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IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Appeal No. 11-17021

SECURITIES EXCHANGE COMMISSION, Plaintiff/Appellee, vs. 1 st GLOBAL STOCK TRANSFER, LLC; HELEN BAGLEY, Defendants/Appellants.

Appeal from the United States District Court for the District of Nevada D.C. No: 2:08-cv-00437-LRH-RJJ

REPLY BRIEF OF APPELLANTS, MARK S. DZARNOSKI, ESQ.

GORDON SILVER Mark S. Dzamoski, Esq. Nevada Bar No. 3398 Email: mdzamoski@gordonsilver.com 3960 Howard Hughes Parkway Ninth Floor Las Vegas, Nevada 89169 Tel. (702)796-5555 FAX (702)369-2666 Attorneys for Defendants/Appellants 1 GLOBAL STOCK TRANSFER, LLC; HELEN BAGLEY
st

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TABLE OF CONTENTS TABLE OF AUTHORITIES ............................................................................. 2 CORPORATE DISCLOSURE STATEMENT ................................................ 3 I. SUMMARY .................................................................................................. 4 II. ARGUMENT ................................................................................................ 7 PLAINTIFF'S COUNTERSTATEMENT OF THE ISSUE A. IS WRONG ......................................................................................... 7 THE NECESSARY PARTICIPANT AND SUBSTANTIAL B. FACTOR TESTS WERE CREATED TO CATCH WILLING PARTICIPANTS IN UNREGISTERED OFFERINGS NOT TRANSFER AGENTS DOING THEIR JOBS ............................... 8 GENUINE ISSUES OF FACT EXIST AS TO WHETHER C. DEFENDANTS WERE SUBSTANTIAL PARTICIPANTS IN AN UNREGISTERED OFFERING .............................................. 11 GENUINE ISSUES OF FACT EXIST REGARDING D. DISGORGEMENT .......................................................................... 16 III. CONCLUSION ........................................................................................... 18 CERTIFICATE OF COMPLIANCE PURSUANT TO FED. R. APP.P. 32(A)(7)(C) AND CIRCUIT RULE 32-1 ................................................. 19 STATEMENT OF RELATED CASES PURSUANT TO CIRCUIT RULE 28-2.6............................................................................................................ 20 CERTIFICATION REQUIRED BY BAP RULE 8010(A)1-(B) .................. 21 PROOF OF SERVICE ..................................................................................... 22

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TABLE OF AUTHORITIES Cases Anderson v. Aurotek, 774 F.2d 927, 930, Fed. Sec. L. Rep. P 92,377, 3 Fed.R.Serv.3d 177 (9 th Cir. 1985) ....................................................................... 11 Ballew v. A.H. Robins Co., 688 F.2d 1325, 1327-28 (11th Cir.1982) .................... 11 Eid v. Alaska Airlines, Inc., 621 F.3 858, 868 (9 th Circuit, 2010) ........................ 12 Geiger v. S.E.C., 363 F.3d 481, 361 U.S.App.D.C. 45, Fed. Sec. L. Rep. P 92,732 (C.A.D.C.,2004) .................................................................................................... 9 Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1157 (9 th Circuit, 2009)...12 In re Homestore.com, Inc. Sec. Litig., 347 F. Supp. 2d 769 (C.D. Cal. 2004) ...... 11 In re Swine Flu Products Liab. Litig., 764 F.2d 637, 641 (9th Cir. 1985) ............ 11 Owen V. Kane, 48 S.E.C. 617, 620 (1986), aff d,842 F.2d 194 (8th Cir. 1988) ..... 8 SEC v. Friendly Power Comp., LLC, 49 F. Supp. 2d 1363, 1371 (S.D. Fla. 1999) 9 SEC v. Rogers, 790 F.2d 1450, 1456 (9th Cir. 1986), ....................................... 9, 10 S.E.C. v. Spongetech Delivery Systems, Inc., Slip Copy, 2011 WL 887940 (E.D.N.Y.), Fed. Sec. L. Rep. P 96,246 (E.D.N.Y.,2011) .............................. 9, 10 Regulations Securities Exchange Act of 1933 ............................................................................. 4

