U.S. Sec. & Exch. Comm'n v. Ahmed (308 F. Supp. 3d 628, 2018)

Janet Bond Arterton, U.S.D.J.

I. Introduction...636

II. Background...637

A. Overarching Facts...637

B. Procedural History...638

C. Defendant's Assertion of his Fifth Amendment Right...638

D. Defendant's Fraudulent Conduct...638

1. Company A ...638

2. Company B ...639

3. Company C ...640

4. Company D ...642

5. Company E ...644

6. Company F ...645

7. Company G ...645

8. Company H ...647

9. Company I ...647

10. Company J ...648

III. Discussion...648

A. Standard on Summary Judgment and Effect of Adverse Inference...648

B. Defendant's Claims he was Treated Unfairly are Without Merit...649

C. Kokesh Does not Require Dismissal of Claims Against Relief Defendants in the Pending Summary Judgment Proceedings...650 D. Defendant's Conduct Violated the Advisers Act, Securities Act, and Exchange Act...652

1. Fraud Under the Advisers Act ...652

a. Defendant is an Investment Adviser...652

b. Defendant Violated Sections 206(1), (2), (4), and Rule 206(4)-8...653

i. Defendant's Fraud was Directed Towards Clients and Investors ...654

ii. Negligence or Scienter ...655

iii. Breach of Fiduciary Duties ...655

c. Section 206(3)...655

2. The Exchange Act and Securities Act ...657

a. Material Misrepresentations/use of a Fraudulent Device...657

b. Scienter...658

c. In Connection With a Purchase or Sale of Securities...658

d. Territorial Requirements...660

i. Morrison and Subsequent Case law ...660

ii. The Intention of the Parties ...663

iii. The SEC's Evidence is Sufficient to Establish Domesticity ...664

IV. Conclusion...673

I. Introduction

Plaintiff, the United States Securities and Exchange Commission ("SEC") alleges that Defendant Iftikar Ahmed ("Mr. Ahmed") violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 (Count One), Section 17(a) of the Securities Act of 1933 ("Securities Act") (Count Two), and Section 206 of the Investment Advisers Act ("Advisers Act") (Counts Three, Four, and Five). (Second Am. Compl. ("SAC") [Doc. # 208].) In Counts Six through Fourteen, the SEC seeks equitable disgorgement against each respective Relief Defendant.

The Court bifurcated summary judgment, with this first stage addressing only liability, and a second stage addressing the appropriate relief, if needed, or in the alternative, a trial on liability will be held. All three parties move for summary judgment. (See Def.'s Mot. for Summ. J. [Doc. # 616]; Relief Defs.' ("RD") Mot. for Summ. J. [Doc. # 618-2]; PL's Mot. for Summary Judgment [Doc. # 622].) The Court held oral argument on February 28, 2018.

The SEC alleges that Defendant "systematically used fraudulent and deceptive means to divert more than $67 million from funds he advised" while employed by venture capital firm Oak Investment Partners ("Oak") "into his personal bank accounts, before funneling much of his ill-gotten gains into assets and accounts in the name of his wife in order to conceal his fraud and protect the assets from confiscation."

(PL's Mot. for Summ. J. at 1.) In response, neither Defendant nor Relief Defendants argue that Defendant did not commit the alleged frauds, instead contending primarily that Defendant should not be held liable because (1) certain fraudulent acts are time-barred by the statute of limitations, (2) the fraud was not sufficiently connected to securities transactions, and (3) the underlying securities transactions are not sufficiently domestic to be within the reach of the United States securities laws.

For the reasons that follow, the SEC's Motion for Summary Judgment is granted. Defendant and Relief Defendants' Motions for Summary Judgment are denied.

II. Background

A. Overarching Facts

Oak Management Corporation ("OMC") is the investment manager for various venture capital investment funds, which raise money from investors (ranging from state and municipal pension funds to individual investors) and, in turn, invest those monies in various types of securities. (SEC Loc. R. 56(a) 1 Statement of Facts ("SOF") at X-4.) Defendant joined Oak in 2004 where he worked as an investment professional and a managing member of entities that serve as general partners of certain Oak funds. (SOF ¶ X-5.) Defendant was responsible for, among other things, identifying companies in which Oak funds might invest ("portfolio companies"), recommending investments, and negotiating the terms of investments with portfolio companies. (Id. ¶¶ X-6 to X-9.)

To enter into a securities transaction, Oak entities memorialized an agreement to consummate a purchase or sale in written agreements, typically share purchase agreements ("SPAs"), merger agreements or tender offer agreements. (Id. ¶ X-25.) The SEC's allegations focus on a series of such transactions relating to ten companies, described in the Second Amended Complaint as Companies A through J, all of which involved Defendant. In essence, and as described infra in detail with respect to each transaction, Defendant opened bank accounts he alone controlled that were deceptively titled in the name of Oak and its portfolio companies, which he then used to divert monies intended for Oak funds or its portfolio companies into his and his wife's personal bank accounts.

B. Procedural History

On April 2, 2015, before the SEC initiated this action and unrelated to this action, Defendant was arrested and charged with insider trading. See United States v. Kanodia , et al., No. 1:15-cr-10131-NMG-MBB, 2015 WL 12672172 (D. Mass. Apr. 1, 2015) (Docs. ## 3-4). Defendant's bond was set at $9 million and, as a condition of release pending his criminal trial, his travel was restricted to Connecticut, New York, and Massachusetts. See United States v. Ahmed , No. 3:15-mj-00052-WIG (D. Conn. Apr. 2, 2015) (ECF 4 & 8 at ¶ 7(f) ); United States v. Kanodia, et al. , No. 1:15-cr-10131-NMG-MBB (D. Mass. Apr. 21, 2015) (ECF 19).

On May 6, 2015, the SEC filed its Complaint [Doc. # 1] and an emergency motion [Doc. # 2] for a temporary restraining order freezing assets and asking for a preliminary injunction. The following day, the Court entered [Doc. # 9] a temporary restraining order freezing assets of Defendant and certain Relief Defendants up to approximately $55 million, and scheduled a preliminary injunction hearing. At some point in May, prior to the preliminary injunction hearing, Defendant fled from the United States to his native country-India-where he remains to this day.

On August 12, 2015, after a two day evidentiary hearing, the Court granted [Doc. # 113] the SEC's motion for a preliminary injunction. This hearing transcript is posted on the docket, to which Defendant has access.

C. Defendant's Assertion of his Fifth Amendment Right

Defendant answered [Doc. # 218] the SEC's Second Amended Complaint on April 22, while represented by counsel, "assert[ing] his right under the Fifth Amendment to the Constitution of the United States and applicable laws and statutes not to be compelled to be a witness against himself ..." in response to the SEC's allegation of fraud. (See SEC Ex. 1; SOF ¶ X-1.) In discovery, among other things, the SEC requested "all communications ... with any of the Relief Defendants regarding any of the allegations in the Complaint," "all communications ... with any individuals from Companies A-I regarding any of the allegations in the Complaint," and "all communications ... with any individual from Oak, and Oak Fund, Oak Funds investors, or an Oak Fund portfolio company regarding any of the allegations in the Complaint." (SEC Ex. 12 at 11-13.) In response to the SEC's Requests for Admission and Interrogatories, Defendant invoked his Fifth Amendment right against self-incrimination. (SOF ¶¶ X-1, X-16.) In response to the SEC's Document Requests, Defendant claimed to have no responsive documents. (Id. ¶ X-16.)

