MA2 2 i 2216 - huntonak.com

UNITED STATES DISTRICT CO URTSO UTH ERN DISTRICT OF FLO RIDA

Case No. 03-80612-Civ-M ARRA

SECURITIES AND EXCHANGE COM M ISSION,

Plaintiff,

V.

M ICH AEL LAUER,

Defendant.

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)

FU DW 1C.

MA2 2 i 2216

- N M. LARIK REctâax u s DlsT cms.n./ gN. - w.éB.

DEFENDANT M ICHAEL LAUER'S M OTION FOR RECONSIDERATION OF ORDER

DENYING LAUER'S M OTIONS TO RECUSE DISTRICT JUDGE (DE 2745. DE 2785)AND M OTION TO STRIKE RECEIVER'S OPPOSITION (DE 2783)

Defendant Lauer tiles his motion for reconsideration of the Court Order Denying M otions

to Recuse and Strike, DE 2809. W hile Lauer obviously disagrees with the entirety of the order, his

motion for reconsideration is confined to the specitk points made below .

Amended Second M otion to Recuse (DE 27851

The Court failed to consider Lauer's contention that 28 U.S.C. j l44 is unconstitutional

insofar as it deprives a litigant any opportunity to move to disqualify ajudge under that section

when the litigant had previously moved to disqualify another, predecessor judge under j 144 in the

snme case. Lauer will simply refer the Court to his discussion in his previous tslings.l The

importance of the failure of the Court to consider the constitutional argument cannot be overstated.

If a litigant cnnnot be denied the use of j 144 to challenge the bias of a second judge after the

litigant had filed a j 144 motion challenging a predecessor judge, the Court must refer Lauer's

Amended Second Motion to Recuse to a different judge and postpone consideration of the other

1 Neither the SEC nor the Receiver discussed Lauer's constitutional argument.

Case 9:03-cv-80612-KAM Document 2820 Entered on FLSD Docket 03/24/2014 of 42

motions on which the Court ruled. 'lhere is no proper procedure that permits ignoring Lauer's

constimtional claim. The Court's tmexplained failure to consider Lauer's argument that j 144 is

unconstitutional œs applied to this motion is inexplicable. A judge who is both unbiased and

seemingly impartial is required.

The Court admits that it had personal knowledge of the facts from the start sunounding the

remssignment of this case from Judge Zloch to Judge Cooke to Judge Zloch to Judge M arrm The

Court's own words refute that statement. rfhe Court states that Lauer's allegations are Etfalse'' attd

that he knew they were false before he obtained the aë davit from court-clerk Edward Seiber. DE

2:09, p.14 (relevant pages attached as Exhibit A). Also, çtWhen Lauer raised the issue again, I

concluded the false assertion should not be left lmrefuted. Thus, Seiber's Afsdavit was obtained

to set the Record straight.'' Id Then, Gtit is not unusual for a Court to inquire about serious

accusations such as these for the purpose of confrming that they are (as already known by the

Court to be) false.'' Id. The Court's Conclusion (p.18) stated that he was not biased or pattial,

&tan.d I iave no knowledge on the subject that I ought not to possess.'' That was the bmsis for his

denial of Lauer's recusat motion based on llis personal knowledge.

But that is not the law even if the facts were otherwise. It does not matter whether personal

knowledge wms properly or improperly obtained. Nothing in 28 U.S.C. j 455(b)(1) remotely

supports the ground on which the Court relied to deny Lauer's recusal m otion. Exhibit A, p.2.

Moreover, such a remarkable construction of j 455(19(1) would excuse a11 actlons by district

judges and allow them to engage in expàrte fact-finding and record building and to sit on cases

concerning which they have intimate knowledge. The Court also ignores or misses Lauer's point

that the recsignm ent of this case is a disputed evidentiary fact on the issue of disqualitkation or

recusal - although not with resmct to Lauer's claim that the Court acted in violation of jj 104 and

455 in conducting an investigation and in securing an affidavit and including lt in the Court's


order, al1 conducted exparte. Lauer refers the Court to his previous analysis of United States v.

Morrison, 153 F.3d 34, 48-49 (2d Cir. 1998), which the Court did acknowledge in its order.

On M arch 1 1, 2014, the Second Circuit decided a case that requires the recusal of the

Court. Costello v. Flatmant L LC, No. 13-1446, 2d Cir. (copy attached as Exhibit B), reversed the

decision of a districtjudge who had bœsed llis decision, like the Court in this case, on his exparte

investigation. While that case involved judicial notice following an exparte investigation and this

case involves an afûdavit sectzred ex parte, the simations are substlmtially the sam e. Both resulted

in exparte evidence and its inclusion in an order without notice and right to contest. ççM oreover,

the district court did not provide notice of its investigation or its tinds prior to the isslmnce of its

opinion, which deprived Costello of an opportunity to contest the facm al findlngs contnined in the

order . . . .'' 1d. at 4. The Court not only reversed the ruling below on the ground that the district

judge had improperly engaged in fact finding, but it also ordered that the case be remanded to a

differentjudge:

Ftnally, we grant Costello's request that this case be reassigned uponremand to a different district court in light of the district court's error in

conducting its own investigations and uking of judicial notice of its lndings.Wltile we 4o not question tlte well-respected judge's impartiality - or even hisconclusions - we remand the case to a different district judge because *ttheoriginal judge would reasonably be cxpected upon remand to have substmdaldim ctllty in putdng out of his or her mind . . . findings determined to be .. . .

based on evidence that must be rejected.'' 1d.

This case is a far more compelling case for recusal and reassigmnent than Costello. First,

lmlike Costello, the issue here is the impartiality of the district judge. Second, tmlike Costello

where the respectedjudge was independent of the issues in the case, the district judge in this case

hms a personal interest in tlze cmse, which directly impinges on his abllity to judge impartially,

Third, the districtjudge effectively destroyed the value of an apparently important fact witness by

securing atl am davit from ltim exparte. Fourth, thc district court lzas twice upheld his exparte

3


action based on personal knowledge. Court-Appointed Receiver v. f auers No. 05-605:4- ,

DE844. Fifth, the district court has demonstrated bias or the appearance of bias on numerous other

occasions, including in 17E2809 itself, as demonstrated below.

The Court never confronts Lauer's claim that the Court is immersed in atxd blinded by self-

intcrest that coincides with the interests of the parties opposing recusal. His investigation was

designed in substantial part to defend him self from accusations that he was involved in a totally

improm r direct remssignment arranged by then-chief Judge Zloch to insure that his rulings were

not tmdone by ajudge of a different persuasion. Judges are prohibited from developing facts that

protect themselves at the expense of one of the parties. In addition, the Court has ignored Lauer's

point that it is especially unseem ly for the Court to allöw the Receiver, who is not a party except

for the all-important fact that the judge has rubber-sfnmped his fee apptications, to defend it. See

DE 2783, where the Court sllmmarily rejected Lauer's arguments that the 1aw prohibited the

nonparty Receiver from participating in this case. How can it not create the appearance of bims

when the judge pays the Receiver, the Receiver suppo> the judge, the other party objects, and the

judge sustains the receiver without even considering the other partygs arguments.

The Court applies the wrong standard with respect to the necessarily lengthy recitation of

prcvious instxnces or bias or the apm arance of bias. lt makes two m istxkes. First, the Court states

that ttnot one of the pum orted misdeeds cited above warrants my recusal.'' 1d., p.8. But the proper

stnndard is whether the totality of purported or actllnl misdeeds establishes bims or appearance of

bias; the whole record hn-q to be confronted at our snme time, not seriatim. Second, Lauer contends

that the Court's exparte extra-judicial (under the adversary system) creation of evidence warrallt-s

recusal, so the lengthy list serves to corroborate his claim ; his recusal m otion is clearly based

pdncipally on the Court's exparte conduct. Lauer's claim dem onstrates that there is more here

4


than simply ççadverse rulings'' an.d ççdisagreement with my rulings.''z The Court also missttes the

law when he quotes outdated or misstated language from United States v. Roca-Alvarez, 451 F.2d

th Cir 1981) and Byrne v. Nezhat, 261 F.3d 1075 1 103 (1 1* Cir. 2001), that adverse843, 848 (5 . , ,

rulings alone do not provlde a basis for disqualifcation. The rule is that tlzey ordinarily do not,

f iteky v. Unitedstates, 510 U.S. 540, 555 (1994), although there is more than adverse rulings

against Lauer in this cmsei3 see Costello v. Flattman, L L C, supra. W hile Lauer believes that many

of his allegations alone medt recusal, ite is not making that oontention in this motiort for rehearing.