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CORPORATE DISCLOSURE STATEMENT Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, defendants 1 st Global Stock Transfer, LLC and Helen Bagley, by and through counsel, Mark S. Dzarnoski, Esq. of the law firm of Gordon Silver, hereby state that there are no parent corporation(s) and/or publicly-held corporation(s) owning 10% or more of the corporate party's stock. DATED: April 17, 2012. GORDON SILVER /s/ Mark S. Dzarnoski MARK S. DZARNOSKI, ESQ.

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I. SUMMARY In the Brief of the Plaintiff Securities Exchange Commission filed on March 23, 2012 ("Answering Brief' [Docket 26]), Plaintiff wholly fails to deny that there is not "a single case where a transfer agent has been found to have violated Section 5 of the Securities Act of 1933 merely for performing its duty of issuing securities upon the instruction of a corporate issuer and in reliance upon the opinions of counsel." [See Opening Brief of Appellants 1 st Global Stock Transfer and Helen Bagley at page 11 Docket 12]. Indeed, since the initial filing of the Complaint in this case on April 7, 2008, the Plaintiff has filed enforcement actions in other instances alleging violations of Section 5 in circumstances where transfer agents have issued hundreds of millions of shares of unlegended, free-trading shares in reliance upon instructions of corporate issuers and opinions of counsel; yet, in not one instance does it appear as if the transfer agent was named as a party defendant and alleged to be a necessary and substantial participant in the unregistered distribution of securities. If this Court accepts the Plaintiffs invitation to make transfer agents an insurer that all certificates it issues are in compliance with the registration requirements of the Securities Act of 1933, the legal landscape upon which transfer agents operate will forever be changed.

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Appellants' Opening Brief and Plaintiff's Answering Brief clearly place the matter before this Court in its proper context. The undisputed facts are the following: 1. John Edwards and Urban Casavant masterminded a "pump and

dump" scheme to defraud in connection with the offer and sales of securities of CMKM Diamonds, Inc. ("CMKM"). 2. 1 st Global was the transfer agent for CMKM and Bagley was 1st

Global's principal. 3. 1 st Global issued stock certificates bearing restrictive legends

upon CMKM's instruction. 4. CMKM hired attorney Brian Dvorak to write opinion letters

stating that the restrictive legends were no longer required pursuant to Rule 144(k). Later, upon the request of 1 st Global and Bagley for CMKM to provide a second legal opinion as to the validity of the issuance of unlegended shares, CMKM hired D. Roger Glenn and the law firm Edwards & Angell to provide opinion letters. These letters were given to 1 st Global and Bagley. 5. In reliance upon the opinion letters of both Dvorak and Glenn

and upon the directives of CMKM, 1 st Global cancelled the certificates

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bearing the restrictive legends and reissued shares without restrictive legends. 6. Casavant, Edwards and other defendants (not 1 st Global or

Bagley) subsequently sold the unrestricted shares. Based solely upon the above and foregoing undisputed facts, Plaintiff argues that it is entitled to summary judgment finding that 1 st Global and Bagley are, as a matter of law, "necessary participants" and "substantial factors" in an illegal distribution of unregistered securities. Appellants assert that absent an adverse finding of knowledge of the unlawfulness of the distribution and/or active participation in an unlawful scheme to defraud, a transfer agent is not a "necessary participant" and "substantial factor" in an illegal distribution of unregistered securities. Plaintiff does attempt to hedge its bet with the Court by arguing certain facts, which it maintains demonstrates 1st Global and Bagley should have known that an unlawful distribution was occurring. However, 1 st Global and Bagley have introduced sufficient evidence and argued sufficient inferences therefrom where a reasonable fact finder could determine that they had insufficient knowledge to be considered a "necessary participant" and/or "substantial factor" in the unregistered distributions. Plaintiff has not sustained its burden on summary judgment to demonstrate, as a matter of law, the factors relevant to such a determination.

