updates on the Magna case: discovery expected to s
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updates on the Magna case: discovery expected to stretch on through summer. magna is hanging by a thread, and every extra hour of legal fees and tie up in court breathes new life for us. Settlement discussions have already begun, it's just a matter of how much of the axe they take. they're squirming under the new weight of the broadened case.
SEC finding new gounds for expert discovery.
February 8, 2021
By ECF
Hon. Loretta A. Preska
United States District Judge
United States District Court for the
Southern District of New York
Daniel Patrick Moynihan U.S. Courthouse
500 Pearl Street
New York, NY 10007
Re: SEC v. Joshua Sason, et al., 19 Civ. 1459 (LAP) (S.D.N.Y.)
Dear Judge Preska:
Plaintiff Securities and Exchange Commission (the “Commission”) and Defendant Marc
Manuel (“Manuel), Defendants Joshua Sason (“Sason”), Magna Management, LLC (“Magna”),
Magna Equities II, LLC (“Equities”), and MG Partners Ltd. (“MGP”) (collectively, Sason, Magna,
Equities and MGP are the “Magna Defendants”), and Defendants Kautilya Sharma (“Sharma”),
Perian Salviola (“Salviola”), and Pallas Holdings, LLC (“Pallas”) (collectively, the “Pallas
Defendants”) respectfully write, pursuant to the Court’s Order of February 1, 2021 (Dkt. No. 93), to
report on the status of this case. The parties jointly submit most of this status report but disagree as
to the timeline for completing discovery, discussed below in Section 4, and separately describe issues
that may require the Court’s intervention in Section 6.
(1) Existing Deadlines—None. The parties jointly proposed a case management plan
prior to the COVID-19 pandemic on March 9, 2020 (Dkt. No. 77), but no discovery schedule has
been set.
(2) Outstanding Motions—Although there are currently no motions pending in this
Court, Manuel has a motion sub judice in the Northern District of Ohio to obtain sentencing and plea
related material from the prosecution of Izak Zirk de Maison (“de Maison”). That motion has been
pending since August 19, 2020. Manuel’s position is that that material is critical to his defense of
this matter because it will bear on de Maison’s credibility.
(3) Status of Discovery
Fact Discovery
Document discovery among the parties is complete, except for the issues identified in
Section 6, below.
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 1 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 2
Deposition discovery is ongoing. The Commission has noticed five non-party depositions
and has taken three of those depositions. The Commission expects to conduct its fourth non-party
deposition later this week and is in the process of rescheduling its fifth non-party deposition given
the unavailability of certain defense counsel.1
The Commission intends to notice approximately five
additional depositions: the four individual Defendants and one additional non-party, de Maison,
who is incarcerated and is discussed more fully below in Section 6. The Commission may seek the
Court’s leave to take more than the ten depositions permitted as of right by Federal Rule of Civil
Procedure 30(a)(2)(A)(i), if the Commission cannot obtain the relevant information through
appropriate declarations or stipulations. Defendants reserve their rights to oppose such an
application if they believe appropriate.
Defendants have not noticed any depositions. Manuel and the Magna Defendants intend to
notice de Maison’s deposition and at least one additional non-party deposition. Manuel and the
Magna Defendants reserve the right to notice more depositions if appropriate including noticing
depositions of Commission counsel in this matter, if warranted, following de Maison’s deposition.2
The Pallas Defendants intend to notice five or six additional non-party depositions.
Expert Discovery
The Commission anticipates the need for expert discovery following the conclusion of fact
discovery concerning, among other potential topics, industry custom and practice concerning the
exemptions from securities registration that are applicable to this case. Manuel and the Magna
Defendants do not at this time see a need for expert testimony, but they reserve the right to oppose
the Commission’s request for expert discovery if they deem appropriate and to seek expert discovery
if they deem appropriate at the conclusion of fact discovery.
