Securities and Exchange Commission v. Tsai, No. 1:2019cv07501 - Document 16 (S.D.N.Y. 2019)
Court Description: FINAL JUDGMENT AS TO DEFENDANT BILL TSAI: The Securities and Exchange Commission having filed a Complaint and Defendant Bill Tsai ("Defendant") having entered a general appearance; consented to the Court's jurisdiction over De fendant and the subject matter of this action; consented to entry of this Final Judgment; waived findings of fact and conclusions of law; and waived any right to appeal from this Final Judgment: IT IS HEREBY ORDERED, ADJUDGED, AND DEC REED that Defendant is permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereu nder [17 C.F.R. § 240.10b-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security; as further set for th herein. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable for disgorgement of $98,750.00, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest there on in the amount of $1,837.32; as further set forth herein. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. The Clerk of Court is directed to close this case. Bill Tsai terminated. (Signed by Judge Gregory H. Woods on 12/16/2019) (Attachments: # 1 Appeal Package)(mro)
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Securities and Exchange Commission v. Tsai Doc. 16 Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 1 of 30 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: DATE FILED: 12/16/19 SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. 1:19-cv-07501-GHW BILL TSAI, Defendant. FINAL JUDGMENT AS TO DEFENDANT BILL TSAI The Securities and Exchange Commission having filed a Complaint and Defendant Bill Tsai (“Defendant”) having entered a general appearance; consented to the Court’s jurisdiction over Defendant and the subject matter of this action; consented to entry of this Final Judgment; waived findings of fact and conclusions of law; and waived any right to appeal from this Final Judgment: I. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security: (a) to employ any device, scheme, or artifice to defraud; 1 Dockets.Justia.com Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 2 of 30 (b) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Defendant or with anyone described in (a). II. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable for disgorgement of $98,750.00, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $1,837.32. In the event that Defendant is subject to an order of forfeiture as part of his sentence in the criminal case before the United States District Court for the Southern District of New York, United States v. Tsai, Crim. No. 19-cr-00675-VM (S.D.N.Y.) (the “Criminal Case”), then Defendant’s monetary obligations under the Final Judgment, including all outstanding pre and post judgment interest, will be deemed satisfied, dollar-for-dollar, by the amount of the forfeiture order. The monetary obligations ordered by this Final Judgment shall become due sixty (60) days after entry of the Judgment of Conviction in the Criminal Case, or twelve (12) months from the date of the entry of this Final Judgment, whichever comes first. Defendant may transmit payment electronically to the Commission, which will provide 2 Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 3 of 30 detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly from a bank account via Pay.gov through the SEC website at http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by certified check, bank cashier’s check, or United States postal money order payable to the Securities and Exchange Commission, which shall be delivered or mailed to Enterprise Services Center Accounts Receivable Branch 6500 South MacArthur Boulevard Oklahoma City, OK 73169 and shall be accompanied by a letter identifying the case title, civil action number, and name of this Court; Bill Tsai as a defendant in this action; and specifying that payment is made pursuant to this Final Judgment. Defendant shall simultaneously transmit photocopies of evidence of payment and case identifying information to the Commission’s counsel in this action. By making this payment, Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part of the funds shall be returned to Defendant. The Commission shall send the funds paid pursuant to this Final Judgment to the United States Treasury. The Commission may enforce the Court’s judgment for disgorgement and prejudgment interest by moving for civil contempt (and/or through other collection procedures authorized by law) at any time after thirty (30) days following the due date of Defendant’s monetary obligations under this Final Judgment. Defendant shall pay post judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 1961. III. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is incorporated herein with the same force and effect as if fully set forth herein, and that Defendant 3 Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 4 of 30 shall comply with all of the undertakings and agreements set forth therein. IV. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, for purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the allegations in the complaint are true and admitted by Defendant, and further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under this Final Judgment or any other judgment, order, consent order, decree or settlement agreement entered in connection with this proceeding, is a debt for the violation by Defendant of the federal securities laws or any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19). V. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. The Clerk of Court is directed to close this case. Dated: December 16, 2019 ____________________________________ UNITED STATES DISTRICT JUDGE 4 Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 5 of 30 Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 6 of 30 Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 7 of 30 Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 8 of 30 Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 9 of 30 Case 1:19-cv-07501-GHW Document 16 Filed 12/16/19 Page 10 of 30 EXHIBIT A Case Document13-1 16 Filed 30 Case1:19-cv-07501-GHW 1:19-cr-00675-VM Document Filed 12/16/19 10/10/19 Page Page 11 1 ofof20 J9J5tsaP plea 2 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x 3 UNITED STATES OF AMERICA, 4 v. 1 5 19 Cr. 675 (VM)(OTW) BILL TSAI, Plaintiff. 6 7 New York, N.Y. ------------------------------x September 19, 2019 11:20 a.m. 8 9 10 Before: HON. ONA T. WANG, 11 Magistrate Judge 12 13 APPEARANCES 14 15 16 17 GEOFFREY S. BERMAN United States Attorney for the Southern District of New York BY: ROBERT L. BOONE GINA M. CASTELLANO Assistant United States Attorneys 18 19 20 PILLSBURY WINTHROP SHAW PITTMAN, LLP Attorneys for Defendant BY: CAROLINA A. FORNOS BY: MARK R. HELLERER 21 ALSO PRESENT: TODD KANESHIRO, Special Agent, FBI 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1 Case Document13-1 16 Filed 30 Case1:19-cv-07501-GHW 1:19-cr-00675-VM Document Filed 12/16/19 10/10/19 Page Page 12 2 ofof20 J9J5tsaP plea 1 (Case called) 2 THE DEPUTY CLERK: 3 MR. BOONE: 4 for the government. 5 Gina Castellano, and Special Agent from the Federal Bureau of 6 Investigation Todd Kaneshiro. Counsel, please state your name. Good morning, your Honor. Robert Boone Here with me at counsel's table are AUSA 7 MS. CASTELLANO: 8 AGENT KANESHIRO: 9 MS. FORNOS: Good morning. Good morning. Good morning, your Honor. Carolina 10 Fornos and Mark Hellerer of Pillsbury Winthrop on behalf of 11 Bill Tsai. THE COURT: 12 Good morning, Mr. Tsai. 13 seated. 14 and understand English, right? I am Magistrate Judge Wang. 15 THE DEFENDANT: 16 THE COURT: 17 2 Correct. Please, be Mr. Tsai, you can speak Yes. You can stay seated. Just make sure that you speak up so that the court reporter can hear you. 18 THE DEFENDANT: 19 THE COURT: Okay? Yes, your Honor. I have before me a Consent to Proceed 20 Before a United States Magistrate Judge on a Felony Plea 21 Allocution that you have signed. 22 knowing that you have the right to have this plea taken by a 23 United States district judge, you are agreeing to have your 24 plea taken by a United States magistrate judge. 25 sure I have the form, I saw it. What this form says is that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Let me make Case Document13-1 16 Filed 30 Case1:19-cv-07501-GHW 1:19-cr-00675-VM Document Filed 12/16/19 10/10/19 Page Page 13 3 ofof20 J9J5tsaP plea 1 3 As a magistrate judge, I have the authority to take 2 your plea with your consent and you will still be entitled to 3 all of the same rights and protections as if you were before a 4 district judge. 5 you will be sentenced by a district judge. 6 7 Among other things, if you are found guilty, Did you sign this consent to proceed before a United States magistrate judge voluntarily? 8 THE DEFENDANT: 9 THE COURT: 10 And, before you signed the form, did your lawyer explain it to you? 11 THE DEFENDANT: 12 THE COURT: 13 Yes, your Honor. Yes, your Honor. And do you wish to proceed with your plea before a United States magistrate judge? 14 THE DEFENDANT: Yes, your Honor. 15 THE COURT: 16 The purpose of this proceeding is to make sure that Your consent is accepted. 