D. Defendant's Fraudulent Conduct

1. Company A

In August 2014, Defendant proposed via email that Oak Fund XIII purchase 124,378 Series A shares of Company A from Company A's holding company, the "BVI Company," at a price of $28.50 per share, for a total purchase price of $3,544,773. (SOF ¶ A-1.) He buttressed his proposal with favorable comments on Company A's financial condition, but before Oak Fund XIII purchased the shares, Defendant received a copy of Company A's most recent board package, which included lower estimated financial results for Company A than the figures Defendant reported in his proposal to Oak. (Id. ¶ A-2.) On August 11, Oak approved Defendant's proposed purchase of Company A shares and executed the stock purchase agreement on behalf of Oak Fund XIII. (Id. ¶ A-6.)

Defendant then induced Oak Fund XIII to pay an inflated purchase price by emailing Oak what appeared to be the deal documents already executed by the seller with the purchase price of $3,544,733. (Id. ¶ A-7.) However, the versions sent to the seller contained a price of $1.5 million. (Id. ) Thus, the seller agreed to a purchase price of $1.5 million for the Company A shares, but Defendant's fraud caused Oak Fund XIII to pay $3,544,733 for those same shares.

Finally, Defendant provided Oak instructions for Oak Fund XIII to wire the $3,544,773 purchase price to a Bank of America account in the name of "Iftikar Ali Ahmed Sole Prop, DBA [BVI Company]" (the "BOA BVI Company Account"), which the Oak Fund followed. (Id. ¶¶ A-6, A-8.) Defendant then wired the $1.5 million actual purchase price from this account to the seller. (Id. ¶ A-8.) Rather than returning the excess purchase price to Oak Fund XIII, Defendant transferred the remaining balance of just over $2 million into a joint account he owned with his wife, Relief Defendant Shalini Ahmed. (Id. )

2. Company B

Company B was a joint venture formed by two parties, denoted here as JV Party 1 and JV Party 2. (SOF ¶ B-1.) JV Party 2 was a subsidiary of the BVI Company from which Oak Fund XIII purchased its Company A shares. (Id. ) In December 2014, Defendant recommended that Oak Fund XII purchase JV Party 1's shares in Company B for $20 million. (Id. ¶ B-2.) Financial documents Defendant received prior to his recommendation, on November 22, 2014, reveal that the projected results for Company B were lower than the projections Defendant included in his presentation recommending the investment. (Id. ¶ B-10.) After the investment was approved, Defendant told Oak that the $20 million purchase price should be split between two accounts, with $2 million wired to JV Party 1 and $18 million wired to an account that Defendant claimed belonged to the BVI Company, but was in fact Defendant's BOA BVI Company Account. (Id ¶¶ B-3, B-8.)

Oak Fund XII wired the payments as Defendant directed. (Id. ¶ B-7.) Defendant also forwarded to Oak personnel what he claimed were the final deal documents reflecting a $20 million purchase price. (Id. ¶ B-4.) The actual purchase price for the Company B shares was $2 million, not $20 million. (Id. ¶ B-5.) Examination of Defendant's personal directory at Oak after his arrest, which is generally inaccessible to other Oak personnel, revealed a Word version of the SPA that is identical to the SPA that Defendant received as a Word document on December 16, with the exception of Section 3.1, which reflects a $20 million purchase price. (Id. ¶ B-6.)

After the $18 million was wired by Oak Fund XII into Defendant's BOA BVI Company account, Defendant transferred approximately $18 million into a joint bank account that he held with his wife, Relief Defendant Shalini Ahmed. (Id. ¶ B-9.)

3. Company C

Defendant engaged in deceptive conduct by misrepresenting Company C's financial performance and concealing and misrepresenting his ownership of Company C shares, while he recommended and advised Oak Fund XIII to make two separate investments in Company C.

$10,896,193.59 Redemption of Company C Shares.

In November 2012, Company C-an e-commerce business based in the United States-sold its Series A shares to several investors including I-Cubed Domains, LLC (discussed more fully below), and the BVI Company, an Oak portfolio company. (SOF ¶ C-1.) At the time, Defendant was one of three people on the BVI Company's board of directors and was responsible for identifying and negotiating the transaction involving BVI Company's purchase of Company C Series A Preferred Stock for $150,000. (Id. ¶¶ C-2, C-3, C-4.) On November 13, 2013, the BVI Company wired $150,000 from a BVI Company Fidelity account to Company C. (Id. ¶ C-5.)

Shortly after the BVI Company's $150,000 investment in Company C, Defendant represented that an additional $2 million investment by the BVI Company was necessary because Defendant was getting pressure from Oak for being on the Board of the Company without a bigger investment. (SEC Ex. 145.) He then requested via email that Company C "lawyers ... wrap up the incremental $2MM funding," which the Company C representative confirmed would be done "right away." (SEC Ex. 146.) On November 26, 2012, $2,000,000 was wired from the same BVI Company Fidelity account for the purchase of additional Company C shares. (SOF ¶ C-6.) When he was subsequently confronted by the BVI Company about the $2 million that was missing from the BVI Company's Fidelity account, Defendant claimed the $2 million purchase was a mistake on the part of the "finance team." (Id. ¶ C-7.) Continuing to conceal that he negotiated the $2 million investment, Defendant told BVI he would "take full responsibility" for the "mistake" and would personally purchase the shares, which he did on or about June 21, 2013. (Id. ¶ C-8.)

Meanwhile, on Defendant's recommendation, in October 2013 Oak Fund XIII invested $25 million into Company C Series B shares, while Defendant simultaneously negotiated with Company C (purportedly on behalf of Oak Fund XIII), an investment by Oak Fund XIII that would be conditioned on Company C redeeming the BVI's Company's Company C shares (now secretly owned by Defendant) for $10,896,193.59. (Id. ¶¶ C-9, C-15.) Essentially, Defendant was pretending to act on behalf of Oak Fund XIII in negotiating its investment in Company C, while actually seeking to profit (by more than $8 million) by redeeming the Company C shares he was holding in the name of the BVI Company. Prior to Oak Fund XIII making its $25 million investment into Company C-which triggered Company C's obligation to redeem Defendant's Company C shares held in the name of the BVI Company for $10,896,193.59-Defendant was specifically asked if he had invested in Company C.

Defendant falsely stated that he had "no personal investment or any other direct beneficial interest or investment" in Company C. (Id. ¶ C-10.)

