                                                         [DO NOT PUBLISH]


            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT            FILED
                      ________________________ U.S. COURT OF APPEALS
                                                         ELEVENTH CIRCUIT
                             No. 08-16710                   MAY 19, 2009
                         Non-Argument Calendar            THOMAS K. KAHN
                                                              CLERK
                       ________________________

                    D. C. Docket No. 04-80153-CV-JIC

SECURITIES AND EXCHANGE COMMISSION,


                                                               Plaintiff-Appellee,

                                  versus

DARREN SILVERMAN,
MATTHEW BRENNER,


                                                       Defendants-Appellants.


                       ________________________

                Appeal from the United States District Court
                    for the Southern District of Florida
                      _________________________

                              (May 19, 2009)

Before CARNES, WILSON and KRAVITCH, Circuit Judges.

PER CURIAM:
      Defendant-appellants Darren Silverman and Matthew Brenner

(“Defendants”) appeal the district court’s final judgement ordering Defendants

collectively to disgorge $8,117,527, together with prejudgment interest, and to

individually pay a civil penalty amount of $100,000.

                                          I.

      In 2004, the Securities and Exchange Commission (“SEC”) brought this

civil law enforcement action against Defendants for fraudulently offering and

selling unregistered securities, in violation of the Securities Act, the Exchange Act,

and the Advisers Act (collectively, the “Acts”). The SEC alleged that Defendants

defrauded hundreds of investors out of more than $32 million when they sold

them, by means of numerous misrepresentations, interests in investment funds that

they ran.

      Rather than contest the allegations made in the SEC’s complaint, Defendants

consented to the entry of judgments that enjoined them from violating the anti-

fraud and registration provisions of the Acts, prohibited them from acting as

officers or directors of certain issuers, and required them to pay disgorgement and

prejudgment interest. In the consents, which were signed by both Defendants and

their counsel, Defendants did not admit or deny the allegations of the complaint,

but they agreed to comply with the SEC policy preventing a defendant from



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consenting to a judgment that imposes a sanction while denying the allegations in

the complaint. Accordingly, Defendants agreed:

       (i) not to take any action or to make or permit to be made any public
       statement denying, directly or indirectly, any allegation in the
       Complaint or creating the impression that the Complaint is without
       factual basis; and (ii) that upon the filing of this Consent,
       Defendant[s] hereby withdraw[] any papers filed in this action to the
       extent that they deny any allegations in the Complaint.

The consents also explained that this provision did not affect either Defendants’

testimonial obligations or their right to take legal positions in litigation in which

the SEC is not a party.

       Pursuant to the consents, the district court entered judgments against

Defendants on May 7, 2004. The judgments, which had been attached to the

consents and incorporated by reference into the consents, enjoined Defendants

from future violations of the Acts and ordered them to “disgorge, with prejudgment

interest, all ill-gotten profits or proceeds that [they] received, directly or indirectly,

as a result of the acts or courses of conduct described in the Complaint.” The

judgments provided that “[t]he dollar amount of disgorgement shall be reached by

agreement of the parties or, if the parties are unable to reach agreement, the amount

shall be determined by the Court upon the Commission’s motion.” The judgments

also provided that Defendants could not “by way of defense to such a motion [for

disgorgement], challenge or otherwise contest the allegations of the Complaint,

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which shall be deemed true by the Court for purposes of this motion,” but that

nothing in the judgments would “prevent [Defendants] from presenting evidence

regarding the amount of disgorgement.” The judgments further stated that

Defendants would pay civil penalties as allowed under the Acts, in an amount to be

determined by the court upon the SEC’s motion. For purposes of imposing such

civil penalties, the judgments provided that the allegations of the complaint shall

be deemed as true, but Defendants may “present[] evidence of factors mitigating

against the imposition of a civil penalty.”

       The SEC and Defendants did not reach agreement as to the amount of

disgorgement and on June 25, 2008,1 the SEC filed a motion for the district court

to set the amount of disgorgement, to hold Defendants liable for prejudgment

interest, and to impose civil money penalties. As evidence of the amount of ill-

gotten gains to be disgorged, the SEC presented the affidavit of a forensic

accountant who had spent more than 600 hundred hours examining the financial

records of Defendants’ investment funds. The accountant stated that, due to

Defendants’ incomplete and inadequate record-keeping, he was unable to account

for $8,117,527 of the $32 million Defendants had collected from their investors.


