Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 1 of 18

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1 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 1 of 18 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO CIV-MARRA SECURITIES AND EXCHANGE COMMISSION Plaintiff, v. MICHAEL LAUER, LANCER MANAGEMENT GROUP, LLC, and LANCER MANAGEMENT GROUP II, LLC, and Defendants, LANCER OFFSHORE, INC., LANCER PARTNERS, LP, OMNIFUND, LTD., LSPV, INC., and LSPV, LLC, Relief Defendants. / RECEIVER S RESPONSE TO MICHAEL LAUER S THIRD MOTION TO VACATE THE JUDGMENT AND/OR DISMISS THE COMPLAINT Marty Steinberg, the Court-appointed receiver (the Receiver ) of Lancer Management Group, LLC ( LMG ), Lancer Management Group II, LLC ( LMG II ), Lancer Offshore, Inc. ( Offshore ), The Omnifund, Ltd. ( Omnifund ), LSPV, Inc., LSPV, LLC, Alpha Omega Group, Inc., G.H. Associates, LLC, and CLR Associates, LLC (collectively, the Receivership Entities ); and formerly the responsible person for Lancer Partners, L.P. ( Partners, and collectively with the Receivership Entities, the Lancer Entities ), files this Response to Michael Lauer s Third Motion to Vacate the Judgment and/or Dismiss the Complaint (DE 2740, the Third Motion to Vacate ).

2 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 2 of 18 I. INTRODUCTION Michael Lauer seeks for the third time to vacate the judgment entered against him and in favor of the SEC over four years ago. His arguments reiterate the allegations he has raised in numerous motions, responses, and appellate briefs. As has become his pattern, Lauer repackages identical accusations under a different legal theory, this time arguing that the conduct of the Receiver and the SEC conduct that has been disclosed, some of it for years somehow violates the separation of powers doctrine, violates his due process rights, and constitutes a fraud on the Court. Lauer s latest attempt to overturn the judgment fails, as an initial matter, because the Third Motion to Vacate is untimely under Rules 60(b)(4) and 60(b)(6), and does meet the exacting standards of Rule 60(d)(3). Even if the motion were not barred procedurally, however, Lauer s arguments are still unfounded. The Receiver s cooperation with the SEC does not violate any constitutional principles, is typical of cooperation shared in similar cases, and furthers the purpose for which the Court appointed him. All of the other allegations impugn belatedly actions or decisions of the Receiver and the SEC that have been disclosed (often years ago), have been approved by this Court, and have drawn no objections from any investors (the victims of Lauer s fraud). Lauer s latest attempt to vacate the judgment is meritless, furthers his campaign to harass the Receiver and the SEC, and further victimizes the innocent investors who must wait for resolution of Lauer s many motions and filings before receiving a final distribution. The Third Motion to Vacate should be denied. II. BACKGROUND On September 24, 2008, this Court granted summary judgment in favor of the SEC (DE 2133) in the enforcement action filed by the SEC against Michael Lauer (the Enforcement Action ). On September 22, 2009, this Court entered a final judgment against Lauer (DE 2321; the Judgment ). On October 6, 2009, Lauer appealed the Judgment to the Eleventh Circuit (the Appeal ). As part of his appeal, Lauer filed three briefs raising numerous issues, including: lack of subject matter jurisdiction; the application of the Supreme Court s Morrison decision; denial of due process; improper venue; the propriety of entering sanctions against him and imposing an asset freeze; and the impact of not having counsel. The Eleventh Circuit denied his 2

3 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 3 of 18 appeal and his subsequent Petition for Rehearing En Banc on April 19, 2012 and June 20, 2012, respectively. Lauer then filed a writ of certiorari with the Supreme Court, which denied his request on October 29, After years of appeal, Lauer s attempt to overturn the Judgment on the merits was denied at every level. On February 20, 2013, Lauer filed two motions to vacate the Judgment before this Court (DE 2676, the First Motion to Vacate and DE 2677, the Second Motion to Vacate ). In the First Motion to Vacate, Lauer argued that: (i) the SEC commenced the Enforcement Action without proper authorization; (ii) the SEC interfered with his attorney-client relationship; (iii) the SEC made false representations with respect to his request to transfer venue; and (iv) this Court improperly deprived him of funds to hire counsel. In the Second Motion to Vacate, Lauer argued that the Judgment should be vacated due to judicial misconduct by Judge Zloch. In conjunction with these Motions, Lauer also filed a Motion to Obtain Discovery. On June 13, 2013, this Court entered various orders denying the First Motion to Vacate, the Second Motion to Vacate, and the Motion to Obtain Discovery (DE s 2723 and 2724). These orders are currently pending on appeal to the Eleventh Circuit. On October 28, 2013 (over four years after the entry of the Judgment, over a year after the writ of certiorari was denied, and over eight months after the First and Second Motions to Vacate were filed), Lauer filed this Third Motion to Vacate, requesting that this Court vacate the Judgment or dismiss the Complaint pursuant to Rules 12(h), 60(b)(4), 60(b)(6) and 60(d)(3) of the Federal Rules of Civil Procedure. He argues that: (i) the SEC and the Receiver violated the separation of powers doctrine and his due process rights by cooperating with each other; (ii) the SEC and the Receiver defrauded this Court by various actions; (iii) the Court lacks subject matter jurisdiction over the Funds; and (iv) the Receiver, the SEC, and the DOJ waived any privileges they have by cooperating with each other. Lauer s latest motion to vacate raises many of the same arguments and assertions that have already been considered and rejected by this and other courts, as well as unsubstantiated and unfounded accusations against the SEC and the Receiver regarding: (i) conspiracies and supposedly improper cooperation between them; (ii) the Receiver s selling of assets below their value to aid the SEC in its case against Lauer; (iii) the refusal of the Receiver to consult with Lauer regarding administration of the Receivership; and (iv) the filing of duplicative lawsuits and depositions by the Receiver. This newest attempt to overturn the Judgment emphasizes that 3

