Sec. & Exch. Comm'n v. Durham
| Decision Date | 26 February 2019 |
| Docket Number | No. 1:11-cv-00370-JMS-TAB,1:11-cv-00370-JMS-TAB |
| Parties | SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Timothy S. DURHAM, James F. Cochran, Defendants. United States of America, Intervenor. |
| Court | U.S. District Court — Southern District of Indiana |
Jennifer Chun Barry, Scott Alexander Thompson, U.S. Securities and Exchange Commission, Philadelphia, PA, for Plaintiff.
Timothy S. Durham, Pine Knot, KY, pro se.
James F. Cochran, Lexington, KY, pro se.
Nearly seven years ago, a jury found Defendant James Cochran guilty of wire fraud, securities fraud, and conspiracy to commit wire and securities fraud. Mr. Cochran has since exhausted his criminal appellate rights, and the Court reopened this parallel civil proceeding brought by the Securities and Exchange Commission (the "Commission") in 2016.1
On November 1, 2018, the Commission filed a Motion for Summary Judgment, [Filing No. 131 ], to which Mr. Cochran did not respond. That Motion is now ripe for the Court's review.
A motion for summary judgment asks the Court to find that a trial is unnecessary because there is no genuine dispute as to any material fact and, instead, the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). As the current version of Rule 56 makes clear, whether a party asserts that a fact is undisputed or genuinely disputed, the party must support the asserted fact by citing to particular parts of the record, including depositions, documents, or affidavits. Fed. R. Civ. P. 56(c)(1)(A). A party can also support a fact by showing that the materials cited do not establish the absence or presence of a genuine dispute or that the adverse party cannot produce admissible evidence to support the fact. Fed. R. Civ. P. 56(c)(1)(B). Affidavits or declarations must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on matters stated. Fed. R. Civ. P. 56(c)(4). Failure to properly support a fact in opposition to a movant's factual assertion can result in the movant's fact being considered undisputed, and potentially in the grant of summary judgment. Fed. R. Civ. P. 56(e).
In deciding a motion for summary judgment, the Court need only consider disputed facts that are material to the decision. A disputed fact is material if it might affect the outcome of the suit under the governing law. Hampton v. Ford Motor Co. , 561 F.3d 709, 713 (7th Cir. 2009). In other words, while there may be facts that are in dispute, summary judgment is appropriate if those facts are not outcome determinative.
Harper v. Vigilant Ins. Co. , 433 F.3d 521, 525 (7th Cir. 2005). Fact disputes that are irrelevant to the legal question will not be considered. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
On summary judgment, a party must show the Court what evidence it has that would convince a trier of fact to accept its version of the events. Johnson v. Cambridge Indus. , 325 F.3d 892, 901 (7th Cir. 2003). The moving party is entitled to summary judgment if no reasonable fact-finder could return a verdict for the non-moving party. Nelson v. Miller , 570 F.3d 868, 875 (7th Cir. 2009). The Court views the record in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Darst v. Interstate Brands Corp. , 512 F.3d 903, 907 (7th Cir. 2008). It cannot weigh evidence or make credibility determinations on summary judgment because those tasks are left to the fact-finder. O'Leary v. Accretive Health, Inc. , 657 F.3d 625, 630 (7th Cir. 2011). The Court need only consider the cited materials, Fed. R. Civ. P. 56(c)(3), and the Seventh Circuit Court of Appeals has "repeatedly assured the district courts that they are not required to scour every inch of the record for evidence that is potentially relevant to the summary judgment motion before them," Johnson , 325 F.3d at 898. Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Ponsetti v. GE Pension Plan , 614 F.3d 684, 691 (7th Cir. 2010).
As set forth by the Seventh Circuit Court of Appeals in its decision affirming Mr. Cochran's criminal conviction, this case involves Mr. Cochran's dealings with Fair Finance Company ("Fair"). United States v. Durham , 766 F.3d 672, 675-76 (7th Cir. 2014). As the Seventh Circuit explained, "Timothy Durham and James Cochran bought the business in 2001 through a holding company formed for that purpose and named Fair Holdings, Inc. Durham was its CEO, Cochran was its COO and chairman of the board." Id. at 676.