The Court stated about the payments to Heidi Carens (pp.15-16), dt-f'he Court knew nothing

about suclt paymeltb to Carens, and there is not a shred of evidence that l did.'' It also asserted,

tç-fhere also is no evidence the Receiver made such payments.'' Let us look at the facts, starting

with Carens' swom testimony at her deposition on December 13, 201 1. Defendants quoted

extensively from that deposition in thejoint motion in In r: f ancer Partners, L .P., No. 06-01469-

BKC-JKO, DE192 (copy nttnched as Exhibit C).4 Carens' deposition demonstrates that the

Receiver or his agents solicited Carens to spy on Lauer attd gatiter evidence in viotatiort of Lauer's

Fourth Amendment rights; that the Receiver or his agents paid Carens substantial sums of money

in cash alld leased an apartment for $25,000 for her and her three small children in exchange for

her unlawful services offered, otherwise known as bribery; that the Receiver or his agents; and the

Recelver or his agents told her that the payments came from Lauer's frozen funds and were Court-

approved. The examination of Carens included the following questions and answers:

2 The Court's quotation from Liteky v. United States, 510 U.S. 540, 555 (1994), demonstrates thatJudge Zloch's dellial of Lauer's initial recusal m otion was wrong, Thc Supreme Court sGted that

4topinions formed by thejudge on the basis of facts inkoduced'' did not warrant recusal. WhenJudge Zloch denied Lauer's recusal motion, no facts had been introduced.3 Judge Zloch made the same mistake when he denied Lauer's recusal m otion in 2004. DE 326.

4 'I'he entire deposition was filed as an exhibit in connection with Defendants' M otion for Summary

Judgm ent in Court-Appointed Receiver v. Lauer, No. 05-60584-cv-M ARItA . M ovants request

that the Court tnke judicial notice of the deposition ptzrsuant to Fed.R.EV. 201.


M S. CARENS: I have spoken numerous tim es with M arty Steinberg Mmself. Therd 2011) when he texted me from London .last 1 spoke w1t14 him was September 23 ( ,

. . . 305 807 7501, that's his cell phone. . . .

MS. CARENS: . . . . they told me about how they had gone through ltis (Lauer'sloftlce that he had in W estchester . . . .

M S. CARENS: . . . . they told me about email he had, which they would never beable to know about unless they had gone through his email . . . .

Q: Did you come to know 9om the list from some of those parties that the receivermight have shared with you might have been obtained gom M r. Lauer's contactinformation list from his iphone that was seized by the FB1 upon his arrest inFebruary of 200879

M S. CARFNS: Oh yes . . . and the list of names they had was absolutely the onlything it could have been taken from his iphone.s

Defendant.s Lauer and Garvey moved in titc Bnnknmtcy Court to obtain a transcript of the

exparte conference with the Court to which the Receiver or his agents had referred as the source

of the Court-approved payments to M s. Carens. DE 762. Banknzptcy Judge Olson responded that

he never had such an exparte conference about payments to Carens. (Exhibit D) This Court has

now stated the snme thing. W hat has the Receiver said about these charges of bdbery an.d iltegal

searches and seizures? Hls sole response to th.e extraordinarily serious charges of illegality is

contained in a footnote to his opposition to Lauer's motion for sllmmary judgment in Court-

Appointed Receiver v. Lauer, No. 05-60584-M AR.1G , DE 760, p.19, n.5:

Lauer even claims that the Receiver improperly released money from Lauer'sfrozen assets to pay for the apartment of Lauer's former spouse, Heidi Carens. Thisrepresenution, however, is false as the fands referred to were approved by the

Bzmkruptcy Coud at the request of the Liquidating Trustee (not tlw Receiver) in anin-camera hearing on December 16, 2009. Like his other acctusations, claim thatthe Receiver som ehow defrauded this Court is simply false.

5 Carens Dep., pp. 96-98, 136. In United States v. Lauer & Garvey, No, 08-20071-JORDAN, in

which the jlzry acquitted both Lauer and Gm ey, Judge Jordan fotmd the FBI search of Lauer'siphone to be unlawful, suppressed any information obtained through the illegal search and seizure,and directed that none of the illegally seized information be used. 'I'he Receiver used it.


That's it! The dog ate my homework. Leaving aside the fact that Judge Olson denies that

there wis an in camera hearing of the sort described by the Receiver, the Receiver's defense is that

ttit wasn't my money that was used to bribe Carens.'' Receiver Steinberg doesn't even try to say

what Judge Olson supposedly was told about the intended use of the money, what wms the extent

of his role in setting up the arrangement with Carens and securing the funds from the Liquidating

Trustee, attd whether the money came from Lauer's frozen funds. ççMake'' (or ççmade'') includes

arranging for something to happen. E.g., F/l: American Herîtage Dictionary 818 (3d ed. 1993

(flrst of 23 defmitions); The New OxfordAmerican Dictionary 1013 (2001) (second of ten

defnitions). Receiver Steinberg's participation makes him a principal in the criminal activity.

Receiver Steinbeig's suggestion that he and his t%professionals'' are not fully guilty of the

committed crimes is fantmstic. For al1 we know, Steinberg arranged for the requisition of money to

pay Carens, although it would not be necessary to prove that. He and his professions are guilty.

The Court says, Rrfhere is also no evidence that the Receiver made such paym ents.''

Lauer's First Motion to Recuse Judge M arra (17E2745)

Lauer argues that this Court hms protected the Receiver's exparte commlmications

conuined in his fee submissions while failing to confront his arguments. Lauer is not challenging

Judge Zloch's ten-year-old order, DE 157. He is challenging this Court's continuation of the ban

on disclosure long aûer it hœs outlived its usefulness. For exnmple, what hedge fund assets require

contidentiality ten years after the Receiver shut down the hedge futtds without notice or a hearing?

In fact, what assets of the hedge f'unds does the Receiver still hold? W hat current strategic

interests are at stake that years' old billing records would reveal? M ore fundamentally, how does

the Receiver justify his failure to share his ten-year oId billing records with the very invtstors who

are paying his fees? Isn't it obvious that someone has som ething to hide?


The same mistake of law that led the Court to deny DE 2785 applies to DE 2745, namely,

that it is irrelevant whether the Receiver's expartt commtmications with the Court contained

information that the Court ttought not to possess.'' The Court applied the incorrect legal standard

when it improperly denied Lauer's first motion to recuse.

Lauer's M otion to Strike (DE 2783)

The Receiver made exactly the same arguments as the Court recites in his order (pp.16-18).

Lauer provided rebuttal to those arguments.6 Once again, the Court simply ignores Lauer's

arguments. Lauer's colm sel studiously challenged the Receiver's arguments.; A pattem of simply

ignoring adverse arguments by one party to a case is strong evidence of bias. M oreover, a pattem

of simply copying one party's flings while ignoring cogent replies of the other party is very strong

evidence of biœs. Lauer attaches the comparable pages from the Receiver's opposition and the

Court's Order. Compare DE 2795, pp.4-6 (Receiver's Response) (Exhibit E), with DE 2809,

pp.16-18 tcourt Order) (Exhibit A).

This sequence is precisely what tmlspired when the SEC filed its boated motion for

summary judpnent. Lauer Sled a detailed response quoting contradictory sworn testimony at

considerable length by the same deponents and, in fact from the very same depositions, as the

ones on wltich the SEC relied. DE l 822, DE 182; see DE 1875, DE 1905. This was exculpatory

testimony thatpro se Lauer elicited on his cross-examination ofthe SEC witnesses.s Lauer's post-

6 The Receiver neither filed nor sought leave to file a response to Lauer's arguments.? Lauer's counsel believes that his submissions should be considered

, not ignored, by the Court

because they can assist the Court. See, e.g., David M, Dorsen, Henry Friendly Greatest Jl/tfge ofHis Era (Harvard University Press 2012) (foreword by Judge Richard A. Posner, calling tltebiography, e.g., çeconmlmmate,'' id.s pp. ix-xiii).' A combination of Lauer'spr/ se status and ignorance of discovery procedttres; his total lack ofmoney to conduct discovery; and a contempt order that barred him from testifying himself,

including presenting an amdavit in opposition to the SEC'S motion for sllmmaryjudgment, and


order m otion for clariâcation and reconsideration proved yet additional sworn exculpatory

testimony. DE 2164.

Altilough the case involved upro le defendant, the SEC had witbheld from the Court the

exculpatory evidence that Lauer produced ill his reply. Remarkably, the Court litemlly scnnned

the SEC'S initial submission as its order and opinion, while ignoring contradictory testimony.

