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JOHN B. BULGOZDY, Cal Bar No. 219897 E-mail: bulgozdyj@sec.gov DAVID J. VAN HAVERMAAT, Cal. Bar No. 175761 E-mail: vanhavermaatd@sec.gov Attorney for Plaintiff Securities and Exchange Commission Rosalind R. Tyson, Regional Director Michele Wein Layne, Associate Regional Director John W. Berry, Regional Trial Counsel 5670 Wilshire Boulevard, 11th Floor Los Angeles, California 90036 Telephone: (323) 965-3998 Facsimile: (323) 965-3908

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. MARCO GLISSON, Defendant Case No. 2:09-cv-00104-LDG-GWF PLAINTIFF SECURITIES AND EXCHANGE COMMISSIONS OPPOSITION TO DEFENDANT GLISSONS MOTION TO BIFURCATE LIABILITY AND DAMAGE ISSUES FOR TRIAL

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I.

INTRODUCTION Plaintiff Securities and Exchange Commission (Commission) opposes

defendant Marco Glissons (Glisson) motion to bifurcate liability and damages issues for trial, because bifurcation will not provide convenience to the Court, avoid prejudice, or expedite or economize these proceedings. To the contrary, bifurcation will require two trials, two decisions by the Court, and will require the parties to present duplicative testimony and evidence from the same witnesses. Defendant Glisson would be required to testify at each trial, as would the Commissions summary witness. The same evidence of Glissons numerous stock transactions, including bank records, are necessary to prove liability and remedies. While defendant argues that it would be inconvenient and inefficient to prepare for trial as to both liability and damages (Motion at page 4, lines 20-21), in fact, the parties have already submitted, and the Court has signed, a Joint Pretrial Order which covers liability and damages. (See Joint Pretrial Order, entered April 22, 2011 (Docket No. 67).) Bifurcation at this late stage would require the parties to amend the Joint Pretrial Order and carve it into two parts, which would waste resources and time. Defendant asserts that the liability portion of the case can be tried to the Court in a single day, (Bretz Decl. at 3), so it would be most convenient for the Court to hear the entire case all at once in a few days, rather than hearing it twice at different times. Rather than expediting and economizing these proceedings, bifurcation would prolong and complicate this case. Therefore, Glissons motion to bifurcate should be denied. II. FACTS In support of his motion, under the heading Argument, Glisson makes numerous unsupported and inaccurate statements of fact, unsupported assertions

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concerning arguments that Glisson seems to believe the Commission may make, and substantive arguments concerning the liability portion of the case. (See Motion at pages 6-12.) Glissons argument of the merits of his case are ostensibly to convince the Court that there is a high probability that Plaintiff will be unable to prove the liability component of its broker/dealer registration case which he believes weighs in favor of bifurcation. (Motion at page 11, lines 17-19.) To address that factual contention, the Commission offers its view of some of the relevant facts. In late 2005, Glisson was a resident of Janesville, Wisconsin.1 Sometime after April 2004, Glisson became aware of CMKM through the Internet, and purchased CMKM securities in his Ameritrade account. Glisson monitored the performance of his CMKM securities via the Internet and CMKM press releases, and visited and participated in Internet chat rooms that discussed CMKM. Glisson used the screen name Deli Dog or Deli when participating in Internet chat rooms. Glisson knew the principal of CMKM, and had even catered an event for CMKM. Glisson learned in October 2005 that the Commission had revoked the registration of CMKM securities and that it was delisted from trading. After CMKMs registration was revoked and it was delisted, Glisson could not buy or sell CMKM securities through his accounts at Ameritrade or E-Trade, and CMKM