17 you understand your rights, to decide whether you are pleading 18 guilty of your own free will, and to make sure you are pleading 19 guilty because you are guilty and not for some other reason. 20 Do you understand that? 21 THE DEFENDANT: 22 THE COURT: Yes, your Honor. If at any time you don't understand any of 23 my questions or if you want to consult with your attorneys, 24 just say so, because it is important that you understand every 25 question before you answer. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document13-1 16 Filed 30 Case1:19-cv-07501-GHW 1:19-cr-00675-VM Document Filed 12/16/19 10/10/19 Page Page 14 4 ofof20 J9J5tsaP plea 1 Before I take your plea I must ask you a series of 2 questions and I therefore need to place you under oath. 3 Please, raise your right hand. 4 (Defendant sworn) 5 THE COURT: Do you understand that any statements you 6 make here today, under oath, may be used against you in a 7 prosecution for perjury or for making false statements if you 8 do not tell the truth? 9 10 11 THE DEFENDANT: THE COURT: Yes, your Honor. I have before me a waiver of indictment. Did you sign this waiver of indictment? 12 THE DEFENDANT: 13 THE COURT: 14 Yes, your Honor. Before you signed it, did you discuss it with your attorneys? 15 THE DEFENDANT: 16 THE COURT: 17 THE DEFENDANT: 18 THE COURT: Yes, your Honor. Do you understand what you are doing? Yes, your Honor. Do you understand that you are under no 19 obligation to waive indictment? 20 THE DEFENDANT: 21 THE COURT: Yes, your Honor. Do you understand that if you do not waive 22 indictment, if the government wants to prosecute you, they 23 would have to present this case to a grand jury which may or 24 may not indict you? 25 4 THE DEFENDANT: Yes, your Honor. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document13-1 16 Filed 30 Case1:19-cv-07501-GHW 1:19-cr-00675-VM Document Filed 12/16/19 10/10/19 Page Page 15 5 ofof20 J9J5tsaP plea 1 THE COURT: 5 And, do you realize that by signing this 2 waiver of indictment you have given up your right to have this 3 case presented to a grand jury? 4 THE DEFENDANT: 5 THE COURT: 6 THE DEFENDANT: 7 THE COURT: 8 THE DEFENDANT: 9 THE COURT: Do you understand what a grand jury is? Yes, I have, your Honor. Do you waive its public reading? THE DEFENDANT: 11 THE COURT: Yes, your Honor. How do you plead to the information; guilty or not guilty? 13 THE DEFENDANT: 14 THE COURT: 15 THE DEFENDANT: 16 THE COURT: 17 THE DEFENDANT: 18 THE COURT: 19 THE DEFENDANT: 20 THE COURT: 21 THE DEFENDANT: 22 THE COURT: 23 THE DEFENDANT: 24 THE COURT: 25 Yes, your Honor. Have you seen a copy of the information? 10 12 Yes, your Honor. Guilty. Please tell me your full name. Bill Tsai. And what is your age? 23. Are you a citizen of the United States? Yes, I am. Are you able to read and write in English? Yes, I am. How far did you go in school? Graduated from college. Are you now or have you recently been under the care of a doctor or psychiatrist for any reason? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document13-1 16 Filed 30 Case1:19-cv-07501-GHW 1:19-cr-00675-VM Document Filed 12/16/19 10/10/19 Page Page 16 6 ofof20 J9J5tsaP plea 1 THE DEFENDANT: 2 THE COURT: 3 Have you been treated recently for any mental illness or addiction to narcotic drugs of any kind? 4 THE DEFENDANT: 5 THE COURT: 6 No, your Honor. As you sit here today, are you under the influence of any mind-altering drug or any alcoholic drink? 7 THE DEFENDANT: 8 THE COURT: 9 THE DEFENDANT: THE COURT: 10 11 No, your Honor. No, your Honor. Are you on any medication? No, your Honor. Have you been able to understand everything that I have said to you so far? 12 THE DEFENDANT: 13 THE COURT: 14 THE DEFENDANT: 15 THE COURT: Yes, your Honor. Do you feel all right today? Yes, your Honor. And, you have seen a copy of the 16 information in this case, right? 17 THE DEFENDANT: 18 THE COURT: 19 THE DEFENDANT: 20 THE COURT: 21 Have you read it? did? THE DEFENDANT: 23 THE COURT: 25 Yes, I have, your Honor. Do you understand what it says that you 22 24 Yes, I have, your Honor. Yes, I do, your Honor. Have you had a chance to discuss the charge and how you wish to plead with your attorney? THE DEFENDANT: Yes, I have, your Honor. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 6 Case Document13-1 16 Filed 30 Case1:19-cv-07501-GHW 1:19-cr-00675-VM Document Filed 12/16/19 10/10/19 Page Page 17 7 ofof20 J9J5tsaP plea 1 2 THE COURT: You are you satisfied with your attorney's representation of you? 3 THE DEFENDANT: 4 THE COURT: 5 this case with them? THE DEFENDANT: 7 THE COURT: 9 Yes, I am, your Honor. Have you had a full opportunity to discuss 6 8 7 Yes, I have, your Honor. And have they told you the consequence of pleading guilty? THE DEFENDANT: 10 THE COURT: 11 THE DEFENDANT: 12 THE COURT: Yes, they have, your Honor. Are you ready to enter a plea? Yes, your Honor. Count One of the information charges you 13 with securities fraud in connection with an insider trading 14 scheme in violation of 15, United States Code, 78b and 78ff, 17 15 CFR, 240.10b-5 and 18 U.S.C. 2. 16 How do you wish to plead; guilty or not guilty? 17 THE DEFENDANT: 18 THE COURT: Guilty, your Honor. With regard to the count charging you with 19 securities fraud in connection with insider trading, I want you 20 to understand that the maximum penalty is a prison term of 20 21 years, a maximum term of supervised release of three years, and 22 a maximum fine of the greater of $5 million or twice what was 23 made by the criminal activity or twice what someone other than 24 yourself lost because of the criminal activity, and a mandatory 25 special assessment of $100. In addition, the Court must order SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document13-1 16 Filed 30 Case1:19-cv-07501-GHW 1:19-cr-00675-VM Document Filed 12/16/19 10/10/19 Page Page 18 8 ofof20 J9J5tsaP plea 1 2 3 8 you to pay restitution to any victims. Do you understand these maximum penalties that I have just described to you? 4 THE DEFENDANT: 5 THE COURT: Yes, your Honor. Do you understand also that the plea 6 agreement states that you will admit the forfeiture allegations 7 and that you have agreed to certain stipulated amounts of 8 forfeiture? 9 10 THE DEFENDANT: THE COURT: Yes, your Honor. Do you also understand that if, as part of 11 your sentence, you are placed on a term of supervised release 12 and you then violated any of the conditions of that release, 13 you could face an additional term of imprisonment? 14 THE DEFENDANT: 15 THE COURT: Yes, your Honor. That means that the district judge can 16 revoke the term of release previously imposed and return you to 17 prison without giving you any credit for time previously served 18 on post-release supervision. 19 citizen, do you understand that your guilty plea may result in 20 your being removed from the United States, denied citizenship, 21 and denied admission to the United States in the future? 22 THE DEFENDANT: 23 THE COURT: If you are not a United States Yes, your Honor. Do you understand that you would be bound 24 by your guilty plea regardless of the immigration consequences 25 of your plea and regardless of any advice you have received SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document13-1 16 Filed 30 Case1:19-cv-07501-GHW 1:19-cr-00675-VM Document Filed 12/16/19 10/10/19 Page Page 19 9 ofof20 J9J5tsaP plea 1 from your counsel or others regarding those consequences? 2 THE DEFENDANT: 3 THE COURT: 4 Yes, your Honor. Have you had an opportunity to discuss the immigration consequences with your attorneys? 5 THE DEFENDANT: 6 THE COURT: Yes, I have, your Honor. I am now going to explain certain 7 constitutional rights that you have. 8 will be giving up if you enter a guilty plea. 9 carefully to what I am about to say and if you do not These are rights that you Please listen 10 understand something, stop me, and your attorney and I can 11 explain the issue more fully. 12 9 Do you understand that you have a right to plead not 13 guilty, or having already pleaded not guilty, to persist in 14 that plea and that you have a right to a speedy and public jury 15 trial, if you wish? 16 THE DEFENDANT: 17 THE COURT: Yes, your Honor. Do you understand that if you plead not 18 guilty and go to trial, you would be presumed innocent and the 19 burden would be on the government to prove your guilt beyond a 20 reasonable doubt? 21 THE DEFENDANT: 22 THE COURT: Yes, your Honor. That means you would not have to prove you 23 were innocent and you could not be convicted unless a jury of 24 12 people unanimously agreed that you are guilty beyond a 25 reasonable doubt. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 10 20 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 1 THE DEFENDANT: 2 THE COURT: Yes, your Honor. Do you understand that you would be 3 entitled to be represented by an attorney at all stages at 4 trial and at every other stage of the proceedings, and if you 5 could not afford to hire one, the Court would provide an 6 attorney to you for free? 7 THE DEFENDANT: 8 THE COURT: 9 10 Yes, your Honor. Do you understand that at such a trial you would be entitled to confront and cross-examine any witnesses 10 called by the government to testify against you, that you would 11 be entitled to testify on your own behalf, that you could call 12 witnesses and present evidence, and that the Court would issue 13 subpoenas, at your request, to compel witnesses to appear and 14 testify in your defense even if they didn't want to come? 15 THE DEFENDANT: 16 THE COURT: 17 Do you understand that at a trial you would not be required to testify against yourself? 