(4) Timeline for Completing Discovery
The Commission’s Position: Fact discovery should conclude by May 28, 2021, with the possible
exception of de Maison’s deposition, given his incarceration at Big Spring CI in Spring, Texas. Like
the Bureau of Prisons (“BOP”), The GEO Group, Inc., which operates Big Spring CI, has put in
place certain restrictions due to the COVID-19 pandemic and has informed Commission counsel
that it may not be able to accommodate the logistics of an in-person or videoconference deposition
of de Maison but would be able to accommodate a telephone deposition. Although the
Commission is amenable to taking this deposition by phone, the Commission understands that
Manuel and the Magna Defendants seek to depose de Maison in person. Contrary to Manuel and
the Magna Defendants’ suggestion, the Commission has no authority to “produce” de Maison for a
deposition; as Manuel and the Magna Defendants are aware, when the Commission has interviewed
de Maison separately from the Department of Justice (“DOJ”), it has traveled to the place or
District of his incarceration to do so. The Commission has asked the U.S. Attorney’s Office for the
Southern District of New York whether it would be possible for the DOJ to move de Maison to this
1
Issues related to this fifth non-party deposition are also discussed in Section 6, below.
2
The Commission intends to oppose any such depositions of Commission counsel, including
by moving for a protective order, if necessary.
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 2 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 3
District for his deposition and was advised that BOP is not likely to grant this request at this time
given the pandemic.
The Commission respectfully submits that the deadline for the completion of expert
discovery should be August 27, 2021, with interim deadlines for the exchange of primary expert
reports by June 25, 2021, and the exchange of rebuttal expert reports by July 23, 2021.
Manuel and the Magna Defendants’ Position: Manuel and the Magna Defendants do not believe
that fact discovery will conclude by May 28, 2021, given a) unresolved document discovery discussed
in Section 6, below, b) the current position of the Commission with respect to de Maison’s
deposition that is summarized by Manuel and the Magna Defendants below, c) an ongoing meet and
confer process relating to unresolved scope, subject matter and proportionality issues for party and
non-party depositions involving individuals who have already provided extensive document
discovery and sworn testimony to the Commission during its multi-year investigation, and d) the five
or six additional non-party depositions that the Pallas Defendants intend to notice for deposition.
With respect to the Pallas Defendants, we note that they have stated to the Commission that any
depositions of their clients “must be confined to the alleged Section 5 violation.” Manuel and the
Magna Defendants believe fact discovery should conclude by the end of July 2021 provided that, in
particular, the Commission produces de Maison for an in-person deposition.
Manuel and the Magna Defendants’ position is that de Maison is the critical witness in this
case for the Lustros transactions, there are numerous documents to question him about, and taking
a live deposition is essential to the defense of this action. Manuel has asked the Commission to
formally request that DOJ have de Maison moved to a location in New York for a live deposition as
the Commission has requested in the past.
The Commission has presented two positions that the Magna Defendants submit do not
clarify an actionable position of the Government with respect to the production of a federal prisoner
in a U.S. court on behalf of the Commission. The first indicates that the private contractor, The
GEO Group, Inc., which operates the facility where de Maison is incarcerated “may not be able to
accommodate the logistics of an in-person or videoconference deposition.” The second position,
which is sourced to DOJ, on behalf of BOP, states, “BOP is not likely to grant this request at this
time.” At this juncture, the Magna Defendants still do not know what formal request, if any, has
been referred by the Commission to the BOP regional office or the institution holding custody of de
Maison with respect to his production for an in-person deposition, in this jurisdiction, in the next
several months.
Manuel believes that if the Court supports this request, DOJ is more likely to respond
favorably. De Maison is the key witness in the Lustros part of this case, and without his testimony
the case cannot proceed to summary judgment. This case has now been pending for more than two
years and this delay has significantly harmed Manuel and the Magna Defendants through lost
employment opportunities and harm to reputation. Additional delays further compound this
material harm.
Subject to the forgoing, Manuel and the Magna Defendants believe it inappropriate to
contemplate expert discovery deadlines until there is a firm date for de Maison to be deposed in
person and fact discovery to end. Once that date is set, subject to the objections and reservations of
Manuel and the Magna Defendants set forth in Section 3, above, counsel for Manuel and the Magna
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 3 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 4
Defendants are willing to meet and confer with the Commission to set reasonable expert discovery
deadlines.
Pallas Defendants’ Position: Citing ongoing scheduling challenges and the probability of further
disruptions related to COVID-19, the Pallas Defendants would add a month to each of the
Commission’s proposed deadlines.
(5) Status of Settlement Discussions—The Commission has engaged in preliminary
settlement discussions with certain Defendants, but these discussions are not ongoing and are not
likely to be fruitful until at least the close of fact discovery. Counsel for Manuel and the Magna
Defendants believe that the live deposition of de Maison will assist in settlement discussions.
