                     FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT


 U.S. SECURITIES & EXCHANGE                         No. 16-55167
 COMMISSION,
                  Plaintiff-Appellee,                 D.C. No.
                                                   3:12-cv-02164-
                      v.                             GPC-JMA

 E. ANDREW SCHOOLER,
              Defendant-Appellant,                    OPINION

                     and

 FIRST FINANCIAL PLANNING
 CORPORATION, DBA Western
 Financial Planning Corporation,
                          Defendant.


         Appeal from the United States District Court
           for the Southern District of California
         Gonzalo P. Curiel, District Judge, Presiding

                    Submitted July 13, 2018*
                      Pasadena, California

                    Filed September 26, 2018


    *
      The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2                       USSEC V. SCHOOLER

    Before: Sandra S. Ikuta and N. Randy Smith, Circuit
    Judges, and Stephen M. McNamee,** District Judge.

                  Opinion by Judge N.R. Smith


                            SUMMARY***


                            Securities Law

    The panel affirmed in part, and vacated in part, the district
court’s judgment in favor of the U.S Securities & Exchange
Commission (“SEC”) in a civil enforcement action alleging
federal securities law violations brought against Louis
Schooler and his company Western Financial Planning
Corporation.

    The panel affirmed the district court’s core holding that
the general partnership interests at issue were investment
contracts and qualified as securities under federal law, and
that Louis Schooler violated federal securities law by selling
unregistered securities and defrauding his investors.

    Louis Schooler died during the pendency of the appeal,
and E. Andrew Schooler (as executor of the estate) replaced
him as the named party on appeal. The panel vacated the
civil penalty ordered by the district court in light of Louis


    **
      The Honorable Stephen M. McNamee, Senior United States District
Judge for the District of Arizona, sitting by designation.
    ***
        This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                   USSEC V. SCHOOLER                       3

Schooler’s death. The panel also vacated and remanded the
disgorgement order for reconsideration in light of the
Supreme Court’s decision in Kokesh v. SEC, 137 S. Ct. 1635
(2017), which altered the analysis for determining the
limitations period applicable to disgorgement.

    The panel affirmed the district court’s judgment in all
other aspects.    The panel affirmed entry of summary
judgment for the SEC on its claims under Section 17(a) of the
Securities Act of 1933, Section 10(b) of the Securities and
Exchange Act of 1934, and Rule 10b-5 thereunder.


                        COUNSEL

Bryan C. Vess, Bryan C. Vess APC, San Diego, California;
Philip H. Dyson, Law Office of Philip H. Dyson, Las Mesa,
California, for Defendants-Appellants.

Stephen G. Yoder, Senior Litigation Counsel; John W. Avery,
Deputy Solicitor; Robert B. Stebbins, General Counsel;
Securities and Exchange Commission, Washington, D.C.; for
Plaintiff-Appellee.
4                     USSEC V. SCHOOLER

                             OPINION

N.R. SMITH, Circuit Judge:

    Dressing an investment contract in the trappings of a
general partnership interest does not immunize that interest
from the federal securities laws. Our standard for identifying
an “investment contract” under federal securities law has long
been “flexible rather than . . . static”; it “is capable of
adaptation to meet the countless and variable schemes
devised by those who seek the use of the money of others on
the promise of profits.” See SEC v. W.J. Howey Co., 328 U.S.
293, 298–99 (1946). The undisputed facts establish that the
general partnership interests at issue were stripped of the
hallmarks of a general partnership and marketed as passive
investments. Accordingly, we affirm the district court’s core
holding that the general partnership interests at issue qualify
as securities under federal law and that Louis Schooler
violated federal securities law by selling unregistered
securities and defrauding his investors.

    Louis Schooler died during the pendency of the appeal,
but E. Andrew Schooler (as executor of his estate) replaced
him as the named party on appeal. In light of Louis
Schooler’s death and intervening Supreme Court precedent,
the Securities and Exchange Commission (SEC)
acknowledges that several components of the district court’s
judgment require vacatur or remand. Specifically, we vacate
the civil penalty ordered by the district court in light of Louis
Schooler’s death.1 We also vacate and remand the


    1
      To determine whether a monetary penalty abates upon a defendant’s
death we ordinarily examine whether the penalty is penal or civil in
nature. United States v. $84,740.00 Currency, 981 F.2d 1110, 1113 (9th
                       USSEC V. SCHOOLER                                 5

disgorgement order for reconsideration in light of the
Supreme Court’s decision in Kokesh v. SEC, 137 S. Ct. 1635
(2017), which alters the analysis for determining the
limitations period applicable to disgorgement. As noted
above, we affirm the district court’s judgment in all other
respects.

