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Case 2:19-cv-05820-KM-MAH Document 31 Filed 05/13/19 Page 1 of 19 PageID: 218

UNITED STATES DISTRICT COURT


DISTRICT OF NEW JERSEY

SECURITIES AND EXCHANGE


COMMISSION,

Plaintiff, Hon. Michael A. Hammer

v.
Civ. No. 19-cv-05820 (KM-MAH)
GORDON J. COBURN and
STEVEN E. SCHWARTZ,
Motion Return Date: June 3, 2019
Defendants.

DEFENDANT GORDON J. COBURN’S OPPOSITION TO THE


MOTION OF THE UNITED STATES FOR LEAVE TO
INTERVENE AND FOR A STAY
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TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT ................................................................................................... 1

ARGUMENT ................................................................................................................................. 2

I. THE COURT SHOULD DENY THE GOVERNMENT’S REQUEST FOR A


BLANKET STAY ............................................................................................................. 2

A. The Government Has a Heavy Burden in Seeking a Stay, Which Is Not


Justified Merely Because Proceedings Overlap ..................................................... 2

B. The Government Has Not Shown that Proceeding with Discovery Would
Prejudice Its Interest or the Public Interest ............................................................ 7

C. A Stay Would Prejudice Gordon’s Ability To Defend Himself In This


Litigation ................................................................................................................ 9

D. The Possibility of a Narrowed Civil Case Does Not Justify a Stay ..................... 11

II. GORDON DOES NOT OBJECT TO A PARTIAL STAY THAT PERMITS


THIRD-PARTY DISCOVERY ....................................................................................... 11

CONCLUSION ............................................................................................................................ 13

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TABLE OF AUTHORITIES

Page

CASES

Berger v. United States,


295 U.S. 78 (1935) .....................................................................................................................8

Campbell v. Eastland,
307 F.2d 478 (5th Cir. 1962) ...................................................................................2, 5, 6, 7, 10

Clinton v. Jones,
520 U.S. 681 (1997) ...................................................................................................................2

Forrest v. Corzine,
757 F. Supp. 2d 473 (D.N.J. 2010) ............................................................................................2

Founding Church of Scientology v. Kelley,


77 F.R.D. 378 (D.D.C. 1977).....................................................................................................7

Gold v. Johns-Manville Sales Corp.,


723 F.2d 1068 (3d Cir. 1983).....................................................................................................2

In re Ivan F. Boesky Sec. Litig.,


128 F.R.D. 47 (S.D.N.Y. 1989) .................................................................................................6

Landis v. N. Am. Co.,


299 U.S. 248 (1936) .......................................................................................................2, 3, 5, 7

SEC v. Blumberg,
No. 14-cv-4962-KM, ECF No. 72 (D.N.J. Mar. 8, 2016)........................................................12

SEC v. Chakrapani,
Nos. 09-cv-325-RJS, 09-cv-1043-RJS, 2010 WL 2605819 (S.D.N.Y. June 29,
2010) ......................................................................................................................................4, 8

SEC v. Cioffi,
No. 08-cv-2457-FB-VVP, 2008 WL 4693320 (E.D.N.Y. Oct. 23, 2008) ...........................4, 12

SEC v. Control Metals Corp.,


57 F.R.D. 56 (S.D.N.Y. 1972) ...................................................................................................7

ii
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SEC v. Downe,
No. 92-cv-4092-PKL, 1993 WL 22126 (S.D.N.Y. Jan. 26, 1993) ............................................6

SEC v. Dubovoy,
No. 15-cv-6076-MCA, ECF No. 240 (D.N.J. Jan. 29, 2016) ....................................................6

SEC v. Fraser,
No. 09-cv-443-PHX, 2009 WL 1531854 (D. Ariz. June 1, 2009)...........................................12

SEC v. Gupta,
No. 11-cv-75666-JSR, 2011 WL 5977579 (S.D.N.Y. Nov. 30, 2011) ........................3, 4, 5, 12

SEC v. Jones,
No. 04-cv-4385-RWS, 2005 WL 2837462 (S.D.N.Y. Oct. 28, 2005) .....................................10

SEC v. Kanodia,
153 F. Supp. 3d 478 (D. Mass. 2015) ....................................................................4, 6, 8, 11, 12

