Case: 22-11226 Document: 49 Page: 1 Date Filed: 04/05/2023
`
`No. 22-11226
`
`In the United States Court of Appeals
`for the Fifth Circuit
`
`SECURITIES AND EXCHANGE COMMISSION,
`
`Plaintiff – Appellee,
`v.
`TIMOTHY BARTON,
`
`Defendant – Appellant.
`
`From the United States District Court
`for the Northern District of Texas
`Honorable Brantley Starr, U.S. District Judge
`Cause No. 3:22-cv-2118-X
`
`RECEIVER’S MOTION FOR LEAVE TO FILE
`AMICUS CURIAE BRIEF
`
`Brown Fox PLLC
`Charlene C. Koonce
`State Bar No. 11672850
`Timothy B. Wells
`State Bar No. 24131941
`8111 Preston Road, Suite 300
`Dallas, TX 75225
`T: (214) 327-5000
`F: (214) 327-5001
`charlene@brownfoxlaw.com
`tim@brownfoxlaw.com
`
`Counsel for Receiver Cortney C. Thomas
`
`

`

`Case: 22-11226 Document: 49 Page: 2 Date Filed: 04/05/2023
`
`In this interlocutory appeal, Cortney C. Thomas, the Court-appointed
`
`Receiver (“Receiver”), seeks leave to file as Amicus Curiae the attached proposed
`
`Response and Opposition to Appellant’s Brief, and in support, respectfully shows
`
`the Court as follows:
`
`SUMMARY
`Although the SEC initiated the lawsuit from which the appeal arises, the
`
`discrete order on appeal was issued in response to a motion filed by the Court-
`
`appointed Receiver. The SEC did not participate in the briefing on the motion that
`
`resulted in the order on appeal, nor did it argue the motion to the district court.
`
`Nonetheless, this Court previously denied the Receiver’s motion for designation as
`
`the Appellee or real party in interest (although it granted leave for the Receiver to
`
`file a motion to dismiss the appeal). Ultimately, the Receiver would prefer not to
`
`spend Receivership Estate funds defending a jurisdiction-less appeal, but to the
`
`extent appeals occurs, the Receiver has grave concerns about denial of the right to
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`defend the Receivership Estate and provide a voice for the defrauded investors.
`
`Further, the Receiver has spent months deciphering the tangled web of Receivership
`
`Entities and associated transactions and has the most current and accurate
`
`information regarding the Receivership Estate and its assets.
`
`‒ 1 ‒
`
`

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`Case: 22-11226 Document: 49 Page: 3 Date Filed: 04/05/2023
`
`FACTUAL SUMMARY
`On December 22, 2022, Appellant filed a Notice of Appeal seeking to
`
`1.
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`overturn an order approving the sale of property located at 4107 Rock Creek Drive,
`
`Dallas, TX (the “Rock Creek Property” and the “Order”). The Order was issued in
`
`response to the Receiver’s Motion. ROA.2373–2379; 2740–2742.
`
`2.
`
`Following Barton’s appeal of the Order, on January 20, 2023, the
`
`Receiver filed a Motion to be Recognized as the Appellee, Party in Interest,
`
`Intervenor, or Motion for Leave to File as an Amicus, since the Receiver is the only
`
`party to file the initial motion at issue.
`
`3.
`
`On January 25, 2023, this Court granted the Receiver’s Motion for
`
`Leave to file as an Amicus Curiae and the Court accepted the Receivers’ Motion to
`
`Dismiss as an Amicus Curiae Brief. The Court denied the Receiver’s request to be
`
`named as an Appellee, Party in Interest, or Intervenor.
`
`4. While the SEC has addressed the merits of Barton’s appeal, the
`
`Receiver should also be heard regarding an appeal of an order issued at the
`
`Receiver’s request.
`
`5.
`
`Moreover, the Receiver possesses the most up-to-date and specific
`
`information regarding the status of the Rock Creek Property, information that is also
`
`relevant to certain arguments raised by Appellant. The Receiver can direct the Court
`
`to that additional information, filed in the district court after the record was prepared
`
`‒ 2 ‒
`
`

