The DOJ has been granted an intervention in the SEC’s civil case against Kristijan Krstic, John DeMarr and Robin Enos.
The granted intervention is followed by an order staying the case, pending the outcome of parallel criminal proceedings.
The stated reason for the DOJ’s intervention request is “the same underlying facts are at issue in both the Civil and Criminal Cases”.
The SEC neither consented or objected to the DOJ’s proposed intervention.
Interestingly, the DOJ cites criminal cases against Krstic and DeMarr. These we knew about but they also mention an “ongoing grand jury investigation”.
Grand Jury proceedings are held in secret so we’re not getting any details till whatever is being investigated plays out.
Defendants should not be permitted to use discovery in the Civil Case to avoid the restrictions on criminal discovery that would otherwise apply in the Criminal Case.
A stay is also necessary to preserve the secrecy of the ongoing grand jury proceedings and would promote judicial economy.
The government’s investigation is ongoing.
BehindMLM readers have speculated that Krstic is a small fish in a bigger sea. Perhaps US authorities are going after those bigger fish.
Whether that will convince Serbian authorities to extradite Krstic remains to be seen.
The DOJ’s Motion to Intervene and stay the SEC’s case was granted on April 5th.
Another interesting point is that defendant Robin Enos appears to be cooperating with authorities.
Wrote the DOJ in a memorandum in support of their intervention motion;
The U.S. Securities and Exchange Commission has advised the government that the defendant Robin Enos consents to the entry of the requested order.
To that end judgment was entered into against Enos on April 7th.
The judgment sees Enos prohibited from committing further violations of the Securities Exchange Act. Disgorgement and a civil penalty will be decided at a later date.
He neither admits nor denies the SEC’s allegations. That said, Enos’ judgment order states;
(a) Defendant will be precluded from arguing that he did not violate the federal securities laws as alleged in the Complaint;
(b) Defendant may not challenge the validity of the Consent or this Judgment;
(c) solely for the purposes of such motion, the allegations of the Complaint shall be accepted as and deemed true by the Court.
Looking forward, despite the SEC’s case being stayed, they’ve pushed for permission to serve Krstic via email and/or publication.
In an April 14th motion the SEC stated;
The Commission has been unable to serve Krstic through the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents, because his present address is unknown to Commission staff.
Krstic was arrested by Serbian authorities in approximately July 2020.
Since that time, Commission staff further understands, Krstic has remained in custody in Serbia, pending the efforts of the United States Department of Justice to obtain his extradition to the United States, which Krstic has contested. See March 23, 2021 article published at scamponzi.com.
(Krstic) remains in custody in Serbia at an address unknown to Commission staff, pending resolution by the Serbian courts of the request of the Department of Justice for Krstic’s extradition to the United States.
Service by email and/or publication comports with constitutional due process concerns, and would advance the administration of justice.
If you’re thinking surely to locate Krstic all the SEC has to do is get in contact with Serbian authorities;
The Commission to date has been unable to initiate its request under the Convention to the Serbian Central Authority, because the Commission does not know Krstic’s address while in custody in Serbia, and requests made on behalf of the Commission staff to and through DOJ’s Office of International Affairs for information as to Krstic’s address have to date been unsuccessful.
As hinted at earlier, there’s something fishy going on between Krstic and Serbian authorities.
In light of Serbian authorities’ ongoing sheltering of Krstic, the SEC has proposed service via publication in “two prominent Serbian publications”, as well as email.
A decision on the SEC’s April 14th service motion remains pending.
Update 23rd April 2021 – The SEC’s service motion was granted on April 19th.