JENNIFER A. DORSEY, District Judge.
Previously, I granted plaintiff Commodity Futures Trading Commission's ("Commission" or "CFTC") motion for an order to show cause why defendants David Saffron and Circle Society Corp. should not be held in civil contempt for violating the court's December 6, 2019, order granting the Commission's motion for a preliminary injunction and other equitable relief.
Although Saffron appeared at the show-cause hearing and offered excuses and promises, he failed to show cause why he and Circle Society should not be held in civil contempt for violating the injunction order and subject to further coercive sanctions if they did not soon comply. I find that the CFTC has established by clear and convincing evidence that Saffron and Circle Society have violated multiple terms and conditions of the injunction order and that the CFTC is entitled to relief in the form of coercive sanctions against each defendant.
On September 30, 2019, the CFTC filed a complaint naming David Gilbert Saffron and Circle Society, Corp. as defendants. It alleges that Saffron and Circle Society violated the Commodity Exchange Act by engaging in a scheme whereby they fraudulently solicited members of the public to participate in an unregistered commodity pool for the purported purpose of trading off-exchange, binary option contracts on foreign currency ("forex") and cryptocurrency pairs, among other things.
On the same date that the CFTC filed its complaint, it also filed an ex parte motion for a temporary restraining order ("TRO")
On November 18, 2019, the CFTC filed a Motion for an Order to Show Cause as to Why Circle Society Should Not Be Held in Civil Contempt for Violation of the Court's October 3, 2019 TRO ("Show Cause Motion I").
On December 6, 2019, the court issued a Preliminary Injunction Order ("PI Order").
On December 20, 2019, the CFTC filed a Motion for an Order to Show Cause as to Why Defendants David Saffron and Circle Society Should Not Be Held in Civil Contempt for Violation of the Court's December 6, 2019, Preliminary Injunction Order ("Show Cause Motion II").
A court may hold a party in civil contempt for violating a court order.
The CFTC contends that Saffron and Circle Society have violated the PI Order by (1) failing to provide the CFTC with a "full and truthful accounting of their assets" within five business days following service of the PI Order and (2) refusing to make available to the CFTC for inspection and copying the "books, records, and other documents of defendants and their agents relating to or referring to defendants' business activities or business or personal finances including, but not limited to, paper documents, electronically-stored information, tape recordings, and computer discs."
Accordingly, and with good cause and clear and convincing evidence appearing, IT IS HEREBY ORDERED that Saffron and Circle Society must:
1. Fully comply with all terms and conditions of the December 6, 2019, PI Order;
2. No later than February 7, 2020, make available to the CFTC, for inspection and reproduction, all of defendants' business and financial books, records, and other documents, including electronically-stored information ("ESI"), or, if defendants are unable to make their books, records and other documents, including ESI, available to the CFTC, file with the District Court (with a copy submitted to the CFTC), a declaration under penalty of perjury by Saffron setting forth in detail all efforts by defendants and their agents to locate defendants' books, records, and other documents, including ESI;
3. No later than February 7, 2020, provide the CFTC with a full accounting of each defendant's assets, held jointly or separately, within or outside the United States, beginning from December 2017 for Saffron and from September 2018 for Circle Society to the date of this Order;
4. No later than February 7, 2020, provide written responses to the CFTC, under oath, to the following questions:
5. Unless Saffron purges his contempt by fully complying with the terms and conditions of this Order and the PI Order, he must pay to the District Court a daily compliance fine of $1,000 per day, beginning on February 8, 2020, and lasting until such time as Saffron has purged his contempt or the court orders otherwise. Any compliance fine due on a day when the court is closed, e.g., weekend or federal holiday, must be paid on the next day that the court is open to the public;
6. Unless Circle Society purges its contempt by fully complying with the terms and conditions of this Order and the PI Order, it must pay to the District Court a daily compliance fine of $1,000 per day, beginning on February 8, 2020, and lasting until such time as Circle Society has purged its contempt or the court orders otherwise. Any compliance fine due on a day when the court is closed, e.g., weekend or federal holiday, must be paid on the next day that the court is open to the public.
Finally, Saffron and Circle Society are cautioned that, should either of them fail to comply with the terms and conditions of this Order, including their individual obligations to pay a $1,000 daily compliance fine if they fail to purge their contempt, the court will entertain a motion from the CFTC to impose additional coercive sanctions upon a satisfactory showing by the CFTC that defendants, or either of them, have failed to comply with the terms and conditions of this Order.