(6) Issues that May Require Court Intervention
Certain Party and Non-Party Depositions
The Commission’s Position: Counsel to Defendants Manuel and Sason have stated that they will
object to producing their clients for depositions without limitations on questioning—specifically,
that the Commission should not be permitted to ask questions about topics or issues that were the
subject of the investigative testimony they gave during the Commission’s underlying investigation.
The Magna Defendants’ counsel—who also represent a former employee of Magna who is not a
party to this action—has asserted the same position on that non-party’s behalf in response to the
Commission’s deposition notice. The Commission began to meet and confer with the Magna
Defendants’ counsel concerning this witness on December 29, 2020, but has had difficulty obtaining
prompt responses from the Magna Defendants’ counsel concerning both the substance and
scheduling of this deposition. The Commission’s position is that it will work in good faith with
counsel to the relevant witnesses (1) to identify examples of new areas and documents it plans to
cover in a deposition and (2) to discuss stipulations or declarations that may obviate the need to ask
certain questions at a deposition, but that it cannot agree to the types of topic-based limitations that
counsel to Manuel and the Magna Defendants have proposed. The parties will continue to meet and
confer concerning these issues but, if they cannot reach a resolution, intend to raise the disputes
with the Court.
Manuel and the Magna Defendants’ Position: The Commission misstates the position of the
Magna Defendants and the non-party identified above, which has been discussed in, at least, an allcounsel meet and confer call concerning depositions. In that call, the Commission advised all
Defendants that it would not discuss potential limitations on depositions generally in the meet and
confer call but rather would engage in separate, deposition meet and confers on a case-by-case basis.
Sason has not been the subject of a separate meet and confer call. Counsel for the Magna
Defendants and the non-party witness, however, are presently conferring with the Commission as to
its intent to depose the non-party witness. Counsel for the non-party witness have provided written
explanations of their position on behalf of the non-party witness on January 20, 2021, as well as
February 5, 2021, as well as participated in a meet and confer call on January 26, 2021, with the
Commission. The Commission advises that it will respond to the February 5, 2021, letter.
Broadly, Manuel and the Magna Defendants contend that the Federal Rules of Civil
Procedure, as amended, do not support the Commission’s belief that it is entitled to “reset” all
testimonial discovery and take unlimited depositions about the same topics, transactions and
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 4 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 5
documents that the Commission already had in its possession during its multi-year joint investigation
(including 10 proffers and one under oath deposition with key witness de Maison, as well as the
voluminous documents that have since been produced to Defendants in this matter) where it took
extensive, sworn testimony during seven-hour or more examinations concerning events and
transactions dating back to the fall of 2012. Manuel and the Magna Defendants have agreed to
depositions regarding new areas of questioning, have asked the Commission to disclose the
additional topics and/or documents it wishes to cover, and counsel for the Magna Defendants, who
are also counsel for a third party witness, have initiated an extensive meet and confer process
intended to narrow and expedite fact discovery in a manner that is proportional to the
Commission’s needs and considerate of the resource and financial burden that taking additional
sworn testimony has on party and non-party deponents. Although this meet and confer process
continues, the Commission has refused to narrow its topics, and contends that it can revisit areas it
already covered with no limitation. No such discussions have commenced with counsel for Manuel.
The parties will meet and confer concerning these issues but, if they cannot reach a resolution,
intend to raise the disputes with the Court.
The Pallas Defendants’ Position: Defendants Salviola and Sharma maintain that their
depositions must be limited to the single remaining claim against them: the alleged Section 5
violation. The parties will continue to discuss the appropriate scope of the examinations and raise
any disputes with the Court.
Privilege Assertions by the Pallas Defendants
Counsel for Defendant Sharma recently informed the Commission that Sharma’s document
production to the Commission during its investigation—a document production Sharma’s former
counsel made approximately two and a half years ago—contained at least 20 privileged documents.
The Commission has segregated these documents from its document review database related to this
litigation and it has requested information about the steps, if any, taken by Sharma to preserve the
privilege, as well as a privilege log from each of the Pallas Defendants. The Commission will meet
and confer with counsel to the Pallas Defendants after receiving this information and these privilege
logs and may seek to compel production of some of these documents.
The Commission’s Document Production
The Commission’s Position: On the evening of February 2, 2021, Defendant Manuel raised, for
the first time, an alleged deficiency in the Commission’s response to one of Manuel’s document
requests. The request sought the Commission’s communications with subdivisions of DOJ that may
have participated in prior parallel criminal investigations touching on certain conduct at issue in this
Commission action. In its responses, the Commission advised Manuel that it had already produced
non-privileged documents responsive to this new request and then asserted various objections to the
request as drafted. The Commission and Manuel will meet and confer on this issue.