       1
          The SEC explains in its appellate brief that the “reason for the several-year delay in
filing a motion was that the [SEC] staff had anticipated that criminal proceedings might be
brought against defendants and believed that sanctions in such proceedings would have made
moot the [SEC’s] request for monetary relief.”

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The SEC therefore sought the unaccounted-for $8.1 million as a reasonable

approximation of Defendants’ ill-gotten profits. In opposing this motion,

Defendants submitted their own affidavits, in which they denied having received

$8.1 million and claimed that all the money in the investment funds was lost in the

stock market. Defendants presented no documentary evidence supporting the

statements in their affidavits. They also claimed that, because the SEC waited four

years after the entry of the consent judgments to bring the motion for disgorgement

and civil penalties, Defendants were entitled to the defenses of estoppel and laches.

      The district court granted the SEC’s motion and ordered Defendants

collectively to disgorge $8,117,527, together with prejudgment interest for the

three-month period from the date of the complaint to the date the consent

judgments were entered, and to each individually pay a civil penalty in the amount

of $100,000. Thereafter, the district court entered a Final Judgment Setting

Disgorgement, Prejudgment Interest, and Civil Penalties Against Defendants.

Defendants appeal from this Final Judgment.

                                         II.

      We review the district court’s interpretation of the consent judgment de

novo. Abbot Laboratories v. Unlimited Beverages, Inc., 218 F.3d 1238, 1239

(11th Cir. 2000). We review the district court’s findings regarding the amount of



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ill-gotten gains to be disgorged for abuse of discretion. SEC v. Calvo, 378 F.2d

1211, 1217-18 (11th Cir. 2004). We also review for abuse of discretion the district

court’s finding that there has been no misconduct by the government sufficient to

justify the defense of estoppel. Stephens v. Tolbert, 471 F.3d 1173, 1175 (11th

Cir. 2006). We review de novo the district court’s legal conclusion that laches is

not an available defense in this civil enforcement action. Estate of Shelfer v.

Commissioner, 86 F.3d 1045, 1046 (11th Cir. 1996).

                                           III.

      Defendants argue that the district court erred in ordering disgorgement,

prejudgment interest, and civil penalties because (1) the case was “settled” four

years ago, leaving no issues to be determined; (2) the alleged securities law

violations were neither proved by record evidence nor admitted by them; (3) the

SEC did not carry its burden of establishing that the amount of disgorgement –

approximately $8.1 million – was the amount Defendants had received in ill-gotten

gains; and (4) the SEC was barred from seeking disgorgement and other remedies

by the doctrines of laches and estoppel.

      Defendants’ first two assignments of error are clearly without merit. The

plain language of Defendants’ consents to judgment and of the judgments entered

by the district court on May 7, 2004, shows that Defendants agreed that further



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proceedings would be held to determine the amount of disgorgement and civil

penalties they would have to pay and that, for the purposes of these proceedings,

all allegations of the complaint would be deemed as true. There is nothing

ambiguous in this language. Defendants are therefore barred by the terms of their

agreements from challenging or otherwise contesting the truth of the allegations of

the complaint in this disgorgement proceeding. Accordingly, no further evidence

of Defendants’ securities law violations is required to justify the district court’s

entry of an order of disgorgement, prejudgment interest, and civil penalties.

      In their third assignment of error, Defendants assert that the affidavit of the

forensic accountant – which states that he could not account of $8,117,527 of the

$32 million collected by Defendants – is insufficient to support the district court’s

conclusion that $8.1 million is a reasonable approximation of the amount of

Defendants’ ill-gotten gains. Defendants note that “the power to order

disgorgement extends only to the amount with interest by which the defendant

profited from his wrongdoing.” SEC v. ETS Payphones, Inc., 408 F.3d 727 (11th

Cir. 2005). As such, Defendants charge the district court with abusing its

discretion in ordering Defendants to pay $8,117,527 in disgorgement, plus

prejudgment interest.