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ARGUMENT A. PLAINTIFF'S COUNTERSTATEMENT OF THE ISSUES IS WRONG

Insofar as it relates to 1 st Global and Bagley, Plaintiff's counterstatement of

issues fails to consider the basis of the decision of the District Court. The District Court made no findings that Defendants issued shares "in the face of red flags indicating that they were facilitating an illegal distribution." Rather, the District Court found Defendants to be "necessary participants and substantial factors in the sale of unrestricted CMKM stock" solely based upon the conclusions that (1) but/for the removal of restrictive legends from the shares "there would not have been a sale of unregistered securities because the CMKM stock would still have the restrictive legend on each certificate" and (2) the removal of legends was not de minimus. [Order at 5:14-21]. The District Court did not consider "red flags" in making this determination. In fact, the District Court totally rejected Defendant's argument that whether Defendants "had known or had a reason to know that an illegal distribution of the stock would occur" was relevant and material to the application of the necessary participant and substantial factor test. [Order at 5:22 6:5]. Rather than analyzing a knowledge component in the necessary participant and substantial factor test, the District Court wrongfully

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concluded that Defendants were attempting to graft a scienter requirement into Section 5 and/or use reliance on opinion of counsel as an affirmative defense. The central question at issue in this appeal is whether the District Court was correct in finding, as a matter of law, that a transfer agent is a necessary participant and substantial factor in an unregistered distribution of securities merely for performing its duties in removing restrictive legends from certificates upon request of the issuer and in reliance upon opinions of counsel. If some knowledge component is required, the existence of red flags stacked against reliance on opinion letters and direct testimony of Bagley denying knowledge of an illegal distribution creates a genuine issue of material fact because reasonable minds could differ regarding what Defendants knew or should have known.

B. THE NECESSARY PARTICIPANT AND SUBSTANTIAL FACTOR TESTS WERE CREATED TO CATCH WILLING PARTICIPANTS IN UNREGISTERED OFFERINGS NOT TRANSFER AGENTS DOING THEIR JOBS
Not everyone, in the chain of intermediaries between a seller of securities and the ultimate buyer is involved sufficiently in the process of distribution to make him responsible for an unlawful transaction. Owen V. Kane, 48 S.E.C. 617, 620 (1986), aff1d,842 F.2d 194 (8th Cir. 1988). The necessary participant and

substantial factor test was developed to provide some rational basis to determine who, outside of a direct seller, could be liable for violations of Section 5. As set forth in Appellants' Opening Brief, "substantial" participation" is a concept
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without precise bounds but generally includes "one who plans a scheme, or, at the least, is a substantial motivating factor behind it." SEC v. Rogers, 790 F.2d 1450, 1456 (9th Cir. 1986). A person who has not had individual contact with the purchasers of unregistered securities may be held liable as having "indirectly" sold the security if the person has "employed or directed others to sell or offer them, or has conceived of and planned the scheme by which the unregistered securities were offered or sold." SEC v. Friendly Power Comp., LLC, 49 F. Supp. 2d 1363, 1371 (S.D. Fla. 1999). Even in its own Answering Brief, Plaintiff acknowledges that "it is common business practice to obtain an opinion letter from the issuer's counsel advising the transfer agent that the requirements for an exemption from registration have been met. (citations omitted)." [Answering Brief at pg. 13]. In Geiger v. S.E.C., 363 F.3d 481, 361 U.S.App.D.C. 45, Fed. Sec. L. Rep. P 92,732 (C.A.D.C.,2004), one of the active participants in the unlawful distribution claimed that he should not be liable for the sale because he relied on the transfer agent's determination that the shares were unrestricted. The court found the SEC's characterization of this argument as "disingenuous" to be "generous" precisely because the transfer agent, as in the case sub judice, relied upon opinion letters which the transfer agent did not know contained false information. Id. at 486. In S.E.C. v. Spongetech Delivery Systems, Inc., Slip Copy, 2011 WL 887940
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(E.D.N.Y.), Fed. Sec. L. Rep. P 96,246 (E.D.N.Y.,2011), filed after Plaintiff brought this action, the transfer agent issued over 922 million Spongetech shares based upon ninety-two opinion letters from one attorney, 12 million shares based upon four opinion letters of another attorney and an unknown number of shares based upon 216 opinion letters that were forged. As with every reported case before Spongetech, supra., the transfer agent was not even alleged to have violated Section 5 because it relied on the general business practice of requiring opinions authored by issuer's counsel before issuing unrestricted shares. In finding one of the two attorneys to be "substantial participants" in the unlawful distribution, the Spongetech court noted that said attorney "did not have a sufficient basis to issue the opinion letter and was reckless in doing so." Id. at 17. Thus, even in determining whether the lawyer drafting the opinion letter was a "substantial participant" in an unregistered offering, the Spongetech court looked for a knowledge and/or recklessness component. To assert that a transfer agent is a "substantial participant" in an unregistered offering simply because of the number of shares it issued is clearly a departure from existing law as set forth in SEC v. Rogers, supra. One wonders how a transfer agent could ever know the threshold of permissible shares that it could issue without fear that the SEC would view him/her as a "substantial participant." Apparently, the issuance of 500,000 unrestricted shares is permissible (i.e. Geiger,

