S.E.C. v. Stewart
- Loretta Preska
- 1:98-cv-02636
- U.S. District Court · Southern District of New York
- 4
In Securities and Exchange Commission v. Gottlieb, Judge Preska denied Gottlieb’s request to undo contempt and the long-standing monetary judgment.
Allen B. Gottlieb’s attempt to obtain relief from the 2021 contempt order and the 2003 monetary judgment was unsuccessful. The Securities and Exchange Commission’s judgment remained undisturbed by this order.
What happened
In Securities and Exchange Commission v. Allen B. Gottlieb, the Securities and Exchange Commission sought to enforce a 2003 judgment requiring Mr. Gottlieb to pay approximately $2 million in disgorgement and approximately $878,000 as a penalty. The court had also held him in civil contempt in 2021 for failing to comply with orders requiring payment and financial information.
Mr. Gottlieb asked for relief from the contempt order based on claimed compliance and again challenged the 2003 judgment, arguing that it involved a penalty rather than disgorgement. The court said he had not shown that he complied with the contempt order and that his challenge to the judgment came nearly two decades too late. It also found no qualifying mistake, new evidence, fraud, invalidity, satisfaction, or other reason to change the judgment.
The court denied the motion. It denied without prejudice the part concerning compliance with the contempt order because Mr. Gottlieb’s appeal had removed that issue from the district court’s authority, and it denied his renewed challenge to the 2003 judgment. Judge Loretta A. Preska directed the clerk to close the motion.
The detailed version
- S.E.C. v. Stewart · No. 1:98-cv-02636
- Loretta Preska
- Feb. 14, 2022
Background
In 2003, the court entered a final judgment against Allen Gottlieb requiring approximately $2 million in disgorgement and approximately $878,000 in penalties. The Court of Appeals affirmed that judgment in 2004. In 2021, the Securities and Exchange Commission moved to hold Mr. Gottlieb in civil contempt because he had not paid, despite evidence of assets and spending that could have been used to partially satisfy the judgment. The court granted that motion after a hearing and entered a written contempt order requiring, among other things, prompt payment of $105,000 and an accounting of assets and income.
Mr. Gottlieb appealed the contempt order. While that appeal was pending, he filed a motion seeking relief from the contempt order based on claimed compliance and arguing that the final judgment was a penalty rather than disgorgement. He also renewed his challenge to the 2003 judgment.
The court’s analysis
The court rejected the compliance argument because Mr. Gottlieb had not shown that he complied with the contempt order. However, because his appeal of that order was pending, the district court lacked authority over that aspect of the matter. The court therefore denied that portion of the motion without prejudice.
The court treated the renewed challenge to the 2003 judgment as a request for relief under Federal Rule of Civil Procedure 60. That rule generally requires such a motion to be made within a reasonable time. The court held that nearly 20 years was far beyond a reasonable time under the circumstances.
The court also considered the substance of Mr. Gottlieb’s arguments and found no basis for relief under Rule 60. It found no showing of a mistake, newly discovered evidence, fraud by the Securities and Exchange Commission, a void judgment, satisfaction of the judgment, or another reason justifying modification or vacatur. The court further held that Supreme Court decisions in Liu v. SEC and Kokesh v. SEC did not undermine the court’s authority to order disgorgement and did not create an extraordinary circumstance warranting relief.
Disposition
The court denied Mr. Gottlieb’s motion. The portion concerning compliance with the contempt order was denied without prejudice because of the pending appeal. The renewed challenge to the 2003 judgment was denied. The clerk was directed to close the motion at docket number 389.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.