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Securities and Exchange Commission v. Brown

United States District Court, S.D. Florida

July 11, 2019

SECURITIES AND EXCHANGE COMMISSION, Plaintiff/Applicant,
v.
MICHAEL P. BROWN, Defendant/Respondent.

          ORDER DENYING PLAINTIFF'S MOTION FOR ALTERNATIVE SERVICE OF PROCESS BY PUBLICATION [DE 8]

          WILLIAM M. MATHEWMAN, UNITED STATES MAGISTRATE JUDGE.

         THIS CAUSE is before the Court upon Plaintiff, Securities and Exchange Commission's ("The SEC") Motion for Alternative Service of Process by Publication. [DE 8]. This matter was referred to the undersigned by United States District Rodney Smith. See DE 10.

         I. Background

         The SEC filed its Petition in this case on April 11, 2019, seeking an entry of judgment enforcing Defendant's compliance with a final Commission Order, entered against Defendant on May 20, 2015, which required Defendant to pay disgorgement of $15, 000 and a civil money penalty of $750, 000. [DE 1]. On April 16, 2019, the Honorable United States District Judge Beth Bloom[1] entered an Order to Show Cause, requiring Defendant to show cause why the Court should not enter a judgment enforcing Defendant's compliance with the Commission Order entered against him on May 20, 2015. [DE 3, pg. 2]. That Order also required the SEC to file proof of service upon Defendant of the Order to Show Cause on or before April 25, 2019. Id.

         On April 26, 2019, the SEC filed a Notice of Service [DE 4], in which the SEC advised the Court that it was having difficulty locating Defendant. The SEC attached the Declaration of Eric M. Turnbaugh, general manager of Cavalier Courier & Process Service ("CCPS"), which stated that CCPS had made several attempts to serve Defendant with the Order to Show Cause at seven different addresses, but was ultimately unsuccessful in locating Defendant. [DE 4-1]. The SEC requested an additional month to attempt to locate Defendant, and asked that if it could not locate Defendant, it be permitted to "send notice to all known addresses that it believes may be valid, all known e-mail addresses and to provide notice via publication and for this to be deemed adequate service." [DE 4]. On April 29, 2019, the Court granted the SEC's request for an extension and ordered the SEC to file proof of service upon Defendant on or before May 27, 2019. [DE 6]. On May 30, 2019, the Court entered an Order which stated that the SEC had not filed proof of service upon Defendant as required in its April 29, 2019 Order [DE 6] and ordered the SEC to file proof of service upon Defendant by June 3, 2019 or face sanctions. [DE 7].

         On June 3, 2019, the SEC filed its Status Report Regarding Notice of Service. [DE 8]. In the Status Report, the SEC advises the Court that it had continued to attempt to locate Defendant but was unsuccessful. The SEC asserts that it has been unable to personally serve Defendant, although it has been diligent in its attempts to serve Defendant. The SEC further states that it is "not confident" that it will be able to locate Defendant for personal service, even given an additional thirty days. The SEC advises that it believes Defendant resides in South Florida because he receives mail at an address in South Florida, and also believes that Defendant was recently traveling in Michigan. The SEC included a supplemental Declaration of Mr. Turnbaugh, who stated that CCPS visited a SunTrust bank in Boca Raton, Florida, a Holiday Inn Express in Petoskey, Michigan, and a residence in Boca Raton, Florida where Defendant's business associate resides, in May, 2019 but could not locate Defendant. Thus, in light of the substantial efforts expended to personally serve Defendant, the SEC asks the Court to allow the SEC to serve Defendant by publication in Florida and Michigan.

         II. Service by Publication

         "Unless federal law provides otherwise, an individual-other than a minor, an incompetent person, or a person whose waiver has been filed-may be served in a judicial district of the United States by: (1) following the state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made;..." Fed.R.Civ.P. 4(e)(1).

         While Florida permits service on any person, corporation, or other legal entity by publication, it limits service by publication to fifteen enumerated actions specified in Florida Statute § 49.011. If service by publication is permitted under Fla. Stat. § 49.011, a party seeking service by publication is required to file "a statement.. .in the action executed by the plaintiff, the plaintiffs agent or attorney, setting forth substantially the matters hereafter required, which statement may be contained in a verified pleading, or in an affidavit or other sworn statement" in its request for alternative service. Fla. Stat. § 49.031(1). The sworn statement should show:

(1) That diligent search and inquiry have been made to discover the name and residence of such person, and that the same is set forth in said sworn statement as particularly as is known to the affiant; and
(2) Whether such person is over or under the age of 18 years, if his or her age is known, or that the person's age is unknown; and
(3) In addition to the above, that the residence of such person is, either:
(a) Unknown to the affiant; or
(b) In some state or country other than this state, stating said ...

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