Compare DE 1737 with DE 2133.9 W hen Lauer again brought these facts to the attention of the

Court in a motion for reconsideration, the Court once again simply ignored the evidence. DE

2164.

Counselfor movant L auer cdr/l/ex that he has con#rred with counselfor the SEC J:IJ the

Receiver in an ef/èr/ to resolve the issues raised in this motion J/'l# has been unable to do so.

W HEREFORE, the Court should grant Michael Lauer's motion for reoonsideration, vacate

his order, and reassign the matter to a differentjudge.

R ectfully submitted,

David M . Dorsen

Suite 5002900 K Street, N.W .W ashington, DC 20007Telephone: 202 204-3706

E-Mai1: [email protected] for M ichael Lauer

Dated: M arch 17, 2014

severely limited his witnesses. The contempt order resulted in Lauer's having had to rely on tlteSEC'S witnesses. Nevertheless, the cross-examination of the SEC witnesses exonerated Lauer.9 A relatively complete list of typos identitied to date appears in Lauer's Petition for a W rit ofCertiorari, Lauer v. SEC, No.12-260, p.18, n.9, which identises nine identical mistakes in theSEC'S statement of mateiial facts and the Coud decision, including several misspellings and

unusual punctuation errors.


E xhibit A

10


Case 9:O3-cv-80612-KAM Document 2809 Entered on FLSD Docket 03/10/2014 Page 1 of 19

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

CASE NO. 03-8G612-CiV-MARRA/HOPKINS

SECURITIES AND EXCHANGE COMMISSION,

Ptaintiff ,

MICHAEL G UER et at.,

Defendants,and

LANCER OFFSHORE, INC-, et at.,

Retief Defendants./

ORDER DENYING MOTION5 TO RECUSE

THIS CAUSE is before the Court upon Defendant Michaet Lauer's Motién for

Recusat of District Judge (DE 27451, Defendant Michaet Lauer's Amended Second

Motion for Recusat of Dlstrict Judge, Pursuant to 28 U.S.C. b 455 (DE 2785), and

Defendant Lauer's Motion to Strike or, in the Alternative, His Repty to the Receiver's

Oppositfon to his Motion for Recusat of the District Judge (DE 2783J. The Court has

carefutly consïdered the motions, responses, repties and is otherwise futty advised in

the premises.

Leqat Standard

The tegat basis upon which Lauer reties for recusat is 28 U.S.C. S 455(a) and

(b)(1), which provide

(a) Any justfce, judge, or magistrate judge of the United States shattdisquatify himsetf in any proceeding in which his impartiatity

mfght reasonable be questioned.


Case 9:03-cv-80612-KAM Document 2809 Entered on FLSD Docket 03/10/2014 Page 2 Of 19

(b)(1) He shatt atso disquatify himsetf . . .lwlhere he has a personat bias orprejudice concerning a party, or personat knowtedge of disputedevidentiary facts concerning the proceedlng.

28 U.S.C, H 455(a) and (b)(1). Lauer maintains that my impartfatity shoutd be

questioned and that I have personat knowtedge of disputed evidentiary facts, The

undersigned rejects Lauer's assertions.

In this circuit, Gthe test for determinin? whether a judge's impartiatity might

reasonabty be questioned is an objectbve one and requires asking whether a

disinterested observer futty informed of the facts woutd entertain a significant doubt

as to the judge's fmpartiatitym'' Bîvens Gardens O//fce Bldn., Inc. v. R rnett Banks ot

FIa., 140 F.3d 898, 912 (1 1th cir. 1998) (citlng nlversltled Numlsmatlcs, Inc. v. Cfty ot

Orlando, 949 F.2d 382, 385 (11th cir. 1991). Gn e words (peqsonat bias or prejudice)

connote a favorabte or unfavorabte disposition or opinion that is somehow wrongfut or

inappropriate, either because it is undeserved, or because it rests upon knowtedge

that the subject ought not to possess (for exampte, a criminat juror who has been

bîased or prejudiced by recelpt of lnadmfssibte evidence concerning the defendant's

prior criminat activities), or because it is excessive in degree (for exampte, a crimlnat

juror who is so inftamed by property admitted evidence of a defendant's prior

criminat activities that he wftt vote guitty regardtess of the factsl-'' Lfteky v. Unfted

States, 510 U.S. 540, 550 (1994).

Page 2 of 19



Improper Alignm ent of the Receiver and SEC

One of the main Gubjects of Lauer's Third Motion to Vacate, requesting that

this Court vacate the Judgment or dismiss the Comptaint pursuant to Rutes 12(h),

60(b)(4), 60(b)(6) and 60(d)(3) of the Federat Rutes of Civft Procedure, addresses the

purported improper retationshlp between the SEC and the Receiver. 5ee DE 2740.

The Court finds that this issue, which raises the doctrine of separation of powers, and

Lauer's due process rights, is more appropriatety addressed in a ruting on that

motïon, rather than in the current motions to recuse. See suprc n.3.

Personal Knowledge of Disputed Evidentiary Facts

Lauer's attegations of my personat knowtedge of disputed evidentiary facts do

not justify my recusat. There are no facts cited that woutd convince a reasonabte

person that my impartiatity might be reasonabty questioned, such as having a

personat bias or prejudice against Lauer, or extrajudiciat knowtedge of facts.

Affidavit of Cdward Sieber

Lauer aques that l have personat knowtedge of the circumstances of the

reassignment of this case to me from Judge Ztoch and that l gained knowtedge on a

contested issue by attaching an affidavit from the Court's Case Assignment

Adminfstrator. Lauer has repeatedty sought my recusat, arguing without any

evidence, that my appointment to preslde over this case was anything but random.l I

1 Lauer's attegations ln the various motions for recusal and/or motions to vacate

inctude groundtess comptaints such as, Judge Ztoch ruted on att pending motions before thecase was transferred to Judge Cooke (which Judge Ztoch exptained was standard protocot

Page 1 3 of 19

Case 9:03-cv-80612-KAM Document 2820 Entered on FLSD Docket 03/24/2014 Page 13 of 42


rejected Lauer's unsupported and fatse ctaim when he raised the issue in his Motion

to Vacate the Finat Judgment based on how the case was assigned to me months prior

to the Affidavit of Edward Sfeber. That motion was property denied- See DE 2723 ft

DE 2727. When Lauer raised the issue again, I conctuded the fatse assertions shoutd

not be teft unrefuted. Thus, Sieber's Affidavft was obtained to set the record

straight. Sieber's Affidavit simpty exptains how this case was eventuatty assigned to

me by demonstrating how the random case assignment wheet functioned in this case.

ln any event, the case reassignment procedures are retated to the adminidtrative

history of this case, and has nothing to do with Gdisputed evidentiary facts'' or

extrajudiciat knowtedge, and its existence as grounds for my recusat is not supported

by reason or evidence. Moreover, it is not unusuat for a Court to inquire about

serious accusations such as these for the purpose of confirming that they are (as

atready known by the Court to be) fatse.Unîted States v. Norrfson, 1 53 F.3d 34, 48-

49 (2d Cir. 1998). Finalty, the Court notes that Lauer has fited a Petition for Writ of

Mandamus with respect to the Order Denfing Third Motion for Recusat in the Eteventh

Circuit Court of Appeals, specifïcatty takink exception with the Seiber Affidavit.

Accordingty, this particutar atteged bias witl be resotved by a higher court. See DE

2773.

per court rules, see DE 402), that I occupied a courtroom in Fort Lauderdate close to JudgeZtoch's chambers (1t is qulte common ln courthouses for judges' chambers and courtroomsto be closety located, and the retevance of this fact ls unclear), and Lauer's unsupportedctalm that when he catted my chambers, a taw cterk totd Lauer that there was nothingwrcng with a Chlef Judge's direct reassignment of a case.

Page 14 of 19



Ex Parte Communications with the Receiver

The Receiver provided a number of unredacted bitting records to the Court on

an ex parte basis pursuant to Orders of Judge Zloch. See DE 157 and 225. Lauer

argues that the Receiver has not estabtished that those bitting records are priviteged

or otherwise exempted from discovery. Those bitting records were provided to the

Court for purposes of evaluating the fee requests, as Judge Zloch noted, fdthat these

records may reveat confidential matters harmfut to the entities and assets contained

in the receivership, these time records may be submitted to the Cotlrt ex parte and

under seat.'' See DE 157 at 2. ln any event, actions taken by another judge are not

proper grounds for my recusat.

Heidi Carens

Lauer states that on December 13, 2011 , the Receiver deposed Heidi Carens

(<dCarens''), the ex-wife of Lauer, who was a defendant in case no. 05-60584-MARM .