Manuel and the Magna Defendants’ Position: Defendant Manuel has raised numerous concerns to
the Commission in regards to ongoing discovery resulting in considerable time and expense to
Manuel as highlighted by the Commission’s two letters to the Court and recently raised an alleged
deficiency in the Commission’s response to one of Manuel’s document requests, as well as a
potential gap in the Commission’s document production. The reference above to an issue being
raised on February 2 requires context—Manuel has had to go back to the Commission numerous
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 5 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 6
times to request material that should have been produced earlier. Most recently, the Commission
refused to produce documents, claiming that they had not been requested previously. Rather than
go back and forth on the issue, Manuel issued another document demand. The Commission
responded on January 15, which promoted counsel, upon further review of the issue on February 2
after receipt of this Court’s order, to raise deficiencies with the response. The request sought the
Commission’s relevant communications with subdivisions of DOJ that may have jointly participated
in prior parallel criminal investigations touching on relevant aspects of this matter. The Commission
refused to produce these documents, asserting objections based on law enforcement privilege,
timeliness, undue burden, and proportionality grounds. Those communications may contain
additional relevant facts which should be disclosed to the defense. The Commission and Manuel
will meet and confer on this issue.
Respectfully submitted,
/s/ Lee A. Greenwood
Lee A. Greenwood
Senior Trial Counsel
cc: All counsel of record by ECF
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 6 of 6
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
-againstJOSHUA SASON, et al.,
Defendants.
No. 19-CV-1459 (LAP)
ORDER
LORETTA A. PRESKA, UNITED STATES DISTRICT JUDGE:
Counsel shall provide the Court with the details of Izak
Zirk de Maison’s incarceration, including the name and address
of the institution where he is being held, his inmate number,
the name of the Warden, etc., so that the Court can request that
he be made available for an in-person deposition.
SO ORDERED.
Dated: February 9, 2021
New York, New York
___________________________
LORETTA A. PRESKA, U.S.D.J.
Case 1:19-cv-01459-LAP Document 95 Filed 02/09/21 Page 1 of 1
SEC finding new gounds for expert discovery.
February 8, 2021
By ECF
Hon. Loretta A. Preska
United States District Judge
United States District Court for the
Southern District of New York
Daniel Patrick Moynihan U.S. Courthouse
500 Pearl Street
New York, NY 10007
Re: SEC v. Joshua Sason, et al., 19 Civ. 1459 (LAP) (S.D.N.Y.)
Dear Judge Preska:
Plaintiff Securities and Exchange Commission (the “Commission”) and Defendant Marc
Manuel (“Manuel), Defendants Joshua Sason (“Sason”), Magna Management, LLC (“Magna”),
Magna Equities II, LLC (“Equities”), and MG Partners Ltd. (“MGP”) (collectively, Sason, Magna,
Equities and MGP are the “Magna Defendants”), and Defendants Kautilya Sharma (“Sharma”),
Perian Salviola (“Salviola”), and Pallas Holdings, LLC (“Pallas”) (collectively, the “Pallas
Defendants”) respectfully write, pursuant to the Court’s Order of February 1, 2021 (Dkt. No. 93), to
report on the status of this case. The parties jointly submit most of this status report but disagree as
to the timeline for completing discovery, discussed below in Section 4, and separately describe issues
that may require the Court’s intervention in Section 6.
(1) Existing Deadlines—None. The parties jointly proposed a case management plan
prior to the COVID-19 pandemic on March 9, 2020 (Dkt. No. 77), but no discovery schedule has
been set.
(2) Outstanding Motions—Although there are currently no motions pending in this
Court, Manuel has a motion sub judice in the Northern District of Ohio to obtain sentencing and plea
related material from the prosecution of Izak Zirk de Maison (“de Maison”). That motion has been
pending since August 19, 2020. Manuel’s position is that that material is critical to his defense of
this matter because it will bear on de Maison’s credibility.
(3) Status of Discovery
Fact Discovery
Document discovery among the parties is complete, except for the issues identified in
Section 6, below.
