Lancer, SEC's Response to Michael Lauer's Motion to Strike - PDF by li3490


									                                                                                                  Apr 20 2006
                                          UNITED STATES DISTRICT COURT
                                          SOUTHERN DISTRICT OF FLORIDA

                             Case No. 03-80612-CIV-MARRA/SELTZER
         SECURITIES AND EXCHANGE COMMISSION,                       )
                           Plaintiff,                              )
                                  v.                               )
         MICHAEL LAUER,                                            )
         LANCER MANAGEMENT GROUP, LLC, and                         )
         LANCER MANAGEMENT GROUP II, LLC,                          )
                           Defendants,                             )
         and                                                       )
         LANCER OFFSHORE, INC.,                                    )
         LANCER PARTNERS, LP,                                      )
         OMNIFUND, LTD.,                                           )
         LSPV, INC., and                                           )
         LSPV, LLC,                                                )
                      Relief Defendants.                           )
         _________________________________________________         )


                  Plaintiff Securities and Exchange Commission files its Response to Defendant Michael

         Lauer’s Motion to Strike (“Motion to Strike”) its Limited Joinder to Receiver’s (I) Motion to

         Compel Lauer, Heidi Carens and Judith Brisman to Turn Over Past Distributions from

         Millennium 3 Opportunity Fund LLC (“Millennium”); and (II) Motion to Direct Millennium to

         Distribute to Receiver All Future Distributions Due Lauer (“SEC’s Limited Joinder”).

         Ostensibly, Lauer moved to strike the SEC’s Limited Joinder because he claims it is improper

         under S.D. Fla. Local 7.1(c) and “does not view a substantive response as appropriate.” [Motion

         to Strike at 4]. The Magistrate should deny Lauer’s Motion to Strike, because a joinder is a

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         proper mechanism for the parties to make their views known to the Court, so it can make a fully

         informed decision, especially in matters such as this one where there are multiple parties with

         differing viewpoints, and Lauer should not be allowed to misrepresent the scope of the findings

         made in Judge Marra’s contempt order.

         I.      The Law of This Case is that Joinders Are Proper

                 Contrary to Lauer’s claim S.D. Fla. Local Rule 7.1(c) does not prevent a party from filing

         a joinder in support. S.D. Fla. Local 7.1(c) applies to “each party opposing a motion shall serve

         an opposing memorandum of law . . .” so it does not address this situation, where the SEC filed a

         joinder in support of the Receiver’s Motion to Compel. Hence, contrary to Lauer’s claim, this

         local rule is silent on whether the parties are allowed to file a joinder in support.

                 Furthermore, the law of this case is that joinders have been allowed. In addition to the

         SEC’s Limited Joinder (DE 1357), twelve other joinders have been filed and accepted by this

         Court. [See DE 260, 466, 533, 546-47, 751, 759, 808, 815, 864, 917, & 1346]. Notably, not a

         single one of these joinders have been stricken and on at least two occasions this Court expressly

         stated in its Order that it had considered the joinder in making its decision. [DE 1072 & 1075]. 1

         Hence, the law of this case is that joinders are an accepted and proper mechanism for parties to

         make their views known to the Court, so it can make a fully informed decision on the merits.

         This is especially true in cases such as this one, where there are multiple defendants numerous

         investors who are represented by different lawyers and committees, and other parties seeking to


          E.g. DE 1070 at 1 – Order Granting Receiver’s Motion to Expand Receivership – “Upon review of the motion,
         Respondent’s, the Receiver’s Reply, and the SEC’s Joinder, the Court finds it appropriate to grant the motion . . .”

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                  Furthermore, Lauer suffered no prejudice by the filing of the SEC’s Limited Joinder. 2

         The briefing period had not closed when the SEC filed its Limited Joinder and the SEC expressly

         told Lauer that it would not object to Lauer making a substantive response to the SEC’s Limited

         Joinder, so the Court could make a fully informed decision with the benefit of all the parties’

         briefings, but Lauer refused to do so. If Lauer has suffered any prejudice, it is of his own

         making. Given the strong federal policy favoring matters being decided on the merits, the Court

         should deny Lauer Motion to Strike on these grounds as well. 3

                  Furthermore, Lauer makes a completely frivolous argument by claiming that the SEC and

         the Receiver use a “tag-team” approach so “Lauer is forced to constantly re-brief and defend

         duplicate proceedings” and “[f]or all practical purposes, the SEC and its Receiver are the same

         entity.” Lauer is the party who has forced the SEC, the Receiver and this Court to constantly

         “re-brief” the same matters over and over again. In fact, on multiple occasions Lauer has

         explicitly filed motions for reconsideration (e.g. DE 351-52, 509, 693, 704, 733, 777, 804 &

         966), while in contrast the SEC has not filed a single motion for reconsideration (the Receiver

         has only filed one motion for reconsideration (DE 506) regarding its ability to sell securities).

         As the record plainly demonstrates, Lauer has been the party that has constantly re-briefed issues

         in this matter, not the SEC and the Receiver. In addition, contrary to Lauer’s misleading claim,

         the Receiver is not the same entity as the SEC. The Receiver is a party to this matter, because he

           Even after undersigned counsel agreed that he would have no objection to Lauer substantively addressing the
         SEC’s Limited Joinder, Lauer insisted on filing his Motion to Strike. By filing a motion to strike and not
         substantively addressing the SEC’s Limited Joinder, Lauer makes it readily apparent that he does not want the Court
         to make a fully informed decision based upon a complete airing of the issues from all interested parties. Also,
         undersigned counsel believes that the true reason, Lauer framed his pleading as a Motion to Strike is to give him an
         excuse to file a purported reply in support of his Motion to Strike, which in reality will be an improper sur-reply to
         both the SEC’s Limited Joinder and the Receiver’s Reply in support of his Motion to Compel.
           See DE 110 Order by Chief Judge Zloch Denying Lauer’s Motion to Strike, but granting him leave to file a sur-
         reply “in the interest of full information.”

