JOHN G. KOELTL, District Judge.
Defendant Thomas Brenner moves to stay this civil proceeding — brought by the United States Securities and Exchange Commission ("SEC") — pending resolution of a parallel criminal investigation brought by the United States Attorney for the Northern District of Ohio. Alternatively, Brenner requests a stay for a period of six months.
In this case, the SEC claims that the defendants — including defendant Brenner — operated a more than $102 million Ponzi scheme that defrauded at least 637 investors. (Dkt. No. 1.) Approximately two weeks before this case was filed, Brenner received a letter from the United States Attorney's Office for the Northern District of Ohio. That letter informed Brenner that he was the target of a federal investigation involving criminal violation of the securities laws. The parties agree that the factual basis underpinning that investigation shares a substantial factual overlap with the facts of the present case.
Brenner moves to stay this case pending resolution of the Ohio criminal investigation or, alternatively, to stay this case for six months. Brenner argues that it will be burdensome for him to litigate both cases concurrently. Specifically, Brenner asserts that dual litigation will place him in the difficult position of having to choose whether to exercise his Fifth Amendment right against self-incrimination in this civil proceeding — which could be used as the basis for an adverse inference against him — or testifying, which leaves the possibility that the testimony will be used against him in the criminal proceeding.
"[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants."
A stay should be imposed only after a "particularized inquiry into the circumstances of, and the competing interests in, the case."
In evaluating whether to grant such a stay, courts in this Circuit consider the following factors:
These balancing factors, as applied to the facts of this case, favor granting a 90-day stay of Brenner's deposition but allowing documentary discovery to proceed.
First, overlap between the cases. In this case, there is no dispute that there is substantial overlap between the civil and criminal cases.
Second, status of the case and indictment. Generally, courts in this Circuit have denied requests for a stay where, as here, the defendant has not yet been indicted.
Conversely, courts routinely grant stays post-indictment.
Third, the plaintiff's interests. The SEC has an interest in pursuing relief expeditiously. As time goes by, witnesses' memories fade or the witnesses may lost entirely. However, the Court has already granted preliminary injunctive relief and an asset freeze, mitigating some of the risk that a stay might pose to the SEC.
Fourth, burden on the defendant. If this case is not stayed Brenner will face the difficult decision of asserting his Fifth Amendment right not to incriminate himself at the risk of losing a civil trial, or waiving those rights to defend himself in this civil proceeding at the risk of incriminating himself. This would be a significant, albeit constitutional, burden on the defendant.
Fifth, the Court's interest. The Court's interest in pursuing the fair administration of justice will not be affected by either a grant or denial of Brenner's motion.
Sixth and finally, the public interest. The public interest in this case is mixed. The public has an interest in assuring that the SEC is able to pursue its actions expeditiously. However, the public interest is not served by burdening a defendant's ability to exercise his Fifth Amendment rights, if that is reasonably avoidable.
On balance, these factors weigh in favor of granting a stay of Brenner's deposition for 90 days, but not a stay of documentary discovery. This stay will allow time for a decision to be made by the United States Attorney's Office for the Northern District of Ohio on whether it will pursue an indictment against Brenner and allow the SEC to continue litigating its civil case, with only a small delay of Brenner's deposition.
For the foregoing reasons, the Court will
To the extent not specifically addressed, the arguments are either moot or without merit. The Clerk of Court is directed to close Docket Number 60.