According to Lauer, the Receiver saw Carens as a potentiat witness against Lauer. DE

2784 at 3. Based on Carens' sworn testimony (referred to in item 15 above), Lauer

argues that the Receiver and/or his agents bribed Carens, totd her that this bribery

was approved by the Court, and then l sealed the incriminating documents. Lauer

argues that l am one of the very few peopte who may have known about the

Receiver's misconduct vis-a-vis Carens at or about the time it occurred. Lauer

supposition is lncorrect. n is fs the very first time I am hearing anything about this.

The Receiver responds that he informed Lauer that the ffrentat payments'' at

Page 15 of 19


case 9:03-cv-80612-KAM Document 2809 Entered On FLSD Docket 03/10/2014 of 19

issue here were requested by the Liquîdatîng Trustee (not the Recefver) and

approved by the Bankruptcy Court, and were not part of this Recelvership or even

before thfs Court. See DE 2793 at 17, n.5. Indeed, Lauer has requested the

transcript of the în clmerl hearing (which the Receiver has been totd occurred)

before the Bankruptcy Court, whbch motion ls pending. See case no. 05-60584, DE

760 at p. 19, n.15; see Jtso ln re #îchael Lauer, bankruptcy case no. 06-01469-1K0

(DE 192 and 195, the ''ln Camera Hearing Motion''). This Court knew nothing about

such payments to Carens, and there is not a shred of evidence that I did. There atso

is no evidence the Receiver made such payments.

Motlon to Strlke Recelver's filings

Lauer moves to strike the Recefver's oppositfon to his motion to reçuse

ctaiming that the Receiver is not authorized to fite motions in this case, and that

''lalssuming he ctafms to stand in the shoes of the Lancer hedge funds, they are not

parties, having been dfsm issed from the case.'' See DE 2783 at 1. Lauer atso asserts

that the Receiver uses an outdated caption in an effort to botster his position. ld.

Lauer ls incorrect.?

Lauer is incorrect that the Receiver is not authorized to fite motions,

responses, objections or other documents in this action.The Order Appointing the

Receiver, the Case Management Order, and the Order Granting Motion for

7 The caption of thls actlon has remained the same. See Om nibus Order, DE 2724.

Page 16 of 19



Ctarificatlon make ctear that the Receiver is authorized to engage in these actions as

necessary to cottect, admlnlster and dfstribute the Recefvership Entities assets before

this Court, as wett as continue to titigate the various ancittary proceedings.

The Order Appointing Receiver states that the Receiver is ''authorized,

empowered and dfrected to defend, compromise or settte tegat actfons, inctuding the

instant proceeding, in which Lancer, Lancer Il, Offshore, Om nifund, Offshore LSPV

and Partners LSPV, or the Receiver is a party . . .'' 5ee Order Appointing Receiver at

3, 6. The Case Management Order, in turn, states that fflslpecificatty, wfth the

exception of the Receiver, no other anciltary party, including, without timitation,

investors and creditors, may partfcipate ln discovery, the adjudication of fssues

and/or triat on the merits in the SEC'S enforcement proceeding-'' See Case

Management Order at 4 (emphasis added). Thus, these initiat appointing orders are

ctear as to the Receiver's powers and duties in this and other cases, inctuding the

power to participate ln discovery and to defend the adjudication of issues in this

case. Moreover, after the entry of the Finat Judgment and the Entities Judgment,

this Court again made ctear that the Receiver woutd continue to be permitted to

participate in this action. See Order Granting Motion for Ctarification at 4 (where the

Court directed the Cterk to accept for fïting any and att subsequent pteadings,

motions, objections, respontes, apptications or nctices from the Receiver in either

the pending ancittary proceedings or in this action).

Consistent with this objective, the Receiver has been fiting responses,

Page 17 of 19


Case 9:03-cv-80612-KAM Document 2809 Entered Gn FLSD Docket 03/10/2014 of 19

objections or other fitings when he deems the interests of the Receivership Entities

have been impticated. By the motions to recuse, the Receiver perceived Lauer's

efforts to be aimed at obtaining yet another judge for the sote purpose of attempting

to undo the Final Judgment. The Receiver finds such efforts to directty impticate hiS

duty to continue to administer the Receivership Entitles and marshat and distribute

assets for the benefit of the innocent învestors. The Court cannot disagree.

Moreover, the Court benefîtted by the Receiver's response to the motion to recuse ln

that he was able to exptain, to some degree, the circumstances of Heidi Carens and

the funds she received.

Concluslon

A disinterested observer futty informed of the facts woutd not entertain a

significant doubt as to the my impartiatity.I have no personat bias or prejudice

against Lauer, and I have no knowtedge on the subject that I ought not to possess.

Therefore, lt is hereby

ORDERED AND ADJUDGED as fottows:

a) Defendant Mlchaet Lauer's Motlon for Recusat of District Judge EDE 274%

is DENIED;

b) Defendant Michaet Lauer's Amended Second Motion for Recusat of

c)

District Judke, Purusant to 28 U.S.C. 1 455 (DE 2785) is DENIED;

Defendant Lauer's Motion to Strike (or, in the Atternatlve, His Repty to

the Recefver's Opposition to his Motion for Recusat of the District Judge)

Page 18 of 19


Case 9203-cv-80612-KAM Document 2809 Entered on FLSD Docket 03/10/2014 of 19

IDE 27831 is DENIED.

DONE AND ORDERED in Cham bers at W est Patm Beach, Patm Beach County,

Ftorida, this lotb day of March, 2014.

.M1 -...

KENNETH A. MARRAUnited States District Judgç

Page 19 of 19


E xhibit B

11


13-1446Costello v, Flatman, L L C

UNITED STATES COURT OF APPEALS

FOR THE SECO ND CIRCUIT

SUMM ARY ORDE.RRULINGSBY SUMM ARYORDERDO NOTHAVE PRECEDENTIAL EFFR

.JW CITATIONTO A SUMM ARV ORDERFILED ONOR AU ERJANUARY ,1 200 .7 ISPERMIW ED AND ISGOVERNED BY FEDEM L RULE OF APPELLATEPROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. W HEN CITING A SUM MARY ORDER IN A

DOCIJMENI' FILED WITH THIS COUR IT A 'ARTY MUST CITE EITHYR THE FEDERAL APPENDIX OR ANELECTRONIC DATABASE (WITH THE NOTATION GSUMMARY ORDERHm) A PARTY CITING TO A SUMMARYORDER M UST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a suted term of the United States Court of Appeals for the Second Circuit, held at the

Thurgood M arshall United States Coudhouse, 40 Foley Square, in the City of New York, on the

1 1* day of Marck two thousand fourteen.

PRESENI': ROBERT A. KATZMANN,

Chiefludge,ROBERT D. SACK,

Circuit Judge,JED S. RAKOFF,

Dîstrict Judge.*

M IKE COSTELLO,

Plaintff-Appellant,

No. 13-1446

FLATM AN, LLC, a New York Iimited liability company,

Defendant-Appellee,

SHAHID DlN, an individual, DBA Subway, LINCOLN

FIVE REALTY, LLC, a New York limited liability company,

Defendants.

*The Honorable Jed S. RakotT, United States District Judge for the Southern District of

New York, sitting by designation.


For Plaintiff-Appellant:

No appearance for Defendant-Appellee

G. Oliver Koppell, Esq., New York, NY

Appeal from ajudgment of the United States District Cottrt for the Eastern District ofNew York (Johnson, J).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, Ae

DECREED that thejudgment of the district court is VACATED and REMANDED for

rcconsideration in light of this Order.

Plaintif-Appellant M ike Costello appeals from a M arch 28, 2013 order of the United

States District Court for the Eastern Distrlct of New York (Johnson, .L), denying his motion for

attorneys' fees following the entry of dcfaultjudgment against Defendant-Appellet Flatmans:

LLC, on Costello's claims for violations of the Americans with Disabillties Act CWDA''), 42

U.S.C. 5 12188(a)(1). W e assume the partits' familiarity with the underlying facts, the

prooedural history of the case, and the issues on apm al.

Pursuant to the ADA, a district court, <tin its discretion, may allow the prevailing party . .

. a reasonable attorney's fee.'' 42 U.S.C. j 12205. We review a decision E'to award or deny

attorneys' fees for abuse of discretion.'' Jacobson v. Healtheare Fin. Serbw, Inc., 5 l 6 F.3d 85, 96

(2d Cir. 20084. <tA district court has abused its discretion if it based its ruling on an erroneous

view of the Iaw or on a clearly erroneous assessment of the evidenct. or rendered a decision that

cannot be located within the raage of permissible decisions-'' In re Sims, 534 F.3d 1 17, 132 (2d

Cir. 200X) (internal citations, quotation marks, and brackets omitted).