4 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 4 of 18 the SEC and the Receiver have shared information in their respective lawsuits, and criticizes the actions taken and decisions made by the Receiver in the fulfillment of the duties ordered by this Court. The actions and decisions Lauer impugns, however, have been open and disclosed for years, most have been approved by this Court after notice to all interested parties, and in many cases have been reviewed by this Court and the Eleventh Circuit as a result of Lauer s motions and appeals. The legal theories under which Lauer now raises the same discredited allegations are, like his prior theories, either inappropriate procedurally or wholly unfounded. The Third Motion to Vacate similarly should be denied. 1 II. ARGUMENT A. Lauer s Motion is Time Barred Under Rules 60(b)(4) and 60(b)(6) Although there is no defined deadline for filing motions for relief from judgment pursuant to Rules 60(b)(4) and 60(b)(6), they must be made within a reasonable time. In the Matter of Abaco Treasure Ltd., Etc., 1993 A.M.C. 1976, 1977 (S.D. Fla. 1993). The determination of what constitutes a reasonable time depends on the circumstances in an individual case, and in making the determination, courts should consider whether the parties have been prejudiced by the delay and whether a good reason has been presented for failing to take action sooner. Rease v. AT&T Corp., 358 Fed. Appx. 73, 75 (11th Cir. 2010); see also Pierce v. Kyle, No , 2013 WL , at *2 (11th Cir. Aug. 22, 2013) (party not entitled to relief under 60(b)(4) where he failed to explain why he did not raise arguments in initial appeal to court, or why he waited more than a year before raising arguments in his Rule 60(b) motion); Abaco Treasure Ltd., Etc., 1993 A.M.C. at 1977 (four years not a reasonable amount of time); Paul v. William Morrow and Co., Inc., 380 Fed. Appx. 957, 958 (11th Cir. 2010) (Rule 60(b)(6) motion must be made within a reasonable time and is an extraordinary remedy that may be invoked only upon a showing of exceptional circumstances); Greenblatt v. Orenberg, No (JCL), 2007 WL , at *2-3 (D.N.J. Mar. 27, 2007) (Rule 60(b)(6) 1 Through his many repetitive and serial filings, it has become apparent that Lauer is engaging in vexatious and in many cases, frivolous litigation. His efforts only serve to drain the Receivership Estates of valuable assets that would otherwise be distributed to the innocent investors that Lauer has already been shown to have defrauded, and to waste the judicial resources of this and other Courts. As such, the Receiver will be filing a motion before this Court that Lauer and his proxies be declared vexatious litigants. 4

5 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 5 of 18 motion to vacate denied because not filed within reasonable time when it was filed three years after the dismissal was entered, one and a half years after the Third Circuit affirmed, and more than one year after the Supreme Court denied certiorari); Buck v. Thaler, 452 Fed. Appx. 423, 429 (5th Cir. 2011) (Rule 60(b)(6) motion not brought within a reasonable time when brought 5 years after the entry of final judgment and more than a year after the Supreme Court denied certiorari). A court s determination regarding the timeliness of a motion to vacate under 60(b)(6) is reviewed using an abuse of discretion standard. Paul, 380 Fed. Appx. at 959; Buck, 452 Fed. Appx. at 429. In addition, relief under Rule 60(b)(6) applies only to cases that do not fall into any of the other provisions of Rule 60(b). See Paul, 380 Fed. Appx. at 958. Thus, Rule 60(b)(6) cannot be used to vacate a judgment based on allegations of fraud on the court or on newly discovered evidence because courts consider motions premised on these factors under Rules 60(b)(2) and (3). Any motion to vacate filed by Lauer under Rules (b)(2) or (3) is, of course, untimely, since motions under these Rules must be filed within one year after the entry of the judgment, a period that lapsed years ago. See Fed. R. Civ. P. 60(c)(1). Lauer s Third Motion to Vacate was not filed within a reasonable time as required under the Rules for filing a motion under Rules 60(b)(4) and 60(b)(6), and wouldn t have been timely filed under Rules 60(b)(2) or 60(b) (3) either. First, Lauer waited over four years after the entry of the Judgment, over a year after the denial of his appeal and of his petition for writ of certiorari, and over eight months after filing the First and Second Motions to Vacate to file the Third Motion to Vacate. Lauer, therefore, did not raise his arguments under Rules 60(b)(4) and 60(b)(6) within a reasonable time. He could have brought these arguments at any time within the last four years. Indeed, he does not cite a single legal authority allowing the filing of a motion to vacate after such a delay. Second, Lauer learned years ago about most of the facts underlying his allegations. For example, he has been aware of the cooperation between the Receiver and the SEC since at least February 27, 2004 (DE 196 in Enforcement Action, p. 18), and was repeatedly reminded of that cooperation thereafter (DE s 462 and 963 at pp and 28, respectively). Thus, there is no reason for him to have delayed raising these issues years ago. 2 2 The Receiver also notes that Lauer s delaying tactics have prejudiced other participants in these cases, namely the innocent investors who are waiting to receive their final distributions from the (continued ) 5

