United States Securities and Exchange Commission v. Collector's Coffee Inc.
- Victor Marrero
- 1:19-cv-04355
- U.S. District Court · Southern District of New York
- 2
In SEC v. Collector's Coffee, Magistrate Judge Gorenstein denied Kontilai’s request to pause the civil case while his criminal proceedings continued.
Mykalai Kontilai’s request to pause the SEC civil enforcement case was denied, so the civil case could continue; the court allowed him to renew the request if the stated conditions occurred.
What happened
United States Securities and Exchange Commission v. Collector's Coffee Inc. involved Mykalai Kontilai’s request to pause the civil case until his criminal case was finished, or for one year. The court considered the parties’ submissions and the usual factors for deciding whether to pause a civil case during related criminal proceedings.
The court found that only the overlap between the criminal and civil cases supported a pause. It concluded that the criminal case might not move beyond the indictment because Kontilai had not appeared to answer the charges, while the Securities and Exchange Commission and intervening plaintiffs had a strong interest in pursuing fraud claims without lengthy delay. The court also said Kontilai had already testified in the civil case and had waived his constitutional protection against compelled self-incrimination there.
The court denied Kontilai’s motion, but said he could renew it if he returned to face the criminal charges or if the civil case reached trial and he planned to testify. Magistrate Judge Gabriel W. Gorenstein issued the order.
The detailed version
- United States Securities and Exchange Commission v. Collector's Coffee Inc. · No. 1:19-cv-04355
- Victor Marrero
- Dec. 11, 2020
Background
Mykalai Kontilai moved to stay, or pause, this civil enforcement matter while his criminal proceedings were completed. In the alternative, he requested a one-year stay. The motion was Docket # 635.
The court analyzed six factors commonly used when deciding whether to stay a civil case while related criminal proceedings are pending. The first factor—the extent of overlap between the criminal and civil issues—clearly favored a stay.
The court’s analysis
The second factor, the status of the criminal case, did not favor a stay. Although an indictment had been returned and an arrest warrant had been issued as of October 15, 2020, the court stated that Kontilai had taken no steps to appear in court to defend against the charges. The court therefore found no reason to believe the criminal process would proceed beyond the indictment stage and concluded that a stay could be prolonged or unending.
The third factor also weighed against a stay because the Securities and Exchange Commission and the intervening plaintiffs had a strong interest in proceeding promptly to protect the rights of allegedly defrauded investors and would be significantly prejudiced by a lengthy delay.
The fourth factor concerned the burden on Kontilai of continuing with the civil case while the criminal charges were pending. The court found that Kontilai had not shown that the criminal charges would affect his ability to defend the civil case, or that the civil case would affect his criminal case. The court noted that avoiding a forced choice between testifying in the civil case and asserting the Fifth Amendment privilege is an important reason courts sometimes grant stays. But it found that concern had little weight here because Kontilai had waived his Fifth Amendment right in the civil case, had been deposed for two days, and had testified at a contempt hearing. The court also stated that there was no reason to believe he would be deposed again.
The fifth factor was the court’s interest in avoiding unnecessary delay on its docket. The sixth was the public’s strong interest in the prompt handling of fraud charges brought by a government agency. Both factors counseled against a stay.
Ruling
The court stated that two central reasons for staying a civil case during related criminal proceedings did not apply: the risk that Kontilai would be forced to invoke his Fifth Amendment privilege to his detriment in the civil case, and the possibility that the criminal case would be resolved promptly. It therefore denied Kontilai’s motion to stay.
The application was denied without prejudice to renewal if either of two events occurred: Kontilai returned to face the criminal charges, or the civil case reached the trial stage, assuming Kontilai planned to testify. The order was issued by United States Magistrate Judge Gabriel W. Gorenstein.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.