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supra.). So, too, is the issuance of 922 million unrestricted shares (i.e. Spongetech, supra.). Unknown is at what point Defendants 1 line that the Plaintiff is now asserting must exist. C. GENUINE ISSUES OF FACT EXIST AS TO WHETHER DEFENDANTS WERE SUBSTANTIAL PARTICIPANTS IN AN UNREGISTERED OFFERING If this Court finds that the mere issuance of unregistered shares by a transfer agent in reliance upon opinion of issuer's counsel is sufficient to prove "substantial participation," Defendants concede the grant of summary judgment was proper. However, if knowledge of the scheme and/or reckless conduct is required, genuine issues do exist. As set forth in Appellants' Opening Brief, whether ones role is pervasive enough to bring him/her within the definitions of "substantial factor" and "necessary participant" usually involves a question of fact for the jury. Anderson v. Aurotek, 774 F.2d 927, 930, Fed. Sec. L. Rep. P 92,377, 3 Fed.R.Serv.3d 177 (9th Cir. 1985). Similarly, whether a party knew or should have known about the
st

Global and Bagley crossed the

causal connection between matters is a question of fact for the jury, and when facts conflict on the extent of the plaintiffs actual knowledge, summary judgment should be reversed. In re Swine Flu Products Liab. Litig., 764 F.2d 637, 641 (9th Cir. 1985) citing Ballew v. A.H. Robins Co., 688 F.2d 1325, 1327-28 (11th Cir.1982). See also In re Homestore.com , Inc. Sec. Litig., 347 F. Supp. 2d 769
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(C.D. Cal. 2004) (Genuine issue of material fact existed as to whether corporate officer, as defendant, knew or should have known of fraudulent deals used to create positive earnings statements through his general work setting revenue goals, precluding summary judgment in federal securities fraud case.). Further, "summary judgment is generally an inappropriate way to decide questions of reasonableness because the jury's unique competence in applying the reasonable man standard is thought ordinarily to preclude summary judgment." Eid v. Alaska Airlines, Inc., 621 F.3 858, 868 (9 th Circuit, 2010) quoting Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1157 (9 th Circuit, 2009). In a flawed attempt to salvage the District Court's order granting summary judgment, Plaintiff asks a series of rhetorical questions designed to make one wonder how Defendants could not have known that an illegal distribution was occurring. [See Answering Brief at pages 53-54]. These rhetorical questions might be very appropriate in a closing argument to the jury. These rhetorical questions invite the listener to draw an inference as to the level of knowledge of Defendants regarding an unlawful, unregistered distribution. However, Plaintiff is not entitled on a summary judgment to have these inferences made in its favor. The short answer to the question "how could Defendants not know that an illegal distribution was occurring" is that Defendants demanded and received not one but two different opinion letters of counsel telling Defendants that the shares

