Opinion
Case No. 2:03CV914 DAK
December 19, 2003
ORDER
This matter is before the court on an Emergency Motion to Vacate the Asset Freeze Order As to Carlucci and GG Capital, which was filed on December 15, 2003. A hearing on the motion was held on December 18, 2003. At the hearing, Defendants Gino Carlucci ("Carlucci") and GG Capital, LLC ("GG") were represented by Jeffrey W. Shields. Plaintiff Securities and Exchange Commission (the "Commission") was represented by Thomas M. Melton. Before the hearing, the court considered carefully the memoranda and other materials submitted by Defendants. The court received the Commission's response immediately prior to the hearing, and after the hearing, the court considered carefully the memoranda and other materials submitted by the Commission. Since taking the matter under advisement, the court has further considered the law and facts relating to the motion. Now being fully advised, the court renders the following Order.
Carlucci and GG have moved this court to vacate the prior ex parte Asset Freeze Order entered on October 16, 2003 (the "Freeze Order"), with respect to the assets of Carlucci and GG. They maintain that the SEC has failed to meet the legal and factual requirements for issuance and maintenance of the Freeze Order concerning these assets.
The Commission disagrees, arguing that it has demonstrated its prima facie case, and that, while Carlucci claims that he has legitimate sources of income, he has failed to provide any evidence whatsoever.
The court is not satisfied with either party's submissions. The court agrees that the Commission previously made a sufficient demonstration to warrant granting the ex parte Freeze Order on October 16, 2003. However, now that a portion of Mr. Frost's deposition has been taken, the Commission should not be relying on Mr. Frost's previous affidavit, and the court is troubled by Mr. Frost's testimony that he has not yet conducted an analysis of the relevant accounts.
On the other hand, if, as Carlucci claims, his funds are from a variety of sources related to the legitimate business activities of GG, it seems that it would be a simple task to provide some evidence to make such a showing. Yet, Carlucci has failed provide any evidence whatsoever.
Because the court is not convinced that the Freeze Order should be vacated or that it should remain in place, the court will provide partial relief from the Freeze Order, in the amount of $24,666.000. Carlucci may transfer this amount from his Arizona Account (account number 641646757, BankOne Arizona, Mesa, Arizona) to his Living Expenses Account. This sum amounts to three months of living expenses, as previously set forth in the October 20, 2003 Stipulation Between Plaintiff Securities and Exchange Commission and Defendants Gino Carlucci and G G Capital for Partial Temporary Relief from Asset Freeze Order. Because there is a dispute between the parties as to how long the previous living expenses should have lasted, the court will not release any further funds-absent a complete setting aside of the Freeze Order-until after March 31, 2004. Defendants may renew their motion on a non-expedited basis and at a time when both parties are able to more thoroughly set forth their respective positions, both legally and factually.
CONCLUSION
For the foregoing reasons, IT IS HEREBY ORDERED that the Emergency Motion to Vacate the Asset Freeze Order As to Carlucci and GG Capital [Docket #117] is DENIED, without prejudice to renew in the future, as set forth above. The court, however, hereby releases $24,666.000 from the Freeze Order, which amount Carlucci may transfer from his Arizona Account (account number 641646757, BankOne Arizona, Mesa, Arizona) to his Living Expenses Account.