." Id. Here, as the movant, Defendant bears the burden of showing that the ruling(s) affected his substantial rights. Id.

ANALYSIS

Here, the Court does not find that the jury verdict went against the weight of the evidence or that leaving the verdict in place would result in a miscarriage of justice. The Court will address each of Defendant's arguments in turn.

I. The SEC's claims against Furman were properly pled.

Furman attempts to relitigate the claims he previously raised in the jointly filed Motion to Dismiss [ECF No. 363] ("Motion to Dismiss"). He argues that the SEC's allegations of fraud against Furman did not meet the heightened pleading standard under Rule 9(b) because the SEC failed to state its claims against Furman with particularity. Mot. at 2. The Court's perspective on this matter has not changed since it issued its Order Denying Defendants’ Joint Motion to Dismiss on May 11, 2021. [ECF No. 583] ("Order on Motion to Dismiss"). The Court continues to find the SEC's pleadings sufficient to satisfy the pleading standard under Rule 9(b). Order on Motion to Dismiss at 32–33 ("Specifically, the SEC alleges that on June 16, 2019, Furman told an undercover individual posing as an investor that the state of New Jersey had ‘retracted’ its action against Par Funding and had said Par Funding was ‘good’ and did not need to pay a fine or have any penalties. Am. Compl. ¶ 233. The SEC alleges that this representation was false. Id. ¶ 234. These allegations are sufficient to satisfy Rule 9(b)’s particularity standard.").

In support of his Motion, Furman cites to Solomon v. Blue Cross and Blue Shield Ass'n , 574 F. Supp. 2d 1288, 1293, for the applicable pleading standard under Rule 9(b). In Solomon , the Eleventh Circuit interpreted the particularity requirement to include four elements:

(1) precisely what statements were made in what documents or oral representations or what omissions were made, and (2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and (3) the content of such statements and the manner in which they misled the plaintiff, and (4) what the defendants obtained as a consequence of the fraud.

Id. (citing United States ex rel. Clausen v. Lab. Corp. of America, Inc. , 290 F.3d 1301, 1310 (11th Cir. 2002) ). Here, the SEC identified the specific misrepresentation made to an undercover individual posing as an investor, Am. Compl. ¶ 233, when and who made the statement, id. , the content of the statement, id. , and what the defendant obtained as a consequence of the fraud—Furman raising in excess of $11 million dollars for Par Funding. Id. ¶ 114. In sum, the SEC satisfied the particularity requirements laid out in Solomon . 574 F. Supp. 2d at 1293.

II. The Court's denial of certain documentary and testimonial evidence was not improper.

Furman argues that the Court's denial of certain documentary and testimonial evidence was improper. To grant a new trial on the basis that the Court erroneously failed to admit highly probative evidence,...