2006-04-18 sec-litreleases pdf 97 KB 4,434 chars

In re LANCER PARTNERS L.P.

summary

Michael Lauer was barred from testifying at trial after being found in contempt for willfully obstructing discovery in an SEC securities fraud case, with the court ruling his testimony was improperly withheld and could not be used to profit from his misconduct.

paragraph

Michael Lauer and multiple affiliated entities were charged by the SEC with securities fraud and egregious discovery violations related to the Lancer Partners fund. Despite a four-day deposition and multiple court orders, Lauer failed to produce documents and answer interrogatories, leading the court to find him in contempt. On March 14, 2006, the court clarified it would prohibit Lauer from testifying or introducing any undisclosed evidence at trial, while still allowing him to cross-examine the SEC’s case, thus punishing his misconduct without granting a default judgment.

narrative

Michael Lauer, along with several affiliated entities including Lancer Management Group, LLC and Lancer Partners, LP, was the target of an SEC enforcement action alleging securities fraud and systemic discovery abuses. The court found Lauer in contempt for repeatedly failing to comply with discovery orders, including withholding documents and obstructing his own deposition, despite sitting for four days. Although the court declined to enter a default judgment, it imposed severe evidentiary sanctions to prevent Lauer from profiting from his misconduct. On March 14, 2006, the court issued a clarifying order explicitly barring Lauer from testifying at trial, reasoning that his own testimony had not been properly, fully, or timely disclosed to the SEC. Lauer was still permitted to cross-examine the SEC’s witnesses and challenge its evidence, ensuring the case proceeded on the merits under fair conditions. The court emphasized that allowing Lauer to testify without full disclosure would reward his contemptuous behavior and undermine the integrity of the judicial process. This ruling reinforced the principle that parties must adhere to discovery obligations, and failure to do so carries serious consequences—even if it means being silenced at trial.

Enriched metadata

Scheme: obstruction (100%)
Court: Southern District of Florida

Classified obstruction(confidence 100%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →

Extracted insights

Entities 2

agency cross-examine and attack the credibility of the evidence presented by the sec
agency the sec should be required to prove its allegations to a trier of fact

Triples 7

the Court attempted to articulate the sanctions that were to be imposed upon Defendant Michael Lauer
the Court concluded Lauer's contemptuous conduct was sufficient to justify the entry of a default judgment
the Court believed the SEC should be required to prove its allegations to a trier of fact
the Court intended to preclude Lauer from testifying at trial
Lauer shall be entitled to cross-examine and attack the credibility of the evidence presented by the SEC
Lauer shall not be permitted to present any witnesses or evidence not properly, fully, and timely disclosed under the Federal Rules of Civil Procedure
the Court attempted to strike a balance which would punish Lauer for his egregious violations of this Court's orders

PDF

In re LANCER PARTNERS L.P. · Source

Text layers

Extracted body text (4,434c)


UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF FLORIDA 
Case No. 03-8061 2-Civ-MARRAISELTZER 
SECURITIES AND EXCHANGE COMMISSION 
Plaintiff 
vs. 
FILED by*^.^. 
MICHAEL LAUER, 

LANCER MANAGEMENT GROUP, LLC, and 
MAR 1 4 2CCG

LANCER MANAGEMENT GROUP II, LLC, 

CLARENCL MAUDOX 
CLERK 
U.S. DIST. CT. 
Defendants 
S.D. OF FLA. FT. LAUD.
I 
and 
LANCER OFFSHORE, INC., 

LANCER PARTNERS, LP, 

OMNIFUND, LTD., 

LSPV, INC., and LSPV, LLC, 

Relief Defendants. 
In re: 
LANCER PARTNERS L.P. 
Debtor. 
ORDER 
THIS CAUSE is before the Court upon Plaintiff Securities and Exchange 
Commission's Motion For Clarification of Order Affirming in Part Magistrate Judge's 
Report and Recommendation [DE 12461. This matter 
is fully briefed and ripe for 
review and the Court 
is fully advised in the premises. 

