U.S. Commodity Futures Trading Commission v. Southern Trust Metals, Inc. et al, No. 1:2014cv22739 - Document 335 (S.D. Fla. 2019)
Court Description: ORDER Denying 314 Defendant Robert Escobio's Motion for Reconsideration. Signed by Senior Judge James Lawrence King on 4/29/2019. See attached document for full details. (jw)
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U.S. Commodity Futures Trading Commission v. Southern Trust Metals, Inc. et al Doc. 335 Case 1:14-cv-22739-JLK Document 335 Entered on FLSD Docket 04/29/2019 Page 1 of 9 U NITED STA TES D ISTRICT C O U RT SO U TH ER N D ISTR ICT O F FL O R ID A M IA M I DIV ISIO N CASE NO .:1:14-CV-22739-JLK U .S.COM M OD ITY FU TU RES TR AD IN G COM M ISSIO N , Plaintiff, SOU TH ERN TRU ST M ETA LS,IN C ., LORELEY OV ERSEA S CO RPOR ATION , and ROBERT ESCOBIO, Defendants. O R DER DEN Y IN G D EFEN DA N T R O BER T ESC O BIO 'S M OTION FOR RECONSIDERATIO N THIS M ATTER isbeforethe Courton DefendantRobertEscobio'sExpedited M otion to Alter,A m end and Reconsider Order Finding Escobio in C ontem ptand O rderD irecting Surrendtr andlndesnitelncarceration,filedApril9,2019(DE 314)(theSlM otion forReconsideration''l.l PR O CED UR AL BA CK G R O U ND ProceedingsLeading Up to Contem ptH earing Followingathree-day bench trialinthisenforcem entaction,onAugust29, 2016,theCourt enteredfinaljudgmentagainstRobertEscobioand orderedhim topay$1,543,892inrestitutionin connection w ith the leveraged m etals schem e at issue in this case. See DE 167.2 Escobio was ordered to m ake the restitution paym entw ithin ten days ofthe FinalJudgm ent. fJ. lThe Courthasalso considered PlaintiffCFTC 'S Opposition, filedApril23,2019(DE 331). 2On appeal, theEleventh Circuitaffirm ed theportion ofthe FinalJudgm entawarding $1,543,892 in restitution fortheleveraged m etalsscheme.SeeDE 257. Dockets.Justia.com Case 1:14-cv-22739-JLK Document 335 Entered on FLSD Docket 04/29/2019 Page 2 of 9 On M arch 21,2017,the CFTC m oved foran orderto show cause why Escobio should not be held in contem pton groundsthatEscobio had paid û'virtually nothing tow ards hisrestitution or gcivilmonetarypenalty)obligations''sincetheFinalJudgmentwasenterednearlyseven months earlier. SeeDE 195. On September20,2017,the Courtentered itsOrderto Show Cause and set thematterforevidentiary hearing.SeeDE 228. Although the hearing w asoriginally setforN ovem ber6,2017,variousintervening m otions causedthehearingtoberescheduled.Escobio,forexample,twicemovedforcontinuances(which theCourtgranted)ashiswife,SusanEscobio,wasundergoingmedicaltreatmentsthatprevented theEscobiosfrom beingabletoprepareforandparticipateinthescheduled hearings.SeeDE 229, 232,DE 230,DE 231,DE 233.Escobio also m oved to vacatethe show-cause orderand quash a subpoena ducestecum served on M rs.Escobio.See DE 237,D E 240. Both m otionsw ere denied, btltthehearing waspushed back severalmonthswhilethey werepending.SeeDE 243,DE 248. B. Tw o-D ay Evidentiary H earing and the C ourt'sFindings U ltim ately,on Septem ber20,2018- a year aherthe Orderto Show Cause w as entered- thehearingwasresetforOctober24,2018.SeeDE 249.3 Duringthetwo-day evidentiaryhearing thatfollowed,theCourtheard livewitnesstestim onyfrom threewitnesses,includingEscobio,and adm itted volum inous exhibits into evidenee spanning thousands ofpages ofdocum ents. See D E 255,DE 258,DE 259,DE 268,DE 269,Attheendofthehearing,theCourttookthem atterunder advisem entand directed the parties to subm itproposed findings offactand conclusionsoflaw on 3M rs Escobio filed anon-party declaration in the run-up to