                                    I.

    Between 1978 and 2012 (when the SEC filed suit), Louis
Schooler individually and through his wholly owned
company, First Financial Planning Corporation d/b/a Western
Financial Planning Corporation (Western),2 engaged in the
business of identifying tracts of land to purchase and sell to
investors by means of general partnership interests. Through
these alleged general partnership interests, each
investor/partner would own a fractional interest in the parcels
to hold as a speculative investment—in the hopes that the
areas where the land was located would become developed
and the value of the land would increase. Specifically,
Schooler would identify a tract of land, purchase it in the
name of his company, and then turn around and mark up the
price (often by several multiples of the price originally paid)


Cir. 1992). If it is a ‘civil’ penalty we examine whether the penalty “is
[nonetheless] so punitive either in purpose or effect as to negate that
intention.” Id. Here the SEC affirmatively concedes that the $1.05 million
penalty “serve[s] no remedial purpose” and “should be vacated.” Given
the lack of adversary briefing on this issue, we accept the SEC’s
stipulation for purposes of this case and vacate the civil penalty, without
deciding the ultimate merits of the issue.
    2
      For convenience, we generally refer to the two principal defendants
before the district court (Louis Schooler and his company, Western)
collectively as “Schooler.”
6                   USSEC V. SCHOOLER

to sell the land to investors. Schooler sold interests in a
general partnership to the investors that would collectively
hold the land (typically with several other general
partnerships). Schooler marketed these general partnership
interests to individuals across the United States and
ultimately sold 3,400 such interests over the lifetime of the
operation.

    In 2012, the SEC brought suit asserting a host of federal
securities law violations. The SEC sought a temporary
restraining order (TRO) and the appointment of a receiver.
The district court granted a TRO and eventually converted the
order to a preliminary injunction. The parties litigated the
case through summary judgment, where the district court
granted the SEC’s summary judgment motions and denied
Schooler’s. This appeal followed.

                              II.

    “We review the district court’s grant of summary
judgment de novo.” SEC v. CMKM Diamonds, Inc., 729 F.3d
1248, 1255 (9th Cir. 2013). In conducting this review, we
take all facts and reasonable inferences therefrom in the light
most favorable to the nonmoving party and determine
whether disputed issues of material fact preclude summary
judgment. See id.

                             III.

    Here, we deal with federal securities laws regulating
investment contracts. 15 U.S.C. § 77b(a)(1); 15 U.S.C.
§ 78c(a)(10). The term “investment contract” has long “been
broadly construed . . . so as to afford the investing public a
full measure of protection.” See SEC v. W.J. Howey Co.,
                    USSEC V. SCHOOLER                        7

328 U.S. 293, 298 (1946). Accordingly, “an investment
contract for purposes of the Securities Act means a contract,
transaction or scheme whereby a person invests his money in
a common enterprise and is led to expect profits solely from
the efforts of the promoter or a third party, it being
immaterial whether the shares in the enterprise are evidenced
by formal certificates or by nominal interests in the physical
assets employed in the enterprise.” Id. at 298–99.

    The “touchstone” of this standard “is the presence of an
investment in a common venture premised on a reasonable
expectation of profits to be derived from the entrepreneurial
or managerial efforts of others.” United Hous. Found., Inc. v.
Forman, 421 U.S. 837, 852 (1975). The standard is “flexible
rather than . . . static” and “is capable of adaptation to meet
the countless and variable schemes devised by those who
seek the use of the money of others on the promise of
profits.” Howey, 328 U.S. at 299. Accordingly, the Supreme
Court’s use of the phrase “solely from the efforts of the
promoter or a third party” has not been literally applied to
innoculate any scheme that nominally purports to afford
investors power or responsibility to advance the common
enterprise. E.g., Forman, 421 U.S. at 853 n.18 (noting that the
“leasehold rights” sold were “purely an incidental
consideration in the transaction” where “exploratory drillings
gave investments ‘most of their value and all of their Lure’”
(quoting SEC v. C.M. Joiner Leasing Corp., 320 U.S. 344,
348–49 (1943))); SEC v. Rubera, 350 F.3d 1084, 1091–92
(9th Cir. 2003) (“We have rejected a strict interpretation of
this prong in favor of a more flexible focus on ‘whether the
efforts made by those other than the investor are the
undeniably significant ones, those essential managerial efforts
which affect the failure or success of the enterprise.’”
8                   USSEC V. SCHOOLER

(quoting SEC v. Glenn W. Turner Enters., 474 F.2d 476, 482
(9th Cir. 1973))).

