Prior History: Sec. & Exch. Comm'n v. Huff, No. 08-60315-CIV, 2010 WL 5287452 (S.D. Fla. Dec 17, 2010) [U.S.A.], notated in 2011 ANNUAL REVIEW OF INTERNATIONAL BANKING LAW & PRACTICE 556

Note: Anthony Huff (Fraudster) used fraudulent letters of credit to provide collateral to insurers, and artificially inflated his companies' assets by listing the bogus LCs as assets. Furthermore, Fraudster improperly siphoned millions of U.S. dollars from multiple companies under his control to Midwest Merger Management (Company), a company which Fraudster controlled but which was nominally owned by Roxann Pixler (Nominal Owner).

After a bench trial in the U.S. District Court for the Southern District of Florida, Fraudster was found guilty of violating U.S. Securities and Exchange Commission (SEC) regulations, and required to disgorge US$10,017,000 of ill-gotten gains, plus $3 million in prejudgment interest. However, Nominal Owner was not required to disgorge $60,379.98 in fraudulently obtained funds. The Judge found that, because Nominal Owner used all of the funds to pay Company's taxes but did not enjoy "a corresponding income or other benefit from [Company]," she was not unjustly enriched and did not have to disgorge the funds. Nominal Owner then moved for an award of legal fees and expenses under the Equal Access to Justice Act.

After reviewing Nominal Owner's motion and SEC's opposition, the U.S. District Court for the Southern District of Florida, Rosenbaum, J., found that SEC was substantially justified in seeking disgorgement of the funds used by Nominal Owner to pay the Company's taxes, and denied her motion for an award of legal fees and expenses. The Judge found that SEC's action had "a reasonable basis in law and fact" because the case against Nominal Owner presented an issue of first impression, and, by representing herself as the owner of Company, Nominal Owner helped Fraudster hide his involvement with Company and carry out his schemes.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.