SEC v. Kornman,
No. 3:04-cv-1803-L, 2006 WL 1506954 (N.D. Tex. May 31, 2006) ..................................4, 12

SEC v. Mazzo,
No. 12-cv-1327-DOC, 2013 WL 812503 (C.D. Cal. Feb. 25, 2013) ..........................4, 5, 9, 12

SEC v. Nicholas,
569 F. Supp. 2d 1065 (C.D. Cal. 2008) .................................................................................7, 9

SEC v. Oakford Corp.,


181 F.R.D. 269 (S.D.N.Y. 1998) .......................................................................................4, 7, 8

SEC v. One or More Unknown Purchasers of Securities of Global Indus., Ltd.,


No. 11-cv-6500-RA, 2012 WL 5505738 (S.D.N.Y. Nov. 9, 2012) ...........................................3

SEC v. O’Neill,
98 F. Supp. 3d 219 (D. Mass. 2015) ........................................................................................12

SEC v. Ott,
No. 06-cv-4195-GEB, 2006 U.S. Dist. LEXIS 86541 (D.N.J. Nov. 29, 2006) .........................6

SEC v. Saad,
229 F.R.D. 90 (S.D.N.Y. 2005) .................................................................................................4

SEC v. Saad,
384 F. Supp. 2d 692 (S.D.N.Y. 2005)............................................................................7, 11, 12

iii
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SEC v. Sandifur,
No. 05-cv-1631, 2006 WL 3692611 (W.D. Wash. Dec. 11, 2006) .............................3, 4, 9, 10

SEC v. Schiff,
No. 05-cv-04132 (FSH), 2006 WL 2690266 (D.N.J. Sept, 19, 2006) .....................................12

SEC v. Shkreli,
No. 1:15-cv-7175-KAM, ECF No. 26 (E.D.N.Y. Feb. 18, 2016) .............................................7

Société Nationale Industrielle Aérospatiale v. U.S. Dist. Ct. for the S. Dist. of
Iowa,
482 U.S. 522 (1987) .................................................................................................................10

United States v. FINRA,


607 F. Supp. 2d 391 (E.D.N.Y. 2009) .......................................................................................7

United States v. GAF Fin. Servs.,


335 F. Supp. 2d 1371 (S.D. Fla. 2004) ......................................................................................6

United States v. Hugo Key & Son, Inc.,


672 F. Supp. 656 (D.R.I. 1987)..................................................................................................6

United States v. Marion,


404 U.S. 307 (1971) .................................................................................................................11

United States v. Mellon Bank, N.A.,


545 F.2d 869 (3d Cir. 1976).......................................................................................................5

United States v. One 1964 Cadillac Coupe DeVille,


41 F.R.D. 352 (S.D.N.Y. 1966) .................................................................................................7

Walsh Sec., Inc. v. Cristo Prop. Mgmt., Ltd.,


7 F. Supp. 2d 523 (D.N.J. 1998) ................................................................................................3

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PRELIMINARY STATEMENT

Gordon Coburn is a loving and supportive husband to his wife of 28 years and proud

father of two young men (one emergency room doctor and one graduate student). Prior to

February 15, 2019, Gordon had an unblemished record. He was working with a global

investment firm providing small to mid-size companies with strategic advice and was on the

advisory board of an Ivy League graduate school. That changed when the Government chose to

bring coordinated criminal and civil actions against Gordon alleging violations of the Foreign

Corrupt Practices Act. The pendency of these serious allegations threatens Gordon’s reputation,

livelihood, and finances. He is entitled to defend against these charges and to try and clear his

name without unreasonable delay. He is entitled to gather evidence now, rather than risk the loss

of favorable evidence due to the vagaries of memories and data retention policies. We

respectfully submit that Gordon is entitled to at least limited civil discovery because the

Government chose to bring serious civil charges in coordination with its criminal charges. But

the Government seeks to stay the SEC’s case in its entirety, on the theory that civil discovery

may jeopardize the DOJ’s chance at a conviction by revealing material that would not have been

discoverable had the Government only brought criminal charges.