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`Case: 22-11226 Document: 49 Page: 4 Date Filed: 04/05/2023
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`for this interlocutory appeal. For instance, the Receiver has discovered that a
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`significant portion of the funds used to purchase the Rock Creek Property came from
`
`several Receivership Entities into which the SEC traced investor funds, contrary to
`
`the Appellant’s assertion in his Brief. Brief p. 15.
`
`6.
`
`Because designation as the Appellee has already been denied, the
`
`Receiver seeks leave to file the attached proposed amicus brief.
`
`‒ 3 ‒
`
`

`

`Case: 22-11226 Document: 49 Page: 5 Date Filed: 04/05/2023
`
`Respectfully submitted,
`
`By: /s/ Charlene C. Koonce
`Charlene C. Koonce
` State Bar No. 11672850
`Timothy B. Wells
` State Bar No. 24131941
`BROWN FOX PLLC
`8111 Preston Road, Suite 300
`Dallas, Texas 75225
`Phone: (214) 327-5000
`Fax: (214) 327-5001
`Email: charlene@brownfoxlaw.com
`Email: tim@brownfoxlaw.com
`
`Counsel For Receiver Cortney C. Thomas
`
`CERTIFICATE OF COMPLIANCE
`I certify that this Motion complies with the type-volume limit of FED.
`
`1.
`
`R. APP. P. 21(d) because, excluding the words that need not be counted, it contains
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`498 words.
`
`2.
`
`This Motion complies with the typeface requirements of FED. R. APP.
`
`P. 32(a)(5) and the type style requirements of FED. R. APP. P. 32(a)(6) because it has
`
`been prepared in a proportionally-spaced typeface using Microsoft Word 365 in
`
`Times New Roman 14-point font in text and Times New Roman 12-point font in
`
`footnotes.
`
`/s/ Charlene C. Koonce
`Charlene C. Koonce
`
`‒ 4 ‒
`
`

`

`Case: 22-11226 Document: 49 Page: 6 Date Filed: 04/05/2023
`
`CERTIFICATE UNDER ECF FILING STANDARDS
`Pursuant to paragraph A(6) of this Court’s ECF Filing Standards, I certify that
`
`(1) required privacy redactions have been made (see Local Rule 25.2.13); (2) the
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`electronic submission is an exact copy of the paper document (see Local Rule
`
`25.2.1); and (3) the document has been scanned for viruses with the most recent
`
`version of a commercial virus scanning program and is free of viruses.
`
`/s/ Charlene C. Koonce
`Charlene C. Koonce
`
`‒ 5 ‒
`
`

`

`Case: 22-11226 Document: 49 Page: 7 Date Filed: 04/05/2023
`
`. 22-11226
`
`In the
`United States Court of Appeals
`for the
`Fifth Circuit
`
`SECURITIES AND EXCHANGE COMMISSION,
`Plaintiff – Appellee,
`v.
`TIMOTHY BARTON,
`Defendant – Appellant.
`
`From the United States District Court
`for the Northern District of Texas
`Honorable Brantley Starr, U.S. District Judge
`Cause No. 3:22-cv-2118-X
`
`RECEIVER’S AMICUS BRIEF
`
`Brown Fox PLLC
`Charlene C. Koonce
`State Bar No.11672850
`Timothy B. Wells
`State Bar No. 24131941
`8111 Preston Road, Suite 300
`Dallas, TX 75225
`T: (214) 327-5000
`F: (214) 327-5001
`charlene@brownfoxlaw.com
`
`Counsel for Receiver Cortney C. Thomas
`
`

`

`Case: 22-11226 Document: 49 Page: 8 Date Filed: 04/05/2023
`
`TABLE OF CONTENTS
`
`INTEREST OF AMICUS CURIAE ................................................................ 3
`I.
`BACKGROUND ............................................................................................. 3
`II.
`III. ARGUMENT ................................................................................................... 7
`A.
`Barton’s Interlocutory Appeals Injure The Receivership Estate .......... 7
`B.
`Barton’s Tracing Arguments Are Misguided ........................................ 9
`1.
`Tracing is Not Required .............................................................. 9
`2.
`To Date, Barton Has Rendered Tracing Impossible .................11
`3.
`Despite Barton’s Efforts to Conceal Records, the
`Receiver has Traced Investor Funds into the Rock Creek
`Property .....................................................................................12
`The Receiver’s Absence as an Appellee Potentially Prejudices
`the Receivership Estate and the Defrauded Investors .........................13
`
`C.
`
`i
`
`