      The SEC is entitled to disgorgement upon producing a “reasonable



                                            7
approximation” of a defendant’s ill-gotten gains. Calvo, 378 F.3d at 1217; see also

SEC v. Warde, 151 F.3d 42, 50 (2d Cir.1998); SEC v. First City Fin. Corp., 890

F.2d 1215, 1231-32 (D.C. Cir. 1989);. The burden then shifts to the defendant to

demonstrate that the SEC’s estimate is not a reasonable approximation. See Calvo,

378 F.3d at 1217. Exactitude is not a requirement; “[s]o long as the measure of

disgorgement is reasonable, any risk of uncertainty should fall on the wrongdoer

whose illegal conduct created that uncertainty.” Id. (citing Warde, 151 F.3d at 50).

Indeed, this court has held that:

      where a defendant’s record-keeping or lack thereof has so obscured
      matters that calculating the exact amount of illicit gains cannot be
      accomplished without incurring inordinate expense, it is well within
      the district court’s discretion to rule that the amount of disgorgement
      will be the more readily measurable proceeds received from the
      unlawful transactions.

Calvo, 378 F.3d at 1218 (citing CFTC v. Am. Bd. of Trade, Inc., 803 F.2d 1242,

1252 (2d Cir. 1986)).

      In this case, the SEC satisfied its burden by producing evidence that

Defendants collected over $32 million from investors and that – based upon the

affidavit of an accountant who spent more than 600 hours on the case – over $8.1

million was unaccounted for due to Defendants’ poor record-keeping. Any further

apportionment by the SEC would have been impractical and excessively expensive

in light of the inadequate documentation employed by Defendants. The burden

                                          8
therefore shifted to Defendants to show that $8.1 million was not a reasonable

approximation of their gains. Defendants, however, provide no documentary

evidence supporting their conclusory and self-serving affidavits stating that they

did not receive $8.1 million and that all of the investment funds were lost in the

stock market. Because Defendants presented no evidence tending to show that

they received less than $8.1 million and that the remainder was lost, the district

court did not abuse its discretion in concluding that Defendants did not carry their

burden of rebutting the SEC’s evidence. We conclude, therefore, that $8,117,527

is a reasonable approximation of the amount of Defendants’ ill-gotten gains to be

disgorged.

      Finally, Defendants argue that the district court abused its discretion in

finding that the doctrines of estoppel and laches did not prevent the SEC from

seeking disgorgement and civil penalties. We disagree. Addressing first the

estoppel argument, this court has stated that “if estoppel is available against the

Government, it is warranted only if affirmative and egregious misconduct by

government agents exists.” Sanz v. U.S. Security Ins. Co., 328 F.3d 1314, 1319

(11th Cir. 2003). The district court found that although four years constituted a

significant delay between the entry of the consent judgments and the SEC’s motion

for disgorgement, it did “not find any actions by the Commission that rise to the



                                           9
level of affirmative and egregious misconduct.” On appeal, Defendants present no

evidence suggesting that the district court abused its discretion in making this

finding; rather, they reassert their argument that the SEC “willfully and/or

negligently violated the common understanding [that the matter was settled and

closed] established when the settlement agreement was signed four (4) years ago.”

As discussed above, however, the plain language of the consents and the judgments

shows that there was no such “common understanding” and that the parties clearly

anticipated further proceedings to establish the amount of disgorgement. Although

four years is certainly a lengthy delay, we conclude that the district court did not

abuse its discretion in finding no “affirmative and egregious” misconduct

justifying the imposition of estoppel.

      Regarding Defendants’ laches argument, we agree with the district court’s

finding that laches is not available as a defense to this SEC civil law enforcement

action. This is so because “the United States is not . . . subject to the defense of

laches in enforcing its rights.” United States v. Summerlin, 310 U.S. 414, 416

(1940). Accordingly, where, as in this case, a government agency brings an

enforcement action to protect the public interest, laches is not a defense. See

Chris-Craft Indust., Inc. v. Piper Aircraft Corp., 480 F.2d 341, 391 (2d Cir. 1973)

(explaining that SEC enforcement action implements “the broader statutory



                                           10
purpose of protecting the public interest through effective enforcement of the

securities laws”). Defendants fairly owe disgorgement of their ill-gotten gains and

paying their civil penalties is in the public interest. The doctrine of laches should

not be used to prevent the Government from protecting the public interest. United

States v. Delgado, 321 F.3d 1338, 1349 (11th Cir. 2003).

                                          IV.

      For the aforementioned reasons, the district court’s Final Judgment Setting

Disgorgement, Prejudgment Interest, and Civil Penalties Against Defendants is

AFFIRMED.




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