Securities and Exchange Commission v. Walter Wencke, Theodore Delusignan, Movant-Appellant v. R.N. Gould, Receiver-Trustee

Theodore deLusignan appeals from a post-judgment order by the district court requiring Ramapo Corporation (“Ramapo”), in which he is a 25% stockholder, to disgorge 401,351 shares of Portsmouth Square, Inc. (“PSI”) and the profits it derived from those shares. The district court issued its order following judgment in a securities fraud action brought by the Securities and Exchange Commission (SEC) against Walter Wencke, who had diverted funds from several public companies and funneled them through Ramapo to acquire the PSI shares. DeLusignan contends that in entering its disgorgement order, the district court exceeded its jurisdiction, violated the Federal Rules of Civil Procedure, and deprived both him and Ramapo of due process. We find these claims to be without merit, and affirm.

FACTUAL BACKGROUND

A. DeLusignan’s Acquisition of His Ramapo Stock

PSI was incorporated in 1967 as a vehicle for investors to purchase a substantial interest in Justice Investors, a partnership that owned the Holiday Inn at 750 Kearny Street in San Francisco. In 1972, PSI was experiencing severe financial problems. All of its subsidiaries were losing money, and PSI was on the verge of bankruptcy. In…