In his Motion, Glisson incorrectly states: Defendant, at the time of the conduct at issue, was a full-time assembly line worker living in Wisconsin. (Motion at page 9, lines 3-4.) The trading in CMKM securities occurred from late 2005 through mid 2007. In fact, Glissons retirement as an assembly line worker was effective in October 2006, at which time he moved to Las Vegas where he met his current wife, Thidarat Tungwongsathong; the two of them spent some time traveling the country in a luxury motor coach, and eventually settled in Florida where they invested in their own propane gas business.
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securities could not be bought or sold on any national exchange. As far as Glisson knew, his CMKM holdings at the time which at the time consisted of a few million shares, were worthless. In December 2005, Glisson contacted Helen Bagley, of Las Vegas, Nevada, whom he knew to be the owner of 1st Global Stock Transfer LLC which was the stock transfer agent for CMKM. Glisson asked if 1st Global would perform transfer agent services for him with respect to purchases and sales of CMKM stock and, in response, 1st Global agreed to cancel and re-issue CMKM stock certificates in accordance with Glissons instructions.2 Beginning in December 2005, through April 2007, Glisson found buyers and sellers of CMKM securities through his visits to various CMKM chat rooms. Glisson talked to CMKM shareholders every day, met with them face to face, on the computer, and on the telephone. In the Internet chat rooms, Glisson posted that he was buying CMKM stock, or that he was selling CMKM stock, and posted his telephone number. Glisson typically offered to buy CMKM stock for trip one, or $0.0001 per share, although he sometimes paid more. Glisson used written agreements to set forth the terms of his purchases of CMKM stock, which were titled Stock Sell-Purchase Agreement. Glisson also had sellers execute letters waiving all rights to any dividends or cash settlements associated with the CMKM stock he purchased. The fact that Glisson had his own contracts and forms

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In listing his proposed issues on the damages portion of the case, Glisson refers to his reliance on counsel affirmative defense. (Motion at page 13, lines 27-28.) In fact, Glisson did not consult with an attorney for advice about whether it was legal to purchase and sell CMKM stock before he began to engage in such transactions in December 2005. Glisson cannot assert a reliance on counsel defense if he did not consult with counsel.
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suggests that his activities were more than those of a day trader who executes trades through a registered broker-dealer on a national exchange. When Glisson was contacted by a prospective purchaser, Glisson typically provided prospective purchasers with (1) his contact information, (2) a price schedule for CMKM securities setting prices of between $0.0003 to $0.00025 per share, depending on the number of shares being purchased, and (3) payment instructions including wire transfer information and an address for mailing payment. Glisson required payment before he would arrange to have a certificate issued to a purchaser, and he charged a fee of $50 a certificate. Glisson received the certificates from 1st Global, made a copy of the certificates, and sent them to his purchasers. Again, the fact that Glisson had a price list and self-executed and cleared trades for his customers differentiates his conduct from that of an individual simply making trades for their own account through a registered broker. When Glisson began his business of buying and selling CMKM stock in December 2005, there were approximately five accounts at Blackhawk Community Credit Union, located in Janesville, Wisconsin, associated with Glisson, his then wife Alma Padilla, and/or the Deli Dog House restaurant. In late 2005 through May 2006, Glisson used two of these accounts the 8307 Account and 3788 Account for his CMKM transactions. In May 2006, Glisson separated from Padilla, closed the 8307 Account, and opened a new account in his name at Blackhawk the 7650 Account. From May through about December 2006, Glisson instructed persons who purchased CMKM stock to wire funds to the 7650 Account, and Glisson deposited checks he received into that account. Shortly after moving to Las Vegas in October 2006, Glisson met Thidarat Tungwongsathong at a Starbucks. In November 2006, Tungwongsathong designated Glisson as a Payable on Death (POD) beneficiary on her bank