the hearing. See DE 252-1. ln the declaration,M rs.Escobio stated thatshe is suffering from a serious illnessand w asunderdoctor's orderstoavoidstress.Id.!6. Case 1:14-cv-22739-JLK Document 335 Entered on FLSD Docket 04/29/2019 Page 3 of 9 theOrderto Show Cause,whichtheCourtreceived on February 22,2019.SeeDE 269,10/24/18 Tr 162-64;D E 275-277.4 On M arch 18,2019,theCourtentered itsOrderFindingRobertEscobio in Contempt.See DE 28l. Atthehearing,itwasundisputed thatEscobio had notsubstantially complied with his restitutionobligationsundertheFinalJudgment,havingpaidjust$3,525towardtheaward since theFinalJudgmentwasentered.fJ.at8.Instead,hisprimaryargument andthesubjectofthe evidentiaryhearing wasthathewasunableto comply,becausehe lacked thefundsto do so. /#. at9.ButtheCourtfound thatEscobio failed todemonstratean inability to comply with the Final Judgm ent,whichrequiresacontem nortoestablish thatheorshemadeStin goodfaithallreasonable efforts''tocomply,Seeid.at6,9)fnreLawrence,279 F.3d 1294,1297 (11th Cir.2002).M ore speciûcally,based on theextensiverecord evidencepresented atthehearing,the Courtfound that Escobio'savailableassetsand spending decisionscontradicted hisargumentthathehad made$$a11 reasonableefforts''to comply with the FinalJudgment. See id.at18. AstoEscobio'sassets,theevidenceshowedthatEscobio hadatleast$941,447 inavailable assets,includingroughly $300,000inhisindividualretirementaccount(the($lRA'');$554,000in equityinaFloridaproperty co-ownedwith hiswife;and$35,000 inasecuritiesinvestm entaccount alongwithanother$3,000inajointcheckingaccountco-ownedwithhiswife,ld at9.5 Escobio alsotestified thatheowned approximately $21,000inpersonalproperty,and offered noexcusefor 4Fivedayslater, Escobio filed apetition forwritofprohibition with theEleventh Circuitseeking tohavethisCourt'sceaseproceedingson itsOrderto show cause.''DE 278-1at9.Afteracouple weekspassed withoutadecisiononthepetition,theCourtentered anoticetothepartiesexplainihg thatthe Courthad completed itswritten decision on theOrderto Show Cause, butintended,atthkt point,to aw aitadvice from the Eleventh Circuiton the properprocedure forthe courtto take. See DE 280. Escobio'spetition was denied shortly thereafter. 5TheCourtrejected Escobio'sargumentthatalleged state-law exemptionsbarred consideration ofthese assets in evaluating hisinability defense. See id.at9-11. Case 1:14-cv-22739-JLK Document 335 Entered on FLSD Docket 04/29/2019 Page 4 of 9 notattempting to sellany ofhispersonalproperty to help satisfy the restitution award. Id.atn.2. Also,theCourtrejectedEscobio'stestimonythathisincomewaslimitedtothe$30,000to$40,000 peryearhem akesasapilot,and instead found thatitwasappropriateto eonsiderM rs. Escobio's six-iguresalary aspresidentofSouthernTrustSecuritiesinanalyzing theinabilityarguments. 1d. at13,15.lm portantly,theCourtalsofound thatEscobio receivedvariousfundsfrom unidentified foreign sources,and found thathisexplanation forthesefundslackedcredibility- heclaimedthat theywerekiloans''hetookoutpost-judgment.1d.at15,17. The Courtfound thatEscobio had also m ade deliberate choicesto prioritize hisexpenses and otherobligationsoverm aking paymentsunderthe Court's FinalJudgm ent. See,e.g.,id.at 10-13.Forexam ple,theevidenceshowedthatEscobio withdrew roughly$250,000from hisIRA , m ostly to pay legalfees in connection w ith this litigation. Id at 10. A lso,Escobio's substantial discretionarypaymentssincetheFinalJudgm entbelied hisinability argum ents. Seeid.at12-13. lnstark contrasttothedeminimis$3,525paidtotherestitution fund sincetheFinalJudgm entwas entered,the record evidence showed thatEscobio had spenthundredsofthousands ofdollarson attorneys,creditcards,studentloan paym ents forhis adultdaughters, and carleases.1d. lndeed, he paid more than twice asmuch forCom castcable ashe paid toward therestitution fund each month.14 at13 n.4.YetanotherexpenseEscobio decidedtoprioritizeoverhisobligationsunder the FinalJudgment was his travel abroad,taking severaltrips to Spain and num erous other destinationsaherthe FinalJudgmentwasentered. 