Costello argues on appeal that the district court abused its discretion by denying his

motion for attom eys' fees in its entirety, For the most parq Costello's arguments lack merit. For

exsmple, Costello contends that the district court abused its discretion because its

2


characterization of his suit and the actions of his attorneys demonstrated a disdain for ADA suits

writ large and a disrespect for this case in particular. However, the district court acknowledged

the worthy goals of the ADA, when used appropriately, but it found, based on counsel's

submissions to that court and their litigation history, that the attorneys' effort.s here were not

deserving of a fee award.

However, we catmot am rm the district courtgs denial of attom eys' fees on the record

before us. In its order, the district court noted that it visited Kdeach of tlle businesses that were

named defendants in Plaintifrs eight lawsuits'' and purported to takt judicial notice of the fact

that d'most if not all of the alleged structurai defciencies preventing access to persons with

disabilities still exist-'' App. 1 15-16 & n.14. The distzict court drew from its observations the

conclusions tizat plaintifps counsel never sought to remedy these failings, that counsel's conduct

was ttmendacious,'' and therefore that they should receive no attom eys' fees. 1d. at 1 16.

However, a court may Gkejudicial notice only of facts that are çlnot subject to reasonable

dispute'' because they are generally known in the jurisdiction or txcan bc accurately and readily

determined from sources whose accuracy cannot reasonably be questioned.'' Fed. R. Evid.

201(b). While the district court may be correct in its observations that certain structural defects

existed at the time of its visit, it is not clear to this Court that such defects are ççnot subject to

reaonable dispute''or that the conclusions that the district court drew from its observations may

be ddreadily determled from sources whose accuracy cannot reasonably be questioned,'' Cf

Wg'li'a v. Bureau ofcitizem-hè tf Immigration Servs. , 437 F.3d 261 , 265 (2d Cir. 2006) (per

curiam) (expressing concern with the Board of Immigration Appeals' taking of administrative

notice, akin tojudicial notice, of an improvement in conditions in another country because this

statement Kirepresents a debatable assessment . . . rather than a statement of fact of the kind


normally appropriate for the taking of administrative orjudicial notice'). Moreover, the district

court did not provide notice of its invejtigation or its ûndings prior to the issuance of its opinion,

which deprived Costello of an opm rtunity to contest the factual findings contained in the order

denying attorneys' fees. See Fed. R. Evid. 201(e) COn timely request, a party is entltled to be

heard on the propriety of taking judicial notice and the nature of the fact to be noticed.n). Thus,

Costello's claim on appeal that he would have provided some explanation for the status of those

facilities undermines the district court's decision to take judiclal notice in this çontext. See lnt'l

Star Cftz-u Yacht RacingAss 'n v, Tommy Hisger US.A., lnc., 146 F.3d 66, 70 (2d Cir. 1998)

(çtBecause the effect of judicial notice is to deprive a party of the opportunity to use rebuttal

evidence, cross-examination, and argument to attack contrary evidence, caution must be ustd in

determining that a fact is beyond controversy under Rule 20l(b).''). Under these circumstances,

the district court erred in takingjudicial notice of the conditions of these businesses and drawing

adverse conclusions therefrom, and we cannot say with certainty that the district court would

have reached the same conclusion with respect to attomeys' fees absent this error. Therefore, we

must remand for rtconsideration of the motion for attorneys' fees.

Finnlly, we grant Costello's request that this case be reassigned upon remand to a

dlffertnt district courtjudge in light of the district court's error in conducting its own

investigation of the restaurants and taking of judicial notice of its tlndings. While we do not

question the well-respectedjudge's impartiality--or even his conclusions-we rtmand the case

to a different districtjudge because t4the orlginal judge would reasonably be expected upon

remand to have substantial diffkulty in putting 0ut of his or her mind . . . Gndings determined to

be . . . based on evidcnce that must be rejected.'' United States v. Robin, 553 F.2d 8, 10 (2d Cir.

1977) (per curiam) (denial of petition for rehearing en banc); accord Shcherbakovskiy v. Da

Capo Al Fine, ff#., 490 F.3d 130, l42 (2d Cir. 2007).


Accordingly, we VACATE the order of the district court and REM AND for

reconsideration of the motion for attorneys' fees. The case shall be mssigned to another district

court judge sitting in the United States District Court for the Eastern District of New York

FOR THE COURT:

Catherine O'Hagan W olfe, Clerk


E xhibit C

12


Case 06-01469-0K0 Doc 192 Filed 06/13/13 Page 1 of 29

IJM TED STATES BANKRW CYCOURTSOIJTHERN BISTRIG OF FLORIDA

LANCER PARTNERS. L.P.

m btor./

I-ANCE: pu zxyxs, L.p. Adv. Case No.; 06-01469-+ 0

PlaintiF,

VS .

MICHAEL LAUEK

Defendant/

U s GNx pTcycœar*. ilsmm oF FtcRo

JUN : 3 2213

FIlD RecEwEn

GARVEY'S JOM D M OTION FOR COURT TODEFEO ANTS' LAUEW S M DRELEASE TIIE TRANG FT 0# THE PURPORTED EX PM T af INX AM ERADECEM ER 16.2e LANCER PARTNO RELATED COURT M ARING

œ fendants Michael Lauer and M% n C- ey Cllefendants'')s Rsmctfully rmuest tbis

Case No. 06-1 1721-BKC-JKO

Court to relea tlte trane pt (çitranscriptM) of the pumorted exparte. in-camera coux proceeding

that, accœding to Receiver's Resmnse to Defendut Lauer's Motion for Summsu JMgnent tdated

May 1, 2013, and flM in the Rçceiver liugation, Case No. 05-605:4-CIV- ), took placz in

this Coux on I- ember 16, 2t#)#. Altrmatively, if no such exl- e, inlcamera hearing took place,

Defeldxnts res- tfully request that the Co> fonnally confirm that fact (1).

For some backgound in supm rt of the instant Motion: on M arch l4, 2013, Defendnnt Iaauer

sled a motion for summaryjudpnent (Exhibit 1) in the Receiver-driven cases, which have beO

litigate for n- ly a dxade. Among multiple causes for dismiual (œ fèndnnt dtu nine, in toG ),

Defendnnt asserte a defenx of Unz>an #,aA dodrine agninqt Rcceiver, clting as evidenœ,

(l) DefMdAnts attemptd multiple times to obtain Tmste's Ou- l's pesition ree ing hb position on thismotioa but m ived no reply.

1


Case 06-01469-JK0 Doc 192 Filed 06/13/13 Page 2 of 29

among otller Y ngs. exœmts fmm Ms. Heidi Carens' (Ms. Camtls is Defendant's former spouse)

Rœeivere nducte dcm sitiona which t* k place itt New York City on December l3, 2011. As

dixusx.d in the atœ hcd Exhibit ls during the said d- sition, M s. Camns disclosed that she had

engaged in a very extensive cm etl collaM ration witlt Reœiver at!d ltis proxies (hee er, elteceiver

and his proxies'' will % referenr.ed as 4tReceiver'), which, among oler things. include

lmlutllodzz!d and unlawful aer-s to Dcfeldnnt's private and litkation-related, aûomey-client

pdvileged info% stion. M er Ms. Carens illicitly ob#xlned the information 9om the Defendant's

aparenest which ix luding pev nal R es stored on DefenY t's computer, sie bad delivere those

files to Receiver. Below am xme represene ve exceo from Ms. Carens' d- sidon (2):

p95: Ms. C- XSJ ... 'd+ zâe), fReeelvezleontinuedto then switch toformer FB1 agents, wethen twfee#ew me to Vr&gœt we uedto come to New York' we told me to ao on M coe/Lauer. Foy fW ceiver) bew 1 *z,2 a 9.: to &J ff auer :7 qv tment, /H I could we that le# toget Into Al: e - ear. rAe.y said f&y aee#ed hn eov ter. n ey wœtted me to gfve them UIJ

Ales. ''

p12 1 : Ms. Ceaans: ':...* . Ste*berg (Recelverl *ZJ t* prlvate investigators were ver.y wellJware thatl woWl lm e œce.u to O yl/ez. Andthey tzçkel - - to M:e./lœ./l drlvet to get Intoàl.x fu uer'sl computer zz- /o ma* - to e copies ofdocu- nts on :ï.: computer... ''

p124 Ms. Cn- s: eunda#er r&z did that. r&.# ex- cted me toprovlde /&- with evea -- wlthcopfea ofhîs computer, for me to we the key to :J.: apctment, to go fa there tplzf make copies of#les. 1 we aent a cu- m. ''

As a quidpro quo for M s. Carens' collaM ration, Receiver had paid M s. Camns at least tens

of thollunds of dollars, apparently obtainM from Defendant's district coM -frozen bank/brokerage

nzvmtmts. For Kme additional dtes from Ms. Cartns' deposition:

D 4.... ''....telling * - fReceiverlthat 1 don 't Gow attything, he &rW',J me ao- cash mzz#ro/#- /H fl do remember, '&J/ thF would -N lz Göw, agai% re ye here to /lel nnathat /ewould lïke to rJ.F - . ''

P95....''...> d theyprx eeded to fell mep int :1- 1 that lH w- what Ineeded zo do In

exee ge/zv t*m eyjag meAnancially, zze f w- in a ver.p vulnerableposition with reeechildren to alp- rz. ade the.v a/-ztw wanted me to ?aake up fàlaga, jtet to re/l t*m zplyz&ag. ''

(2) n e entire fonqeript of M s. Ca ns' x ember l 1, 201 l deN sition was file as an exhl-bit wità Defendant'sMSJ in tlw Tu- No. 05..6G5< N -< * .

