Case: 11-17802

12/13/2011

ID: 7998510

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EMERGENCY MOTION UNDER CIRCUIT RULE 27-3

IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

SECURITIES AND EXCHANGE COMMISSION,

) No. 11-17802 ) ) DC No.: 3:11-mc-80214-JSW(EDL) Plaintiff/Respondent, ) U.S. District Court, Northern District of vs. ) California ) ) DC No. 2:08-cv-00437-LRH-RJJ HAROLD P. GEWERTER; HAROLD P. ) U.S. District Court for Nevada, Las Vegas GEWERTER, ESQ., LTD. ) ) Movants/ Appellants ) _____________________________________ ) CMKM DIAMONDS, INC., URBAN ) CASAVANT, JOHN EDWARDS, GINGER ) GUTIERREZ, JAMES KINNEY, ANTHONY ) TOMASSO, KATHLEEN TOMASSO, 1ST ) GLOBAL STOCK TRANSFER LLC, ) HELEN BAGLEY, NEVWEST SECURITIES ) CORPORATION, DARYL ANDERSON, ) SERGEYRUMYANTSEV, ANTHONY ) SANTOS, and BRIAN DVORAK, ) Defendants. ) ) APPELLANTS RESPONSE TO OPPOSITION TO EMERGENCY MOTION FOR STAY OF ENFORCEMENT OF SUBPOENA PENDING APPEAL

WENDY E. MILLER, ESQ. California Bar No. 181654 Law Office of Wendy E. Miller 10364 Almayo Ave. #106 Los Angeles, CA 90064 wemesq@gmail.com (949) 400-8913 (310) 943-1972 Fax

HAROLD P. GEWERTER, ESQ. Nevada Bar No. 499 Harold P. Gewerter, Esq., Ltd. 5440 West Sahara Ave., Suite 105 Las Vegas, NV 89146 harold@gewerterlaw.com (702)382-1714 (702) 382-1759 Fax

Attorneys for Moving Appellants Harold P. Gewerter and Harold P. Gewerter, Esq., Ltd. -1-

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I. INTRODUCTION Under the pretense of a collection action, the Securities and Exchange Commission seeks to examine the constitutionally-protected private financial information of Appellants and their clients through the use of the Courts subpoena power. Each time that Appellants and this Court have questioned the SECs motives, the SEC responds the same way: there is no fourth amendment protection for bank records. This is not an administrative or enforcement action, and Appellants are not the subject of an investigation, so why does the SEC keep bringing up the Fourth Amendment? Because the SEC knows that the information is not relevant. The law governing post-judgment discovery is quite clear-- "Inquiry into the assets of third persons is permissible where the relationship between the judgment debtor and third person(s) is sufficient to raise a reasonable doubt about the bona fides of any transfer of assets between them." Other than John Edwards paying Harold Gewerter a $25,000 fee ($10,000 of which was returned), there is no evidence of any transfer of assets to Mr. Gewerter, much less his clients! And there is no evidence of any fraudulent transfer whatsoever. The SEC has no legal right to subpoena these bank records. As the Court of Appeal has already pointed out, this is nothing but a fishing expedition to get a list of Harold Gewerters clients and obtain their private financial information. In fact, even though the SEC has had a judgment for almost three years now, there is no collection activity. Even the entities associated with John Edwards that had valuable assets have not been pursued. This fact belies any claim that Mr. Gewerters financial information is necessary for collection efforts. In fact, it appears that Plaintiff simply recycled its brief from the previous appeal, even going so far as to argue that Appellants lack standing to challenge the subpoena (a matter that was previously decided in Appellants favor). The SEC does not dispute that if enforcement of the subject subpoena is not stayed pending appeal, Movants and their clients will be irreparably harmed. Furthermore, a stay is in the public interest because of the constitutional privacy rights implicated by the appeal. Additionally, the SEC has failed to articulate any need for or use of the subpoenaed information, other than some vague need to identify other entities associated with John Edwards. Bank

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records of nonparties are not going to provide that information. This why Appellants have a likelihood of prevailing on appeal, and why a stay of enforcement should be granted. II. MOVANTS/APPELLANTS WILL BE IRREPARABLY HARMED IF A STAY OF ENFORCEMENT OF THE SUBPOENA IS NOT GRANTED. THIS COURT MAY PROPERLY GRANT THE REQUESTED RELIEF As previously stated, the four factors that the Court considers when presented with a motion for a stay pending appeal 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 proceedings; and (4) where the public interest lies. Golden Gate Restaurant v. City and County of San Francisco, 512 F.3d 1112, 1115 (9th Cir. 2008) (Golden Gate)(quoting Hilton v. Braunskill, 481 U.S. 770, 776, 107 S. Ct. 2113, 95 L. Ed. 2d 724 (1987)). To satisfy steps (1) and (2), the Court will accept proof either that the applicant has shown "a strong likelihood of success on the merits [and] . . . a possibility of irreparable injury to the [applicant]," or "that serious legal questions are raised and that the balance of hardships tips sharply in its favor." Golden Gate at 1115-16. There is no dispute that Appellants will be irreparably harmed absent a stay. The issue is whether Appellants have shown a strong likelihood of success on the merite or have raised serious legal questions. Appellants submit that they have satisfied their burden to merit a stay. The Supreme Court has recognized a right of personal privacy which encompasses two types of interests. "One is the individual interest in avoiding disclosure of personal matters, and another is the interest in independence in making certain kinds of important decisions." Whalen v. Roe, 429 U.S. 589, 599-600, 51 L. Ed. 2d 64, 97 S. Ct. 869 (1977). These interests have been termed the "confidentiality" and "autonomy" branches of the right of privacy. The confidentiality branch protects an individual's right not to have his affairs made public by the government. U.S. v. Westinghouse Elec. Corp., 638 F.2d 570, 577 (3d Cir. 1980). Personal financial information is entitled to privacy protection. Fraternal Order of Police, Lodge No. 5 v. City of Philadelphia, 812 F.2d 105, 115 (3d Cir. 1987). See also In re