In this Court's January 24, 2006 Order [DE 12181, the Court attempted to 
articulate clearly the sanctions that were to be imposed upon Defendant Michael 
Lauer, including the evidentiary limitations that would be placed on Lauer at the trial 
on the merits. In view of the instant motion brought by the Securities and Exchange 
Commission ("SEC") and Defendant Lauer's response, 
it is apparent the Court failed 
to accomplish 
its goal. The parties now dispute whether the sanction which 
prohibited Defendant Lauer from presenting any witness or introducing any evidence 
"that has not already been disclosed or produced by him to the 
SEC" applied to 
Defendant Lauer's own testimony at trial. 
In the January 24, 2006 Order finding Defendant Michael Lauer in contempt, 
the Court concluded that Lauer's contemptuous conduct was sufficient to justify the 
entry of a default judgment. Because of the seriousness of the 
SEC's charges and the 
federal policy favoring decisions on the merits, the Court attempted to strike a 
balance which would punish sufficiently Lauer for his egregious violations of this 
Court's orders, but which would not at the same time hand the 
SEC a victory by 
default. The Court believed that the 
SEC should be required to prove its allegations 
to a trier of fact under circumstances that would not prejudice the 
SEC and would not 
permit Lauer to profit from his wrongdoing. 
To allow Lauer to testify on his own behalf at the trial, without having been 
subject to a full and complete examination by the SEC at his deposition and without 
complying fully with his obligations to produce documents and answer interrogatories, 
Page 
2 of 4 

would reward Lauer for his contemptuous behavior. The fact that Lauer sat for 
deposition for four 
(4) days is of no moment if he did not provide all the information 
needed by the 
SEC to confront his assertions and if he failed to allow the SEC to 
complete the examination. Therefore, the Court intended from the outset to 
preclude Lauer from testifying at trial. To the extent the language of the Court's 
Contempt Order did not articulate that intention clearly, the Court now does so. 
Consistent with the Court's prior pronouncement, the 
SEC should not be 
entitled to a victory by default to the extent 
it has not been prejudiced by Lauer's 
contemptuous conduct. Lauer shall be entitled to cross-examine and attack the 
credibility of the evidence presented by the 
SEC, but he shall not be permitted to 
present any witnesses or evidence which were not properly, fully, and timely 
disclosed under the Federal Rules of Civil Procedure and this Court's prior orders. By 
virtue of Lauer's contemptuous conduct, his own testimony was not properly, fully 
and timely disclosed to the 
SEC. Any suggestion by Lauer that he is now willing to 
comply with his discovery obligations, as previously ordered, comes too late. 
Accordingly, 
it is hereby 
ORDERED AND ADJUDGED that Plaintiff Securities and Exchange Commission's 
Motion For Clarification of Order Affirming in Part Magistrate Judge's Report and 
Page 
3 of 4 

Recommendation [DE 12461 is GRANTED.' Defendant Lauer shall not be permitted to 
testify at the trial on his own behalf. 
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida, 
this 14th day of March, 
2006. 
2
7 
-. 
KENNETH A. MARRA 
United States District Judge 
copies to: 
Magistrate Judge Seltzer 
Christopher Martin, Esq. 
Marty Steinberg, Esq. 
Carl Schoeppl, 
Esq. 
' The Court is only providing clarification as to the issue raised in the SEC's Motion 
For Clarification. 
Page 
4 of 4

OCR text (4,507c · tika · 95% conf)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

Case No. 03-8061 2-Civ-MARRAISELTZER

SECURITIES AND EXCHANGE COMMISSION

Plaintiff
vs.

FILED by*^.^.
MICHAEL LAUER,

LANCER MANAGEMENT GROUP, LLC, and MAR 1 4 2CCG

LANCER MANAGEMENT GROUP II, LLC,

CLARENCL MAUDOX
CLERK U.S. DIST. CT.