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 1 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 2
Deposition discovery is ongoing. The Commission has noticed five non-party depositions
and has taken three of those depositions. The Commission expects to conduct its fourth non-party
deposition later this week and is in the process of rescheduling its fifth non-party deposition given
the unavailability of certain defense counsel.1
The Commission intends to notice approximately five
additional depositions: the four individual Defendants and one additional non-party, de Maison,
who is incarcerated and is discussed more fully below in Section 6. The Commission may seek the
Court’s leave to take more than the ten depositions permitted as of right by Federal Rule of Civil
Procedure 30(a)(2)(A)(i), if the Commission cannot obtain the relevant information through
appropriate declarations or stipulations. Defendants reserve their rights to oppose such an
application if they believe appropriate.
Defendants have not noticed any depositions. Manuel and the Magna Defendants intend to
notice de Maison’s deposition and at least one additional non-party deposition. Manuel and the
Magna Defendants reserve the right to notice more depositions if appropriate including noticing
depositions of Commission counsel in this matter, if warranted, following de Maison’s deposition.2
The Pallas Defendants intend to notice five or six additional non-party depositions.
Expert Discovery
The Commission anticipates the need for expert discovery following the conclusion of fact
discovery concerning, among other potential topics, industry custom and practice concerning the
exemptions from securities registration that are applicable to this case. Manuel and the Magna
Defendants do not at this time see a need for expert testimony, but they reserve the right to oppose
the Commission’s request for expert discovery if they deem appropriate and to seek expert discovery
if they deem appropriate at the conclusion of fact discovery.
(4) Timeline for Completing Discovery
The Commission’s Position: Fact discovery should conclude by May 28, 2021, with the possible
exception of de Maison’s deposition, given his incarceration at Big Spring CI in Spring, Texas. Like
the Bureau of Prisons (“BOP”), The GEO Group, Inc., which operates Big Spring CI, has put in
place certain restrictions due to the COVID-19 pandemic and has informed Commission counsel
that it may not be able to accommodate the logistics of an in-person or videoconference deposition
of de Maison but would be able to accommodate a telephone deposition. Although the
Commission is amenable to taking this deposition by phone, the Commission understands that
Manuel and the Magna Defendants seek to depose de Maison in person. Contrary to Manuel and
the Magna Defendants’ suggestion, the Commission has no authority to “produce” de Maison for a
deposition; as Manuel and the Magna Defendants are aware, when the Commission has interviewed
de Maison separately from the Department of Justice (“DOJ”), it has traveled to the place or
District of his incarceration to do so. The Commission has asked the U.S. Attorney’s Office for the
Southern District of New York whether it would be possible for the DOJ to move de Maison to this
1
Issues related to this fifth non-party deposition are also discussed in Section 6, below.
2
The Commission intends to oppose any such depositions of Commission counsel, including
by moving for a protective order, if necessary.
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 2 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 3
District for his deposition and was advised that BOP is not likely to grant this request at this time
given the pandemic.
The Commission respectfully submits that the deadline for the completion of expert
discovery should be August 27, 2021, with interim deadlines for the exchange of primary expert
reports by June 25, 2021, and the exchange of rebuttal expert reports by July 23, 2021.
Manuel and the Magna Defendants’ Position: Manuel and the Magna Defendants do not believe
that fact discovery will conclude by May 28, 2021, given a) unresolved document discovery discussed
in Section 6, below, b) the current position of the Commission with respect to de Maison’s
deposition that is summarized by Manuel and the Magna Defendants below, c) an ongoing meet and
confer process relating to unresolved scope, subject matter and proportionality issues for party and
non-party depositions involving individuals who have already provided extensive document
discovery and sworn testimony to the Commission during its multi-year investigation, and d) the five
or six additional non-party depositions that the Pallas Defendants intend to notice for deposition.
With respect to the Pallas Defendants, we note that they have stated to the Commission that any
depositions of their clients “must be confined to the alleged Section 5 violation.” Manuel and the
Magna Defendants believe fact discovery should conclude by the end of July 2021 provided that, in
particular, the Commission produces de Maison for an in-person deposition.
Manuel and the Magna Defendants’ position is that de Maison is the critical witness in this
case for the Lustros transactions, there are numerous documents to question him about, and taking
a live deposition is essential to the defense of this action. Manuel has asked the Commission to
formally request that DOJ have de Maison moved to a location in New York for a live deposition as
the Commission has requested in the past.
