United States District Court, W.D. North Carolina, Charlotte Division
U.S. COMMODITY FUTURES TRADING COMMISSION, Plaintiff,
BRYAN COATS, and JONATHAN DAVEY, Defendants
J. CONRAD, JR. UNITED STATES DISTRICT JUDGE
MATTER comes before the Court on the motion of
Plaintiff U.S. Commodity Futures Trading Commission
(“CFTC”) for summary judgment, (Doc. No. 157),
against Bryan Coats (“Coats”) and Defendants
Jonathan Davey (“Davey”), and related pleadings.
Defendants have responded to the motion, (Doc. No. 160: Davey
Response; Doc. No. 178: Coats Response; Doc. No. 179: Davey
Supplemental Response); therefore, the issues are ripe for
civil case arises out of a Ponzi scheme operating in this
district and elsewhere approximately between 2007 and 2011.
(Doc. No. 1: Complaint at 2, 6-12). Investigation of the
scheme led to the criminal convictions of Keith Simmons,
Bryan Coats, Jonathan Davey and others for various offenses
including securities fraud, wire fraud, money laundering, and
tax evasion. (See Case Nos. 3:10-cr-23 (Simmons),
3:11-cr-309 (Coats), 3:12-cr-68 (Davey)).
purposes of this motion, Coats pled guilty to conspiring to
commit offenses against the United States, including
violations of Title 7, United States Code, Section 6b, and
Title 17, Code of Federal Regulations, Section 1.1
(commodities fraud); Title 15, United States Code, Sections
78j(b) and 78ff, and Title 17, Code of Federal Regulations,
Section 240.10b-5 (securities fraud); and Title 18, United
States Code, Section 1343 (wire fraud) (Count One) and to
conspiring to commit money laundering in violation of Title
18, United States Code, Section 1956(h) (Count Two). (Case
No. 3:11-cr-309, Doc. No. 11: Superseding Information; Doc.
No. 12: Plea Agreement; Doc. No. 14: Acceptance and Entry of
was convicted by a jury of conspiring to commit offenses
against the United States, including violations of Title 15,
United States Code, Sections 78j(b) and 78ff, and Title 17,
Code of Federal Regulations, Section 240.10b-5 (securities
fraud); and Title 18, United States Code, Section 1343 (wire
fraud) (Count One); conspiring to commit wire fraud in
violation of Title 18, United States Code, Section 1349
(Count Two); conspiring to commit money laundering in
violation of Title 18, United States Code, Section 1956(h)
(Count Three);. and tax evasion in violation of Title 26,
United States Code, Section 7201 (Count Four). (Case No.
3:12-cr-68, Doc. No. 174: Verdict).
evidence at trial and sentencing tended to show that Simmons,
Coats, Davey, and others fraudulently solicited approximately
$40 million from hundreds of investors for purported trading
in off-exchange foreign currency. (Doc. No. 157-1: CFTC Mem.
at 5). Even though false account statements
showed profits for customers, investor funds were never
traded, but rather were comingled and misappropriated for the
personal benefit of Coats, Davey, and other co-conspirators.
(Id. at 6). Davey generally denies the accusations
against him, (Doc. No. 179: Davey Supp. Resp. at 1), but
neither Defendant has submitted evidence to create a genuine
issue about these material facts.
STANDARD OF REVIEW
judgment shall be granted “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). A factual dispute is genuine “if
the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is
material only if it might affect the outcome of the suit
under governing law. Id. The movant has the
“initial responsibility of informing the district court
of the basis for its motion, and identifying those portions
of the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any,
which it believes demonstrate the absence of a genuine issue
of material fact.” Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986) (internal quotation marks omitted).
This “burden on the moving party may be discharged by
‘showing'- that is, pointing out to the district
court-that there is an absence of evidence to support the
nonmoving party's case.” Id. at 325.
this initial burden is met, the burden shifts to the
nonmoving party, which “must set forth specific facts
showing that there is a genuine issue for trial.”
Anderson, 477 U.S. at 250. The nonmoving party may
not rely upon mere allegations or denials of allegations in
the pleadings to defeat a motion for summary judgment, rather
it must present sufficient evidence from which “a
reasonable jury could return a verdict for the nonmoving
party.” Id. at 248; accord Sylvia Dev.
Corp. v. Calvert Cnty., Md., 48 F.3d 810, 818 (4th Cir.
ruling on a summary judgment motion, a court must view the
evidence and any inferences from the evidence in the light
most favorable to the nonmoving party. Anderson, 477
U.S. at 255. “Where the record taken as a whole could
not lead a rational trier of fact to find for the nonmoving
party, there is no genuine issue for trial.” Ricci
v. DeStefano, 557 U.S. 557, 586 (2009) (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986)). The mere argued existence of a
factual dispute does not defeat an otherwise properly
supported motion. Anderson, 477 U.S. at 248-49.
“If the evidence is merely colorable or is not
significantly probative, ” summary judgment is
appropriate. Id. at 249-50 (citations omitted).
guilty verdict and Coats's guilty plea prevent each of
them from relitigating the same issues in this civil
proceeding. See SEC v. Farkas, 557 F. App'x 204,
206 (4th Cir. 2014) (guilty verdict in criminal securities
fraud case collaterally estopped defendant from denying
liability for civil securities fraud); Williams v.
Comm'r of Internal Revenue, 498 F. App'x 284,
291 n. 6 (4th Cir. 2012) (guilty plea in criminal tax evasion
case had same conclusive effect as trial for purposes of
collateral estoppel in civil tax fraud case). The issue in
this civil proceeding of fraudulent solicitation,
misappropriation, and false statements in connection with
future transactions in violation of 7 U.S.C. §
6b(a)(2)(A)-(C) of the Commodity Exchange Act
(“CEA”) is identical to the one previously
litigated in Defendants' criminal cases. The issue was
resolved against them by guilty plea or jury verdict, which
was critical and necessary to their criminal judgments. Those