18 THE DEFENDANT: 19 THE COURT: 20 Yes, your Honor. Yes, your Honor. And, if you chose not to testify, that could not be used against you. Do you understand that if you were convicted at a 21 22 trial you would have a right to appeal that verdict to a higher 23 court? 24 THE DEFENDANT: 25 THE COURT: Yes, I do, your Honor. And, do you understand that if you enter a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 11 21 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 1 guilty plea you would give up all of these rights including 2 your right to a trial, that you will not be able to withdraw 3 this plea, and that the only remaining step in this case will 4 be the sentencing? 5 THE DEFENDANT: 6 THE COURT: 11 Yes, I do, your Honor. And, do you understand that the decision 7 as to the appropriate sentence in your case will be entirely up 8 to the sentencing judge and that he or she will be limited only 9 by what the law requires? 10 THE DEFENDANT: 11 THE COURT: Yes, I do, your Honor. And, do you understand that even if you 12 are surprised or disappointed by your sentence, you will still 13 be bound by your guilty plea? 14 THE DEFENDANT: 15 THE COURT: Yes, I do, your Honor. And, finally, if you do plead guilty, you 16 are also giving up the right not to incriminate yourself and I 17 will ask you questions about what you did in order to satisfy 18 myself that you are actually guilty. 19 will be admitting your factual, as well as legal, guilt. 20 Do you understand that? 21 THE DEFENDANT: 22 THE COURT: 23 By pleading guilty you Yes, I do, your Honor. Knowing all of this, do you still wish to plead guilty to Count One of the information? 24 THE DEFENDANT: 25 THE COURT: I do, your Honor. Have any force or threats been used, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 12 22 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 1 12 either direct or indirect, to influence how you plead today? 2 THE DEFENDANT: 3 THE COURT: No, your Honor. I have before me a letter dated September 4 11th, 2019 from the U.S. Attorney to your attorney containing a 5 plea agreement. Have you read this letter? 6 THE DEFENDANT: 7 THE COURT: 8 THE DEFENDANT: 9 THE COURT: And did you sign it on the last page? Yes, I have, your Honor. And before you signed it, did you discuss 10 it with your attorneys? 11 THE DEFENDANT: 12 THE COURT: 13 Yes, I have, your Honor. Yes, I have, your Honor. And did they explain to you all of its terms and conditions? 14 THE DEFENDANT: 15 THE COURT: Yes, your Honor. Apart from what is contained in this 16 letter, have any promises been made to you in order to get you 17 to plead guilty? 18 THE DEFENDANT: 19 THE COURT: No, your Honor. In reviewing the plea agreement I note 20 that it contains an analysis of how part of our law of 21 sentencing known as the sentencing guidelines may impact on any 22 prison term in your case. 23 agreement states that the guidelines sentencing range can be 24 expected to be from 18 to 24 months. 25 Based on that analysis, the Do you understand that? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 13 23 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 1 THE DEFENDANT: 2 THE COURT: 13 Yes, your Honor. Do you understand that the sentencing 3 judge is not bound by the calculation in the letter and that 4 they will be free do their own calculation which may result in 5 a guideline range that is different from the one in the letter? 6 THE DEFENDANT: 7 THE COURT: Yes, your Honor. Do you understand that no matter what the 8 sentencing range is that the sentencing judge believes is 9 called for by the guidelines, that range is one of many factors 10 that the Judge will consider in determining your sentence and 11 that the Judge has the discretion to give you a prison sentence 12 below or above that range anywhere up to the maximum sentence 13 of imprisonment of 20 years? 14 THE DEFENDANT: 15 THE COURT: Yes, I do, your Honor. Do you also understand that under the 16 terms of this plea agreement, if the Judge sentences you to a 17 prison term that is 24 months or less, you are giving up your 18 right to appeal that sentence or to challenge it in any other 19 way such as through a writ of habeas corpus? 