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         stepped into the shoes of the Corporate Defendants and Relief Defendants, not because he is the

         same entity as the SEC. Consequently, the Receiver and the SEC are not the same entity and

         unlike Lauer, have not constantly re-briefed the same issues.

         II.     The SEC’s Limited Joinder is Not a Motion for Reconsideration

                 Contrary to Lauer’s bad faith claim, the SEC’s Limited Joinder is not a motion for

         reconsideration. It was expressly limited to Part II of the Receiver’s requested relief (to escrow

         with the Receiver the proposed distribution to Lauer by Millennium of over $60,000 of frozen

         funds), which has not been ruled upon by the Court. Notably, on the first page of the SEC’s

         Limited Joinder it clearly stated that its joinder is: “expressly limited to Part II of the

         Receiver’s requested relief, which has not been ruled upon by the Court. Although, the SEC

         respectfully disagrees with the Court’s prior order regarding Millennium, it is not requesting

         that the Court reconsider it, but would support a request by the Receiver to do so (for the

         reasons stated herein).” [DE 1357, emphasis added]. Hence, the SEC’s Limited Joinder is not a

         motion for reconsideration, since the Court has not ruled on Part II of the Receiver’s requested

         relief, and the SEC plainly stated that it was “not requesting that the Court reconsider” its

         previous ruling regarding Part I of the Receiver’s requested relief. 4

         III.    The SEC filed its Limited Joinder to Bring to the Magistrate’s Attention, Lauer’s
                 Unwarranted and Dangerous Interpretation of the Court’s Contempt Order

                 As the record amply demonstrates, Lauer will use any justification no matter how feeble

         to strip assets out of the freeze. Now, Lauer is trying to boot-strap the Court’s single sentence in

         a footnote of its Contempt Order to mean that he can sell a portion of any asset owned by him at

         the time the Court entered its Asset Freeze Order. Lauer speciously claims that:

           The Court certainly has the grounds to construe the Receiver’s Motion to Compel as a motion for reconsideration,
         since he has presented new evidence that the distributions from Millennium were derived from dividends, but from
         the sale of assets, which reduces the realizable value of Lauer’s frozen interest in Millennium.

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                   the Court’s concluded that dividend income from the Millennium shares held by
                   Lauer was not within the scope of the Asset Freeze Order and that his receipt of
                   such dividend income was not in violation of the Asset Freeze Order. [Motion
                   to Strike at 2, emphasis added].

         Contrary to Lauer’s claim, the Court did not hold that the dividend income was not within the

         scope of the Asset Freeze Order (it only concluded that Lauer’s use of the dividend income was

         not in violation of the Asset Freeze Order). 5               The Court, however, did not rule that all

         distributions from Millennium are not subject to the Court’s asset freeze. Now with much more

         money involved, the Court should not allow Lauer to receive the over $60,000 distribution from


                 Moreover, Lauer’s proposed interpretation of the Court’s asset freeze order (which would

         allow him to claim that he is entitled to the proceeds from the sale of any frozen asset), would

         create such a big loophole that it would effectively demolish the Court’s Asset Freeze Order by

         allowing him strip out nearly all of the frozen assets before final judgment is entered. Lauer’s

         interpretation of the Court’s contempt Order would mean that he could sell a frozen asset (like a

         single stock in a brokerage account) and divert the proceeds away from the Court’s Asset Freeze.

         Lauer’s strained interpretation would make a mockery of the Court’s Asset Freeze Order.

                 Based on the foregoing, the Court should deny Lauer’s Motion to Strike and require

         Millennium to distribute to the Receiver for safekeeping all future distributions due Lauer.

                                                              Respectfully submitted,

         Dated: April 20, 2006                            By: s/ Christopher E. Martin
                                                             Christopher E. Martin
                                                             Senior Trial Counsel
                                                             SD Fla. Bar. No. A5500747
                                                             Direct Dial No.: (305) 982-6386

           Lauer turned over both of the distributions from Millennium (in total worth around $20,000) that were subject of
         the Contempt proceeding to either Heidi Carens (before they got married) or Judith Brisman (the mother of some of
         his children). It is unclear to what extent the Court relied upon this in determining that Lauer’s use of the monies
         paid to him by Millennium did not violate the asset freeze.

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                                                     Attorney for Plaintiff
                                                     SECURITIES AND EXCHANGE COMMISSION
                                                     801 Brickell Avenue, Suite 1800
                                                     Miami, Florida 33131
                                                     Facsimile: (305) 536-4154

                                        CERTIFICATE OF SERVICE
                I HEREBY CERTIFY that a true and correct copy of the foregoing was served by
         FedEx or as indicated below this 20th day of April 2006, on the following:
         Magistrate Judge Barry Seltzer
         United States District Court
         299 E. Broward Blvd., Room 109
         Fort Lauderdale, FL 33301

         Marty Steinberg, Receiver
         Craig V. Rasile, Esq.
         Hunton & Williams LLP
         1111 Brickell Avenue, Suite 2500
         Miami, Florida 33131-1802
         Carl Schoeppl, Esq.                                 (FedEx & Facsimile)
         Schoeppl & Burke, P.A.
         4651 North Federal Highway
         Boca Raton, FL 33431

                                                            s/ Christopher E. Martin
                                                            Christopher E. Martin

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