United States District Court, D. Nevada
FOLEY, JR. United States Magistrate Judge.
matter is before the Court on Plaintiff Securities and
Exchange Commission's ("SEC") Motion to
Establish a New Installment Payment Plan (ECF No. 531), filed
on May 8, 2017. The SEC filed its Memorandum (ECF No. 536) on
June 13, 2017. Defendant Gary Thomas Vojtesak
("Thomas") filed his Response (ECF No. 539) on July
7, 2017. The SEC filed its Motion to Strike, or in the
Alternative, Reply to Defendant's Response (ECF No. 542)
on July 18, 2017.
December 22, 2006, the Court entered a default judgment
against Mr. Thomas in the amount of $540, 000.00. Default
Judgment (ECF No. 86). On March 3, 2014, the SEC filed a
motion for an installment payment order against Thomas
pursuant to 28 U.S.C. § 3204. Motion for Installment
Payment Order (ECF No. 445). Thomas did not file a
response to the SEC's motion and the Court entered an
order on March 31, 2015 ordering him to make monthly
installment payments of $ 15, 966.00 in satisfaction of the
judgment, with the first installment payment due on April 1,
2014. Order (ECF No. 449). Thomas was also required
to submit quarterly financial statements to the SEC.
Id. On June 9, 2014, the SEC filed a motion for
order to show cause why Thomas should not be held in civil
contempt for failure to comply with the installment payment
order. Motion for Order to Show Cause (ECF No. 450).
The SEC deposed Thomas on October 14, 2014 at which time it
learned that he had dissipated money from an account he
controlled and invested it in another company. The Court
ordered Thomas to deposit $700, 000 into the registry of the
Court, but he never did. Order (ECF No. 473);
Motion (ECF No. 536), pg. 3, ¶8. In December
2014, the SEC and Thomas entered into an agreement pursuant
to which Thomas would pay $2, 000 per month on the judgment
during the 2015 calendar year, and $3, 000 per month during
the 2016 calender year. Memorandum (ECF No. 536),
Tyler Declaration ¶ 4, Exhibit B.
Based on this agreement, the contempt proceedings were
stayed. Thomas did not make any payments pursuant to
installment agreement. Accordingly, the stay was lifted on
January 11, 2016. Order (ECF No. 489).
Court conducted a show cause hearing on July 27, 2016. The
Court found that Thomas failed to comply with the previous
order to make installment payments, submit quarterly
financial reports, and to notify the SEC of changes in his
financial condition. The Court directed the parties to work
at establishing a new payment plan and stated that if they
could not agree the Court would refer the matter to the
Magistrate Judge. Minutes of Proceedings (ECF No.
512). The Court entered an order on August 9, 2016, finding
Thomas in civil contempt and ordering him to provide bank
statements and a variety of other business and financial
information and records to the SEC. Order (ECF No.
515). The SEC asserts that Thomas failed to produce many of
the ordered items and materially misrepresented his financial
condition. Motion (ECF No. 536), pg. 4, ¶ 14.
The parties were unable to reach agreement on a new payment
plan. The SEC notes that Defendant Thomas made an offer to
pay $150.00/month which the SEC rejected as unreasonably low.
Accordingly, the SEC has brought this motion to implement a
new installment payment plan. With interest calculated on the
judgment through May 16, 2017, the amount owed is now in
excess of $843, 386.55. Memorandum (ECF No. 536),
Tyler Declaration ¶ 3.
asserts that Thomas, by his own statements, has interests in
six corporate entities: 44 Square, LLC; PVC OPPS, LLC;
ZaaZoom Solutions, LLC; 4040 Holdings, LLC; I AM AKA, LLC;
and Clean Shoe, LLC. Memorandum (ECF No. 536), pg.
6, Tyler Declaration ¶ 4, Exhibits E
and F. The SEC further states that in 2016 Thomas was a
signatory on bank accounts located at BBVA Compass Bank in
the names of 44 Square, LLC, PVC OPPS, LLC, 4040 Holdings,
LLC, and I AM AKA, LLC. These bank accounts were opened in
early January 2016, but were closed in late May and early
June 2016. New accounts were opened at Bank of America in the
names of I AM AKA, LLC, 44 Square, LLC, and Clean Shoe, LLC.
The address for the holders of the Bank of America accounts
is Thomas's home address in Scottsdale, Arizona. A person
named Andrea Skinner is listed as the signatory on these
accounts. Id. at pg. 6. The SEC notes that during
his testimony before the Court on July 27, 2016, Thomas
admitted that the Bank of America accounts belong to him. He
also testified that he had received $100, 000 from the sale
of a bar business approximately six weeks before the hearing.
