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JOHN B. BULGOZDY, Cal Bar No. 219897 E-mail: bulgozdyj@sec.gov DAVID J. VAN HAVERMAAT, Cal. Bar No. 175761 E-mail: vanhavermaatd@sec.gov Attorney for Plaintiff Securities and Exchange Commission Rosalind R. Tyson, Regional Director Michele Wein Layne, Associate Regional Director John W. Berry, Regional Trial Counsel 5670 Wilshire Boulevard, 11th Floor Los Angeles, California 90036 Telephone: (323) 965-3998 Facsimile: (323) 965-3908

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. MARCO GLISSON, Defendant Case No. 2:09-cv-00104-LDG-GWF PLAINTIFF SECURITIES AND EXCHANGE COMMISSIONS OPPOSITION TO DEFENDANT GLISSONS MOTION FOR STAY

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I.

INTRODUCTION Defendant Marco Glissons (Glisson) Motion for Stay lacks merit and

should be denied because there is no parallel criminal proceeding that is implicated by this case. By Glissons own admission, the criminal investigation that is the basis of his motion is said to focus, not on the broker/dealer activities alleged by [the Commission] in this case, but on a prior, unrelated tax obligation of Glisson and his alleged efforts to avoid payment thereof by reducing the visibility of his assets . . . . (Defendant Glissons Motion for Stay at page 21, lines 11-12 (emphasis added)). By Glissons own admission, the criminal investigation involves Glissons prior tax obligations and his efforts to evade payment of his taxes, and is not a parallel criminal investigation of the same conduct that is the subject of the Commissions civil enforcement action for violation of the federal securities laws. Glisson provides no support for the proposition that a defendant in a civil action should be able to stay such proceedings, for an indefinite period, because of an unrelated criminal investigation. To the contrary, the authority cited by Glisson shows that a stay is not appropriate in this case even if the criminal proceedings involved a parallel investigation, and the motion for stay should be denied. Earlier in these proceedings, in opposing plaintiff Securities and Exchange Commissions (Commission) efforts to obtain discovery of Glissons 2010 activities in CMKM securities, Glisson informed the Court: Glisson would like to go to trial as soon as possible. (Glissons Opposition to Commissions Renewed Motion to Further Extend Additional Discovery Period or to Clarify (Docket No. 54), at page 7, lines 23-24.) The Court should honor Glissons request to go to trial as soon as possible, and deny the motion for stay.

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II.

LEGAL ARGUMENT A. A Defendant in a Civil Action is Not Entitled to a Stay of Discovery Even When Criminal Charges Have Been Filed The Supreme Court has held that a defendant is not entitled to a stay of civil

litigation merely because criminal charges are pending against him. It is well established that parallel civil and criminal proceedings can be brought and pursued against the same defendant simultaneously or successively. See Standard Sanitary Mfg. Co. v. United States, 226 U.S. 20, 52, 33 S. Ct. 9, 16 (1912). In the absence of substantial prejudice to the rights of the parties involved, such parallel proceedings are unobjectionable. SEC v. Dresser Industries, Inc., 628 F.2d 1368, 1374 (D.C. Cir. 1980). The Constitution does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings. Keating v. OTS, 45 F.3d 322, 324 (9th Cir. 1995); accord FSLIC v. Molinaro, 889 F.2d 899, 902 (9th Cir. 1989). In Keating, the Ninth Circuit rejected Charles Keatings argument that overlapping civil and criminal proceedings entitled him to a stay of the civil proceedings. In affirming an administrative law judges refusal to stay the Office of Thrift Supervisions civil case against Keating, the Ninth Circuit ruled that [a] defendant has no absolute right not to be forced to choose between testifying in a civil matter and asserting his Fifth Amendment privilege. Not only is it permissible to conduct a civil proceeding at the same time as a related criminal proceeding, even if that necessitates invocation of the Fifth Amendment privilege, but it is even permissible for the trier of fact to draw adverse inferences from the invocation of the Fifth Amendment in a civil proceeding. Keating, 45 F.3d at 326 (citing Baxter v. Palmigiano, 425 U.S. 308, 318, 96 S. Ct. 1551, 1557, 47 L.Ed.2d 810 (1976)). In FSLIC v. Molinaro, defendant argued that the FBI was investigating the same activities that caused the FSLIC to file a civil action against him. The Ninth

