SAN FRANCISCO – The U.S. District Court for the Northern District of California partially granted the Securities Exchange Commission’s motion for summary judgment in its case against companies it alleged violated federal securities laws.
"The motion is denied to the extent it seeks to require disgorgement by BHD-LLC of the $17.4 million in diverted investor funds it never received," U.S. District Judge Richard Seeborg wrote Jan. 10. "The motion is otherwise granted."
The SEC filed the civil enforcement action against San Francisco Regional Center LLC and North America 3PL LLC over allegations of infringing federal securities laws. The SEC also alleged because of these alleged actions, NA3PL and relief defendant Berkeley Healthcare Dynamics LLC should have to pay up $23.9 million in allegedly ill-gotten revenue from a supposed scheme.
Even though SFRC and NA3PL didn’t challenge the motion for summary judgment, the court only granted it in part because the SEC didn’t prove that it was owed disgorgement from BHD.
“The SEC’s request for a finding that SFRC and NA3PL LLC violated the federal securities laws by diverting EB-5 investors funds from the purposes for which they were solicited is unopposed and is well-supported by the record,” Seeborg wrote, granting that portion of the motion.
Seeborg ruled that the SEC filed to show it is entitled to disgorgement from BHD.
The SEC argued BHD can be obliged to disgorge money it did not get thanks to its close partnership with the other defendants. The court pointed out that logic could serve as a conspiracy claim that could have been successful if BHD LLC wasn’t simply named as a relief defendant.
The original claim was over the sale of a warehouse in Oakland. The SEC sought the disgorgement of the funds SFRC allegedly contributed to the purchase of the warehouse and money that alleedly was transferred from BHD from other entities to cover expenses.