1d Basedontheextensiverecord evidenceandtestimonypresentedatthetwo-dayevidentiafy hearing,theCourtfoundthatEscobio had notin good faith m adea11reasonable effortstocom ply. JJ.Accordingly,theCourtheld Escobio in contempt,and ordered him to pay $350,000 w ithin ten . 4 Case 1:14-cv-22739-JLK Document 335 Entered on FLSD Docket 04/29/2019 Page 5 of 9 daysandcom mencem akingpaym entsof$10,000permonthtowardsthebalanceoftherestitution award orface coercive sanctionsin the form ofincarceration. f#.at 19.6 Escobio failed to pay the required purge amountswithin ten days,and instead elected to surrenderhim selfto the custody ofthe U .S.M arshals Service on April 1,2019. See D E 298. N ew C ounselA ppears for Escobio and FilesM otion for R econsideration On April9,2019,new counselappeared on behalfofEscobio and filed theinstantM otion forReconsideration.SeeDE 314.7 TheM otionseeksreliefunderFederalRulesofCivilProcedm e 59(e)and60(b)(6). AccordingtotheMotion,justbeforesurrendering,Escobio orderedtheliquidationofhis IRA,which now had only $136,255.37in available fundsafterpaymentofincometaxesand other unspecified withdrawals. 1d.at2. Escobio arguesthatthe Courtoverlooked thatone-third ofthe fundswithdrawn from the II:A mustbe paidto the 1RS forincometaxesdue.ld atl5. EscobioalsoarguesthattheCourt'ioverlookedordidnothavegcertainlfactstoconsidçIr'' in reaehing itscontem ptfindings.SeeDE 314 at14-15.Forexam ple,astotheEscobios'Floripa property,Escobio contendsthatthe$500,000-p1usin equity 'icould notbeused to obtain aloan ' or reversem ortgage,becausetheEscobioshaveinsufficientincom eandtheresidencehasinsufficient 6Escobiothen appealed and m oved to stay theOrderFinding Escobio in Contempt. See DE 283 287,305. Although the motion to stay wasdenied,theappealremainspending beforethe United States CourtofAppeals forthe Eleventh Circuit. See DE 295. ! 7Despitethetiexpedited''designation(seeDocketSheet,DE 314),Escobiofailedtocomply wii ,h theLocalRulesgoverning expeditedm otions,which requirethem ovantto Sdsetforth in detailttle datebywhichanexpeditedrulingisneededandthereasonthenllingisneededbythestateddatl.'' S.D.Fla.L.R.7.1(d)(2).EscobiothentiledanotherexpeditedmotiononApril17,2019,requestiàg arulingorhearing on orbeforeFriday,April19,2019,basedon Escobio'scontinuedincarceration. See DE 322. Case 1:14-cv-22739-JLK Document 335 Entered on FLSD Docket 04/29/2019 Page 6 of 9 equity.''Seeid.at2.8 He also arguesthathiscontinued consnementiiwillresultin hispermanent lossofem ploym entasa pilot,which currently ishissole sourceofincom e.''1d.at3.A dditionally, he contendsthe Court'sfindingsSido notconsiderM rs.Susan Escobio's serioushealth conditions, herage(62),andthedecreaseinMrs.Escobio'sabilitytoearnthefundsimputedtoRobertEscobio after she w as diagnosed w ith cancerand com m enced treatm ents.'' fJ. lI. LE G AL STA ND A RD UnderRule59(e),apartymaymovetoalteroramendajudgmentwithin28daysafterthe entryofthejudgment.Fed.R.Civ.P.59(e).Rule60(b)(6),describedastheiscatchallprovision,'' WellsforChambersv.Talton,695F.App'x 439,447 (11thCir.2017),authorizesreliefforiiapy E 1 otherreasonthatjustifiesrelief.''Rule60(b)(6)istsanextraordinaryremedywhichmaybeinvokq:d only upon a showing of exceptionalcircum stances.''Hisey v.Qualtek USA,LLC,753F.Appi jx ! 