SEC case response - partial: Four investors? H

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Defendants’ motion for a stay, pending the resolution of any related criminal proceedings [Docket No. 104], should be denied. Although Defendant David Foley has been indicted in a related criminal case, a stay is not needed to protect his Fifth Amendment privilege against self- incrimination. He already has chosen to assert that privilege in this case.

The SEC began its investigation into this matter in 2016, and issued numerous subpoenas for documents, to the Defendants in this case as well as to other parties. The SEC obtained and reviewed hundreds of thousands of pages of documents, including bank records, corporate records, trading records, emails and recorded telephone conversations which have been produced to the Defendants in discovery. The SEC also took sworn investigative testimony from several witnesses, including from Defendant Edward Liceaga.

Over the past ten months, the parties’ activities in this case have been limited somewhat, and delayed, due to restrictions imposed because of the global COVID-19 pandemic. However, fact discovery is nearly complete. Among other things, the SEC has obtained sworn declarations from a number of witnesses, including four investors and a records custodian.

In fact, David Foley asserted his Fifth Amendment privilege during the SEC’s investigation, and did so again during discovery in this civil case. He has never provided any investigative or deposition testimony. Instead, David Foley has stated his intent to continue asserting his Fifth Amendment privilege in any future testimonial proceedings.

By contrast, both Chavez and Liceaga, the other Defendants who have joined in the motion to stay, already have provided sworn testimony and discovery responses in connection with this case. Although Chavez did not testify (or assert his Fifth Amendment privilege) at any point during the SEC’s investigation, he has provided deposition testimony in this matter, has responded to interrogatories and requests for admission, and has answered the Complaint, all without asserting the Fifth Amendment. Similarly, Liceaga actually testified during the SEC’s investigation, without asserting a Fifth Amendment privilege.

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