`

`Case: 22-11226 Document: 49 Page: 9 Date Filed: 04/05/2023
`
`TABLE OF AUTHORITIES
`
`Cases
`Helt v. Sethi Petroleum, L.L.C.,
`No. 20-40240, 2022 WL 127977 (5th Cir. Jan. 13, 2022) ...................................14
`Janvey v. Adams,
`588 F.3d 831 (5th Cir. 2009)................................................................................10
`Long Beach Mortg. Co. v. White,
`No. 95 C 4068, 1995 WL 470234 (N.D. Ill. Aug. 7, 1995) ..................................11
`Netsphere, Inc. v. Baron,
`703 F.3d 296 (5th Cir. 2012)................................................................................10
`SEC v. Camarco,
`No. 19-1486, 2021 WL 5985058 (10th Cir. Dec. 16, 2021) .................................. 9
`SEC v. Faulkner,
`No. 3:16-CV-1735-D, 2018 WL 4362729 (N.D. Tex. Sept. 12, 2018) ...............11
`SEC v. Res. Dev. Intern.,
`291 Fed. Appx. 660 (5th Cir. 2008) .....................................................................14
`SEC v. Stanford Int’l Bank, Ltd.,
`927 F.3d 830 (5th Cir. 2019)............................................................................7, 14
`United States v. Antiques Ltd. P’ship,
`760 F.3d 668 (7th Cir. 2014).................................................................................. 7
`
`ii
`
`

`

`Case: 22-11226 Document: 49 Page: 10 Date Filed: 04/05/2023
`
`INTEREST OF AMICUS CURIAE
`I.
`Amicus Curiae Cortney C. Thomas is the court-appointed Receiver
`
`(“Receiver”) in this case. The appeal originated from a motion filed by the Receiver,
`
`not the SEC, seeking approval for the sale of realty in furtherance of the Receiver’s
`
`duties and obligations. The Receiver, rather than the SEC (which is designated as
`
`the Appellee) is most familiar with the property and the justification for its sale. The
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`Receiver previously filed a motion seeking designation as an appellee, real party in
`
`interest, or intervenor, but the motion was denied, and the Receiver was permitted
`
`only to file a motion to dismiss as an amicus. Accordingly, the Receiver seeks leave
`
`to file this amicus brief responding to Appellant’s Brief, and in support, respectfully
`
`shows the Court as follows:
`
`BACKGROUND
`II.
`The SEC filed suit against Appellant Barton for securities fraud. ROA.21.
`
`Through its investigation, the SEC discovered “Barton had been commingling,
`
`transferring, dissipating, and encumbering investor funds and assets purchased with
`
`investor funds,” while at the same time using investor funds to “pay personal
`
`expenses of Barton and his family, including exorbitant credit card bills, rent, and to
`
`buy a plane.” ROA.120–21, 126. To preserve the limited assets available to repay
`
`the investors whose funds Barton misappropriated, the SEC filed a Motion for
`
`‒3‒
`
`