20 THE DEFENDANT: 21 THE COURT: Yes, I do, your Honor. Also, do you understand that the plea 22 agreement says that you cannot appeal any fine of $5 million or 23 less and that you cannot appeal any lawful sentence of 24 supervised release? 25 THE DEFENDANT: Yes, I do, your Honor. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 14 24 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 1 THE COURT: Do you also understand that in this letter 2 you are giving up your right to complain if the government 3 withheld evidence from your attorney that would have been 4 helpful to you? 5 THE DEFENDANT: 6 THE COURT: 7 your own free will? THE DEFENDANT: 9 THE COURT: Yes, it is, your Honor. Have any threats been made to influence how you plead today? 11 THE DEFENDANT: 12 THE COURT: 13 Yes, I do, your Honor. Is your plea voluntary, that is, made of 8 10 14 No, your Honor. Did you in fact commit the offense that is charged in Count One of the information? 14 THE DEFENDANT: 15 THE COURT: Yes, your Honor. Before I ask you to tell me what you did I 16 will ask the government to summarize the elements of the 17 offense and, if they wish, tell me any evidence that they would 18 proffer at trial. 19 MR. BOONE: Your Honor, to establish the violation of 20 securities fraud the government must prove, beyond a reasonable 21 doubt, three elements. 22 First, that in connection with the purchase or sale of 23 securities of the identified company, here that company being 24 EFI, the defendant employed a device, scheme or artifice to 25 defraud; second, that when the defendant engaged in this SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 15 25 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 15 1 scheme, he acted knowingly, willfully, and with an intent to 2 defraud EFI and its shareholders or the source of the 3 information; and third, that the mail, interstate communication 4 facility or facility of a national securities exchange was used 5 in furtherance of the scheme. 6 engaged in an insider trading scheme in particular the 7 government must prove, one, that the defendant owed a duty of 8 trust and confidence, here to RBC, defendant's employer; and 9 two, that the defendant violated that duty of trust and To establish that defendant 10 confidence by using material non-public information that he 11 obtained by virtue of his relationship with RBC to trade EFI 12 securities for his personal benefit. 13 THE COURT: Can you tell me what evidence that you 14 would have offered at trial? 15 MR. BOONE: At trial, the government would have 16 offered both documentary evidence and testimonial evidence. In 17 terms of documentary evidence it would have included evidence 18 regarding the defendant's trades in an EFI brokerage account in 19 his name in which that trading occurred. 20 communications that the defendant received as a result of his 21 employment with RBC concerning a deal RBC was working on 22 involving EFI. 23 explaining the policies and procedures in terms of how to 24 handle such confidential information, as well as testimony from 25 individuals from RBC further explaining that and confirming It would also include It would also include documents from RBC SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 16 26 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 16 1 that defendant was informed of his duties to the employer in 2 that regard. 3 THE COURT: 4 Mr. Tsai, please tell me in your own words what you 5 6 Thank you. did that makes you guilty of the charge against you. THE DEFENDANT: Between approximately March and April 7 2019, I obtained material non-public information through my 8 employment at an investment bank in Manhattan. 9 information to trade in the securities of Electronics Form I used that 10 Imaging, EFI. 11 purchase securities, I breached my duties to my employer. 12 the time I did it I knew it was wrong. 13 crime that I committed and I agree to forfeit my profits. 14 By using this confidential information to THE COURT: At I am very sorry for the And I notice that you have been reading 15 from a statement and that's entirely appropriate. 16 that you and your attorney wanted to make sure that the 17 statements were exact and correct but I want to ask you if you 18 really did those things you told me about. 