698,702(11thCir.2018)(quotingCrapp v,CityofM iamiBeach,242F.3d 1017,1020(11thCj r. i ! 2001)). i Th 1 eEleventhCircuithasrecognizedthat(iltqheonlygroundsforgrantingaRule59moti4!n are new ly-discovered evidence orm anifesterrorsof law orfact.'' Arthur v.K ing 500 F.3d 1335, ( , 1343(11th Cir.2007)(quotingfn reKellogg,l97F.3d 1lt6,1l19 (11th Cir.1999)). k$A Rule 59(e)motioncannotbeusedtorelitigateoldmatters,raiseargumentorpresentevidencethatcoutd I h i avebeenraisedpriortotheentryofjudgment.''Arthur,500F.3dat1343;seealsoMichaelLinqt, 1 ! I nc.v.Vill.of Wellington,Fla.,408 F.3d 757,763 (11th Cir.2005). To supporta Rule 59(t) ! m otionbased onnewlydiscovered evidence,themovingpartyûimustshow eitherthattheevidente ! isnewly discovered or, ifthe evidencewasavailableatthetim eofthe decision being challengey, I ! . I I BAstheCFTC notesin itsOpposition (DE 331at8n.5),thisargumentisbased on unverified screenshots,computerprintouts,andlettersfrom SunTrustandQuickenLoans(seeDE 314-2,DE 314-3,andDE 321-1). 6 j ' Case 1:14-cv-22739-JLK Document 335 Entered on FLSD Docket 04/29/2019 Page 7 Iof 9 ! ! i l I thatcounselm adeadiligentyetunsuccessfuleffortto discovertheevidence.''Wells,695F.Apptx at445(quotingChery v.Bowman,901F.3d 1053,1057n.6(11th Cir.1990)). 111. DISCU SSIO N Escobio'sMotionforReconsideration failstojustifyreliefunderRules59(e)or60(b)(6). To besure,theM otion doesnotarguethattheCourtmadeany errorsoflaw,manifestorotherwise. Andwhile Escobio arguesthatthe Courtdioverlooked''orû'did nothave''certain factsto consider, ' theMotionfailstoidentifyanyiimanifesterrorsoffact''oridnewlydiscoveredevidence''justifying r reconsideration ofthe Court'sfndings. lnstead,the M otion isbased solely on issuesthateithrr 1 wereorcould have been raised duringthetwo-day evidentiary hearing in October2018. ! I i Forexam ple,Escobio'sargumentthatonly $136,255.37 wasavailableupon liquidation of : hisIRA isclearly som ethingthatcould havebeen raisedatthehearing. W hetherthedifferencetn ! theamountofavailablefundsisattributabletowithdrawalsfortiexistingloansand debts''lid At ; 7),incometaxpaymentslid at6-7),orsomeotherreason,theM otion offersnoexplanationast o i ts whythisissuecouldnothavebeenraisedatthehearing.Instead,theMotionstatesthatEscobioj i counseliûgenerallyalerted theCourtoftherequirem entfortaxesto bededucted''ata later,M arch 22,2019hearing.1d.at7n.3.lntheCFTC'SOpposition,theCFTCarguesthatthiswastktoolitt!e l and severalmonthstoo late.'' DE 331at6 n.2, The Courtagrees. Escobio had m orethan a yeqr ! aftertheOrderto Show Causewasentered to obtain evidenceregarding hisIItA assetspriorto the i evidentiary hearing. Thus,therewasampletimeboth beforeand during thehearing to raisetheje issues,and doing so forthefirsttim eon am otion forreconsideration isim proper. ! ! I I l NordoesEscobio'scontinuedincarceration (orresulting damagetohisemployabilityasla 1 pilotljustifyrelief.SeeDE 314at3-4.TheSupremeCourthasdescribedindefiniteincarceratiàin asthetdparadigmatic''coercivecivilcontemptsanction.Int'1Union,UnitedM ine WorkersofAm. j' Case 1:14-cv-22739-JLK Document 335 Entered on FLSD Docket 04/29/2019 Page 8 ! iof 9 ! ! i v.Bagwell,512U.S.821,823(1994).AndEscobiocannotusetheverysanctionchosentocoerte hiscompliancewith theFinalJudgm entasan excusetobereleasedfrom incarceration.See CFTC v.WellingtonPreciousMetals,Inc.,950F.2d 1525,1531(11thCir.1992)(lsprisontime,inandof 1 itself,willnotsatisfy(thecontemnor'sjburdenofprovingthatthereexistsnokrealisticpossibiliti y' thathecancomplywiththecourt'scontemptorder.'');seealsoFTC v.Leshin,No.06-61851-C1V, i i 2011W L 617500,at#25(S.D.Fla.Feb.15,2011)(Simonton,M .J.),reportandrecommendatih 1n . adopte4 2011W L 845065 (S.D.Fla.M ar.8,2011)(Ungaro,J.)