`

`Case: 22-11226 Document: 49 Page: 11 Date Filed: 04/05/2023
`
`Appointment of Receiver (“Motion to Appoint”). ROA.115.1
`
`On October 18, 2022, the District Court entered the Order Appointing
`
`Receiver (“Receivership Order”). ROA.601. The factual basis for the Receivership
`
`Order was Barton’s misappropriation of investor funds, which the SEC’s evidence
`
`demonstrated he misused to, “among other things, purchase properties in the name
`
`of other entities he controlled, pay undisclosed fees and commissions, pay expenses
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`associated with unrelated real estate development projects, and fund his lifestyle.”
`
`ROA.120; ROA.174–79.
`
`The Receivership Order authorized the Receiver to “[e]nter into and cancel
`
`contracts . . . as the Receiver deems necessary or advisable” and “[t]o pursue, resist,
`
`defend, compromise or otherwise dispose of all . . . claims[] and demands which
`
`may now be pending or which may be brought by or asserted against the
`
`Receivership Entities.” ROA.605 (Receivership Order ¶¶ 6(H), 6(J)). In accordance
`
`with additional orders and governing statutes such as 28 U.S.C. §§ 2001 and 2004,
`
`the Receivership Order also authorized the Receiver to sell real property owned by
`
`the Receivership Entities. ROA.618 (Receivership Order ¶ 39).
`
`1 Barton was also indicted on seven counts of wire fraud, one count of conspiracy to commit wire
`fraud, and one count of securities fraud due to his alleged misuse of over $26 million acquired
`from investors. See United States v. Timothy Barton, Case No. 3:22-cr-00352-K, in the United
`States District Court for the Northern District of Texas.
`
`‒4‒
`
`

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`Case: 22-11226 Document: 49 Page: 12 Date Filed: 04/05/2023
`
`The Rock Creek Property is a house located at 4107 Rock Creek Drive, Dallas,
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`Texas 75204 (the “Rock Creek Property,”) owned by SF Rock Creek, LLC,2 which
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`the Receiver has contracted to sell for $1.4 Million. ROA.2374–75. In the initial
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`days of his appointment, the Receiver discovered that on October 17, 2022 Barton,
`
`through SF Rock Creek, had also entered a listing agreement, engaging a real estate
`
`broker to sell the Rock Creek Property. ROA.2375, ROA.2385-2387.
`
`On December 2, 2022, in accordance with 28 U.S.C. § 2001, the Receivership
`
`Order, and a subsequent Order Governing Administration of Receivership Estate,
`
`(ROA.1185)3 the Receiver filed a Motion for Appointment of Appraisers, Approval
`
`of Appraisals of Rock Creek Property, and Setting Hearing Regarding Approval of
`
`Sale of Rock Creek Property (“Motion to Approve Sale”), by which he sought the
`
`Court’s approval to sell the Rock Creek Property. ROA.2373.
`
`Following an objection filed by Barton (ROA.2629), the Receiver’s Notice of
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`Publication regarding the sale (ROA.2727, ROA.2730) and the Receiver’s Reply in
`
`2 As an entity controlled by Barton, SF Rock Creek, LLC is a Receivership entity. (ROA.604;
`700–05; 715–17; 727–31; 738; 1179–84; 1358–1405; 2373–78; 2600–10; 2654–63; 2740–42).
`3 “Sale of Real Property, if any, shall be made pursuant to 28 U.S.C. § 2001 with further motions
`and notices filed and published as required by that statute. If multiple offers are received from
`disinterested purchasers for any one property, the Court hereby concludes that the Receiver may,
`in his discretion, utilize any one or more of such offers as one or more of the “appraisals” required
`by § 2001(b). Similarly, the Receiver may in his discretion utilize informal “opinions of value”
`received from respected brokers in the respective industries related to the subject property, as one
`or more of the “appraisals” required by § 2001(b).” ROA.1193 (Order Governing Administration
`of Receivership Estate ¶ (D)(2)).
`
`‒5‒
`
`

`

`Case: 22-11226 Document: 49 Page: 13 Date Filed: 04/05/2023
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`Support of the Motion (ROA.2654), the District Court granted the Motion to
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`Approve Sale, in part, by appointing the appraisers and accepting the appraisals
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`submitted with the Motion to Approve Sale. ROA. 2724. On December 19, 2022,
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`as required by 28 U.S.C. § 2001, the District Court conducted a hearing to consider
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`the sale. Following the hearing, on December 20, 2022, the District Court entered
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`an order approving the sale (ROA.2740) (the “Rock Creek Order”).
`
`On December 22, 2022, Appellant filed a Notice of Appeal seeking to
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`overturn the Rock Creek Order. ROA.2781. The case was docketed reflecting the
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`SEC as the Appellee.4
`
`Because the Motion to Approve Sale was filed and urged only by the Receiver,
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`on January 20, 2023, the Receiver filed a Motion to be Recognized as Appellee,
`
`Party in Interest, Intervenor, or Motion for Leave to File as an Amicus (“Motion to
`
`be Recognized”).5 App. Dkt. 29.6
`
`On January 25, 2023, this Court denied the Receiver’s Motion to be
`
`Recognized, in part, granting the Motion to the extent the Receiver was permitted to
`
`file a Motion to Dismiss, as amicus curiae brief. App. Dkt. 34-1. In his Motion to
`
`4 The Receiver was excluded from the appellate docket, either based on how this Court docketed
`the appeal, or from the way the appeal was filed.
`5 Barton opposed the Receiver’s request that the clerk alter the docket and opposed the Receiver’s
`motion.
`6 Cites to “App. Dkt.” refer to the appeal docket, while bracketed docket cites [Dkt.__] refer to the
`district court docket.
`
`‒6‒
`
`