This Court should reject the Government’s bid to have its cake and eat it too. As the

party seeking the extraordinary remedy of a stay, the Government must make a clear showing

that the interests served by a stay outweigh the potential for prejudice to Gordon. Courts have

routinely applied this principle to hold that a stay is not warranted merely because the

Government’s decision to bring overlapping proceedings affords criminal defendants access to

civil discovery. Instead, the Government must make a particularized, non-speculative showing

that proceeding with discovery will concretely harm its interest or the public interest. The
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Government’s motion does not even attempt that showing or address the substantial prejudice to

Gordon that would result if this proceeding were stayed in its entirety pending resolution of the

criminal case.

The Government’s request for a blanket stay should accordingly be denied. 1 But Gordon

does not object to entry of a partial stay permitting third-party discovery while precluding

discovery from the parties and the Government’s cooperating witnesses. Such a result would

accommodate Gordon’s interest in advancing his defense against the civil action, while

protecting the Government from any potential prejudice.

ARGUMENT

I. THE COURT SHOULD DENY THE GOVERNMENT’S REQUEST FOR A


BLANKET STAY.

A. The Government Has a Heavy Burden in Seeking a Stay, Which Is Not


Justified Merely Because Proceedings Overlap.

Staying a case disrupts the ordered process of justice and impinges on a litigant’s right

“to a reasonably prompt determination of his civil claims or liabilities.” Campbell v. Eastland,

307 F.2d 478, 487 (5th Cir. 1962). Accordingly, a stay is a disfavored, “extraordinary” remedy,

Forrest v. Corzine, 757 F. Supp. 2d 473, 476 (D.N.J. 2010), and the “proponent of a stay bears

the burden of establishing its need.” Clinton v. Jones, 520 U.S. 681, 708 (1997). That burden is

heavy. “[B]efore a stay may be issued, the petitioner must demonstrate ‘a clear case of hardship

or inequity,’ if there is ‘even a fair possibility’ that the stay would work damage on another

party.” Gold v. Johns-Manville Sales Corp., 723 F.2d 1068, 1075–76 (3d Cir. 1983) (quoting

Landis v. N. Am. Co., 299 U.S. 248, 255 (1936)).

1
We do not object to the Government’s intervention in this matter.

2
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The settled presumption against civil stays applies with full force when the Government

seeks to stay an SEC enforcement proceeding in favor of a criminal action. SEC v. Gupta, No.

11-cv-7566-JSR, 2011 WL 5977579, at *1 (S.D.N.Y. Nov. 30, 2011). In such circumstances,

courts evaluate several factors to determine whether the Government has carried its burden,

including the extent of overlap between the cases and the interests of the parties, the public, and

the court. Walsh Sec., Inc. v. Cristo Prop. Mgmt., Ltd., 7 F. Supp. 2d 523, 526 (D.N.J. 1998)

(setting forth six factors). But the basic inquiry (as on any stay motion) is whether the

Government has affirmatively demonstrated, “based on the particular facts” of the litigation, the

degree of “hardship, inequity, or injustice” necessary to justify the “extraordinary remedy” of a

stay. SEC v. One or More Unknown Purchasers of Sec. of Global Indus., Ltd., No. 11-cv-6500-

RA, 2012 WL 5505738, at *2 (S.D.N.Y. Nov. 9, 2012) (internal quotation marks omitted).

The Government’s motion ignores these principles. The Government seemingly believes

a stay is an entitlement based on a generalized concern common to virtually all cases involving

overlapping civil enforcement and criminal proceedings: that discovery available to the

defendant in the civil matter could, conceivably, jeopardize a criminal conviction. See Gov’t Br.

11–14. We respectfully submit that this, standing alone, cannot be a proper basis for a full stay

and that the government’s argument runs headlong into the bedrock rule that a stay’s proponent

must clearly show actual hardship. See, e.g., Landis, 299 U.S. at 255. The case law makes clear

that the mere pendency of parallel civil enforcement and criminal proceedings, without more,

will not justify a stay.

“Although courts have been receptive to Government stay requests in civil cases brought

by parties other than the Government, results in recent years have been markedly different when

the Government itself brings a civil lawsuit simultaneous with a criminal proceeding.” SEC v.

