Despite having summary judgement granted against him, Steve Chen is still fighting the SEC in court.

The SEC allege Steve Chen’s USFIA was ‘
a massive pyramid scheme that defrauded myriad investors
‘. Following Judge Klausner’s
summary judgement ruling
, this is no longer a point of contention.

Rather Chen is challenging the SEC how much monetary relief he should pay.

Chen (right) is arguing that he’s entitled to a jury trial to determine awarded monetary relief. Monetary relief includes disgorgement, prejudgment interest and/or a civil penalty.

The SEC argue

the law in the Ninth Circuit and elsewhere is clear that the issue of monetary relief in SEC enforcement actions is to be determined by the court, not a jury.

A jury does not decide these issues, and so there are no triable issues remaining in this case for a jury to hear.

As per cited case-law,

the disgorgement amount should be the “total proceeds” raised by the defendants in the offering, including offering proceeds received by entities owned or controlled by the defendants, minus amounts defendants returned to investors.

The process sees the SEC estimate the total proceeds (based on collected evidence), with the defendant then able t challenge the amount (with their own evidence).

The problem for Chen is that he’s previously asserted his Fifth Amendment right.

Chen should be barred from offering any affirmative evidence contesting the SEC’s disgorgement figure, as calculated by the court-appointed receiver, based on the fact that he asserted his Fifth Amendment right against self-incrimination in refusing to comply with the Court ordered accounting, and continued to assert his Fifth Amendment rights in response to every substantive question at his deposition.

The SEC claim Chen’s ‘ability to challenge the SEC’s evidence’ is limited to the extent a jury trial is not necessary.

With respect to penalties;

the Court’s findings on summary judgment will likely play a key role in determining the appropriate penalty level and amount.

By way of example, the Court found that Chen

(1) ran USFIA as a fraudulent pyramid scheme;

(2) defrauded investors by failing to advise them that the pyramid scheme was destined to collapse;

(3) made five material misrepresentations to investors in connection with the sale of the securities;

(4) misused investor funds to fund a lifestyle that included multiple million-dollar mansions and luxury automobiles for him and his family;

(5) acted with a high degree of scienter;

(6) orchestrated the pyramid scheme over many years; and

(7) showed no recognition of wrongdoing and no assurance against future violations.

These now undisputed facts all weigh in favor of sizable penalties.

To be honest I’m not really sure why Chen wants this to go to jury trial. From the sounds of it he’s not going to able to get up and deliver a sob story to the jurors, so why bother?

If anything a jury trial, in light of the damning evidence against Chen, could potentia

🤖 Quick Answer

What is Steve Chen disputing with the SEC after the summary judgment ruling?
Following the court's confirmation that USFIA was a pyramid scheme, Chen is contesting the amount of monetary relief he must pay, including disgorgement, prejudgment interest, and civil penalties. He argues for a jury trial to determine these damages, while the SEC maintains courts should decide such matters.

What is the SEC's position regarding monetary relief determination in enforcement actions?
The SEC contends that established Ninth Circuit law clearly establishes that courts, not juries, determine monetary relief in SEC enforcement actions. This includes disgorgement and civil penalties, leaving no triable issues for jury consideration in this matter.

🔗 Related Articles

- Receiver: No indication USFIA’s GemCoin was legitimate
- OneCoin try to extort German cryptocurrency blogger
- Talk Fusion terminate top ranked affiliates, lawsuit filed
- BidForMyMeds threaten legal action over review
- Traffic Monsoon flat sell-off prompts Hague Convention request