`

`Case: 22-11226 Document: 49 Page: 14 Date Filed: 04/05/2023
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`Dismiss, the Receiver challenged this Court’s interlocutory jurisdiction for this
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`appeal, based on 28 U.S.C. § 1292(a)(2).
`
`A.
`
`III. ARGUMENT
`Barton’s Interlocutory Appeals Injure The Receivership Estate
`This appeal involves Barton’s interlocutory challenge to the Rock Creek
`
`Order. It is not, however, the only interlocutory appeal Barton has initiated.7
`
`Presumably, unless precluded from doing so by this Court, Barton will continue
`
`challenging future interlocutory orders authorizing or approving the Receiver’s
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`sales, settlements, or administrative work, issued in the ordinary course of this
`
`receivership. Allowing piecemeal appeals of every order entered by the district court
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`hinders the primary purpose of the equitable receivership: “marshaling [] the estate’s
`
`assets for the benefit of aggrieved investors and other creditors of the receivership
`
`entities.” SEC v. Stanford Int’l Bank, Ltd., 927 F.3d 830, 840 (5th Cir. 2019); see
`
`also United States v. Antiques Ltd. P’ship, 760 F.3d 668, 671 (7th Cir. 2014)
`
`(concluding no appellate jurisdiction existed for order approving receiver’s property
`
`sales, because “that would both strain the statutory language and make anything the
`
`receiver did appealable immediately, which could flood the courts of appeals with
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`interlocutory appeals.”).
`
`7 See Appeal No. 22-11242.
`
`‒7‒
`
`

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`Case: 22-11226 Document: 49 Page: 15 Date Filed: 04/05/2023
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`This meritless and jurisdiction-less appeal has nonetheless interrupted the sale
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`of the Rock Creek Property, while the equity in that Property continues to erode.
`
`Even though the District Court denied Barton’s motion to stay the sale, the title
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`company assisting in the sale has been unwilling to issue a title policy until the
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`appeal is concluded. [Dkt. 139, p.10].
`
`The appeal is not, however, the sole cause of a delayed closing for the Rock
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`Creek Property. Shortly before the December 19 hearing to approve the sale, the
`
`Receiver learned that in early December 2022, Barton had filed a lis pendens on the
`
`Rock Creek Property. The Receiver was forced to file an Emergency Motion to
`
`Declare Lis Pendens Void (ROA.2705) which the District Court granted. ROA.2741.
`
`Just a few hours after the December 19 hearing, unsolicited and without permission
`
`from the Court or the Receiver, Barton notified the purchaser of past foundation and
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`flooding issues Barton claimed to have experienced at the Rock Creek Property.
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`[Dkt. 134, ¶ 28; Dkt 139, p.10]. Although Barton’s communication caused the
`
`purchaser to request an extension of the closing date, he is now ready to close—once
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`the title company will issue a title policy.
`
`Regardless of the cause, the delayed sale necessitates payment of taxes,
`
`insurance, and other expenses, and allows the equity in the Property to continue to
`
`erode. More specifically, the Rock Creek Property continues to accrue interest at
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`$285.60 per day (utilizing the contract rate of 9.95% rather than the default rate of
`
`‒8‒
`
`

