EB-5 Center's Boss Must Cede Assets In SEC Row: 5th Circ.

The Fifth Circuit denied a petition for writ of mandamus Wednesday by a man held in civil contempt for failing to comply with an asset turnover order after the U.S. Securities and Exchange Commission sued him for securities fraud in connection with his EB-5 regional center, ruling his arguments lacked merit. 
In a per curiam decision, the three-judge panel said that the district court’s decision to issue the turnover order for Marco Ramirez — who ran the company USA Now, a regional center for the EB-5 program, which provides visas and paths to citizenship to foreigners who invest $500,000 in businesses that create jobs — is supported by clear and convincing evidence.

Ramirez allegedly used the business to solicit money from potential candidates and promised to hold the investments in escrow until the visas were approved, but allegedly spent the money or transferred it to his other businesses.

The district court had granted the SEC’s bid for a receivership order, which required Ramirez to provide an accounting and turn over all of his assets to a receiver. When the receiver’s accountant discovered that Ramirez issued a $500,000 refund check to an investor even though there was no record of the investor’s deposit, the district court filed the turnover order requiring him to return the $500,000 to the receiver because it was part of the estate.

“The district court had ample evidence to support the turnover order, even under the clear and convincing evidence standard,” Wednesday's decision stated. “Mandamus will not issue because it is not clear and indisputable that the district court erred in issuing the underlying order.”

The appeals court said that Ramirez paid the refund check from the funds provided by another investor, “in a Ponzi-scheme-like fashion.”

Ramirez argued that the district court refused to strike two affidavits, which he said it should have done since he was unable to cross-examine the affiants. But the appeals court said Ramirez had never, in fact, moved to strike the affidavits and that he himself had introduced them.

“Overall, Ramirez’s arguments regarding the affidavits are a puzzling red herring,” the appeals court said. “Ramirez’s counsel has patently misrepresented the situation to this court.”

Finally, the three-judge panel shot down Ramirez’s argument that the contempt proceedings essentially punish him for asserting his Fifth Amendment privilege against self-incrimination, saying he is being punished for refusing to turn over $500,000, not for his refusal to answer questions.

After denying the petition for writ of mandamus, the appeals court said it would grant motions to seal certain exhibits made by both Ramirez and the receiver.

Attorneys for the parties did not immediately return a request for comment Wednesday.

The SEC is represented in-house by John W. Avery, Benjamin L. Schiffrin and Benjamin M. Vetter.

Ramirez is represented by Jason Davis of Davis & Santos Attorneys & Counselors PC and Tony Canales of Canales & Simonson PC.

Source : law360.com

Litigation Cases

• UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs USA Now Regional Center, LLC