Ms. Ames, OMC's Chief Operating Officer and designated witness in this case (id. ¶ X-3), asked Defendant about any ownership of Company C shares because each Oak Fund is prohibited, absent proper consent, from investing in the securities of any entity in which any of the Managing Members of its general partner (including Defendant) have, or have had within the preceding ninety days, any investment or any other material financial interest. (SOF ¶ C-16.) Oak funds also are prohibited, absent the proper consent, from purchasing or selling securities to or from any Managing Members of the general partner of the Oak Funds (including Defendant) or any of their respective affiliates. (Id. )

To further conceal that he was holding Company C shares and would personally profit from their redemption (triggered by Oak Fund XIII's investment in Company C), Defendant opened the BOA BVI Company Account on October 10, 2013, and directed, through an attorney, Company C to wire the redemption proceeds into this account. (Id. ¶¶ C-11-13.) After he received the funds in his BOA BVI Company Account, Defendant transferred the funds into a joint bank account that he held with his wife, Relief Defendant Shalini Ahmed. (Id. ¶ C-14.)

In sum, Defendant purposefully lied to his fellow BVI Company directors when he told them the $2 million purchase of Company C shares was a mistake, as he had personally negotiated the purchase of those shares in the name of the BVI Company. Defendant then bought the shares, left them in the name of the BVI Company, and negotiated their redemption for a price that was substantially greater than the $2 million originally paid by leveraging the redemption on Oak Fund XIII's $25 million investment in Company C. While recommending that Oak Fund XIII purchase $25 million of Company C's Series B shares, Defendant concealed from Oak Fund XIII and Company C that he (as opposed to the BVI Company, which was an Oak portfolio company) was the seller of those Company C shares and that he would personally profit by more than $8 million upon Oak Fund XIII's $25 million investment. Defendant told Oak that he did not have any personal investment or direct beneficial interest in Company C, which was false because Defendant was: (1) holding the Company C shares in the name of BVI Company that were redeemed upon Oak Fund XIII's investment; and (2) holding Company C shares in the name of I-Cubed, as explained below.

$7,500,000 I-Cubed Sale

I-Cubed is a single member Delaware LLC formed on October 24, 2012 whose sole member (and owner) was Defendant. (Id. ¶ C-22.) In November 2012, Defendant, through I-Cubed, invested in Company C. (Id. ¶ C-24.)

On October 30, 2014 Oak Fund XIII entered into a Stock Purchase Agreement with I-Cubed to purchase its Company C shares for $7.5 million. (SOF ¶ C-18.) That agreement was executed by Defendant on behalf of Oak Fund XIII and was purportedly executed on behalf of I-Cubed by Richard N. Kimball. (Id. ) Defendant provided wire transfer instructions to Oak and directed that it wire $7.5 million to an account held by I-Cubed at Bank of America ending x8384 ("BOA I-Cubed Account"), which Oak followed. (Id. ¶ C-19.) On November 3, 2014 Defendant wrote a $7,425,000 check from the BOA I-Cubed Account to the Shalini Ahmed 2014 Grantor Retained Annuity Trust (the "GRAT"). (SEC Ex. 160 at SEC-BOA-E-1355.)

When presenting this proposed investment to Oak's managing partners at their investment committee meeting held on or about October 27, 2014, Defendant described the seller of the shares, I-Cubed, as a "family office." (SOF ¶ C-17.) Defendant's written presentation included financials for Company C showing, among other things, that Company C's estimated revenues in 2014 were $515.6 million, a 65% increase over 2013 revenues of $311.81 million. (Id. ) However, on October 8, 2014, Defendant had received Company C's financials showing $178.1 million in revenue for the first eight months of 2014, which was just 11.7% ahead of revenues for the first eight months of 2013. (Id. ¶ C-30.)

Defendant had recognized the declining value of Company C stock even before this. In August 2014, two months before I-Cubed sold the Company C stock to Oak Fund XIII for $7.5 million, a 99% interest in I-Cubed-which held only the Company C shares-was transferred into the GRAT. (Id. ¶¶ C-32-33.) According to the GRAT formation document, which the GRAT's 30(b)(6) witness confirmed was accurate, the market value of the 99% interest in I-Cubed was worth only $876,193.72. (Id. ¶ C-32.) Similarly, during the preliminary injunction hearing, Relief Defendant Shalini Ahmed testified that she believed the GRAT formation document was accurate and that I-Cubed's Company C shares were worth $876,193.72 as of August 29, 2014. (Id. ¶ C-33.) Thus, while Defendant represented to Oak that I-Cubed's Company C shares had increased in value by 375% (to $7.5 million) since their purchase, Defendant himself had acknowledged the shares had diminished in value by more than 50% to less than $1 million. (Compare SOF ¶ C-18 with ¶¶ C-32-33.)

Defendant misrepresented that he had no personal investment or any other direct beneficial interest or investment in Company C and did not disclose to Oak or its funds that he or his family owned or had an interest in I-Cubed despite recommending that Oak Fund XIII buy Company C shares directly from I-Cubed. (Id. ¶¶ C-10, C-27.) Thus, Defendant concealed that he was on both sides of the transaction, going so far as to forge the signature of Mr. Richard Kimball who had retired as I-Cubed's manager more than one month earlier and had no knowledge of the transaction. (Id ¶¶ C-27-29.)

4. Company D

Oak Fund IX purchased and sold Company D shares through a special purpose vehicle based in the Netherlands named A. Bohl Praktiijk B.V. ("BPBV"), and Defendant had substantial responsibilities in connection with this investment. (SOF D-1, D-6.) The evidence, discussed below, shows that in connection with these transactions, Defendant misappropriated money from Oak Fund IX four different times by causing money to be transferred to his secret bank accounts and then transferring it to his personal accounts.

The first misappropriation occurred in connection with Oak Fund IX's December 2004, purchase of Company D shares. (Id. ¶ D-1.) Defendant negotiated a letter agreement with Company D that replaced the annual dividend provisions in the deal's term sheet with a one-time management fee of $600,000 to be paid to Oak Fund IX by Company D. (Id. ¶ D-2.) After receiving instructions from Defendant to wire the money to a Fleet Bank account number x9310 in the name of OIP Advisors, Company D confirmed in a January 5, 2005 email that it would wire $600,000 the following day. (Id. ¶ D-3.) On January 7, 2005, Defendant received a revised agreement reflecting a $50,000 increase in the management fee to be paid by Company D. (Id. ¶ D-4.) On January 11, 2005, Defendant emailed Company D stating "[s]ame instructions as last time" and, three days later, Company D confirmed that it had wired $50K that day. (Id. ) In fact, the account that Defendant provided Company D was not an Oak account. (Id. ¶ D-5.) Rather, Defendant had previously opened a Fleet Bank account ending in numbers x9310 in the name of "Ifitkar Ali Ahmed dba OIP Advisors," and after the two banks merged, that account became Bank of America account ending in numbers x9310 (the "BOA OIP Advisors Account"). (Id. )

The second misappropriation was in relation to Oak Fund IX's sale of a portion of its Company D shares in May 2006. (SOF ¶ D-6.) Defendant had substantial responsibilities in connection with Oak Fund IX's exit from the Company D investment in 2006 and 2007. (Id. ) Pursuant to the Share Purchase Agreement, Oak Fund IX agreed to pay the broker's (the "Investment Bank") fees and expenses in connection with the transaction. (Id. ¶ D-7.)