2


Case 06-01469-JK0 Doc 192 Filed 06/13/13 Page 3 of 29

P115: '/fRecefver waq....trylng to a ïN lle mynnnncîal Wpzzze a by .-:# unaermînlng myentire rel/ff/aâ'&p thnt 1 &*# with hlm fu uerl ''

P1 19/120 Ms. C= ns:#'....Mr. î'abinson fone ofReceiver 's #lvelzfgeorf zplzf others op redmeJazz-/l/ compenmtion - well * lncentive to provide facr/-faefag evîdence Jgc/-/ * .FWOXX %$

P122 Ms. CaM s: *t.... - & y JRece/er./ leœed = aM mem lH r me zmzlpl.p tpee ce&ealiwd â, and /#e amount 0.f/e/ exceede4 I believe, $25,000.

P123 Ms. Cm ns: *'.....they releœel tl- moae.g-/nm his F.zzwer 'd#ozen = erz nw'? %..4 '&permission ofthe czv / to do fl'#. That 's wMz 1 w- told. ''

P124: Q.' f'Mç. Cyens, didyou reeeive fpl.y other 'tzz.tllu-vmeatç by ro receiver....?A: 1 JIW recefve 'm h plvmeaa. ''

P126: :.' 'Did làe receiver or - ofhis repreaealzàve.ç tellyou /H thesepayments were eourtJ##M VeW

A:Yes, aâ.eo/eeth,, ''

M s. Camns alx state that R= iver was in dired communication with her, and that

R= iver and/or bis proxies, had revealed to her that they enN ged in other ttinvestigative'' activities,

which alO were likdy urmutlmrized and otherwise unlawful. For example:

* 7 Ms. fu- s: al lm e sr ken avplem- zf- with M zet.p Rteùtbec àl'- e De lYf tlme IJm ke with Afpl we September 2./ (2011$ when àe texted - .*0- London ''..... '305 807 7501./H ': his cellphone. ''

1$96 Ms. CarO s: .... ''...they told - A * e w t* .y izzzgoae through Fliç ff- r 'sJ ol ee that& M zl fa Wesmk ster.... ''

846* . Carensi.... ''...f&# toldme J&m/ email fH * M4 which t&y wouldnever be able foeow about =/e.ov t% izzzzgoxe through àf.e emall''

Pl 39: Q2 HDV /& =ceiver o' œty o./Wie#roxfe.ç that sW edMr. fzwzee 's email - derivedInformatlon ever 'ellyou weràer they ànz? zâe court % permisslon to fzc/lw//y %nnk lnto t&emaîl Jccoa z;

A. Ms. Cm ns: N% 1 w- notglwn fâaf information.

P136: Q.' ''Didp u come to bl/w that the listftom some o/fe e pardes fe the Fece/er mighte e slw ed withyou ll/gà/ have &ea obtainedkom * . Is er 's cozlœ z information Jf.ç/.#t>hia f'e ae that w,fzç seizedby f:e F#f upon &.ç - est ïn Februn 0

./*2*#? ''A: ''Ohps ''... .... ''adt* list 0/:w- .: they plzwf wœ absolutely oa/.y thing it eoxll have beenlckenN ?a f.v his ipAoae ... ''

Reve ingly, Rerniver's Resm nse to Defendant's M SJ dœ s not o/er any substantive

mbuttal to Defendnnt's allegations made itl his Uneleqn Sàxzf arguments. otller thnn:

3


Case 06-01469-JK0 Doc 192 Fiied 06/13/13 Page 4 of 29

''....a%sets fope'./'or the gwrzzzlea/ ofu uer 'z//r- r sp use, NezW/ Carens.... were apFovedâ.y the 2,,,.* ,,,//.p Covt J/ the revxey/ ofthe fklze /àlg Truatee (not the Aeeefverl in Ja Ve- e H-H- la #eœe 16. J*#. '' (fce de l5)

of course, on its faœ , tlw R--iver's May 1, 2013 disdosure/admission raix s m any more

quœtions #bnn it ansewers, and given tlle very high level of pmjudice ca- d to Defendants by

Re iver's lmnuthorized access to Defendant Lauer's personal and attomey-cllent privileged

litigation information the matter mus't % investigated more fully. Additionally, it ap> tbst

Receiver also likely contempmously skided the disd ct couh-imm sed assd freeze, while

su% uently submite g *audulent reœivership-related ex-nse billingsa as lo requests for

r- iverslzi#tmst- blp f*s file withtlte couds ever dted any comNnsationpaid to Heif f'>renK.

The tmnxript of the alleged lw emGr 16, 2* 9 exparte hearing would also help e- blish whether

tcy Co< which according to Receiver had approved payments to Ms. Camns, was also

misled by the pedtioning padies.

Defendnnt bn3 *e11 previously geatly prejudie by exy rte prnr-zings in the SEC case,

including the original July 10, 2003 exparte hearing in district court that latmched tlw SEC'S

enfom- ent action against Defendnnt, at:d which al> gave rix to Receiver (a). There Ls a

(3) n e tx x'ript of the July I0, 2% 3 exparte he.*rlnp which œ ftndant wa ablv to obtxln

subsmuently, reveale * l- t a dozzn material mirep= œtations made by the SFf's counxk :ll of whichwem severely pojudicial to œ fen* t. Indeed, as cite Glow, the SEC even mislead the court a*ut thevelyjustiflction for the expcte pnv- ing:

SEC/Zinn: Now. Your Honor may be wonderinq why ve ISECI wanted to proceedex-parte. -......Iauer haa at least one pers/pa; account offshore that weereaware of. VAICA in set forth in Exhibjt 48. ('rRO Y xdl pue.#)

Puttingu e the kssue of whete an allege Ttolrshœe xrnuntH wouldjuVfy an ex parte heAn'ng, the m weSEC N nœiœ tle œ fmdant lM such a= unt was N ntly fnl-.'rhe bank acount cite in tho SEC'SefExhlblt 48* plainlydid not Glœg to œ fendant Such bman SEC mir c œi- would nG have survivean M v- rul h-elnp witb œ fM dnnt pa nt. Evm Ms. Caxns in herde- ltlon conflne iat:

P 103: Ms. Camns: '*...the t- fee ofthefunds, Jeo MeHale, & said to me fM / t*y neverfound Ay money oversees.... ''

4


Case 06-01469-.1K0 Doc 192 Filed 06/13/13 Page 5 of 29

very goM - qnn why Ameriœ jurisprudence grœtly disfavors expyte pmzvvvlings, as thef

fxquently resdt itt prejudice to tike exclude p-ies.

n e tranM ript will nlKn * helpful in answerinw amoag otitc , the following imx rtnnt

que ons related to R= iver's probable misconduct:

* W hat private and attomey-client privilege irzfonnation Y longing to Defendant wasunlawfully obfnined by M s. CArenA and delivexd for Receiver's use. n is is a veryimx - t considemtion as Re iver, by its ou admissions had sha d all of itq dixoverywith various U.S. gove= ent agencies, includlg the DepaM ent of Justice and theSœ urities and Exchange Commission. n us tlle signiscance of tbis infonnauon reaches wellY yond the instant llmcer Pnenership matter, or even the xceivership cases still m nding.