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could legally be issued as requested without restrictive legend. [App. 485-487 and 491-493]. In its Answering Brief, Plaintiff does not dispute any of these Undisputed Facts contained in Defendants' Opening Brief: Neither Bagley nor 1 st Global ever removed a restrictive legend from a share of CMKM stock and/or reissued certificates without a legend without first receiving the support of an opinion of counsel letter stating that certificates evidencing the newly issued shares need bear no restrictive legend. [APP 565: Separate Statement of Undisputed Facts #16] Neither Bagley nor 1 st Global ever made a new issuance of shares of CMKM stock without first receiving appropriate corporate resolutions authorizing such issuance. [APP 565: Separate Statement of Undisputed Facts #17] For most of 2003 and about half of 2004, the opinion letters Bagley relied upon in determining whether to reissue certificates without restrictive legend were written by Brian Dvorak. [APP 565: Separate Statement of Undisputed Facts #18] From approximately June 2004 forward, Bagley required CMKM to submit Dvorak's opinion letters to D. Roger Glenn of Edwards & Angell for review. From that point forward, neither Bagley nor 1 st Global would reissue certificates without restrictive legend unless they had an opinion letter from Edwards & Angell. [APP 565: Separate Statement of Undisputed Facts #20] Typically, Edwards & Angell would send both the Dvorak opinion letter and their own directing Bagley and 1 st Global to reissue shares without restrictive legends. [APP 565: Separate Statement of Undisputed Facts #21] After CM1KM retained Edwards & Angell, Bagley even requested Edwards & Angell review earlier submitted opinions tendered to her by Dvorak. Bagley would not remove restricted legends based solely upon the opinion of Dvorak and requested "a letter to the effect that these [Dvorak's] opinions are valid." [APP 565: Separate Statement of Undisputed Facts #22] During most of 2003 and through May of 2004, but/for the receipt of opinion letters from Dvorak stating that "[Customer name] should be now be
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issued [Number] shares without restrictive legend, as fully paid and nonassessable" neither Bagley nor 1 st Global would have removed restricted legends from any shares of CMKM stock and/or reissued shares without restrictive legend. [APP 566: Separate Statement of Undisputed Facts #26] From and after June of 2004, but/for the receipt of opinion letters from Edwards & Angell stating that "the Shares may be issued to the Shareholders in the amounts set forth above, and that the certificates evidencing the Shares need bear no restrictive legend," neither Bagley nor 1 st Global would have removed restricted legends from any shares of CMKM stock and/or reissued shares without legend. [APP 566: Separate Statement of Undisputed Facts #27]

The best that Plaintiff can do is argue that the opinion letters submitted by Edwards & Angell were not really opinion letters at all since they "explicitly rely upon Dvorak's opinion letters in support of the central determination that the requirements of Rule 144(k) have been met." [See Answering Brief at page 57]. This argument is meritless. Regardless of the factual underpinnings and quality of the law firms investigation of factual predicates, the conclusion in the Edwards & Angell opinion letters is clear: "we are of the opinion that the Shares may be issued to the Shareholders in the amounts set forth above, and that the certificates evidencing the Shares need bear no restrictive legend." [See App at 493]. While acknowledging reliance on certain aspects of the Dvorak opinion letters, Edwards & Angell also affirmatively represent that "we have examined such certificates, certified copies of organizational and governance documents, certificates of good standing, certifications of factual matters, company resolutions and other records,