3
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Sandifur, No. 05-cv-1631, 2006 WL 3692611, at *2 (W.D. Wash. Dec. 11, 2006) (emphasis

added). Rightly so. Id. at *2. A defendant facing a “serious SEC civil action” is entitled to the

“timely discovery” that “federal law grants.” SEC v. Saad, 229 F.R.D. 90, 92 (S.D.N.Y. 2005).

If that defendant faces overlapping criminal charges, he may “obtain certain ordinary discovery”

“helpful in defense of [the] criminal case.” SEC v. Oakford Corp., 181 F.R.D. 269, 273

(S.D.N.Y. 1998). This may undercut the informational advantage the Government generally

enjoys in criminal cases, where discovery is more limited. But that loss of “tactical advantage”

is not a “cognizable harm.” Id. It is “simply the reality of litigation,” SEC v. Kanodia, 153 F.

Supp. 3d 478, 481 (D. Mass. 2015), when the Government endeavors to “use[ ] parallel

proceedings to its advantage.” Sandifur, 2006 WL 3692611, at *2. 2

Accordingly, courts “regularly deny” requests for stays in parallel civil cases based on the

same generalized concerns set forth by the Government that civil discovery will afford a

defendant access to materials not discoverable in the criminal action. Sandifur, 2006 WL

3692611, at *2. 3 Courts instead insist that the Government make a particularized, non-

speculative showing of harm based on the specific facts of the case (and may tailor a stay to

avoid such harm while protecting the defendant’s interests). See, e.g., Kanodia, 153 F. Supp. 3d

2
See also SEC v. Chakrapani, Nos. 09-cv-325-RJS, 09-cv-1043-RJS, 2010 WL 2605819,
at *7 (S.D.N.Y. June 29, 2010) (“Surely, the government was well aware of the discrepancy
between the civil and criminal discovery rules when it, along with the SEC, chose to initiate
parallel proceedings.”); Saad, 229 F.R.D. at 91 (it was “bewildering” that “the U.S. Attorney’s
Office, having closely coordinated with the SEC in bringing simultaneous civil and criminal
actions against some hapless defendant, should then wish to be relieved of the consequences that
will flow if the two actions proceed simultaneously”).
3
See, e.g., Kanodia, 153 F. Supp. 3d at 480–81; SEC v. Mazzo, No. 12-cv-1327-DOC,
2013 WL 812503, at *2 (C.D. Cal. Feb. 25, 2013); Gupta, 2011 WL 5977579, at *1;
Chakrapani, 2010 WL 2605819, at *10–11; SEC v. Cioffi, No. 08-cv-2457-FB-VVP, 2008 WL
4693320, at *2 (E.D.N.Y. Oct. 23, 2008); SEC v. Kornman, No. 3:04-cv-1803-L, 2006 WL
1506954, at *2–5 (N.D. Tex. May 31, 2006).

4
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at 482; Gupta, 2011 WL 5977579, at *1. Indeed, without such a particularized showing, a court

cannot even perform the “thoughtful,” “case-specific analysis” required on a motion for stay.

Mazzo, 2013 WL 812503, at *2; see Landis, 299 U.S. at 255 (describing the required analysis).

The Government cites two Courts of Appeals cases for the proposition that “a civil

litigant should not be permitted to proceed simultaneously with an overlapping criminal matter.”

Gov’t Br. 12; see id. at 12–13. But these cases confirm that a stay must rest on a particularized

showing of need, not overlap alone or generalized concerns about the breadth of civil discovery.

In United States v. Mellon Bank, N.A., 545 F.2d 869 (3d Cir. 1976), the Government prosecuted

a defendant for fraud and also brought an action to seize his safe deposit box. In the seizure

proceeding, the defendant sought discovery of investigatory materials from the IRS, SEC, and

DOJ. Mellon Bank, 545 F.2d at 871. The Third Circuit upheld the Government’s stay request,

but not merely because the cases overlapped. Instead, the court cited evidence that the defendant

was attempting “to keep the seizure proceeding alive only so that he” could “use the civil court’s

discovery mechanism in connection with” the criminal case. Id. at 871 n.5 (emphasis added).

This manipulative conduct weighed in favor of a stay in the required “balanc[ing]” of

“hardship,” and the defendant had failed to demonstrate any hardship at all. Id. at 873, 871 n.5.

