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Securities Investor Protection Corp. v. Christian-Paine & Co.

February 28, 1985

SECURITIES INVESTOR PROTECTION CORPORATION, APPLICANT, SECURITIES AND EXCHANGE COMMISSION
v.
CHRISTIAN-PAINE & CO., INC., CARLTON-CAMBRIDGE & CO., INC., A/K/A, CARLTON-CAMBRIDGE, A/K/A, CARLTON-CAMBRIDGE, A N.J. CORPORATION AND GEORGE J. SANTORIELLO, CHRISTOPHER J. NICKOS, APPELLANT, (D.C. CIVIL NO. 74-528)



On Appeal from the United States District Court for the District of New Jersey.

Gibbons and Becker, Circuit Judges and Katz, District Judge .*fn*

Author: Gibbons

Opinion OF THE COURT

GIBBONS, Circuit Judge:

Christopher J. Nickos appeals from an order, dated February 28, 1984, denying his motion to vacate an order, dated December 15, 1983, directing Nickos to appear for an oral deposition under oath, and to produce documents for an examination into his assets. The examination was sought by Irving Weinberg, the trustee appointed under the Securities Investor Protection Act of 1970 (SIPA), Pub. L. No. 91-598, 84 Stat. 1636, et seq., codified at 15 U.S.C. 78aaa et seq. (1976) (amended 1978), to liquidate two brokerage firms, Christian-Paine & Co., Inc. Nickos contends that the district court lacked authority to enter the order compelling him to submit to such an examination. We affirm.

I.

Proceedings in the District Court

Nickos was a principal in the now defunct brokerage firms. He was charged with and convicted of securities fraud in connection with their operations, and was sentenced to 11 years in prison. Thereafter he was released on parole prior to the completion of that sentence.

In 1976 Mr. Weinberg, the SIPA trustee, sued Nickos and others in the Superior Court of New Jersey to recover assets misappropriated from the brokerage firms. That suit resulted in a judgment, dated February 2, 1978, against Nickos and others, jointly and severally, in the amount of $3,474,452.49. In his application for the order compelling Nickos to appear for examination, the SIPA trustee informed the district court that despite his collection efforts, he had been unable to satisfy the judgment. He further informed the court that Nickos had, upon his release from prison, returned to the securities business using what the trustee described as "a corporate from known as 'Falcon Sciences'. "The trustee alleged that routine supplemental proceedings in the Superior Court of New Jersey to enforce the outstanding judgment would be time consuming, costly and non-productive. The trustee requested the court to enter a discovery order which could be enforced by civil or criminal contempt in the district court. The requested order was entered on December 15, 1983.

Nickos moved to vacate that order, urging that the trustee should be relegated to supplemental proceedings in state court under the New Jersey Court Rules. The district court denied Nickos' motion and directed him to appear on February 29, 1984, and submit to examination. Nickos filed a notice of appeal and applied to the district court and this court for a stay. Those applications were denied.

Nickos appeared on February 29, but refused to answer questions or produce documents, asserting the privilege against self-incrimination. So far as the record before us discloses, no further steps were taken in the district court to compel his testimony, and he has not yet submitted to examination.*fn1 On March 5, 1984, Nickos renewed a motion in this court to stay discovery. This motion was denied on March 20, 1984.

II.

Appellate Jurisdiction

The SIPA trustee contends that the appeal should be dismissed for lack of jurisdiction, because the order appealed from is interlocutory until such time as Nickos is adjudicated to be in contempt. The trustee relies on the rule of Alexander v. United States, 201 U.S. 117, 50 L. Ed. 686, 26 S. Ct. 356 (1906), that a witness resisting enforcement of a subpoena may not appeal an order directing testimony, but must first be adjudged to be in contempt. If Nickos' appeal depended upon ...


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