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pertinent documents and instruments, and have investigated such other matters of law and fact, as we have deemed necessary for the purpose of rendering the opinions set forth herein." [App at 492-493]. While Plaintiff wishes the Court to draw an inference, as a matter of law, that reliance on one or both opinion letters is unreasonable, Defendant submitted evidence to the contrary as follows: D. Roger Glenn (Edwards & Angell) felt it reasonable for him to rely upon the opinions expressed by Dvorak in writing his own opinion letters [Defendants' Undisputed Facts 29 at App 567]; D. Roger Glenn felt Dvorak's opinion letters were valid. [Defendants' Undisputed Facts 30 at App 567];

While D. Roger Glenn found CMKM to be a "peculiar company," he had no reason to believe the issuances of shares subject to the Dvorak opinion letters was wrongful. [Defendants' Undisputed Facts 31 at App 567]; and, Dvorak fully investigated the factual claims underlying the opinions set forth in his opinion letters. [Defendants' Undisputed Facts 32 at App 567]. Thus, even if Defendants parsed the opinions carefully and realized that Edwards & Angell disclosed their reliance upon Dvorak's opinion letters, it can hardly be said, as a matter of law, that it was unreasonable for Defendants to rely upon the Edwards & Angell opinion letters. If a former SEC staff attorney and current well reputed securities attorney (D. Roger Glenn) employed with a reputable firm (Edwards & Angell) believed it reasonable to rely upon Dvorak and thought Dvorak's opinions were valid, certainly a reasonable jury could view Defendants'
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reliance on both Dvorak and Edwards & Angell to be reasonable as well. Defendants issued shares based upon the independent opinion of Edwards & Angell and D. Roger Glenn who are not named as participants in the alleged scheme nor are they even alleged to have known of the scheme. How the writer of the opinions could not even be alleged to be substantial participant in the distribution yet the transfer agent that relied upon those opinions is alleged to be a substantial participant is left a total mystery.

D. GENUINE ISSUES OF FACT EXIST AS TO DISGORGEMENT

In its Answering Brief, Plaintiff totally distorts the matters set forth in Defendants' Opening Brief regarding disgorgement and that are contained in the record. Plaintiff states that "Bagley states in her affidavit that the only money she received from the defendants was fees related to the stock transfer services provided to CMKM. Br. 33." To the contrary, Defendants, at page 33 of their Opening Brief state as follows: Except for a bona fide loan transaction with John Edwards, which st loan was fully repaid, any funds received by Bagley or 1 Global from any other defendant or from any entity affiliated with any other defendant were for payment of fees for stock transfer services provided to CMKM as well as other issuers unrelated to CMKM. [Defendants' Separate Statement of Undisputed Facts # 10: APP 564] (emphasis added). This distinction between CMKM and "other issuers unrelated to CMKM is crucial. The sole evidence produced by Plaintiff is that Defendants received approximately

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$300,000 from other defendants in this case and/or non-party entities that are somehow related to or controlled by other defendants in this case. Plaintiff failed to even show that the accounts from which fees were paid to Defendants ever had proceeds from the sale of CMKM stock in them at all. Plaintiff offered zero proof that the money received by Defendants is related in any way to CMKM. Defendants acknowledge receiving only $15 per certificate issued for their ministerial issuance of certificates. Further, Plaintiff offers to this Court, without any evidentiary support, that Defendants must somehow be lieing about receiving only $15 per certificate issued. [Answering Brief at page 64]. The Plaintiff states that Defendants would only have been paid $15 each for issuing 450 unlegended stock certificates. That is sheer nonsense. CMKM had hundreds of billions of shares of stock that traded in the free market. Plaintiff claims tens of thousands of investors lost over $64 million making these purchases. Defendants were paid $15 per certificate for every certificate it issued not just the 450 unlegended certificates. It is significant that Plaintiff does not allege that every certificate issued by Defendants was wrongful: only the 450 unlegended certificates. Any disgogemnt should be limited to payments received for issuance only of those 450 certificates. If the ill-gotten gains that Defendants need to disgorge are limited to the 450

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unlegended stock certificates as Plaintiff is suggesting, then total disgorgement should not have exceeded $6,250. Plaintiffs burden is to show a reasonable approximation of ill-gotten gains received by Defendants. At a minimum, this burden requires Plaintiff to show some rational basis for concluding that money received by Defendants is related to the wrongful conduct. The mere receipt of some money from some defendants and/or from non-party entities under their control provides no nexus whatsoever. It does not differentiate between fees received for non-objectionable issuances of CMKM certificates nor does it account for fees received in connection with issuers unrelated to CMKM.