On June 20, 2012, a jury found Mr. Cochran guilty of conspiracy to commit wire fraud and securities fraud, securities fraud, and six counts of wire fraud. See Jury Verdict, U.S. v. Durham, et al. , No. 1:11-cr-42-JMS (SD Ind. June 22, 2012), ECF No. 354. Thereafter, Mr. Cochran was sentenced to 25 years of imprisonment and the Court imposed criminal restitution in the amount of $ 202,830,082.27. See Entry for November 30, 2012, U.S. v. Durham, et al. , No. 1:11-cr-42-JMS (SD Ind. December 5, 2012), ECF No. 444. Upon entry of judgment, the Court directed that restitution be paid to payees listed on a 115-page spreadsheet that was attached to the judgment. See List of Payees, U.S. v. Durham, et al. , No. 1:11-cr-42-JMS (SD Ind. December 10, 2012), ECF No. 450-1.
On September 4, 2014, the Seventh Circuit Court of Appeals affirmed Mr. Cochran's conviction, and denied rehearing on March 10, 2015. See Mandate of the USCA, U.S. v. Durham, et al. , No. 1:11-cr-42-JMS (SD Ind. March 18, 2015), ECF No. 537.
Throughout the pendency of the criminal case, including the appeal, this parallel civil action, which was filed on March 16, 2011, was stayed. On June 8, 2016, the Court ordered the civil case reopened. [Filing No. 39.] The substance of this action involves allegations that Mr. Cochran committed civil violations of the Securities and Exchange Acts of 1933 and 1934 (collectively, the "Securities Acts"), in particular, Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5 thereunder. [Filing No. 1 at 26-27.] The Commission requested that the Court: (1) issue an injunction permanently restraining and enjoining Mr. Cochran from violating Sections 17(a) and 10(b) and Rule 10b-5; (2) order Mr. Cochran to disgorge all ill-gotten gains derived from his unlawful activities with prejudgment interest; (3) order Mr. Cochran to pay civil penalties pursuant to the Securities Acts; and (4) prohibit Mr. Cochran from acting as an officer or director pursuant to the Securities Acts. [Filing No. 1 at 28-29.]
On January 26, 2017, the Commission moved for summary judgment on its claims against Mr. Cochran and Mr. Durham. [Filing No. 68.] On July 13, 2017, in lieu of a response to the Commission's Motion for Summary Judgment, Mr. Cochran informed the Court that he "desired" to settle the matter with the Commission. [Filing No. 79.] On August 18, 2017, the Court ruled on the Commission's Motion for Summary Judgment, but only as it related to the Commission's claims against Mr. Durham. [Filing No. 86.] With regard to Mr. Cochran, the Court stated that "the Magistrate Judge assigned to this case has been asked to convene a conference to attempt to resolve the claims against Mr. Cochran" and that the Court's Order "only relates to the Commission's claims against Mr. Durham." [Filing No. 86 at n.2.]
On December 14, 2017, the Commission advised that it had not yet reached a settlement agreement with Mr. Cochran. [Filing No. 97.] Five days later, Mr. Cochran filed a document with the Court in which he argued that the Commission had relied upon inadmissible hearsay in pursuing its claims against him and that, in attempting to settle the matter, the Commission was "trying to get one over on" him. [Filing No. 99 at 4.] Following additional settlement efforts before the Magistrate Judge, on February 26, 2018, Mr. Cochran filed a document with the Court in which he questioned the $ 183 million disgorgement amount sought by the Commission in its previous Motion for Summary Judgment and proposed a new disgorgement amount of approximately $ 24.5 million. [Filing No. 108.]
On April 13, 2018, the Commission filed a Motion to Determine Disgorgement with regard to Mr. Durham, in which it advised the Court that it expected an imminent settlement with Mr. Cochran. [Filing No. 111 at 2 n.1.] Despite the fact that this Motion did not pertain to him, Mr. Cochran filed a response to the Commission's Motion, in which he again proposed a disgorgement amount of $ 24.5 million. [Filing No. 113 at 5.] On June 29, 2018, the Court ruled on the Commission's Motion as it related to Mr. Durham, and specifically stated that the Order did not apply to Mr. Cochran. [Filing No. 118 at 1 n.2.] Days later, the Court noted that Mr. Cochran and the Commission were still in settlement negotiations, and denied Mr. Cochran's motion concerning disgorgement as premature, but without prejudice should settlement not be achieved. [Filing No. 119 at 1.]
What followed were numerous updates from the Commission regarding the status of...
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...within the confines of the default judgment standard, the amount of disgorgement in this case is ascertainable with certainty. Durham, 370 F.Supp.3d at 964 (“[T]he Commission has provided the Court with enough detail to support a reasonable approximation of ill-gotten gains.”). Liu teaches ......