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McVane v. Federal Deposit Insurance Corp., 1995 WL 15828, *12 n.4 (2d Cir. Jan. 12, 1995)(rejecting argument that there are no constitutionally protected privacy interests in bank statements and financial data); DeMasi v. Weiss, 669 F.2d 114, 119 (3d Cir. 1982)(private individuals have legitimate privacy expectation regarding income); Plante v. Gonzalez, 575 F.2d 1119, 1136 (5th Cir. 1978)("Financial privacy is a matter of serious concern, deserving strong protection."). As explained in Internet Direct Response, Inc. v. Buckley, 2010 U.S. Dist. LEXIS 50576, 4-6 (C.D. Cal. Apr. 29, 2010) FRCP Rule 69(a)(2) governs discovery in judgment enforcement proceedings and provides that a judgment creditor "may obtain discovery from any person-including the judgment debtor--as provided in these rules or by the procedure of the state where the court is located." This rule entitles a judgment creditor to "a very thorough examination of the judgment debtor." Credit Lyonnais, S.A. v. SGC Int'l, Inc., 160 F.3d 428, 430-31 (8th Cir. 1998) (quoting Caisson Corp. v. County West Bldg. Corp., 62 F.R.D. 331, 335 (E.D. Pa. 1974)). "The presumption should be in favor of full discovery of any matters arguably related to the [creditor's] efforts to trace [the debtor's] assets and otherwise to enforce the judgment." Id. Although courts have cautioned that third party inquiry must "be kept pertinent to the goal of discovering concealed assets of the judgment debtor and not be allowed to become a means of harassment," Caisson, 62 F.R.D. at 334 (citations omitted), inquiry into the assets of third persons is permissible where "the relationship between [the judgment debtor and third person(s)] is sufficient to raise a reasonable doubt about the bona fides of any transfer of assets between them." Credit Lyonnais, 160 F.3d at 431; see also Ryan Inv. Corp. v. Pedregal de Cabo San Lucas, 2009 U.S. Dist. LEXIS 118337, 2009 WL 5114077, at *3 (N.D. Cal. Dec. 18, 2009). Movants/Appellants are not judgment debtors, nor are their clients (except for one). They are not the alleged to be the recipients of any fraudulent transfer of assets by John Edwards, nor is there a scintilla of evidence of such a transfer. For these reasons, the subpoena must be quashed. Again, the argument that there is no privacy interest is misleading at best, untrue at worst. Only where parties are subjects of a criminal, tax, or administrative investigation by a

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government agency is there a lack of fourth amendment privacy interest in bank records.

In

United States v. Miller, 425 U.S. 435, the Supreme Court held that bank customers have no reasonable expectation of privacy, under the Fourth Amendment, in bank records of their accounts. This is because the bank records are required to be maintained under the Bank Secrecy Act, codified at 12 USC 1829b. As a result, when a subpoena is issued in connection with criminal, tax, and regulatory investigations and proceedings (12 U.S.C. 1829b (a)(1)), the subject of such a proceeding cannot object on the grounds that the subpoena constitutes an unreasonable search under the Fourth Amendment. United States v. Miller, 425 U.S. 435, 442443 (U.S. 1976). Moving Non-Parties, are not the subject of any criminal, tax, or regulatory investigation or proceeding. Plaintiff is simply trying to enforce a money judgment. The privacy interest in the bank records is protected under the First, Fifth, and Fourteenth Amendments of the United States Constitution. Despite Plaintiffs protestations to the contrary, it was not practicable to seek relief in the lower court. Northern District of California Local Rule 7-10 allows ex parte motions only if a statute, Federal Rule, local rule or Standing Order authorizes the filing of an ex parte motion in the circumstances and the party has complied with the applicable provisions allowing the party to approach the Court on an ex parte basis. Only FRCP Rule 65 allows for ex parte relief, or to seek a hearing on a shortened notice period. Plaintiffs gratuitous statement that it would have refrained from enforcing the subpoena while a stay was sought is belied by the fact that Plaintiff sought to enforce the subpoena immediately after the notice of appeal was filed. CONCLUSION Based on the foregoing, it is clear that the balance of hardships tips steeply in Movants/Appellants favor. Movants respectfully request that the Court enter an order staying enforcement of the subpoena of Movants bank records pending appeal in this matter, in order to allow Movants to enjoy their constitutional right to meaningful appellate review of the Courts order denying their motion to quash.

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Dated December 6, 2011

/s/ Wendy E. Miller _________________________ Wendy E. Miller Attorney for Movants/Appellants Harold P. Gewerter and Harold P. Gewerter, Esq., Ltd.

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9th Circuit Case Number(s) 11-17802

NOTE: To secure your input, you should print the filled-in form to PDF (File > Print > PDF Printer/Creator).

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CERTIFICATE OF SERVICE When All Case Participants are Registered for the Appellate CM/ECF System
I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system on (date) . December 13, 2011 I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system. Signature (use "s/" format) /s/ Wendy E. Miller

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CERTIFICATE OF SERVICE When Not All Case Participants are Registered for the Appellate CM/ECF System
I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system on (date) . Participants in the case who are registered CM/ECF users will be served by the appellate CM/ECF system. I further certify that some of the participants in the case are not registered CM/ECF users. I have mailed the foregoing document by First-Class Mail, postage prepaid, or have dispatched it to a third party commercial carrier for delivery within 3 calendar days to the following non-CM/ECF participants:

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