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accounts held at Bank of America, and changed the address for the account statements to the address of Glissons apartment in Las Vegas. Glisson then transferred $105,000 from his 7650 Account to Tungwongsathongs account. Beginning in November 2006, Glisson told his clients to make payments to Tungwongsathong by check or money order, or to wire funds to one of her accounts at Bank of America, the 9145 Account. During the period from December 2005 through May 2006, and again from September 2006 through April 2007, Glisson regularly communicated with 1st Global the transfer agent for CMKM stock through the mails and using telephones, for the purpose of arranging transfers of the ownership of CMKM stock. Glisson, or his assistants including Tungwongsathong, visited 1st Globals offices to drop off and pick up certificates. In some cases, Glisson arranged for all of a sellers shares to be re-issued directly in the name of a purchaser; in some cases, some of the sellers shares were re-issued directly to purchasers and some were re-issued to Glisson; and in some cases, Glisson was the seller or provided some of the shares being sold. During his periods of activity, Glisson arranged numerous transfers of CMKM securities: for example, during three month period between October 16, 2006 and January 16, 2007, Glisson instructed 1st Global to re-issue 1,366 certificates to persons other than Glisson or Tungwongsathong or over 15 certificates a day.3

Glisson claims that he sporadically traded the stock for his own account on a high frequency basis and was fortunate enough to make a substantial amount of money from trading such stock. (Motion at page 9, lines 19-20.) In fact, Glisson regularly engaged in transactions in CMKM stock on an almost daily basis. Glissons explanation of sporadic high-frequency trading is difficult to grasp in view of the fact that Glisson was self-executing and self-clearing each and every trade, because CMKM was not traded on a national exchange or through any registered broker or dealer.
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To arrive at a reasonable estimation of Glissons ill-gotten gains, the Commission added up the deposits into the four accounts Glisson used for his CMKM transactions during 2005 through 2007 which totaled approximately $4.3 million, and subtracted expenditures to obtain CMKM stock which were approximately $1.4 million, to arrive at a net profit of approximately $2.8 million. It should be remembered that Glisson did not actively engage in his CMKM business during the entire period. In fact, between May and September 2006, Glisson ceased his activities after being contacted by state and federal authorities. For the twelve months that he was active, Glisson averaged revenues per month of around $358,000, and monthly profits of about $233,000. III. LEGAL ARGUMENT A. Bifurcation Will Not Provide Convenience, or Expedite and Economize These Proceedings Federal Rule of Civil Procedure 42(b) affords a court broad discretion to conduct separate trials of discrete issues or claims if it finds that such bifurcation would be [f]or convenience, to avoid prejudice, or to expedite and economize. The decision whether to exercise such discretion is made on a case by case basis. See David & Cox v. Summa Corp., 751 F.2d 1507, 1517 (9th Cir. 1985). The substance of Glissons argument is that he believes he has a high probability of convincing the Court that he did not violate the federal securities laws, so that it would be easier to try liability first. The Commission does not agree with Glissons assessment of the merits of its liability case. However, whether or not a party can convince the Court that it has a high probability of success is not, in the end, something to be addressed in a motion for bifurcation. Glisson provides no authority for the proposition that the Court should weigh the merits of a case on a bifurcation motion, and there is none.

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1.

Because of the Overlap of Evidence and Witnesses, Bifurcation is Not Convenient or Economical

To prove liability, the Commission will introduce evidence from Glisson and others concerning Glissons transactions in CMKM securities, including bank records showing where the proceeds from sales were deposited. For the period after mid-January 2007, Glisson did not produce transfer letters or emails, purportedly because his computers were lost or stolen, so that bank records showing deposits from purchasers are the evidence of his activity. As Glisson states, this is not contested: Glisson does not contest that he sold the shares and realized proceeds from the sales or where the proceeds were deposited. (Motion at page 18, lines 15-17.)4 The Commission will also introduce evidence from a summary witness, who will provide summary information on the number of certificates cancelled and re-issued at Glissons direction, and on activity relating to CMKM transactions in the various Glisson-related bank accounts. These same witnesses and evidence would be introduced in support of the Commissions request for remedies, so there is a direct overlap of the evidence and proof relating to liability and damages.

