Case 9:03-cv-80612-KAM Document 2795 Entered on FLSD Docket 01/17/2014 Page 1 of 8 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO. 03-80612-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. / RESPONSE TO DEFENDANT S MOTION TO STRIKE OR, IN THE ALTERNATIVE, DEFENDANT S REPLY TO RECEIVER S OPPOSITION TO HIS THIRD MOTION TO VACATE THE JUDGMENT AND DISMISS THE COMPLAINT Marty Steinberg, Court-Appointed Receiver of Lancer Management Group, LLC, et al. (the Receiver ), through undersigned counsel, files this Response to Defendant s Motion to Strike or, in the Alternative, Defendant s Reply to Receiver s Opposition to his Third Motion to Vacate the Judgment and Dismiss the Complaint, and in support thereof states as follows: RELEVANT BACKGROUND 1. On July 8, 2003, the Securities and Exchange Commission (the SEC ) filed a
Case 9:03-cv-80612-KAM Document 2795 Entered on FLSD Docket 01/17/2014 Page 2 of 8 Complaint for Injunctive and Other Relief against Michael Lauer ( Lauer ) and various Lancer Entities based upon certain alleged bad acts, including violations of various securities laws, commencing the above-styled case (the Enforcement Action ) before the United States District Court for the Southern District of Florida (the District Court ). 2. On July 11, 2003, this Court entered the Order Appointing Receiver in the Enforcement Action (DE 18). The Order Appointing Receiver states that the Receiver is authorized, empowered and directed to defend, compromise or settle legal actions, including the instant proceeding, in which Lancer, Lancer II, Offshore, Omnifund, Offshore LSPV and Partners LSPV, or the Receiver is a party See Order Appointing Receiver at 3 and 6. 3. On January 9, 2004, this Court entered the Case Management Order in the Enforcement Action (DE 123). The Case Management Order further elaborates on the duties and powers of the Receiver in these case, stating: [s]pecifically, with the exception of the Receiver, no other ancillary party, including, without limitation, investors and creditors, may participate in discovery, the adjudication of issues and/or trial on the merits in the SEC s enforcement proceeding. See Case Management Order at 4 (emphasis added). 4. On September 24, 2008, this Court entered its Order and Opinion on Motion for Summary Judgment, entering judgment in favor of the SEC. 5. On September 21, 2009, this Court entered its Judgment Granting Permanent Injunction and Other Relief as to Defendants Lancer Management Group, LLC and Lancer Management Group II, LLC and Disgorgement Judgment as to Relief Defendants Lancer Offshore, Inc., Lancer Partners, LP., Omnifund, Ltd., LSPV, Inc., and LSPV, LLC (DE 2320, the Entities Judgment ). 6. On September 22, 2009, this Court entered its Final Judgment Granting 2
Case 9:03-cv-80612-KAM Document 2795 Entered on FLSD Docket 01/17/2014 Page 3 of 8 Permanent Injunction and Other Relief Against Defendant Michael Lauer (DE 2321, the Lauer Judgment ). 7. On October 6, 2009, the Receiver filed his Motion for Clarification and/or Partial Reconsideration of Final Judgment (DE 2323, the Motion for Clarification ) for the purpose of clarifying that the Receiver would continue to be permitted to collect, administer and distribute the Receivership Entities assets before this Court, as well as continue to litigate the various ancillary proceedings, under the auspices of the Receivership Order and the Case management Order. 8. On November 2, 2009, this Court entered its Order Granting the Motion for Clarification (DE 2335). In the Order Granting Motion for Clarification, this Court stated that: [b]y entering the Entities Judgment and the Lauer Judgment, it was not the Court s intention to close the Receivership Proceeding so as to prevent the Receiver from filing necessary motions or otherwise collecting, administering and distributing the Receivership Entities assets. Similarly, this Court had no intention of denying as moot the Pending Applications or of precluding the Receiver from litigating the Pending Ancillary Proceedings and administering the estate s assets under the jurisdiction of this Court. See Order Granting Motion for Clarification at 3-4. The Court then directed the Clerk to accept for filing any and all subsequent pleadings, motions, objections, responses, applications or notices in either the Pending Ancillary Proceedings or in the Enforcement Action. Id. at 4. 