6 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 6 of 18 Finally, Lauer s arguments should be raised under Rule 60(b)(3), not under the inapplicable catch-all provisions of Rule 60(b)(6). He is asserting (wrongly) that he discovered new evidence or that the Receiver and the SEC have perpetrated a fraud on this Court. Regardless of the merits of his arguments and they have been repeatedly rejected by various courts these arguments are not properly raised under Rule 60(b)(6). See Paul, 380 Fed. Appx. at 958. The Third Motion to Vacate was not filed within a reasonable time and does not meet the requirements of Rules 60(b)(4) and 60(b)(6), and should be denied. B. Lauer is not entitled to relief pursuant to Rule 60(d)(3) Lauer also seeks to vacate the Judgment pursuant to Rule 60(d)(3), which gives the Court the power to set aside a judgment for fraud on the court. See Fed. R. Civ. P. 60(d)(3). Courts have found that only the most egregious misconduct, such as bribery of a judge or members of a jury, or the fabrication of evidence by a party in which an attorney is implicated, will constitute fraud on the court. Galatolo v. U.S., 394 Fed. Appx. 670, 672 (11th Cir. 2010); Buck, 452 Fed. Appx. at 431; see also Gupta v. Walt Disney World Co., 519 Fed. Appx. 631, 632 (11th Cir. 2013) (movant must show an unconscionable plan or scheme to improperly influence the court s decision) (citing Rozier v. Ford Motor Co., 573 F.2d 1332, 1338 (5th Cir. 1978). The movant must establish by clear and convincing evidence that the adverse party obtained the verdict through fraud. Id. A court s denial of a Rule 60(d)(3) motion is reviewed under an abuse of discretion standard. Gupta, 519 Fed. Appx. at 631. Lauer s allegations in the Third Motion to Vacate, even if true, do not come close to satisfying the standards for a Rule 60(d)(3) motion. He has not alleged, much less proven, that a judge was bribed, that evidence was fabricated by a party (implicating an attorney), or that there was an unconscionable plan or scheme to improperly influence the court s decision. Moreover, his allegations mirror the scandalous and often-rejected accusations he has levied repeatedly. For example, Lauer implies that the Receiver sold assets and settled lawsuits for nominal value to aid the SEC. Lauer ignores, however, that the Receiver retained asset managers to advise him regarding the management of the Funds; that the Receiver typically sought a further grant of authority from this Court (aside from that already given) before effectuating the Receivership Estates distributions that are delayed by Lauer s filing serial frivolous motions to vacate or disturb the judgment. 6

7 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 7 of 18 sale of a large asset; and that all settlements were approved by this Court after notice to all interested parties. Lauer s other arguments are similarly unfounded and are almost identical to the ones he has raised repeatedly. For example, he has continuously complained about the Receiver s administration of the Funds (DE 152 at 3 and 14, DE 328 at 4-5 in the Enforcement Action) and about the Receiver s independence and ethics (DE 500 at 4-6 and 9; DE 631 at 4 and 8; DE 1008 at 7; DE 2676 at 5 in the Enforcement Action). As with his prior assertions, he provides no evidence for his discredited accusations. Regardless of the merits of his arguments, however, they do not rise to the extraordinary level required for a judgment to be vacated under Rule 60(d)(3). Galatolo, 394 Fed. Appx. at 672 ( only the most egregious misconduct will constitute fraud on the court ). C. Lauer s Arguments Are Without Merit Lauer argues that the cooperation between the Receiver and the SEC in these Receivership cases violates the doctrine of the separation of powers, Lauer s due process rights, and constitutes a fraud on this Court. Specifically, Lauer asserts that a receiver must be a neutral party and cannot favor another party (in this case, allegedly the SEC). As a result, he also asserts that the SEC and the Receiver have waived their evidentiary privileges. Lauer s arguments are not supported by law, defy common sense, and are belied by the usual practice in receivership cases. Consequently, even if Lauer s arguments were timely and met the requirements of any subsection of Rule 60 (which, as shown above, they do not), his assertions have no merit. 1. There has been no violation of the separation of powers doctrine or of Lauer s due process rights The separation of powers doctrine precludes one branch of government from usurping the power and authority of one of the other branches. Stern v. Marshall, 131 S.Ct. 2594, 2609 (2011). The separation of powers doctrine, however, does not prohibit one branch of government from cooperating with another branch. Such a theory would be ridiculous. Thus, the application of this doctrine does not prevent the SEC and the Receiver from cooperating in their respective litigation. None of the cases cited by Lauer prevents such cooperation, and none addresses whether such cooperation is constitutionally forbidden. To the contrary, the cases Lauer cites actually show that his interpretation of the doctrine belies common sense and established practice. 7

