Colello
Securities & Exchange Commission v. Colello
Opinion
Lead Opinion
Goodwin, J.
This appeal challenges the right of the Securities and Exchange Commission (the “SEC”) to recover, from a non-party to a fraud, investor funds traced to the “nominal defendant” in an action in personam. In the district court proceedings against a number of defendants, the SEC named Michael Co-lello as a nominal defendant after he had been dismissed as a party to the fraud. Upon a motion for summary judgment, the district' court ordered Colello to disgorge over $2.6 million. On appeal, Colello argues that the district court lacked subject matter jurisdiction and that, in any event, summary judgment was in error. We have jurisdiction pursuant to 28 U.S.C. § 1291 and we affirm.
Facts and Procedural Background
This ease arises from a scheme whereby a company called Cross Financial Services, Inc. (“CFS”) and a. number of individuals defrauded more than 700 public investors out of more than $21 million. The SEC claims that Colello received approximately $2.9 million of the $21 million. Colello claims that the money he received was to obtain letters of credit for CFS, that he did not keep most of it, and that what he did retain was payment for services rendered.