This statement contradicts Glissons position as stated in the Joint Pretrial Order, where Glisson proposes to prove: Glisson never had any joint ownership, or any signatory power or control, over any of Thidarat Tungwongsathongs bank accounts, including her account(s) at the Bank of America opened in Las Vegas, Nevada. See Joint Pretrial Order at page 36, 98. Glisson is making expedient and inconsistent arguments that are contradicted by the facts and his other positions in this case. However, the Commission has moved in limine for admission of bank records of these accounts, which motion should be granted in view of Glissons statement to the Court that he does not dispute where and when he deposited the proceeds of his transactions in CMKM stock.
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In cases where there is an overlap of witnesses and evidence on issues of liability and damages, courts have typically exercised their discretion and refused to bifurcate because it will not serve judicial economy. For example, in Lincoln Benefit Co. v. Frangos, No. 2:09-cv-1466-RLH-PAL, 2010 WL 3613915 (D. Nev. Sept. 8, 2010), Chief Judge Hunt denied a motion to bifurcate and stay discovery because evidence about various issues was interrelated that such a procedure would compound the costs and time for the Court and the parties. In Lindsay v. Lindsay, No. 3:05-cv-00305-LRH (RAM), 2007 WL 201160 (D. Nev. Jan. 23, 2007), the Court denied a motion to bifurcate because the same evidence would need to be heard on the different issues before the Court, which would result in witnesses having to testify at two separate proceedings. This potential duplication of evidence and proceedings is likely to increase the litigation costs and delay the final resolution of this case. Id. at *2. Similarly, in other cases where the issue of liability is not separable from the issue of damages such as this one, courts have exercised their discretion against bifurcating such interrelated issues. In Matter of Sortwell, Inc., No. 8-05167 JW, 2011 WL 4896475 (N.D. Cal. Oct. 12, 2011), the Court determined that there was an overlap between evidence relating to liability and evidence of damages, which counsel[s] against bifurcation. Id. at *2 (citations omitted). See also Spellbound Development Group, Inc. v. Pacific Handy Cutter, Inc., No. SACV 09951 DOC, 2011 WL 1810961, at *4 (C.D. Cal. May 12, 2011) (Two separate trials will be unduly consumptive of the Courts and the parties resources, and will prejudice [non-movant] in forcing it to conduct two trials. Furthermore, these issues are sufficiently related to justify one trial.); Onyx Pharm., Inc. v. Bayer Corp., No. C-09-2145 EMC, 2011 WL 4527402, at *4 (N.D. Cal. Sept. 21, 2011) (finding bifurcation would not be more efficient or convenient because it would be

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difficult for Court to maintain its trial schedule, parties would have to parse the evidence for the different issues, some witnesses would have to testify twice, and there was no showing of prejudice by the movant). The overlap of the evidence and witnesses -- including testimony from defendant Glisson -- on the issues of liability and damages counsels against bifurcation. 2. Bifurcation at This Late Date Will Prejudice Plaintiff and Waste Resources Glisson incorrectly argues that there is no prejudice to the Commission if the Court orders bifurcation at this late date; however, Glisson ignores the fact that the parties have invested substantial resources in preparing for a single trial addressing all the issues in the case, and to that end, prepared and submitted a Joint Pretrial Order for a single trial. The Court signed and entered the Joint Pretrial Order for a single trial. The parties and the Court are therefore prepared to proceed to address all the issues in a single trial. Glissons proposal to bifurcate would delay the trial and require the parties to submit a revised Joint Pretrial Order for the Courts consideration. Glisson fails to address the fact that the case is already prepared for trial on liability and damages, so that bifurcation will not expedite, economize, or provide any convenience to the Court or the parties. 3. Glissons Contentions About the Complexity of Remedies are Incorrect and Not Supported by Precedent In support of his motion, Glisson posits a series of questions and issues that he believes need to be resolved with regard to remedies; however, Glisson provides no legal support for the convoluted and complicated process he envisions. In fact, precedent establishes that the Commissions request for disgorgement is not subject to the standards Glisson proffers to the Court. Glissons motion is