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`Case: 22-11226 Document: 49 Page: 16 Date Filed: 04/05/2023
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`18%, as negotiated with the lender based on a now passed closing date). [Dkt. 134,
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`¶ 29]. The lender had also agreed to reduce a pre-payment penalty if the sale had
`
`closed before the end of 2022. To prevent further dilution of equity in the Rock
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`Creek Property and mitigate the continuing expenses, the Court should dismiss the
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`appeal and affirm the Rock Creek Order.
`
`B.
`
`Barton’s Tracing Arguments Are Misguided
`In his Brief, Barton contends the Receiver and SEC are required to show that
`
`funds traceable to the alleged fraud flowed into the Rock Creek Property and that no
`
`such tracing can be shown. Both are assertions are incorrect.
`
`Tracing is Not Required
`1.
`As the Tenth Circuit explained “imposing [a] strict tracing requirement . . .
`
`would not further the goals of disgorgement because a savvy embezzler could
`
`quickly spend the money on luxury vacations, secrete ill-gotten funds away in a
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`location or foreign bank account not detectable by authorities, or so commingle
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`tainted funds with untainted funds as to make it impossible to trace the tainted funds
`
`to their final resting place.” SEC v. Camarco, No. 19-1486, 2021 WL 5985058, at
`
`*14 (10th Cir. Dec. 16, 2021) (emphasis added)).
`
`Moreover, the authorities Barton cites are inapplicable to the facts here. For
`
`instance, Adams arose out of the Stanford receiver’s claw-back efforts and
`
`considered whether passive investors who received ill-gotten gains as profits were
`
`‒9‒
`
`

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`Case: 22-11226 Document: 49 Page: 17 Date Filed: 04/05/2023
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`properly designated as relief defendants. Janvey v. Adams, 588 F.3d 831, 834 (5th
`
`Cir. 2009). Barton’s characterization of the Adams two-part test misrepresents the
`
`holding of the case, which did not impose a strict tracing requirement where the
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`target of a claim—here Barton and the entities he controlled—are not designated as
`
`“relief defendants.” Instead, the case identified the factual predicate for designating
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`defendants as “relief defendants,” a holding that has no relevance here.
`
`In Netsphere, this Court considered the propriety of a receivership imposed
`
`over an individual’s assets and two corporations he controlled to preclude the
`
`defendant’s vexatious litigation tactics, where no allegation was made that the
`
`entities were used by the defendant in any wrongdoing, or possessed any assets
`
`related to the litigation. Netsphere, Inc. v. Baron, 703 F.3d 296, 301-302, 304 (5th
`
`Cir. 2012). The case arose from a dispute between private litigants; securities
`
`violations and preserving assets for defrauded victims was not in issue. Id. In
`
`concluding the district court abused its discretion in imposing the receivership, the
`
`Fifth Circuit observed that receiverships over “corporate assets,” i.e., corporate
`
`entities, were appropriate where the “corporate assets are the underlying subject
`
`matter of the dispute.” Id. at 306.
`
`Similarly, the Faulker Court considered a motion to expand a receivership
`
`estate. In partially granting the motion, the district court explained that it “will
`
`include in the receivership estate the assets of any non-party entity that is (i)
`
`‒10‒
`
`

`

`Case: 22-11226 Document: 49 Page: 18 Date Filed: 04/05/2023
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`controlled by Faulkner and (ii) in possession of funds traceable to BOG or BECC
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`investors.” SEC v. Faulkner, No. 3:16-CV-1735-D, 2018 WL 4362729, at *5 (N.D.
`
`Tex. Sept. 12, 2018). These cases do not require impose a protracted tracing
`
`requirement in every instance a receivership is imposed, particularly in a securities
`
`enforcement proceeding.
`
`To Date, Barton Has Rendered Tracing Impossible
`2.
`If the Court finds tracing is required, Barton’s role in rendering a robust
`
`tracing analysis impossible prior to the Receiver’s Motion to Approve Sale,
`
`mitigates the requirement here. See Long Beach Mortg. Co. v. White, No. 95 C 4068,
`
`1995 WL 470234, at *2 (N.D. Ill. Aug. 7, 1995) (“[W]here the presumed wrongdoer’s
`
`conduct has itself created the roadblock that prevents resort to that usual process
`
`[tracing], it is entirely appropriate for a court to freeze all of that party’s assets pending
`
`the determination of just which assets may be traceable to the allegedly fraudulent
`
`activities.”). From the first days of the Receivership, as detailed in the Receiver’s
`
`Motion to Compel Documents and Information, Request for Sanctions, or
`
`Alternatively, Motion for Show Cause Hearing [Dkt. 133; 134] (which was filed
`
`after the record in this appeal was prepared) Barton has refused to provide access to
`
`the Receivership Entities’ accounting records and electronic files. Barton has
`
`responded to the Receiver’s requests for access to these records with delays, refusals,
`
`and roadblocks, thereby impeding the Receiver’s efforts to trace the ultimate
`
`‒11‒
`
`