Campbell v. Eastland, 307 F.2d 478 (5th Cir. 1962), likewise shows that a stay is never

automatic, but requires a case-specific showing of need. See 307 F.3d at 487 (“it may be

appropriate to stay the civil proceeding” “in some situations,” but “[i]n others it may be

preferable for the civil suit to proceed”). In Campbell, the civil proceeding was brought not by

the Government, but by the criminal defendant, who then sought discovery intended strictly to

explore criminal defenses. Id. at 481–83, 488. The Fifth Circuit enumerated nine specific

factors that supported a stay, including that the Government had not filed the civil suit, that

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discovery was sought solely to prepare a criminal defense, and that “the record [was] bare of any

showing” of prejudice to the defendant. Id. at 490.

Given that Campbell involved a defendant’s attempt to secure otherwise unobtainable

criminal discovery by suing the Government, the case cannot help the Government here. See

Kanodia, 153 F. Supp. 3d at 482 (Campbell was “distinct from the instant case” because “it was

the defendant who brought the civil action”). To the contrary, Campbell is relevant in two ways,

both damaging to the Government: (1) the Fifth Circuit strongly suggested that the result would

be different had the Government been, as it is here, “the moving party seeking to recover while

withholding information that might defeat recovery”; and (2) the Fifth Circuit’s thorough

analysis of case-specific factors confirms the need for such an inquiry when the Government

seeks a stay. Id. at 490; see id. at 488–90.

The Government’s district court cases are no more convincing. Although the

Government offers multiple string cites of cases staying civil actions, those cases are

distinguishable, unreasoned, outdated, or some combination of all three; none offers persuasive

authority for the idea that the existence of broad civil discovery, without more, can justify a

blanket stay. 4 In any event, if the Government is correct that some courts reflexively grant

4
See SEC v. Ott, No. 06-cv-4195-GEB, 2006 U.S. Dist. LEXIS 86541, at *9–10 (D.N.J.
Nov. 29, 2006) (defendants consented to stay and represented that a stay would serve their
interests); Order, SEC v. Dubovoy, No. 15-cv-6076-MCA-MAH (D.N.J. Jan. 29, 2016), ECF No.
240 (unreasoned, one-sentence order); United States v. GAF Fin. Servs. Inc., 335 F. Supp. 2d
1371, 1373 (S.D. Fla. 2004) (stating, contrary to the Government’s position here, that “the
government must make an actual showing regarding the anticipated adverse effects that civil
discovery will have on the criminal investigation”); SEC v. Downe, No. 92-cv-4092-PKL, 1993
WL 22126, at *12–14 (S.D.N.Y. Jan. 26, 1993) (at the request of the Government, staying
discovery as to a single defendant who was “presently cooperating with an ongoing Grand Jury
investigation”; then, at the request of defendants, staying other discovery as well); In re Ivan F.
Boesky Sec. Litig., 128 F.R.D. 47, 49–51 (S.D.N.Y. 1989) (permitting “full discovery, except for
3500 materials”); United States v. Hugo Key & Son, Inc., 672 F. Supp. 656, 658 (D.R.I. 1987)
(more than three decades old, and specifically pointing to the prospect of “discovery of the

6
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blanket stays in these circumstances, the practice would flatly contravene “existing case law

mak[ing] plain that such stays” are not “granted automatically.” Oakford Corp., 181 F.R.D. at

271; see Landis, 299 U.S. at 255 (describing the showing required for a stay).

The existence of overlapping proceedings, without more, does not justify a stay. Instead,

consistent with settled law, the Government must make a “clear,” case-specific showing of

“hardship or inequity,” Landis, 299 U.S. at 255, sufficient to outweigh Gordon’s right to a

“prompt determination” of this serious civil action. Campbell, 307 F.2d at 487.

B. The Government Has Not Shown that Proceeding with Discovery Would
Prejudice Its Interest or the Public Interest.

“The Court’s starting point is that discovery and other proceedings” in this action “ought

to proceed in the normal course[.]” SEC v. Saad, 384 F. Supp. 2d 692, 693 (S.D.N.Y. 2005).

The Government must identify “particularized concerns” showing that discovery would harm its

interest or the public interest. Oakford Corp., 181 F.R.D. at 270. It has failed to do so.