@ What actnnl court's authorigxtion R= iver hada if any, to sœ k and obtain W fervlnnt's

pdvate Sles, or hK k into W fendant's œ ails or .$fgol... zàmvg: hls ffaver'f osce z&/ &àY ln Westehester.... '' P126: Q: m Id * receiver o' any o/àtç representati- fellyov re thesev ea/: were com Fproved? A.'yes, absolutely. '' Sum ce it to say, if R= iver had noae orization for tlwx r0% violations of privx y, timn itm ay % appropriate for tbe œ urtsto apm int a s- ial pm seclztor to investigate Rcceiver*s b- f!n malfeasance. It should i)enote that dxleing the SEC'S litigatiow the cotmsel for the Commission hal 51ed a motion indisdct coud to obtnin nrr-ss to Ix fendo t's emsil a= tmt. However, Defertdant hadvigorously opm e the SEC'S motion to access Defendant's emm'ls atxl the SEC had thenwithdmwn tts m otiom N refore, tmless a c,0* authodzation to aœ ess cxnail: was grantedpurs- t to x me othcr exparte helm'ng, of wllich tlwm's no r= rdy them is no ma n to

G lieve that Recdver, or any other pazly, had court's m rm ission to hack into Defendant'scmail account, or seamh œ fendant's private oœ oe in W estchcstcr. or violatc Defendant'sprivacy in D y other mnnner. Indtxd, in regard to aor- s to Defendant's iphone, th* was ane rmative district order denying the govemment or any other party, a xarch the saidiphone.

* W llat lf any inenlctions Ru iver gave M s. Carcns to dnmage or in some msnner xhltageDefendant's litigation related elece nic fles. To lx clear, * . Ca ns not only %scopiedoDefendantgs computer fles e pm vided them to Reœ ivm but in a number of insA ces,M s. Csv s x hmlly either entirely trsnqfee or emY critiœ l elx tronic liles. n is ca.'œ

e itinnsl pxjudie to Defene t. as these Reœiver-inidated actions deprived m fendant ofhis litigaion critical material.

* W hy did the pumoe Decem/ r 16, 2009 exclude other pu ies to tb1'n litigationa incllvllngDefendqnts. lt certninly cannot % said that Defendant would have opN e gr-ncial support

for his ex smuse, and a custMian r ent of his thre youngest daughters. Defendot lladplee ed numerous times with the dlstrict court to modify the blnnket n- t H ze againstDefendant, to m rmit Defendant nrrz'.qs to suœ cient funds to supm h his fsmily (43.

(4) Wbile dise court in the SEC ca had ruled favorably as to tbe applpprie ness of such customaryrelief ( '* k &tç &ea shown :H Lauer H , or H r ea, tqfew #'> = ea ot*r '&za tA e wA/ec/ to /&auetkeae. /& Cov- z M ds it z/œoalâ/e nna necesao t-o releœe some ofthose ele/.ç for /& Dumose t?fsattsfv' faglmez''.# livinz exxxçe.e nW atto-rnev% fees. '' (SEC rœe; DE 108p.3j4, iltexplicably, tlw court hadfailed to mnke any practical accommMnfion to meet the ordor's ctxte.zl objxtive.

5



Revealingly. R= iver 1M vigom usly opm x'd O y relief to mrultfy' the asset H ze. Indeed, msdisdosed by M s. Camns, R= iver reprchensibly and cmelly used the nq- t fc ze to coerce and tocynie y msnipulate M s. Cv ns' collaM ration:

P1 15 Ms. Cn-ns: ''tRece* r wasl....trying to v a/l/afe myjînandal qelzaff/a * -â#u-aermining zzz

.p entire re/afloaâ'à: that I Jzzyz/wi/à him Jo lzer./ ''

Pl l l Ms. r.snmn: ... ''It izzzm been zzzzeoaacf/a/âld that < er nine .Je= tmd < er hls r'slaco ltful ..... tM t tAeze law ers repreaezlt/ng the recefwr œ e still able to v lerAoae calls to

>le * to tell me z/ get Aiç computer > # to get âfzA e.v and to gpe them fa/e- e a - tow& t âe iç doing. It fa uncoudonable. 4* it 1: absolutely not rlgk nnH ao dlrty in ever.p single

#/lf1?1plt)#*.....

P109 Ms. Caxns: ''.-.-nlghtmce /H the receiver H been able to do. It 's really beene rrï:le ''

* n y was the mntier of paying for Ms. Ca ns' collae ration adA ssed in the tcyCOU/ o'ber than the disd ct court? M er a11 it was the disd ct court that goze œ feM ant'snq.qets. and not the bnnG lptcy court Indeed, when œ fendnnt sotzg:t access to a smallN rtion of his frozen funds to pay for attomey's fees in his then v ding cn'm lnal

pro- ding, the judgq itï the cdminal pM ecdlng delegated the matter to lejudge thatpresided over the SEC nnqe, which imm sed the msset H ze. It appears on its faœ tbatReceiver had slyly skirted disd ct œ urt tiIM imw xxd altd maintained the asset geeza, whichis plainly im pro- r.

* W hat did the tcy CoM ae lnlly authoHa Receiverc nkstee to do dzm'ng the

alleged Decc W 16, 2û* heenp if anything? Althoul R= ivcr ip his Rtsmnse,sdectively and misle ingly suggests that B tcy Court might have authorizd

pam ents for Ms. Carems' apaM ent (....releasedmoneyjnm >-r 'apozen eaea topqv #orthe e f- - olïmxer'sformer > =e..> Ms. Carens had testiGed under oath tlmt sitc wasalxn given envelops full of z-mqb: @4: 4ç. . .-he &/G eJ me some c-/l. . ..p124: #z... I didreceivec-AN - a/'. #'.....pl52: .*....alIp- dme aa envelo- -...

n y is iere no court xcord of aay achxsl payments to M s. Cv ns? Given tlxat Ru lver Andfach.nlly ndmiflal that M s. Carens was paid sube ntial sllmn of money for ller collsboration,unless Receiver bnd paid M s. Carens A m his m rsonal funds, which is tmlikely, +en themln-d e should have appeared in œ urt rccords. Since they did not it K pears th1Re ver likely submieM A udulent exm nx Kcotmts for couh's appm val.

* W hy waq R= iver's investigator attempting to lmmrxnate a fu eral ofhcr? pl 17: ''Q.. ljzf* . wRl#tv/zl fReceiver's e ez/fg-zf actually Jllav&lwyw a credentlal or a âege that wouldJl- .ç' seem > #'& mll w- workingfor fe FBL correct '' ? A: Fea. 1 wtzç not .<l#.e what his ellr-Al/connectiou were. He wY a little b' i/ veiled with &': representations .... ''

11 eond- ion, for the ge r.%..qe shown ao ve, the Court should xlease to œ fendxntq the

tranxript of the pu> rted December 16, 20* expart pru eding.

Res- tfully submittc June l0. 20 b ae1 IAuer,pr/ se and Mm in Cm zynpro se



Certileate mf seM ee

W e hemby cerufy that a copy of iis motionfor tlw Liquidating Tnzstx , D Pi- r, LLP,

tb' * f une 2013.Fiorida 331310n lR o ,

ichae tauet pro se

was = 1 via U.S. M ail to Andrew n mny F.,sq., counsel200 South Bin yne Blvd., Suite 2500, M inmi,

A

z .*A.kf'

M ndin Gw ey,pro se

7


E xhibit D

14



# * wg * ** # *

+ .vz

ORDERED in the Southern District of Florida on July 11, 2013.

John K. Olson? JudgeUnlted States Bankruptcy Coud

UM TED STATES BANKRUPTCY COIJRT

SOUTIIERN DISTRICT OF FLORIDAFORT LAUDERDALE DIW SION

www.qsb.uscourtmEov

Chapter 1 lll1 re :

Lancer Partners, L.P.,

Debtor.l

Lancer Partners, L.P.,

Plaintiff,

Case No. 06-1 172l-BKC-JKO

Adv. Case No. 06-01469-.1K0

M ichael Lauer,

Defendant.

ORDER DENYING DEFENDANTS' M OTION TO RELEASE THE TRANSCRIPT OF

THE PURPORTED EX PARTE. TN-C/AFU DECEM BER 16. 2009, LANCERPARTNERS-RELATED COURT HEARING fECF No. 192)


Case 06-01469-2K0 D0c 193 Filed 07/12/13 Page 2 Of 2

THIS CAUSE came before the Court on June 13, 2013 as a result of Defendant M ichael

Lauer and interested party M artin Garvey'g M otion to Release the Transcript of the Purported Ex

Parte, In-camera December l 6. 2009. Lancer Partners-Related Coud Hearing (the d(Motion'').