(incarceration wasapproprijte ! sanctiontocoercecompliancewithdisgorgementorder).Thus,Escobio'sincarcerationargumti nt d oesnotjustifyreconsideration, A ! ; i ! sto Escobio'sclaim ed inability to obtain loansusing theequity in hisFlorida hom e,even : ! iftheCourtwereto considertheunattested evidencesubm itted with theM otion- unaccompaniyd i byactualloanapplicationsorsworn statementsregardingEscobio'seffortstoobtainloans thbre isno reasonwhy Escobio couldnothaveraised thisissue atthe hearing.g j ! ! Similarly,Escobio'sargumentregardinghiswife'smedicalissuesandearningscouldhaye : been raised priorto the contem ptfinding. Based on Escobio's tw o continuance m otions and M ris. Escobio'snon-party declaration,these issuesw ere know n overa yearbefore the hearing. See D E 229!2,DE 252-1!6.TheCourtsympathizeswith Mrs.Escobio,butthetimetoraisethisissue wasduringthetwo-dayhearingwhereampleevidencewaspresentedandconsideredonEscobih's I I inabilityargument. i I i I I 9The Courtalso notes thatEscobio m akesno m ention ofany othereffortsto use the equity in tIe Floridaproperty to satisfy therestitution award,including any effortsto sellorrenttheprope . y. SeeSEC v.Greenberg,105 F.Supp.3d 1342,1348 (S.D.Fla.2015)(Hurley,J.)(holding that contem nor failed to show present inability to com ply w here Cireasonable effortsto com ply''with judgment'icould include'iselling orrenting the New York home,selling orrenting the M iami condominium,terminatingtheleaseontheluxury carsr''andso forth). Case 1:14-cv-22739-JLK Document 335 Entered on FLSD Docket 04/29/2019 Page 9 of 9 Finally,Escobio m akesno effol' tto address theCourt'sfndingsregarding any oftheothyr ! I substantialassetsconsidered in evaluating Escobio'sinabilitydefknse,including,forexample,tlle 1 ! $200,000to $300,000 from unidentitiedforeignsourcespaid into Escobio'sbankaccountbetwekn thetim etheFinalJudgmentwasentered and theOctober2018hearing.NordoesEscobio address i the Court'sfindingsregarding the discretionary expensesfoundto beimproperlyprioritizedovhr . ! : ! l IV . C O N CLU SIO N I I i hisobligationsundertheFinalJudgment. See ïtf at 12-13 10 I Inshort,Escobiofailstodemonstrateanymanifesterrorof1aw orfact,newly discoverid ! I evidence,oranyexceptionalcircumstancesjustifyingreconsiderationoftheCourt'sOrderFindil)g I EscobioinContempt.Therefore,itisORDERED,ADJUDGED andDECREED thattheMotisn I I forReconsiderationfiledApril9,2019(DE 314)beandthesameisherebyDENIED. E I ltisfurtherORDEREDandADJUDGEDthatEscobio'sExpeditedMotionforHearitg ! and RulingontheM otionforReconsideration,filedApril17,2019(DE 322)beandthesame1 is ! i herebyDENIED ASM OOT. 1 1 DONE AND ORDERED in Chambers at the Jam es Lawrence King Federal Justiqie Building and United StatesCourthouse,atM iam i,Florida,this29th day ofApril,2019. 1 1 . * AM ES LA W RENCE KING UN ITED STATES DISTRICT JU . cc: AIICounselofRecord ! I I j i 1 I i I I I 10whiletheCFTC addressesEscobio'scurrentfinancialsbasedonadditionalevidencesubmitttd withitsOpposition (see,e.g.,DE 331at8-10),inlightoftheCourt'sconclusionthattheM otion lacksmeritunderRules59(e)or60(b)(6),theCoul' tneednotconsidersuchadditionalevidencein deciding on the M otion.
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