`

`Case: 22-11226 Document: 49 Page: 19 Date Filed: 04/05/2023
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`disposition of millions of dollars that flowed through the Receivership Entities’ bank
`
`accounts.8 [Dkt. 133; 134].
`
`3.
`
`Despite Barton’s Efforts to Conceal Records, the Receiver has
`Traced Investor Funds into the Rock Creek Property
`Despite Barton’s best efforts to preclude review of accounting records for the
`
`Receivership Entities, the Receiver has recently obtained bank records for many of
`
`the Receivership Entities and traced funds from Receivership Entities into the Rock
`
`Creek Property. For example, as detailed in the Receiver’s Verified Motion to
`
`Compel Documents and Information from Attorneys, Request for Sanctions, and
`
`Brief in Support [Dkt. 199], on August 17, 2020, $300,000 was transferred from a
`
`JMJ Development, LLC account (5193) to SF Rock Creek, LLC (3575). That same
`
`day nearly $300k was wired to HSTX Title with the memo “41047 [sic] Rock Creek
`
`Drive…Balance Due at Closing.” The JMJ account statement showed a
`
`corresponding transfer of $300k to the SF Rock Creek account, the balance of which
`
`at the beginning of the month was $446. On February 17, 2021, SF Rock Creek
`
`wired BSI Financial $6,700. Several transfers from JMJ Residential, LLC and JMJ
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`Development accounts provided the funds for the wire to BSI. On March 09, 2021
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`JMJ Development wired SF Rock Creek $10,200. On March 11, SF Rock Creek
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`wired BSI Financial nearly $10,200. [Dkt. 199].
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`8 See ROA. 167–171.
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`‒12‒
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`

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`Case: 22-11226 Document: 49 Page: 20 Date Filed: 04/05/2023
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`But–for Barton’s refusal to comply with the Receivership Order, this
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`information would have been included in the Receiver’s Motion to Approve Sale.
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`C.
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`The Receiver’s Absence as an Appellee Potentially Prejudices the
`Receivership Estate and the Defrauded Investors
`Barton’s interlocutory appeals cause a continuing strain on the Receivership
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`Estate by delaying or disrupting sales of real property, which are the primary
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`Receivership Assets. And the outcome of these appeals will directly impact the
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`amount recovered for the defrauded investors. Excluding the Receiver from the
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`docket in this, and related appeals arising from orders issued at the Receiver’s
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`request, raises grave due process and procedural concerns.
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`Ideally, spending Receivership Assets to defend improper interlocutory
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`appeals should be unnecessary. To the extent Barton continues to flout the absence
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`of jurisdiction for these appeals, however, the Receiver occupies the best position to
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`defend orders related to the administration of the Estate, as well as providing all
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`relevant information related to his motions, and representing the interests of the
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`defrauded investors on whose behalf the Receiver serves. While the SEC is
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`interested in the final outcome of the case, it lacks the same procedural “interest” in
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`interlocutory appeals of orders granted based on the Receiver’s motions.
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`As explained in the Motion to be Recognized, designating the Receiver as the
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`appellee or otherwise as an interested party is appropriate. Based on the Receivership
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`Order, ROA.601–625, and subject to the District Court’s supervision, the Receiver
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`‒13‒
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`

