In what shouldn’t come as a surprise to anyone, the SEC have revealed, contrary to Charles Scoville’s representations, that Traffic Monsoon cannot repay its investors.
In late September Scoville filed a motion requesting the court dissolve the Receivership and either lift the asset freeze or reduce it to $15 million.
In their opposition to Scoville’s motion, the SEC claim Traffic Monsoon doesn’t have enough money to pay off investors.
This is based on Scoville’s lawyer requesting the Receiver ‘calculate the amount invested by U.S.-based Traffic Monsoon investors, the amount that had been repaid to those investors, and the remaining amount owing.‘
According to Traffic Monsoon’s own records, Traffic Monsoon’s U.S.-based investors are owed approximately $56 million.
Thus far the Receiver has marshaled $49.5 million in assets.
And bear in mind that’s only US-based affiliates. 90% of Traffic Monsoon affiliates are based outside of the US.
Scoville also argued that the his constitutional rights were abrogated by the appointment of the Receivership.
As the potential violations identified by Scoville are purely hypothetical, and as courts “do not rule in the abstract on questions of suppression,” U.S. v. Setser, 568 F.3d 482 (5th Cir. 2009), the Court (should) deny Scoville’s requested relief.
Citing U.S. v. Setser, a case Scoville himself cited that pertains to Ponzi fraud and Christian groups, the SEC point out
as long as there was no collusion between and among the different governmental agencies, wherein the civil process was used in a deceptive manner to obtain evidence that otherwise would not have been available through the criminal process, the court concluded there was no violation of a Fourth and Fifth Amendment right.
There has been no such alleged collusion in this matter, and the Receiver is well within her court-ordered and statutory rights to possess and marshal the defendants’ assets.
As such, Scoville has no constitutional rights violations here.
If Scoville wants to pursue the argument he’s going to have to provide some actual proof.
Given criminal proceedings against him have not been publicly confirmed, that’s pretty much impossible to do at this point.
Likewise, the asset freeze in this case does not abrogate Scoville’s Due Process rights.
As this matter is civil, not criminal, in nature, Scoville does not have a constitutional right to counsel.
Courts have refused requests to access frozen funds to pay for defense costs because, in civil enforcement matters, unlike criminal matters, there is no Sixth Amendment right to counsel and because those funds should be used to repay defrauded victims.
I suspect a decision on Scoville’s motions will be made next week, or at the latest on November 1st when the preliminary injunction hearing takes place.