United States District Court, D. Connecticut
RULING ON FRANCISCO ILLARRAMENDI'S EMERGENCY
MOTION FOR TEMPORARY INJUNCTION OR STAY OF COURT'S GRANT
OF SUMMARY JUDGMENT AND ORDERS DERIVED THEREOF AND OPPOSITION
TO PLAINTIFF'S REQUEST FOR DISTRIBUTION OF ESCROW FUNDS
[DOC. # 1120]
Bind Arterton, U.S.D.J.
Francisco Illarramendi seeks to stay the effect and impact of
the Summary Judgment [Doc. # 1062] and related Final Judgment
entered against him [Doc. # 1072] including the SEC's
current efforts to apply funds held in escrow by the Receiver
to satisfy that judgment against him (Commission's Mot.
to Apply Funds Held in Escrow by the Receiver to
Illarramendi's Final J. and to Distribute Those Funds
Pursuant to the Ct.'s Approved Distribution Plan [Doc.
# 1118]). Defendant also sought a similar emergency
stay in the Second Circuit (Appx. A to Mot. Stay), which the
Court of Appeals has denied. (Order Denying Mot. Stay,
SEC v. Illarramendi, No. 17-1506 (2d Cir. March 5,
2018), Doc. # 152.) Defendant further opposes the
SEC's Motion because he believes that PDVSA is the only
potential beneficiary of enforcement of the disgorgement
component of the summary judgment, reprising his arguments on
why PDVSA's claim for investor losses should have been
rejected. That argument has been rejected by the Court and
will not be revisited. (See, e.g., Rulings on
Receiver's Mot. Approval of Subsequent Distribution and
Establishment of Third Subsequent Distribution Date and
Defendant's Mot. Deny Receiver's Proposed Third
Subsequent Distribution [Doc. # 1053], Ruling Denying Mot.
Stay of Distributions [Doc. # 1005], Ruling on Def.'s
Mots. Stay Execution of and to Extend Deadline to Obj. to
Receiver's Distribution Plan [Doc. # 921], Order Granting
Receiver's Mot. Establish Claim Administration Procedures
[Doc. # 800].)
the SEC conceptualizes Defendant's motion as one to
reconsider the Court's lifting of the stay on enforcement
of the summary judgment, such that it argues that it is
untimely and fails to meet the grounds for reconsideration,
the Court reads his motion differently. Defendant seeks
"prudential relief in the interest of justice to either
stay the summary judgment or to deny the SEC's Motion to
Distribute. However, the Second Circuit cases that Defendant
cites do not support his contention that a stay should be
granted on prudential grounds separate and apart from the
legal standard governing a stay application, discussed below.
Rather, the cited cases reference the fact that district
courts and the Court of Appeals may issue temporary stays
pending full consideration of a motion for stay. See,
e.g., In re World Trade Ctr. Disaster Site Litig., 503
F.3d 167,169 (2d Cir. 2007) (noting that "an
applications judge granted a temporary stay pending panel
consideration of the stay motion."). Here, however, the
Second Circuit has already rejected Defendant's stay
motion on its merits, as described above. And Defendant makes
no showing that a stay application is warranted here, on
prudential or any other grounds.
arguments in support of a request for a stay do not differ
substantially from his arguments in support of the same
requested relief to the Second Circuit, and the Court will
join the Second Circuit in denying the requested relief.
Defendant's request for a stay fails to meet the
requisite standard. The four factors courts consider when
determining whether to grant a stay are: "(1) whether
the stay applicant has made a strong showing that he is
likely to succeed on the merits; (2) whether the applicant
will be irreparably injured absent a stay; (3) whether
issuance of the stay will substantially injure the other
parties interested in the proceeding; and (4) where the
public interest lies." S.E.C. v. Citigroup Glob.
Markets Inc., 673 F.3d 158, 162 (2d Cir. 2012).
Defendant has made no showing of likelihood of success on the
merits of his appeal, made no claim of any injury other than
a claimed monetary harm, failed to address whether issuance
of a stay may substantially harm other interested parties,
and has failed to demonstrate that the public interest lies
in an issuance of a stay.
Defendant's related "Opposition to Plaintiffs
Request for Distribution of Escrow Funds," he views a
grant of the SEC's motion to be a premature enforcement
of the summary judgment without the finality of appellate
review. Notwithstanding Defendant's bitterness that the
stay of summary judgment he obtained was lifted several
months later (instead of being denied ab initio),
the SEC has full authority to proceed to satisfy the summary
judgment. Defendant urges that he anticipates that his
conviction will be overturned by grant of his habeas petition
such that "my assets would be considered fully untainted
and not subject to any disgorgement" and a grant of the
SEC's Motion to Apply Escrow Funds would result in
Defendant having been "disgorged of untainted
assets." The appellate action thus far and the record on
summary judgment render Defendant's optimistic future
scenario unrealistic and provides no basis for denying the
SEC's motion. See, e.g., S.E.C. v. Michael Kenwood
Capital Mgmt., LLC, 703 F. App'x 39, 41 (2d Cir.
2017) (affirming this Court's Fourth Distribution Order);
U.S. v. Illarramendi, 677 F. App'x 30 (2d Cir.
2017) (affirming order of restitution imposed by district
court in criminal case); U.S. v. Illarramendi, 642
F. App'x 64, 65 (2d Cir. 2016) (affirming sentence in
Defendant's Emergency Motion for Temporary Injunction or
Stay of Court's Grant of Summary Judgment and Orders
Derived Thereof and Opposition to Plaintiffs Request for
Distribution of Escrow Funds is denied.
The Second Circuit similarly
denied the concurrently-filed Motion to Stay on the same day
in Defendant's two other ...