    We must here determine whether the general partnership
interests Schooler sold qualify as investment contracts
governed by federal securities law. A traditional general
partnership implies a joint endeavor in which all partners
share in the control and management of the enterprise and
advancement of the collective profit effort. See Williamson v.
Tucker, 645 F.2d 404, 423–24 (5th Cir. 1981); see also
Hocking v. Dubois, 885 F.2d 1449, 1460–61 (9th Cir. 1989)
(en banc) (reaffirming that Williamson has been adopted in
the Ninth Circuit). Where such an arrangement was
anticipated at the outset, e.g., Williamson, 645 F.2d at 424
n.14 (noting the timing requirement that “reliance on the
manager” must be shown to be “an understanding in the
original transaction, and not some subsequent decision to
delegate partnership duties”), and is not illusory in practice,
id. at 422–24, investment in a general partnership is not a
security. See id. at 422–26.

    We have adopted the three factors articulated in
Williamson v. Tucker (any one of which is sufficient) to
establish that a general partnership should be treated as a
security when:

       (1) an agreement among the parties leaves so
       little power in the hands of the partner or
       venturer that the arrangement in fact
       distributes power as would a limited
       partnership; or (2) the partner or venturer is so
       inexperienced and unknowledgeable in
       business affairs that he is incapable of
       intelligently exercising his partnership or
                    USSEC V. SCHOOLER                          9

        venture powers; or (3) the partner or venturer
        is so dependent on some unique
        entrepreneurial or managerial ability of the
        promoter or manager that he cannot replace
        the manager of the enterprise or otherwise
        exercise meaningful partnership or venture
        powers.

Hocking, 885 F.2d at 1460 (quoting Williamson, 645 F.2d at
424). These factors are not exhaustive. Id. (“Of course, under
different facts or legal arrangements other factors might give
rise to such a dependence on the promoter or manager that
exercise of control would be effectively precluded.”).

                              IV.

     Applying these principles, the district court correctly
determined that the general partnership interests in this case
were investment contracts governed by federal securities law.
The district court primarily rested its decision on the fact that
investors placed their money with Schooler significantly
before their general partner interests (and associated powers)
became effective. The district court characterized this
circumstance as complying with the first Williamson factor,
but it also noted that, whether this fact fit squarely within the
first factor, it nonetheless found it to be an important other
factor establishing dependence on Schooler. The district court
also analyzed the second and third Williamson factors but
ultimately concluded that, although the SEC had submitted
significant undisputed facts to support these factors, the
record was not sufficient to establish these factors as a matter
of law.
10                   USSEC V. SCHOOLER

    The district court treated each of the Williamson factors
as an issue for summary judgment. However, the Williamson
factors are not in fact distinct ‘claims’ or ‘issues’ that need be
decided individually for summary judgment purposes. These
factors are simply heuristics useful in answering the ultimate
question of whether a general partnership interest should be
considered an investment contract for purposes of federal
securities laws.

     Even giving Schooler the benefit of all reasonable
inferences, the collective force of the following undisputed
facts identified by the district court establish as a matter of
law that the general partnership interests in this case were
securities under federal law. First, the facts establish beyond
dispute that Louis Schooler, personally and through Western,
exercised near total control over the investments between
receipt of investor payments and execution of the partnership
agreements. Unlike a traditional general partnership, the
partnership agreements in this case were not effective upon
delivery of investor funds. Rather, the agreement stated that
it became effective upon the date identified (and intentionally
left blank) on the first page of the partnership agreement.
Because the agreements were not yet effective, investors had
no power to control their investments during this period. Yet,
it was during this precise time that nearly all meaningful
decisions were made that would determine the success or
failure of the investment. Schooler controlled how many
interests to market and sell in each partnership, diluting the
power of partners by selling a large number of interests in
each general partnership. Schooler determined the properties
to purchase and the price the partnerships would pay. He
determined how many different general partnerships to
include as co-tenants of a single property. Likewise, Schooler
determined when to close the final partnership and establish
                    USSEC V. SCHOOLER                       11

the co-tenancy arrangements. During this critical period, 93%
of the investors’ money was expended—without any
opportunity for investor input or control.