On June 26, 2006, Defendant received a $1.2 million invoice from the Investment Bank for advisory services related to the sale of the shares. (Id. ¶¶ D-8, D-9.) That same day, Defendant opened a Bank of America account number x2349 in the name of Company D (the "BOA Company D Account"), on which he was listed as the sole authorized representative. (Id. ¶ D-10.) Company D did not actually have an account at Bank of America. (SOF ¶ D-6.) On July 3, 2006, BPBV wired $3 million to Defendant's BOA Company D Account, believing that to be the amount for advisory fees charged by the Investment Bank. (Id. ¶ D-11.) On that same day, $1.2 million was transferred to Defendant's BOA OIP Advisors Account, and $1.8 million was transferred to his joint bank account that he held with his wife, Relief Defendant Shalini Ahmed. (Id. ¶ D-11.) On July 5, 2006, $1.2 million was transferred from Defendant's BOA OIP Account to an account for the Investment Bank. (Id. )

Defendant again misappropriated funds when, in January 2007, he requested that Oak Fund IX make a $6.6 million payment for a Korean tax obligation related to the 2006 sale of Company D shares. (SOF J D-13.) Defendant submitted a wire transfer request with an invoice on Company D letterhead and included that wire transfer instructions for Defendant's BOA Company D Account. (Id. ) The Company D invoice was not from Company D. (Id. ¶ D-6.) On January 26, 2007, Oak Fund IX wired a total of $6.6 million to BPBV which, in turn, on January 29, 2007, wired $6.6 million to Defendant's BOA Company D Account. (Id. ¶ D-14.) On that same date, nearly $6.6 million was transferred from Defendant's BOA Company D Account to a joint bank account that he held with his wife, Relief Defendant Shalini Ahmed. (Id. ) Contrary to Defendant's instructions, Oak is not aware of any document suggesting that Korean capital gains taxes were in fact assessed on the sale of the shares or that there was any legitimate reason for the $6.6 million payment that Defendant directed Oak Fund IX to make in January 2007. (Id. ¶ D-15.)

Lastly, on August 21, 2007, Defendant presented Oak Fund IX with a wire transfer request relating to another invoice on Company D letterhead seeking payment of $800,528.81 in "[t]ransaction fees to be paid to the Korean Tax Authority" in connection with Oak Fund IX's January and March 2007 distributions of Company D shares to its investors. (Id. ¶ D-16.) The invoice provided wire transfer instructions for payment to Defendant's BOA Company D Account. (Id. ) Again, the Company D invoice was not from Company D. (Id. ¶ D-6.) On August 21, 2007, Oak Fund IX wired a total of $800,528.81 to Defendant's BOA Company D Account. (SOF ¶ D-17.) None of this money was transferred to Company D; rather, the money (minus a $30.00 wire transfer fee) was transferred to a joint bank account that Defendant held with his wife, Relief Defendant Shalini Ahmed. (Id. ¶ D-17.) Oak is not aware of any document or other evidence to suggest that Company D paid $800,528.81 (or any other amount) in securities transaction taxes to the Korean tax authorities in connection with Oak Fund IX's March 2007 distribution of Company D shares. (Id. ¶ D-18.)

5. Company E

Defendant recommended to Oak's Managing Partners that Oak Fund XI purchase Company E shares for 17 million Euros. (SOF ¶ E-1.) In his recommendation, Defendant used an exchange rate of 1.3 U.S. Dollars to Euros to convert the purchase price to a total of $22.1 million. (Id. ¶ E-2.) Company E's bank account appears in the final version of the written agreement for the deal and in an email from Company E to Defendant providing payment instructions, while Defendant's BOA Company E Account appears in neither. (Id. ¶ E-3.)

Defendant instructed Oak Fund XI to fund the $22.1 million purchase with two separate transfers: (1) $20.74 million to an account of Company E; and (2) $1.36 million to Defendant's BOA Company E Account. (Id. ) In the written wiring instructions that Defendant sent Oak Fund XI, Defendant represented the account name as "[Company E] USA" and did not state in any manner that he owned or had a personal interest in the account. (SOF ¶ E-4.) Three days later, on July 29, 2005, Oak Fund XI made the transfers requested by Defendant. (SEC Exs. 44, 45.)

Although Defendant represented to Oak Fund XI that the purchase price of 17 million Euros was equivalent to $22.1 million-an exchange rate of 1.3 dollars to Euros-Defendant knew at the time that the exchange rate was actually closer to 1.2 dollars to Euros. Defendant stated as much in an email to Company E dated August 2, 2005, where he told Company E

that the actual exchange rate at the time of Oak Fund XI's transfer "was more like 1.21," and Defendant "did the calculations at 1.22 assuming some maring [sic] for movement" to arrive at the $20.74 million amount transferred by Oak Fund XI to the seller. (SEC Ex. 46 at OAK-SEC-1643.)

Thus, Company E agreed to a purchase price of $20.74 million but Oak Fund XI paid $22.1 million and Defendant diverted the difference of $1.36 million to Defendant's BOA "Company E" Account. (SOF ¶ E-6.) Over the next month, Defendant transferred a total of $1,358,188 from the BOA Company E Account to two of his personal accounts. (Id. ¶ E-7; SEC Ex. 47 at SEC-BOA-E-2141.)

Soon after the transaction, Company E notified Defendant of a shortfall in the purchase price and then accepted Defendant's suggestion that Oak Fund XI pay the shortfall of €19,486 as a setoff against the amount Company E owed Oak Fund XI for legal expenses under the Investment Agreement. (Id. ¶¶ E-5, E-8.) Unbeknownst to Oak Fund XI, Defendant then directed the seller to send the legal expense reimbursement (less the shortfall in the purchase price) to Defendant's BOA OIP Advisors Account. (Id. ¶ E-9.) The seller complied with Defendant's direction and transferred $92,285.15 to Defendant's OIP Account on November 11, 2005. (Id. ¶ E-10.) Two weeks later, Defendant transferred the funds from the BOA OIP Advisors Account to his personal account. (Id. )

6. Company F

In February 2007, Oak Fund XII invested in shares of Company F. (SOF ¶ F-1.) Company F was required to reimburse Oak Fund XII for its legal fees in connection with the share purchase, up to $250,000. (Id. ¶ F-2.) Defendant advised Company F to send the legal fees reimbursement to his BOA OIP Advisors Account, which Company F did. (Id. ¶¶ F-3 to F-4.) Defendant then wired those funds to a joint bank account that he held with Relief Defendant Shalini Ahmed. (Id. ¶ F-4.)

Later in 2007, Oak Fund XII sold its shares in Company F. (Id. ¶ F-5.) Similar to the initial share purchase agreement, the sale agreement related to this transaction provided that the acquiring company would pay the seller's transaction expenses, with a cap of $500,000. (Id. ) Oak Fund XII paid its own legal fees, however, once again Defendant advised Company F to send Oak Fund XII's reimbursement of legal fees to his BOA OIP Advisors Account, which Company F did. (Id. ¶¶ F-6 to F-7.) Just as in June 2007, Defendant did not provide the legal fees to Oak Fund XII, but rather wired the $500,000 to a joint bank account that he held with Relief Defendant Shalini Ahmed. (Id. ¶ F-8.)

