Ross

I. FACTS AND PROCEEDINGS

Bustos worked as a sales agent for Alpha Telcom, selling investments styled as purchases of pay telephones and man- agement services from Alpha Telcom and its affiliates. In fact, as detailed in our Rubera opinion, while Alpha Telcom’s business plan was curiously anachronistic—selling service contracts on pay phones—its business model was timeless: the Ponzi scheme. See Rubera, 350 F.3d at 1087-89. As in all Ponzi schemes, expenses far exceeded revenues, and “re- turns” to investors were funded by monies obtained from more recent investors. On August 24, 2001, Alpha Telcom filed voluntary petitions for bankruptcy.

A. The SEC Enforcement Action

On August 27, 2001, the SEC commenced a civil enforce- ment action against Alpha Telcom for violations of the federal SEC v. ROSS 13911 securities laws. On the same day, the district court appointed a receiver (“Receiver”) to manage the corporation and pre- serve its assets for eventual distribution to the injured inves- tors. The Receiver’s appointment was confirmed on September 6, 2001.

In the underlying enforcement action, the district court held that the “investment opportunity”…