    By the time Schooler executed the partnerships by filling
in the effective date, there was little that could be done to
determine the success or failure of the investment. At the time
of execution, general partners were transferred fractional
interests in land and could do little more than hope that the
land would appreciate in value substantially more than the
ongoing maintenance expenses Schooler charged. An
investment in land for long-term holding is inherently
speculative, as expressly noted in the partner representations.
Nonetheless, decisions about what property to purchase and
how much to pay for it are among the most important
decisions in determining the success of the investment. In this
scheme, general partners had no real control over these
decisions.

    Further, once the partnership agreements were executed
and co-tenancies established, Louis Schooler acknowledges
that it was “potentially unworkable” for partners to exercise
their powers to jointly manage the parcels. Louis Schooler
and his associates at Western meanwhile exercised all
practical authority in the operation of the partnership, having
defaulted authority to themselves and hand-picked signatory
partners. From the viewpoint of investors, this passive
arrangement was what many expected—having been lured in
by the promise of Schooler’s expertise in finding parcels
and directing when they should be sold. Under these
circumstances the SEC made a clear showing that investors
“were prevented from exercising their powers” as general
partners. Cf. Matek v. Murat, 862 F.2d 720, 731–32 (9th Cir.
1988) (finding a general partnership not a security where no
12                  USSEC V. SCHOOLER

practical impairment to exercising partnership authority had
been shown), abrogated on other grounds by Koch v.
Hankins, 928 F.2d 1471 (9th Cir. 1991).

    Andrew Schooler cites a series of cases for the
proposition that the first Williamson factor is limited to taking
the partnership documents at face value. But there is an
obvious flaw in this argument—the effective date was on the
very first page of the partnership agreement and it
unambiguously articulated that the agreement (including all
of the shared authority and control) did not become effective
until the date indicated (and originally left blank). Nothing in
the California code overrides the parties’ express agreement
that the partnership not begin until the date identified on the
face of the agreement. See Cal. Corp. Code §§ 16101(9),
16202(a) (defining a partnership as an “association of two or
more persons to carry on as coowners a business for profit”).
Even if a partnership arose in the interim, there was no
mechanism in place for partners to exercise any control over
the arrangement during this critical time period. Accordingly,
the district court did not err in awarding summary judgment
to the SEC and concluding that the general partnership
interests were securities.

                               V.

    We likewise affirm the district court’s determination that
Schooler sold unregistered securities in violation of federal
law. Schooler essentially conceded to the district court that
his sales of general partnership interests failed to meet the
securities registration requirements of Section 5. See
15 U.S.C. §§ 77e(a), 77e(c); Greenwood v. FAA, 28 F.3d 971,
977 (9th Cir. 1994) (holding that courts will not “manufacture
arguments for an appellant, and a bare assertion does not
                        USSEC V. SCHOOLER                               13

preserve a claim”). Schooler’s only defense rested on a
claimed exemption to the registration requirements under
Rule 506(b) of the Securities Act, see 17 C.F.R. § 230.506.3
However, the district court rejected this affirmative defense,
because (among other reasons) the court concluded that all of
the sales of general partnership interests were an integrated
offering and exceeded the 35 investor limit for the exemption.
17 C.F.R. § 230.506(b)(2)(i). In reaching its decisions the
district court analyzed the five factors outlined in 17 C.F.R.
§ 230.502(a):

         (a) Whether the sales are part of a single plan
         of financing;

         (b) Whether the sales involve issuance of the
         same class of securities;

         (c) Whether the sales have been made at or
         about the same time;

         (d) Whether the same type of consideration is
         being received; and

         (e) Whether the sales are made for the same
         general purpose.




    3
       Under Rule 506(b), securities are exempt from registration if they
are private offerings. 15 U.S.C. § 77d(2). A security qualifies as a private
offering if there are fewer than 35 non-accredited investors of securities
in the offering, and each non-accredited investor has “such knowledge and
experience in financial and business matters that he is capable of
evaluating the merits and risks of the prospective investment.” 17 C.F.R.
§ 230.506(b)(2).
14                  USSEC V. SCHOOLER

The district court concluded that this case was analogous to
SEC v. Murphy, 626 F.2d 633 (9th Cir. 1980), where the court
found that “[t]he separation in time from one system offering
to the next suggest[ed] that the offerings were not integrated,
but that [this] factor [was] heavily outweighed by the
remaining considerations.” Id. at 646.

