United States District Court, D. Colorado
ORDER RE MOTIONS FOR SUMMARY JUDGMENT AND THE
SEC'S MOTION TO CONVERT JURY TRIAL TO REMEDIES
Brooke Jackson United States District Judge
filed this suit on August 23, 2017 alleging that Sonya D.
Camarco, a stock broker, defrauded several investor clients
out of more than $2.8 million. Camarco Investments, Inc. (a
company into which Ms. Camarco allegedly deposited investor
funds), Camarco Living Trust (a trust established by Ms.
Camarco and her husband Paul Camarco, which allegedly held
assets purchased with investor funds), and Mr. Camarco were
named as “relief defendants.” On May 14, 2018 Ms.
Camarco agreed in a state court criminal case to plead guilty
to felony counts of filing a false tax return, securities
fraud, and theft. She agreed to pay approximately $1.7
million in restitution to the victims.
moves for a summary judgment in the present case asserting
that Ms. Camarco violated the securities laws. ECF No. 98. In
the motion it sought the following relief: (1) a permanent
injunction prohibiting Ms. Camarco from violating the
securities laws; (2) a determination that
“third-tier” civil penalties against her are
appropriate; (3) imposition of joint and several liability
for disgorgement of $1, 503, 856.86 against Ms. Camarco and
the Camarco Living Trust, subject to offset of any
disgorgement paid by Camarco Investments; (4) imposition of
joint and several liability for disgorgement of $948, 811.19
against Ms. Camarco and Camarco Investments; and (5) an order
that Paul Camarco disgorge $73, 295.83. ECF No. 98. Ms.
Camarco and relief defendants Paul Camarco and the Camarco
Living Trust have filed responses. ECF Nos. 108 and 109. Ms.
Camarco essentially does not contest the relief sought except
as to civil penalties. The relief defendants contend that the
relief sought against them punishes them for the crimes of
Ms. Camarco and is inequitable.
relief defendants Paul Camarco and the Camarco Living Trust
have filed their own motion for summary judgment, asserting
that the relief sought by the SEC has not been authorized by
Congress. ECF No. 100. The SEC responds that it is authorized
to seek disgorgement from those possessing gains obtained by
securities violations. ECF No. 107.
to Convert Jury Trial.
also moves to convert the jury trial scheduled for February
11-15, 2019 into a one-day remedies hearing to be conducted
by the Court without a jury. ECF No. 117. The SEC informs the
Court that Ms. Camarco has confessed liability; that the SEC
will not, after all, request a civil penalty; and, therefore,
that the sole remaining issue to be decided is equitable
relief to be ordered against Ms. Camarco and the relief
defendants. Id. at 2.
relief defendants Camarco Living Trust and Paul Camarco have
filed an opposition to this motion. ECF No. 118. They argue
that even if the relief sought by the SEC were authorized, it
amounts to a civil penalty, and the relief defendants are
entitled to a jury trial. Id. at 2. In reply the SEC
contends that it is authorized to seek disgorgement; that
disgorgement is an equitable remedy; and that even if it
weren't, a jury could only determine liability
for a civil penalty. But the relief defendants have confessed
that they received ill-gotten gains. Therefore, the only
remaining issue is the amount of the penalty.
See ECF No. 107 (response to motion for summary
judgment) and ECF No. 120 at 1-2 (reply in support of motion
Ms. Camarco has admitted liability (and has been sentenced to
20 years in state court). Accordingly, the SEC's motion
for summary judgment, ECF No. 98, is GRANTED IN PART and
DENIED IN PART. It is granted as to liability against Ms.
Camarco. We will determine the scope of the remedies in the
hearing that the SEC has requested.
I conclude that the relief defendants' argument
concerning the SEC's authority is incorrect, and their
motion for summary judgment, ECF No. 100, is DENIED. Relief
Defendants cite Kokesh v. SEC, 137 S.Ct. 1635
(2017), for the proposition that the Supreme Court suggested
without deciding that the SEC lacks the authority to seek the
remedy of disgorgement. ECF No. 100 at 8-10. According to the
relief defendants, because the Supreme Court left open the
question of whether courts possess the authority to order
disgorgement, and because nothing in the securities laws
expressly permit federal courts to order disgorgement, this
Court should refrain from doing so. I cannot agree with
relief defendants. If the Supreme Court leaves open a
question of law, I must follow settled precedent. Although
the Tenth Circuit has yet to rule on the issue since the
Supreme Court decided Kokesh, at least 15 federal
courts have ruled that Kokesh did not overrule the
long-standing precedent that courts possess authority to
order disgorgement in SEC enforcement proceedings. See
SEC v. Liu, No. 17-CV-55849, 2018 WL 5308171, at *3 (9th
Cir. Oct. 25, 2018) (unpublished); see also SEC v.
Flowers, No. 17-CV-1456, 2018 WL 6062433, at *2 (S.D.
Cal. Nov. 19, 2018) (holding that the court retained the
equitable power to order disgorgement post-Kokesh).
After reviewing existing caselaw, it is plain to me that the
SEC is entitled to seek disgorgement.
I conclude that the relief defendants are not entitled to a
jury trial. While their argument is not completely baseless,
existing precedent classifies disgorgement as an equitable
remedy. SEC v. Maxxon, Inc., 465 F.3d 1174, 1179
(10th Cir. 2006) (“Disgorgement is by nature an
equitable remedy as to which a trial court is vested with
broad discretionary powers.”). And, actions in equity
do not entitle the parties to a jury. Manning v. United
States, 146 F.3d 808, 811 (10th Cir. 1998). However, Mr.
Camarco argues that much of the money and equity in the joint
property that the SEC seeks to disgorge came from Mr.
Camarco's individual financial contributions. ECF No. 108
at 16. Thus, I will grant Mr. Camarco an opportunity to
present evidence that some of the money the SEC wants to
disgorge was in fact his own lawfully obtained money. ECF No.
117 is GRANTED.