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Circuit upheld the district courts denial of Molinaros motion to stay the civil proceeding, holding that while a district court may stay civil proceedings pending the outcome of parallel criminal proceedings, such action is not required by the Constitution and the decision to stay should be made in light of the particular circumstances and competing interests involved in the case. Molinaro, 889 F.2d at 902 (citations omitted). In this case, no indictment has been returned by any state or federal authorities, which undermines any argument for a stay. Id. at 903 (case for staying civil proceedings is a far weaker one when [n]o indictment has been returned [, and] no Fifth Amendment privilege is threatened (citing Dresser Indus., 628 F.2d at 1376)). Courts generally decline to stay civil proceedings when a related criminal matter is still in the investigatory stage. See, e.g., SEC v. Treadway, No. 04-Civ-3464 WM JCF, 2005 WL 713826, at *3 (S.D.N.Y. Mar. 30, 2005); In re Worldcom, Inc. Sec. Litig., Nos. 02 Civ. 3288, 02 Civ. 4816, 2002 WL 31729501, at *4 (S.D.N.Y. Dec. 5, 2002). B. The Factors to be Considered Militate Against a Stay in This Case

In Keating and Molinaro, the Ninth Circuit identified the factors that generally should be considered when a stay is requested: (1) the interest of the plaintiff in proceeding with the litigation or any particular aspect of it, and the potential prejudice to the plaintiff of a delay; (2) the burden which any particular aspect of the proceedings may impose on defendants; (3) the convenience of the court in the management of its cases, and the efficient use of judicial resources; (4) the interests of persons not parties to the civil litigation; and (5) the interests of the public in the pending civil and criminal litigation.

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Molinaro, 889 F.2d at 903 (citations omitted). As described below, these factors favor denying Glissons motion for a stay. 1. A Stay Would Substantially Prejudice the Commission

The Commission has a strong and legally cognizable interest in timely pursuing civil actions to obtain judgments of permanent injunction against defendants, obtain orders that ill-gotten gains be disgorged, and seek the imposition of civil penalties to punish wrongdoers for their violations of the federal securities laws. See Molinaro, 889 F.2d at 903; FTC v. J.K. Publications, Inc., 99 F. Supp. 2d 1176, 1197 (C.D. Cal. 2000) (recognizing government agencies strong interest in avoiding delay in civil enforcement proceedings). The Commission brought this case in the public interest, to protect investors from being sold deregistered securities in CMKM. The Commission deregistered CMKMs securities in 2005 because CMKM was delinquent in making mandatory public filings concerning its operations, and the Commissions order was made to protect the investing public, the integrity of the markets, and the public interest. Indeed, Glisson admitted that his existing CMKM holdings became worthless after the shares were deregistered in 2005. Once CMKM securities were deregistered, all trading in CMKM was halted on any national exchange, and by any registered broker or dealer. Glissons conduct in CMKM securities effectively circumvented the Commissions efforts to protect the public. Moreover, Glisson renewed his illegal conduct in 2010 in direct contravention of a sworn statement he made to the Court in his successful effort to avoid summary judgment. Glisson lied to this Court that he would never trade CMKM securities again. Glisson profited substantially from his duplicity realizing net proceeds in excess of $1.6 million for a few months of activity in 2010. At any time, without the Courts or the Commissions knowledge,

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Glisson could resume his illegal activities in CMKM securities to the detriment of innocent investors who are duped into believing CMKM securities have some value. A stay would prejudice the Commission and the public interest in full disclosure in the securities markets, and the integrity of the markets. 2. Proceeding With This Action Will Not Impose an Undue Burden on Defendant Because No Criminal Proceeding is Pending As previously noted, [t]he case for staying civil proceedings is a far weaker one when [n]o indictment has been returned . . . Molinaro, 889 F.2d at 903 (citing Dresser, 628 F.2d at 1376 (stays will generally not be granted before an indictment is issued)); SEC v. Brown, No. 06-1213, 2007 WL 4191998 (D. Minn. Nov. 21, 2007) (finding no basis for stay even though defendant had received a target letter from the U.S. Attorneys Office). Thus, courts routinely decline to stay civil proceedings when a related criminal matter is still in the investigatory stage. See, e.g., SEC v. Treadway, No. 04-CIV-3463 WM JCF, 2005 WL 713826, at *3 (S.D.N.Y. Mar. 30, 2005); In re Worldcom, Inc. Sec. Litig., Nos. 02 Civ. 3288, 02 Civ. 4816, 2002 WL 31729501, at *4 (S.D.N.Y. Dec. 5, 2002); SEC v. Sandifur, No. C05-1631C, 2006 WL 1719920 (W.D. Wash. June 19, 2006); SEC v. Rivelli, No. Civ.A 05-CV-1039RPM, 2005 WL 2789317 (D. Col. Oct. 26, 2005). In the absence of an indictment, the Court has no way of knowing what conduct a hypothetical future indictment might cover if one is ever issued. The U.S. Attorneys Office has not intervened to support defendants request for a stay. This uncertainty about whether and when an indictment may or may not issue is why the Ninth Circuit has held that the case for a stay in such circumstances is far weaker than when there is an actual, pending indictment. Molinaro, 889 F.2d at 903.