The Commission has presented two positions that the Magna Defendants submit do not
clarify an actionable position of the Government with respect to the production of a federal prisoner
in a U.S. court on behalf of the Commission. The first indicates that the private contractor, The
GEO Group, Inc., which operates the facility where de Maison is incarcerated “may not be able to
accommodate the logistics of an in-person or videoconference deposition.” The second position,
which is sourced to DOJ, on behalf of BOP, states, “BOP is not likely to grant this request at this
time.” At this juncture, the Magna Defendants still do not know what formal request, if any, has
been referred by the Commission to the BOP regional office or the institution holding custody of de
Maison with respect to his production for an in-person deposition, in this jurisdiction, in the next
several months.
Manuel believes that if the Court supports this request, DOJ is more likely to respond
favorably. De Maison is the key witness in the Lustros part of this case, and without his testimony
the case cannot proceed to summary judgment. This case has now been pending for more than two
years and this delay has significantly harmed Manuel and the Magna Defendants through lost
employment opportunities and harm to reputation. Additional delays further compound this
material harm.
Subject to the forgoing, Manuel and the Magna Defendants believe it inappropriate to
contemplate expert discovery deadlines until there is a firm date for de Maison to be deposed in
person and fact discovery to end. Once that date is set, subject to the objections and reservations of
Manuel and the Magna Defendants set forth in Section 3, above, counsel for Manuel and the Magna
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 3 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 4
Defendants are willing to meet and confer with the Commission to set reasonable expert discovery
deadlines.
Pallas Defendants’ Position: Citing ongoing scheduling challenges and the probability of further
disruptions related to COVID-19, the Pallas Defendants would add a month to each of the
Commission’s proposed deadlines.
(5) Status of Settlement Discussions—The Commission has engaged in preliminary
settlement discussions with certain Defendants, but these discussions are not ongoing and are not
likely to be fruitful until at least the close of fact discovery. Counsel for Manuel and the Magna
Defendants believe that the live deposition of de Maison will assist in settlement discussions.
(6) Issues that May Require Court Intervention
Certain Party and Non-Party Depositions
The Commission’s Position: Counsel to Defendants Manuel and Sason have stated that they will
object to producing their clients for depositions without limitations on questioning—specifically,
that the Commission should not be permitted to ask questions about topics or issues that were the
subject of the investigative testimony they gave during the Commission’s underlying investigation.
The Magna Defendants’ counsel—who also represent a former employee of Magna who is not a
party to this action—has asserted the same position on that non-party’s behalf in response to the
Commission’s deposition notice. The Commission began to meet and confer with the Magna
Defendants’ counsel concerning this witness on December 29, 2020, but has had difficulty obtaining
prompt responses from the Magna Defendants’ counsel concerning both the substance and
scheduling of this deposition. The Commission’s position is that it will work in good faith with
counsel to the relevant witnesses (1) to identify examples of new areas and documents it plans to
cover in a deposition and (2) to discuss stipulations or declarations that may obviate the need to ask
certain questions at a deposition, but that it cannot agree to the types of topic-based limitations that
counsel to Manuel and the Magna Defendants have proposed. The parties will continue to meet and
confer concerning these issues but, if they cannot reach a resolution, intend to raise the disputes
with the Court.
Manuel and the Magna Defendants’ Position: The Commission misstates the position of the
Magna Defendants and the non-party identified above, which has been discussed in, at least, an allcounsel meet and confer call concerning depositions. In that call, the Commission advised all
Defendants that it would not discuss potential limitations on depositions generally in the meet and
confer call but rather would engage in separate, deposition meet and confers on a case-by-case basis.
Sason has not been the subject of a separate meet and confer call. Counsel for the Magna
Defendants and the non-party witness, however, are presently conferring with the Commission as to
its intent to depose the non-party witness. Counsel for the non-party witness have provided written
explanations of their position on behalf of the non-party witness on January 20, 2021, as well as
February 5, 2021, as well as participated in a meet and confer call on January 26, 2021, with the
Commission. The Commission advises that it will respond to the February 5, 2021, letter.