8 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 8 of 18 First, it is not clear that the Receiver, whose appointment was requested by the SEC and approved by this Court, is a member of the judicial branch (at least for separation of power analysis). Indeed, the cases cited by Lauer only speak to the proposition that a receiver appointed by the court is an officer of the court. His appointment and whether he is considered an officer of the court, however, do not transform a receiver into a member of the judicial branch for purposes of applying the separation of powers doctrine. The Receiver is an independent party appointed by this Court to marshal the assets of the Receivership Entities for the benefit of the innocent investors, including through the filing of lawsuits against various parties. Receivers are routinely appointed by courts to step into the shoes of receivership entities and bring causes of action belonging to them. See Donell v. Nixon Peabody LLP, No. CV DDP(JEMX), 2012 WL , at *3-4 (C.D. Cal. Sept. 5, 2012) (court found that a receiver was not acting as a prosecutor for the SEC and that there had been no violation of the separation of power by virtue of the Receiver s lawsuit); see also Order Appointing Receiver and Case Management Order in SEC Action (DE s 18 and 123) (expressly giving Receiver very broad powers in this Receivership). Lauer does not cite any cases addressing, much less holding, that a receiver s cooperation with the SEC or the Department of Justice violates the separation of powers doctrine. Indeed, Lauer even acknowledges that it is customary for receivership orders to give receivers the power to settle cases. See the Third Motion to Vacate, p. 9. In the Order Appointing Receiver (DE 18), the Receiver was ordered by this Court to: [t]ake immediate possession of all property, assets and estates of every kind of Lancer, Lancer II, Offshore, Omnifund, Offshore LSPV and Partners LSPV, whatsoever and wherever located, belonging to or in their possession, including, but not limited to, all offices maintained by Lancer, Lancer II, Offshore, Omnifund, Offshore LSPV and Partners LSPV, rights of action, books, papers, data processing records, evidences of debt, bank accounts, savings accounts, certificates of deposit, stocks, bonds, debentures and other securities, mortgages, furniture, fixtures, office supplies and equipment, and all real property wherever situated See the Order Appointing Receiver at 3-4. The Order Appointing Receiver also directed the Receiver to [i]nvestigate the manner in which the affairs of Lancer, Lancer II, Offshore, Omnifund, Offshore LSPV and Partners LSPV were conducted and institute such actions and legal proceedings, for their benefit and on their behalf as the Receiver deems necessary. Id. at 4. Based on these directives from this Court, the Receiver seized the Funds records and 8

9 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 9 of 18 began the task of organizing them in a manner allowing him to fully understand the magnitude of the fraud perpetrated by Lauer and others working with him, as well as the identities of any recipients of fraudulent transfers. These efforts allowed the Receiver to bring various independent causes of action against Lauer and other insiders, as well as against the Funds service providers and hundreds of recipients of fraudulent transfers. Through these efforts, the Receiver has or is in the process of distributing to innocent investors $44 million in Courtapproved distributions from the assets of the Receivership Entities. 3 By cooperating with the SEC, then, the Receiver was performing his duty to maximize the assets of the Receivership Estates and provide distributions to the innocent investors defrauded by Lauer. In any event, if the Receiver were a mere appendage or arm of the Court, not an independent party, he could not litigate cases against third parties in front of this Court. Such a result would contradict established practice. No case cited by Lauer requires such an absurd conclusion. Second, even if the Receiver due to his appointment by this Court were a member of the judicial branch for a separation of powers analysis, the separation of powers doctrine would be violated only if the Receiver usurped the powers of the SEC. Notwithstanding Lauer s unsupported allegations, there is no evidence that the Receiver made actual litigation decisions for (or jointly with) the SEC, made any prosecutorial decisions for the Department of Justice, or otherwise performed an actual function reserved exclusively for the executive branch. Indeed, courts have been clear that a receiver and other parties (including the SEC) are permitted to share discovery. U.S. v. Petters, 667 F. Supp. 2d 1043, 1046 (D. Minn. 2009) ( Indeed, a receiver who has acquired possession of records lawfully and for a proper purposes may make those records available to the government if production of the records is not inconsistent with the purpose of the receivership. ); SEC v. Private Equity Mgmt. Grp., Inc., No. CV PSG(EX), 2009 WL , at *5 (C.D. Cal. July 2, 2009) (communications between SEC and Receiver is not suspicious when the SEC is meant to have access to books and records of entities, and in making recommendations to the SEC, the Receiver was not providing legal strategy as much as he was attempting to fulfill his duties); SEC v. Mikula, No. 1:08-CV-3097 BBM, 2009 WL , at *1 (N.D. Ga. Feb. 13, 2009) ( The Court will look to the SEC for proof of the allegations here. The 3 The $44 million does not include other substantial distributions made by the Receiver in these Receivership cases due to settlements with Citco, PwC, GGK and other defendants. 9