19 THE DEFENDANT: 20 THE COURT: I am sure Yes, your Honor. I just wanted to ask the government, is 21 the third element of the securities fraud, the use of means or 22 instruments of transportation or communication in interstate 23 commerce or use of the mails, has that been satisfied by the 24 allocution, or not? 25 MR. BOONE: We actually have another follow up and SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 17 27 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 1 17 maybe we can roll this all into one. 2 THE COURT: Okay. 3 MR. BOONE: One is the defendant could discuss where 4 he was located physically when he placed the trades, 5 particularly if that was in the Southern District of New York; 6 and on what exchange were these trades taking place. 7 Maybe that will solve your issue. 8 THE COURT: 9 All right, Mr. Tsai. Thank you. You heard the government's 10 request for some follow up, one is where did the activity take 11 place and on what exchange were the trades made. 12 13 THE DEFENDANT: The trades were made in Manhattan and through the New York Stock Exchange. 14 THE COURT: Through the New York Stock Exchange. 15 Anything else on that? 16 MR. BOONE: No, your Honor. 17 THE COURT: Does the government represent that it has 18 sufficient evidence to establish Mr. Tsai's guilt beyond a 19 reasonable doubt? 20 MR. BOONE: Yes, your Honor. 21 THE COURT: Defense counsel, do you know of any 22 defense that would prevail at trial or any other reason why 23 your client should not be permitted to plead guilty? 24 MS. FORNOS: 25 THE COURT: No, your Honor. Does counsel have any doubt as to the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 18 28 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 1 defendant's competence to plead at this time? 2 MS. FORNOS: 3 THE COURT: No doubt, your Honor. Mr. Tsai, again, you knew that what you 4 were doing was against the law? 5 THE DEFENDANT: 6 THE COURT: 7 Correct, your Honor. Yes. Are there any further questions either side wants me to ask? 8 MR. BOONE: No, your Honor. 9 THE COURT: Ms. Fornos? 10 MS. FORNOS: 11 THE COURT: 12 18 No, your Honor. Is there any reason why I should not recommend that the district judge accept this plea? 13 MR. BOONE: 14 MS. FORNOS: 15 THE COURT: No, your Honor. No, your Honor. One of the things I typically do when I 16 take a felony plea, because the district judge usually has not 17 had a chance to see the defendant, is to ask if there is any 18 family or friends in support of either side. 19 anything you would like to say at this time, this is your time. So, if there is 20 MS. FORNOS: Yes, your Honor. 21 We would like to say that Mr. Tsai's mother is in the 22 courtroom. 23 situation for the family and we thank the Court for that 24 opportunity. 25 As you can imagine, this has been a very tough THE COURT: Thank you; and I see you, Mrs. Tsai. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 19 29 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 19 On the basis of the defendant's responses to my 1 2 questions and my observation of his demeanor, I find that he is 3 fully competent to enter an informed plea at this time. 4 conclude that he understands the nature of the charge and the 5 consequences of the plea. 6 his plea is voluntary and that there is a factual basis for it. 7 Accordingly, I recommend that the proffered plea to Count One 8 of the information be accepted. 9 order a copy of the transcript and will submit it to the I also And, finally, I am satisfied that I assume the government will 10 district judge, together with any additional paperwork so that 11 they may ask on my recommendation. 12 ordered. I understand we don't have a sentencing date yet, 13 14 A presentence report is right? 15 MR. BOONE: That's correct, your Honor. 16 THE COURT: So, should I set a control date? 17 MR. BOONE: I think that's fine. 18 THE COURT: How much time do we need for the control 20 MR. BOONE: I think 90 days will give enough time for 21 a PSR report to be written. 22 THE COURT: 19 date? So, 90 days puts us at December 18. Let 23 me make sure that's not on the weekend; 90 days is December 24 18th. 25 The prosecution case summary, for the purposes of the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 Case Document 16 Filed Filed 10/10/19 12/16/19 Page Page 20 30 of of 20 30 Case 1:19-cv-07501-GHW 1:19-cr-00675-VM Document 13-1 J9J5tsaP plea 20 1 presentence report, is to be delivered to the Probation 2 Department no later than 14 days from today. 3 you had should make yourself available to be interviewed by the 4 Probation Department with your client no later than 14 days 5 from today. Defense counsel, 6 Anything further on this matter from either side? 7 MR. BOONE: 8 MS. FORNOS: 9 THE COURT: 10 11 Not from the government, your Honor. No, your Honor; not from the defense. Okay. All right. Thank you. adjourned. o0o 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 We are
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