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Law360

April 6, 2021 — On March 30, following an appellate victory in August 2020, Larson LLP's clients in SEC v. Yang et al. were ordered to pay a fraction of the judgment originally handed down by U.S. District Judge Stephen V. Wilson in 2018 to end the SEC's fraud claims.

Partners Stephen G. Larson and Hilary Potashner and associate John Lee are representing the defendants in the SEC enforcement action that began in 2015 over an alleged EB-5 visa scam. The defendants accepted the imposition of monetary remedies through a consent agreement with the SEC in 2016, and in 2018, the SEC asked for $6 million in civil penalties against each of the defendants. Judge Wilson then granted a $15.5 million judgment in total against the defendants.

Stephen and Hilary led the defendants' appeal of the judgment before the U.S. Court of Appeals for the Ninth Circuit in March 2019. They argued, as stated in the Law360 article covering the appellate ruling, that "the lower court failed to exercise discretion in setting the amount of civil penalties and instead rubber-stamped the SEC’s requests."

The appellate panel agreed, finding that Judge Wilson didn't explain why the defendants received the penalties and reversing and remanding the $15.5 million judgment. Still, the SEC moved to restore the judgment yet again and the defense swiftly objected, arguing, "While monetary remedies are appropriate, the SEC’s requests departs by a wide margin from any legally permissible calculation."

In his new order on March 30, Judge Wilson determined the defendants must pay disgorgement, interest, and civil penalties that are, combined, approximately $12 million less than the original $15.5 million judgment.

Law360 reported on the order that reduced the judgment by millions. The article referenced an earlier order in February where Judge Wilson noted that "in this case, a civil penalty equaling the pecuniary gains of the individual defendants was appropriate, saying that while Yang and Kano had repeatedly and intentionally misled investors, they recognized that what they'd done was wrong. They also both work outside of the securities industry and aren't professionally poised to reoffend."

Read the full article by Emilie Ruscoe of Law360 covering the order here.