10 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 10 of 18 court is aware that the SEC may look to the records obtained, and the work done by the Receiver to support its allegations, but again, the court will look to the SEC and not the Receiver to make that case. ). As the Receiver was litigating his causes of action against the various Receivership defendants (including Lauer), the SEC continued to litigate its independent action against Lauer. Regardless of any cooperation the SEC and the Receiver provided to each other, however, the SEC made all litigation decisions in its enforcement action. And, although the SEC would have been free to look at the records obtained by the Receiver to support its allegations (as the SEC was able to do in Mikula), this Court would have looked to the SEC (and not the Receiver) to make its case. There is no evidence that the Receiver controlled the SEC in the litigation of the SEC Action, or in any way usurped any actual powers of the SEC. Nor is there any evidence that the SEC controlled the Receiver in the litigation of his numerous ancillary actions. Under Lauer s strained and unsupported logic, the SEC and the Receiver should be expected to separately catalogue and index the massive amount of documents received from the Funds as any sharing of the documents or the index would constitute improper cooperation. The case law cited by Lauer does not support his theory that the SEC and the Receiver violated the separation of power doctrine or Lauer s due process rights because of their cooperation. Instead, the cases cited by Lauer merely stand for the general unremarkable propositions that the various branches of government cannot usurp the powers of the others or that a receiver should be a neutral party, or discuss unrelated recusal issues. For example, Lauer cites to Justice Scalia s concurring opinion in Young v. U.S., 107 S.Ct. 2124, 2142 (1987), where Justice Scalia concluded that a court violated the separation of powers doctrine when it appointed a private lawyer as special prosecutor to prosecute alleged criminal contempt. Young, however, does not stand for this broad proposition advanced by Lauer, is not a separation of powers case, and does not address receiverships at all. Instead, the majority opinion in Young holds in relevant part that a court cannot appoint an interested private attorney as special prosecutor to undertake contempt prosecutions. Justice Scalia concurred in the result because, in his opinion, appointing a private attorney as special prosecutor usurps the prosecutorial decision-making power reserved to the executive. But, Justice Scalia s rationale was rejected by the majority of the Court, and subsequent to Young courts have continued the practice of appointing private attorneys as prosecutors under these circumstances. See U.S. v. Cohn, 586 F.3d 844, 849 (11th 10

11 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 11 of 18 Cir. 2009) (courts have authority to appoint private attorneys to initiate and prosecute a criminal contempt case); In re Jackson, 51 A.3d 529, 538 (D.C. Conn. 2012) ( trial judges may initiate and preside over, but may not prosecute, a CPO indirect criminal contempt proceeding in cases involving intrafamily offenses ). Moreover, the rationale of Justice Scalia s concurrence, even if it had been adopted, has no bearing on Lauer s arguments. Justice Scalia, for example, does not conclude that an Assistant United States Attorney prosecuting criminal contempt cannot seek the cooperation of the private litigants in the underlying lawsuit. He merely concludes that private attorneys cannot act as special prosecutor because they would be making actual prosecutorial decisions, a power he believes is reserved exclusively to the executive. There is no evidence, of course, that the Receiver made any prosecutorial decisions. Lauer s interpretation of Young is but one of a number of examples where Lauer takes cases out of context attempting to support his theory regarding separation of power or due process violations. No case cited by him addresses, much less supports, the argument he raises, which is totally without merit. 2. The Receiver has not committed fraud upon the Court Lauer asserts that this Court should vacate the Judgment, alleging that the SEC and the Receiver perpetrated a fraud upon this Court through their actions. Lauer s allegations reiterate accusations he has made in numerous motions and appellate briefs, and that have been consistently rejected by this Court and the Eleventh Circuit. Specifically, Lauer alleges that the Receiver was spending Lauer s money to help the SEC defeat Lauer while at the same time they were spending Lauer s money to successfully convince the district court to deny Lauer the use of his assets to defend himself ; that the SEC tasked the Receiver with specific assignments and that the Receiver attempted to locate Lauer s assets overseas; that the Receiver sold assets or settled cases for nominal amounts to aid the SEC in its case against Lauer, and refused to consult with Lauer regarding the administration of the Receivership; and that the Receiver filed duplicative lawsuits and took unnecessary discovery. These allegations have not only been consistently dismissed by this Court and the Eleventh Circuit, but, even if true, they do not meet the exacting standard required to vacate a judgment for fraud. First, the Receiver reviewed and organized the massive amount of documents seized from Lauer and the Funds because the Receiver seized these documents as instructed by this Court, and needed them organized and catalogued to fully understand and unravel Lauer s complex 11

