Securities and Exchange Commission v. Francisley Valdevino Da Silva

Background

The Securities and Exchange Commission (SEC) brought this enforcement action against four defendants in connection with a cryptocurrency pyramid scheme known as Forcount Trader Systems, Inc. The court had previously granted the Government’s request to intervene and stay the case while parallel criminal proceedings against the defendants proceeded. Juan Tacuri later pleaded guilty to conspiracy to commit wire fraud and received a 20-year prison sentence. The court stated that the stay of discovery and other deadlines did not prevent settlement discussions.

The SEC reported that it was trying to negotiate a settlement with Tacuri and two other defendants. Because the defendants were incarcerated, the SEC reported difficulty conferring with them. Tacuri renewed his request for appointment of counsel.

Legal standard

In civil cases, the statute governing people who cannot afford litigation costs allows a court to request, rather than require, a lawyer to volunteer. Courts have broad discretion and must seek volunteer counsel sparingly. The court first considers whether the person is indigent, meaning unable to afford counsel, and then considers whether the claim appears substantial and whether factors such as incarceration, language limitations, difficulty investigating facts, complexity, or other circumstances make volunteer counsel more likely to produce a fair resolution.

Court’s analysis

The court reviewed Tacuri’s application and found that he qualified as indigent. It also found that his incarceration and limited English constrained his ability to represent himself in ongoing settlement discussions with the SEC. The court concluded that volunteer counsel would be more likely to lead to a fair determination. Because discovery and other deadlines were stayed, the court limited the representation to settlement.

The requested lawyer would file a notice of limited appearance. Unless the court expanded the representation, the lawyer would not be responsible for discovery if the stay were lifted. The representation would end after settlement was resolved and the lawyer filed a notice of completion.

Disposition

The court granted Tacuri’s applications for the court to request counsel and for permission to proceed under the statute for people unable to afford counsel. The clerk was directed to seek volunteer counsel and to mail Tacuri a copy of the order. The order also stated that finding a volunteer lawyer could take time and was not guaranteed.