     On appeal, Schooler fails to engage with the district
court’s analysis and to explain why the four remaining factors
do not outweigh the timing factor. Instead, he again
articulates that the offerings occurred over a long period of
time and makes additional arguments unrelated to any of the
factors. Accordingly, he has waived argument on this issue.
Greenwood, 28 F.3d at 977. The district court correctly
determined that all but the timing factor weighed in favor of
finding an integrated offering. All of the offerings were used
to finance Western’s acquisition of land for the partnerships,
each involved the issuance of general partner interests in
exchange for cash, and all were for the purpose of holding
real estate in hope of subsequent appreciation. Murphy
supports the district court’s conclusion that all sales were part
of an integrated offering even though the offerings were not
made at the same time, 626 F.2d at 646, and Schooler
identifies no authority to the contrary.

    Moreover, Schooler presents no due process violation.
Schooler argues that his due process rights were violated by
the district court’s decision to amend its order after the SEC
filed an amended summary judgment motion. This argument
fails because the parties had full opportunity to brief and
argue the only issue on which the district court amended its
opinion—who bears the burden of producing sufficient facts
to establish a genuine issue for trial on exemptions. Schooler
can establish no prejudice, because he does not argue that the
                    USSEC V. SCHOOLER                       15

district court’s resolution of this legal issue was erroneous.
Without prejudice, Schooler has not established a due process
violation. SEC v. Am. Capital Invs., Inc., 98 F.3d 1133, 1147
(9th Cir. 1996), abrogated on other grounds by Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83 (1998).

    Additionally, Schooler argues that his reliance on advise
of counsel excuses his failure to comply with registration and
disclosure requirements, but this too fails. By not raising it
before the district court, Schooler waived this issue for
appeal. Campbell v. Burt, 141 F.3d 927, 931 (9th Cir.1998)
(deeming issues not raised before the district court to be
waived). Moreover, Schooler’s briefing fails to identify any
basis for excusing the waiver. We will not make arguments
for him. Greenwood, 28 F.3d at 977. On the merits, the
defense likewise fails because “Section 5 is a strict liability
statute” so “good faith reliance on counsel” cannot “preclude
liability under the statute.” SEC v. CMKM Diamonds, Inc.,
729 F.3d 1248, 1256 n.6 (9th Cir. 2013).

                             VI.

    Lastly, we affirm the entry of summary judgment in favor
of the SEC on its claims under Section 17(a) of the Securities
Act, Section 10(b) of the Exchange Act, and Rule 10b-5
thereunder. To establish this violation, the SEC must
demonstrate that Schooler made a materially misleading
misrepresentation or omission in connection with the offer or
sale of a security in interstate commerce and with the
requisite scienter. SEC v. Phan, 500 F.3d 895, 907–08 (9th
Cir. 2007). The district court correctly concluded that the
SEC established these elements based on the undisputed
evidence that Schooler represented to investors that the value
of the “Stead property” was $2.50 per square foot. Instead,
16                  USSEC V. SCHOOLER

Western had recently purchased the property for $0.40 per
square foot and the property was appraised at just under $1.00
per square foot (when the value of water rights was taken into
account). This misrepresentation was “so obviously important
to an investor, that reasonable minds cannot differ on the
question of materiality.” TSC Indus., Inc. v. Northway, Inc.,
426 U.S. 438, 450 (1976) (citation omitted).

    Schooler’s only defense is good faith reliance on the
advice of counsel. Yet, the district court concluded that
Schooler had failed to meet his burden in establishing his
defense with respect to the Stead property. Specifically, the
court found no evidence to establish that Schooler “made a
complete disclosure to counsel” by informing counsel that
their advertising included representations as to the fair market
value of particular parcels. SEC v. Goldfield Deep Mines Co.
of Nev., 758 F.2d 459, 467 (9th Cir. 1985) (identifying
complete disclosure as an element of the affirmative defense
of reliance on counsel). On appeal, Schooler cites no record
evidence to rebut the district court’s finding. Schooler’s cited
pages make the conclusory assertion that disclosure was
complete, but they do not identify any evidence to support the
conclusory allegation. Accordingly, we affirm entry of
summary judgment for the SEC on the securities fraud claim.

                             VII.

    In sum, we AFFIRM the district court’s judgment against
Louis Schooler with only two exceptions acknowledged by
the SEC. Specifically, we VACATE the civil penalty on
account of Louis Schooler’s death, and we VACATE the
disgorgement award and REMAND for reconsideration of
the appropriate disgorgement in light of Kokesh v. SEC,
137 S. Ct. 1635 (2017). In all other respects, the district
                  USSEC V. SCHOOLER                    17

court’s judgment is AFFIRMED. The parties shall bear their
own costs on appeal.