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predicated on a misstatement of the applicable law regarding remedies; in fact, remedies are intimately tied into liability and not so complex as Glisson would argue, which also counsels against bifurcation. The district court has broad equity powers to order the disgorgement of illgotten gains obtained through the violation of the securities laws. SEC v. First Pacific Bancorp, 142 F.3d 1186, 1191 (9th Cir. 1998). The purpose of disgorgement is to deprive a wrongdoer of unjust enrichment, and to deter others from violating the securities laws by making violations unprofitable. Id. at 1191. The Commission has the initial burden of establishing that its disgorgement figure reasonably approximates the amount of unjust enrichment. SEC v. Hughes Capital Corp., 917 F. Supp. 1080, 1085 (D.N.J.), affd 124 F.3d 449 (3d Cir. 1997) (quoting SEC v. First City Financial Corp., 890 F.2d 1215, 1232 (D.C. Cir. 1989)). To meet this burden, the Commission is not required to trace every dollar of proceeds obtained from the illegal activity. First Pacific Bancorp, 142 F.3d at 1192 n.6 (The district court was not required to trace every dollar of the offering proceeds fraudulently retained by Sands). Rather, the amount ordered in disgorgement need only be a reasonable approximation of the profits causally connected to the violation. Id; see also SEC v. First Jersey Securities, Inc., 101 F.3d 1450, 1474-75 (2d Cir. 1996). Any risk of uncertainty in calculating disgorgement must fall on the wrongdoer who created the uncertainty in the first instance. SEC v. Hughes Capital Corp., 124 F.3d 449, 455 (3d Cir. 1997) (Very often defendants move funds through various accounts to avoid detection, use several nominees to hold securities or improperly deprived profits, or intentionally fail to keep accurate records and refuse to cooperate with investigators in identifying illegal profits.

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Hence, the risk of uncertainty should fall on the wrongdoer whose illegal conduct created that uncertainty. (quotations omitted)). Once the Commission establishes that the disgorgement amount it seeks is a reasonable approximation of defendants unlawful profits, the burden shifts to the defendant to demonstrate that the amount sought is not a reasonable estimate of their profits. Hughes Capital Corp., 917 F. Supp. at 1085. The amount of disgorgement may properly include all proceeds obtained as a result of the illegal activity. SEC v. Manor Nursing Centers, 458 F.2d 1082, 1104 (9th Cir. 1972). Thus, under the applicable law, the Commission is not put to the onerous and complex inquiry proposed by Glisson. In fact, the question of disgorgement can be resolved simply by looking at the total proceeds of the illegal activity. The fact that assessing the amount of disgorgement is not as complex as Glisson would have it also counsels against bifurcation. In fact, most of the evidence relating to remedies, such as the nature of the conduct and assurances against future violations, are intimately bound up with the liability question, so that bifurcation would needlessly complicate the resolution of this matter. IV. CONCLUSION For the foregoing reasons, the Court should deny Glissons motion to bifurcate the trial into two trials, separately addressing liability and remedies.

Date: November 30, 2011

Respectfully submitted,

/s/ John B. Bulgozdy John B. Bulgozdy David J. Van Havermaat Attorneys for Plaintiff Securities and Exchange Commission

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PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036-3648 Telephone No. (323) 965-3998; Facsimile No. (323) 965-3908.

On November 30, 2011, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSIONS OPPOSITION TO DEFENDANT GLISSONS MOTION TO BIFURCATE LIABILITY AND DAMAGE ISSUES FOR TRIAL on all the parties to this action addressed as stated on the attached service list: [ ] OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agencys practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. [ ] PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid.

HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (UPS) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. E-FILING: By causing the document to be electronically filed via the Courts CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct.

Date: November 30, 2011

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/s/ John B. Bulgozdy John B. Bulgozdy

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SEC v. MARCO GLISSON United States District Court - District of Nevada Case No. 2:09-cv-00104-LDG-GWF (LA-3028) SERVICE LIST Frederick A. Santacroce, Esq. 706 South Eighth Street Las Vegas, NV 89101 Email: fasatty@yahoo.com Attorney for Marco Glisson Robert H. Bretz, Esq. 578 Washington Boulevard, Suite 843 Marina del Rey, CA 90292 Email: Rhbretzpc@aol.com Attorney for Marco Glisson

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