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3.

Judicial Economy Does Not Warrant a Stay

The parties have prepared this case for trial, the Court has signed the Joint Pretrial Order, and the case has been set for trial. The case was originally set for trial on November 14, 2010. At defendants request, the settlement conference was postponed, which mandated vacating the trial date. After the settlement conference, the Court set the case for trial on February 27, 2012. Again at defendants request, the trial date was pushed back, to April 9, 2012. Defendant Glisson continually has sought to delay the trial in this case, despite the fact that in January 2010, Glisson informed the Court that he would like to go to trial as soon as possible. (See Docket No. 54 at page 7, lines 22-23.) This matter has been pending for several years. Discovery has been completed, the pretrial order has been signed and filed. The Commission has produced all of its exhibits to defendant. Motions in limine have been filed, and a schedule has been set for responses and replies. The case is on the eve of trial, where the Court can finally reach the merits of the case. Defendant now seeks a stay, of indeterminate length, due to a completely unrelated criminal tax investigation. There is simply no basis to disrupt, again, the schedule put in place by the Court for the resolution of this matter. See IBM Corp. v. Brown, 857 F. Supp. 1384, 1392 (C.D. Cal. 1994) ([a] stay would disrupt the courts calendar by indefinitely postponing trial). 4. A Stay is Contrary to the Interests of Investors

The law recognizes and protects the interests of investors in prompt resolution of claims involving alleged violations of the federal securities laws. See Molinaro, 889 F.2d at 903 (victims interest in prompt resolution weighs heavily against request for stay). Many CMKM investors may be realizing that they were duped into buying worthless CMKM securities through Glisson. Forcing the

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investors to wait in limbo for the Commissions enforcement action to proceed, based solely on speculation about some future indictment, is contrary to the interests of these investors. Moreover, since Glisson has shown the ability and propensity to resume his trafficking of deregistered CMKM securities at will, a stay is contrary to the interests of investors who may be duped into buying deregistered CMKM securities through Glissons market making activities. The interests of the non-party investors weigh heavily against the requested stay. 5. The Public Interest Strongly Favors the Timely Prosecution of This Action The public interest does not favor a stay. The Commission brought this civil enforcement action in the public interest. The Commission, which is statutorily charged with the enforcement of the federal securities laws in the public interest, has a strong interest in the timely prosecution and resolution of civil enforcement proceedings. A stay would run counter to the publics compelling interest in the fair, efficient, effective, and swift enforcement of the federal securities laws. See Keating, 45 F.3d at 325 (recognizing public interest favors timely resolution of civil action and weighs against stay); Molinaro, 889 F.2d at 903 (same). Indeed, in Keating, the Ninth Circuit held that the publics interest in a speedy resolution of the controversy outweighed Keatings asserted interest in avoiding reliance upon his Fifth Amendment rights, and that the compelling public concern for efficient administration would [be] unnecessarily impaired by the imposition of a stay. Keating, 45 F.3d at 325. /// /// /// ///

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III.

CONCLUSION For the foregoing reasons, the defendants motion for a stay should be

denied in all respects.

Date: November 30, 2011

Respectfully submitted,

/s/ John B. Bulgozdy John B. Bulgozdy David J. Van Havermaat Attorney for Plaintiff Securities and Exchange Commission

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Date: November 30, 2011 [ ] [X] [ ] [ ] [ ] [ ] [X]

PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036-3648 Telephone No. (323) 965-3998; Facsimile No. (323) 965-3908.

On November 30, 2011, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSIONS OPPOSITION TO DEFENDANT GLISSONS MOTION FOR STAY on all the parties to this action addressed as stated on the attached service list: [ ] OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agencys practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. [ ] PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid.

HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (UPS) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. E-FILING: By causing the document to be electronically filed via the Courts CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. /s/ John B. Bulgozdy John B. Bulgozdy
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SEC v. MARCO GLISSON United States District Court - District of Nevada Case No. 2:09-cv-00104-LDG-GWF (LA-3028) SERVICE LIST Frederick A. Santacroce, Esq. 706 South Eighth Street Las Vegas, NV 89101 Email: fasatty@yahoo.com Attorney for Marco Glisson Robert H. Bretz, Esq. 578 Washington Boulevard, Suite 843 Marina del Rey, CA 90292 Email: Rhbretzpc@aol.com Attorney for Marco Glisson

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