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`Case: 22-11226 Document: 49 Page: 21 Date Filed: 04/05/2023
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`possesses and controls all Receivership Property and is authorized, subject to further
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`orders, to sell receivership property. SEC v. Stanford Int’l Bank, Ltd., 927 F.3d 830,
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`840 (5th Cir. 2019). Indeed, the Receiver is currently the only person or entity vested
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`with authority to make decisions regarding the Rock Creek Property, including
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`paying taxes and insurance for the Property and determining its appropriate
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`disposition. ROA.604-05.
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`Nor would including the Receiver as a party to the appeal be novel. See
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`Crawford v. Sillette Appeal No. 09-40641 (designating the receiver as an interested
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`party, although the underlying case clearly reflected the CFTC as the Plaintiff);
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`Zacarias v. Stanford Int’l Bank, Ltd., Appeal No. 17-11073 and many other
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`Stanford-related appeals, (identifying the receiver as a (“null”) appellee and
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`permitted to file responsive motions and briefs); Helt v. Sethi Petroleum, L.L.C., No.
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`20-40240, 2022 WL 127977, at *1 (5th Cir. Jan. 13, 2022) (designating receiver,
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`Helt, as the Appellee in SEC enforcement case involving interlocutory appeal of
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`denial of motion to intervene by party who sought to challenge Receiver’s authority
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`over certain receivership entities as assets); SEC v. Res. Dev. Intern., 291 Fed. Appx.
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`660, 661 (5th Cir. 2008) (case docketed reflecting receiver as “Counter-Defendant
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`Appellee” where order at issue, finding appellant in contempt, was issued based on
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`receiver’s motion). A similar docketing practice was followed by the Seventh Circuit
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`in SEC v. Ventus Holdings, Appeal No. 21-2664, where that receiver was designated
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`‒14‒
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`

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`Case: 22-11226 Document: 49 Page: 22 Date Filed: 04/05/2023
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`as “Court-Appointed Receiver-Appellee,” while the SEC, the Plaintiff, was
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`identified as the “Plaintiff-Appellee” and allowed to file motions and briefs.
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`Here, no one is harmed by the Receiver’s inclusion in this appeal, but his
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`absence potentially harms the investors whose interests he serves and on whose
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`behalf the Rock Creek Order was issued.
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`CONCLUSION
`The appeal should be dismissed for lack of jurisdiction, or in the alternative,
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`the Rock Creek Order should be affirmed. In the event the appeal proceeds, the
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`Receiver should be included as a party and permitted to be heard.
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`Respectfully submitted,
`
`By: /s/ Charlene C. Koonce
`Charlene C. Koonce
` State Bar No. 11672850
`charlene@brownfoxlaw.com
`Timothy B. Wells
` State Bar No. 24131941
`tim@brownfoxlaw.com
`BROWN FOX PLLC
`8111 Preston Road, Suite 300
`Dallas, Texas 75225
`T: (214) 327-5000
`F: (214) 327-5001
`
`Attorneys for Receiver Cortney C.
`Thomas
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`‒15‒
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`

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`Case: 22-11226 Document: 49 Page: 23 Date Filed: 04/05/2023
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`CERTIFICATE OF COMPLIANCE
`I certify that this Motion complies with the type-volume limit of FED.
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`1.
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`R. APP. P. 21(d) because, excluding the words that need not be counted, it contains
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`2,973 words.
`
`2.
`
`This Motion complies with the typeface requirements of FED. R. APP.
`
`P. 32(a)(5) and the type style requirements of FED. R. APP. P. 32(a)(6) because it has
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`been prepared in a proportionally-spaced typeface using Microsoft Word 365 in
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`Times New Roman 14-point font in text and Times New Roman 12-point font in
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`footnotes.
`
`/s/ Charlene C. Koonce
`Charlene C. Koonce
`
`CERTIFICATE UNDER ECF FILING STANDARDS
`Pursuant to paragraph A(6) of this Court’s ECF Filing Standards, I certify that
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`(1) required privacy redactions have been made (see Local Rule 25.2.13); (2) the
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`electronic submission is an exact copy of the paper document (see Local Rule
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`25.2.1); and (3) the document has been scanned for viruses with the most recent
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`version of a commercial virus scanning program and is free of viruses.
`
`/s/ Charlene C. Koonce
`Charlene C. Koonce
`
`‒16‒
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`