Defendants S.D. OF FLA. FT. LAUD.I
and

LANCER OFFSHORE, INC.,

LANCER PARTNERS, LP,

OMNIFUND, LTD.,

LSPV, INC., and LSPV, LLC,

Relief Defendants.

In re:

LANCER PARTNERS L.P.

Debtor.

ORDER

THIS CAUSE i s before the Court upon Plaintiff Securities and Exchange

Commission's Motion For Clarification of Order Affirming in Part Magistrate Judge's

Report and Recommendation [DE 12461. This matter i s fully briefed and ripe for

review and the Court i s fully advised in the premises.

In this Court's January 24, 2006 Order [DE 12181, the Court attempted to

articulate clearly the sanctions that were to be imposed upon Defendant Michael

Lauer, including the evidentiary limitations that would be placed on Lauer at the trial

on the merits. In view of the instant motion brought by the Securities and Exchange

Commission ("SEC") and Defendant Lauer's response, it i s apparent the Court failed

to accomplish i t s goal. The parties now dispute whether the sanction which

prohibited Defendant Lauer from presenting any witness or introducing any evidence

"that has not already been disclosed or produced by him to the SEC" applied to

Defendant Lauer's own testimony at trial.

In the January 24, 2006 Order finding Defendant Michael Lauer in contempt,

the Court concluded that Lauer's contemptuous conduct was sufficient to justify the

entry of a default judgment. Because of the seriousness of the SEC's charges and the

federal policy favoring decisions on the merits, the Court attempted to strike a

balance which would punish sufficiently Lauer for his egregious violations of this

Court's orders, but which would not at the same time hand the SEC a victory by

default. The Court believed that the SEC should be required to prove i t s allegations

to a trier of fact under circumstances that would not prejudice the SEC and would not

permit Lauer to profit from his wrongdoing.

To allow Lauer to testify on his own behalf at the trial, without having been

subject to a full and complete examination by the SEC at his deposition and without

complying fully with his obligations to produce documents and answer interrogatories,

Page 2 of 4

would reward Lauer for his contemptuous behavior. The fact that Lauer sat for

deposition for four (4) days i s of no moment i f he did not provide all the information

needed by the SEC to confront his assertions and i f he failed to allow the SEC to

complete the examination. Therefore, the Court intended from the outset to

preclude Lauer from testifying at trial. To the extent the language of the Court's

Contempt Order did not articulate that intention clearly, the Court now does so.

Consistent with the Court's prior pronouncement, the SEC should not be

entitled to a victory by default to the extent it has not been prejudiced by Lauer's

contemptuous conduct. Lauer shall be entitled to cross-examine and attack the

credibility of the evidence presented by the SEC, but he shall not be permitted to

present any witnesses or evidence which were not properly, fully, and timely

disclosed under the Federal Rules of Civil Procedure and this Court's prior orders. By

virtue of Lauer's contemptuous conduct, his own testimony was not properly, fully

and timely disclosed to the SEC. Any suggestion by Lauer that he i s now willing to

comply with his discovery obligations, as previously ordered, comes too late.

Accordingly, it i s hereby

ORDERED AND ADJUDGED that Plaintiff Securities and Exchange Commission's

Motion For Clarification of Order Affirming in Part Magistrate Judge's Report and

Page 3 of 4

Recommendation [DE 12461 i s GRANTED.' Defendant Lauer shall not be permitted to

testify at the trial on his own behalf.

DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida,

this 14th day of March, 2006.

- .

KENNETH A. MARRA
United States District Judge

copies to:

Magistrate Judge Seltzer
Christopher Martin, Esq.
Marty Steinberg, Esq.
Carl Schoeppl, Esq.

' The Court i s only providing clarification as to the issue raised in the SEC's Motion
For Clarification.

Page 4 of 4