CONCLUSION For the above and foregoing reasons, this Court should reverse the District Court's granting of summary judgment. DATED: April 17, 2012. GORDON SILVER /s/ Mark S. Dzarnoski MARK S. DZARNOSKI, ESQ.

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CERTIFICATE OF COMPLIANCE PURSUANT TO FED. R. APP. P. 32(a)(7)(C) AND CIRCUIT RULE 32-1 Pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth Circuit Rule 32-1, the attached OPENING BRIEF OF APPELLANTS is proportionally spaced, has a typeface of 14 points or more, and contains 3,490 words, excluding the parts of the Brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). DATED: April 17, 2012. GORDON SILVER /s/ Mark S. Dzamoski MARK S. DZARNOSKI, ESQ.

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STATEMENT OF RELATED CASES PURSUANT TO CIRCUIT RULE 28-2.6 Brian Dvorak has filed an appeal with this Court (Appeal No. 11-17025). Pursuant to DktEntry: 9, the matter is consolidated with 11-17021. DATED: April 17, 2012. GORDON SILVER /s/ Mark S. Dzarnoski MARK S. DZARNOSKI, ESQ.

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CERTIFICATION REQUIRED BY BAP RULE 8010(a)1-(b) I, Mark S. Dzarnoski, certify that the following parties have an interest in the outcome of this appeal. These representations are made to enable judges of the Panel to evaluate possible disqualification or recusal: None other than those named in the appeal. DATED: April 17, 2012. GORDON SILVER /s/ Mark S. Dzamoski MARK S. DZARNOSKI, ESQ.

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PROOF OF SERVICE I am employed in the County of Clark, State of Nevada. I am over the age of 18 and not a party to the within action. My business address is 3960 Howard Hughes Pk , 9th Floor, Las Vegas, Nevada 89169. On April 17, 2012,1 served the REPLY BRIEF OF APPELLANTS on the interested parties in this action by placing a true and correct copy of each document(s) thereof, enclosed in a sealed envelope addressed as follows: BlaMe T. Welsh, Esq. US District Court Chief Civil Division 333 Las Vegas Blvd. South Las Vegas, NV 89101 Email: Blaine.Welsh@usdoj.gov Harold P. Gewerter, Esq. Attorney at Law 2705 Airport Drive Las Vegas, NV 89032 Email: Harold@gewerterlaw.corn James L. Edwards, Esq. Parker & Edwards 1481 W. Warm Springs Road #135 Henderson, NV 89014 Email: ecf@beckeylaw.com John M. McCoy, III, Esq. Regional Trial Counsel Securities and Exchange Commission 5670 Wilshire Boulevard, 11th Floor Los Angeles, California 90036-3648 Email: mccovj@sec.gov John Wesley Hall, Jr., Esq. Law Offices of John Wesley Hall, Jr., P.A. 1202 Main St., Suite 210 Little Rock, AR 72202-5057 Email: tjl@forhall.corn Karen Lynn Matteson, Esq. Securities and Exchange Commission th 5670 Wilshire Boulevard, 11 Floor Los Angeles, California 90036-3648 Email: mattesonk@sec.gov

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Leslie A. Hakala, Esq. Securities and Exchange Commission 5670 Wilshire Boulevard, 1 l th Floor Los Angeles, California 90036-3648 Email: hakalal@sec.gov

Molly M. White, Esq. Securities and Exchange Commission 5670 Wilshire Boulevard, 1 l th Floor Los Angeles, California 90036-3648 Email: whitem@sec.gov

/s/ Anna Dang Anna Dang, an employee of Gordon Silver

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