First, the Government argues that a stay “will prevent the defendants from utilizing the

expansive civil discovery rules to obtain discovery that they otherwise would not be entitled to

under the narrow rules of criminal discovery.” Gov’t Br. 12. But the Federal Rules of Criminal

Procedure do not “enshrine a tactical advantage in favor of the government.” United States v.

identity of confidential government informants”); Founding Church of Scientology v. Kelley, 77


F.R.D. 378, 378–79 (D.D.C. 1977) (civil case filed by potential criminal defendants, as in
Campbell); SEC v. Control Metals Corp., 57 F.R.D. 56, 57–58 (S.D.N.Y. 1972) (staying only
four depositions); see also Government’s Reply Memorandum 12–14, SEC v. Shkreli, No. 1:15-
cv-7175-KAM-RML (E.D.N.Y. Feb. 18, 2016), ECF No. 26 (showing need for stay by
specifying defendant’s past efforts “to intimidate or threaten individuals” and his attempt to
tamper with a government witness); SEC v. Nicholas, 569 F. Supp. 2d 1065, 1069 (C.D. Cal.
2008) (concluding that civil discovery (requiring depositions of between 75 and 100 witnesses)
would be so expansive as to delay the criminal case); United States v. One 1964 Cadillac Coupe
DeVille, 41 F.R.D. 352, 353 (S.D.N.Y. 1966) (fifty-year-old in rem case in which the claimant,
owner of the subject property, sought discovery “plainly directed toward” his pending criminal
proceeding).

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FINRA, 607 F. Supp. 2d 391, 393 (E.D.N.Y. 2009). The Rules instead “guard against specific

concerns,” such as avoiding perjury and witness intimidation. Id. The Government has not even

tried to show that these specific concerns are implicated here and cannot do so. 5

The Government worries that Gordon may obtain exculpatory material through civil

discovery, which is “a strategic and tactical consideration that has little to do with the public

interest.” Kanodia, 153 F. Supp. 3d at 483–84. The Government may wish to preserve the

“tactical advantage” created by the narrow criminal discovery rules, Oakford Corp., 181 F.R.D.

at 273, but it evidently also desired to “take advantage of the benefits of dual prosecutions” by

“bring[ing] parallel civil and criminal cases.” Kanodia, 153 F. Supp. 3d at 483–84. By forcing

Gordon to defend against a civil action, the Government has potentially undermined part of its

tactical advantage in the criminal case, but the loss of tactical advantage is “no cognizable harm”

to the Government or the public. Oakford Corp., 181 F.R.D. at 273 (emphasis added);

Chakrapani, 2010 WL 2605819, at *11 (Government’s desire to preserve strategic advantage is

not a “right,” but a mere “litigator’s preference”). Indeed, to the extent that civil discovery

undermines the prosecution by revealing material demonstrating Gordon’s innocence of criminal

wrongdoing, the Government’s interests are not impeded, but advanced. See Berger v. United

States, 295 U.S. 78, 88 (1935) (interest of the United States in a criminal prosecution “is not that

it shall win a case, but that justice shall be done”).

Second, the Government asserts that “interrogatories and deposition notices in the SEC

Case could undermine or otherwise hinder the criminal prosecution.” Gov’t Br. 14. Concerns of

this nature can support a stay if accompanied by an adequate showing from the Government.

5
In fact, the government has already provided the defense with at least 21 FBI 302s of
witness statements, including statements of a cooperating witness who is not in custody.

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E.g., Nicholas, 569 F. Supp. 2d at 1069 (depositions of between 75 and 100 civil witnesses

would almost certainly delay criminal case). The Government has not attempted to make such a

showing, or even to describe its concern at anything other than the highest level of generality.

This is precisely the sort of generalized, conclusory “bare assertion” of harm that courts have

held insufficient to justify a stay. Sandifur, 2006 WL 3692611, at *3; see Mazzo, 2013 WL

812503, at *2; Point I.A, supra. Moreover, any such concerns can be addressed by a partial stay

that allows some amount of discovery to go forward that will not delay the criminal trial.

In the end, the Government tries to justify a blanket stay based on generalized

considerations common to virtually all overlapping civil enforcement and criminal proceedings.