7. Company G

Oak Fund XII purchased and sold Company G shares through its affiliated entity Oak Asia Infrastructure, LLC. (SOF ¶ G-1.) Specifically, with respect to these transactions, Defendant recommended and/or signed the agreements on behalf of Oak Fund XII or its affiliate. (Id. ¶¶ G-2, G-7, G10.) In connection with these transactions, Defendant misappropriated money from Oak Fund XII five different times, as discussed below.

The first misrepresentation relates to Defendant's 2007 proposal that Oak Fund XII invest 40 billion Korean Won in Company G shares. (SOF ¶ G-2.) After the investment was approved, Defendant presented wire transfer instructions showing that Oak Fund XII was buying 2,348,904 shares for a total price of $47.5 million. (Id. ) In accordance with Defendant's instructions, on December 18, 2007, Oak Fund XII wired $45 million to a Korea Exchange Bank account and the remaining $2.5 million to a Bank of America account ending in numbers x9887 in the name of "Company G" (the "BOA Company G Account 1"), which Defendant had opened earlier that same day. (Id. ¶¶ G-2, G-5.) The $2.5 million was immediately transferred to a joint bank account that Defendant held with his wife, Relief Defendant Shalini Ahmed. (Id. ¶ G-5.)

Defendant knew that the purchase price for the Company G shares would be less than $45 million, and he instructed that the excess funds be sent to his BOA OIP Advisors Account. (Id. ¶ G-3.) On January 9, 2008, Korea Exchange Bank wired $2,201,070.56 to Defendant's BOA OIP Advisors Account. (Id. ¶ G-4.) Oak has no record of receiving that money or any other amount back from the $45 million Oak Fund XII wired on December 18, 2007. (Id. ) The next day that money was transferred to a joint bank account that Defendant held with his wife, Relief Defendant Shalini Ahmed. (Id. ¶ G-6.)

On four separate occasions from 2009 to 2013, Defendant presented requests for Oak Fund XII to make payments purportedly to Company G with an invoice that appeared to be on Company G letterhead. Each invoice was submitted with a wire request and contained wire transfer instructions directing that payment be remitted to one of two Bank of America accounts in the name of Company G. In each instance, Oak Fund XII made the payments as requested by Defendant. However, Defendant's BOA Company G Accounts did not belong to Company G, and Company G never received the funds mentioned above. (Id. ¶¶ G-7-16.)

Defendant's second misrepresentation was in connection with Oak Fund XII's 2009 Tender Offer Agent Engagement Agreement for Company G that resulted in the company being taken private and delisted, which Defendant signed. (Id. ¶ G-7.) On October 29, 2009, Defendant submitted a wire request and Company G invoice for Oak Fund XII's payment of 2,490,325,000 Korean Won (or $2,101,185.45) to Company G for purported delisting fees and legal fees with wire instructions for Defendant's BOA Company G Account 1. (SOF ¶ G-8.) Oak Fund XII subsequently wired the $2,101,185.45 to the BOA Company G Account 1, of which $2,099,998 was transferred to a joint bank account Defendant held with his wife the following day. (Id. ¶ G-9.)

Defendant's third fraud associated with Company G centers on Oak Fund XII's sale of its Company G shares in October 2011, with a portion of the sales price remaining in escrow until 2013. (Id. ¶ G-10.) This agreement was also executed by Defendant. (Id. ) The transaction was set up so that Oak Fund XII would receive a certain portion of the consideration for its shares at the initial closing and the remainder would be held in escrow until March 31, 2013, upon which time it would be released to Oak Fund XII. (Id. )

On November 25, 2011, Defendant submitted a wire request, along with an invoice, for Oak Fund XII's payment of a $3,113,981 "Management Incentive Payment" to Company G. (SOF ¶ G-11.) The wire request directed that $3,113,981 be paid to Company G, and the invoice contained wire transfer instructions for a Bank of America account number x6367 in the name of Company G (the "BOA Company G Account 2"), which Defendant had previously opened on October 17, 2011. (Id. ¶¶ G-11-12.) On November 28, 2011, Oak Fund XII wired $3,113,981 to that account, and the next day $3,000,000 was transferred to Defendant and his wife's joint bank account. (Id. ¶ G-12.)

Defendant made his fourth misrepresentation on April 10, 2013 when Defendant submitted a wire transfer request, along with an invoice and an email explanation of the fees for Oak Fund XII's payment of a $1,556,990 Management Incentive Payment to Company G, related to the sale of Company G shares. (Id. ¶ G-13.) The invoice contained wiring instructions for the BOA Company G Account 2. (Id. ) On April 11, 2013, Oak Fund XII wired $1,556,990 to the BOA Company G Account 2 and that same day the money was transferred to the joint bank account that Defendant held with his wife. (Id. ¶ G-14.)

Finally, on April 29, 2013, Defendant submitted a wire transfer request, along with an invoice, for Oak Fund XII's payment of a $622,796 Investment Banking Advisory Fees reimbursement to Company G, again containing wiring instructions for the BOA Company G Account 2. (Id. ¶ G-15.) On April 30, 2013, Oak Fund XII wired $622,796 to the BOA Company G Account 2, and $622,796 was immediately transferred to Defendant and Ms. Ahmed's joint bank account. (Id. ¶ G-16)

8. Company H

Oak Fund XII made several investments in Company H and its parent company, incurring fees from two law firms in connection with the investments and other legal matters related to Company H. (SOF ¶¶ H-1, H-2.) Purporting to act pursuant to agreements between Oak and Company H, Defendant directed Company H to transfer nearly 1.5 million British pounds to the BOA OIP Advisors Account as reimbursement for Oak's legal expenses. (Id. ¶ H-3.)

On June 17 and 18, 2009, Company H made three separate transfers to Defendant's BOA OIP Advisors Account in the amounts of $1,575,905.94, $118,578.60, and $535,025.04. (Id. ¶¶ H-4, H-5.) Shortly after the transfers, Defendant transferred $1,690,932.54 from the BOA OIP Advisors Account into Defendant's personal account. (Id. ¶¶ H-4, H-5.) Then, after Defendant had moved the funds paid by Company H for reimbursement of Oak's legal fees into his own personal accounts, on July 7, 2009, Defendant sent Company H a letter on Oak letterhead explaining that Oak requested that Company H "reimburse Oak for legal expenses up to a maximum of UK £1,500,000." (Id. ¶ H-6.)