Broadly, Manuel and the Magna Defendants contend that the Federal Rules of Civil
Procedure, as amended, do not support the Commission’s belief that it is entitled to “reset” all
testimonial discovery and take unlimited depositions about the same topics, transactions and
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 4 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 5
documents that the Commission already had in its possession during its multi-year joint investigation
(including 10 proffers and one under oath deposition with key witness de Maison, as well as the
voluminous documents that have since been produced to Defendants in this matter) where it took
extensive, sworn testimony during seven-hour or more examinations concerning events and
transactions dating back to the fall of 2012. Manuel and the Magna Defendants have agreed to
depositions regarding new areas of questioning, have asked the Commission to disclose the
additional topics and/or documents it wishes to cover, and counsel for the Magna Defendants, who
are also counsel for a third party witness, have initiated an extensive meet and confer process
intended to narrow and expedite fact discovery in a manner that is proportional to the
Commission’s needs and considerate of the resource and financial burden that taking additional
sworn testimony has on party and non-party deponents. Although this meet and confer process
continues, the Commission has refused to narrow its topics, and contends that it can revisit areas it
already covered with no limitation. No such discussions have commenced with counsel for Manuel.
The parties will meet and confer concerning these issues but, if they cannot reach a resolution,
intend to raise the disputes with the Court.
The Pallas Defendants’ Position: Defendants Salviola and Sharma maintain that their
depositions must be limited to the single remaining claim against them: the alleged Section 5
violation. The parties will continue to discuss the appropriate scope of the examinations and raise
any disputes with the Court.
Privilege Assertions by the Pallas Defendants
Counsel for Defendant Sharma recently informed the Commission that Sharma’s document
production to the Commission during its investigation—a document production Sharma’s former
counsel made approximately two and a half years ago—contained at least 20 privileged documents.
The Commission has segregated these documents from its document review database related to this
litigation and it has requested information about the steps, if any, taken by Sharma to preserve the
privilege, as well as a privilege log from each of the Pallas Defendants. The Commission will meet
and confer with counsel to the Pallas Defendants after receiving this information and these privilege
logs and may seek to compel production of some of these documents.
The Commission’s Document Production
The Commission’s Position: On the evening of February 2, 2021, Defendant Manuel raised, for
the first time, an alleged deficiency in the Commission’s response to one of Manuel’s document
requests. The request sought the Commission’s communications with subdivisions of DOJ that may
have participated in prior parallel criminal investigations touching on certain conduct at issue in this
Commission action. In its responses, the Commission advised Manuel that it had already produced
non-privileged documents responsive to this new request and then asserted various objections to the
request as drafted. The Commission and Manuel will meet and confer on this issue.
Manuel and the Magna Defendants’ Position: Defendant Manuel has raised numerous concerns to
the Commission in regards to ongoing discovery resulting in considerable time and expense to
Manuel as highlighted by the Commission’s two letters to the Court and recently raised an alleged
deficiency in the Commission’s response to one of Manuel’s document requests, as well as a
potential gap in the Commission’s document production. The reference above to an issue being
raised on February 2 requires context—Manuel has had to go back to the Commission numerous
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 5 of 6
Hon. Loretta A. Preska
February 8, 2021
Page 6
times to request material that should have been produced earlier. Most recently, the Commission
refused to produce documents, claiming that they had not been requested previously. Rather than
go back and forth on the issue, Manuel issued another document demand. The Commission
responded on January 15, which promoted counsel, upon further review of the issue on February 2
after receipt of this Court’s order, to raise deficiencies with the response. The request sought the
Commission’s relevant communications with subdivisions of DOJ that may have jointly participated
in prior parallel criminal investigations touching on relevant aspects of this matter. The Commission
refused to produce these documents, asserting objections based on law enforcement privilege,
timeliness, undue burden, and proportionality grounds. Those communications may contain
additional relevant facts which should be disclosed to the defense. The Commission and Manuel
will meet and confer on this issue.
Respectfully submitted,
/s/ Lee A. Greenwood
Lee A. Greenwood
Senior Trial Counsel
cc: All counsel of record by ECF
Case 1:19-cv-01459-LAP Document 94 Filed 02/08/21 Page 6 of 6
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
-againstJOSHUA SASON, et al.,
Defendants.
No. 19-CV-1459 (LAP)
ORDER
LORETTA A. PRESKA, UNITED STATES DISTRICT JUDGE:
Counsel shall provide the Court with the details of Izak
Zirk de Maison’s incarceration, including the name and address
of the institution where he is being held, his inmate number,
the name of the Warden, etc., so that the Court can request that
he be made available for an in-person deposition.
SO ORDERED.
Dated: February 9, 2021
New York, New York
___________________________
LORETTA A. PRESKA, U.S.D.J.
Case 1:19-cv-01459-LAP Document 95 Filed 02/09/21 Page 1 of 1
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