That effort is inconsistent with settled law providing that stays are not automatic in such cases,

and must instead rest on a clear showing of harm to the interest of the Government or public.

See Point I.A, supra. The Government’s motion should be denied on this basis alone.

C. A Stay Would Prejudice Gordon’s Ability To Defend Himself In This


Litigation.

Permitting limited discovery would not harm the Government, but entering a full stay

would harm Gordon. The Government all but ignores the question of prejudice to Gordon,

offering only the assurance that “a stay . . . will cause little to no particularized harm . . . to the

defendants.” Gov’t Br. 15. That assurance is both unsupported and unsupportable.

Gordon is “facing very serious civil charges.” Sandifur, 2006 WL 3692611, at *3. The

SEC alleges that Gordon, a business professional who occupied a position of corporate trust,

participated in serious violations of securities laws. See generally Complaint, SEC v. Coburn,

No. 2:19-cv-5820-KM (D.N.J. Feb. 15, 2019), ECF No. 1 (“Compl.”). These allegations mar

Gordon’s reputation, endanger his livelihood, and threaten his finances. As a direct result of the

filing of the Government’s coordinated civil and criminal cases, Gordon has lost employment,

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including three directorships (one public company and two private companies), and his position

as an operating executive at a global investment firm. He has also lost his position serving on

the advisory board of an Ivy League graduate school. Gordon is 55 years old and has a limited

number of prime working years ahead of him. Gordon accordingly has “a strong interest in a

timely resolution” of the claims against him. Sandifur, 2006 WL 3692611, at *3; see also

Campbell, 307 F.2d at 487 (recognizing “the right of a civil litigant to a reasonably prompt

determination of his civil claims and liabilities”); SEC v. Jones, No. 04-cv-4385-RWS, 2005 WL

2837462, *2 (S.D.N.Y. Oct. 28, 2005) (denying stay where defendant’s “reputation and

credibility have been called into question, and he deserves a timely opportunity to clear his

name”).

A complete stay would impede this interest by threatening to substantially delay

disposition of the civil case. The criminal proceeding is in its earliest stages, with ongoing

government discovery, and has not yet been set for trial. If the civil matter proceeds with a

limited stay, Gordon will be able to use this period to seek civil discovery from third parties,

including Cognizant and the Contracting Firm, the Indian entity alleged to have paid the bribe.

See Compl. ¶¶ 2, 20. That process is likely to be protracted and complex. Discovery requests to

the Contracting Firm may have to be made through letters rogatory issued under the Hague

Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, a procedure apt

to be “unduly time consuming and expensive” for the defense. Société Nationale Industrielle

Aérospatiale v. U.S. Dist. Ct. for the S. Dist. of Iowa, 482 U.S. 522, 542 (1987). If a full stay

enters, the wheels of civil discovery would not begin to turn until criminal acquittal. This could

add a year or more to the time this case is on the Court’s docket, and would unnecessarily require

Gordon to continue to live under the cloud of this litigation. This is unfair.

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Avoiding delay is all the more imperative because key events alleged in the SEC

Complaint occurred years ago. See, e.g., Compl. ¶ 25 (alleging that construction of the KITS

Campus occurred in 2011); id. (alleging that the Contracting Firm applied for a planning permit

in February 2013); id. ¶ 27 (alleging that Mr. Coburn discussed a bribe demand in April 2014).

“[E]xtended delay” in litigation carries “the real possibility of prejudice” in that “memories will

dim, witnesses become inaccessible, and evidence be lost,” a consideration weighing against a

stay in these circumstances. United States v. Marion, 404 U.S. 307, 325–26 (1971).

D. The Possibility of a Narrowed Civil Case Does Not Justify a Stay.

The Government contends that a stay might narrow the issues in the civil case: “For

example, if the Criminal Case results in guilty verdicts,” “the jury’s findings will have preclusive

effect in the SEC case.” Gov’t Br. 16. This speculation does not warrant a stay. As one court

has put it, a stay entered for that purpose would “undoubtedly” “create efficiencies for the SEC,

which would then be able to bring and win a case without actually having to try it or even go

through the discovery process.” Kanodia, 153 F. Supp. 3d at 483. But “permit[ting] the SEC to

defer its case so as to capitalize more efficiently on a successful criminal prosecution” is not a

sound reason to “abridge [Gordon’s] procedural rights.” Id. Tellingly, the Government does not

discuss the prejudice to Gordon if he is acquitted in the criminal case and then has to start civil

discovery from scratch.