9. Company I

In December 2010, Defendant recommended that two Oak funds-Oak Fund XII and Oak Fund XIII-invest 36.5 million British pounds in Company I. (SOF ¶ I-1.) Defendant represented to Oak that this purchase price translated into $3.6084 per share for a total of approximately 59 million U.S. dollars, and that this was based upon a fixed exchange rate of 1.62 dollars to the British pound, which had been reflected in a term sheet signed in November 2010. (Id. ¶¶ I-2, I-3.) These representations were not true-the November 2010 term sheet contained no such provision for a fixed exchange rate, and application of the correct exchange rate on the date of Oak Fund XII's investment would have resulted in a per share price of $3.49. (Id. ¶¶ I-4, I-5.)

As a result of these misrepresentations the Oak funds overpaid, and on December 17, 2010, shortly after Oak wired the $59 million, Company I contacted Defendant and informed him that it was wiring back to Oak the approximately £1.4 million that had been overpaid. (Id. ¶ I-6.) Defendant directed Company I to wire these surplus funds to his secret BOA OIP Advisors Account, which Company I did. (Id. ¶¶ I-7, I-8.) The next day, Defendant transferred these funds-which amounted to approximately $2.185 million-into a joint bank account that he held with his wife, Relief Defendant Shalini Ahmed. (Id. ¶ I-8.) Oak never received these funds. (Id. ¶ I-9.)

10. Company J

Oak Fund XI entered into a Stock Purchase Agreement dated April 7, 2006, in which it agreed to purchase from Company J (a Delaware corporation) 15,000,000 shares of its Series A Preferred Stock. (SEC Ex. 51 at OAK-SEC-5630, 5662.) Defendant worked on Oak Fund XI's purchase of Company J shares. (SOF ¶ J-2.) The Share Purchase Agreement stated that Company J would use the proceeds from the sale of the stock to, among other things, fund the payment of a one-time special dividend to Oak Fund XI in the amount of $0.12 per share, which equates to $1.8 million. (See SEC Ex. 53 § C(3)(a) at OAK-SEC-5610.)

On April 19, 2006 Defendant directed Company J to send the dividend to Defendant's BOA OIP Advisors Account. (SOF ¶ J-5.) Company J complied with Defendant's directives and transferred $1.8 million to Defendant's OIP Account on May 1, 2006. (Id. ¶ J-6.) Seven weeks later, Defendant transferred the $1.8 million from the BOA OIP Advisors Account to his and his wife's joint bank account. (Id. ¶ J-7.)

III. Discussion

A. Standard on Summary Judgment and Effect of Adverse Inference

Summary judgment is appropriate where, "resolv[ing] all ambiguities and draw[ing] all permissible factual inferences in favor of the party against whom summary judgment is sought," Holcomb v. Iona Coll. , 521 F.3d 130, 137 (2d Cir. 2008), "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law," Fed. R. Civ. P. 56(a). "A dispute regarding a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Williams v. Utica Coll. of Syracuse Univ. , 453 F.3d 112, 116 (2d Cir. 2006) (quotation marks omitted). "The substantive law governing the case will identify those facts that are material, and '[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.' " Bouboulis v. Transp. Workers Union of Am. , 442 F.3d 55, 59 (2d Cir. 2006) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). When considering a motion for summary judgment, the Court may consider depositions, documents, affidavits, interrogatory answers, and other exhibits in the record. Fed. R. Civ. P. 56(c). The same standard applies to cross-motions for summary judgment. See Morales v. Quintel Entm't, Inc. , 249 F.3d 115, 121 (2d Cir. 2001). The Court must examine the merits of each motion independently and in each case must consider the facts in the light most favorable to the non-moving party. Id. at 121.

In this case, Defendant has invoked the Fifth Amendment instead of responding to the SEC's Complaint, allegations, or discovery requests. (SEC SOF X-1.) It is Defendant's right to assert this privilege in a civil proceeding. See, e.g. , Baxter v. Palmigiano , 425 U.S. 308, 316, 96 S.Ct. 1551, 47 L.Ed.2d 810 (1976). However, "[a] court may draw an adverse inference against a party who asserts his Fifth Amendment privilege in a civil matter, because the invocation of the privilege results in a disadvantage to opposing parties by keeping them from obtaining information they could otherwise get." S.E.C. v. Suman , 684 F.Supp.2d 378, 386 (S.D.N.Y.2010) (citing Collazos v. United States , 368 F.3d 190, 203-04 (2d Cir. 2004) (noting that where the defendant "deprives the government of the opportunity to conduct a deposition ... [that] itself supports an adverse inference") ); see also S.E.C. v. Pittsford Capital Income Partners, L.L.C. , 2007 WL 2455124, at *14 (W.D.N.Y. Aug. 23, 2007)

("[L]itigants denied discovery based upon an assertion of the privilege may ask the court to draw a negative inference from the invocation of that right.").

"An adverse inference may be given significant weight because silence when one would be expected to speak is a powerful persuader." LiButti v. United States ("LiButti II") , 178 F.3d 114, 120 (2d Cir. 1999). "While the strength and cogency of the adverse inference" must "be tested against the other evidence in the case, 'the claim of privilege will not prevent an adverse finding or even summary judgment if the litigant does not present sufficient evidence to satisfy the usual evidentiary burdens in the litigation.' " LiButti v. United States ("LiButti I") , 107 F.3d 110, 124 (2d Cir. 1997) (quoting United States v. Certain Real Prop. & Premises Known as 4003-4005 5th Ave., Brooklyn, N.Y. , 55 F.3d 78, 83 (2d Cir. 1995) ); see also Suman , 684 F.Supp.2d at 386 ("a motion for summary judgment cannot be granted on an adverse inference alone; rather, the inference must be weighed with other evidence in the matter in determining whether genuine issues of fact exist."); United States v. Inc. Vill. of Island Park , 888 F.Supp. 419, 432 (E.D.N.Y. 1995) (finding that the moving party "must produce independent corroborative evidence of the matters to be inferred before liability will be imposed" (internal quotation marks omitted) ).

B. Defendant's Claims That he was Treated Unfairly are Without Merit

Defendant claims that he has been treated unfairly, inappropriately denied access to evidence, and coerced into asserting his Fifth Amendment right against self-incrimination. (Def.'s Opp.'n at 1-8.)

Defendant chose to flee the United States shortly after this case was filed, in violation of his conditions of release in a criminal matter. (See Order Denying Def.'s Mot. for Full Access to the SEC's Investigative File [Doc. # 286] at 2.) It was as a result of this choice that the Court denied Defendant's requests for access to confidential information, reasoning that it could not enforce any protective order while Defendant remained outside of its jurisdiction. (See, e.g. , id at 3; Order Denying Def.'s Mots. To Compel Oak to Produce Documents [Doc. # 477] at 3.)

Defendant also claims that he has been unfairly deprived of access to counsel, but as this Court has articulated in previous rulings in this case, Defendant has no Sixth Amendment right to counsel in this civil case nor the right to use tainted assets to retain counsel. (See Ruling on Defendant's Motion for Release of Funds [Doc. # 191] at 2-3; Ruling Denying Defendant's Motion for Reconsideration to Modify the Asset Freeze Order to Release Funds for Legal Defense [Doc. # 392].) Since he consented to the withdrawal of his counsel, Defendant has actively participated in this litigation, and Relief Defendants, who have been continuously represented by counsel, have also litigated aspects of the merits of Defendant's claimed liability. (See, e.g. , RD's Mot. for Summ. J.)