9. On October 28, 2013, Lauer (through his attorney David M. Dorsen) 1 filed his 1 On March 1, 2013, David M. Dorsen, Esq. filed his Motion to Appear Pro Hac Vice as Attorney for Defendant Michael Lauer (DE 2680). On March 19, 2013, this Court denied the Initial Pro Hac Vice Motion due to procedural irregularities (DE 2698). On March 29, 2013, Mr. Dorsen filed his Re-filed Motion of David M. Dorsen, Esq. to Appear Pro Hac Vice as Attorney for Defendant Michael Lauer (DE 2706, the Re-filed Pro Hac Vice Motion ). In conjunction with the Re-filed Pro Hac Vice Motion, Mr. Dorsen affirmed that he had read and was familiar with the Rules of Procedure for this Court. On April 2, 2013, this Court granted the Re-filed Pro Hac Vice Motion (DE 2711). 3
Case 9:03-cv-80612-KAM Document 2795 Entered on FLSD Docket 01/17/2014 Page 4 of 8 Third Motion to Vacate the Judgment and/or Dismiss the Complaint on the Ground, Inter Alia, that the SEC s and the Court-Appointed Receiver s Joint Operation Against Lauer Violated Separation of Powers and Due Process (DE 2740, the Third Motion to Vacate ). 10. On December 13, 2013, the Receiver filed the Response to the Third Motion to Vacate (DE 2769, the Response ). 11. On December 27, 2013, Lauer, through his counsel, filed his Motion to Strike or, in the alternative, Defendant s Reply to Receiver s Opposition to his Third Motion to Vacate the Judgment and Dismiss the Complaint (DE 2781, the Motion to Strike and Reply ). 12. In the Motion to Strike and Reply, Lauer combines his reply in support of the Third Motion to Vacate with a request that this Court strike the Receiver s Response, thus necessitating that the Receiver respond to the portion seeking to strike the Receiver s Response. ARGUMENT Lauer claims that the Response should be stricken because the Receiver is not authorized to file motions in this Enforcement Proceeding, and that [e]ven if he stands in the shoes of the Lancer hedge funds, they are not parties, having been dismissed from the case. See Motion to Strike and Reply at 1. Lauer also asserts that the Response should be stricken because it obviously exceeds the page limits, since the Receiver has only one-and-a-half spaces between lines. Id. at 1-2. Lauer is incorrect. First, Lauer is incorrect that the Receiver is not authorized to file motions, responses, objections or other documents in the Enforcement Action. As discussed above, the Order Appointing the Receiver, the Case Management Order, and the Order Granting Motion for Clarification make clear that the Receiver is authorized to engage in these actions as necessary to collect, administer and distribute the Receivership Entities assets before this Court, as well as 4
Case 9:03-cv-80612-KAM Document 2795 Entered on FLSD Docket 01/17/2014 Page 5 of 8 continue to litigate the various ancillary proceedings. The Order Appointing Receiver states that the Receiver is authorized, empowered and directed to defend, compromise or settle legal actions, including the instant proceeding, in which Lancer, Lancer II, Offshore, Omnifund, Offshore LSPV and Partners LSPV, or the Receiver is a party See Order Appointing Receiver at 3 and 6. The Case Management Order in turn states that: [s]pecifically, with the exception of the Receiver, no other ancillary party, including, without limitation, investors and creditors, may participate in discovery, the adjudication of issues and/or trial on the merits in the SEC s enforcement proceeding. See Case Management Order at 4 (emphasis added). Thus, these initial appointing orders are clear as to the Receiver s powers and duties in these cases, including the power to participate in discovery and the adjudication of issues in the Enforcement Action. Moreover, after the entry of the Final Lauer Judgment and the Entities Judgment, this Court again made clear that the Receiver would continue to be permitted to participate in the Enforcement Action. See Order Granting Motion for Clarification at 4 (where the Court directed the Clerk to accept for filing any and all subsequent pleadings, motions, objections, responses, applications or notices from the Receiver in either the Pending Ancillary Proceedings or in the Enforcement Action). That is precisely what the Receiver has done; he has filed responses in this Enforcement Action, just as the Court authorized. The purposes for this authority is clear; the Receiver s interests in marshaling the assets of the Receivership Entities and in protecting the interests of the innocent investors are implicated by actions taken in this Enforcement Action. Consistent with this objective, although the Receiver has not responded to everything that Lauer has filed in this Enforcement Action, the Receiver has filed appropriate responses, objections or other filings when the interests of the Receivership Entities have been implicated. 5