12 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 12 of 18 fraud. Through his efforts, the Receiver was able to file a number of ancillary actions against Lauer and other insiders, various professionals of the Funds, and the recipients of fraudulent transfers, thereby realizing funds to distribute to investors. 4 Indeed, it was Lauer s failure to cooperate and his failure to prepare or preserve any normal business records that required the Receiver to issue over 1000 subpoenas, interview over 100 witnesses, and retain forensic accountants to actually recreate ten years worth of financial records. Second, Lauer s complaints mainly involve issues related to the Receiver s administration of the Receivership. Lauer does not have standing, however, to question the Receiver s administration of the Receivership because Lauer is not a claimant of the Receivership. This Court established a procedure for filing claims, including a deadline. That deadline expired over seven years ago. Since then, the Receiver has made many decisions, with notice to all claimants and approval from this Court, including making substantial distributions from the Estate. Lauer does not have an allowed claim before this Court and is, thus, not a claimant of the Receivership Estate. Accordingly, Lauer does not have standing to contest issues relating to the administration of the Receivership, including the Receiver s attempts to locate Lauer s assets overseas, the Receiver s sale of assets or settlement of cases, or the determination of what lawsuits to file and what discovery is necessary in those lawsuits. See Wolff v. Cash 4 Titles, 351 F.3d 1348, 1358 (11th Cir. 2003) (movants lacked standing to object to fee award in class action in part because fee award would not injure them). In any event, each of these allegations by Lauer is baseless. The Receiver had a duty to locate assets (even if overseas). All asset sales were either approved by this Court and/or recommended by the Receiver s Fund advisors, and all settlements were noticed and approved by this Court. Further, the Receiver did not consult with Lauer regarding the administration of the Receivership because Lauer was a defendant in multiple cases brought by the Receiver and 4 Lauer comments that the Receiver was spending Lauer s money to help the SEC defeat Lauer while at the same time they were spending Lauer s money to successfully convince the district court to deny Lauer the use of his assets to defend himself. Lauer is incorrect. First, the Receiver utilized funds in the Receivership estates to further his own ancillary cases and to maximize returns to the innocent investors that Lauer defrauded. Second, any funds that the Receiver has used did not belong to Lauer, but to these innocent investors, and were comprised of what was left of their investments after Lauer s fraud or recoveries from defendants in the various ancillary actions. 12

13 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 13 of 18 the SEC due to his fraudulent actions while in control of the Funds. After all, the purpose of the Receivership and the Enforcement Action was, in part, to remove Lauer from control of the Funds that he used to bilk innocent investors of their money, and to replace his fraudulent leadership with competent professionals (all of whom were approved by this Court after notice to all claimants). Finally, it is absurd to suggest that the Receiver defrauded the Court through these and other actions as the Court was aware of the Receiver s actions in these cases through the Receiver s filings, including the fee applications and the numerous status reports filed with this Court by the Receiver. Lauer s claim that the exercise of the Receiver s duties constituted a fraud on this Court is, thus, unfounded. Even if the allegations were true, however, they do not rise to the level of extraordinary fraud required to vacate a judgment on this basis. In re Bennett, No , 2012 WL , at *3 (Bankr. S.D. Tex. June 28, 2012). Lauer s Third Motion to Vacate should be denied on these additional reasons. 3. The Receiver and the SEC have not waived any privileges Lauer asserts that due to the cooperation and alleged fraud perpetrated on this Court by the SEC and the Receiver, all privileges have been waived. And, in the event this Court is not inclined to grant the Third Motion to Vacate, Lauer seeks a variety of discovery from the SEC and the Receiver regarding their cooperation or any ex parte contacts between the Receiver and this Court (including production of documents and depositions of the Receiver and the SEC, their lawyers, and others ). Lauer s argument is without merit. First, as discussed above, the Receiver and the SEC cooperation in the Receivership Cases was appropriate and lawful. Moreover, the sharing of information or communications between the SEC and the Receiver is protected under the common interest doctrine, which provides that parties with common business or legal interests can share information on those topics without waiving the protection afforded by the work-product doctrine. See Visual Scene, Inc. v. Pilkington Bros., PLC, 508 So.2d 437, 439 (3d DCA 1987); Schachar v. Am. Acad. of Ophthalmology, Inc., 106 F.R.D. 187, 192 (N.D. Ill. 1985). The Receiver and the SEC share a common interest in discovering facts underlying the fraud perpetrated against the Lancer Funds and its investors, and in preserving and collecting the most assets for the benefit of the innocent investors. Thus, these types of communications are protected by the common interest doctrine. Second, the SEC and the U.S. Attorney s office are law enforcement agencies. No party 13

