SEC v. Voight ( 2023 )

Case: 21-20511 Document: 00516635934 Page: 1 Date Filed: 02/06/2023
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
February 6, 2023
No. 21-20511
Lyle W. Cayce
Clerk
Securities and Exchange Commission,
Plaintiff—Appellee,
versus
Frederick Alan Voight; Daystar Funding, L.P.; F.A.
Voight & Associates, L.P., Relief Defendant; Rhine Partners,
L.P., Relief Defendant; Topside Partners, L.P., Relief Defendant,
Defendants—Appellants.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:15-CV-2218
Before Elrod, Haynes, and Willett, Circuit Judges.
Per Curiam:*
The Securities and Exchange Commission brought civil enforcement
proceedings against Appellant Frederick Alan Voight for the latter’s role in
Ponzi schemes that defrauded investors of tens of millions dollars. Voight
challenges the legality of the remedies ordered by the district court, and the
sufficiency of the process he received in connection with the district court’s
*
This opinion is not designated for publication. See 5th Cir. R. 47.5.
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No. 21-20511
consideration of the SEC’s remedies motion. But the issues he presents are
either foreclosed by our recent decision in SEC v. Hallam, 42 F.4th 316 (5th
Cir. 2022), or otherwise meritless.
Among other things, the district court ordered Voight to pay disgorge-
ment and pre-judgment interest on that award, enjoined him from participat-
ing in the sale or issuance or securities except on his own behalf, froze assets
belonging to several companies he controlled, and ordered that those assets
be turned over to contribute towards the disgorgement award. Voight chal-
lenges each of those remedies.
First, the disgorgement award was lawful because it reasonably ap-
proximated Voight’s unjust enrichment, in accordance with our precedent
prior to the Supreme Court’s decision in Liu v. SEC, 140 S. Ct. 1936 (2020).
See Hallam, 42 F.4th at 338, 341 (explaining that the relevant amendments to
the Securities Act and Exchange Act ratified the pre-existing framework for
calculating disgorgement). Second, the pre-judgment interest was permissi-
ble because Voight consented to a disgorgement award with such interest in
the agreed partial judgment and because, as we recently held, an award of
legal disgorgement “may include interest.” Id. at 341. Third, as to the legal-
conduct injunction and asset-freeze order, Voight failed to “address the dis-
trict court’s analysis and explain how it erred,” and so failed to “adequately
brief the arguments on appeal.” Id. at 327 (quoting Rollins v. Home Depot
USA, 8 F.4th 393, 397 & n.1 (5th Cir. 2021)) (internal quotation marks omit-
ted). Thus, those issues are forfeited.
The district court also relied on a declaration made by the SEC’s fraud
examiner to support the disgorgement award. Voight contends that this was
error because the statements made in the declaration are irrelevant and hear-
say. That issue is forfeited. Voight moved to exclude the declaration in the
district court, and the motion was referred to the magistrate judge. The
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magistrate judge denied the motion, and Voight did not appeal that motion
to the district judge, as is required to preserve such an objection. See 28
U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). He forfeited this issue by failing
to do so. See, e.g., Singletary v. BRX, Inc., 828 F.2d 1135, 1137 (5th Cir. 1987);
Lee v. Plantation of Louisiana, LLC, 454 F. App’x 358, 359–60 (5th Cir. 2011).
And even if he did not, Voight forfeited any argument that the magistrate
judge’s order constitutes plain error by failing to adequately brief the issue
on appeal. See, e.g., Garcia v. Orta, 47 F.4th 343, 349 n.1 (5th Cir. 2022);
United States v. O’Neal, 742 F. App’x 836, 845 (5th Cir. 2018).
Finally, in considering the SEC’s remedies motion, the district court
denied a motion by Voight to take the deposition of the SEC’s fraud examiner
and (over Voight’s objection) declined to hold an evidentiary hearing. Voight
argues that those decisions constitute an abuse of discretion and denied him
due process. As to the discovery motion, Voight fails to present anything that
overcomes the “great deference” we afford discovery rulings. United States
v. Mora, 994 F.2d 1129, 1138 (5th Cir. 1993); see also SEC v. Team Resources,
Inc., 942 F.3d 272, 278 (5th Cir. 2019), vacated on other grounds sub nom., Team
Resources, Inc. v. SEC, 141 S. Ct. 186 (2020) (mem.).
As to the evidentiary hearing, Voight argues that he was entitled to (a)
cross-examine the SEC’s fraud examiner; and (b) introduce evidence contra-
dicting the fraud-examiner’s assertions. As an initial matter, we note that, as
in Hallam, Voight consented to have the remedies motion decided on the
SEC’s motion—and that a district court is not required to hold a hearing on
such a motion. See 42 F.4th at 324. Moreover, Voight’s objections to the
fraud examiner’s testimony are the same as those he made when he moved
to exclude the declaration. But he failed to appeal that decision. Voight
therefore offers no other basis for eliciting testimony from the fraud examiner
on cross examination other than to reiterate those rejected arguments. See
Sahara Health Care, Inc. v. Azar, 975 F.3d 523, 531 (5th Cir. 2020) (cross
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examination was not required where defendant failed to identify sufficient
need for it). And regarding would-be contradicting evidence, Voight fails to
identify any such evidence, either in his opening brief or in his supplemental
letter brief. As such, the district court did not err in concluding that Voight
had “not identified any evidence that must be further developed at a hear-
ing.” SEC v. Voight, No. 4:15-cv-2218, 2021 WL 5181062, at *3 n.14 (S.D.
Tex. June 28, 2021); see Hallam, 42 F.4th at 323 (holding that the district
court did not abuse its discretion in denying evidentiary hearing where de-
fendant failed to identify any evidence “not already in the record” that would
have affected the proceedings below).
***
To summarize, Voight’s remedies issues are foreclosed by our recent
decision in SEC v. Hallam, his evidentiary objections are forfeited, and his
due-process objections lack merit. AFFIRMED.
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