Defendant further argues that he was "forced and coerced" to invoke his Fifth Amendment privilege when the SEC insisted that he appear for his deposition at the U.S. Consulate in India. (Def.'s Opp'n at 6.) The record does not support this claim. Indeed, in initially objecting to his deposition-which was noticed in the United States-Defendant stated that he was "likely to assert his Fifth Amendment privileges," belying his argument that he ever intended to substantively testify. (See Def.'s Mot. for a Protective Order and to Quash Notice of Deposition [Doc. # 238] at 3.) And critically, Defendant's Fifth Amendment invocation was not made only at his deposition: Defendant also invoked his Fifth Amendment privilege in his Answer on advice of counsel and later when responding to written discovery. (Id. )

Defendant has received the benefit of the Fifth Amendment privilege at every stage of this proceeding, and now he must also bear the consequences of that decision. See United States v. 4003-4005 5th Ave., Brooklyn, N.Y. , 55 F.3d 78, 82 (2d Cir. 1995) ("[A] civil litigant's invocation of the privilege against self-incrimination during the discovery process is far from costless.") Defendant's claims that he has been "muzzled, silenced and rendered deaf, dumb and blind" are simply not accurate. (Def.'s Opp'n at 1.) The Court has afforded Defendant every opportunity to participate in this litigation despite the circumstances he created for himself by leaving its jurisdiction, as evidenced by his prolific filings since the withdrawal of his attorney.

C. Kokesh Does not Require Dismissal of Claims Against Relief Defendants in the Pending Summary Judgment Proceedings

Relief Defendants and Mr. Ahmed respectively move for summary judgment in their favor on all claims arising from alleged frauds involving Companies D, E, F, H, and J, and those involving Company G (other than the frauds alleged to have occurred in November 2011 and April 2013) because each of these transactions took place more than five years prior to the filing of the SEC's claim and is therefore time-barred pursuant to 18 U.S.C. § 2462, as the Supreme Court recently held in Kokesh v. SEC , --- U.S. ----, 137 S.Ct. 1635, 198 L.Ed.2d 86 (2017). The SEC's Motion for Summary Judgment on liability does not discuss the impact of Kokesh , and its Opposition to Defendants' Motion contends that Kokesh does not affect the question of whether Defendant is liable for the alleged violations, but only the extent of damages. It therefore argues that Kokesh should not be addressed until the next phase of the bifurcated summary judgment proceedings, if there is one.

Nonetheless, Plaintiff makes two arguments against dismissal of the claims arising out of events which occurred over five years before the SEC filed its Complaint: first, the SEC also seeks injunctive relief relating to those transactions, which does not carry the same statute of limitations; and second, even if the SEC could not seek any relief related to Defendant's conduct that occurred more than five years prior to the filing of this case, that conduct is still relevant to Defendant's subsequent liability and any ultimate remedies.

The SEC does not dispute that the claims for disgorgement tied to the transactions which occurred over five years before this case was filed are time-barred, however, it argues that Defendants' argument-that all relief is barred because some of the SEC's claims are based on pre-2010 conduct-ignores that the non-disgorgement relief the SEC seeks for these pre-2010 violations includes injunctive relief. (See Am. Compl. [Doc # 208] at 53-54.) In fact, Relief Defendants appear to admit as much, noting that "[t]he only remedy potentially available to the SEC for misconduct that accrued five years before this case was filed is injunctive relief that would prohibit the Defendant from violating the securities laws." (RDs' Opp'n to PL's Mot. for Summ. J. (citing S.E.C. v. Collyard , 861 F.3d 760, 764 (8th Cir. 2017) (injunction barring defendant from violating Securities Exchange Act § 15(a) permitted under Kokesh because a properly imposed injunction is designed to protect the public, not to punish, and thus is not a penalty subject to § 2462.) ).) Accordingly, the SEC argues that "it would be premature to dismiss any of [its] claims at this stage, since this court's decision whether injunctive relief is appropriate should follow its disposition of the summary judgment motions on liability." (SEC Opp'n at 6.)

The SEC also claims that even if discrete acts fall outside of a statutory time period, those acts are competent background evidence for analyzing timely misconduct. See e.g. , Nat'l R.R. Passenger Corp. v. Morgan , 536 U.S. 101, 112-13, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002) (quoting United Airlines, Inc. v. Evans , 431 U.S. 553, 558, 97 S.Ct. 1885, 52 L.Ed.2d 571 (1977) ; Chin v. Port Authority , 685 F.3d 135, 150 (2d Cir. 2012) ("It is well established ... that so long as at least 'one alleged [violation] ... occurred within the applicable filing period[,] ... evidence of an earlier alleged [violation] may constitute relevant background evidence in support of [that] timely claim.' " (quoting Jute v. Hamilton Sundstrand Corp. , 420 F.3d 166, 176 (2d Cir. 2005) ) ). Moreover, the SEC argues evidence of Defendant's older conduct-which involved similar fraudulent acts as the more recent conduct, including misrepresenting the purchase price of shares and fabricating invoices for purported expenses-tends to prove his motive, opportunity, and intent, for his conduct that is indisputably timely. See Fed. R. Evid. 404(b) ; see also U.S. v. Vilar , No. 05 Cr. 621, 2008 WL 4178117, at *2 (S.D.N.Y. Sept. 5, 2008) (noting the Second Circuit has adopted an "inclusionary" approach to Rule 404(b) evidence).

The Court agrees the evidence may be relevant, regardless of whether it forms the basis of an independent claim. The crux of the issue, however, is whether there is any relief which this Court may grant with respect to the pre-2010 conduct alleged in the Complaint. Because this stage of the proceedings deals with liability, and the question of whether injunctive relief is appropriate as it relates to the otherwise time-barred conduct deals with the remedy, this question must be left to be addressed in the next phase of the proceedings. The Court therefore will not dismiss any claims under Kokesh at this liability stage, however it earlier modified the Asset Freeze Order [Doc. # 113] to reflect this change in law. (See Order on Defendant's Motions for Modification of the Asset Freeze Order to Release Funds for his Legal Defense and for a Stay [Doc. # 829].)

D. Defendant's Conduct Violated the Advisers Act, Securities Act, and Exchange Act

1. Fraud Under the Advisers Act

The Advisers Act " 'reflects ... a congressional intent to eliminate, or at least to expose, all conflicts of interest which might incline an investment adviser-consciously or unconsciously-to render advice which was not disinterested.' " SEC v. Wall St. Transcript Corp. , 422 F.2d 1371, 1376 (2d Cir. 1970) (quoting SEC v. Capital Gains Research Bureau, Inc. , 375 U.S. 180, 186, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963) ).

The SEC alleges violations of all four subsections of Section 206 and Rule 206(4)-8, although not with respect to each transaction.

a. Defendant is an Investment Adviser

Subject to certain exceptions not applicable to Defendant, Section 202(a)(11) of the Advisers Act defines "investment adviser" as follows:

[A]ny person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.

