SEC v. Chancellor Corporation; and Brian Adley, No. LR-20177, District of Massachusetts (July 2, 2007) — Press Release
raw: Chancellor Corporation, et al.
Chancellor Corporation, et al., No. LR-20177 (July 2, 2007)
Brian Adley, the last remaining defendant in the SEC’s accounting fraud case against Chancellor Corporation, faced civil contempt and default judgment motions for repeatedly failing to appear at court-ordered depositions, including one mandated for June 13, 2007, with sanctions sought including barring his testimony and imposing legal fees.
The SEC moved for civil contempt and default judgment against Brian Adley for failing to comply with multiple court orders to appear for depositions in its accounting fraud case against the defunct Chancellor Corporation. Despite being ordered by Judge Patti B. Saris to sit for a deposition in early June and again specifically on June 13, 2007, Adley failed to appear each time, prompting the SEC to seek sanctions including prohibiting his testimony, allowing adverse jury inferences, and requiring him to pay the SEC’s attorney fees. Although the underlying case involved accounting fraud at Chancellor Corporation, no specific dollar amounts or fraud details were included in this filing, which focused solely on Adley’s discovery obstruction.
Brian Adley, the last remaining defendant in the SEC’s accounting fraud case against the now-defunct Chancellor Corporation, was the subject of a June 14, 2007 motion for civil contempt, default judgment, and sanctions due to his repeated refusal to comply with court-ordered depositions. The SEC had properly noticed Adley’s deposition multiple times, and on June 11, 2007, Judge Patti B. Saris explicitly ordered him to appear on June 13, 2007 — a deadline he again ignored. The SEC’s motion sought severe penalties, including barring Adley from testifying at trial, permitting the jury to draw an adverse inference from his absence, and compelling him to pay the SEC’s reasonable legal expenses. While the original case involved accounting fraud at Chancellor Corporation, the June 2007 filing did not detail the nature or dollar amount of the alleged fraud, focusing exclusively on Adley’s obstruction of discovery. The court scheduled a hearing on the motion for July 18, 2007, with potential outcomes including default judgment against Adley. This motion marked a critical procedural turning point in a case that had been ongoing since 2003, as Adley was now the sole remaining defendant. The SEC’s actions underscored its commitment to enforcing discovery compliance, even in the absence of a resolved underlying fraud claim.
Extracted insights
- agency the securities and exchange commission
- The Securities and Exchange Commission announced that on June 14, 2007, the Commission filed a motion for civil contempt, default judgment
- Commission filed a motion for civil contempt, default judgment
- Commission moves for order holding Defendant Brian Adley in civil contempt
- Order holds Defendant Brian Adley in civil contempt
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20177 / July 2, 2007 Accounting and Auditing Enforcement Release No. 2630 / July 2, 2007 SEC v. Chancellor Corporation, et al., (United States District Court for the District of Massachusetts, C.A. No. 03-10762-PBS) Commission Moves for Order Holding Defendant Brian Adley in Civil Contempt, Subject to Default Judgment and Other Sanctions for Failing to Comply with Court Orders The Securities and Exchange Commission announced that on June 14, 2007, the Commission filed a motion for civil contempt, default judgment, and other sanctions against Defendant Brian Adley. Adley is the last remaining defendant in the Commission's accounting fraud case related to the now defunct Chancellor Corporation. The Commission filed its motion based on Adley's failure to comply with the Court's May 16, 2007 and June 11, 2007 Orders, entered by the Honorable Patti B. Saris of the United States District Court for the District of Massachusetts, requiring that Adley appear for a deposition, as well as Adley's failure to appear at properly noticed depositions. According to the Commission's Memorandum in Support of its Motion, at a May 16, 2007 status conference, the Court ordered that Adley sit for a deposition "in early June." The SEC properly noticed Adley's deposition on several occasions, but, each time, Adley failed to appear. On June 8, 2007, the SEC moved on an emergency basis to compel Adley's deposition. The Emergency Motion to Compel requested that the Court order Adley to sit for a deposition to start on June 12 or June 13, 2007. On June 11, 2007, the Court granted the Commission's Emergency Motion to Compel. The Commission scheduled Adley's deposition for June 13, 2007. On that day, however, Adley again failed to appear. The Commission's June 14, 2007 Motion requests that the Court hold Adley in civil contempt, impose default judgment and other sanctions including (to the extent that the Court allows a trial to proceed): (1) prohibiting Adley from introducing his own testimony at trial; (2) allowing the Commission to introduce evidence of Adley's failure to appear at his deposition at trial and instructing the jury that they may draw an adverse inference from Adley's refusal to appear; (3) requiring Aldey to pay reasonable expenses, including attorney's fees; and (4) imposing other sanctions. The Court has set a hearing on the Commission's Motion for July 18th. For further information, see Litigation Release Nos. 18104 (April 24, 2003) and 19177(April 11, 2005).
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20177 / July 2, 2007 Accounting and Auditing Enforcement Release No. 2630 / July 2, 2007 SEC v. Chancellor Corporation, et al., (United States District Court for the District of Massachusetts, C.A. No. 03-10762-PBS) Commission Moves for Order Holding Defendant Brian Adley in Civil Contempt, Subject to Default Judgment and Other Sanctions for Failing to Comply with Court Orders The Securities and Exchange Commission announced that on June 14, 2007, the Commission filed a motion for civil contempt, default judgment, and other sanctions against Defendant Brian Adley. Adley is the last remaining defendant in the Commission's accounting fraud case related to the now defunct Chancellor Corporation. The Commission filed its motion based on Adley's failure to comply with the Court's May 16, 2007 and June 11, 2007 Orders, entered by the Honorable Patti B. Saris of the United States District Court for the District of Massachusetts, requiring that Adley appear for a deposition, as well as Adley's failure to appear at properly noticed depositions. According to the Commission's Memorandum in Support of its Motion, at a May 16, 2007 status conference, the Court ordered that Adley sit for a deposition "in early June." The SEC properly noticed Adley's deposition on several occasions, but, each time, Adley failed to appear. On June 8, 2007, the SEC moved on an emergency basis to compel Adley's deposition. The Emergency Motion to Compel requested that the Court order Adley to sit for a deposition to start on June 12 or June 13, 2007. On June 11, 2007, the Court granted the Commission's Emergency Motion to Compel. The Commission scheduled Adley's deposition for June 13, 2007. On that day, however, Adley again failed to appear. The Commission's June 14, 2007 Motion requests that the Court hold Adley in civil contempt, impose default judgment and other sanctions including (to the extent that the Court allows a trial to proceed): (1) prohibiting Adley from introducing his own testimony at trial; (2) allowing the Commission to introduce evidence of Adley's failure to appear at his deposition at trial and instructing the jury that they may draw an adverse inference from Adley's refusal to appear; (3) requiring Aldey to pay reasonable expenses, including attorney's fees; and (4) imposing other sanctions. The Court has set a hearing on the Commission's Motion for July 18th. For further information, see Litigation Release Nos. 18104 (April 24, 2003) and 19177(April 11, 2005).