14 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 14 of 18 can be barred from cooperating with law enforcement. Third, Lauer has not made any showing that he is entitled to take discovery with respect to the issues brought in the Third Motion to Vacate. Generally, a court has broad discretion in regulating discovery. Hornor, Townsend & Kent, Inc. v. Hamilton, No. Civ. A. 1:02 CV 2979J, 2003 WL (N.D. Ga. Sept. 29, 2003); Scutieri v. Paige, 808 F.2d 785, 795 (11th Cir. 1987) (Eleventh Circuit affirmed district court s denial of parties request for further discovery because district court had detailed record of the evidence and because party did not adequately indicate how further discovery would have aided the district court s determination). Nevertheless, Lauer still has to satisfy that the discovery he seeks is relevant or will aid this Court. Additionally, some courts have found that the usually flexible discovery provisions of the Federal Rules of Civil Procedure are less generous after pleadings and trial. See U.S. v. Peters, III, 826 F. Supp. 1153, 1154 (N.D. Ill. 1993). [C]ourts generally embrace restrictive discovery rights posttrial, requiring a prima facie demonstration of success on the merits. Id. at ( [P]arties seeking to avoid judgment on the basis of Rule 60(b)(3) ordinarily are required to make a prima facie showing of fraud in order to be entitled to discovery after judgment. Likewise, those seeking post-judgment relief under Rule 60(b)(2) will not be afforded posttrial discovery unless, at a minimum, the newly discovered evidence relied upon could not have been discovered in time to move for a new trial under Rule 59(b). ); see also Jones v. Swanson, 512 F.3d 1045, 1050 (8th Cir. 2008) (party not permitted to conduct discovery on Rule 60(b)(2) and 60(b)(6) motion to vacate because not likely to prevail on the merits); Jones v. Ill. Cent. R.R. Co., 617 F.3d 843, 854 (6th Cir. 2010) (denying post-judgment discovery in connection with Rule 60(d)(3) motion to vacate); Halliburton Energy Serv., Inc. v. NL Indus., 618 F. Supp. 2d 614, 654 (S.D. Tx. 2009); H.K. Porter Co., Inc. v. Goodyear Tire & Rubber Co., 536 F.2d 1115, 1118 (6th Cir. 1976) (party not entitled to discovery on 60(b) fraud claim on documents it failed to request in pretrial discovery). Lauer has not demonstrated that the discovery he seeks will aid this Court in any way. He has not made a prima facie demonstration of success on the merits. Additionally, the issues raised in the Third Motion to Vacate have either already been brought before this Court during the history of the Enforcement Action, could have been brought before the entry of the Judgment, or were raised by Lauer or one of his various attorneys in the Appeal. Lauer also could have requested any of the discovery he seeks during the normal discovery period. It is 14

15 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 15 of 18 irrelevant whether this Court utilizes a lenient or a more restrictive standard for Lauer s request for discovery because Lauer has not satisfied any standard and is not entitled at this late stage to discovery on any of the issues discussed in the Third Motion to Vacate. 5 D. Lauer Cannot Raise Any Arguments Regarding Whether the Funds Were Improper Relief Defendants Lauer further claims that the Judgment should be vacated because the Funds were improper relief defendants in the Enforcement Action. 6 Essentially, Lauer is challenging the decisions made in the SEC Action ten years after the case was filed; nearly six years after the Court entered the Judgment; and well after Lauer s appeal of the Judgment had been denied at 5 Martin Garvey has also sought discovery into many of these issues, which the Court has consistently denied. On June 20, 2011, Martin Garvey filed his Motion Requesting Depositions of Certain Individuals Associated with the Receiver, Hunton & Williams (DE 546, the First Garvey Motion ) in the case styled: Court-Appointed Receiver of Lancer Management Group, LLC, et al., v. Michael Lauer, et al., CIV-MARRA, seeking to depose the Receiver, as well as several of his current and former attorneys. The Receiver objected to the First Garvey Motion and moved for a protective order for the requested depositions (DE 553). In his subsequent Reply (DE 562), Garvey further explained to this Court his purposes for the requested depositions, including but not limited to, his desire to inquire into the Receiver s administration of the Receivership Estate, reasons for engaging experts, and rationale for settling with certain defendants. On August 22, 2011, this Court entered its Omnibus Order Denying the First Garvey Motion and Granting the Receiver s Motion for Protective Order (DE 574), finding, among other things, that Garvey would not be permitted to inquire into the Receiver s litigation and settlement strategy as this would necessarily intrude into matters that are protected by the attorney-client privilege. See First Order at 9. This Court further found that Garvey would not be permitted to obtain irrelevant material concerning the general administration of the Receivership Entities, including the disposition of Receivership assets and the Receiver s retention of certain advisors and counsel. See id. On August 30, 2012, Garvey filed a new motion, this time in the case styled: Marty Steinberg, as Court-Appointed Receiver of Lancer Management Group, LLC, et al., v. Alpha Fifth Group, et al., CIV-MARRA, seeking an order from this Court requiring the Receiver to provide Garvey with information pertaining to the non-defendant status of Eric Hauser in that action, and again attempting to inquire into the Receiver s administration of the Receivership Estate (the Second Garvey Motion ). In its Order denying the Second Garvey Motion, this Court again refused to permit Garvey to inquire into issues relating to the administration of the Receivership. (DE 938). 6 Lauer has raised this argument at least once before. See DE 801 in Insider Action, joining Martin Garvey Motion to Dismiss (DE 770, p. 4). The Garvey Motion to Dismiss is pending before this Court. 15