Case 9:03-cv-80612-KAM Document 2795 Entered on FLSD Docket 01/17/2014 Page 6 of 8 Lauer s numerous attempts to overturn the Judgment (including through the Third Motion to Vacate) directly affect the Receiver s attempts to marshal and distribute assets for the benefit of the innocent investors (in this case, Lauer s frozen assets that would be utilized to partially satisfy the Judgment and subsequently be distributed to the innocent investors). Accordingly, the Receiver is entitled to respond to the Third Motion to Vacate. Indeed, taking Lauer s position to the absurd result for which he is advocating, the Receiver would have to file a motion to intervene or for authority to file an amicus brief, or go through some other procedural hurdle, every time that Lauer filed anything in the Enforcement Action that could adversely affect the Receivership Entities or the Receiver s administration of the estates. This Court did not intend this result as evidenced by the entry of the Receivership Order, the Case Management Order, and the Order Granting Motion for Clarification, as well as this Court s acceptance and review of the Receiver s filings in the Enforcement Action during the history of that case. 2 Lauer is also incorrect that the Response exceeds the page limitations because it contains one-and-a-half spaces between lines. Rule 5.1(a)(4) of the Local Rules for the United States District Court for the Southern District of Florida states that documents filed with this Court shall have not less than one and one-half (1 ½) spaces between lines. See Local Rule 5.1(a)(4). 3 Thus, the Response complies with the Local Rules. The Motion to Strike and Reply, 2 Given the clear language in the Orders discussed above, it is striking, but not surprising, that Lauer contends that the Receiver does not have the power to file responses and objections in this case. It is also striking that he makes this argument without any analysis of the clear directives of these Orders. 3 Lauer is represented by counsel in this action. Indeed, the Motion to Strike and Reply was filed by counsel. Yet, Lauer, through his lawyer, makes an argument about the page limit that is directly contradicted by the Local Rules. 6
Case 9:03-cv-80612-KAM Document 2795 Entered on FLSD Docket 01/17/2014 Page 7 of 8 to the extent it seeks to strike the Receiver s Response, should therefore be denied. 4 WHEREFORE, the Receiver respectfully requests that this Court enter an order denying the Motion to Strike and Reply, to the extent it seeks to strike the Receiver s Response, and grant such other and further relief as is just and appropriate. Dated: January 17, 2014. Respectfully submitted, HUNTON & WILLIAMS LLP Counsel for the Receiver Sabadell Financial Center 1111 Brickell Avenue, Suite 2500 Miami, Florida 33131 Tel: (305) 810-2500 Fax: (305) 810-1653 /s/ Juan C. Enjamio Juan C. Enjamio (FBN 571910) David E. Bane (FBN 515701) 4 The Receiver also notes that Lauer has yet again failed (even though he is now represented by counsel attesting familiarity with the Local Rules of this Court) to consult with opposing counsel prior to filing certain requests for relief with this Court. See Local Rule 7.1(a)(4). As this Court is aware, this has been a recurring problem in this Enforcement Action (as well as the ancillary actions). Indeed, on May 1, 2007, this Court entered its Order warning Lauer about these failures and that any future motions by Lauer lacking the statement required by Local Rule 7.1(a)(4) (formerly 7.1.A.3) would be automatically stricken by the Court on its own motion. See DE 1868 at 4. 7
Case 9:03-cv-80612-KAM Document 2795 Entered on FLSD Docket 01/17/2014 Page 8 of 8 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 17th day of January, 2014, I electronically filed the foregoing with the Clerk of the Court using CM/ECF and that a true and correct copy was served via U.S. Mail and email upon Michael Lauer, 101 West End Avenue, Apt. 8P, New York, NY 10023, mb.lauer@hotmail.com and David M. Dorsen, Suite 500, 2900 K Street, N.W., Washington DC 20007. /s/ Juan C. Enjamio For Hunton & Williams LLP 8 64036.000002 EMF_US 48956406v1