II. GORDON DOES NOT OBJECT TO A PARTIAL STAY THAT PERMITS


THIRD-PARTY DISCOVERY.

Although a blanket stay is not justified in this case, Gordon does not object to a stay that

would preclude discovery from the Government (including the SEC) and the Government’s

cooperating witnesses. This partial stay would avoid asymmetry should Gordon invoke his Fifth

Amendment rights in response to SEC discovery requests. See Saad, 384 F. Supp. 2d at 693–

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94. 6 It would also appear to alleviate the Government’s concern that “interrogatories and

deposition notices in the SEC Case” could hinder prosecution. See Point I.B & n.3, supra

(quoting Gov’t Br. 14); see Kornman, 2006 WL 1506954, at *2 (discovery aimed at “records of

third parties,” as opposed to “efforts of SEC investigators,” could not prejudice the prosecution).

At the same time, a stay permitting third-party discovery would permit Gordon to seek materials

necessary for his civil defense that are likely to prove difficult and time-consuming to obtain, and

which may not exist at the conclusion of the criminal case. See Point I.C, supra.

Courts can issue partial stays of civil discovery when the Government’s interests do not

justify a blanket stay. See, e.g., Schiff, 2006 WL 2690266, at *2 (D.N.J. Sept. 19, 2006)

(affirming magistrate judge’s decision to issue limited stay while allowing defendants to engage

in certain document discovery); Gupta, 2011 WL 5977579, at *1–2; Saad, 384 F. Supp. 2d at

693–94. 7 Consistent with the Government’s failure to demonstrate that a blanket stay is

necessary, and with Gordon’s legitimate interest in defending against the SEC action, we

respectfully submit that this Court should do so here.

6
In this way, the current request is distinguishable from that made in SEC v. Blumberg,
No. 14-cv-4962-KM (D.N.J. Mar. 8, 2016), ECF No. 72. Indeed, in the alternative, Gordon
would not object to a stay that would be limited to third-party document discovery, akin to the
limited stay approved in SEC v. Schiff, No. 05-cv-04132-FSH, 2006 WL 2690266 (D.N.J. Sept.
19, 2006). This would allow the parties to make substantial, albeit less, progress during the
pendency of the criminal matter.
7
See also SEC v. Fraser, No. 09-cv-443-PHX, 2009 WL 1531854, at *4 (D. Ariz. June 1,
2009) (noting government may object to particular discovery requests); Kanodia, 153 F. Supp.
3d at 484 (same); SEC v. O’Neill, 98 F. Supp. 3d 219, 225 (D. Mass. 2015) (same); Mazzo, 2013
WL 812503, at *2 (same); SEC v. Cioffi, 2008 WL 4693320, at *1 (same).

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CONCLUSION

The Court should deny the Government’s request for a blanket stay and enter a partial

stay permitting third-party discovery to exclude the government’s cooperating witnesses.

Dated: May 13, 2019 Respectfully Submitted,

/s/ James H. Keale_____________


James H. Keale
TANENBAUM KEALE LLP
Three Gateway Center, Suite 1301
100 Mulberry Street
Newark, New Jersey 07102
Tel: 973.242.0002

Henry Klehm III (admitted pro hac vice)


Harold B. Walther (admitted pro hac vice)
James P. Loonam (admitted pro hac vice)
Sarah Efronson (admitted pro hac vice)
Conor Reardon (pro hac vice pending)
JONES DAY
250 Vesey Street
New York, NY 10281-1047
Tel: (212) 326-3939
Fax: (212) 755-7306

Counsel for Defendant Gordon Coburn

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CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing document was filed via

CM/ECF and was served upon all counsel of record via CM/ECF on May 13, 2019.

/s/ James H. Keale____________________


James H. Keale
TANENBAUM KEALE LLP
Three Gateway Center, Suite 1301
100 Mulberry Street
Newark, New Jersey 07102
Tel: 973.242.0002

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