Thomas claimed that he had suffered a financial loss from
this sale based on the amount of money he had previously
invested in the business. Id. at pgs 7-8; Tyler
Declaration, ¶ 4, Exhibit D.
Allen, a legal intern with the SEC reviewed and summarized
the 2016 bank account records of the entities controlled by
Thomas. Memorandum (ECF No. 536), Allen
Declaration. During the calender year 2016, $592, 079.00
was deposited into the accounts and $577, 849.00 was
withdrawn from the accounts. The SEC further states that
Thomas uses these bank accounts to pay personal living
expenses, including $16, 308 in dining expenses; $14, 678 in
clothing expenses; $1, 790 on tickets, movies and concerts;
$6, 823 in charges on Amazon; $2, 438 for gym dues and yoga
sessions; $676 for manicures; and $4, 975 on iTunes. Mr.
Thomas also paid $715 for court resurfacing; $4, 286 for
photography; $5, 592 for a ski trip; and $7, 635 for a Fourth
of July party. Additionally, Thomas used the accounts to pay
for regular house cleaning, landscaping and pool cleaning
services. Thomas also used these accounts to make the
mortgage payments for the house in which he resides and which
is titled in his father's name. Id. According to
the calculations made by Mr. Allen, Defendant Thomas spent
$103, 711.07 in 2016 on personal and family living expenses.
Thomas states in his response to the SEC's memorandum
that during 2015 and 2016 he did not generate any income,
revenue or earnings from any business entity and was living
on borrowed money. Thomas started a business which he thought
would generate revenue and earnings. The business failed to
yield any revenue and he needed to continue to borrow funds.
Response (ECF No. 539), at pg. 4. Thomas attached as
exhibits copies of twelve promissory notes that he allegedly
executed and delivered in 2014, 2015 and 2016. Exhibits
9 and 10. Six of the notes were made by Mr.
Thomas personally or in his name and on behalf of one of the
limited liability companies. The other notes were made by one
of the limited liability companies, usually "I am aka,
LLC", which Mr. Thomas signed as the manager. The
alleged loans evidenced by these promissory notes were made
between October 25, 2014 and February 21, 2017 and total
$594, 000.00. Most of the promissory notes are identical in
form except for the date, amount and name of holder. They
were generally payable in a lump sum within one or two years
after the date of the note. A few of the notes were
"[acknowledged and accepted by" the holder whose
signature is allegedly contained on the note. Defendant
Thomas has not provided any affidavits or declarations from
any of the lenders/holders attesting to the authenticity of
the notes, that funds were actually loaned to Mr. Thomas or
his businesses, or whether any of the loans were repaid. Mr.
Thomas did not provide any information as to what these loans
were used for, other than to state that he paid his living
expenses from the loans. Mr. Thomas has not provided any tax
returns for the years from 2011 through 2016. It is therefore
not known what he reported as taxable income during those
years, or whether he even filed federal income tax returns.
has submitted a declaration by an individual named Naomi
Sanchez who identifies herself as a specialist certified in
Quick Books accounting software. Response (ECF No.
539), Exhibit 16, ¶ 1. Ms. Sanchez states:
"The first and most important thing I discovered was
that the SEC had erroneously added an additional $300, 579.30
in bank deposits to the total." Id. at ¶
4. She does not identify which deposits were erroneously
added, however. The Court has added the deposits listed in
the SEC's exhibit and they appear to correctly total
Thomas states in the conclusion to his response:
If Thomas can afford to borrow money to live and fund his
lifestyle through loans until one of his business ventures
starts to generate cash flow, income and earnings, Mr. Thomas
should have the right to do so. Being his lifestyle is
afforded through loan proceeds and not earnings, 28 U.S.C.
§ 3204 is not applicable to Thomas and Thomas
respectfully submits an offer of $150.00 per month toward
this debt based on his limited ability to pay.
Response (ECF No.539), pg. 10.
U.S.C. § 3204 provides that if it is shown that a
judgment debtor (1) is receiving or will receive substantial
nonexempt disposable earnings from self employment that are
not subject to garnishment; or (2) is diverting or concealing
substantial earnings from any source, or property received in
lieu of earnings, then upon motion by the United States and
notice to the judgment debtor, the court may order that the
judgment debtor make specified installment payments to the
United States. An installment payment order may not be issued