15 U.S.C.A. § 80b-2(11). This is a "broad definition," Financial Planning Ass'n v. SEC , 482 F.3d 481, 484 (D.C. Cir. 2007), and reaches persons who receive compensation for investing funds of their clients or who advise their "customers by exercising control over what purchases and sales are made with their clients' funds." Abrahamson v. Fleschner , 568 F.2d 862, 870-871 (2d Cir. 1977) (includes "persons who manage[ ] the funds of others for compensation.").

As a threshold matter, Defendant argues that he did not "advise anyone on the value of securities or ... the advisability of investing in, purchasing, or selling any securities," instead claiming he was merely an "assistant" and "support staff." (Def.'s Opp. at 22-23 & n.36.) He further contends that he cannot be an "investment adviser" under the federal securities laws because he did not hold the requisite licenses and certifications and was not registered with any state or federal agency. (See, e.g. , Def.'s Mot. for Summ. J. at 44-47.) Lastly, he maintains that an investment adviser must be compensated in certain ways. None of his arguments are availing.

The record indisputably shows that Defendant was not simply some "assistant," but played a central role in the transactions at issue. From 2004 through 2015 he recommended and advised that Oak Funds IX, XI, XII, and XIII purchase or sell securities, and then monitored and managed those investments. (SOF ¶ X-8.) Specifically, Defendant's responsibilities at Oak included identifying, analyzing, and recommending investment opportunities for the various Oak Funds at issue in this case, which were typically investments in the securities of various "portfolio companies." (Id. ¶¶ X-6, X-7.) Defendant was also responsible for negotiating the terms of the investments and managing the relationships with the companies in which the Oak Funds invested. (Id. ¶ X-6.) Indeed, Defendant signed many of the agreements for the transactions at issue on behalf of Oak. (See, e.g. , SEC Ex. 127 at Oak-SEC-747; SEC Ex. 135 at Oak-SEC-26.) Contrary to Defendant's contention, the fact that he was not licensed, certified, or registered with any state or federal agency does not preclude him from being considered an investment adviser under the Adviser's Act, as the Act's definition of an adviser turns on conduct, not certification or registration. See, e.g. , U.S. v. Onsa , 523 Fed.Appx. 63, 65 (2d Cir. 2013) ("[T]he Act defines investment adviser in a functional way, applying to 'any person' who engages in the specified conduct," and "the structure of the Act demonstrates that individuals need not register, or even be required to register, in order to be an 'investment adviser' within the meaning of the Act." (quoting 15 U.S.C. § 80b-2(a)(11) ) ).

In addition, Defendant was clearly compensated for his work at Oak. (SOF ¶ X-9.) There is no requirement that an investment adviser be compensated in any particular way, and Defendant's citation to an SEC Investor Bulletin is unconvincing. (Def.'s Mot. for Summ. J. at 47 & id. at n.57.) Even if the bulletin were binding on this Court, it says only that individuals "might" pay a broad range of financial professionals in certain ways. See https://www.sec.gov/investor/alerts/ib_top_tips.pdf at 2. It does not purport to exhaustively list the ways investments advisers are compensated. Defendant's misappropriation of investor funds is sufficient, by itself, to meet the "compensation" element of the definition. See U.S. v. Ogale , 378 Fed.Appx. 959, 960-61 (11th Cir. 2010).

Because Defendant received compensation to advise the Oak Funds as to the value of securities and recommended that Oak Funds purchase and sell securities at all times relevant to the SEC's claims in this case, Defendant was an "investment adviser" under Section 202(a)(11). See Abrahamson , 568 F.2d at 870-871.

b. Defendant Violated Sections 206(1), (2), (4), and Rule 206(4)-8

Section 206(1) prohibits investment advisers from employing "any device, scheme or artifice to defraud any client or prospective client." 15 U.S.C. § 80b-6(1). Section 206(2) prohibits an investment advisor from engaging "in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client." 15 U.S.C. § 80b-6(2). Section 206(4) prohibits advisers from engaging in "any act, practice, or course of business which is fraudulent, deceptive, or manipulative" as defined by rules promulgated by the SEC. For conduct after September 10, 2007, Rule 206(4)-8 prohibits advisers to "pooled investment vehicles" from engaging in fraudulent acts or making material misrepresentations to investors or prospective investors. 17 C.F.R. § 275.206(4)-8.

i. Defendant's Fraud was Directed Towards Clients and Investors

Defendant argues that certain of his misconduct related to Companies D, E, F, G, and H did not violate Sections 206(1) or 206(2) of the Advisers Act because he did not direct this fraud to any "clients." (Def.'s Mot. for Summ. J. at 40-41.) However, Defendant's clients were the various Oak Funds, and the record demonstrates without question that Defendant's fraud was directed towards these Funds.

With respect to Company D, Defendant fraudulently informed Company D that it was to pay $650,000 in a "management fee" to an Oak entity in exchange for removing a provision from the Oak Fund's investment agreement that would have required Company D to pay an annual dividend. (SOF ¶¶ D-1-D-2.) In other words, Defendant fraudulently bargained away a provision that would have benefitted his client in exchange for $650,000 that he misappropriated for himself. Similarly, with respect to Companies E, F, and G, Defendant fraudulently caused these companies to pay legal fees that his clients (the Oak funds) were entitled to receive to an account that he personally controlled, and then further misappropriated these funds for his personal use. (Id. ¶¶ E-5, E-8-E-10, F-1-F-8, H-1-H-6.) And with respect to Company G, Defendant fraudulently induced his client-the Oak fund-to send money that it thought was paying to Company G for "delisting fees" to another account that he personally controlled, and again misappropriated these funds for his personal use. (Id. ¶¶ G-8-G-9.)

In each of these instances, Defendant either misappropriated a benefit his client was entitled to receive (Company D), intercepted funds his client was entitled to be paid (Companies E, F, and H), or caused his client to send him money it thought was destined for a portfolio company (Company G). Defendant's misconduct and resultant misappropriation of his clients' money plainly violated his "affirmative duty of utmost good faith, and full and fair disclosure" to his clients, therefore violating Sections 206(1) and (2) of the Advisers Act.

Defendant also argues that his conduct did not violate Advisers Act Section 206(4) and Rule 206(4)-8 because he did not direct any of his fraud to "investors." (Def.'s Mot. for Summ. J. at 42-43.) As discussed above, Rule 206(4)-8 provides that an investment adviser may not, among other things, "engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative with respect to any investor ..." 17 C.F.R. § 275.206(4)-8(a) (2). Misappropriating investor funds plainly violates this provision. See, e.g. , SEC v. Neman , 2016 WL 6661174, at *6 (CD. Cal. July 15, 2016) (violation of Rule 206(4)-8 where, "rather than pooling investor funds to purchase securities, [the adviser] pooled investor funds in his personal bank account"); SEC v. Parrish , 2012 WL 4378114, at *4-5 (D. Colo. Sept. 25, 2012) (violation of Rule 206(4)-8 where "Defendant pooled funds invested in his Ponzi scheme and transferre