S.E.C. v. Stewart

Background

The Securities and Exchange Commission had a judgment against Allen Gottlieb requiring him to pay $2,005,443.54 in disgorgement and prejudgment interest, a $787,333 civil penalty, and injunctive relief. The judgment was based on findings that he violated the anti-fraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5.

In 2015, the SEC served a restraining notice on First American Title Insurance Company in connection with the sale of the home where the Gottliebs resided. The home was titled to Phyllis Gottlieb’s living trust. First American held the sale proceeds and later deposited them into the court’s registry, meaning an account controlled by the court.

Phyllis Gottlieb later asked the court to release some or all of the funds to her, asserting that she was the true owner of the property. The SEC presented evidence that Allen Gottlieb was the beneficial owner. After two days of testimony and arguments, the court ruled on February 11, 2025, that Allen Gottlieb was the beneficial owner of the property and the proceeds.

Rulings

The court entered the attached order authorizing disbursement of the entire amount held in the registry. The Clerk was directed to:

- Set aside $40,000 for First American for attorneys’ fees and costs, as agreed by the parties, with payment to be sent after the order became nonappealable. - Send the remaining registry funds to the SEC to help satisfy the judgment against Allen Gottlieb.

The court stated that the February 11 decision was entered as an order rather than a judgment because it related directly to the court’s prior judgment. Although the disbursement was partly administrative, the court said its underlying analysis was substantive and that the order was appealable. The attached order stated that it was final and appealable.

The court also denied all pending motions as moot because Allen Gottlieb’s filings repeated arguments the court had already rejected. It directed the Clerk to close all open motions. The court further reminded Allen Gottlieb that he could not file additional papers in the matter unless the court expressly ordered them or the papers were addressed to the Court of Appeals; other papers would be disregarded.

Effect

The order directs how the money held by the court will be distributed: $40,000 to First American and the balance to the SEC. It leaves in place the court’s determination that Allen Gottlieb beneficially owned the property and proceeds. The order also restricts further filings by Allen Gottlieb and states that the order is final and appealable.