See ECF No. 192. In the alternative, Defendants requested that the Court formally confirm that

no such meeting took place.

After conducting a diligent search of the catendar and hearing notes from December 16,

2009, the Court is able to confirm that a hearing was held in court and on the record for several

Applications for Compensation. However, none of the Court's records retlect any ex parte, in

camera hearing taking place. The Court similarly has no independent recollection of any ex

parte, in camera proceedings in this case, and it is the Court's practice to conduct no such

hearings. Accordingly, it is ORDERED that Defendants' Motion ECF No. l92 is DEM ED.

###

I'he Clerk 0./*//* Court is hereby directed to Jerve a copyofthis Order upon all interestedparties.


F

E xhibit E


Case 9:03-cv-80612-KAM Document 2796 Entered G1) FLSD Docket 01/17/2014 Page 1 of 8

UNITED STATES DISTRICT COURTSOUTHERN DISTM CT 0F FLORIDACASE NO. 03-80612-CIV-M ARRA

SECURITIES AND EXCHANGE COM M ISKON

Plaintiff,

MICHAEL LAUEKLANCER M ANAGEM ENT GROUP, LL SC andLANCER M ANAGEM ENT GROUP 1I, LLC,

Defendants,

and

LANCER OFFSHORE, INC.,LANCER PARTNERS, LP,OM NIFUND, LTD =Lspv, INC., and LSPV, LLC,

Relief Defendants.

/

RESPONSE TO DEFENDANT'S M OTION TO STRIKE OR, IN THEALTERNATIVE, DEFENDANT'S REPLY TO RECEIVER'S OPPOSITION TO H1STm RD M OTION TO VACATE THE JVDG-MENT AND DISG SS Tc COMPLAINT

M arty Steinberg, Court-Appointed Receiver of Lancer M anagement Group, LLC, et al.

(the 'sReceiver'), through undersigned counsel, Gles this Response to Defendant's Motion to

Strike or, in the Altemative, Defendant's Reply to Receiver's Opposition to his Third M otion to

Vacate the Judgment and Dismiss the Complaint, and in support thereof sotes as foliows;

IG LEVANT BACKGROUND

1 . On July 8, 2003, the Securities and Exchange Commission (the (ISEC'') filed a


Case 9:O3-cv-80612-KAM Document 2795 Entered on FLSD Docket 01/17/2014 Page 4 Of 8

Third Motion to Vacate the Judgment and/or Dismiss the Complaint on the Ground, Inter Alia,

that the SEC'S and the Court-Appointed Receiver's Joint Operation Against Lauer Violated

Separation of Powers and Due Process (DE 2740, the Sç-l-hird Motion to Vacate'').

On December 13, 2013, the Receiver fled the Response to the Third Motion to

Vacate (DE 2769, the LtResponse').

On December 27, 2013, Lauer, thzough his counsel, filed his M otion to Strike or,

in the alternative, Defendant's Reply to Receiver's Opposition to his Third M otion to Vacate the

Judgment and Dismiss the Complaint (DE 2781, the ttMotion to Strike and Rep1y'').

I2. In the M otion to Strike and Replys Lauer combines his reply in support of the

Third M otion to Vacate with a request that this Coul't strike the Receiver's Response, thus

necessitating that the Receiver respond to the portion seeking to skike the Receiver's Response.

ARGUM ENT

Lauer claims that the Response should be stricken because the Receiver is not authorized

to file motions in this Enforcement Proceeding, and that iitelven if he stands in the shoes of the

Lancer hedge funds, they are not parties, having been dismissed from the case.'' See M otion to

Stdke and Reply at 1. Lauer also asserts that the Responst should be stricken because it

ttobviously exceeds the pagt limits, since the Receiver has only one-and-a-half spaces between

lines.'' Id at 1-2. Lauer is incorrect.

First, Lauer is incorrect that the Receiver is not authorized to tsle motions, responses,

objections or other documents in the Enforcement Action. As discussed above, the Order

Appointing the Receiver, the Case M anagement Order, and the Order Granting M otion for

Clarifkation make clear that the Receiver is authorized to engage in these actions as necessary to

collect, administer and distribute the Receivership Entities assets before this Courq as well as

4


Document 2795 Entered On FLSD Docket 01/17/2014 Page 5 Of 8

Case 9:03-cv-80612-KAM

continue to litigate the various ancillary proceedings.

The Order Appointing Receiversàtes that the Receiver is ttauthorized,

Iegal actions, including the insunt proceeding, in which

empowered and

directed to defend, compromise or settle

Lancer, Lancer I1, Offshore, Omnifund, Offshore LSPV and Partners LSPV, or the Receiver is a

party . . .'' See Order Appointing Receiver at 3 and 6. The Case M anagement Order in turn sttes

that: t'lslpecificaliy, with the exception of the Aeccfver, no other ancillary party, including,

without limitation, invesvtors and creditors, may participate in discovery, the adjudication of

issues and/or trial on tbe merit-s in the SEC'S enforcement proceeding.'' See Case M anagement

Order at 4 (emphasis added). Thus, these initial appointing orders are clear as to the Receiver's

powers and duties in these cases, including the power to participate in discovery and the

adjudication of issues in the Enforcement Action. Moreover, after the entry of the Final Lauer

Judgmem and the Entities Judgment, this Court again made cltar that the Receiver would

continue to be permitted to participate in the Enforcement Action. See Order Granting M otion

for Clarifkation a't 4 (where the Court directed the Clerk to accept for filing any and a1l

subsequent pleadings, motions, objections, responses, applications or notices from the Receiver

in either the Pending Ancillary Proceedings or in the Enforcement Action). That is precisely

what the Receiver has done; he has filed responses in this Enforcement Action, just as thc Court

authorized. The pup oses for this authority is clear; the Receiver's interests in marshaling the

assets of the Receivership Entities and in protecting the interests of the innocent investors are

implicated by actions taken in this Enforcement Action.

Consistent with this objective, although the Receiver has not responded to everything that

Lauer has filed in this Enforcement Action, the Receiver has filed appropriate responses,

objections or other filings when the interests of the Receivership Entities have bten implicated.

5


case g:03-cv-80612-KAM Document 2795 Entered On FLSD Docket 01/17/2014 Page 6 Of 8

Lauer's numerous attempts to overmrn the Judgment (including through the Third Motion to

Vacate) directly afl-ect the Receiver's attempts to marshal and distribute assets for the benefk of

the innocent investors (in this case, Lauer's frozen assets that would be utilled to partially

satisfy the Judgment and subsequcntly be distributed to the innocent investors). Accordingly, the

Receiver is entitled to respond to the Third M otion to Vacate. lndeed, taking Lauer's position to

the absurd result for which he is advocating, the Receiver would have to file a motion to

intervene or for authority to t5le an amicus brief, or go through some other procedural hurdle,

every time that Lauer filed anything in the Enforcement Action that could adversely affect the

Receivership Entities or the Receiver's administration of the estates. This Court did not intend

this result as evidenced by the entry of the Receivership Order, thc Case M anagement Order, and

the Order Granting M otion for Clarifkation, as well as this Court's acceptance and review of the

' i the Enforcement Action during the history of that case.2Receiver s filings n

Lauer is also incorrect that the Response exceeds the page limitations becaust it contains

one-and-a-half spaces between lines. Rule 5.1(a)(4) of the Local Rules for the United Sutes

District Court for the Southern District of Florida states that documents filed with this Court

Gfshall have not less than one and one-half (1 %) spaces between lines-'' See Local Rule

3 Thus the Response complies with the Local Rules. The M otion to Strike and Reply,5.1(a)(4). ,

2 Given the clear language in tlze Orders discussed above, it is striking, but not surprising, that

Lauer contends that the Receiver does not have the power to file responses and objections in thiscase. It is also striking that he makes this argumcnt without any analysis of the clear directives

of these Orders.

3 Lauer is represented by counsel in this action. lndeed, the M otion to Stike and Reply was filed

by counsel. Yet, Lauer, through his lawyer, makes an argument about the page limit that is

directly contradicted by the Local Rules.

6


CERTIFICATE OF SERW CE

I HEREBY UERTIFY that on this 14th day of March, 2014, a 1ue and correct copy of the

foregoing has been sent by electronic atld tlrst-class mail to:

Christopher M artin, Esq.

Securities & Exchange Commission

#01 Brickell Avenue

Suite 1800

M inmi, FL 33 l31

M d

Juan C. Enjnmio, Esq.David Bane, Esq.

Hunton & W illinms

1 11 1 Brickell Avenue

Suite 2500

M iami, FL 33131

David M . DorsenAttorney for M ichael Lauer


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