16 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 16 of 18 the Supreme Court level. Lauer is barred procedurally from raising the argument. First, Lauer waived any such argument. Second, Lauer has no standing to challenge decisions regarding the Funds Lauer waived this argument As this Court is aware, the SEC filed the SEC Action on July 8, Three days later, this Court entered an Order appointing the Receiver. Thus, both the commencement of the SEC Action and the appointment of the Receiver occurred over ten years ago. Moreover, the Alpha Fifth Action was filed against Lauer in 2004, and the Cable Road Action and Insider Action were filed against Lauer in 2005 each over eight years ago. Notwithstanding that the Receiver was appointed and filed suit against Lauer so long ago, Lauer has failed to assert in his Answers to the SEC Complaint (or even in any of his answers to the complaints in the Alpha Fifth Action, the Insider Action, or the Cable Road Action) that the Funds were improper relief defendants in the SEC Action. Even if Lauer s arguments had any merit which they do not Lauer waived these arguments because he waited so long to raise them. See Ark. La. Gas Co. v. Kroeger, 303 F.2d 129, 133 (5th Cir. 1962) (finding that even if attack on appointment of receiver were not improper for various other reasons, the delay by the claimant making the challenge would deem his challenge waived). Indeed, Lauer s assertion is nothing more than an affirmative defense that had to be raised as such in his answers to the SEC Complaint. See Keen v. Reg l Emergency Med. Serv. Of Ga., Inc., Civil Action No. 7:11-cv-106 (HL), 2012 WL , at *6 (M.D. Ga. Oct. 15, 2012) (court ruled at summary judgment stage that parties defense of failure to mitigate was waived because not asserted in answer); Demezier v. Ravede Ins. Agency, Inc., No CIV, 2010 WL , at *2 (S.D. Fla. Feb. 18, 2010) (court finding at summary judgment stage that party had waived affirmative defense not asserted in answer); Norton v. Groupware Int l, Inc., No. 6:05-cv-1649-Orl-31 DAB, 2007 WL 42955, at *2 (M.D. Fla. Jan. 4, 2007) (same); Am. Nat l Bank of Jacksonville v. Fed. Deposit Ins. Corp., 710 F.2d 1528, (11th Cir. 1983) (same); Alliance Metals, Inc. v. Hinely Indus., Inc., No. 1:96-CV-268, The Receiver will not address whether the Funds were proper relief defendants, adopting for this point the memorandum of law filed by the SEC in response to the motion to intervene filed by former directors Geist and Bendall (D.E at pp ). 16

17 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 17 of 18 WL , at *8 (N.D. Ga. Feb. 19, 1998) (Court deferred ruling on whether waiver had occurred due to failure to assert defense of in pari delicto in answer, but refused to allow defendant to amend answer after summary judgment had been filed by plaintiff); Edwards v. Fulton County, Ga., No , 2013 WL , at *4 (11th Cir. Feb. 15, 2013) (court considers whether plaintiff will be prejudiced when analyzing whether a defendant has waived affirmative defense by not asserting in pleadings); Miranda de Villalba v. Coutts & Co. (USA) Int l, 250 F.3d 1351, 1353 (11th Cir. 2001) (same). Lauer never pled as an affirmative defense that the Funds were improper relief defendants. See Case No (DE 421); Case No (DE 449 and 701). Accordingly, he waived this defense and cannot rely on it even if the defense had any merit, which it does not. 2. Lauer is without standing to assert these argument Lauer is without standing to complain about issues relating to the Funds. Lauer is not a claimant of the Funds. This Court established a procedure for filing claims, including a deadline. That deadline expired over seven years ago. Since then, the Receiver has made many decisions, with notice to all claimants and approval from the Court, including making substantial distributions from the Estate. Lauer does not have an allowed claim before this Court and is, thus, not a claimant of the Receivership Estate. Accordingly, Lauer does not have standing to contest issues relating to the administration of the Receivership, including whether the Funds were proper relief defendants in the SEC Action. See Wolff v. Cash 4 Titles, 351 F.3d 1348, 1358 (11th Cir. 2003) (movants lacked standing to object to fee award in class action in part because fee award would not injure them). For these reasons, Lauer cannot raise arguments regarding whether the Funds were proper relief defendants. 8 8 Lauer brought various arguments based on lack of subject matter jurisdiction and due process issues in the Appeal of the Judgment (which were properly discounted). Similarly, Lauer s argument here that this Court is without subject matter jurisdiction on the basis of the inclusion of various Funds as relief defendants is without merit. 17

18 Case 9:03-cv KAM Document 2769 Entered on FLSD Docket 12/13/2013 Page 18 of 18 WHEREFORE, the Receiver respectfully requests that this Court enter an order denying the Third Motion to Vacate, and granting such other and further relief as the Court deems just and proper. Date: December 13, 2013 Miami, Florida Respectfully submitted, HUNTON & WILLIAMS LLP Counsel for the Receiver 1111 Brickell Avenue - Suite 2500 Miami, FL Tel: (305) Fax: (305) /s/ Juan C. Enjamio Juan C. Enjamio (FBN ) David E. Bane (FBN ) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was furnished on December 13, 2013 via and First Class U.S. Mail to: Michael Lauer, 101 West End Avenue, Apt. 8P, New York, NY 10023; and David M. Dorsen, 2900 K Street, N.W., Suite 500, Washington, DC /s/ Juan C. Enjamio Juan C. Enjamio EMF_US v2 18