594 F. App'x 957
11th Cir.2014Background
- Daniel Imperato controlled Imperiali, Inc., which in 2005 conducted an unregistered offering that raised about $2.5 million through cold-calls, press releases, and a private placement memorandum.
- The offering materials promised investments in publicly traded companies and large revenues; instead proceeds were diverted to Imperato’s other entity and for his personal uses (including a presidential campaign).
- Imperiali later elected to be regulated as a business-development company and filed Commission reports that materially overstated assets (including impossible $3.5M and $70M entries). Imperato dictated, approved, or certified many of these communications and forms.
- The SEC sued Imperato alleging violations of the Securities Act, Exchange Act, the Investment Company Act, and related rules seeking injunctions, disgorgement, and civil penalties. The district court granted summary judgment for the SEC on all counts.
- Imperato appealed pro se, raising factual disputes (e.g., he allegedly did not personally cold-call, did not file forms, and did not control Imperiali) and various procedural complaints; the Eleventh Circuit affirmed on the merits but noted a jurisdictional defect in a post-appeal correction to the district court judgment.
Issues
| Issue | Plaintiff's Argument (Imperato) | Defendant's Argument (SEC) | Held |
|---|---|---|---|
| Unregistered sales under §5 | Imperato says he did not personally sell via cold-calls and Imperiali was exempt | Imperato was a substantial factor in sales, filed Form D, promoted and closed sales; no exemption proved | Summary judgment for SEC; no genuine dispute on substantial involvement or exemption burden |
| Material misrepresentations (§10(b), Rule 10b-5; §17(a)) | Valuations were legitimate, discretionary, based on comparative analysis | Press releases and filings contained extreme, fabricated valuations (e.g., $70M in non-existent companies) showing severe recklessness | Summary judgment for SEC; misrepresentations were materially misleading and severely reckless |
| Acting as an unregistered broker (§15(a)) | Imperato claims he didn’t receive proceeds or initiate sales | Evidence he spoke with investors, drafted materials, and acted as the “closer,” fitting broker indicia | Summary judgment for SEC; Imperato functioned as a broker despite not directly receiving proceeds |
| Control-person liability (§20(a)) | Imperato contends he relinquished control and thus cannot be liable as a control person | Imperato remained the controlling shareholder and decision-maker; many false filings predate his alleged relinquishment | Summary judgment for SEC; Imperato was a control person and liable |
Key Cases Cited
- Sec. & Exch. Comm’n v. Calvo, 378 F.3d 1211 (11th Cir.) (defines "substantial factor" standard for unregistered sales)
- Sec. & Exch. Comm’n v. Ralston Purina Co., 346 U.S. 119 (1953) (burden on party claiming exemption from registration)
- Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194 (11th Cir.) (severe recklessness standard for scienter)
- Sec. & Exch. Comm’n v. George, 426 F.3d 786 (6th Cir.) (factors showing broker activity)
- Whatley v. CNA Ins. Cos., 189 F.3d 1310 (11th Cir.) (de novo review of summary judgment)
- Zaklama v. Mount Sinai Med. Ctr., 906 F.2d 645 (11th Cir.) (district court lacks jurisdiction to amend judgment after appeal without leave)
- Brown v. Crawford, 906 F.2d 667 (11th Cir.) (liberal construction of pro se briefs)
- Young v. City of Palm Bay, Fla., 358 F.3d 859 (11th Cir.) (summary judgment standard for bald assertions)